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As filed with the Securities and Exchange Commission on March 17, 2005

Registration No. 333-122108

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

Amendment No. 2 to
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

SYNTA PHARMACEUTICALS CORP.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)	 	2834
(Primary Standard Industrial
Classification Code Number)	 	04-3508648
(IRS Employer
Identification No.)	

45 Hartwell Avenue
Lexington, Massachusetts 02421
(781) 274-8200
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)	

Safi R. Bahcall, Ph.D.
President and Chief Executive Officer
Synta Pharmaceuticals Corp.
45 Hartwell Avenue
Lexington, Massachusetts 02421
(781) 274-8200
(Name, address, including zip code, and telephone number,
including area code, of agent for service)

With copies to:

Jonathan L. Kravetz, Esq.
Brian P. Keane, Esq.
Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
One Financial Center
Boston, Massachusetts 02111
(617) 542-6000	
 	
Wendy E. Rieder, Esq.
Vice President, IP and
Legal Affairs
Synta Pharmaceuticals Corp.
45 Hartwell Avenue
Lexington, Massachusetts 02421
(781) 274-8200	
 	
Patrick O'Brien, Esq.
Ropes & Gray LLP
One International Place
Boston, Massachusetts 02110
(617) 951-7000	

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

        If any of the securities being registered on this Form are being offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box.     o

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

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

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

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

CALCULATION OF REGISTRATION FEE

	
Title of Each Class of
Securities to be Registered
	 	Proposed Maximum
Aggregate
Offering Price(1)
	 	Amount of
Registration Fee(2)

	
Common Stock, $0.0001 par value per share	 	$115,000,000	 	$13,536(3)	

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

(2)
Calculated pursuant to Rule 457(o) based on an estimate of the proposed maximum aggregate offering price.

(3)
Previously paid.

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

PROSPECTUS (Subject to Completion)

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities, and we are not soliciting offers to buy these securities, in any state where such offer or sale is not permitted.

Issued March 17, 2005

                      Shares

COMMON STOCK

We are offering                             shares of our common stock. This is our initial public offering, and no public market currently exists for our shares. We anticipate the initial public offering price will be between $                      and $               per share.

We have applied to have our common stock approved for listing on the Nasdaq National Market under the symbol "SNTA."

Investing in our common stock involves risks. See "Risk Factors" beginning on page 7.

PRICE $       A SHARE

 
	 	Price to
Public

	 	Underwriting
Discounts and
Commissions

	 	Proceeds
to Synta

	
Per Share	 	 	$              	 	 	$              	 	 	$              	
Total	 	$	                           	 	$	                           	 	$	                           	
We have granted the underwriters the right to purchase up to an additional                           shares of common stock to cover over-allotments.

The Securities and Exchange Commission and state securities regulators have not approved or disapproved these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

Morgan Stanley & Co. Incorporated expects to deliver the shares to purchasers on                           , 2005.

MORGAN STANLEY

LEHMAN BROTHERS

LAZARD

                    , 2005

TABLE OF CONTENTS
Prospectus Summary	 	1	

Risk Factors	
 	
7	

Special Note Regarding Forward-Looking Statements	
 	
26	

Use of Proceeds	
 	
27	

Dividend Policy	
 	
27	

Capitalization	
 	
28	

Dilution	
 	
29	

Selected Historical Financial and Operating Data	
 	
30	

Management's Discussion and Analysis of Financial Condition and Results of Operations	
 	
31	

Business	
 	
42	

Management	
 	
67	

Certain Relationships and Related Party Transactions	
 	
82	

Principal Stockholders	
 	
88	

Description of Capital Stock	
 	
91	

Shares Eligible for Future Sale	
 	
94	

Underwriters	
 	
97	

Legal Matters	
 	
100	

Independent Registered Public Accounting Firm	
 	
100	

Where You Can Find More Information	
 	
100	

Index to the Financial Statements	
 	
F-1	

        You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus. We are offering to sell, and seeking offers to buy, shares of common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of common stock.

        Until            , 2005 (25 days after the date of this prospectus), all dealers that buy, sell or trade our common stock, whether or not participating in this offering, may be required to deliver a prospectus. This delivery requirement is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

        For investors outside the United States: Neither we nor any of the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourselves about and to observe any restrictions relating to this offering and the distribution of this prospectus.

i

PROSPECTUS SUMMARY

        The following summary highlights information appearing elsewhere in this prospectus. It may not contain all of the information that may be important to you in deciding whether to invest in our common stock. You should read the entire prospectus carefully, including the "Risk Factors" section and the financial statements and related notes appearing at the end of this prospectus, before making an investment decision.
Synta Pharmaceuticals Corp.

        We are a biopharmaceutical company focused on discovering, developing, and commercializing novel, small-molecule drugs for inflammatory diseases and cancer. Our pipeline of drug candidates is diverse – each of our seven clinical and preclinical drug programs is based on a unique chemical class with a distinct mechanism of action – and addresses some of the largest pharmaceutical markets in the world. All of our drug candidates were discovered internally, using the chemistry, biology, and pharmaceutical development assets and capabilities built over the combined history of Synta and predecessor companies. We use these capabilities to discover and develop new drug candidates, and to increase and protect the value of our drug candidates in clinical trials. We have retained worldwide rights to all of our drug candidates in all indications.

        We have three drug candidates in human clinical trials and four additional programs in preclinical studies. For our two most advanced drug candidates, we are conducting six Phase 2 clinical trials across five therapeutic indications, including Crohn's disease, psoriasis, and multiple cancer types. We have enrolled approximately 500 patients in these Phase 2 trials at over 100 trial sites. STA-5326, an orally administered, small-molecule inhibitor of interleukin-12, or IL-12, and interleukin-23, or IL-23, is currently in Phase 2 clinical development for the treatment of Crohn's disease and psoriasis. STA-4783, a small-molecule anticancer therapeutic, is in three separate Phase 2 trials for the treatment of non-small cell lung cancer, malignant melanoma, and soft tissue sarcoma. STA-5312, a small-molecule anticancer agent we are developing initially for the treatment of chemotherapy-resistant cancers, is currently in two Phase 1 trials for the treatment of solid-tumor cancers and cancers of the blood. Given the current stage of development of these drug candidates, we do not expect to receive regulatory approval for any of our drug candidates until 2008 at the earliest, if at all. Our drug candidates are described in greater detail below.

STA-5326

        STA-5326 is a novel, orally administered, small-molecule drug candidate that selectively and potently inhibits the production of the IL-12 family of proteins, including IL-12 and IL-23. Over-production of these proteins plays a central role in chronic inflammatory diseases, driving the body's immune system to infiltrate and damage tissues and organs. In particular, IL-12 has been recognized as a key regulator of a type of immune cell known as T H 1. Inflammatory diseases known to be mediated by T H 1 cells include Crohn's disease, psoriasis, rheumatoid arthritis, and multiple sclerosis.

        A category of approved drugs, including Remicade, Enbrel, and Humira, that inhibit a protein known as tumor necrosis factor-alpha, or TNFa, has achieved significant commercial success as a treatment for certain T H 1-biased diseases. However, for many patients these TNF a -antagonist drugs are ineffective or poorly tolerated. Recent results have shown that inhibiting IL-12 is a promising alternative therapeutic strategy. Two antibody drug candidates that target IL-12 are currently in development. Data from recent clinical trials involving these antibodies have indicated significant therapeutic benefit to patients, and offer promise that inhibiting IL-12 activity may be a more advantageous therapeutic approach for the treatment of T H 1-biased inflammatory diseases than inhibiting TNF a  activity. We believe that STA-5326, as an orally administered, small-molecule IL-12 inhibitor, may offer additional advantages over both the TNF a -antagonists and anti-IL-12 antibodies, which require intravenous or subcutaneous injection.

        Our initial therapeutic focus for STA-5326 has been on the treatment of Crohn's disease and psoriasis. We have completed enrollment of a 57-patient Phase 2a clinical trial in moderate-to-severe Crohn's

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disease. This trial was designed as an open-label, dose-escalating study to assess the safety, pharmacokinetics, and efficacy of STA-5326. Patients were assigned to one of four dose levels of STA-5326 – 14 mg twice-a-day, 35 mg once-a-day, 28 mg twice-a-day, and 35 mg twice-a-day – and treated for four weeks. Efficacy was assessed using the Crohn's Disease Activity Index, or CDAI, which is a composite index of symptomatic and other parameters that has been the basis of pivotal studies for previously approved Crohn's disease therapies.

        We currently have data for the 57 patients comprising the four dose cohorts of this Phase 2a trial. To date, STA-5326 has demonstrated an acceptable safety profile over four weeks of treatment. In addition, we observed clinical improvement at all but the lowest dose level and an onset of therapeutic benefit within two weeks of initiation of treatment. Based on these preliminary safety and efficacy results, we have expanded this Phase 2a trial to evaluate one higher dose. These results are preliminary and are based on a small number of patients, and may not be supported by further results in this or subsequent clinical trials. Assuming continued favorable results from our ongoing Phase 2a trial, we plan to initiate a randomized, double-blind, placebo-controlled clinical trial in Crohn's disease in the second half of 2005.

        In the second half of 2004, we initiated two Phase 2 trials for the treatment of chronic plaque psoriasis, the most common form of psoriasis. The first psoriasis trial is a randomized, double-blind, placebo-controlled Phase 2b trial. We recently completed enrollment of 214 patients in this trial. The second psoriasis trial is a complementary open-label Phase 2a trial designed to enroll approximately 60 patients, 33 of whom have been enrolled to date. Results from both trials are expected to be available in the second half of 2005. If the data are favorable, we expect to initiate a pivotal Phase 3 clinical trial for the treatment of chronic plaque psoriasis by the end of 2005.

STA-4783

        STA-4783 is a novel, small-molecule compound that we are currently evaluating in three separate Phase 2 trials for the treatment of non-small cell lung cancer, malignant melanoma, and soft tissue sarcoma, in combination with taxanes, a leading class of anticancer therapeutic agents. STA-4783 induces the expression of heat shock protein 70, or Hsp70, on the surface of tumor cells, which flags the cells for destruction and elimination by the immune system. STA-4783 also disrupts the function of the centrosome, a critical component of cellular infrastructure. Preclinical studies demonstrated that the combination of STA-4783 with a taxane achieved superior antitumor activity compared to the taxane alone, with minimal or no increase in toxicity. Based on the encouraging results seen during the initial stages of the ongoing Phase 2 trials, we began the second-stage, randomized portion of each of the non-small cell lung cancer, malignant melanoma, and soft tissue sarcoma trials. In January 2005, we completed enrollment of 87 patients in the second stage of the non-small cell lung cancer trial. We continue to enroll patients in the second stage of the malignant melanoma trial and have reached our target enrollment of 80 patients in the soft tissue sarcoma trial. We expect to report data from our Phase 2 cancer trials in the second half of 2005. The results seen to date are preliminary and are based on a small number of patients, and may not be supported by the second stages of these trials or subsequent clinical trials. If supported by continued favorable clinical data, we expect to initiate a pivotal Phase 3 clinical trial of STA-4783 for the treatment of one of these cancer types by the end of 2005.

STA-5312

        STA-5312 is a novel, small-molecule anticancer agent that we are initially developing for the treatment of chemotherapy-resistant cancers. STA-5312 inhibits the assembly of microtubules, fibers inside cells which play an essential role in cell division. By inhibiting microtubule assembly, STA-5312 disrupts the process of cell division, thereby causing cell death. This inhibition is more pronounced in rapidly dividing cells, such as cancer cells. In preclinical studies, STA-5312 has been shown to have considerably higher anticancer activity in chemotherapy-resistant cancer cells than standard treatments and to significantly increase animal survival in chemotherapy-resistant cancer models. We have initiated two dose-escalating

2

Phase 1 trials of STA-5312 for the treatment of solid-tumor cancers and cancers of the blood. Results from these trials are expected by the end of 2005.

Our Business Strategy

        Our mission is to extend and enhance the lives of patients by discovering, developing, and commercializing novel pharmaceutical products for treating severe medical conditions. To achieve this objective, we intend to continue to:

•
Focus on novel therapies for severe diseases with large market potential. Our clinical and discovery programs are focused on severe or life-threatening diseases, including chronic inflammatory diseases and cancer, each of which represents a large therapeutic market and an attractive commercial opportunity.

•
Use our drug discovery capabilities to maximize the value of our ongoing clinical-stage programs. We apply our discovery capabilities to improve, expand, and protect the value of our ongoing clinical programs.

•
Expand our pipeline of unique drug candidates, with a focus on inflammatory diseases and cancer. Applying our discovery capabilities to rapidly and efficiently develop new drug candidates enhances the value of our pipeline through increased market potential and through diversification of our product, regulatory, and market risks.

•
Maximize the retained value of our drug candidates. At present, we own worldwide rights to all of our drug candidates in development. Based on our strong financial position, we intend to independently develop and commercialize certain drug candidates, and for other candidates, to develop them to a more advanced clinical stage before entering into development and commercial agreements. We believe this approach will allow us to retain a higher share of the value from our drug candidates.

•
Maintain our focus on small-molecule drug development. We discover and develop small-molecule drug candidates, not large molecule biologic agents such as proteins or antibodies, which are complex and costly to manufacture. Small-molecule drugs have the potential for development into orally administered drugs, thereby offering patients greater convenience. They also typically require lower infrastructure investment, face fewer manufacturing constraints, and may enable us to realize greater potential profit margins.

•
Build on the strength of our intellectual property estate. We are continuing to strengthen our intellectual property estate, which provides us with the ability to maximize the value of our internal discoveries and to protect these discoveries from competition. As of March 11, 2005, we had a total of 236 issued patents and pending patent applications worldwide, including issued U.S. composition-of-matter patents for each of our drug candidates in clinical development.

Risks Associated with Our Business

        Our business is subject to numerous risks, as more fully described in the section entitled "Risk Factors" immediately following this prospectus summary. We have a limited operating history, have incurred substantial net losses, and had an accumulated deficit of $110.4 million as of December 31, 2004. We expect to continue to incur substantial losses for the foreseeable future, and we expect these losses to increase substantially as we conduct larger scale trials for our drug candidates. All of our drug candidates are undergoing clinical trials or are in early stages of development, and failure is common and can occur at any stage of development. Our two lead clinical drug candidates, STA-5326 and STA-4783, are currently in Phase 2 clinical trials where the historical rate of failure is significantly higher than in pivotal Phase 3 clinical trials. In addition, we expect to replace the formulations of STA-5326 and STA-4783 used in clinical trials to date with commercial formulations. This transition will require the successful completion of comparability studies, which cannot be assured. While there have been a limited number of serious adverse

3

events reported to date in connection with our clinical trials of STA-5326, STA-4783, and STA-5312, we cannot assure you that the number of serious adverse events will not increase as we expand our clinical trial programs for these drug candidates. Our ability to generate product revenue in the future will depend heavily on the successful development and commercialization of our drug candidates, particularly our clinical drug candidates, STA-5326, STA-4783, and STA-5312. Even if we succeed in obtaining regulatory approval of one or more of our drug candidates, we have no experience in commercializing drug products. Accordingly, we may never generate sufficient revenue to achieve and then sustain profitability.

Company History and Information

        Our current drug candidates and drug discovery capabilities have their origins in research begun in 1992 by the U.S.-based research subsidiary of a Japanese imaging company. A unique chemical compound library developed by this entity was acquired in 1998 by Shionogi BioResearch Corp., a U.S.-based research company formed by Shionogi & Co., Ltd., a Japanese pharmaceutical company. Synta commenced operations in July 2001, and in September 2002, we acquired Principia Associates, Inc., which had acquired Shionogi BioResearch Corp. a few months earlier. Through this acquisition, we obtained the chemical compound library, a pipeline of preclinical and research programs, and the chemistry, biology, and pharmaceutical development assets built over the preceding decade. A core group of our scientists contributed to the development of our drug candidates at predecessor companies and continue at Synta as key members of our scientific team, including our scientific founder; Senior Vice President, Drug Development; Vice President, Chemistry; and Vice President, Clinical Development. Since the Principia acquisition, we have devoted our efforts to advancing the clinical development of our current drug candidates and discovering new drug candidates. We remain, however, a development-stage company and, as Synta Pharmaceuticals, have a limited operating history.

        Our principal executive offices are located at 45 Hartwell Avenue, Lexington, Massachusetts 02421, and our telephone number is (781) 274-8200. Our website address is www.syntapharma.com. The information contained on our website is not incorporated by reference into, and does not form any part of, this prospectus. We have included our website address as a factual reference and do not intend it to be an active link to our website. Our trademarks include Synta Pharmaceuticals and our logo. Other service marks, trademarks and trade names appearing in this prospectus are the property of their respective owners. Unless the context requires otherwise, references in this prospectus to "the company," "the Company," "we," "our," "us," and "Synta" refer to Synta Pharmaceuticals Corp.

4

The Offering
Common stock offered by Synta	 	            shares	

Common stock to be outstanding after this offering	
 	
            shares	

Over-allotment option	
 	
            shares	

Use of proceeds	
 	
To fund clinical trials, preclinical testing and other research and development activities, general and administrative expenses, working capital needs, and other general corporate purposes. See "Use of Proceeds."	

Proposed Nasdaq National Market symbol	
 	
SNTA	
        The information above is based on the number of shares of common stock outstanding as of March 14, 2005. It does not include:

•
11,789,899 shares of common stock issuable upon the exercise of stock options outstanding as of March 14, 2005, including 300,000 shares of common stock issuable upon the exercise of stock options granted outside of our stock plans, at a weighted average exercise price of $3.32 per share; and

•
1,751,438 shares of common stock reserved for future awards under our stock plans.

        Unless otherwise indicated, all information contained in this prospectus:

•
assumes that the underwriters do not exercise their over-allotment option to purchase up to            shares of our common stock;

•
reflects a one-for-            reverse split of our common stock to be effected prior to the completion of this offering; and

•
assumes the adoption of our restated certificate of incorporation and restated bylaws upon the completion of this offering.

5

Summary Financial Data
(in thousands, except per share data)

        The following tables summarize our consolidated financial data for the periods presented. We prepared this information using our consolidated financial statements for each of the periods presented. You should read this information in conjunction with our audited and unaudited consolidated financial statements and related notes, "Selected Historic Consolidated Financial and Operating Data" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus. The unaudited as adjusted balance sheet data set forth below gives further effect to our sale of                    shares of common stock in this offering at an assumed initial public offering price of $        per share, after deducting estimated underwriting discounts and commissions and offering expenses payable by us.

	 	Years ended December 31

	 	 	
 
	 	Period from inception
(March 10, 2000)
to December 31, 2000

	 	 	 	 	 	
 
	 	 	 	2001

	 	2002(1)

	 	2003

	 	2004

	 	 	 	 	 	
 
	 	(unaudited)

	 	 

	 	 	 	 	 	
Consolidated Statement of Operations Data:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Revenues	 	 	—	 	 	—	 	 	—	 	$	1,304	 	$	173	 	 	 	 	 	
Operating expenses	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Research and development	 	 	—	 	$	277	 	$	7,292	 	 	24,337	 	$	38,136	 	 	 	 	 	
 	In-process research and development	 	 	—	 	 	—	 	 	18,088	 	 	—	 	 	1,583	 	 	 	 	 	
 	General and administrative	 	$	78	 	 	124	 	 	1,569	 	 	5,261	 	 	7,383	 	 	 	 	 	
 	Other compensation expense	 	 	—	 	 	—	 	 	9,315	 	 	—	 	 	—	 	 	 	 	 	

	 	

	 	

	 	

	 	

	 	 	 	 	 	
 	 	Total operating expenses	 	 	78	 	 	401	 	 	36,264	 	 	29,598	 	 	47,102	 	 	 	 	 	

	 	

	 	

	 	

	 	

	 	 	 	 	 	
Loss from operations	 	 	(78	)	 	(401	)	 	(36,264	)	 	(28,294	)	 	(46,929	)	 	 	 	 	
Investment income, net	 	 	—	 	 	20	 	 	110	 	 	416	 	 	995	 	 	 	 	 	

	 	

	 	

	 	

	 	

	 	 	 	 	 	
Net loss	 	$	(78	)	$	(381	)	$	(36,154	)	$	(27,878	)	$	(45,934	)	 	 	 	 	

	 	

	 	

	 	

	 	

	 	 	 	 	 	
Basic and diluted net loss per common share	 	 	—	 	$	(0.03	)	$	(1.09	)	$	(0.46	)	$	(0.61	)	 	 	 	 	

	 	

	 	

	 	

	 	

	 	 	 	 	 	
Weighted average shares used in computing basic and diluted net loss per share	 	 	—	 	 	12,156	 	 	33,115	 	 	60,096	 	 	74,816	 	 	 	 	 	

	 	

	 	

	 	

	 	

	 	 	 	 	 	

(1)
In September 2002 and December 2002 Synta acquired Principia Associates, Inc. and Diagon Genetics, Inc., respectively. See footnote 3 to Synta's audited consolidated financial statements.

	 	December 31, 2004

 
	 	Actual

	 	As adjusted

	

	 	(unaudited)

Consolidated Balance Sheet Data:	 	 	 	 	
Cash, cash equivalents and marketable securities	 	124,968	 	 	
Working capital	 	113,147	 	 	
Total assets	 	132,019	 	 	
Capital lease obligations, net of current portion	 	1,188	 	 	
Common stock	 	9	 	 	
Additional paid-in capital	 	238,923	 	 	
Deficit accumulated during the development stage	 	(110,425	)	 	
Total stockholders' equity	 	117,956	 	 	
6

RISK FACTORS

        An investment in our common stock involves a high degree of risk. You should carefully read and consider the risks and uncertainties described below together with all of the other information contained in this prospectus, including the consolidated financial statements and the related notes appearing at the end of this prospectus, before deciding to invest in our common stock. If any of these risks actually occur, our business, business prospects, financial condition, results of operations, or cash flows could be materially harmed. In any such case, the trading price of our common stock could decline, and you could lose all or part of your investment.

Risks Related to Our Financial Position and Need for Additional Capital

        We have incurred significant losses since our inception, and we expect to incur losses for the foreseeable future and may never reach profitability.

        Since inception we have incurred significant operating losses and, as of December 31, 2004, we had an accumulated deficit of $110.4 million, which includes research and development expense of $70.0 million. We expect to continue to incur significant operating expenses and capital expenditures and anticipate that our expenses and losses will increase substantially in the foreseeable future as we:

•
complete our Phase 2 clinical trials for STA-5326 and, if supported by the Phase 2 results, initiate pivotal Phase 3 trials;

•
complete our Phase 2 clinical trials for STA-4783 and, if supported by the Phase 2 results, initiate pivotal Phase 3 trials;

•
complete our Phase 1 clinical trials for STA-5312 and, if supported by the Phase 1 results, initiate larger scale Phase 2 trials;

•
seek regulatory approvals for STA-5326, STA-4783, and STA 5312;

•
advance our ion channel modulator, Hsp90 inhibitor, microtubule inhibitor, and antidiabetic agent preclinical programs into clinical trials, if supported by positive preclinical data;

•
discover, develop and seek regulatory approval for new drug candidates;

•
commercialize STA-5326, STA-4783, and STA-5312, if approved;

•
hire additional clinical, scientific, and management personnel;

•
add operational, financial, and management information systems and personnel; and

•
identify additional compounds or drug candidates and acquire rights from third parties to those compounds or drug candidates through licenses.

        We must generate significant revenue to achieve and maintain profitability. Even if we succeed in developing and commercializing one or more of our drug candidates, we may not be able to generate sufficient revenue and we may never be able to achieve or maintain profitability.

        Our operating history may make it difficult for you to evaluate the success of our business to date and to assess our future viability.

        We commenced operations in July 2001 and are a development-stage company. Our operations to date have been limited to organizing and staffing our company, acquiring, developing, and securing our technology, and undertaking preclinical studies and clinical trials of our drug candidates. We have not yet demonstrated our ability to obtain regulatory approval, formulate and manufacture a commercial-scale product, or conduct sales and marketing activities necessary for successful product commercialization.

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Consequently, any predictions you make about our future success or viability may not be as accurate as they could be if we had a longer operating history.

        If we fail to obtain the capital necessary to fund our operations, we will be unable to successfully develop and commercialize our lead drug candidates.

        Although we have raised substantial capital to date, we will require substantial future capital in order to continue to complete clinical development and commercialize our lead drug candidates, STA-5326, STA-4783, and STA-5312, and to conduct the research and development and clinical and regulatory activities necessary to bring other drug candidates to market. Our future capital requirements will depend on many factors that are currently unknown to us, including:

•
the progress and results of our Phase 2 clinical trials for STA-5326 and any future Phase 3 trials we may initiate based on the Phase 2 results;

•
the progress and results of our Phase 2 clinical trials for STA-4783 and any future Phase 3 trials we may initiate based on the Phase 2 results;

•
the progress and results of our Phase 1 clinical trials for STA-5312, any future Phase 2 trials we may initiate based on the Phase 1 results, and Phase 3 trials we may initiate based on the Phase 2 results;

•
the results of our preclinical studies and testing for our ion channel modulator, Hsp90 inhibitor, microtubule inhibitor, and antidiabetic agent preclinical programs, and our decision to initiate clinical trials if supported by the preclinical results;

•
the costs, timing, and outcome of regulatory review of STA-5326, STA-4783, STA-5312, and our preclinical drug candidates;

•
the scope, progress, results, and cost of preclinical development, clinical trials, and regulatory review of any new drug candidates we may discover or acquire;

•
the costs of preparing, filing, and prosecuting patent applications and maintaining, enforcing, and defending intellectual property-related claims;

•
the costs of establishing sales and marketing functions and of establishing commercial manufacturing arrangements if any of our drug candidates is approved;

•
our ability to establish strategic collaborations and licensing or other arrangements on terms favorable to us;

•
the costs to satisfy our obligations under potential future collaborations; and

•
the timing, receipt, and amount of sales or royalties, if any, from STA-5326, STA-4783, STA-5312, and our other potential products.

        We may seek the additional capital necessary to fund our operations through public or private equity offerings, debt financings, and collaborative and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted and the terms may include liquidation or other preferences that adversely affect your rights as a stockholder. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions such as incurring additional debt, making capital expenditures, or declaring dividends. If we raise additional funds through collaboration and licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies or drug candidates, or grant licenses on terms that are not favorable to us. We cannot assure you that additional funds will be available when we need them on terms that are acceptable to us, or at all. If adequate funds are not available on a timely basis, we may be required to:

•
terminate or delay clinical trials or other development for one or more of our drug candidates;

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•
delay our establishment of sales and marketing capabilities or other activities that may be necessary to commercialize our drug candidates; or

•
curtail significant drug development programs that are designed to identify new drug candidates.

        We believe that the proceeds we receive from this offering and our existing cash and investment securities will be sufficient to support our current operating plan through at least                         . However, our operating plan may change as a result of many factors currently unknown to us, and we may need additional funds sooner than planned. In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans.

Risks Related to the Development and Regulatory Approval of Our Drug Candidates

        Our success is largely dependent on the success of our clinical drug candidates, STA-5326, STA-4783, and STA-5312, and we cannot be certain that we will be able to obtain regulatory approval for or successfully commercialize any of these drug candidates.

        We have invested a significant portion of our time and financial resources in the development of STA-5326 for the treatment of inflammatory disease, and STA-4783 and STA-5312 for the treatment of cancer. We anticipate that our success will depend largely on the receipt of regulatory approval and successful commercialization of these drug candidates. The future success of these drug candidates will depend on several factors, including the following:

•
our ability to provide acceptable evidence of their safety and efficacy;

•
receipt of marketing approval from the FDA and any similar foreign regulatory authorities;

•
successful reformulation of our drug candidates from the formulation used for early clinical trials to a commercial formulation, including the successful completion of the comparative studies required in connection with our reformulation of STA-5326 and STA-4783;

•
obtaining and maintaining commercial manufacturing arrangements with third-party manufacturers or establishing commercial-scale manufacturing capabilities;

•
establishing an internal sales force or collaborating with pharmaceutical companies or contract sales organizations to market and sell any approved drug; and

•
acceptance of any approved drug in the medical community and by patients and third-party payors.

        Many of these factors are beyond our control. Accordingly, we cannot assure you that we will ever be able to generate revenues through the sale of STA-5326, STA-4783, or STA-5312.

        If we do not obtain required regulatory approval, we will be unable to market and sell our drug candidates.

        STA-5326, STA-4783, and STA-5312 and any other drug candidates we may discover or acquire and seek to commercialize are subject to extensive governmental regulations relating to development, clinical trials, manufacturing, and commercialization. Rigorous preclinical testing and clinical trials and an extensive regulatory approval process are required to be successfully completed in the U.S. and in many foreign jurisdictions before a new drug can be sold. Satisfaction of these and other regulatory requirements is costly, time consuming, uncertain, and subject to unanticipated delays. The time required to obtain approval by the U.S. Food and Drug Administration, or FDA, is unpredictable but typically exceeds five years following the commencement of clinical trials, depending upon the complexity of the drug candidate. We initiated clinical development of STA-5326, STA-4783, and STA-5312 in 2003, 2002, and 2003, respectively, and thus far, these drug candidates have been studied in only a small number of patients. Currently, STA-5326 and STA-4783 are in Phase 2 trials, and STA-5312 is in Phase 1 trials. It is possible

9

that none of these drug candidates or any other drug candidates we may seek to develop in the future will ever obtain the appropriate regulatory approvals necessary for us to begin selling them.

        We have limited experience in conducting and managing the clinical trials necessary to obtain regulatory approvals, including approval by the FDA. In connection with the clinical trials for STA-5326, STA-4783, and STA-5312 and any other drug candidate we may seek to develop in the future, we face risks that:

•
the drug candidate may not prove to be efficacious;

•
patients may die or suffer other adverse effects for reasons that may or may not be related to the drug candidate being tested (for example, a patient died during our Phase 2 non-small cell lung cancer trial for STA-4783 of causes which we believe were unrelated to the treatment);

•
the results may not confirm the positive results of earlier trials; and

•
the results may not meet the level of statistical significance required by the FDA or other regulatory agencies.

        Of the large number of drugs in development, only a small percentage result in the submission of a new drug application, or NDA, to the FDA and even fewer are approved for commercialization. Furthermore, even if we do receive regulatory approval to market a commercial product, any such approval may be subject to limitations on the indicated uses for which we may market the product. These limitations may limit the size of the market for the product.

        Because our drug candidates are in an early stage of development, there is a high risk of failure, and we may never succeed in developing marketable products or generating product revenue.

        We have no drug candidates that have received regulatory approval for commercial sale. Our most advanced drug candidates, STA-5326 and STA-4783, are currently in Phase 2 clinical trials, and STA-5312 is currently in Phase 1 trials. We do not expect to have any commercial products on the market until at least 2008, if at all. We are exploring human diseases at the cellular level and attempting to develop drug candidates that intervene with cellular processes. Trial and error is inherent in science, and we may fail at numerous stages along the way. Success in preclinical studies of a drug candidate may not be predictive of similar results in humans during clinical trials, and successful results from early clinical trials of a drug candidate may not be replicated in later clinical trials. A number of companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in late stage clinical trials even after achieving promising results in early stage development. Accordingly, the results from the completed and ongoing trials for STA-5326, STA-4783, and STA-5312 may not be predictive of the results we may obtain in later stage trials.

        If clinical trials for our drug candidates, including STA-5326, STA-4783, and STA-5312, are prolonged or delayed, we may be unable to commercialize our drug candidates on a timely basis, which would require us to incur additional costs and delay our receipt of any revenue from potential product sales.

        We cannot predict whether we will encounter problems with any of our completed, ongoing or planned clinical trials that will cause us or any regulatory authority to delay or suspend those clinical trials or delay the analysis of data derived from them. A number of events, including any of the following, could delay the completion of our ongoing and planned clinical trials and negatively impact our ability to obtain regulatory approval for, and to market and sell, a particular drug candidate, including our clinical drug candidates STA-5326, STA-4783, and STA-5312:

•
conditions imposed on us by the FDA or any foreign regulatory authority regarding the scope or design of our clinical trials;

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•
delays in obtaining, or our inability to obtain, required approvals from institutional review boards or other reviewing entities at clinical sites selected for participation in our clinical trials;

•
insufficient supply or deficient quality of our drug candidates or other materials necessary to conduct our clinical trials;

•
lower than anticipated retention rate of subjects in clinical trials;

•
negative or inconclusive results from clinical trials, or results that are inconsistent with earlier results, that necessitate additional clinical study;

•
serious and unexpected drug-related side effects experienced by patients in clinical trials; or

•
failure of our third-party contractors to comply with regulatory requirements or otherwise meet their contractual obligations to us in a timely manner.

        In addition, clinical trials require sufficient patient enrollment, which is a function of many factors, including the size of the patient population, the nature of the trial protocol, the proximity of patients to clinical sites, the availability of effective treatments for the relevant disease, the eligibility criteria for our clinical trial, and competing studies or trials. Although we have had satisfactory patient enrollment in our clinical trials to date, future delays in patient enrollment can result in increased costs and longer development times. For example, soft tissue sarcoma is a disease indication with a relatively low incidence, which may make patient enrollment more difficult in future clinical trials. Our failure to enroll patients in our clinical trials could delay the completion of the clinical trial beyond our current expectations. In addition, the FDA could require us to conduct clinical trials with a larger number of subjects than we have projected for any of our drug candidates. We may not be able to enroll a sufficient number of patients in a timely or cost-effective manner.

        Furthermore, enrolled patients may drop out of our clinical trials, which could impair the validity or statistical significance of the clinical trials. For example, in our Phase 2b randomized, double-blind, placebo-controlled clinical trial of STA-5326 for the treatment of psoriasis, there has been a higher aggregate patient discontinuation rate to date than we expected when we initiated the trial in the second half of 2004. While this preliminary discontinuation rate is within the range described in published results from other Phase 2 psoriasis trials of which we are aware, it is at the high end of the range, and it is possible that it will increase before the completion of the trial. A number of factors could be influencing the patient discontinuation rate, including, but not limited to: the inclusion of a placebo arm in the trial; possible inactivity or low activity of STA-5326 at one or more of the dose levels being tested; adverse side effects experienced, whether or not related to the drug candidate; and the availability of numerous alternative treatment options that may induce patients to discontinue their participation in the trial. Since the relationship of the safety or efficacy data to active dose level or placebo from this double-blinded study is generally unknown to us, we are unable to assess the relationship, if any, between the discontinuations and the safety or efficacy of STA-5326, and no conclusions can be made until the completion of the trial.

        We do not know whether our clinical trials will begin as planned, will need to be restructured, or will be completed on schedule, if at all. Delays in our clinical trials will result in increased development costs for our drug candidates. In addition, if our clinical trials are delayed, our competitors may be able to bring products to market before we do and the commercial viability of our drug candidates, including our drug candidates STA-5326, STA-4783, and STA-5312, could be limited.

        If we are unable to successfully complete required clinical comparative studies of our new formulations of STA-5326 and STA-4783, clinical development may be delayed and our ability to supply commercial quantities of these drug candidates may be adversely affected.

        We are currently using a capsule formulation of STA-5326 in our clinical trials. This current capsule formulation was originally developed to increase the water solubility of STA-5326 but has a limited shelf

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life and is complicated to manufacture. In addition, we expect we would be required to pay a modest royalty if we used this formulation in a commercial product. Accordingly, we do not currently believe that this will be our commercial formulation for STA-5326. We have developed a novel salt form of STA-5326 that allows us to formulate the drug as a tablet. We believe this tablet will serve as our commercial formulation, replacing the current capsule formulation. We also plan to use the tablet formulation of STA-5326 in all future clinical trials. We must first, however, complete a clinical comparative study in healthy volunteers and demonstrate the comparability of pharmacokinetics of the salt form tablet formulation and the capsule formulation. Although animal and in vitro  preclinical studies have confirmed the comparability of the salt form tablet formulation and the capsule formulation, we cannot assure you that the comparative clinical study will do so as well. We have initiated this study and expect to complete it in the first half of 2005. Similarly, we also do not believe that the current form or formulation of STA-4783 being used in clinical trials will be our commercial formulation. This formulation is not water soluble and requires manual dissolution in an organic solvent prior to administration. We have developed a novel salt form of STA-4783 that is water-soluble and that we expect will replace the current form of STA-4783. We plan to use the new form of STA-4783 in all future clinical trials and believe that it also represents the likely commercial form of this drug candidate. Animal and in vitro  preclinical studies have confirmed the comparability of this novel salt form, but we must also complete a similar clinical comparative study in healthy volunteers before this new form may be used. We plan to initiate this study in the second quarter of 2005 and expect to complete it in the second half of 2005. If we do not successfully complete these studies or comparative studies of other new formulations of these drug candidates, our clinical development may be delayed and our ability to supply commercial quantities of these drug candidates, if approved, may be adversely affected.

        Failure to comply with foreign regulatory requirements governing human clinical trials and marketing approval for drugs could prevent us from selling our drug candidates in foreign markets, which may adversely affect our operating results and financial condition.

        The requirements governing the conduct of clinical trials, product licensing, pricing, and reimbursement for marketing our drug candidates outside the U.S. vary greatly from country to country and may require additional testing. We have no experience in obtaining foreign regulatory approvals and, to date, the only foreign regulatory submission we have pursued is the submission of a filing necessary to conduct clinical trials of STA-4783 in soft tissue sarcoma in Canada. We expect that our future clinical development of STA-5326 and STA-4783 will involve a number of clinical trials in foreign jurisdictions, particularly in Europe. The time required to obtain approvals outside the U.S. may differ from that required to obtain FDA approval. We may not obtain foreign regulatory approvals on a timely basis, if at all. Approval by the FDA does not ensure approval by regulatory authorities in other countries, and approval by one foreign regulatory authority does not ensure approval by regulatory authorities in other countries or by the FDA. Failure to comply with these regulatory requirements or obtain required approvals could impair our ability to develop foreign markets for our drug candidates and may have a material adverse effect on our results of operations and financial condition.

        Our drug candidates will remain subject to ongoing regulatory review even if they receive marketing approval, and if we fail to comply with continuing regulations, we could lose these approvals and the sale of any approved commercial products could be suspended.

        Even if we receive regulatory approval to market a particular drug candidate, the manufacturing, labeling, packaging, adverse event reporting, storage, advertising, promotion, and record keeping related to the product will remain subject to extensive regulatory requirements. If we fail to comply with the regulatory requirements of the FDA and other applicable U.S. and foreign regulatory authorities or

12

previously unknown problems with any approved commercial products, manufacturers, or manufacturing processes are discovered, we could be subject to administrative or judicially imposed sanctions, including:

•
restrictions on the products, manufacturers or manufacturing processes;

•
untitled or warning letters;

•
civil or criminal penalties;

•
fines;

•
injunctions;

•
product seizures or detentions;

•
import bans;

•
voluntary or mandatory product recalls and related publicity requirements;

•
suspension or withdrawal of regulatory approvals;

•
total or partial suspension of production; and

•
refusal to approve pending applications for marketing approval of new products or supplements to approved applications.

        If side effects increase or are identified after our drug candidates are approved and on the market, we may be required to perform lengthy additional clinical trials, change the labeling of any such products, or withdraw any such products from the market, any of which would hinder or preclude our ability to generate revenues.

        To date, there has been one drug-related serious adverse event reported related to treatment with STA-5326, which involved rigors, increased liver function tests, and diarrhea, and three patients with possible drug-related serious adverse events related to treatment with STA-4783, including syncope, infection, anemia, and axillary mass change. In addition, there has been one serious adverse event related to treatment with STA-5312, a hospitalization for the treatment of myalgia. If the incidence of these events increases or if other effects are identified after any of our drug candidates are approved and on the market:

•
regulatory authorities may withdraw their approvals;

•
we may be required to reformulate any such products, conduct additional clinical trials, make changes in labeling of any such products, or implement changes to or obtain new approvals of our or our contractors' manufacturing facilities;

•
we may experience a significant drop in the sales of the affected products;

•
our reputation in the marketplace may suffer; and

•
we may become the target of lawsuits, including class action suits.

        Any of these events could harm or prevent sales of the affected products or could substantially increase the costs and expenses or commercializing and marketing any such products.

        We deal with hazardous materials and must comply with environmental laws and regulations, which can be expensive and restrict how we do business.

        Our activities involve the controlled storage, use, and disposal of hazardous materials, including infectious agents, corrosive, explosive and flammable chemicals, and various radioactive compounds. We are subject to federal, state, and local laws and regulations governing the use, manufacture, storage, handling, and disposal of these hazardous materials. Although we believe that our safety procedures for

13

handling and disposing of these materials comply with the standards prescribed by these laws and regulations, we cannot eliminate the risk of accidental contamination or injury from these materials.

        In the event of an accident, state or federal authorities may curtail our use of these materials, and we could be liable for any civil damages that result, which may exceed our financial resources and may seriously harm our business. While we believe that the amount of insurance we carry is sufficient for typical risks regarding our handling of these materials, it may not be sufficient to cover pollution conditions or other extraordinary or unanticipated events. Additionally, an accident could damage, or force us to shut down, our operations. In addition, if we develop a manufacturing capacity, we may incur substantial costs to comply with environmental regulations and would be subject to the risk of accidental contamination or injury from the use of hazardous materials in our manufacturing process.

Risks Related to Our Dependence on Third Parties

        We rely on third parties to conduct our clinical trials, and those third-parties may not perform satisfactorily, including failing to meet established deadlines for the completion of such trials.

        We do not have the ability to independently conduct clinical trials for our drug candidates, and we rely on third parties such as contract research organizations, medical institutions, and clinical investigators to perform this function. Our reliance on these third parties for clinical development activities reduces our control over these activities. Furthermore, these third parties may also have relationships with other entities, some of which may be our competitors. To date, our contract research organizations and other similar entities with which we are working have performed well; however, if these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may be delayed in obtaining regulatory approvals for our drug candidates and may be delayed in our efforts to successfully commercialize our drug candidates for targeted diseases.

        We have no manufacturing capacity and depend on third-party manufacturers to produce our clinical trial drug supplies.

        We do not currently operate manufacturing facilities for clinical or commercial production of STA-5326, STA-4783, or STA-5312, or any of our preclinical drug candidates. We have no experience in drug manufacturing, and we lack the resources and the capabilities to manufacture any of our drug candidates on a clinical or commercial scale. As a result, we currently rely on third-party manufacturers to supply, store, and distribute drug supplies for our clinical trials and anticipate future reliance on a limited number of third-party manufacturers until we increase the number of manufacturers with whom we contract. Any performance failure on the part of our existing or future manufacturers could delay clinical development or regulatory approval of our drug candidates or commercialization of any approved products, producing additional losses and depriving us of potential product revenue.

        Recently, we observed granules in some of the capsules of STA-5326 manufactured by the third-party contractor used in our Phase 2 Crohn's disease and psoriasis trials. We conducted preclinical studies of the capsules containing the granules and determined that the granules consisted of the active pharmaceutical ingredient of STA-5326 rather than impurities. Based on these studies, we believe that the capsules containing the granules are comparable to the capsules without the granules, including with respect to pharmacokinetics and expected absorption in patients. We do not believe that this has had any adverse effect on our trials, but we cannot assure you that it has not. We submitted a summary of our findings from the preclinical studies on this issue to the FDA, and the FDA has recently requested the data from these studies that support these findings. We do not know whether the FDA will require additional information or require that corrective action be taken. Since the identification of these granules, we have performed a comprehensive investigation and believe we identified the cause of the granule formation. We have made improvements to the manufacturing process, and thereafter, no granules have been observed in these

14

batches. We do not expect any delay in the clinical development of STA-5326 due to this issue, but we cannot assure you that no such delay will occur.

        Our drug candidates require precise, high quality manufacturing. Our contract manufacturers' failure to achieve and maintain high manufacturing standards could result in patient injury or death, product recalls or withdrawals, delays or failures in testing or delivery, cost overruns, or other problems that could seriously hurt our business. Contract manufacturers may encounter difficulties involving production yields, quality control, and quality assurance. These manufacturers are subject to ongoing periodic unannounced inspection by the FDA and corresponding state and foreign agencies to ensure strict compliance with current Good Manufacturing Practice, or cGMP, and other applicable government regulations and corresponding foreign standards; however, we do not have control over third-party manufacturers' compliance with these regulations and standards.

        If for some reason our contract manufacturers cannot perform as agreed, we may be unable to replace such third-party manufacturers in a timely manner and the production of our drug candidates would be interrupted, resulting in delays in clinical trials and additional costs. Switching manufacturers may be difficult because the number of potential manufacturers is limited and the FDA must approve any replacement manufacturer prior to manufacturing our drug candidates. Such approval would require new testing and compliance inspections. In addition, a new manufacturer would have to be educated in, or develop substantially equivalent processes for, production of our drug candidates after receipt of FDA approval. It may be difficult or impossible for us to find a replacement manufacturer on acceptable terms quickly, or at all. We have in the past experienced low inventory levels of the capsule formulation of STA-5326 we currently use in our clinical trials. To date, however, our clinical trials for STA-5326 have not been adversely affected, and we believe we have taken sufficient steps to ensure that we will have adequate inventory to complete our current Phase 2 trials for STA-5326 in Crohn's disease and plaque psoriasis. We expect to have completed our clinical comparative study of the tablet form of STA-5326 prior to the commencement of any future clinical trial for STA-5326.

        If we do not establish collaborations, we may have to alter our development plans.

        Our drug development programs and potential commercialization of our drug candidates will require substantial additional cash to fund expenses. Our strategy includes potentially selectively collaborating with leading pharmaceutical and biotechnology companies to assist us in furthering development and potential commercialization of some of our drug candidates. Although we are not currently a party to any such collaboration, we may enter into one or more of such collaborations in the future, especially for target indications in which the potential collaborator has particular therapeutic expertise or that involve a large, primary care market that must be served by large sales and marketing organizations. We face significant competition in seeking appropriate collaborators and these collaborations are complex and time-consuming to negotiate and document. We may not be able to negotiate collaborations on acceptable terms, or at all. If that were to occur, we may have to curtail the development of a particular drug candidate, reduce or delay its development program or one or more of our other development programs, delay its potential commercialization or reduce the scope of our sales or marketing activities, or increase our expenditures and undertake development or commercialization activities at our own expense. If we elect to increase our expenditures to fund development or commercialization activities on our own, we may need to obtain additional capital, which may not be available to us on acceptable terms, or at all. If we do not have sufficient funds, we will not be able to bring our drug candidates to market and generate product revenue.

        We anticipate continued reliance on third-party manufacturers if we are successful in obtaining marketing approval from the FDA and other regulatory agencies for any of our drug candidates.

        To date, our drug candidates have been manufactured in small quantities for preclinical testing and clinical trials by third-party manufacturers. If the FDA or other regulatory agencies approve any of our

15

drug candidates for commercial sale, we expect that we would continue to rely, at least initially, on third-party manufacturers to produce commercial quantities of our approved drug candidates. These manufacturers may not be able to successfully increase the manufacturing capacity for any of our approved drug candidates in a timely or economic manner, or at all. Significant scale-up of manufacturing may require additional validation studies, which the FDA must review and approve. If they are unable to successfully increase the manufacturing capacity for a drug candidate or we are unable to establish our own manufacturing capabilities, the commercial launch of any approved products may be delayed or there may be a shortage in supply.

        If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to market and sell our drug candidates, we may be unable to generate product revenue.

        We do not currently have an organization for the sales, marketing, and distribution of pharmaceutical products. In order to market any products that may be approved by the FDA, we must build our sales, marketing, managerial, and other non-technical capabilities or make arrangements with third parties to perform these services. If we are unable to establish adequate sales, marketing, and distribution capabilities, whether independently or with third parties, we may not be able to generate product revenue and may not become profitable.

Risks Related to Our Intellectual Property

        If our patent position does not adequately protect our drug candidates or any future products, others could compete against us more directly, which would harm our business.

        As of March 11, 2005, our patent portfolio included a total of 236 patents and patent applications worldwide with claims covering the composition-of-matter and methods of use for all three of our clinical stage compounds. We own or license a total of 15 issued U.S. patents and 57 U.S. patent applications, as well as 164 foreign counterparts to many of these patents and patent applications. We have issued U.S. composition-of-matter patents claiming the chemical structures of STA-5326, STA-4783, and STA-5312.

        Our commercial success will depend in part on our ability to obtain additional patents and protect our existing patent position as well as our ability to maintain adequate protection of other intellectual property for our technologies, drug candidates, and any future products in the U.S. and other countries. If we do not adequately protect our intellectual property, competitors may be able to use our technologies and erode or negate any competitive advantage we may have, which could harm our business and ability to achieve profitability. The laws of some foreign countries do not protect our proprietary rights to the same extent as the laws of the U.S., and we may encounter significant problems in protecting our proprietary rights in these countries.

        The patent positions of biotechnology and pharmaceutical companies, including our patent position, involve complex legal and factual questions, and, therefore, validity and enforceability cannot be predicted with certainty. Patents may be challenged, deemed unenforceable, invalidated or circumvented. We will be able to protect our proprietary rights from unauthorized use by third parties only to the extent that our proprietary technologies, drug candidates, and any future products are covered by valid and enforceable patents or are effectively maintained as trade secrets.

        The degree of future protection for our proprietary rights is uncertain, and we cannot ensure that:

•
we or our licensors were the first to make the inventions covered by each of our pending patent applications;

•
we or our licensors were the first to file patent applications for these inventions;

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•
others will not independently develop similar or alternative technologies or duplicate any of our technologies;

•
any of our or our licensors' pending patent applications will result in issued patents;

•
any of our or our licensors' patents will be valid or enforceable;

•
any patents issued to us or our licensors and collaborators will provide a basis for commercially viable products, will provide us with any competitive advantages or will not be challenged by third parties;

•
we will develop additional proprietary technologies or drug candidates that are patentable; or

•
the patents of others will not have an adverse effect on our business.

        We typically file for patent protection first on the composition-of-matter of our drug candidates and also claim their activities and methods for their production and use to the extent known at that time. As we learn more about the mechanisms of action and new methods of manufacture and use of these drug candidates, we generally file additional patent applications for these new inventions. Although our patents may prevent others from making, using or selling similar products, they do not ensure that we will not infringe the patent rights of third parties. For example, because we sometimes identify the mechanism of action or molecular target of a given drug candidate after identifying its composition-of-matter and therapeutic use, we may not be aware until the mechanism or target is further elucidated that a third party has an issued or pending patent claiming biological activities or targets that may cover our drug candidate. If such a patent exists or is granted in the future, we cannot provide assurances that a license will be available on commercially reasonable terms, or at all.

        We are aware of an issued U.S. patent held by a third party that claims a method of increasing Hsp70 levels by administering a proteasome inhibitor. Our drug candidate STA-4783 induces the expression of Hsp70 on the surface of tumor cells. We are not certain about the role that proteasome inhibition may have with respect to STA-4783's induction of Hsp70 expression. We cannot guarantee that the patent holder will not assert the patent claims against us, but based on our analysis of this patent, we do not believe that the manufacture, use, or sale of STA-4783 would infringe any valid claim of this U.S. patent. However, we cannot guarantee that a court would find this patent to be invalid or would find STA-4783 not to infringe this patent. If the patent were held to be valid and infringed, we would be required to take corrective action, which might include acquiring a license to the patent, paying damages or ceasing infringement. We cannot provide assurances that a license would be available on commercially reasonable terms, or at all.

        We may be unable to adequately prevent disclosure of trade secrets and other proprietary information.

        We rely on trade secrets to protect our proprietary technologies, especially where we do not believe patent protection is appropriate or obtainable. However, trade secrets are difficult to protect. We rely in part on confidentiality agreements with our employees, consultants, outside scientific collaborators, sponsored researchers, and other advisors to protect our trade secrets and other proprietary information. These agreements may not effectively prevent disclosure of confidential information and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. In addition, others may independently discover our trade secrets and proprietary information. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain trade secret protection could adversely affect our competitive business position.

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        Litigation or other proceedings or third-party claims of intellectual property infringement would require us to spend time and money and could prevent us from developing or commercializing our drug candidates.

        Our commercial success will depend in part on not infringing upon the patents and proprietary rights of other parties. Although we are not currently aware of any litigation or other proceedings or third-party claims of intellectual property infringement related to our drug candidates, the pharmaceutical industry is characterized by extensive litigation regarding patents and other intellectual property rights. Other parties may obtain patents in the future and claim that the use of our technologies infringes these patents or that we are employing their proprietary technology without authorization. We could incur substantial costs and diversion of management and technical personnel in defending ourselves against any claims that the use of our technologies infringes upon any patents, defending ourselves against any claim that we are employing any proprietary technology without authorization or enforcing our patents against others. In the event of a successful claim of infringement against us, we may be required to:

•
pay substantial damages;

•
stop developing, commercializing, and selling the infringing drug candidates or approved products;

•
stop utilizing the infringing technologies and methods in our drug candidates or approved products;

•
develop non-infringing products, technologies, and methods; and

•
obtain one or more licenses from other parties, which could result in our paying substantial royalties or our granting of cross licenses to our technologies.

        We may not be able to obtain licenses from other parties at a reasonable cost, or at all. If we are not able to obtain necessary licenses at a reasonable cost, or at all, we could encounter substantial delays in product introductions while we attempt to develop alternative technologies, methods, and products, which we may not be able to accomplish. Although third parties may challenge our rights to, or the scope or validity of our patents, to date, we have not received any communications from third parties challenging our patents or patent applications covering our drug candidates.

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

        As is commonplace in our industry, we employ individuals who were previously employed at other biotechnology or pharmaceutical companies, including our competitors or potential competitors. Although no claims against us are currently pending, we may be subject to claims that these employees or we have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers. Litigation may be necessary to defend against these claims. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management.

Risks Related to the Commercialization of Our Drug Candidates

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

        Even if STA-5326, STA-4783, STA-5312, or any other drug candidates we may develop or acquire in the future obtain regulatory approval, they may not gain market acceptance among physicians, healthcare payors, patients, and the medical community. Physicians may elect not to recommend these drugs for a variety of reasons including:

•
timing of market introduction of competitive products, including the anti-IL-12 antibodies currently in development;

•
demonstration of clinical safety and efficacy compared to other products;

18

•
cost-effectiveness;

•
availability of reimbursement from managed care plans and other third-party payors;

•
convenience and ease of administration;

•
prevalence and severity of adverse side effects;

•
other potential advantages of alternative treatment methods; and

•
ineffective marketing and distribution support.

        If our approved drugs fail to achieve market acceptance, we may not be able to generate significant revenue and our business would suffer.

        If the government and third-party payors fail to provide adequate coverage and reimbursement rates for our future products, if any, our revenue and prospects for profitability will be harmed.

        In both domestic and foreign markets, our sales of any future products will depend in part upon the availability of reimbursement from third-party payors. Such third-party payors include government health programs such as Medicare, managed care providers, private health insurers, and other organizations. These third-party payors are increasingly attempting to contain healthcare costs by demanding price discounts or rebates and limiting both coverage and the amounts that they will pay for new drugs, and, as a result, they may not cover or provide adequate payment for our drugs. We might need to conduct post-marketing studies in order to demonstrate the cost-effectiveness of any future products to such payors' satisfaction. Such studies might require us to commit a significant amount of management time and financial and other resources. Our future products might not ultimately be considered cost-effective. Adequate third-party reimbursement might not be available to enable us to maintain price levels sufficient to realize an appropriate return on investment in product development.

        U.S. and foreign governments continue to propose and pass legislation designed to reduce the cost of healthcare. For example, in some foreign markets, the government controls the pricing and profitability of prescription pharmaceuticals. In the U.S., we expect that there will continue to be federal and state proposals to implement similar governmental controls. In addition, recent changes in the Medicare program and increasing emphasis on managed care in the U.S. will continue to put pressure on pharmaceutical product pricing. Cost control initiatives could decrease the price that we would receive for any products in the future, which would limit our revenue and profitability. Accordingly, legislation and regulations affecting the pricing of pharmaceuticals might change before our drug candidates are approved for marketing. Adoption of such legislation could further limit reimbursement for pharmaceuticals.

        If a successful product liability claim or series of claims is brought against us for uninsured liabilities or in excess of insured liabilities, we could be forced to pay substantial damage awards.

        The use of any of our drug candidates in clinical trials, and the sale of any approved products, might expose us to product liability claims. We currently maintain product liability insurance coverage to cover us against such claims. However, such insurance coverage might not protect us against all of the claims to which we might become subject. We might not be able to maintain adequate insurance coverage at a reasonable cost or in sufficient amounts or scope to protect us against potential losses. In the event a claim is brought against us, we might be required to pay legal and other expenses to defend the claim, as well as uncovered damages awards resulting from a claim brought successfully against us. Furthermore, whether or not we are ultimately successful in defending any such claims, we might be required to direct financial and managerial resources to such defense and adverse publicity could result, all of which could harm our business.

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Risks Related to Our Industry

        We may not be able to keep up with the rapid technological change in the biotechnology and pharmaceutical industries, which could make any future approved products obsolete and reduce our revenue.

        Biotechnology and related pharmaceutical technologies have undergone and continue to be subject to rapid and significant change. Our future will depend in large part on our ability to maintain a competitive position with respect to these technologies. Our competitors may render our technologies obsolete by advances in existing technological approaches or the development of new or different approaches, potentially eliminating the advantages in our drug discovery process that we believe we derive from our research approach and proprietary technologies. In addition, any future products that we develop, including our clinical drug candidates STA-5326, STA-4783, and STA-5312, may become obsolete before we recover expenses incurred in developing those products, which may require that we raise additional funds to continue our operations.

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

        Competition in the pharmaceutical and biotechnology industries is intense and expected to increase. We face competition from pharmaceutical and biotechnology companies, as well as numerous academic and research institutions and governmental agencies, both in the U.S. and abroad. Some of these competitors have products or are pursuing the development of drugs that target the same diseases and conditions that are the focus of our drug development programs.

        For example, if approved, we expect STA-5326 to compete against currently approved treatments for chronic inflammatory diseases, including:

•
large-molecule, injectable TNFa-antagonists, including: Remicade, marketed by Johnson & Johnson; Enbrel, marketed by Amgen and Wyeth Pharmaceuticals; and Humira, marketed by Abbott Laboratories;

•
Tysabri, formerly known as Antegren, the anti-a4 integrin antibody marketed by Biogen Idec and Elan Corporation; and

•
broadly immunosuppressive small-molecule agents including corticosteroids, methotrexate and azathioprine.

        STA-5326 may also compete with CNTO-1275 and ABT-874, two antibody-based clinical candidates targeting IL-12 currently in clinical trials that are being developed by Johnson & Johnson and Abbott Laboratories, respectively.

        If approved, we would expect STA-4783 to compete with:

•
other agents that are being used or tested in combination with taxanes, including: Herceptin, marketed by Genentech; Tarceva, marketed by OSI Pharmaceuticals, Genentech, and Roche; and Xeloda, marketed by Roche;

•
taxane-like molecules such as epothilones; and

•
modifications or reformulations of taxanes.

        We would expect STA-5312, if approved, to compete against the currently approved therapies for the treatment of cancers, in particular, those being used or tested for the treatment of chemotherapy-resistant cancers.

20

        Many of our competitors and their collaborators have significantly greater experience than we do in the following:

•
identifying and validating targets;

•
screening compounds against targets;

•
preclinical studies and clinical trials of potential pharmaceutical products; and

•
obtaining FDA and other regulatory approvals.

        In addition, many of our competitors and their collaborators have substantially greater capital and research and development resources, manufacturing, sales, and marketing capabilities, and production facilities. Smaller companies also may prove to be significant competitors, particularly through proprietary research discoveries and collaboration arrangements with large pharmaceutical and established biotechnology companies. Many of our competitors have products that have been approved or are in advanced development and may develop superior technologies or methods to identify and validate drug targets and to discover novel small-molecule drugs. Our competitors, either alone or with their collaborators, may succeed in developing drugs that are more effective, safer, more affordable or more easily administered than ours and may achieve patent protection or commercialize drugs sooner than us. Our competitors may also develop alternative therapies that could further limit the market for any drugs that we may develop. Our failure to compete effectively could have a material adverse effect on our business.

Risks Related to Employee Matters and Managing Growth

        Our future success depends on our ability to retain our chief executive officer and other key executives and to attract, retain and motivate qualified personnel.

        We are highly dependent on Safi R. Bahcall, Ph.D., our President and Chief Executive Officer, and the other principal members of our executive and scientific teams, particularly: James G. Barsoum, Ph.D., our Vice President, Biology; Keizo Koya, Ph.D., our Senior Vice President, Drug Development; John A. McCarthy, Jr., our Senior Vice President, Corporate Development and Chief Financial Officer; Wendy E. Rieder, Esq., our Vice President, Intellectual Property and Legal Affairs; and Matthew L. Sherman, M.D., our Senior Vice President and Chief Medical Officer. We currently do not have any employment agreement with Dr. Bahcall, and all of the agreements with these other principal members of our executive and scientific teams provide that employment is at will and may be terminated by the employee at any time and without notice. Although we do not have any reason to believe that we may lose the services of any of these persons in the foreseeable future, the loss of the services of any of these persons might impede the achievement of our research, development, and commercialization objectives. Recruiting and retaining qualified scientific personnel and possibly sales and marketing personnel will also be critical to our success. We may not be able to attract and retain these personnel on acceptable terms given the competition among numerous pharmaceutical and biotechnology companies for similar personnel. We also experience competition for the hiring of scientific personnel from universities and research institutions. We do not maintain "key person" insurance on any of our employees. In addition, we rely on consultants and advisors, including scientific and clinical advisors, to assist us in formulating our research and development and commercialization strategy. Our consultants and advisors may be employed by employers other than us and may have commitments under consulting or advisory contracts with other entities that may limit their availability to us.

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

        We expect to experience significant growth in the number of our employees and the scope of our operations. To manage our anticipated future growth, we must continue to implement and improve our

21

managerial, operational, and financial systems, expand our facilities, and continue to recruit and train additional qualified personnel. Due to our limited resources, we may not be able to effectively manage the expansion of our operations or recruit and train additional qualified personnel. The physical expansion of our operations may lead to significant costs and may divert our management and business development resources. Any inability to manage growth could delay the execution of our business plans or disrupt our operations.

        If we make strategic acquisitions, we will incur a variety of costs and might never realize the anticipated benefits.

        We have grown primarily through acquisitions, particularly our 2002 acquisition of Principia Associates, Inc. All of our acquisitions to date, however, have been of related parties. Accordingly, we have very limited experience in independently identifying acquisition candidates and integrating the operations of truly independent acquisition candidates with our company. Currently we are not a party to any acquisition agreements, nor do we have any understanding or commitment with respect to any such acquisition. If appropriate opportunities become available, however, we might attempt to acquire approved products, additional drug candidates, or businesses that we believe are a strategic fit with our business. If we pursue any transaction of that sort, the process of negotiating the acquisition and integrating an acquired product, drug candidate, or business might result in operating difficulties and expenditures and might require significant management attention that would otherwise be available for ongoing development of our business, whether or not any such transaction is ever consummated. Moreover, we might never realize the anticipated benefits of any acquisition. Future acquisitions could result in potentially dilutive issuances of equity securities, the incurrence of debt, contingent liabilities or impairment expenses related to goodwill, and impairment or amortization expenses related to other intangible assets, which could harm our financial condition.

Risks Related to our Common Stock and the Offering

        Our stock price is likely to be volatile and the market price of our common stock after this offering may drop below the price you pay.

        You should consider an investment in our common stock as risky and invest only if you can withstand a significant loss and wide fluctuations in the market value of your investment. Prior to this offering, there was not a public market for our common stock. We will negotiate and determine the initial public offering price with the representatives of the underwriters based on several factors. This price may vary from the market price of our common stock after this offering. You may be unable to sell your shares of common stock at or above the initial offering price due to fluctuations in the market price of our common stock arising from changes in our operating performance or prospects. In addition, the stock market has recently experienced significant volatility, particularly with respect to pharmaceutical, biotechnology, and other life sciences company stocks. The volatility of pharmaceutical, biotechnology, and other life sciences company stocks often does not relate to the operating performance of the companies represented by the stock. Some of the factors that may cause the market price of our common stock to fluctuate include:

•
results of our current Phase 2 or any subsequent clinical trials for STA-5326;

•
results of our current Phase 2 or any subsequent clinical trials for STA-4783;

•
results of our current Phase 1 or any subsequent clinical trials for STA-5312;

•
results of clinical trials conducted by others on drugs that would compete with our drug candidates;

•
failure or delays in advancing drug candidates from our ion channel modulator, Hsp90 inhibitor, microtubule inhibitor, and antidiabetic agent preclinical programs, or other drug candidates we may discover or acquire in the future, into clinical trials;

22

•
failure or discontinuation of any of our research programs;

•
issues in manufacturing our drug candidates or approved products;

•
regulatory developments or enforcement in the U.S. and foreign countries;

•
developments or disputes concerning patents or other proprietary rights;

•
introduction of technological innovations or new commercial products by us or our competitors;

•
changes in estimates or recommendations by securities analysts, if any cover our common stock;

•
public concern over our drug candidates or any approved products;

•
litigation;

•
future sales of our common stock;

•
general market conditions;

•
changes in the structure of health care payment systems;

•
failure of any of our drug candidates, if approved, to achieve commercial success;

•
economic and other external factors or other disasters or crises; and

•
period-to-period fluctuations in our financial results.

        These and other external factors may cause the market price and demand for our common stock to fluctuate substantially, which may limit or prevent investors from readily selling their shares of common stock and may otherwise negatively affect the liquidity of our common stock. In addition, in the past, when the market price of a stock has been volatile, holders of that stock have instituted securities class action litigation against the company that issued the stock. If any of our stockholders brought a lawsuit against us, we could incur substantial costs defending the lawsuit. Such a lawsuit could also divert the time and attention of our management.

There may not be an active, liquid trading market for our common stock.

        There is currently no established trading market for our common stock. There is no guarantee that an active trading market for our common stock will develop and be maintained after this offering. If a trading market does not develop or is not maintained, you may experience difficulty in reselling, or an inability to sell, your shares quickly or at the latest market price.

        Insiders will continue to have substantial control over Synta which could delay or prevent a change in corporate control or result in the entrenchment of management and/or the board of directors.

        After this offering, our directors, executive officers and principal stockholders, together with their affiliates and related persons, will beneficially own, in the aggregate, approximately            % of our outstanding common stock. As a result, these stockholders, if acting together, may have the ability to determine the outcome of matters submitted to our stockholders for approval, including the election and removal of directors and any merger, consolidation or sale of all or substantially all of our assets. In addition, these persons, acting together, may have the ability to control the management and affairs of our company. Accordingly, this concentration of ownership may harm the market price of our common stock by:

•
delaying, deferring or preventing a change in control;

•
entrenching our management and/or the board of directors;

•
impeding a merger, consolidation, takeover or other business combination involving Synta; or

23

•
discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of Synta.

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

        Sales of a substantial number of shares of our common stock in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of our common stock. After this offering, we will have outstanding                        shares of common stock based on the number of shares outstanding as of                        , 2005. This includes the shares that we are selling in this offering, which may be resold in the public market immediately. The remaining                         shares are currently restricted as a result of securities laws or lock-up agreements but will be able to be sold in the near future as set forth below.
Number of Shares

	 	Date Available for Sale Into the Public Market

	
                                      	 	After 180 days* from the date of this prospectus (subject, in some cases, to volume limitations).	
                                      	 	At various times after 180 days* from the date of this prospectus (subject, in some cases, to volume limitations).	

*
180 days corresponds to the end of the lock-up period described in "Shares Eligible for Future Sale — Lock-Up Agreement." This lock-up period may be extended under certain circumstances as described in that section.

        Moreover, beginning after the lock-up period described in "Shares Eligible for Future Sale — Lock-Up Agreement" expires, the holders of 34,293,361 shares of our common stock and 1,018,750 shares of our common stock issuable upon the exercise of options will have rights, subject to some conditions, to require us to file registration statements covering their shares or to include their shares in registration statements that we may file for ourselves or other stockholders. We also intend to register all shares of common stock that we may issue under our stock plans. For additional information, see "Shares Eligible for Future Sale."

        We have broad discretion in the use of the net proceeds from this offering and may not use them effectively.

        Management will retain broad discretion over the use of the net proceeds from this offering. Stockholders may not agree with such uses, and our use of the proceeds may not yield a significant return or any return at all for our stockholders. The failure by our management to apply these funds effectively could have a material adverse effect on our business.

        We intend to use the proceeds from this offering for clinical trials, preclinical testing and other research and development activities, and general and administrative expenses, working capital needs, and other general corporate purposes. Because of the number and variability of factors that will determine our use of the proceeds from this offering, their ultimate use may vary substantially from their currently intended use. For a further description of our intended use of the proceeds of the offering, see "Use of Proceeds."

        Provisions of our charter, bylaws, and Delaware law may make an acquisition of us or a change in our management more difficult.

        Certain provisions of our restated certificate of incorporation and restated bylaws that will be in effect upon the completion of this offering could discourage, delay or prevent a merger, acquisition or other change in control that stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares. These provisions also could limit the price that investors might be willing to pay in the future for shares of our common stock, thereby depressing the market price of our common stock. Stockholders who wish to participate in these transactions may not have the

24

opportunity to do so. Furthermore, these provisions could prevent or frustrate attempts by our stockholders to replace or remove our management. These provisions:

•
allow the authorized number of directors to be changed only by resolution of our board of directors;

•
establish a classified board of directors, providing that not all members of the board be elected at one time;

•
authorize our board of directors to issue without stockholder approval blank check preferred stock that, if issued, could operate as a "poison pill" to dilute the stock ownership of a potential hostile acquirer to prevent an acquisition that is not approved by our board of directors;

•
require that stockholder actions must be effected at a duly called stockholder meeting and prohibit stockholder action by written consent;

•
establish advance notice requirements for stockholder nominations to our board of directors or for stockholder proposals that can be acted on at stockholder meetings;

•
limit who may call stockholder meetings; and

•
require the approval of the holders of 80% of the outstanding shares of our capital stock entitled to vote in order to amend certain provisions of our restated certificate of incorporation and restated bylaws.

        In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which may, unless certain criteria are met, prohibit large stockholders, in particular those owning 15% or more of our outstanding voting stock, from merging or combining with us for a prescribed period of time.

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

        We have paid no cash dividends on any of our classes of capital stock to date and we currently intend to retain our future earnings, if any, to fund the development and growth of our businesses. As a result, capital appreciation, if any, of our common stock will be your sole source of gain on your investment for the foreseeable future.

        Investors in this offering will pay a much higher price than the book value of our common stock and therefore you will incur immediate and substantial dilution of your investment.

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

25

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

        This prospectus contains forward-looking statements. The forward-looking statements are contained principally in the sections entitled "Prospectus Summary," "Risk Factors," "Use of Proceeds," "Management's Discussion and Analysis of Financial Condition and Results of Operations," and "Business." These statements involve known and unknown risks, uncertainties, and other factors which may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. Forward-looking statements include statements about:

•
the anticipated progress of our research, development, and clinical programs, including the timing of current and future clinical trials;

•
our ability to market, commercialize, and achieve market acceptance for our drug candidates that we may develop or acquire;

•
our anticipated use of the proceeds of this offering; and

•
estimates regarding the sufficiency of our cash resources.

        In some cases, you can identify forward-looking statements by terms such as "anticipates," "believes," "could," "estimates," "expects," "intends," "may," "plans," "potential," "predicts," "projects," "should," "will," "would," and similar expressions intended to identify forward-looking statements. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. We discuss many of these risks in this prospectus in greater detail under the heading "Risk Factors." Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our estimates and assumptions only as of the date of this prospectus. You should read this prospectus and the documents that we have filed as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding that our actual future results may be materially different from what we expect.

        Except as required by law, we assume no obligation to update any forward-looking statements publicly or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.

26

USE OF PROCEEDS

        We estimate that our net proceeds from the sale of            shares of our common stock in this offering will be approximately $                  million, or approximately $            million if the underwriters exercise their over-allotment option in full, assuming an initial public offering price of $                  per share and after deducting estimated underwriting discounts and commissions and offering expenses payable by us.

        The principal purposes of this offering are to obtain additional working capital to fund anticipated operating losses, establish a public market for our common stock, and facilitate future access to the public markets. We estimate that we will use the proceeds of this offering as follows:

•
$       million to fund continued clinical development of STA-5326, STA-4783, and STA-5312;

•
$       million to fund preclinical testing, and other research and development activities; and

•
$       million to fund general and administrative expenses, working capital needs, and other general corporate purposes.

We may also use a portion of the proceeds for the potential acquisition of, or investment in, technologies, products, or companies that complement our business, although we have no current understandings, commitments, or agreements to do so.

        We believe that the proceeds from this offering, together with our existing cash resources, will be sufficient to fund our drug development efforts through          , including initiation of a pivotal Phase 3 trial for at least one of our product candidates. However, the costs and timing of drug development and regulatory approval, particularly conducting clinical trials, are highly uncertain, are subject to substantial risks, and can often change depending on the results of a particular trial. Accordingly, we may need to raise additional funds sooner than anticipated.

        As of the date of this prospectus, we cannot specify with certainty all of the particular uses for the proceeds from this offering, or the amounts that we may spend on the uses set forth above. The amounts and timing of our actual expenditures will depend upon numerous factors, including the progress of our research, development, and commercialization efforts, the progress of our clinical trials, and our operating costs and expenditures. Accordingly, our management will have significant flexibility in applying the net proceeds of this offering.

        Pending use of the proceeds from this offering as described above or otherwise, we intend to invest the net proceeds in short-term interest-bearing, investment grade securities.
DIVIDEND POLICY

        We have never paid or declared any cash dividends on our common stock. We currently intend to retain all available funds and any future earnings to fund the development and expansion of our business, and we do not anticipate paying any cash dividends in the foreseeable future. Any future determination to pay dividends will be at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, and other factors that our board of directors deems relevant. In addition, the terms of any future debt or credit facility may preclude us from paying dividends.

27

CAPITALIZATION

        The following table sets forth our capitalization as of December 31, 2004:

•
on an actual basis;

•
on an as adjusted basis to give effect to our sale of                        shares of common stock in this offering at an assumed initial public offering price of $                   per share after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

        This table should be read with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our financial statements and the related notes appearing elsewhere in this prospectus.
 
	 	As of December 31, 2004

	
 
	 	Actual

	 	As adjusted

	
 
	 	(in thousands, except share and per share data)

 
	 	(unaudited)

Cash, cash equivalents and marketable securities	 	$	124,968	 	 	

	 	 	

Capital lease obligations, long-term	

1,188	

Stockholders' equity	

 	

 	Common stock, par value $.0001 per share
Authorized 150,000,000 shares actual; 90,202,937 shares issued and outstanding actual and                  shares issued and outstanding as adjusted	 	 	9	 	 	
 	Additional paid-in capital	 	 	238,923	 	 	
 	Deferred compensation	 	 	(10,435	)	 	
 	Accumulated other comprehensive loss	 	 	(116	)	 	
 	Deficit accumulated during the development stage	 	 	(110,425	)	 	

	 	 	
 	 	Total stockholders' equity	 	 	117,956	 	 	

	 	 	
 	 	Total capitalization	 	$	119,144	 	 	

	 	 	
        The outstanding share information excludes:

•
10,088,099 shares of common stock issuable upon the exercise of stock options outstanding as of December 31, 2004, including 300,000 shares of common stock issuable upon the exercise of stock options granted outside of our stock plans, at a weighted average exercise price of $2.95 per share;

•
268,555 shares of common stock issuable upon the exercise of warrants outstanding as of December 31, 2004 at a weighted average exercise price of $0.50 per share, all of which were exercised on January 11, 2005; and

•
3,465,964 shares of common stock reserved for future awards under our stock plans.

28

DILUTION

        If you invest in our common stock, your interest will be diluted to the extent of the difference between the initial public offering price per share of our common stock and the pro forma net tangible book value per share of our common stock after this offering. We calculate pro forma net tangible book value per share by dividing the net tangible book value, tangible assets less total liabilities, by the number of outstanding shares of common stock.

        Our historical net tangible book value at December 31, 2004 was $118.0 million, or $1.31 per share, based on 90,202,937 shares of common stock outstanding at December 31, 2004. After giving effect to the sale of                  shares of common stock by us in this offering at an assumed initial public offering price of $                  per share, less the underwriting discounts and commissions and the estimated offering expenses payable by us, our pro forma net tangible book value at December 31, 2004, would be $                  million, or $                  per share. This represents an immediate increase in the pro forma net tangible book value of $                  per share to existing stockholders and an immediate dilution of $                  per share to new investors purchasing shares in this offering. The following table illustrates this per share dilution:
Assumed initial public offering price per share	 	 	 	 	$	 	
 	Net tangible book value per share as of December 31, 2004	 	$	1.31	 	 	 	
 	Increase per share attributable to new investors	 	 	 	 	 	 	

	 	 	 	
Pro forma net tangible book value per share after this offering	 	 	 	 	 	 	

	
Dilution per share to new investors	 	 	 	 	$	 	

	
        The following table shows on a pro forma basis at December 31, 2004 the difference between the number of shares of common stock purchased from us, the total consideration paid to us and the average price paid per share by existing stockholders and by new investors purchasing common stock in this offering:
 
	 	Shares Purchased

	 	Total Consideration

	 	 

	 	 	 	 	 	Average
Price
Per Share

	 	 	 	
 
	 	Number

	 	Percent

	 	Amount

	 	Percent

	 	 	 	 	 	
Existing stockholders	 	90,202,937	 	 	%	$	222,161,633	 	 	%	$	2.46	 	 	 	
New investors	 	 	 	 	 	 	 	 	 	 	$	 	 	 	 	

	 	

	 	

	 	

	 	

	 	 	 	
Total	 	 	 	100	%	$	 	 	100	%	 	 	 	 	 	

	 	

	 	

	 	

	 	

	 	 	 	
        Assuming the underwriters' over-allotment option is exercised in full, sales by us in this offering will reduce the percentage of shares held by existing stockholders to             % and will increase the number of shares held by new investors to            , or            %.

        The information set forth above is based on shares outstanding as of December 31, 2004. It excludes:

•
10,088,099 shares of common stock issuable upon the exercise of stock options outstanding as of December 31, 2004, including 300,000 shares of common stock issuable upon the exercise of stock options granted outside of our stock plans, at a weighted average exercise price of $2.95 per share;

•
268,555 shares of common stock issuable upon the exercise of warrants outstanding as of December 31, 2004 at a weighted average exercise price of $0.50 per share; and

•
3,465,964 shares of common stock reserved for future awards under our stock plans.

        All of the outstanding warrants were exercised on January 11, 2005. To the extent outstanding options are exercised, there will be further dilution to the new investors.

29

SELECTED HISTORICAL FINANCIAL AND OPERATING DATA
(in thousands, except per share amounts)

        You should read the following selected financial information together with our financial statements and the related notes appearing at the end of this prospectus and the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of this prospectus.

        We have derived the consolidated statements of operations data for the years ended December 31, 2002, 2003 and 2004 and the consolidated balance sheet information at December 31, 2003 and 2004 from our audited consolidated financial statements which are included in this prospectus. We have derived the consolidated statements of operations data for the year ended December 31, 2001 and consolidated balance sheet data at December 31, 2001 and 2002 from our audited consolidated financial statements, which are not included in this prospectus. We have derived the consolidated statements of operations data for the period from March 10, 2000 (inception) to December 31, 2000 and the consolidated balance sheet data at December 31, 2000 from our unaudited consolidated financial statements, which are not included in this prospectus. Our historical results for any prior period are not necessarily indicative of results to be expected for any future period.
 
	 	Period from
inception
(March 10, 2000)
to December 31,
2000

	 	 

	 	 

	 	 	 	Years ended December 31

	 	 	 	 	 	
 
	 	 	 	2001

	 	2002(1)

	 	2003

	 	2004

	 	 	 	 	 	 	 	
 
	 	(unaudited)

	 	 

	 	 	 	 	 	 	 	
Consolidated Statement of Operations Data:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Revenues	 	$	—	 	$	—	 	$	—	 	$	1,304	 	$	173	 	 	 	 	 	 	 	
Operating expenses	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Research and development	 	 	—	 	 	277	 	 	7,292	 	 	24,337	 	 	38,136	 	 	 	 	 	 	 	
 	In-process research and development	 	 	—	 	 	—	 	 	18,088	 	 	—	 	 	1,583	 	 	 	 	 	 	 	
 	General and administrative	 	 	78	 	 	124	 	 	1,569	 	 	5,261	 	 	7,383	 	 	 	 	 	 	 	
 	Other compensation expense	 	 	—	 	 	—	 	 	9,315	 	 	—	 	 	—	 	 	 	 	 	 	 	

	 	

	 	

	 	

	 	

	 	 	 	 	 	 	 	
 	 	Total operating expenses	 	 	78	 	 	401	 	 	36,264	 	 	29,598	 	 	47,102	 	 	 	 	 	 	 	

	 	

	 	

	 	

	 	

	 	 	 	 	 	 	 	
Loss from operations	 	 	(78	)	 	(401	)	 	(36,264	)	 	(28,294	)	 	(46,929	)	 	 	 	 	 	 	
Investment income, net	 	 	—	 	 	20	 	 	110	 	 	416	 	 	995	 	 	 	 	 	 	 	

	 	

	 	

	 	

	 	

	 	 	 	 	 	 	 	
Net loss	 	$	(78	)	$	(381	)	$	(36,154	)	$	(27,878	)	$	(45,934	)	 	 	 	 	 	 	

	 	

	 	

	 	

	 	

	 	 	 	 	 	 	 	
Basic and diluted net loss per common share	 	 	—	 	$	(0.03	)	$	(1.09	)	$	(0.46	)	$	(0.61	)	 	 	 	 	 	 	

	 	

	 	

	 	

	 	

	 	 	 	 	 	 	 	
Weighted average shares used in computing basic and diluted net loss per share	 	 	—	 	 	12,156	 	 	33,115	 	 	60,096	 	 	74,816	 	 	 	 	 	 	 	

	 	

	 	

	 	

	 	

	 	 	 	 	 	 	 	

(1)
In September 2002 and December 2002, Synta acquired Principia Associates, Inc. and Diagon Genetics, Inc., respectively. See footnote 3 to Synta's audited consolidated financial statements.
 
	 	As of December 31

	 	
 
	 	2000

	 	2001

	 	2002

	 	2003

	 	2004

	 	
 
	 	(unaudited)

	 	 

	 	
Consolidated Balance Sheet Data:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash, cash equivalents and marketable securities	 	$	4	 	$	1,708	 	$	28,952	 	$	76,226	 	$	124,968	 	
Working capital	 	 	4	 	 	2,697	 	 	27,574	 	 	73,564	 	 	113,147	 	
Total assets	 	 	53	 	 	2,773	 	 	33,173	 	 	80,387	 	 	132,019	 	
Capital lease obligations, net of
current portion	 	 	—	 	 	—	 	 	—	 	 	—	 	 	1,188	 	
Common stock	 	 	—	 	 	3	 	 	5	 	 	7	 	 	9	 	
Additional paid-in capital	 	 	—	 	 	3,519	 	 	68,430	 	 	144,149	 	 	238,923	 	
Deficit accumulated during the development stage	 	 	(78	)	 	(459	)	 	(36,613	)	 	(64,491	)	 	(110,425	)	
Total stockholders' equity (deficit)	 	 	(78	)	 	2,744	 	 	31,151	 	 	76,891	 	 	117,956	 	
30

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

        You should read this discussion together with the financial statements, related notes and other financial information included elsewhere in this prospectus. The following discussion may contain predictions, estimates and other forward-looking statements that involve a number of risks and uncertainties, including those discussed under "Risk Factors" and elsewhere in this prospectus. These risks could cause our actual results to differ materially from any future performance suggested below.

Overview

        We are a biopharmaceutical company focused on discovering, developing, and commercializing novel, small-molecule drugs for inflammatory disease and cancer. Our pipeline of drug candidates is diverse and addresses some of the largest pharmaceutical markets in the world. We currently have three drug candidates in human clinical trials and four additional programs in preclinical studies or discovery. For our two most advanced drug candidates, we are currently conducting six Phase 2 clinical trials across five therapeutic indications, including Crohn's disease, plaque psoriasis, and multiple cancer types. All of our drug candidates were discovered internally, using the chemistry, biology, and pharmaceutical development assets and capabilities built over the combined history of Synta and predecessor companies. We use these capabilities to increase and protect the value of our clinical programs, and to expand our drug candidate pipeline. We have retained worldwide rights to all of our drug candidates in all indications.

        We were incorporated in March 2000 and commenced operations in July 2001. Since that time, we have been principally engaged in raising capital and in the discovery and development of novel drug candidates. In September 2002, we acquired all of the outstanding stock of Principia Associates, Inc., an operating biopharmaceutical company and a related party, in exchange for our common stock, common stock warrants and forgiveness of notes receivable with an aggregate value of $16.9 million. In July 2002, Principia acquired all of the outstanding stock of SBR Pharmaceuticals Corp. (formerly Shionogi BioResearch Corp.), an operating biopharmaceutical company, in exchange for cash of $12.5 million. In December 2002, we acquired all of the outstanding stock of Diagon Genetics, Inc., a related party, whose activities consisted of owning the rights to the development of certain intellectual property, in exchange for cash of $5.0 million and $8.5 million of our common stock. In January 2004, we acquired the assets, consisting principally of rights to intellectual property, and assumed certain liabilities of Cancer Genomics, Inc., Kava Pharmaceuticals, Inc and SinglePixel Biomedical, Inc., collectively referred to herein as CKS, all related parties, in a single transaction in exchange for our common stock with a value of $2.2 million.

        Since our inception, we have had no revenues from product sales and have funded our operations primarily through the private placement of common stock. Through December 31, 2004, we raised net cash proceeds of $196.5 million through the private placement of common stock and exercise of common stock options and warrants. In November 2004, we raised net cash proceeds of $79.9 million through the private placement of common stock. We have devoted substantially all of our capital resources to the research and development of our drug candidates and to the acquisitions of Principia and Diagon. We have never been profitable and, as of December 31, 2004, we have an accumulated deficit of $110.4 million. We had net losses of $78,000 for the period from inception (March 10, 2000) through December 31, 2000, $381,000 for the year ended December 31, 2001, $36.2 million for the year ended December 31, 2002, $27.9 million for the year ended December 31, 2003, and $45.9 million for the year ended December 31, 2004. We expect to incur significant and increasing operating losses for the foreseeable future as we advance our drug candidates from discovery through preclinical and clinical trials and seek regulatory approval and eventual commercialization. In addition to these increasing research and development expenses, we expect general and administrative costs to increase as we add personnel and begin to operate as a public company. We will need to generate significant revenues to achieve profitability and may never do so.

31

Financial Operations Overview

Revenue

        We have not yet generated any product revenue and do not expect to generate any product revenue for the foreseeable future. We have recognized, in the aggregate, $1.5 million of revenue from our inception through December 31, 2004. This revenue was derived entirely from government research grants. We will seek to generate revenue from product sales, and possibly from research and development payments, profit sharing payments, milestone payments, and royalties. In the future, we expect that any revenue we generate will fluctuate from quarter-to-quarter as a result of the timing and amount of research and development and other payments received under any future collaborative or strategic relationships, and the amount and timing of payments we receive upon the sale of our drug candidates, to the extent any are successfully commercialized.

Research and Development

        Research and development expense consists of expenses incurred in connection with developing and advancing our drug discovery technology and identifying and developing our drug candidates. These expenses consist principally of salaries and related expenses, license fees, facility costs, and costs for clinical trials including related contract research, formulation and manufacturing. We charge all research and development expenses to operations as incurred.

        Clinical development timelines, likelihood of drug candidate success, and total costs vary widely. We began tracking our internal and external research and development costs and our personnel and related costs on an individual drug candidate basis in 2003. For the year ended December 31, 2004, research and development expenses for our STA-5326, STA-4783, and STA-5312 drug candidates were approximately $15.0 million, $10.8 million and $2.5 million, respectively. The remaining $9.8 million of research and development expenses for the year ended December 31, 2004 is allocated among our early-stage programs. For the year ended December 31, 2003, research and development expenses for these drug candidates were $7.8 million, $3.8 million and $3.2 million, respectively, with the remaining $9.5 million of research and development expenses allocated among our early-stage programs. While expenses associated with the completion of our current clinical programs are expected to be substantial and increase, we believe that accurately projecting total program-specific expenses through commercialization is not possible at this time. There exist numerous factors associated with the successful commercialization of any of our drug candidates, including clinical candidate selection, future trial design, and various regulatory requirements, many of which cannot be determined with accuracy at this time based on our stage of development. Additionally, future commercial and regulatory factors beyond our control will evolve and therefore impact our clinical development programs and plans over time.

        Despite this uncertainty, however, our development strategy for our two lead drug candidate programs, STA-5326 and STA-4783, is currently based on a number of assumptions that allow for broad estimates of certain clinical trial related expense. If successful with our current Phase 2 clinical trials for these two lead drug candidates, we currently anticipate that we would choose a lead indication for each drug candidate and initiate a pivotal Phase 3 clinical trial program by the end of 2005. The direct costs associated with each of these two Phase 3 programs could be in the range of $35-$45 million, or an aggregate of $70-$90 million for both programs, over the estimated two years necessary to complete the programs. Additional clinical trials may also be initiated in the future to explore other therapeutic indications for each drug candidate. Our current strategy assumes that for the foreseeable future we do not pursue a collaboration with a strategic corporate partner for the development of either of these drug candidates and therefore continue to internally finance all current and future clinical development initiatives. We do not expect to receive regulatory approval of any of our drug candidates until 2008 at the earliest, if at all.

32

        Beyond our two lead drug candidates, we anticipate that we will select drug candidates and research projects for further development on an ongoing basis in response to their preclinical and clinical success, as well as commercial potential.

In-process Research and Development

        Our acquisitions of Principia, Diagon and the CKS assets resulted in in-process research and development charges to our consolidated statements of operations in the respective periods of the acquisitions. The total amount of in-process research and development charges related to these acquisitions was approximately $19.7 million. Under purchase accounting, we allocate the purchase price to assets acquired and liabilities assumed based upon our analysis and estimates of fair values. We used the income approach to estimate the fair value of in-process research and development for the Principia and Diagon acquisitions and the cost approach for the CKS acquisition. If the in-process research and development acquired is incomplete and has no alternative future value, we record the value of the in-process research and development as an expense in our consolidated statement of operations in the period of the acquisition. Generally, in cases where the purchase price exceeds the fair value of net assets acquired, the excess purchase price has been allocated to acquired intangible assets, principally in-process research and development.

        Under the income approach, each project was analyzed to determine the utilization of core technology; the complexity, cost and time to complete development; any alternative future use or current technological feasibility; and the stage of completion. Future cash flows were estimated, taking into account the expected life cycles of the product and the underlying technology, relevant market sizes and industry trends. The estimated net cash flows from these products were based on management's estimates of related revenues, cost of goods sold, research and development costs, selling, general and administrative costs, and income taxes. Material cash flows from each of the projects valued under the income approach was assumed to commence in the year following project completion. Discount rates and probability factors were utilized based on the nature of the technology of the products, the stage of completion of the projects, the complexity of the development effort and the risks associated with reaching technological feasibility of the projects.

        The following tables summarize the value of the Principia in-process research and development projects acquired, including the allocations of excess purchase price, and significant assumptions used for valuation under the income approach at the time of the acquisitions (dollars in millions):
Project

	 	In-process
R&D recorded

	 	Discount
Rate

	 	Estimated
Completion
Date

	 	Estimated
Remaining
Costs through Completion

	
STA-4783	 	$	1.5	 	40	%	2007	 	$	61.6	
STA-5326	 	 	3.7	 	30	%	2008	 	 	41.5	
STA-5312	 	 	8.7	 	40	%	2008	 	 	62.3	

	 	 	 	 	 	 	 	
 	Total	 	$	13.9	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	
        Projects acquired in the Diagon acquisition related to ion channel technology and anti-allergy antibody projects and resulted in in-process research and development valuation of approximately $3.0 million and $1.2 million, respectively. The discount rate applied in the valuations was 30%. Estimated completion dates for these projects ranged from 2008 to 2009 and the estimated remaining costs to be incurred through completion ranged from approximately $42 million to $63 million per project.

        The CKS in-process research and development charge, after allocation of excess purchase price of $1.6 million, pertained to the technology related to the treatment of anxiety and general pain. The value of the CKS in-process research and development charge was based on the cost approach. During 2004, after an initial investment to advance the technology, the Company ceased further funding of the project.

33

        The following table summarizes the value of the SBR in-process research and development projects acquired by Principia upon its acquisition of SBR, including the allocations of excess purchase price, and significant assumptions used for valuation under the income approach at the time of the acquisition (dollars in millions):
Project

	 	In-process
R&D recorded

	 	Discount
Rate

	 	Estimated
Completion
Date

	 	Estimated
Remaining
Costs through Completion

	
STA-4783	 	$	1.1	 	40	%	2007	 	$	61.8	
STA-5326	 	 	2.5	 	30	%	2008	 	 	42.1	
STA-5312	 	 	6.0	 	40	%	2008	 	 	63.6	

	 	 	 	 	 	 	 	
 	Total	 	$	9.6	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	
        We believe each of the acquired technologies for which in-process research and development was recorded was unique and patents were filed for each of the acquired projects. Completion of these projects will be a complex and costly undertaking, involving continuing research, animal studies and human clinical trials.

General and Administrative

        General and administrative expense consists primarily of salaries and related expenses for personnel in administrative, finance, business development, and human resource functions. Other costs include legal costs of pursuing patent protection of our intellectual property, and fees for general legal and other professional services. After this offering, we anticipate increases in general and administrative expense relating to public-company requirements and initiatives. These increases will likely include legal fees, accounting fees, directors' and officers' liability insurance premiums as well as fees for investor relations services.

Critical Accounting Policies and Estimates

        Our discussion and analysis of our financial condition and results of operations are based on our financial statements which have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. On an ongoing basis, we evaluate our estimates and judgments, including those related to revenue, accrued expenses, and the fair value of our common stock. We base our estimates on historical experience, known trends and events, and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

        We believe the following accounting policies and estimates are most critical to aid you in understanding and evaluating our reported financial results.

Accrued Expenses

        As part of the process of preparing financial statements, we are required to estimate accrued expenses. This process involves identifying services which have been performed on our behalf, and estimating the level of service performed and the associated cost incurred for such service as of each balance sheet date in our financial statements. Examples of services for which we must estimate accrued expenses include contract service fees paid to contract manufacturers in conjunction with the production of clinical drug supplies and to contract research organizations in connection with our preclinical studies and

34

clinical trials. In connection with such service fees, our estimates are most affected by our understanding of the status and timing of services provided. The majority of our service providers invoice us in arrears for services performed. In the event that we do not identify certain costs which have begun to be incurred, or we under- or over-estimate the level of services performed or the costs of such services in a given period, our reported expenses for such period would be too low or too high. The date on which certain services commence, the level of services performed on or before a given date, and the cost of such services are often determined based on subjective judgments. We make these judgments based upon the facts and circumstances known to us in accordance with GAAP. There were no changes in our estimates and accruals for contract service fees that had a material effect on our net losses in the years ended December 31, 2002, 2003, and 2004.

Acquisitions

        We apply purchase accounting in our acquisitions. Under purchase accounting, we allocate the purchase price to assets acquired and liabilities assumed based upon our analysis and estimates of fair values. Our analysis generally includes three approaches to estimate the value of acquired assets. The cost approach measures the value of an asset by quantifying the aggregate expenditures that would be required to replace the subject asset, given its future service capability. The market approach employs a comparative analysis of actual transactions in which similar assets have been transferred or in which businesses have been sold whose value is comprised largely of assets similar to the subject assets. The income approach is an estimation of the present value of the future monetary benefits expected to flow to the owner of the asset during its remaining useful life. We generally use the income approach to estimate the fair value of in-process research and development. We perform a discounted cash flow analysis, utilizing anticipated revenues, expenses and net cash flow forecasts related to the technology. Given the high risk associated with the development of new drugs, we probability adjust the revenue and expense forecasts to reflect the risk of advancement through the regulatory approval process based on the stage of development in the regulatory process. Such a valuation requires significant estimates and assumptions. We believe the fair value assigned to the in-process research and development reflected in our consolidated financial statements is based on reasonable assumptions. However, these assumptions may be incomplete or inaccurate, and unanticipated events and circumstances may occur. If the in-process research and development is incomplete and has no alternative future value, we record the full value of the in-process research and development as an expense in the period of the acquisition.

Stock-Based Compensation

        We have elected to follow Accounting Principles Board (APB) Opinion No. 25,Accounting for Stock Issued to Employees, and related interpretations, in accounting for our stock-based compensation plans, rather than the alternative fair value method provided for under Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation.  In the notes to our consolidated financial statements, we provide pro forma disclosures in accordance with SFAS No. 148 Accounting for Stock-Based Compensation — Transition and Disclosure  (an amendment of FASB Statement No. 123). We account for transactions in which services are received from non-employees in exchange for equity instruments based on the fair value of such services received or of the equity instruments issued, whichever is more reliably measured, in accordance with SFAS No. 123 and the Emerging Issues Task Force (EITF) Issue No. 96-18, Accounting for Equity Instruments that Are Issued to Other than Employees for Acquiring, or in Conjunction with Selling, Goods or Services.

        Accounting for equity instruments granted or sold by us under APB Opinion No. 25, SFAS No. 123 and EITF Issue No. 96-18 requires fair value estimates of the equity instrument granted or sold. If our estimates of the fair value of these equity instruments are too high or too low, our expenses may be over- or understated. The value of equity instruments granted or sold in exchange for the receipt of goods or services and the value of those goods or services cannot be readily estimated, as is true in connection with most stock options and warrants granted to employees and non-employees. We estimated the fair value of

35

the equity instruments based upon consideration of factors which we deemed to be relevant at the time. Because shares of our common stock have not been publicly traded, market factors historically considered in valuing stock and stock option grants include comparative values of public companies discounted for the risk and limited liquidity provided for in the shares we are issuing, pricing of private sales of our common stock, prior valuations of stock grants, and the effect of events that have occurred between the time of such grants, and economic trends.

        We contemporaneously estimated the fair value of the equity instruments based upon consideration of factors which we deemed to be relevant at the time of each respective grant or issuance. Because shares of our common stock have not been publicly traded, market factors historically considered in valuing stock and stock option grants include comparative values of public companies discounted for the risk and limited liquidity provided for in the shares we are issuing, pricing of private sales of our common stock, prior valuations of stock grants, and the effect of events that have occurred between the time of such grants, and economic trends. The fair value of our common stock is determined by our board of directors. In the absence of a public trading market for our common stock, our board of directors considers objective and subjective factors in determining the fair value of our common stock. In all periods, the board of directors evaluated events that provided indicators of the fair value of our common stock. These included, depending on the period, the purchase price of our common stock that was issued in December 2003 and throughout 2004 and the impact of our proposed initial public offering of common stock. These factors indicated that the common stock options granted to employees and board members during 2003 and 2004 had a deemed fair value that was equivalent to the exercise price except for one grant of an option for 300,000 shares of common stock to a board member in May 2004 at an exercise price that was below fair value. The difference, or the intrinsic value, is being amortized as compensation expense over the vesting period of the stock options. In addition, these factors indicated that issuance of 1,460,000 shares of restricted stock and the grant of stock options in December 2004 were at sales and exercise prices below fair value and, accordingly, the difference is being amortized as compensation expense over the respective vesting periods.

Revenue

        Revenues to date have been generated by research grant contracts and, accordingly, we follow the revenue recognition guidance of Staff Accounting Bulletin (SAB) No. 104, Revenue Recognition . Revenues from research grant contracts are generally recorded as the services are performed. When we are required to defer revenue, the period over which such revenue should be recognized is subject to estimates by management and may change over the course of the agreement.

Consolidated Results of Operations

Twelve Months Ended December 31, 2004, 2003 and 2002

        Revenue.    Research grant revenues were $0.2 million in the year ended December 31, 2004 compared to $1.3 million in the year ended December 31, 2003 and none in the year ended December 31, 2002, as research services were performed principally in 2003 and concluded during 2004.

        Research and Development.    Research and development expense for the year ended December 31, 2004 was $38.1 million compared to $24.3 million for the year ended December 31, 2003 and $7.3 million for the year ended December 31, 2002. The increase from 2003 to 2004 principally resulted from (1) an increase of $6.8 million for personnel costs and related research supplies and operational overhead and (2) an increase of $9.3 million for external costs of clinical trials, animal studies and other preclinical testing, clinical product manufacturing and consulting, partially offset by a net decrease in stock-based compensation expense resulting from a $1.7 million one-time charge in 2003 as described below. The increase from 2002 to 2003 principally resulted from an increase of $6.5 million for personnel costs and related research supplies and operational overhead and an increase of $10.2 million for external costs of clinical trials, animal studies and other preclinical testing, clinical product manufacturing and consulting.

36

These increases were principally the result of the acquisition of Principia in September 2002 and the inclusion of Principia's operations within the operations of Synta for a full year in 2003 compared to approximately three months in 2002 and, to a lesser extent, an increase in research and development headcount. In addition, during 2003 and 2002 we paid one-time technology license fees of cash and stock valued at $0.2 million and $2.1 million, respectively. The increase in research and development expense for the year ended December 31, 2003 as compared to the year ended December 31, 2002 is also due to a charge in the amount of $1.7 million related to a modification to the terms of a former scientific officer's stock option of $1.3 million, and $0.4 million in cash payments to be made over 18 months.

        In-process Research and Development.    In-process research and development expense of $1.6 million for the year ended December 31, 2004 represents the expensing of the value of incomplete research and development acquired in connection with the purchase of the CKS assets in January, 2004. In-process research and development expense of $18.1 million for the year ended December 31, 2002 includes the expensing of the $13.9 million value of incomplete research and development acquired in the purchase of Principia in September 2002 and the expensing of the $4.2 million value of incomplete research and development acquired in the purchase of Diagon in December 2002.

        General and Administrative.    General and administrative expense for the year ended December 31, 2004 was $7.4 million compared to $5.3 million for the year ended December 31, 2003 and $1.6 million for the year ended December 31, 2002. The increase from 2003 to 2004 was principally a result of an increase of $1.1 million for personnel costs and related overhead due primarily to increased hiring as well as an increase of $1.0 million in legal fees related to support of our intellectual property. The increase from 2002 to 2003 was principally a result of an increase of $2.5 million for personnel costs and related overhead due primarily to increased headcount and the inclusion of the operations of Principia following its acquisition in September 2002 as well as an increase of $0.5 million in legal fees in connection with our intellectual property. In addition, our costs of corporate communications, legal, audit and tax fees, consulting fees and insurance increased by $0.7 million as our administrative infrastructure was expanded to accommodate growth.

        Other Compensation Expense.    Other compensation expense of $9.3 million for the year ended December 31, 2002 reflects the excess purchase price paid for Diagon over the fair value of its net assets. Diagon, a related party, was owned by our Chief Executive Officer and our scientific founder, both of whom are board members and significant shareholders of Synta.

        Investment Income, Net.    Net investment income increased to $995,000 for the year ended December 31, 2004 from $416,000 for the year ended December 31, 2003 and from $110,000 for the year ended December 31, 2002. The increase in net investment income in each year was principally due to increases in the average cash balances invested resulting from sales of our common stock.

Liquidity and Capital Resources

Sources of Liquidity

        Since our inception in March of 2000, we have funded our operations principally through the private placement of common stock which, together with the exercise of common stock warrants and options, provided aggregate net cash proceeds of approximately $196.5 million through December 2004. We have also generated funds from government grant revenues, equipment lease financings and investment income. As of December 31, 2004, we had cash, cash equivalents, and short-term investments of approximately $125.0 million. In November 2004, we raised net cash proceeds of $79.9 million from the sale of common stock to private investors. Our funds are currently invested in investment grade and U.S. government securities with an average duration of less than one year.

37

Cash Flows

        Our operating activities used cash of $33.8 million, $23.6 million and $6.3 million in the years ended December 31, 2004, 2003 and 2002, respectively. The use of cash in all periods principally resulted from our losses from operations and changes in our working capital accounts. The sequential increase in cash used in operations in each of the periods was due to our increase in research and development activities and the related expansion of our organizational infrastructure to support the broadened development activities.

        Our investing activities used cash of $43.8 million, $40.4 million and $5.3 million in the years ended December 31, 2004, 2003 and 2002, respectively. Our investing activities in 2004 consisted of purchases of marketable securities in the amount of $124.7 million and purchases of property and equipment in the amount of $1.6 million. The cash provided by investing activities in 2004 resulted from the sales and maturities of marketable securities in our investment portfolio in the amount of $82.5 million. Our investing activities in 2003 consisted of purchases of marketable securities in the amount of $47.9 million and purchases of property and equipment in the amount of $0.8 million. The cash provided by investing activities in 2003 resulted from the sales and maturities of marketable securities in our investment portfolio in the amount of $7.8 million and the repayment to the Company of $0.5 million of advances to a related party. Our investing activities in 2002 consisted of cash paid to acquire Diagon Genetics, Inc. and Principia Associates, Inc. in the amount of $5.6 million, net of cash acquired, purchases of property and equipment in the amount of $0.2 million and the advance of cash to a related party in the amount of $0.5 million. The cash provided by investing activities in 2002 consisted of the repayment to the Company of $1.0 million of advances to related parties.

        Our financing activities provided $84.3 million, $71.1 million and $38.8 million in the years ended December 31, 2004, 2003 and 2002, respectively. The cash provided in the years ended December 31, 2004, 2003 and 2002, is principally a result of the sale and issuance of 17.0 million, 21.2 million and 14.3 million shares of common stock, respectively, to private investors and for exercises of common stock options and warrants in each period. Our financing activities since inception through December 31, 2004 consisted principally of the sale of common stock to private investors and exercise of stock options and warrants in the net amount of $196.5 million and the sale and lease-back of equipment of $1.3 million, less the repayment of $0.3 million of our equipment leases and payment of $0.2 million of deferred offering costs in connection with our proposed initial public offering of common stock.

        In November 2004, we negotiated an equipment lease line of credit. Under the agreement, we may finance up to $3.0 million of equipment, software and leasehold improvements through December 2005 either through direct leasing arrangements or under a sale-leaseback arrangement. Amounts borrowed under the facility are repayable over 36 or 48 months. In November, we sold and leased back approximately $1.3 million of our property and equipment under the lease line.

Contractual Obligations and Commitments

        The following table summarizes our contractual obligations at December 31, 2004 and the effects such obligations are expected to have on our liquidity and cash flows in future periods (in thousands).
Contractual Obligations

	 	Total

	 	2005

	 	2006
through
2007

	 	2008
through
2009

	
Capital lease obligations	 	$	1,976	 	$	670	 	$	1,215	 	$	91	
Operating lease obligations	 	 	5,011	 	 	1,880	 	 	2,777	 	 	354	
Research and development contracts	 	 	15,568	 	 	14,837	 	 	731	 	 	—	
Consulting and separation obligations	 	 	810	 	 	288	 	 	347	 	 	175	
Purchase obligations	 	 	350	 	 	350	 	 	—	 	 	—	

	 	

	 	

	 	

	
Total	 	$	23,715	 	$	18,025	 	$	5,070	 	$	620	

	 	

	 	

	 	

	
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        Research and development contracts principally include contracts for human clinical studies, animal studies and clinical manufacturing. The future research and development contract obligations in the table of Contractual Obligations above assume that each of the studies and related manufacturing contracts is completed as planned. In the event a study or manufacturing contract is terminated prior to planned completion by mutual agreement between the contractor and us, the amount paid under such contracts may be less than the amounts presented.

        Under various license agreements, substantially all of which are related to our early-stage discovery programs, we may be obligated to pay up to an aggregate of to $4.4 million if specified development and commercialization milestones are met, as follows (in thousands). These amounts are not included in the table of Contractual Obligations above.
Milestone

	 	Amount

	
Phase 1 clinical trials	 	$	225	
Phase 2 clinical trials	 	 	375	
Phase 3 clinical trials	 	 	525	
FDA new drug approval	 	 	1,875	
European market approval	 	 	750	
Other	 	 	650	

	
Total	 	$	4,400	

	
        In January 2005, we entered into an Agreement and Release with our scientific founder, who is a board member. Pursuant to this Agreement and Release, we are paying the founder a total of $500,000 in equal quarterly installments over five years beginning in January 2005.

        In January 2005, we entered into a lease for additional office space in Lexington, Massachusetts. The lease is for two years with a one year extension option at the same base rent. The minimum rents payable for 2005 and 2006 are approximately $314,000 and $426,000, respectively. We are in negotiations to assume a facilities lease, currently leased by us on a tenant-at-will basis from a company controlled by our scientific founder, who is also a board member. Annual base rent payable under the lease is expected to be approximately $209,000 through May 2009.

        In November 2004, we entered into an agreement for an equipment lease line of credit. Under the agreement, we may periodically directly lease, or sell and lease back up to $3.0 million of equipment with repayment periods of 36 or 48 months and a $1.00 purchase option at the end of each lease period. In November 2004, we sold and leased back under this agreement approximately $1.3 million of our previously purchased equipment, of which approximately $1.0 million and $0.3 million were capitalized and will be paid over 36 and 48 month periods, respectively.

        Based on our operating plans, we expect the proceeds of this offering, together with our existing resources, to be sufficient to fund our planned operations, including our continued research and drug development, through at least                        . However, we may require significant additional funds earlier than we currently expect to conduct additional clinical trials and seek regulatory approval of our drug candidates. We may seek additional funding through collaboration agreements and public or private financings. Additional funding may not be available to us on acceptable terms or at all. In addition, the terms of any financing may adversely affect the holdings or the rights of our stockholders. For example, if we raise additional funds by issuing equity securities, further dilution to our existing stockholders may result. If we are unable to obtain funding on a timely basis, we may be required to significantly curtail one or more of our research or development programs. We also could be required to seek funds through arrangements with collaborators or others that may require us to relinquish rights to some of our technologies or drug candidates which we would otherwise pursue on our own.

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Funding Requirements

        We expect to use the net proceeds from this offering to fund clinical development of STA-5326, STA-4783, and STA-5312, preclinical testing, and other research and development activities, and for general and administrative expenses, working capital needs, and other general corporate purposes.

        We expect to incur substantial expenses and generate significant operating losses as we continue to advance our drug candidates into preclinical studies and clinical trials and as we expand our research and development activities. Our funding requirements will depend on numerous factors, including:

•
the progress of our research and development programs, including the completion of our preclinical and clinical trials for our current drug candidates and the nature of the results from these studies and trials;

•
the number of drug candidates we advance into later-stage clinical trials and the scope of our research and development programs;

•
our ability to discover additional drug candidates using our drug discovery technology and advance them into clinical development;

•
the costs involved in preparing, filing, prosecuting, maintaining and enforcing patent claims for our drug discovery technology and drug candidates and avoiding the infringement of intellectual property of others;

•
the time and costs involved in obtaining regulatory approvals for our drug candidates;

•
our ability to establish and maintain collaborative arrangements;

•
the potential in-licensing of other products or technologies or the acquisition of complementary businesses;

•
the cost of manufacturing, marketing and sales activities, if any; and

•
the timing, receipt and amount of revenues, if any, from our drug candidates.

        We do not expect to generate significant revenues, other than payments that we may receive from potential future collaborations, until we successfully obtain marketing approval for, and begin selling one or more of our drug candidates. We believe the key factors that will affect our internal and external sources of cash are:

•
the success of our preclinical and clinical development programs;

•
our ability to successfully develop, manufacture, obtain regulatory approval for and commercialize our drug candidates;

•
our ability to enter into strategic collaborations with corporate collaborators and the success of such collaborations; and

•
the receptivity of the capital markets to financings by biotechnology companies.

Off-Balance Sheet Arrangements

        We do not have any off-balance sheet arrangements or relationships with unconsolidated entities of financial partnerships, such as entities often referred to as structured finance or special purpose entities.

Tax Loss Carryforwards

        The Company completed an analysis to determine if there were changes in ownership, as defined by Section 382 of the Internal Revenue Code, that would limit our ability to utilize certain net operating loss and tax credit carryforwards. We determined that we experienced a change in ownership, as defined by Section 382, in connection with the acquisition of Principia on September 20, 2002. As a result, the utilization of our federal tax net operating loss carryforwards generated prior to the ownership change is

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limited. As of December 31, 2004, we have net operating loss carryforwards for U.S. federal tax purposes of approximately $85.5 million, after taking into consideration net operating losses expected to expire unused as a result of this limitation. In addition, as of December 31, 2004, we have state net operating loss carryforwards of approximately $69.7 million. The utilization of these net operating loss carryforwards may be further limited if we experience future ownership changes as defined in Section 382.

Recently Issued Accounting Pronouncements

        In January 2003, the FASB issued FIN 46,Consolidation of Variable Interest Entities, and in December 2003, issued a revision to FIN 46 (FIN 46R). This interpretation addresses the requirements for business enterprises to consolidate related entities in which they are determined to be the primary beneficiary as a result of their variable economic interest. The interpretation is intended to provide guidance in judging multiple economic interests in an entity and in determining the primary beneficiary. The interpretation outlines disclosure requirements for Variable Interest Entities in existence prior to January 31, 2003, and outlines consolidation requirements for Variable Interest Entities created after January 31, 2003. The Company does not have any entities that require disclosure or entities that would require consolidation under FIN 46 so the interpretation did not have an impact on the Company's financial statements.

        In April 2003, the FASB issued SFAS No. 149,Amendment of Statement 133 on Derivative Instruments and Hedging Activities (SFAS 149). SFAS 149 amends and clarifies financial accounting and reporting for derivative instruments and for hedging activities under Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities.  The adoption of SFAS 149 in 2003 did not have a material impact on the Company's results of operation or financial position

        In May 2003, the FASB issued SFAS No. 150,Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. SFAS No. 150 establishes standards for classifying and measuring certain financial instruments with characteristics of both liabilities and equity. SFAS No. 150 requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances) because that financial instrument embodies an obligation of the issuer. SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective for public companies during the first interim period beginning after June 15, 2003. The adoption of this pronouncement did not have a material impact on the Company's financial position, results of operations or liquidity.

        In December 2004, the FASB issued SFAS No. 123R,Share-Based Payment: an amendment of FASB Statements No. 123 and 95 (SFAS 123R), which requires companies to measure and recognize compensation expense for all stock-based payments at fair value. SFAS 123R is effective for all interim and annual periods beginning after June 15, 2005 and, thus, will be effective for us beginning with the third quarter of 2005. Early adoption is encouraged and retroactive application of the provisions of SFAS 123R to the beginning of the fiscal year that includes the effective date is permitted, but not required. We are currently evaluating the impact of SFAS 123R on our financial position and results of operations. See note 3 for information related to the pro forma effects on our reported net loss and net loss per share of applying the fair value recognition provisions of the previous SFAS 123, to stock-based employee compensation.

Qualitative and Quantitative Disclosures About Market Risk

        We are exposed to market risk related to changes in interest rates. As of December 31, 2004, we had cash, cash equivalents and marketable securities of $125.0 million consisting of cash and highly liquid, short-term and long-term investments. Our cash is deposited in and invested through highly rated financial institutions in North America. Our marketable securities are subject to interest rate risk and will fall in value if market interest rates increase. If market interest rates were to increase immediately and uniformly by 10% from levels at December 31, 2004, we estimate that the fair value of our investments will decline by an immaterial amount, and therefore, our exposure to interest rate changes is immaterial.

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BUSINESS

Overview

        We are a biopharmaceutical company focused on discovering, developing, and commercializing novel, small-molecule drugs for inflammatory diseases and cancer. Our pipeline of drug candidates is diverse – each of our seven clinical and preclinical small-molecule drug programs is based on a unique chemical class with a distinct mechanism of action – and addresses some of the largest pharmaceutical markets in the world. All of our drug candidates were discovered internally, using the chemistry, biology, and pharmaceutical development assets and capabilities built over the combined history of Synta and predecessor companies. We use these capabilities to discover and develop new drug candidates, and to increase and protect the value of our drug candidates in clinical trials. We have retained worldwide rights to all of our drug candidates in all indications.

        We have three drug candidates in human clinical trials and four additional programs in preclinical studies. For our two most advanced drug candidates, we are conducting six Phase 2 clinical trials across five therapeutic indications, including Crohn's disease, psoriasis, and multiple cancer types. We have enrolled more than 500 patients in these Phase 2 trials at over 100 trial sites. STA-5326, an orally administered, small-molecule inhibitor of interleukin-12, or IL-12, and interleukin-23, or IL-23, is currently in Phase 2 clinical development for the treatment of Crohn's disease and chronic plaque psoriasis. STA-4783, a small-molecule anticancer therapeutic, is in three separate Phase 2 trials for the treatment of non-small cell lung cancer, malignant melanoma, and soft tissue sarcoma. STA-5312, a small-molecule anticancer agent we are developing initially for the treatment of chemotherapy-resistant cancers, is currently in two Phase 1 trials for the treatment of solid-tumor cancers and cancers of the blood. All of our drug candidates are in early stages of development, and we do not expect to receive regulatory approval for any of our drug candidates until 2008 at the earliest, if at all. Our drug candidates are described in greater detail below.

•
STA-5326.  STA-5326 is a novel, orally administered, small- molecule drug candidate that selectively and potently inhibits the production of the IL-12 family of proteins, including IL-12 and IL-23. Over-production of these proteins plays a central

role in chronic inflammatory diseases, driving the body's immune system to infiltrate and damage tissues and organs. We believe that STA-5326 may provide considerable benefits over existing therapies for inflammatory diseases. In 2003, we completed two Phase 1 trials which enrolled a total of 120 healthy volunteers and suggested a favorable safety profile. Our initial therapeutic focus for STA-5326 has been on the treatment of Crohn's disease and psoriasis. We have completed enrollment of a total of 57 patients across four cohorts in our Phase 2a Crohn's disease trial. Results from this Phase 2a Crohn's trial continue to suggest a favorable safety profile and indicate a rapid onset of therapeutic benefit. Based on these preliminary results, we have expanded this Phase 2a Crohn's trial to investigate one higher dose level. We expect to complete enrollment of these additional patient groups in the first half of 2005. These results are preliminary and are based on a small number of patients, and may not be supported by further results in this or subsequent clinical trials. If supported by favorable clinical data, we expect to initiate a randomized, double-blind, placebo-controlled clinical trial for the treatment of Crohn's disease in the second half of 2005. In the second half of 2004, we initiated two Phase 2 trials for the treatment of chronic plaque psoriasis: a blinded, randomized, placebo-controlled Phase 2b trial and a complementary open-label Phase 2a trial. We have completed enrollment of 214 patients in our Phase 2b psoriasis trial and have enrolled 33 of approximately 60 patients in the Phase 2a psoriasis trial. We expect to report data from both psoriasis trials in the second half of 2005. If the data are favorable, we expect to initiate a pivotal Phase 3 clinical trial for the treatment of chronic plaque psoriasis by the end of 2005. We may also initiate additional exploratory Phase 2 trials in rheumatoid arthritis and multiple sclerosis.
•
STA-4783.  STA-4783 is a novel, small-molecule compound that we are currently evaluating in three separate Phase 2 trials for the treatment of non-small cell lung cancer, malignant melanoma, and soft tissue sarcoma, in combination with taxanes, a leading class of anticancer therapeutic agents.

42

STA-4783 induces the expression of heat shock protein 70, or Hsp70, on the surface of tumor cells, which flags the cells for destruction and elimination by the immune system. STA-4783 also disrupts the function of the centrosome, a critical component of cellular infrastructure. Preclinical studies demonstrated that the combination of STA-4783 with a taxane achieved superior antitumor activity compared to taxane alone, with minimal or no increase in toxicity. Based on the encouraging results seen during the initial stages of the ongoing Phase 2 trials, we began the second-stage, randomized portion of each of the non-small cell lung cancer, malignant melanoma, and soft tissue sarcoma trials. In January 2005, we completed enrollment of 87 patients in the second stage of the non-small cell lung cancer trial. We expect to report data from our Phase 2 cancer trials in the second half of 2005. The results seen to date are preliminary and are based on a small number of patients, and may not be supported by the second stages of these trials or subsequent clinical trials. If supported by continued favorable clinical data, we expect to initiate a pivotal Phase 3 clinical trial of STA-4783 for the treatment of one of these cancer types by the end of 2005.•
STA-5312.  STA-5312 is a novel, small-molecule anticancer agent that we are initially developing for the treatment of chemotherapy-resistant cancers. STA-5312 inhibits the assembly of microtubules, fibers inside cells which play an essential role in cell division. By inhibiting microtubule assembly, STA-5312 disrupts the process of cell division, thereby causing cell death. This inhibition is more pronounced in rapidly dividing cells such as cancer cells. In preclinical studies, STA-5312 has been shown to have considerably higher anticancer activity in chemotherapy-resistant cancer cells than standard treatments and to significantly increase animal survival in chemotherapy-resistant cancer models. We have initiated two dose-escalating Phase 1 trials of STA-5312 for the treatment of solid-tumor cancers and cancers of the blood that are refractory, meaning the cancer has not responded to treatment, or relapsed, meaning the cancer has returned after treatment. Results from these trials are expected by the end of 2005.

        All of our clinical-stage drug candidates were discovered using our internal assets and capabilities. These capabilities are based on our strength in medicinal chemistry, our unique chemical compound library, and the processes we use to achieve a tight integration and rapid cycle time among our chemistry, biology, and pharmaceutical development functions. These processes, together with our cell-biology expertise and in-house in vivo  testing capabilities, allow us to rapidly optimize the safety, efficacy, and pharmaceutical profiles of our most promising lead compounds. In certain cases, our approach has led to the identification of new pathways and mechanisms of action, resulting in potentially novel therapeutic categories. We believe that our ability to identify, create and develop novel therapeutic categories is a strong competitive advantage.

        We apply our research and development capabilities to maximize the value of our drug candidate pipeline in two primary ways. First, we use our accumulated experience with our internally developed clinical-stage programs to improve, expand, and protect the long-term value of these programs. We do so by developing laboratory tests and identifying new chemical families that strengthen our intellectual property positions, facilitate the interpretation and design of our clinical trials, and allow us to identify new potential therapeutic applications. Second, we apply our research capabilities to novel drug discovery programs designed to lead to new drug candidates with chemical structures, therapeutic applications, and, potentially, mechanisms of action that are distinct from our current clinical-stage drug candidates. In addition to our three clinical development programs, we have four active discovery programs in inflammatory disease, cancer, and diabetes, each with promising lead candidates in the optimization/preclinical stages.

        We commenced operations in July 2001. In September 2002, we acquired Principia Associates, Inc., which had previously acquired Shionogi BioResearch Corp., a U.S.-based drug discovery subsidiary of the Japanese pharmaceutical company, Shionogi & Co., Ltd. In this acquisition, we acquired a unique chemical compound library, an integrated set of drug discovery capabilities, and a pipeline of preclinical and research programs. Since 2002, we have been advancing these programs into later stages of

43

development, discovering and developing additional drug candidates, and expanding our management and scientific teams and capabilities to support more advanced stages of drug development. To date, we have raised approximately $196 million from private investors to support our growth strategy.

Our Business Strategy

        Our company mission is to extend and enhance the lives of patients by discovering, developing, and commercializing novel pharmaceutical products for treating severe medical conditions. To achieve this objective, we intend to continue to:

•
Focus on novel therapies for severe diseases with large market potential.  Our clinical and discovery programs are focused on severe or life-threatening diseases, including chronic inflammatory diseases and cancer. We develop compounds for these diseases that have novel mechanisms of action not shared by competing products. We believe this strategy targets attractive market opportunities for a number of reasons: the severity of these diseases may permit smaller or more expedited clinical trials; the specialized nature of these markets may require lower sales and marketing costs; and finally, the novel mechanisms of action of our product candidates may allow us to better address unmet medical needs, creating the potential for more rapid market acceptance and greater pricing flexibility.

•
Use our drug discovery capabilities to maximize the value of our ongoing clinical-stage programs.  We apply our discovery capabilities to improve, expand, and protect the value of our ongoing clinical programs. We aim to improve our clinical choices and trial designs through a deeper understanding of the biology of our drug candidates and their effects in patients. We seek to expand the market potential of our drug candidates by exploring new potential therapeutic applications. Finally, we continue to strengthen our intellectual property position, as well as our potential future market position, by developing and protecting new chemical compounds and biological assays that complement our programs and increase our competitive advantage.

•
Expand our pipeline of unique drug candidates, with a focus on inflammatory disease and cancer.  Our ability to apply our discovery capabilities to rapidly and efficiently develop promising new chemical compounds is a valuable competitive advantage. New drug candidates enhance the value of our pipeline through increased market potential and through diversification of our product, regulatory, and market risks.

•
Maximize the retained value of our drug candidates.  At present, we own worldwide rights to all of our drug candidates in development. For certain drug candidates, we may in the future establish collaborations with other pharmaceutical companies to assist in the development and commercialization of these drug candidates and mitigate commercial and financial risk. Based on our strong financial position, however, we intend to independently develop and commercialize certain drug candidates, and for other candidates, to develop them to a more advanced clinical stage before entering into development and commercial agreements. We believe this approach will allow us to retain a higher share of the value from our drug candidates.

•
Maintain our focus on small-molecule drug development.  We discover and develop small-molecule drug candidates, not large molecule biologic agents such as proteins or antibodies, which are complex and costly to manufacture. By developing small-molecule drugs, we believe we will require lower infrastructure investment, face fewer manufacturing constraints, and realize greater potential profit margins than competitors developing biologic drugs. In addition, small-molecule drugs have the potential for development into orally administered drugs, thereby offering patients greater convenience.

•
Build on the strength of our intellectual property estate.  We are continuing to strengthen our intellectual property estate, which provides us with the ability to maximize the value of our internal discoveries and to protect these discoveries from competition. As of March 11, 2005, we had a total

44

of 236 issued patents and pending patent applications worldwide, including issued U.S. composition-of-matter patents for each of our drug candidates in clinical development. We believe that our intellectual property estate provides strong protection for all aspects of our drug discovery and development programs, including our drug candidates, methods of treatment, and manufacturing processes.

Our Drug Candidate Pipeline

        The following table summarizes our most advanced drug candidates currently in clinical or preclinical development:

        In the above chart, Optimization/Preclinical indicates identification and evaluation of compounds inin vitro and animal models to allow for Phase 1 clinical trials in humans. Phase 1 indicates initial clinical safety testing and pharmacological profiling in healthy volunteers, with the exception that Phase 1 trials in oncology are performed in patients with cancer. Phase 2 indicates clinical efficacy testing and continued clinical safety testing in patients with a specific disease, and may include separate Phase 2a and Phase 2b trials. Phase 2a trials typically represent the first human clinical trial of a drug candidate in a smaller patient population and are designed to provide earlier information on drug safety and efficacy. Phase 2b trials typically involve larger numbers of patients and comparison with placebo, standard treatments, or other active comparators. Phase 3 indicates a confirmatory study of efficacy and safety in an even larger patient population, and typically involves comparison with placebo, standard treatments, or other active comparators.

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Clinical Development Programs

        We have three drug candidates undergoing human clinical trials in chronic inflammatory disease and oncology. STA-5326, an orally administered, small-molecule IL-12 inhibitor, is currently in Phase 2 clinical development for the treatment of Crohn's disease and chronic plaque psoriasis. STA-4783, a small-molecule anticancer therapeutic, is in three separate Phase 2 trials for the treatment of non-small cell lung cancer, malignant melanoma, and soft tissue sarcoma. STA-5312, a small-molecule anticancer agent we are developing initially for the treatment of chemotherapy-resistant cancers, is currently in two Phase 1 trials for the treatment of refractory or relapsed solid-tumor cancers and cancers of the blood.

Inflammatory Disease Program

Background

        Inflammatory diseases are typically caused by aberrant activity of the immune system. The immune system normally protects the body from injury and infection, but in these diseases it attacks and damages the body's own tissues. Major chronic inflammatory diseases include Crohn's disease, psoriasis, rheumatoid arthritis, and multiple sclerosis. Together, these diseases afflict over 7 million people in the U.S. and over 21 million people worldwide.
Selected Indications

	 	Worldwide patient
population

	 	U.S. patient
population

	
Crohn's disease(1)	 	1.0 million	 	0.5 million	
Psoriasis(2)	 	13.0 million	 	4.5 million	
Rheumatoid arthritis(3)	 	5.0 million	 	2.0 million	
Multiple sclerosis(4)	 	2.5 million	 	0.4 million	

(1)
Source: Journal of Gastroenterology (Worldwide); Crohn's and Colitis Foundation of America (U.S.)
(2)
Source: Clinical and Experimental Dermatology (Worldwide); National Psoriasis Foundation (U.S.)
(3)
Source: Forbes.com (Worldwide); American College of Rheumatology (U.S.)
(4)
Source: National Multiple Sclerosis Society (Worldwide, U.S.)

        Despite the availability of numerous therapeutic options for these diseases, inflammatory diseases remain major causes of impairment of daily activities, reduced quality of life, significant disability, and sometimes death. Current therapeutic treatments for chronic inflammatory diseases have the potential to cause skeletal, endocrinologic, neurologic, and metabolic side effects, which can limit their long-term use. The limitations of conventional treatments, together with a growing understanding of the pathogenesis of inflammatory diseases, have stimulated significant interest in the development of targeted immune modulators for the management of chronic inflammatory diseases.

The TH1 Pathway and the Role of IL-12 in Chronic Inflammatory Diseases

        T cells play a critical role in the coordination of the body's immune response. T cells secrete cytokines, which are proteins that signal the activity of other cells in the immune system. T helper type 1, or T H 1, and T helper type 2, or T H 2, cells are two important types of T cells that play both a beneficial role in defending against infection and a harmful role in mediating the hyperinflammatory responses underlying immune diseases. T H 1 cells are normally involved in the body's defense against intracellular attack by bacteria and other micro-organisms. T H 2 cells are critical for eliminating extracellular bacteria, parasites, allergens, and toxins, and initiating the production of antibodies. Overactive immune responses by these T cell types, however, can lead to certain inflammatory diseases. For example, an overactive T H 1 response can lead to Crohn's disease, psoriasis, rheumatoid arthritis, and multiple sclerosis, and an overactive T H 2 response can lead to ulcerative colitis, lupus, allergy, and asthma.

        The IL-12 cytokine plays a central role in the initiation of the TH1 response, as highlighted in the figure below. Antigen-presenting cells, or APCs, first present antigens to naïve T cells, which then become T H 0 cells. A T H 0 cell will then become either a T H 1 or a T H 2 cell depending on the cytokine signals the T H 0

46

cell receives. Production of IL-12 by APCs triggers TH0 cells to become TH1 cells, whereas the presence of the IL-4 cytokine triggers TH0 cells to become T H 2 cells. T H 1 and T H 2 cells themselves also produce cytokines. T H 1 cells produce pro-inflammatory cytokines including interferon-gamma, or IFNg, IL-2, and tumor necrosis factor-alpha, or TNF a . These cytokines initiate the swelling, immune cell invasion of tissues, and tissue damage that underlie T H 1-biased chronic inflammatory diseases, while other cytokines initiate the inflammation underlying T H 2-biased inflammatory diseases.

        As illustrated above, because of its early role in the TH1 pathway, IL-12 is an important "master switch" that triggers the TH1 immune response. An additional cytokine, IL-23, is critical to the maintenance of the T H 1 response. This cytokine, a member of the IL-12 cytokine family, contributes to the differentiation of T H 1 cells into so-called "memory" T cells that mediate prolonged inflammatory responses. Because STA-5326 inhibits the production of the protein subunit shared by IL-12 and IL-23, STA-5326 inhibits the production of both of these important pro-T H 1 cytokines that drive chronic inflammatory diseases.

Limitations of Current Therapies

        The selective inhibition of the TH1 immune response by STA-5326 contrasts with the inhibition of both TH1 and TH2 immune responses by broad-spectrum immunosuppressive agents which lack selectivity. Some of these agents, such as steroids and cyclosporine, lack selectivity because they inhibit the expression of a wide variety of proteins, while others, such as methotrexate and leflunomide, lack selectivity due to their broad inhibition of DNA synthesis and their effects on multiple cell types. These non-selective agents can display significant undesirable side effects, including bone thinning, cataracts, loss of vision, liver damage, kidney dysfunction, diabetes, muscle weakness, and alterations in mental status.

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        To date, the most successful targeted modulators of the immune system for TH1-biased diseases have been antibodies and other proteins that provide selective inhibition of TNF a . These TNF a -antagonist therapies have offered a significant improvement over the broad-spectrum immunosuppressive therapies described above. By targeting a single, important cytokine, these drugs can successfully prevent the tissue damage caused by the over-production of TNF a , with fewer side effects than broad-spectrum immunosuppressive agents. As a category, TNF a -antagonist drugs, including Remicade, marketed by Johnson & Johnson, Enbrel, marketed by Amgen and Wyeth Pharmaceuticals, and Humira, marketed by Abbott Laboratories, generated over $3.0 billion in worldwide sales in 2003, according to the annual reports of these companies. However, for many patients these TNF a -antagonist drugs are ineffective or poorly tolerated. While important, TNF a  is not the only potentially destructive cytokine associated with T H 1-biased diseases. Such diseases can therefore persist despite the selective inhibition of TNF a . In addition, many of the side effects of TNF a -antagonist drugs are severe and include tuberculosis and other infections, lupus-like syndromes, lymphomas, congestive heart failure, and adverse neurologic events. The FDA has required "black box" and bolded warnings on the labels for these drugs recommending screening for latent tuberculosis and other infections, and treatment of infections prior to initiation of TNF a -antagonist therapy. In addition, because all TNF a -antagonist therapies are large-molecule biologic agents, they require administration by injection or infusion. This requirement for injection or infusion, sometimes in a hospital setting, can reduce patient convenience and compliance in the treatment of chronic inflammatory diseases.

        Because IL-12 and IL-23 play critical roles in the initiation and maintenance of chronic TH1-biased inflammatory diseases, these cytokines represent promising alternative targets to TNF a  in the treatment of these conditions. Two monoclonal antibody therapies targeting IL-12 and IL-23 are currently in clinical trials in Crohn's disease, psoriasis, and other inflammatory diseases. According to recently reported results of completed clinical trials, these drug candidates have shown promising indications of efficacy in the treatment of Crohn's disease and psoriasis. While the degree of efficacy and safety of these drug candidates remains to be confirmed in clinical trials with larger patient populations, the results observed in these clinical trials to date have been received with significant interest by experts in the field.

        We believe that the results observed with anti-IL-12 antibody therapies validate the inhibition of IL-12 activity as a promising approach for the treatment of inflammatory diseases. Anti-IL-12 antibody therapies, however, like TNF a -antagonist therapies, require injection or infusion at periodic intervals and have other disadvantages. For example, these antibodies are complex and costly to manufacture. In addition, antibody therapies are also subject to the risk that patients will develop neutralizing antibodies to the drug. Therefore, we believe there is an unmet need and a significant market opportunity for an orally administered, highly selective, small-molecule inhibitor of IL-12.

STA-5326 — IL-12 Inhibitor

        We believe we have discovered the first oral, selective inhibitor of IL-12. To our knowledge, no other oral, selective IL-12 inhibitor drug candidates are in clinical development by other companies. Our research indicates that STA-5326 inhibits production of IL-12 by interfering with the activity of c-Rel, a regulator that enables the transcription of genes that encode the two protein subunits that comprise IL-12. Because IL-23 shares a subunit with IL-12, STA-5326 inhibits the production of both of these inflammatory cytokines. In studies performed to date, STA-5326 has demonstrated strong inhibition of IL-12 and IL-23 production without significant inhibition of other cytokines. Preclinical studies have shown substantial efficacy in animal models of Crohn's disease, rheumatoid arthritis, and multiple sclerosis.

        We have completed two Phase 1 clinical trials in 120 healthy volunteers. These trials were designed to test the safety, pharmacokinetics, and pharmacodynamics of STA-5326 at escalating doses from 7 mg per day to 210 mg per day. Pharmacokinetics is the determination of how much of a drug is absorbed, distributed, metabolized, and eliminated by the body. Pharmacodynamics is the determination of the processes through which a drug exerts the biological effect observed. In these trials, STA-5326 was

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well-tolerated, with no serious adverse events or early discontinuations due to adverse events. Treatment with STA-5326 at a dose of 35 mg twice-a-day for two weeks was found to inhibit the production of IL-12 by immune cells in blood samples following antigen stimulation. As shown in the figure below, a decrease in IL-12 production was observed in all of the nine individuals treated, whereas no consistent change in IL-12 production was observed for the ten subjects not treated with STA-5326:

        Blood samples were collected from two healthy volunteers untreated with STA-5326 that were part of the Phase 1 study as well as eight additional volunteers outside of the Phase 1 volunteer group. No substantial difference was observed in IL-12 production between these two subgroups. Expanded studies of IL-12 production in blood samples collected during current Phase 2 trials in Crohn's disease and psoriasis are ongoing.

        Based on results from these Phase 1 studies, we expanded the clinical development of STA-5326 and initiated multiple Phase 2 clinical trials in Crohn's disease and plaque psoriasis.

        Crohn's Disease.    Crohn's disease is a chronic inflammatory bowel disease characterized by inflammation throughout the length of the gastrointestinal, or digestive, tract. Symptoms can be severe, and include abdominal pain, frequent diarrhea, and intestinal bleeding. In addition, patients with Crohn's disease may experience malnutrition and an increased risk of gastrointestinal cancers. Although several anti-inflammatory and immunosuppressive agents have been used to treat Crohn's disease, the two FDA-approved therapies for Crohn's disease are Remicade, a TNF a -antagonist marketed by Johnson & Johnson, and Entocort, a coated, corticosteroid capsule marketed by AstraZeneca.

        Therapeutic efficacy in clinical trials of treatments for Crohn's disease is assessed using the Crohn's Disease Activity Index, or CDAI. The CDAI is a composite index of symptomatic and other parameters and has been the basis of pivotal studies for previously approved Crohn's disease therapies. A decrease in CDAI of 100 points or more is accepted to represent a clinical response, and a decrease in the CDAI to lower than 150 points is accepted to indicate the induction of remission of the disease. Historically, a decrease in CDAI of 70 points or more was accepted to represent a clinical response; however, an increasing number of clinical trials have been designed with the more stringent 100-point response definition. In the pivotal, 108-patient study of Remicade that formed the basis of its FDA approval, Remicade demonstrated at week four a clinical response, as defined in that trial by a 70-point decrease, in 65% of all patients receiving treatment, and in 81% and 50% of patients receiving 5 mg/kg and 10 mg/kg, respectively. Clinical remission was observed at week four in 33% of all patients receiving treatment, and in 48% and 25% of patients receiving 5 mg/kg and 10 mg/kg, respectively.

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        We have completed enrollment of a 57-patient Phase 2a clinical trial in moderate-to-severe Crohn's disease. This trial was designed as an open-label, dose-escalating study to assess the safety, pharmacokinetics, and efficacy of STA-5326. Patients were assigned to one of four dose levels – 14 mg twice-a-day, 35 mg once-a-day, 28 mg twice-a-day, and 35 mg twice-a-day – and treated for four weeks. Patients were permitted to continue stable doses of other medications for Crohn's treatment other than a TNF a -antagonist, such as Remicade, but prior therapy with a TNF a -antagonist was allowed. Patients were selected for the trial based on a baseline CDAI score of between 220 and 450 and a diagnosis of Crohn's disease for at least six months. Measurement of clinical response was a secondary objective of the study, with clinical response defined as a decrease in the CDAI of 70 points or more at week two or four. The rates of response using the more stringent definition of at least a 100-point drop in CDAI were also calculated as part of the efficacy analysis.

        We have safety and efficacy data for the 57 patients in the four dose cohorts. STA-5326 demonstrated an acceptable safety profile over four weeks of treatment; no serious adverse events related to the use of STA-5326 were reported. Eleven patients discontinued treatment due to adverse events. The most common drug-related adverse events observed were dizziness, nausea, fatigue, and headache. Clinical response and remission rates are shown in the table below. For the purposes of this analysis, patients for whom CDAI data are unavailable at weeks two or four due to missing data or discontinued treatment were assumed at these time points not to have achieved clinical response or remission. One patient receiving 35 mg once-a-day, for whom no available CDAI data are available beyond baseline, was excluded from this efficacy analysis as it was prospectively defined.

	 	Clinical response
( ³ 70-point drop)

	 	Clinical response
( ³ 100-point drop)

	 	Clinical remission
CDAI < 150

	 	
Dose level

	 	Patients

	 	Week 2

	 	Week 4

	 	Week 2

	 	Week 4

	 	Week 2

	 	Week 4

	 	

 	

 	

 	

 	

 	

14 mg, twice-a-day	 	13	 	15	%	8	%	15	%	8	%	8	%	8	%	
35 mg, once-a-day	 	11	 	64	%	82	%	55	%	64	%	36	%	36	%	
28 mg, twice-a-day	 	12	 	50	%	42	%	33	%	42	%	25	%	33	%	
35 mg, twice-a-day	 	20	 	35	%	45	%	30	%	40	%	10	%	15	%	
        These preliminary results are based on a small number of patients in an open-label trial which is not designed to show statistically significant evidence of efficacy and may not be supported by further results in this or subsequent clinical trials. No statistical testing was performed on these results. However, at all but the lowest dose level, the results suggest substantial clinical improvement following STA-5326 treatment, with an onset of therapeutic benefit within two weeks of initiation of treatment. Based on these safety and efficacy results, we have expanded this Phase 2a trial to evaluate one higher dose level. Assuming continued favorable results from our ongoing Phase 2a trial, we plan to initiate a randomized, double-blind, placebo-controlled clinical trial of STA-5326 for the treatment of Crohn's disease in the second half of 2005.

        Psoriasis.    Psoriasis is a chronic, inflammatory skin disorder that is characterized by thickened, red areas of skin that are covered with scales. The area of skin affected can range from discrete, localized patches, to large areas of the body. The joints, nails, and mucous membranes may also be affected by the disease. Chronic plaque psoriasis is the most common form of psoriasis. This disease involves the formation of plaques, which are circular-to-oval, elevated, and often scaly skin lesions that contain swollen blood vessels and infiltrating immune cells. In these affected areas, itching, swelling, and pain are common, all of which can impair daily activities and sleep.

        Treatment of psoriasis falls into three general classes: topical agents, phototherapy, and systemic agents. Topical agents include corticosteroids, coal tar, and tazarotene. Phototherapy involves exposure to ultraviolet light, often in combination with a topical or photosensitizing agent. Systemic medications include methotrexate, cyclosporine, and retinoids. These non-specific immunosuppressive agents have

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serious side effects that can lead to liver toxicity, kidney toxicity, and birth defects. The increasing recognition of psoriasis as an immune-mediated disease has led to the development and adoption of targeted biologic agents for treatment of the disease, such as the TNF a -antagonist Enbrel, marketed by Amgen and Wyeth Pharmaceuticals, Amevive, marketed by Biogen Idec, and Raptiva, marketed by Genentech. These agents require subcutaneous or intravenous injection, which can reduce patient convenience and compliance. In addition, these products have been found to cause severe side effects including liver failure, serious infections requiring hospitalization such as sepsis, new onset or exacerbation of central nervous system disorders including multiple sclerosis, aplastic anemia, reduced platelet count, and reduced white blood cell count. Therefore, we believe there is an unmet need and substantial commercial opportunity for a selective, targeted, orally administered agent.

        We are currently conducting two complementary Phase 2 clinical trials of STA-5326 for the treatment of moderate-to-severe chronic plaque psoriasis. Each of these trials will treat patients for 12 consecutive weeks. Results from both trials are expected to be available in the second half of 2005.

        The first psoriasis trial is a randomized, double-blind, placebo-controlled Phase 2b trial. We recently completed enrollment of 214 patients in this trial at 30 medical centers throughout the U.S. This trial is the largest ongoing trial of STA-5326 and is designed to provide information on the safety and efficacy profile of three doses of STA-5326 (7 mg, 21 mg, and 35 mg, each twice-a-day) for 12 weeks and guide dose selection for future studies. For inclusion in this trial, patients were required to have greater than 10% of their body surface area affected by psoriasis and to have been diagnosed with psoriasis for at least six months. Patients are not allowed to take any phototherapy or systemic treatments for their psoriasis during the study. We will assess efficacy using the static Physician's Global Assessment, or sPGA, a seven-point scale of disease severity. A secondary efficacy endpoint is the Psoriasis Area and Severity Index, or PASI, a composite, weighted index that measures the severity of certain disease symptoms and the proportion of body surface area affected by psoriasis. To date, there has been one drug-related serious adverse event reported involving rigors, increased liver function tests, and diarrhea. If supported by favorable clinical data from this trial, we intend to initiate Phase 3 trials by the end of 2005.

        The second psoriasis trial is a complementary open-label Phase 2a trial designed to assess the biological response to STA-5326 through histological studies of skin biopsies. This trial is expected to enroll approximately 60 patients, with the same inclusion criteria as our Phase 2b trial described above. To date, we have enrolled 33 patients in this trial. These patients will be treated with either 21 mg twice-a-day, 35 mg twice-a-day, 70 mg once-a-day, or 35 mg once-a-day for 12 weeks. Skin biopsies will be examined through microscopic visual assessment, as well as through assessments of levels of inflammatory biomarkers. In addition, clinical and pharmacokinetic activity will be assessed, and levels of biological markers of immune activity will be measured in blood samples. The additional information gathered in this trial will help guide future clinical development choices for STA-5326 in this indication.

        Clinical Support.    Several ongoing clinical, pharmaceutical development, and discovery efforts were designed to support and enhance the STA-5326 development program. First, we have developed a novel salt form of STA-5326 that allows us to formulate the drug candidate as a tablet. We believe this tablet will serve as our commercial formulation, replacing the current capsule formulation. Preclinical studies in animals and in vitro  have confirmed the comparability of the salt form tablet formulation and the STA-5326 capsule formulation. We plan to use the tablet formulation of STA-5326 in all future clinical trials. We must first, however, complete a clinical study in healthy volunteers to demonstrate the comparability of pharmacokinetics of the salt form tablet formulation and the capsule formulation. We have initiated this study and expect to complete it in the first half of 2005. Second, advanced discovery efforts are also underway to identify additional, next-generation oral inhibitors of IL-12 production. We expect to initiate a Phase 1 trial of the first of these compounds in late 2005 or early 2006. We believe that successful development of follow-on IL-12 inhibitor drug candidates will allow us to maximize the commercial value of our IL-12 inhibitor program. Finally, we have filed for intellectual property protection on the

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mechanistic pathways through which STA-5326 exerts its action which we believe will strengthen our competitive position in developing orally available IL-12 inhibitor drugs.

Oncology Program

Background

        Cancers are diseases characterized by abnormal and uncontrolled cell growth and division, typically leading to tumor formation. As a tumor grows, it can directly disrupt the organ function at its site of origin. In addition these cells can also spread to other organs, such as the brain, bones and liver, by a process called metastasis. The growth of metastatic tumors at these new sites can disrupt the function of these other organs. There are many kinds of cancer, but all are characterized by uncontrollable growth of abnormal cells.

        The American Cancer Society estimated that approximately 1.4 million people would be diagnosed with cancer and approximately 560,000 would die of cancer in the U.S. in 2004. Together, non-small cell lung cancer, melanoma, and sarcoma were projected to account for approximately 200,000 new diagnoses and approximately 140,000 deaths in the U.S. in 2004 as described below.
Cancer Type

	 	U.S. Incidence

	 	U.S. Mortality

	
All cancers	 	1,300,000	 	564,000	
Non-small cell lung cancer	 	140,000	 	128,000	
Melanoma	 	55,000	 	8,000	
Sarcoma	 	9,000	 	4,000	

STA-4783 — Hsp70 Inducer

        STA-4783 is a novel, small-molecule drug candidate that acts through two distinct pathways to disrupt the function of cancer cells. In preclinical studies, STA-4783 demonstrated an ability to strongly enhance the antitumor activity of taxanes with minimal or no increase in toxicity. We are initially developing STA-4783 to be intravenously administered in combination with taxanes for the treatment of solid-tumor cancers.

        The class of drugs known as taxanes, the first of which was approved in 1992, is the market-leading class of anticancer therapeutic drugs, with over $2.0 billion in worldwide sales in 2003, as reported by the companies marketing these drugs. Approved taxanes include Taxol, a formulation of paclitaxel marketed by Bristol-Myers Squibb; Taxotere, marketed by Sanofi-Aventis; Abraxane, a paclitaxel protein conjugate marketed by American Pharmaceutical Partners; and generic equivalents of paclitaxel. The commercial success of taxanes can be attributed in large part to their efficacy across a wide range of cancer types. Taxanes have been approved by the FDA for the treatment of prostate, ovarian, breast, non-small cell lung cancer, and Kaposi's sarcoma. Additionally, we believe taxanes are prescribed off-label for other cancer types, including head and neck, uterine, stomach, esophageal, and bladder cancers. The efficacy of taxanes in many of these cancer types is limited, with response rates ranging from 30% to 40% according to clinical trial results published in oncology scientific journals, including the August 1996 issue of Gynecologic Oncology  and the June 1995 issue of Seminars in Oncology .

        Other anticancer agents are sometimes added to taxanes in attempts to improve efficacy. A common example of such an agent is Paraplatin, a formulation of carboplatin marketed by Bristol-Myers Squibb. While incrementally increasing treatment efficacy, carboplatin has been shown to add significant toxicity as well. As a result, we believe there exists a significant need for agents that can enhance the antitumor effects of taxanes without adding undesirable side effects.

        Our research indicates that STA-4783 has two distinct actions that we believe may contribute to the killing of tumor cells: (1) induction of Hsp70 on tumor cell surfaces, which targets the tumor cells for

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destruction by the body's immune systen and (2) disruption of the cytoskeletal network of tumor cells, a network of fibers essential to cell structure, attachment, movement, and cell division.

•
Hsp70 induction. Hsp70 is a critical stress protein that serves as a danger signal for the immune system, identifying cells for immune-mediated elimination. The induction of Hsp70 expression on the surface of cancer cells can therefore attract immune cells to attack the cancer cells on which Hsp70 is expressed. The following pictures show staining for Hsp70; the image on the left shows untreated cells, the image on the right highlights cells after treatment with STA-4783 in which the Hsp70 can be observed on the cell surface.

•
Disruption of the cytoskeletal network. Our research has shown that STA-4783 also has a significant effect on the cytoskeleton of tumor cells by altering the structure and function of the centrosome, a cellular component critical to the organization of the cytoskeleton. This alteration of the cytoskeleton results in changes in tumor cell structure, loss of cell attachment, and death of tumor cells. The following pictures show the centrally organized microtubule network of untreated cells, at left, and the disrupted network following treatment with STA-4783, at right:

        Preclinical studies in animal models of a range of cancer types including breast, lung, uterine melanoma, and lymphoma, demonstrated that the combination of STA-4783 with paclitaxel achieved superior antitumor activity than paclitaxel alone. Results included numerous instances of tumor regression, tumor eradication, and increased survival time. Preclinical safety studies showed that this increase in antitumor activity was accompanied by minimal to no increase in toxicity with the compound in combination with taxanes.

        We recently completed a Phase 1 clinical trial of STA-4783 with paclitaxel. This trial, which enrolled 35 patients, was designed to assess the safety, pharmacokinetics, and efficacy of STA-4783 with paclitaxel in a broad cancer patient population. The combination of STA-4783 and paclitaxel was well-tolerated, with minimal to no toxicity attributed to STA-4783 at all doses tested. Partial response or disease stabilization was observed in several cancer types, including parotid gland adenocarcinoma, colon, Kaposi's sarcoma, melanoma, ovarian, pancreatic and paraganglioma. In some of these patients, their cancers had previously progressed to more advanced stages during treatment with paclitaxel alone.

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        In addition to measuring safety, efficacy, and pharmaceutical properties in our Phase 1 trial, we also measured biological markers of activity, including levels of circulating Hsp70 in the blood. We observed time-dependent and dose-dependent increases in levels of Hsp70 following administration of STA-4783. At the lowest doses, the change in circulating Hsp70 from before treatment to after treatment was minimal. However, at the uppermost doses, following treatment with STA-4783, every patient was observed to have substantial increases of circulating Hsp70 ranging from 80% to 850%.

        Based on the safety results and the promising signs of activity we observed in our Phase 1 trial, we initiated Phase 2 clinical trials in non-small cell lung cancer, malignant melanoma, and soft tissue sarcoma. Together these trials are expected to ultimately enroll over 280 patients at over 50 medical centers throughout the U.S. and Canada. These trials have been designed to assess response rates and time-to-tumor-progression, and to further expand the safety profile of STA-4783. Results from our Phase 2 clinical trial are expected to be available in the second half of 2005, and, assuming the data support further development, we would expect to initiate a Phase 3 clinical trial for one of these cancers by the end of 2005.

        Non-Small Cell Lung Cancer.    Lung cancers are diseases characterized by uncontrolled growth where the cancerous cells originate from within the lung. Based on pathology, these tumors are grouped into either small cell or non-small cell lung cancers. Non-small cell lung cancers account for approximately 80% of all lung cancers according to the American Lung Association. The American Cancer Society estimated that approximately 140,000 people would be diagnosed with non-small cell lung cancer and approximately 128,000 would die of non-small cell lung cancer in the U.S. in 2004. Most non-small cell lung cancer patients are diagnosed with advanced stage disease, where surgery is not a reasonable therapeutic option. Combination chemotherapies, such as carboplatin and paclitaxel, are a common first line treatment for these patients. Responses to these combinations can occur in 20-30% of patients and have been observed in as many as 50% according to the National Cancer Institute. Despite these response rates, average survival among advanced non-small cell lung cancer patients is less than one year and non-small cell lung cancer continues to be the leading cause of cancer-related deaths for Americans. Additionally, because the toxicity observed with current therapeutic regimens is substantial, we believe there is a need to continue to improve patient outcome without adding to that toxicity.

        Our Phase 2 trial for the treatment of non-small cell lung cancer is a two-stage trial, which enrolled over 100 patients. This trial is designed to directly compare the effect of a standard first-line lung combination cancer therapy, paclitaxel and carboplatin, with the effect of this same combination therapy plus STA-4783. We expect this direct assessment of the impact of STA-4783 will provide a more detailed and controlled comparison of treatment effects than other studies which compare the efficacy of drug candidates to historical controls. Patients included in this study were diagnosed with either stage IIIb or stage IV non-small cell lung cancer and had not received prior chemotherapy. In both stages of this trial, patients receive one treatment of paclitaxel and carboplatin, with or without STA-4783, every three weeks. These three-week cycles are repeated until the earlier of disease progression or completion of six cycles. We have recently completed enrollment in both stages of this trial; treatment of patients in the second stage is ongoing. In stage one, a total of 16 patients were treated to establish the safety, tolerability, and pharmacokinetics of the combination therapy plus STA-4783. Three of the 16 patients had serious adverse events that were deemed related to the study drug combination. All three patients experienced decreases in neutrophils, a type of white blood cell. These events were deemed expected by the investigators based on historical occurrence of similar toxicity in patients treated with the carboplatin and paclitaxel combination. Additionally, one of those patients experienced a decrease in platelets that was likely related to the combination, and dehydration that was possibly related to the combination.

        We assessed efficacy using the RECIST criteria, which is the unified response assessment criteria agreed to by the World Health Organization, National Cancer Institute, and European Organisation for Research and Treatment of Cancer. In stage one, seven of the 16 patients treated experienced a partial response, defined under the RECIST criteria as a 30% or greater reduction in tumor diameter. An

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additional six of the 16 patients experienced disease stabilization, defined as between a 30% reduction and a 20% increase in tumor diameter. Two of the 16 patients experienced disease progression, defined as a greater than 20% increase in tumor diameter. The remaining patient died prior to the first follow-up scan; the cause of death was not related to treatment. In addition, preliminary data show that the median time-to-tumor progression in the first 16 patients is currently at least 4.2 months, compared to a historically reported median time-to-tumor progression of 3.1 months in patients with advanced non-small cell lung cancer who receive only the combination of paclitaxel and carboplatin as first-line therapy. These preliminary results are based on a small number of patients in the open-label stage of this trial, which is not designed to show statistically significant evidence of efficacy, and may not be supported by further results in the second stage of this trial or in subsequent clinical trials.

        In stage two of the trial, 87 patients have been randomized in a blinded fashion to receive the paclitaxel and carboplatin combination with or without STA-4783 every three weeks for 18 weeks. The two groups will be compared based on endpoints including time-to-tumor-progression, time-to-treatment failure, response rate, duration of response, safety, quality of life, and survival. Data from this trial are expected to be available in the second half of 2005.

        Melanoma.    Melanoma is a serious form of skin cancer that arises from the pigment producing cells of the skin. Although melanoma accounts for only about 5% of all skin cancers, it causes most skin cancer-related deaths. The American Cancer Society estimated that approximately 55,000 people would be diagnosed with melanoma and approximately 8,000 would die of melanoma in the U.S. in 2004. If melanoma is diagnosed early, surgical treatment may lead to a cure. However, for patients whose disease spreads, the prognosis is poor, with expected survival of roughly seven months. Dacarbazine, or DTIC, has been the standard chemotherapy used in the treatment of melanoma despite never having demonstrated survival benefit. Immunotherapy with interleukin-2 has been approved by the FDA based on durable responses which occur in a small subset of patients. As such, we believe there is a need for additional therapies with activity against melanoma.

        Our Phase 2 malignant melanoma trial is a two-stage trial, which is expected to enroll approximately 100 patients and is designed to directly compare standard treatment with paclitaxel with weekly treatments of paclitaxel plus STA-4783 for three weeks, followed by one week of rest. These four-week cycles are repeated until the earlier of disease progression, or a minimum of four months. We are enrolling patients with metastatic melanoma who have received up to one prior chemotherapy treatment. Prior immunotherapy is also allowed. In stage one, 20 patients receiving the combination were evaluated for disease status after two cycles of treatment, and based on preliminary data, 11 of the 20 patients achieved non-progression of disease. There were three patients with serious adverse events that were possibly drug-related, which included syncope, infection, anemia, and axillary mass changes. These preliminary results are based on a small number of patients in the open-label stage of this trial, which is not designed to show statistically significant evidence of efficacy, and may not be supported by further results in the second stage of this trial or in subsequent clinical trials.

        Based on these results, we initiated the second-stage, randomized, blinded portion of the study, which is expected to enroll approximately 80 patients. The two patient groups in stage two will be compared based on endpoints including time-to-tumor-progression, response rate, duration of response, and safety. Patients will receive cycles of paclitaxel and STA-4783 at the same doses and treatment schedule as stage one. Because paclitaxel alone has been shown to have only limited activity in the treatment of melanoma, this trial is randomizing only one-third of patients to paclitaxel alone, with the remaining two-thirds of the patients to receive paclitaxel plus STA-4783. We believe this weighting has increased the attractiveness of the trial to patients and physicians and contributes more productively to the safety database for STA-4783 than an even randomization, while still allowing for a statistical comparison of treatment effects. As with the non-small cell lung cancer trial, the direct comparison of treatment effects in this melanoma trial should be more informative than the use of historical control comparisons. Data from this trial are expected to be available in the second half of 2005.

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        Sarcoma.    Soft tissue sarcoma is a group of cancers in which the malignant cells originate from any of the body's numerous types of soft tissue, such as muscles, connective tissues, blood vessels, lymph vessels, joints, and fat. Surgery can be curative if the disease is diagnosed early, although almost half of patients eventually die of their disease. The American Cancer Society estimated that approximately 9,000 people would be diagnosed with sarcoma and approximately 4,000 would die of sarcoma in the U.S. in 2004. Drugs commonly used to treat soft tissue sarcoma include doxorubicin and ifosfamide; however, most patients eventually fail these therapies and require other treatments.

        Our soft tissue sarcoma trial is an 80-patient, two-stage Phase 2 trial designed to assess activity based on response and non-progression rates. In this trial, since there is no established role for paclitaxel alone in this indication, all patients will receive weekly treatments of the combination of paclitaxel and STA-4783 for three weeks, followed by one week of rest. These four-week cycles are repeated until the earlier of disease progression, or a minimum of four months. We will enroll patients with soft tissue sarcoma who have failed at least one prior chemotherapy treatment. In the first stage, 30 eligible patients will be evaluated for disease response or stabilization after three months. We completed enrollment of these 30 patients in the first stage of this trial in December 2004. Preliminary data on 24 of these patients show that eight patients achieved non-progression of disease after three cycles of treatment. This result met the prospective success criteria for the first stage allowing us to advance to the second stage. We have reached our target enrollment of 50 additional patients for the second stage of this trial, and the entire group of 80 patients will be assessed on endpoints including time-to-tumor-progression, response rates, and non-progression rates at several time points to further characterize potential efficacy. There have been no drug-related serious adverse events reported. These preliminary results are based on a small number of patients in the open-label stage of this trial, which is not designed to show statistically significant evidence of efficacy, and may not be supported by further results in the second stage of this trial or in subsequent clinical trials.

        Clinical Support.    Several ongoing clinical, pharmaceutical development, and discovery efforts were designed to support and enhance the STA-4783 development program. First, we have developed a novel water-soluble salt form of STA-4783 that we expect will replace the current form, which requires manual dissolution in the paclitaxel formulation prior to administration. We plan to use the new form of STA-4783 in all future clinical trials and believe that it also represents the likely commercial form of this drug candidate. Preclinical animal and in vitro  studies have confirmed the comparability of this novel form; however, we must complete a clinical comparative study in patients and demonstrate the comparability of pharmacokinetics of this form and the current form before this new form may be used in future clinical trials. We plan to initiate this study in the second quarter of 2005 and expect to complete it in the second half of 2005. Second, we have identified certain pathways through which STA-4783 exerts its action, have filed for intellectual property protection of these discoveries, and are developing assays designed to assess the biological activity of STA-4783. Finally, we are actively exploring additional potential uses of STA-4783 in combination with other agents, and in other therapeutic areas where the mechanism of action suggests potential benefit.

STA-5312 — Microtubule Inhibitor

        Our microtubule inhibitor, STA-5312, is an intravenously administered small-molecule anticancer agent that we are initially developing for the treatment of chemotherapy-resistant cancers. Resistance to chemotherapy is a major obstacle in cancer treatment and frequently results in metastasis, or spreading of the cancer. The five-year survival rates for patients with metastatic cancers are poor: 34% for prostate cancer and 21% for breast cancer, for example, according to the National Cancer Institute's Surveillance, Epidemiology, and End Results, or SEER, database. These poor survival rates reflect the limitations of current treatments and the fact that cancers develop resistance to currently available therapies. To our knowledge, no currently marketed drugs exist with sufficient activity against chemotherapy-resistant

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tumors. As a result, we believe that drugs developed to address resistant cancers represent a significant market opportunity.

        STA-5312 inhibits the assembly of microtubules, which are essential cellular components for the proliferation of cells. This inhibition disrupts the process of cell division thereby causing cell death. The inhibition of microtubule function is an approach shared with clinically proven drugs such as paclitaxel and vincristine. Over time, however, many tumors become resistant to these drugs. One mechanism of drug resistance involves overexpression of the P-glycoprotein, or P-gp, pump by cancer cells. The P-gp pump has been shown to increase drug efflux from cells and to decrease intracellular drug accumulation. It is believed that effective anticancer agents that are able to evade the P-gp pump could therefore counteract this resistance strategy taken by cancer cells. Our research indicates that STA-5312 is able to evade the P-gp pump and may overcome the resistance faced by other agents. In preclinical studies, STA-5312 has been shown to have considerably higher anticancer activity than paclitaxel and vincristine in chemotherapy-resistant cancer cells and to significantly increase animal survival in chemotherapy-resistant cancer models. STA-5312 inhibited tumor growth, delayed tumor progression, and prolonged survival in models of chemotherapy-resistant cancers against which comparable drugs had limited or no effect. In a chemotherapy-resistant animal model of leukemia, for example, STA-5312 more than doubled survival times, while vincristine increased survival by only 10%.

        We have initiated two Phase 1 trials of STA-5312 for the treatment of refractory or relapsed solid-tumor cancers and cancers of the blood. We have enrolled more than 20 patients to date; together these trials are expected to ultimately enroll up to 60 patients. The trials are dose-escalating trials that were designed to assess the safety, pharmacokinetics, and efficacy of STA-5312. Results from these trials are expected by the end of 2005. There has been one serious adverse event related to treatment with STA-5312, a hospitalization for the treatment of myalgia. Assuming that trial results support continued development, we would expect to initiate Phase 2 trials in a number of indications.

Discovery Programs

        We are actively expanding our pipeline of drug candidates through internal research activities. Our most advanced research-stage drug candidates are described below.

Ion Channel Modulators

        We are developing modulators of calcium release-activated calcium, or CRAC, transient-receptor potential, or TRP, and other novel ion channels expressed on immune cells and other non-excitable cells for the treatment of asthma, transplant rejection, allergies, cancer, and other conditions. For several ion channel targets, we hold exclusive licenses for their sequences and related screening assays.

        Ion channel modulators are an extremely successful class of marketed drugs, generating a total of over $12.0 billion in worldwide revenues in 2003, according to Decision Resources, Inc. and Nature Reviews Drug Discovery . Successful examples of such drugs are the hypertension agent, Norvasc, marketed by Pfizer with approximately $4.3 billion in worldwide sales in 2003, and the sleep and anxiety medication, Ambien, marketed by Sanofi-Aventis with approximately $1.3 billion in worldwide sales in 2003, according to company reports. To date, these drugs target only excitable cells, such as cardiac cells and neurons. We are currently investigating ion channel modulators targeting non-excitable cells, notably immune cells and cancer cells.

        CRAC ion channels are critical to the activation of T cells and other immune cells. The channels provide the primary route for calcium entry, which drives multiple cellular processes, including cell proliferation and secretion. Therapies that inhibit these channels could therefore provide a novel approach to modulation of the immune system; however, potent, selective inhibitors of CRAC channels have proven elusive.

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        We have discovered a family of novel, small-molecule, orally administered CRAC channel inhibitors that are both selective and highly potent. We are currently studying these molecules in multiple disease models. We have demonstrated in vitro  and in vivo  that this novel family has promising activity, including inhibition of mast cell degranulation, which may be important for the treatment of allergy and asthma, and potent inhibition of critical pro-inflammatory cytokines including IL-2 and TNF a , which may be important for the treatment of transplant rejection and chronic inflammatory diseases. We have obtained early signs of efficacy in multiple animal models of immune diseases.

Hsp90 Inhibitor

        We are using our internal chemistry and drug optimization expertise to develop novel small-molecule inhibitors of heat shock protein 90, or Hsp90, for the treatment of cancer. This program is currently in the lead optimization stage.

        Hsp90 is a chaperone protein that regulates the folding, stability, and function of numerous signaling proteins associated with cancer. Through interaction with Hsp90, these signaling proteins can trigger the uncontrolled proliferation of cancer cells. Because of the broad scope of the role of Hsp90, we believe inhibition of Hsp90 may provide a means to simultaneously attack multiple cancer pathways. Furthermore, since cancer cells have far greater levels of active Hsp90 than normal cells, we believe that inhibitors of Hsp90 may selectively halt proliferation and cause cancer cell death.

        The Hsp90 inhibitors we have identified have demonstrated far less toxicityin vitro than certain other Hsp90 inhibitors in development, while demonstrating similar efficacy in mouse tumor models. Based on our understanding of the mechanism, we believe our Hsp90 inhibitors may also provide additive or synergistic effects in combination with other anticancer treatments. We are continuing optimization of our lead molecules and further characterizing their efficacy in additional animal models of cancer.

Microtubule Inhibitor

        We have identified a family of novel small-molecule compounds that shows highly potent antitumor activityin vitro andin vivo, with little toxicity against normal cells. Like our clinical drug candidate, STA-5312, these compounds inhibit microtubule assembly, thereby disrupting the process of cell division and leading to cancer cell death. These compounds belong to a different chemical class than STA-5312, and, based on certain structural features, we believe that these compounds may act by a unique mechanism. We are currently evaluating a working hypothesis that, in addition to microtubule inhibition, these compounds also act by disrupting blood vessels in tumors that are needed to support tumor cell proliferation.

        The lead compound in this novel series has potent antitumor cell activity and is equally effective against both chemo-sensitive and multi-drug-resistant tumor cells. Our in vivo  data show that the lead compound is effective in multiple mouse tumor models of human cancers and has a favorable toxicological profile. We continue to test the lead compound in additional animal efficacy models and evaluate its activity relative to other anticancer agents.

Antidiabetic Agent

        We are actively investigating an orally administered antidiabetic agent that we believe could represent a potentially effective treatment for Type 2 diabetes. Based on its apparent novel mechanism of action and demonstrated effectiveness in animal models in combination with two of the most successful oral antidiabetic agents, we believe that the compound represents an exciting new potential drug candidate for the underserved diabetes market.

        Over 140 million people worldwide suffer from Type 2 diabetes, according the International Diabetes Federation. Type 2 diabetics represent over 90% of all diabetics. Type 2 diabetes is most common in obese adults over 45 years of age. The number of Type 2 diabetics is growing, due to the increasing prevalence of

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obesity and an aging population. Also, as a consequence of increased obesity in the young, Type 2 diabetes is becoming more prevalent among children and young adults. The worldwide market for oral agents for Type 2 diabetes was approximately $9.0 billion in 2003, according to figures published by Pharmaceutical Executive . Glucophage, marketed in the U.S. by Bristol-Myers Squibb, and Avandia, co-marketed by GlaxoSmithKline and Bristol-Myers Squibb, are leading therapies in this class. One driver for the market growth of diabetes therapies is the increasing use of combinations of oral agents.

        In Type 2 diabetes, either insufficient amounts of insulin are produced or cells become unresponsive to insulin. Since insulin is necessary for glucose to be taken from the blood into cells, a lack of insulin or unresponsiveness to insulin in diabetics leads to elevated glucose levels in the blood. Elevated blood glucose can lead to muscle weakness, renal failure, blindness, heart abnormalities, and other serious health concerns. Type 2 diabetes is treated primarily with oral, glucose-lowering agents. These agents themselves can cause undesirable side effects including fluid retention, weight gain, and hypoglycemia. According to a recent study published in the Journal of the American Medical Association , the vast majority of diabetics using available treatments do not meet treatment goals defined by the American Diabetic Association for blood glucose and other parameters. In addition, for many patients, most oral therapies lose effectiveness after several months or years of treatment. Due to the limited effectiveness of existing treatments, there is a clear need for novel therapies.

        We believe we have discovered a novel, oral, glucose-lowering agent for the treatment of Type 2 diabetes. Our compound appears to act through a unique mechanism of action not shared by any existing therapies. In multiple diabetes mouse and rat models, our compound has been shown to reduce blood glucose levels and increase glucose tolerance. In addition, the compound was shown to substantially enhance the activity of the active ingredients in both Glucophage and Avandia in a number of preclinical animal models.

Our Drug Discovery Capabilities

        Our drug discovery approach is based on the tight integration and rapid cycle times among our chemistry, biology, and pharmaceutical development groups. Drug candidates are typically identified using novel chemical structures as molecular probes in cell-based assays that are designed to preserve the complexity of biological signaling. Early in vivo  testing and a rapid optimization process allow for high productivity of promising leads, improved profiles for our compounds, and, in some cases, the discovery of novel pathways or mechanisms of action with the potential to define entirely new categories of treatment.

        Our approach is based on the integration of the following capabilities and resources:

•
Unique chemical library. Our chemical library contains over 100,000 small molecules and numerous plant extracts collected from universities, non-profit institutions, other organizations, and commercial sources. This library represents a diverse and distinct set of chemical structures that was not generated using combinatorial chemistry and continues to be a valuable source of lead compounds for drug discovery. We are continuing our compound collection efforts. In addition, for each of our discovery programs we build focused libraries dedicated to particular drug targets.

•
Broad set of screening assays. We have high throughput screening capabilities linked to our chemical library that facilitate the rapid identification of new drug candidates. We have developed a wide variety of biochemical and cell-based in vitro  assays designed to identify promising compounds for treating cancer, immune disorders and other diseases, which form the basis of our initial screening efforts. In addition to assays for identifying new compounds, we have also developed assays we use for early optimization of safety and pharmacokinetic properties.

•
Robust in vivo testing capabilities. We have a substantialin vivo testing facility we use for evaluating the safety, efficacy, and pharmaceutical properties of our compounds, including absorption, distribution, metabolism, excretion, and toxicology properties. The facility is equipped for detailed experimental measurements and surgical tasks, and we have in-house experience with

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approximately 90 individual animal models of disease, including oncology, inflammatory diseases, metabolic disease, and pain. The early testing of compounds in vivo , and our ability to complete these tests internally without dependencies on third parties, is a valuable advantage in our ability to rapidly optimize the pharmaceutical properties of our most promising compounds.•
Multi-functional chemistry capabilities. We possess a full range of chemistry capabilities, including medicinal chemistry, analytical chemistry, formulation, process development, natural products isolation, and computational chemistry. Our approach to medicinal chemistry applies the rigorous exploration of permutations of biologically active molecular components to optimize lead compounds. Our in-house process development capability – characterizing and specifying manufacturing processes for our compounds – allows us to reduce dependencies on third parties and is an important advantage in our ability to successfully commercialize our drug candidates.

•
Novel target elucidation. Our scientists use expression profiling, RNA interference, affinity purification, proteomics, and other methods to identify the therapeutic intervention points of novel, promising compounds.

Manufacturing

        Our drug candidates and preclinical compounds are small molecules that can be readily synthesized by processes that we have developed. Utilizing our medicinal chemistry and process development capabilities, we have developed the manufacturing process to produce the active ingredients for our drug candidates. We also have the internal capability to synthesize small-molecule compounds in quantities of up to several kilograms for use in our preclinical studies, including proof-of-concept studies in animal models, early pharmacokinetic assays, initial toxicology studies, and formulation development. We currently contract with third parties for the synthesis of all materials used in our clinical trials and rely on third party manufacturers for the supply of our drug candidates in bulk quantities and for the production of suitable dosage forms. We are not dependent on any particular third party manufacturer for these services and anticipate being able to readily contract with additional manufacturers on favorable terms if such a need arises.

        The starting materials and reagents required for synthesizing our drug candidates and preclinical compounds are commercially available from multiple sources. We have established a quality control and quality assurance program, including a set of standard operating procedures, analytical methods, and specifications, designed to ensure that our drug candidates are manufactured in accordance with the FDA's current Good Manufacturing Practices, or cGMP, and other applicable domestic and foreign regulations. We have selected manufacturers that we believe comply with cGMP and other applicable regulatory standards. We do not currently expect to internally manufacture cGMP material for our clinical trials nor undertake the commercial scale manufacture of our drug candidates after approval. We are discussing with our current suppliers and other third party manufacturers the long-term supply and manufacture of these and other drug candidates we may develop.

Sales and Marketing

        We currently have no marketing, sales or distribution capabilities. In order to commercialize any of our drug candidates, we must develop these capabilities internally or through collaboration with third parties. In selected therapeutic areas where we feel that any approved products can be commercialized by a specialty sales force that calls on a limited and focused group of physicians, we currently plan to commercialize these drug candidates. In therapeutic areas that require a large sales force selling to a large and diverse prescribing population, we currently plan to partner our drug candidates for commercialization.

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Patents and Proprietary Rights

        Our success depends in part on our ability to obtain and maintain proprietary protection for our drug candidates, technology, and know-how, to operate without infringing on the proprietary rights of others, and to prevent others from infringing our proprietary rights. Our policy is to seek to protect our proprietary position by, among other methods, filing U.S. and foreign patent applications related to our proprietary technology, inventions, and improvements that are important to the development of our business. We also rely on trade secrets, know-how, continuing technological innovation, and in-licensing opportunities to develop and maintain our proprietary position.

        As of March 11, 2005, our patent portfolio included a total of 236 patents and patent applications worldwide with claims covering the composition-of-matter and methods of use for all three of our clinical stage compounds. We own or exclusively license a total of 15 issued U.S. patents and 57 U.S. patent applications, as well as 164 foreign counterparts to these patents and patent applications. We have issued U.S. composition-of-matter patents claiming the chemical structures of STA-5326, STA-4783, and STA-5312. The patents covering our three clinical programs have patent terms that will expire no earlier than 2021. The patent term may be extended under applicable law or regulations, such as the Patent Term Restoration Act. Counterpart filings to these patents and patent applications have been made in a number of other jurisdictions, including Europe and Japan.

        We have also in-licensed various technologies to complement our ongoing clinical and research programs. These licenses generally extend for the term of the related patent and contain customary royalty, termination, and other provisions. We have license agreements with Beth Israel Deaconess Medical Center and The Queen's Medical Center, Inc. that provide us with the exclusive commercial right to certain patent filings made by Beth Israel and Queen's Medical in the field of ion channels. We also have an exclusive license with Dana-Farber Cancer Institute for certain patent applications relating to rare event detection, such as circulating cancer cell detection. We do not believe that these license agreements are currently material to our business. We have exclusive license rights to a patent application filed by Dana-Farber covering combinations of ingredients that could potentially cover our STA-4783/taxane combination therapy. We would owe nominal royalty payments to Dana-Farber if any of the claims which ultimately issue under the Dana-Farber patent application or that are pending in such application cover our commercial product.

Regulatory and Legal Matters

        Government authorities in the U.S., at the federal, state, and local level, and other countries extensively regulate, among other things, the research, development, testing, manufacture, labeling, promotion, advertising, distribution, marketing, and export and import of products such as those we are developing.

U.S. Government Regulation

        In the U.S., the information that must be submitted to the FDA in order to obtain approval to market a new drug varies depending on whether the drug is a new product whose safety and effectiveness has not previously been demonstrated in humans or a drug whose active ingredient(s) and certain other properties are the same as those of a previously approved drug. A new drug will follow the New Drug Application, or NDA, route.

NDA Approval Processes

        In the U.S., the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act, and implementing regulations. Failures to comply with the applicable regulatory requirements at any time may result in administrative or judicial sanctions. These sanctions could include the FDA's imposition of a clinical hold on trials, refusal to approve pending applications, license suspension or revocation,

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withdrawal of an approval, warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties, or criminal prosecution. Any agency or judicial enforcement action could have a material adverse effect on us.

        The steps required before a drug or biologic may be marketed in the U.S. include, but are not limited to, the following:

•
completion of preclinical laboratory tests, animal studies and formulation studies in compliance with applicable FDA regulations;

•
submission to the FDA of an Investigational New Drug application, or IND, for human clinical testing, which must become effective before human clinical trials may begin and must include independent Institutional Review Board, or IRB, approval at each clinical site before the trial is initiated;

•
performance of adequate and well controlled clinical trials to establish the safety and efficacy of the product for each indication;

•
submission to the FDA of an NDA;

•
satisfactory completion of an FDA Advisory Committee review, if applicable;

•
satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product is produced to assess compliance with cGMP to assure that the facilities, methods and controls are adequate to preserve the drug's identity, strength, quality and purity or to meet standards designed to ensure the biologic's continued safety, purity and potency; and

•
FDA review and approval of the NDA.

        Preclinical tests include laboratory evaluations of product chemistry, toxicity, and formulation, as well as animal studies. An IND sponsor must submit the results of the preclinical tests, together with manufacturing information and analytical data, to the FDA as part of the IND. An IND will automatically become effective 30 days after receipt by the FDA, unless before that time, the FDA raises concerns or questions about issues such as the conduct of the trials as outlined in the IND. In that case, the IND sponsor and the FDA must resolve any outstanding FDA concerns or questions before clinical trials can proceed. In other words, submission of an IND may not result in the FDA allowing clinical trials to commence.

        Clinical trials involve the administration of the investigational product to human subjects under the supervision of qualified investigators. Clinical trials are conducted under protocols detailing, among other things, the objectives of the study, the parameters to be used in monitoring safety, and the effectiveness criteria to be evaluated. A protocol for each clinical trial and any subsequent protocol amendments must be submitted to the FDA as part of the IND, and an IRB at each site where the study is conducted must approve the protocol and any amendments.

        Clinical trials typically are conducted in three sequential phases, but the phases may overlap or be combined. Phase 1 trials usually involve the initial introduction of the investigational drug into humans to evaluate the product's safety, dosage tolerance, and pharmacodynamics and, if possible, to gain an early indication of its effectiveness.

        Phase 2 trials usually involve controlled trials in a limited patient population to:

•
evaluate dosage tolerance and appropriate dosage;

•
identify possible adverse effects and safety risks; and

•
evaluate the preliminary efficacy of the drug for specific indications.

        Phase 2 trials are sometimes denoted as Phase 2a or Phase 2b trials. Phase 2a trials typically represent the first human clinical trial of a drug candidate in a smaller patient population and are designed to

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provide earlier information on drug safety and efficacy. Phase 2b trials typically involve larger numbers of patients and involve comparison with placebo, standard treatments, or other active comparators.

        Phase 3 trials usually further evaluate clinical efficacy and test further for safety in an expanded patient population. Phase 1, Phase 2, and Phase 3 testing may not be completed successfully within any specified period, if at all. Furthermore, the FDA or we may suspend or terminate clinical trials at any time on various grounds, including a finding that the subjects or patients are being exposed to an unacceptable health risk.

        Assuming successful completion of the required clinical testing, the results of the preclinical studies and of the clinical trials, together with other detailed information, including information on the chemistry, manufacture, and control criteria of the product, are submitted to the FDA in the form of an NDA requesting approval to market the product for one or more indications. The FDA reviews an NDA to determine, among other things, whether a product is safe and effective for its intended use and whether its manufacturing is cGMP-compliant to assure and preserve the product's identity, strength, quality and purity.

        Before approving an NDA, the FDA will inspect the facility or the facilities at which the product is manufactured. The FDA will not approve the product unless cGMP compliance is satisfactory. If the FDA determines the application, manufacturing process, or manufacturing facilities are not acceptable, it will outline the deficiencies in the submission and often will request additional testing or information. Notwithstanding the submission of any requested additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.

        The testing and approval process requires substantial time, effort, and financial resources, and each may take several years to complete. The FDA may not grant approval on a timely basis, or at all. We may encounter difficulties or unanticipated costs in our efforts to secure necessary governmental approvals, which could delay or preclude us from marketing our products. The FDA may limit the indications for use or place other conditions on any approvals that could restrict the commercial application of the products. After approval, some types of changes to the approved product, such as adding new indications, manufacturing changes and additional labeling claims, are subject to further FDA review and approval.

        We are not currently aware of any material incidents of noncompliance with FDA regulations. However, the FDA regulatory approval process is extensive and complex. Furthermore, we rely on third parties such as contract research organizations, medical institutions, and clinical investigators to conduct clinical trials for our drug candidates. Accordingly, while we are not currently aware of any material incidents of noncompliance, we cannot assure you that there have been no such incidents or that there will be none in the future.

Post-Approval Requirements

        After regulatory approval of a product is obtained, we are required to comply with a number of post-approval requirements. For example, as a condition of approval of an NDA, the FDA may require post marketing testing and surveillance to monitor the product's safety or efficacy.

        In addition, holders of an approved NDA are required to report certain adverse reactions and production problems to the FDA to provide updated safety and efficacy information and to comply with requirements concerning advertising and promotional labeling for their products. Also, quality control and manufacturing procedures must continue to conform to cGMP after approval. The FDA periodically inspects manufacturing facilities to assess compliance with cGMP, which imposes certain procedural, substantive, and recordkeeping requirements. Accordingly, manufacturers must continue to expend time, money, and effort in the area of production and quality control to maintain compliance with cGMP and other aspects of regulatory compliance.

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        We use, and will continue to use in at least the near-term, third-party manufacturers to produce our products in clinical and commercial quantities. Future FDA inspections may identify compliance issues at our facilities or at the facilities of our contract manufacturers that may disrupt production or distribution or require substantial resources to correct. In addition, discovery of problems with a product or the failure to comply with applicable requirements may result in restrictions on a product, manufacturer or holder of an approved NDA, including withdrawal or recall of the product from the market or other voluntary FDA initiated or judicial action that could delay or prohibit future marketing. Also, new government requirements may be established that could delay or prevent regulatory approval of our products under development.

Foreign Regulation

        In addition to regulations in the U.S., we will be subject to a variety of foreign regulations governing clinical trials and commercial sales and distribution of our products. Whether or not we obtain FDA approval for a product, we must obtain approval of a product by the comparable regulatory authorities of foreign countries before we can commence clinical trials or marketing of the product in those countries. The approval process varies from country to country, and the time may be longer or shorter than that required for FDA approval. The requirements governing the conduct of clinical trials, product licensing, pricing, and reimbursement vary greatly from country to country.

        Under European Union regulatory systems, we may submit marketing authorizations either under a centralized or decentralized procedure. The centralized procedure provides for the grant of a single marketing authorization that is valid for all European Union member states. The decentralized procedure provides for mutual recognition of national approval decisions. Under this procedure, the holder of a national marketing authorization may submit an application to the remaining member states. Within 90 days of receiving the applications and assessment report, each member state must decide whether to recognize approval.

Reimbursement

        In the U.S., European Union and elsewhere, sales of pharmaceutical products depend in part on the availability of reimbursement to the patient from third-party payors, such as government health administrative authorities, managed care providers, and private insurance plans. Third-party payors are increasingly challenging the prices charged for medical products and services and examining their cost-effectiveness.

        In the U.S., Medicare, a federal health program for those over the age of 65 and certain disabled younger individuals, is the largest single third-party payor for medical care. Historically, Medicare did not cover the cost of most types of prescription drugs. The Medicare Prescription Drug Improvement and Modernization Act of 2003, or MMA, will change significantly the way that Medicare covers and pays for pharmaceutical products after January 1, 2006. Medicare beneficiaries will have the opportunity to obtain prescription drug coverage by enrolling in one of several non-governmental prescription drug plans. Coverage may vary for one enrolled beneficiary to the next depending in part on the plan chosen, the income level of the beneficiary, and the availability of a specific drug on a particular plan's drug formulary.

        The MMA also introduced a new reimbursement methodology, part of which went into effect in 2004. At this point, it is not clear what effect MMA will have on the prices paid for currently approved drugs and the pricing options for new drugs approved after January 1, 2006. Moreover, while the MMA applies only to drug benefits for Medicare beneficiaries, private payors often follow Medicare coverage policy and payment limitations in setting their own payment rates. Any reduction in payment that results from the MMA may result in a similar reduction in payments from non-governmental payors.

        In some foreign countries, the proposed pricing for a drug must be approved before it may be lawfully marketed. The requirements governing drug pricing vary widely from country to country. For example, the

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EU generally provides options for its member states to restrict the range of medicinal products for which their national health insurance systems provide reimbursement and to control the prices of medicinal products for human use. A member state may approve a specific price for the medicinal product or it may instead adopt a system of direct or indirect controls on the profitability of the company placing the medicinal product on the market.

Other Regulatory Matters

        From time to time, legislation is drafted, introduced and passed in Congress that could significantly change the statutory provisions governing the approval, manufacturing, and marketing of products regulated by the FDA. In addition, FDA regulations and guidance are often revised or reinterpreted by the agency in ways that may significantly affect our business and our products. It is impossible to predict whether legislative changes will be enacted, or FDA regulations, guidance or interpretations changed, or what the impact of such changes, if any, may be.

Competition

        The development and commercialization of new drugs is highly competitive. We will face competition with respect to all drug candidates we may develop or commercialize in the future from pharmaceutical and biotechnology companies worldwide. The key competitive factors affecting the success of any approved product will be its efficacy, safety profile, price, and method of administration. The efficacy and safety profile of our drug candidates relative to competitors will depend upon the results of our clinical trials and experience with the approved product in the commercial marketplace.

        STA-5326.    If approved, STA-5326 is expected to compete against the currently approved therapies for the treatment of chronic inflammatory diseases, including:

•
large-molecule, injectable TNFa antagonists, including: Remicade, marketed by Johnson & Johnson; Enbrel, marketed by Amgen and Wyeth Pharmaceuticals; and Humira, marketed by Abbott Laboratories;

•
Tysabri, formerly known as Antegren, an anti-a4 integrin antibody marketed by Biogen Idec and Elan Corporation; and

•
broadly immunosuppressive small-molecule agents including corticosteroids, methotrexate and azathioprine.

        STA-5326 may also compete with CNTO-1275 and ABT-874, two injectable antibody-based clinical candidates targeting IL-12 currently in clinical trials that are being developed by Johnson & Johnson and Abbott Laboratories, respectively. We expect that as an oral, small-molecule drug, STA-5326 may prove competitive relative to current and future biologic therapies in price and convenience of administration. We are not aware of any orally administered, selective inhibitors of IL-12 production in clinical trials. Other novel, oral agents in development for inflammatory diseases represent potential competition to STA-5326. These include chemokine inhibitors, oral fumarates, and calcineurin inhibitors.

        STA-4783.    If approved, STA-4783 may compete with:

•
other agents that are being used or tested in combination with taxanes, including: Herceptin, marketed by Genentech; Tarceva, marketed by OSI Pharmaceuticals, Genentech and Roche; and Xeloda, marketed by Roche;

•
taxane-like molecules such as epothilones; and

•
modifications or reformulations of taxanes.

        STA-5312.    If approved, STA-5312 may compete against the currently approved therapies for the treatment of cancers. In particular, STA-5312 may compete with other agents that are being used or tested

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in combination with taxanes such as epothilones. STA-5312 may also compete with agents that inhibit the P-gp pump. These agents include tariquidar, manufactured by Xenova, and R101933, manufactured by Janssen-Cilag.

        Many of our potential competitors have substantially greater financial, technical, and personnel resources than us. In addition, many of these competitors have significantly greater commercial infrastructures. Our ability to compete successfully will depend largely on our ability to leverage our experience in drug discovery and development to:

•
discover and develop medicines that are superior to other products in the market;

•
attract high-quality scientific, product development, and commercial personnel;

•
obtain patent and/or proprietary protection for our medicines and technologies;

•
obtain required regulatory approvals; and

•
selectively partner with pharmaceutical companies in the development and commercialization of certain drug candidates.

Employees

        We believe that our success will depend greatly on our ability to identify, attract, and retain capable employees. As of March 14, 2005, we had 130 full time employees, including a total of 44 employees who hold M.D. or Ph.D. degrees. Ninety-nine of our employees are primarily engaged in research and development activities, and 31 are primarily engaged in general and administrative activities. Our employees are not represented by any collective bargaining unit, and we believe our relations with our employees are good.

Properties

        Our operations are based primarily in Lexington, Massachusetts, which is located 30 minutes west of Boston, Massachusetts. We lease a total of 68,730 square feet of office and laboratory space in Lexington and 8,700 square feet of office and laboratory space in the neighboring city of Bedford, Massachusetts. We lease the following properties:
Location

	 	Approximate
Square Feet

	 	Use

	 	Lease
Expiration
Date

	
45 Hartwell Avenue
Lexington, Massachusetts	 	24,420	 	Office and
Laboratory	 	Nov. 2006	

125 Hartwell Avenue
Lexington, Massachusetts	
 	
22,480	
 	
Office and
Laboratory	
 	
Jan. 2008	

8-A Preston Court
Bedford, Massachusetts	
 	
8,700	
 	
Office and
Laboratory	
 	
May 2009	

91 Hartwell Avenue
Lexington, Massachusetts	
 	
21,830	
 	
Office	
 	
Jan. 2007	
        We believe these facilities are adequate for our current needs.

Legal Proceedings

        We are currently not a party to any material legal proceedings.

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MANAGEMENT

Executive Officers and Directors

        The following table sets forth certain information concerning our executive officers, key employees, and directors as of March 14, 2005:
Name

	 	Age

	 	Position

	
Executive Officers and Key Employees	 	 	 	 	
 	Safi R. Bahcall, Ph.D. 	 	36	 	President and Chief Executive Officer and Director	
 	Keizo Koya, Ph.D. 	 	47	 	Senior Vice President, Drug Development	
 	John A. McCarthy, Jr.	 	46	 	Senior Vice President, Corporate Development and Chief Financial Officer	
 	Matthew L. Sherman, M.D. 	 	49	 	Senior Vice President and Chief Medical Officer	
 	James G. Barsoum, Ph.D. 	 	48	 	Vice President, Biology	
 	Jeremy G. Chadwick, Ph.D. 	 	42	 	Vice President, Program Management and Clinical Operations	
 	Thomas A. Dahl, Ph.D. 	 	42	 	Vice President, Clinical Development	
 	Ninad A. Deshpanday, Ph.D. 	 	45	 	Vice President, Drug Product Development	
 	Keith S. Ehrlich	 	54	 	Vice President, Finance and Administration	
 	Stephen M. Gansler	 	50	 	Vice President, Human Resources	
 	Wendy E. Rieder, Esq. 	 	37	 	Vice President, Intellectual Property and Legal Affairs	
 	Lijun Sun, Ph.D. 	 	42	 	Vice President, Chemistry	

Directors	

 	
 	
 	Keith R. Gollust(1)(2)(3)	 	59	 	Chairman of the Board of Directors	
 	Lan Bo Chen, Ph.D. 	 	61	 	Director	
 	Bruce Kovner(2)(3)	 	59	 	Director	
 	William S. Reardon, C.P.A.(1)	 	58	 	Director	
 	Robert N. Wilson(1)(2)(3)	 	64	 	Director	

(1)
Member of our Audit Committee

(2)
Member of our Compensation Committee

(3)
Member of our Nominating and Governance Committee

        Safi R. Bahcall, Ph.D. co-founded Synta with Dr. Lan Bo Chen and has been our Chief Executive Officer and a member of our board of directors since July 2001. Dr. Bahcall has served as our President since December 2003. From 1998 to 2001, Dr. Bahcall was a consultant at McKinsey & Company serving investment banks and pharmaceutical companies on key issues of strategy, technology, and operations. Dr. Bahcall also co-founded a drug discovery company focused on novel ion channel research in November 2001, which was acquired by Synta in December 2002. He received his B.A. summa cum laude  from Harvard University, was awarded his Ph.D. from Stanford University in theoretical physics, and was a Miller postdoctoral fellow at the University of California, Berkeley.

        Keizo Koya, Ph.D. has served as our Senior Vice President, Drug Development since September 2002. From September 1997 to August 2002, Dr. Koya worked for Shionogi BioResearch Corp. as Vice President, Research and Development. From April 1995 to August 1997, Dr. Koya was the Director, Drug Discovery and Development at Fuji ImmunoPharmaceuticals Corp., now EMD Lexigen Research Center Corp., a biopharmaceutical company. From October 1990 to March 1995 he was employed by Fuji Photo

67

Film Co., Ltd., a global imaging and information company, where he was most recently the Head of Pharmaceutical R&D, U.S. Representative Office. He earned his Ph.D. in organic chemistry at Kyushu University.

        John A. McCarthy, Jr. has served as our Senior Vice President, Corporate Development and Chief Financial Officer since May 2004. From October 2000 until February 2004, Mr. McCarthy worked for Exact Sciences Corporation, a publicly traded applied genomics company, in various capacities, most recently as Executive Vice President, Chief Financial Officer and Treasurer. From October 1999 to October 2000, Mr. McCarthy worked with InfoMedtrics, Inc., a developer of software for large self-insured employers and managed care organizations, as President, Chief Operating Officer and a director and, following its merger with Physician WebLink, Inc. in July 2000, as a consultant. From January 1998 to August 1999, Mr. McCarthy was General Partner of Crescent Gate, L.P., a private equity fund that he co-founded. From August 1994 to January 1998, Mr. McCarthy was employed by Concentra Managed Care, Inc., a publicly traded nationwide provider of managed care services to the workers' compensation, auto and disability marketplaces, most recently as President, Managed Care Services Division. Mr. McCarthy holds a B.S. in finance from Lehigh University and an M.B.A. from Harvard Business School.

        Matthew L. Sherman, M.D. has served as our Senior Vice President and Chief Medical Officer since March 2004. From January 1997 to March 2004, Dr. Sherman worked at Wyeth, a global pharmaceutical and biotechnology company, in various capacities, most recently as Assistant Vice President of Medical Research, Clinical Research and Development and Therapeutic Area Director for Oncology at Wyeth Research. From October 1992 to January 1997, he held various clinical positions at Genetics Institute, which was acquired by Wyeth in January 1997. From July 1983 to June 2001, Dr. Sherman held various clinical positions at Harvard Medical School, most recently as Assistant Clinical Professor of Medicine, with corresponding hospital appointments at the Dana-Farber Cancer Institute and Brigham and Women's Hospital. Dr. Sherman holds a B.S. in chemistry Phi Beta Kappa from the Massachusetts Institute of Technology and an M.D. with honors from Dartmouth Medical School. He is board certified in Medical Oncology and Internal Medicine and has published over 75 papers and book chapters.

        James G. Barsoum, Ph.D. has served as our Vice President, Biology since February 2003. From February 1987 to February 2003, Dr. Barsoum held various leadership roles at Biogen, Inc., now Biogen Idec Inc., a publicly traded biopharmaceutical company, most recently as the Director of Molecular and Cellular Biology. From January 1984 to January 1987, Dr. Barsoum held research fellowships at Stanford University and the Whitehead Institute for Biomedical Research. Dr. Barsoum received a Ph.D. in Biology from the Massachusetts Institute of Technology.

        Jeremy G. Chadwick, Ph.D. has served as our Vice President, Program Management and Clinical Operations since May 2004. From January 2002 to May 2004, Dr. Chadwick served as Vice President, Development Operations at Vertex Pharmaceuticals, Inc., a publicly traded pharmaceutical company. From December 1995 to September 1998, Dr. Chadwick held various positions at Parexel International, a publicly traded pharmaceutical services company, most recently as Vice President, U.S. Biostatistics and Data Management. From September 1985 to October 1995, Dr. Chadwick held various positions at Glaxo Group Research, most recently as Senior Manager, Medical Data Sciences Division. From September 1998 to October 2001, Dr. Chadwick was the Chief Operating Officer at Foliage Software Systems, a privately held software development company. Dr. Chadwick obtained both his Masters and Ph.D. in statistics from the University of London, U.K.

        Thomas A. Dahl, Ph.D. has served as our Vice President, Clinical Development since September 2002, after having worked for Synta and Shionogi BioResearch Corp. since April 2002. From February 2002 to September 2002, Dr. Dahl was President and CEO of SinglePixel Biomedical, Inc. From 1994 to February 2002, Dr. Dahl held various positions at Lexigen Pharmaceuticals Corp. (now EMD Lexigen Research Center Corp.), most recently as the Vice President, Clinical Products Development, and its

68

predecessor, Fuji ImmunoPharmaceuticals Corp. From 1993 to 1994, Dr. Dahl was a drug development consultant at Arthur D. Little, a global management consulting firm, and from 1989 to 1993 he was an Assistant Professor at Tufts Medical School's department of pharmacology and experimental therapeutics. He received his Ph.D. in biology from Johns Hopkins University.

        Ninad A. Deshpanday, Ph.D. has served as our Vice President, Drug Product Development since June 2004. From October 2001 to April 2004, Dr. Deshpanday was employed by Cardinal Health, Inc., a publicly traded provider of products and services supporting the healthcare industry, and most recently held the position of the Technical Business Director. From March 1997 to April 2001, Dr. Deshpanday worked at AAI Pharma, a publicly traded specialty pharmaceutical and product development company, in various positions most recently as Global Product Director. From May 1994 to February 1997, Dr. Deshpanday served as Manager, Transdermal Research at TheraTech, Inc. From March 1990 to April 1994, he served as Staff Scientist at Procter & Gamble Pharmaceuticals. Dr. Deshpanday obtained both his Baccalaureate and Masters in pharmacy from Gujarat University in India and his Ph.D. in pharmacy from the University of South Carolina.

        Keith S. Ehrlich has served as our Vice President, Finance and Administration and Treasurer since March 2004. From November 2003 to February 2004, Mr. Ehrlich served as a financial consultant to the Company. From September 1999 to April 2003, Mr. Ehrlich was Vice President, Finance and Administration and Chief Financial Officer and Treasurer at Argentys Corporation, a private software development company. From January 1998 to July 1999, Mr. Ehrlich served as Senior Vice President, Finance and Administration, Chief Financial Officer and Treasurer of Dyax Corp., a publicly traded biopharmaceutical company. From October 1993 to January 1998, he served as Vice President, Finance and Administration and Chief Financial Officer and Treasurer of Oravax, Inc., a publicly traded biopharmaceutical company since acquired by Peptide Therapeutics Group. From May 1991 to October 1993, he served as Treasurer and Director of Finance of Vertex Pharmaceutics, Inc., a publicly traded biopharmaceutical company. From January 1980 to April 1991, Mr. Ehrlich was an auditor with Coopers & Lybrand LLP. Mr. Ehrlich received his B.A. in Biology from Drew University and his M.B.A. in Finance and Accounting from Rutgers University.

        Stephen M. Gansler has served as our Vice President, Human Resources since January 2005. From March 2001 to July 2004, Mr. Gansler worked for Covanta Energy Corporation, a publicly traded energy company as Senior Vice President, Human Resources. From May 1981 to March 2001, Mr. Gansler worked for Johnson & Johnson, a global manufacturer of health care products, in various capacities, most recently Worldwide Vice President, Human Resources for DePuy, Inc. He holds a B.I.A. from General Motors Institute, now known as Kettering University, and an M.B.A. and J.D. from Seton Hall University.

        Wendy E. Rieder, Esq. has served as our Vice President, Intellectual Property and Legal Affairs since December 2002. In August 1998, Ms. Rieder co-founded Microbiotix, Inc., a privately held biotechnology company developing small-molecule anti-infectives, and served as its Chief Operating Officer and Vice President, Business Development and Intellectual Property from January 2000 to December 2002. From August 1997 to December 1999 Ms. Rieder served as the Vice President, Business Development and Intellectual Property at LipoGenics, Inc., a subsidiary of a publicly traded biopharmaceutical company. Ms. Rieder was a patent attorney at Boehringer Ingelheim Pharmaceuticals, a U.S. affiliate of Boehringer Ingelheim GmbH, a global pharmaceutical company, from August 1995 to July 1997, and a patent agent at Fish & Neave LLP from January 1991 to July 1995. Ms. Rieder received an M.S. in organic chemistry from Columbia University and a J.D. from Fordham Law School.

        Lijun Sun, Ph.D. has served as our Vice President, Chemistry since December 2003. From November 1997 to August 2002, Dr. Sun worked for Shionogi BioResearch Corp. in various capacities, most recently as Senior Director of Chemistry. He received his Ph.D. in synthetic organic chemistry from Emory University and was a postdoctoral fellow in chemical biology at the Emory University School of Medicine.

69

        Keith R. Gollust has been a member of our board of directors since July 2002 and has been our Chairman since September 2002. Mr. Gollust is a private investor and founded Gollust, Tierney, and Oliver, a private investment firm, in 1978. Mr. Gollust also was a Managing Director of Caxton Associates, L.L.C., a hedge fund firm, from July 2003 through December 2004. Mr. Gollust received a B.A. from Princeton University and an MSIA from Carnegie Mellon University.

        Lan Bo Chen, Ph.D. co-founded Synta with Dr. Safi Bahcall and has been a member of our board of directors since July 2001, and a member of our scientific advisory board and its Chairman since July 2001. Dr. Chen is a Professor of Pathology, Emeritus, at Harvard Medical School. He has been at the Dana-Farber Cancer Institute and Harvard Medical School since July 1977. Dr. Chen is the founder of several biotechnology companies, including Fuji ImmunoPharmaceuticals Corp. and Shionogi BioResearch Corp. Dr. Chen received his B.S. in chemistry from National Taiwan University and his Ph.D. in cell biology from the Massachusetts Institute of Technology.

        Bruce Kovner has been a member of our board of directors since July 2002. In 1983, Mr. Kovner founded Caxton Corporation, a diversified trading company and manager of client funds active in currency, interest rate, commodity and equity markets, and has acted as its Chairman since its inception. He is also Chairman of Caxton Associates, L.L.C., which succeeded to a significant portion of Caxton Corporation's trading and investment activities in 1996. Prior to the formation of Caxton, Mr. Kovner served as a Vice President of Commodities Corporation, a private commodities trading company since acquired by Goldman Sachs. Mr. Kovner is also Chairman of the Board of the American Enterprise Institute, Chairman of the Board of the Juilliard School, and Vice Chairman of Lincoln Center for the Performing Arts. In addition, he is the Founder and Chairman of the School Choice Scholarships Foundation, which provides scholarships to low-income students in New York City to attend primary schools of their choice. Mr. Kovner received his B.A. from Harvard College in 1966. He continued his studies at the John F. Kennedy School of Government until 1970.

        William S. Reardon, C.P.A. has been a member of our board of directors since August 2004. Until his retirement in 2002 from PricewaterhouseCoopers LLP, where he was employed from June 1973 to July 2002, Mr. Reardon was a business assurance (audit) partner at the firm's Boston office and leader of its life sciences industry practice for New England and the eastern U.S. From 1998 to 2000, Mr. Reardon served on the board of the emerging companies section of the Biotechnology Industry Organization. He also served on the board of the Massachusetts Biotechnology Council from 2000 until his retirement in 2002. Mr. Reardon is currently a member of the board of directors and the chairman of the audit committees of Hybridon, Inc. and Oscient Pharmaceuticals Corp., both of which are publicly traded pharmaceutical companies. He is an advisor to the audit committee at Momenta Pharmaceuticals, Inc., a publicly traded pharmaceutical company, and a member of the board of advisors for Feinstein Kean Healthcare. Mr. Reardon received both his undergraduate degree in East Asian history and his M.B.A. from Harvard University.

        Robert N. Wilson has been a member of our board of directors since June 2003. Mr. Wilson served as Vice Chairman of the board of directors of Johnson & Johnson, a global manufacturer of healthcare products, from 1986 until 2003. Mr. Wilson joined Johnson & Johnson in 1964. He was appointed to Johnson & Johnson's executive committee in 1983 and was elected to its board of directors in 1986. Mr. Wilson is also a director of The Charles Schwab Corporation, a publicly traded retail brokerage firm, U.S. Trust Corporation, United States Trust Company of New York and Amerada Hess Corporation, an integrated oil and gas company. Mr. Wilson received his B.A. in business administration from Georgetown College in Kentucky, and received an Executive Program B.A. from Columbia University Graduate School of Business.

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Scientific Advisory Board

        We have established a scientific advisory board comprised of leading experts in their fields. Members of our scientific advisory board consult with us regularly on matters relating to:

•
our research and development programs;

•
the design and implementation of our clinical programs;

•
market opportunities from a clinical perspective;

•
new technologies relevant to our research and development programs; and

•
scientific and technical issues relevant to our business.

        The current members of our scientific advisory board are:
Name

	 	Professional Affiliations/Honors

	
Lan Bo Chen, Ph.D., Chairman	 	See biography above.	

Sir James W. Black, O.M., F.R.S. 	
 	
Emeritus Professor of Analytical Pharmacology at King's College London; previously conducted research with Imperial Chemical Industries plc, SmithKline French and Wellcome Laboratories; was awarded the Nobel Prize in Medicine in 1989 for his work in pharmotherapeutic potential of receptor blocking drugs; knighted by the Queen of England in 1981; received the Order of Merit from the Queen in 2000.	

Judah Folkman, M.D. 	
 	
Surgeon-In-Chief Emeritus and Director of the Vascular Biology program at Boston Children's Hospital; Professor of Pediatric Surgery and Cell Biology at Harvard Medical School; member of the National Academy of Sciences and the American Academy of Arts and Sciences; awarded the 2004 Prince of Asturias award for Technical and Scientific Research in Spain, The Franklin Institute's 2001 Benjamin Franklin Award in Life Science, the 1998 Keio University (Tokyo) Medical Science Prize, and the 1997 Charles S. Mott Prize of the General Motors Cancer Research Foundation.	

Nir Hacohen, Ph.D. 	
 	
Assistant Professor at Massachusetts General Hospital and Harvard Medical School; founder of the RNAi consortium, a group of Harvard and Massachusetts Institute of Technology researchers who are spearheading efforts to create and apply genome-wide gene silencing libraries to accelerate gene discovery in humans; honors include the Sandler Memorial first prize Ph.D. thesis award, Helen Hay Whitney Fellowship with David Baltimore and Whitehead Institute Fellowship.	

Jean-Pierre Kinet, M.D. 	
 	
Professor of Pathology at Harvard Medical School; Director of the Division of Allergy and Immunology at the Beth Israel Deaconess Medical Center; previously the head of the Molecular Allergy and Immunology section of the National Institute of Allergy and Infectious Diseases at the National Institutes of Health; scientific founder of Astarix Institute, Inc., an early-stage drug discovery company later sold to Heska Corporation.	

71

Christopher J. Logothetis, M.D. 	
 	
Professor and Chairman of the Department of Genitourinary Medical Oncology at the University of Texas M.D. Anderson Cancer Center; Principal Investigator of the M.D. Anderson SPORE in Prostate Cancer; Director of the Genitourinary Cancer Center and the Prostate Cancer Research Program, which are multidisciplinary collaborations of physicians and scientists dedicated to genitourinary cancer treatment, research, prevention, and education; leader in the Therapy Consortium, an active group of researchers involved in the development of innovative therapy for prostate cancer.	

Reinhold Penner, M.D., Ph.D. 	
 	
Director of Research at the Center for Biomedical Research at Queen's Medical Center; professor at the University of Hawaii; previously served as research head at the Max Planck Institute for Biophysical Chemistry.	

Mace L. Rothenberg, M.D. 	
 	
Ingram Professor of Cancer Research at the Vanderbilt-Ingram Cancer Center and Professor of Medicine at Vanderbilt University Medical Center; Medical Oncologist with appointments at the Vanderbilt University Medical Center and the Department of Veterans Affairs Medical Center; Director of the Phase 1 Drug Development Program at Vanderbilt-Ingram Cancer Center; serves on a number of committees including the Vanderbilt-Ingram Cancer Center Gastrointestinal Cancer SPORE Executive Committee and Lung Cancer SPORE Steering Committee, the Clinical Cancer Research Committee for the American Association for Cancer Research, and the Medical Oncology Committee for the American College of Surgeons.	

Daniel D. Von Hoff, M.D. 	
 	
Professor of Medicine, Pathology, Molecular and Cellular Biology, at the University of Arizona; Director of the Arizona Health Sciences Center's Cancer Therapeutics Program; Executive Vice President of the Translational Genomics Research Institute, or TGen; Director of TGen's Translational Drug Development Division; Head, Pancreatic Cancer Research Program; Chief Medical Officer for U.S. Oncology, the nation's largest health-care services network devoted exclusively to cancer treatment and research; past President of the American Association for Cancer Research; past board member of the American Society of Clinical Oncology; founder and editor emeritus of Investigational New Drugs—The Journal of New Anticancer Agents;  editor-in-chief of Molecular Cancer Therapeutics ; appointed to President Bush's National Cancer Advisory Board in June 2004.	
 	 	 	
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Michael E. Weinblatt, M.D. 	
 	
Co-Director of Clinical Rheumatology at the Brigham and Women's Hospital and Professor of Medicine at Harvard Medical School; published over 127 papers, reviews and invited chapters in the field of rheumatology primarily rheumatoid arthritis therapeutics; co-editor of the textbook, Treatment of Rheumatic Diseases, the textbook, Rheumatology 3 rd  edition; author of the Arthritis Action Program; co-received in 1997 the Arthritis Foundation Virginia P. Engalitcheff Award for Impact on Quality of Life for work on methotrexate; served as an Associate Editor of Arthritis and Rheumatism ; currently sits on the editorial board of Journal of Rheumatology ; was a member of the Rheumatology Subspeciality Board of the American Board of Internal Medicine; in 2001, served as the President of the American College of Rheumatology.	

Bruce R. Zetter, Ph.D. 	
 	
Charles Nowiszewski professor in the departments of cell biology and surgery at Harvard Medical School; Chief Scientific Officer at Boston Children's Hospital; has won numerous national and international awards for his work in the field of cancer research including a Faculty Research Award from the American Cancer Society and the MERIT award from the National Cancer Institute; served as an expert witness on cancer to the U.S. senate.	
Board Composition

        Our restated certificate of incorporation and restated bylaws to be effective upon completion of this offering provide that the authorized number of directors may be changed only by resolution of the board of directors. We currently have six directors. In accordance with our restated certificate of incorporation and restated bylaws, immediately upon the closing of this offering, our board of directors will be divided into three classes with staggered three-year terms. At each annual meeting of stockholders following the offering, the successors to the directors whose terms then expire will be elected to serve until the third annual meeting following the election. At the closing of this offering, our directors will be divided among the three classes as follows:

•
The Class I directors will be Dr. Chen and Mr. Reardon, and their terms will expire at the annual meeting of stockholders to be held in 2006;

•
The Class II directors will be Messrs. Gollust and Wilson, and their terms will expire at the annual meeting of stockholders to be held in 2007; and

•
The Class III directors will be Dr. Bahcall and Mr. Kovner, and their terms will expire at the annual meeting of stockholders to be held in 2008.

        Any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors.

Committees of the Board of Directors

        Our board of directors has an audit committee, a compensation committee, and a nominating and governance committee, each of which has the composition and responsibilities described below.

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        Audit Committee.    Our audit committee is composed of Messrs. Gollust, Reardon (chairman) and Wilson and is authorized to:

•
approve and retain the independent auditors to conduct the annual audit of our books and records;

•
review the proposed scope and results of the audit;

•
review and pre-approve the independent auditor's audit and non-audit services rendered;

•
approved the audit fees to be paid;

•
review accounting and financial controls with the independent auditors and our financial and accounting staff;

•
review and approve transactions between us and our directors, officers and affiliates;

•
recognize and prevent prohibited non-audit services;

•
establish procedures for complaints received by us regarding accounting matters;

•
oversee internal audit functions; and

•
prepare the report of the audit committee that SEC rules require to be included in our annual meeting proxy statement.

        Compensation Committee.    Our compensation committee is composed of Messrs. Gollust, Kovner and Wilson (chairman) and is authorized to:

•
review and recommend the compensation arrangements for management, including the compensation for our President and Chief Executive Officer;

•
establish and review general compensation policies with the objective to attract and retain superior talent, to reward individual performance and to achieve our financial goals;

•
administer our stock incentive plan; and

•
prepare the report of the compensation committee that SEC rules require to be included in our annual meeting proxy statement.

        Nominating and Governance Committee.    Our nominating and governance committee is composed of Messrs. Gollust (chairman), Kovner and Wilson and is authorized to:

•
identify and nominate members of the board of directors;

•
develop and recommend to the board of directors a set of corporate governance principles applicable to our company; and

•
oversee the evaluation of the board of directors and management.

Compensation of Directors

        We reimburse each member of our board of directors who is not an employee for reasonable travel and other expenses in connection with attending meetings of the board of directors.

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        We have granted the following stock options to our non-employee directors:
Name of Director

	 	Number of
Shares

	 	Exercise
Price

	 	Date of
Grant

	
Keith R. Gollust	 	500,000
300,000	(1)
(2)	$
	2.7108
2.7108	 	7/15/2002
5/27/2004	
Bruce Kovner	 	500,000	(1)	 	2.7108	 	7/15/2002	
William S. Reardon, C.P.A.	 	60,000	(1)	 	4.00    	 	8/25/2004	
Robert N. Wilson	 	250,000	(1)	 	2.7108	 	6/17/2003	

(1)
The options vest as to 25% of the shares on the first anniversary of the grant date and an additional 6.25% of the shares at the end of each successive three-month period thereafter.

(2)
The option vests as to 50% of the shares upon grant and an additional 6.25% of the shares at the end of each successive three-month period thereafter.

        In January 2005, our board of directors approved a policy in which each non-employee director will receive an option to purchase 60,000 shares of our common stock upon his or her initial appointment to our board of directors. These options shall vest as to 25% of such grant on the first anniversary of the grant date and as to an additional 6.25% of such grant at the end of each successive three-month period thereafter continuing until the fourth anniversary of the date of grant, subject to the non-employee director's continued service as a director. However, in the event of termination of service of a non-employee director, such option shall vest to the extent of a pro rata portion through the non-employee director's last day of service based on the number of days accrued in the applicable period prior to his or her termination of service. Each non-employee director stock option will terminate on the earlier of ten years from the date of grant and three months after the recipient ceases to serve as a director, except in the case of death or disability, in which event the option will terminate one year from the date of the director's death or disability. The exercise price of all of these options will equal the fair market value of our common stock on the date of grant.

        Each non-employee director shall be compensated on an annual basis for providing services to Synta. Director compensation shall be paid for the period from July 1 through June 30 of each year. Each non-employee director shall receive compensation consisting of one of the following combinations of cash and/or a grant of our common stock, at the election of each non-employee director, as follows:

•
$40,000 cash;

•
$30,000 cash and such number of shares of restricted common stock with a value of $10,000 on the date of grant of the shares;

•
$20,000 cash and such number of shares of restricted common stock with a value of $20,000 on the date of grant of the shares;

•
$10,000 cash and such number of shares of restricted common stock with a value of $30,000 on the date of grant of the shares; or

•
such number of shares of restricted common stock with a value of $40,000 on the date of the grant of the shares.

        The number of shares to be received by a non-employee director shall be calculated by dividing the total dollar amount that the non-employee director has elected to be paid in shares of common stock by the fair market value of the shares of our common stock on the last business day prior to the date of grant of the shares. Shares granted shall be subject to a lapsing repurchase right such that the shares shall be subject to forfeiture to us if a non-employee director does not continue to serve as a member of the board of directors as of the end of the applicable quarter as follows: the repurchase right shall lapse as to 25% of

75

each such grant on each of September 30, December 31, March 31 and June 30 thereafter, provided such non-employee director continues to serve as a member of the board of directors as of the applicable date.

        In addition, under this policy each non-employee director received the following pro rata share of the annual fee for the period from January 1, 2005 through June 30, 2005:
Director

	 	Pro Rata Fee Paid

	
Keith R. Gollust	 	3,636 shares of restricted common stock	
Bruce Kovner	 	3,636 shares of restricted common stock	
William S. Reardon, C.P.A.	 	$10,000 and 1,818 shares of restricted common stock	
Robert N. Wilson	 	3,636 shares of restricted common stock	
The shares issued as set forth above were issued on January 18, 2005 based on a fair market value of $5.50 per share as of such date. These shares are subject to our repurchase right, which shall lapse as to 50% of each such grant on March 31, 2005 and June 30, 2005, provided such non-employee director continues to serve as a member of the board of directors as of such date. Any cash to be paid as set forth above will be paid 50% on March 31, 2005 and 50% on June 30, 2005.

        Each non-employee director shall also receive an annual fee of $5,000 for each committee of the board of directors on which such individual serves. However, the chairman of each committee, other than the audit committee, shall receive an annual fee of $10,000, and the chairman of the audit committee shall receive an annual fee of $15,000 for services as chairman.

Compensation Committee Interlocks and Insider Participation

        Our compensation committee is composed of Messrs. Gollust, Kovner and Wilson. No member of our compensation committee has at any time been an employee of ours. None of our executive officers serve as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of our board of directors or compensation committee.

        Each of Messrs. Gollust, Kovner and Wilson and affiliates of theirs have participated in transactions with us. For a detailed description of these transactions, see "Certain Relationships and Related Party Transactions."

Executive Compensation

        The following summary compensation table sets forth summary information as to compensation received by our President and Chief Executive Officer and our four other most highly compensated executive officers who were employed by us as of December 31, 2004 and earned more than $100,000 in salary and bonus for the year ended December 31, 2004.

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Summary Compensation Table

	 	 
	 	 
	 	Long-Term Compensation

	 	 

	 	 

	 	Awards

	 	 
	
Name and Principal Position

	 	Year

	 	Salary

	 	Bonus(1)

	 	Restricted
Stock
Awards(2)

	 	Securities
Underlying
Options/
SARs (#)

	 	All Other
Compensation(3)

	
Safi R. Bahcall, Ph.D.
President and Chief Executive Officer	 	2004	 	$	300,000	 	$	100,000	 	$	1,099,980	 	—	 	$	25,503	

James G. Barsoum, Ph.D.
Vice President, Biology	
 	
2004	
 	
$	
208,998	
 	
$	
53,000	
 	
$	
879,984	
 	
40,000	

—	

Keizo Koya, Ph.D.
Senior Vice President,
Drug Development	
 	
2004	
 	
$	
208,959	
 	
$	
53,000	
 	
$	
879,984	
 	
40,000	
 	
$	
4,188	

Matthew L. Sherman, M.D.(4)
Senior Vice President and
Chief Medical Officer	
 	
2004	
 	
$	
222,693	
 	
$	
81,000	
 	
$	
879,984	
 	
350,000	

—	

Keith S. Ehrlich(5)
Vice President, Finance and Administration	
 	
2004	
 	
$	
191,811	
 	
$	
44,000	
 	
$	
549,990	
 	
150,000	

—	

(1)
Reflects bonuses earned in 2004 and paid in 2005.

(2)
Reflects restricted shares of common stock granted under our 2001 Stock Plan to each of the named executive officers on December 21, 2004. The amount in the table is based on the number of shares granted to the executive officer multiplied by $5.50, the fair value of our common stock as determined by our board of directors, less the per share purchase price of the restricted shares of $0.0001. As of December 31, 2004, Dr. Bahcall held 200,000 restricted shares valued at $            , Dr. Barsoum held 160,000 restricted shares valued at $            , Dr. Koya held 160,000 restricted shares valued at $            , Dr. Sherman held 160,000 restricted shares valued at $            , and Mr. Ehrlich held 100,000 restricted shares valued at $            . Because there was no public trading market for our common stock as of December 31, 2004, the value of the restricted shares at year-end have been calculated using an assumed initial public offering price of $        per share less the per share purchase price of the restricted shares of $0.0001. Dividends will be paid on the restricted shares. These restricted shares are subject to repurchase by us at a repurchase price of $0.0001 per share if the executive officer is no longer employed by us. This right of repurchase lapses as to 50% of the shares on January 4, 2007 and the remaining 50% of the shares on the earlier of January 4, 2009 or the date the FDA approves an NDA for one of our drug candidates.

(3)
The amounts shown include $25,503 of rental payments for a company apartment for Dr. Bahcall's use and $4,188 in lease payments for an automobile for Dr. Koya's use.

(4)
Dr. Sherman joined us as Senior Vice President and Chief Medical Officer in March 2004.

(5)
Mr. Ehrlich joined us as Vice President, Finance and Administration in March 2004. Mr. Ehrlich's salary includes $45,562 earned as a consultant in 2004 prior to his employment with us.

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Option Grants in Last Fiscal Year

        The following table shows information regarding stock options granted to the executive officers named in the summary compensation table above during our fiscal year ended December 31, 2004. Options were granted with an exercise price per share equal to the fair market value of our common stock on the date of grant, as determined by our board of directors. The potential realizable value is based on the assumption that our common stock appreciates at the annual rate shown, compounded annually, from the date of grant until the expiration of the ten-year term. These numbers are calculated based on SEC requirements and do not reflect projections or estimates of future stock price growth. Potential realizable values are computed by:

•
multiplying the number of shares of common stock underlying each option by $        per share, the assumed initial public offering price per share;

•
assuming that the total stock value derived from that calculation compounds at the annual 5% or 10% rate shown in the table for the entire ten-year term of the option; and

•
subtracting from that result the total option exercise price.

        Actual gains, if any, on stock option exercises will be dependent on the future performance of the common stock. The percentage of total options granted is based on an aggregate of 2,541,875 options granted by us during the year ended December 31, 2004, to our employees, including the executive officers listed in the table below.

	 	Individual Grants

	 	 

	 	

	 	 	 	 
	 	Potential Realizable
Value at Assumed Annual Rates
of Stock Price Appreciation
for Option Term ($)

	 	 	 	 	 	 	
 
	 	Number of
Securities
Underlying
Options/SARs
Granted (#)

	 	% of Total
Options/SARs
Granted to
Employees in
Fiscal Year

	 	 

 
	 	 	 	 	 	Exercise
or Base
Price
($/Share)

	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	
Name

	 	 	 	 	 	 	 	Expiration
Date

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	5%

	 	10%

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Safi R. Bahcall, Ph.D. 	 	—	 	—	 	 	—	 	—	 	—	 	—	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

James G. Barsoum, Ph.D. 	
 	
40,000	
 	
1.6	
%	
$	
4.00	
 	
5/27/2014	

 	

Keizo Koya, Ph.D.  	
 	
40,000	
 	
1.6	
%	
$	
4.00	
 	
5/27/2014	

 	

Matthew L. Sherman, M.D. 	
 	
350,000	
 	
13.8	
%	
$	
4.00	
 	
5/27/2014	

 	

Keith S. Ehrlich	
 	
150,000	
 	
5.9	
%	
$	
4.00	
 	
5/27/2014	

 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Year-End Option Values

        The following table sets forth certain information with respect to the total value of options held by each executive officer named in the summary compensation table above as of December 31, 2004. Because there was no public trading market for the common stock as of December 31, 2004, the value of the

78

unexercised in-the-money options at year-end have been calculated using an assumed initial public offering price of $        per share minus the applicable per share exercise price.
 
	 	Number of Securities
Underlying Unexercised
Options at
December 31, 2004

	 	 

 
	 	 	 	Value of Unexercised
In-the-Money Options at
December 31, 2004

	 	 	 	 	 	
Name

	 	 	 	 	 	 	 	 	 	
 	 	Exercisable

	 	Unexercisable

	 	Exercisable

	 	Unexercisable

	 	 	 	 	 	
Safi R. Bahcall, Ph.D. 	 	—	 	—	 	—	 	—	 	 	 	 	 	

James G. Barsoum, Ph.D. 	
 	
131,250	
 	
208,750	

 	

Keizo Koya, Ph.D. 	
 	
518,750	
 	
221,250	

 	

Matthew L. Sherman, M.D. 	
 	
—	
 	
350,000	

 	

Keith S. Ehrlich 	
 	
—	
 	
150,000	

 	
 	 	 	 	 	 	
Employment Contracts and Termination of Employment and Change-in-Control Arrangements

Offer Letters

        Pursuant to a letter agreement dated October 1, 2002, between us and Keizo Koya, Ph.D., we agreed to employ Dr. Koya as Vice President of Drug Development on an at-will basis, beginning on October 1, 2002. Dr. Koya's base salary is currently $250,000 per year and he is also eligible to receive annual performance based bonuses. Under this agreement, Dr. Koya has been granted an incentive stock option to purchase a total of 500,000 shares of common stock at an exercise price of $2.7108 per share. This option vests as to 150,000 of the shares upon grant and an additional 6.25% per calendar quarter after December 31, 2002.

        Pursuant to a letter agreement dated February 18, 2004, between us and Matthew L. Sherman, M.D., we agreed to employ Dr. Sherman as Senior Vice President and Chief Medical Officer on an at-will basis, beginning on March 1, 2004. Dr. Sherman's base salary is currently $285,000 per year and he is also eligible to receive annual performance based bonuses. Under this agreement, Dr. Sherman has also been granted an incentive stock option to purchase a total of 350,000 shares of common stock at an exercise price of $4.00 per share. This option vests as to 25% of the shares on March 4, 2005 and an additional 6.25% of the shares per calendar quarter thereafter. In the event of termination without cause, as defined in the agreement, Dr. Sherman is entitled to a one-time severance payment one week after the date of termination equal to six months of base salary if the employment period has been less than 12 months, or 12 months of base salary if the employment period has been more than 12 months.

        Pursuant to a letter agreement dated January 22, 2003, between us and James G. Barsoum, Ph.D., we agreed to employ Dr. Barsoum as Vice President of Biology on an at-will basis, beginning on February 26, 2003. Dr. Barsoum's base salary is currently $220,000 per year and he is also eligible to receive annual performance based bonuses. Under this agreement, Mr. Barsoum has also been granted an incentive stock option to purchase 300,000 shares of common stock at an exercise price of $2.7108 per share. This option vests as to 25% of the shares on the first anniversary of the grant date and an additional 6.25% of the shares per calendar quarter thereafter. In the event of termination without cause, as defined in the agreement, Dr. Barsoum is entitled to a one-time severance payment on the date of termination equal to three months of base pay.

        Pursuant to a letter agreement dated February 19, 2004, between us and Keith S. Ehrlich, we agreed to employ Mr. Ehrlich as Vice President, Finance and Administration on an at-will basis, beginning on March 1, 2004. Mr. Ehrlich's base salary is currently $175,000 per year and he is also eligible to receive annual performance based bonuses. Under this agreement, Mr. Ehrlich has been granted a nonqualified stock option to purchase 150,000 shares of common stock at an exercise price of $4.00 per share. This

79

option vests as to 43,752 shares on the first anniversary of the grant date and an additional 8,854 shares per calendar quarter thereafter. In the event of termination without cause, as defined in the agreement, the vesting of the options will be adjusted so that 21,350 shares vest as of June 1, 2004 and an additional 3,129 shares vest each month through the date of termination.

Separation Agreement with Dr. Mitsunori Ono

        On April 21, 2004, we entered into an agreement memorializing a previously established agreement with Dr. Mitsunori Ono, our former President and Chief Operating Officer, under which Dr. Ono resigned his employment with us in 2003, effective as of January 1, 2004. Under the agreement, we agreed to make a one time payment to Dr. Ono of $200,000 upon the signing of the agreement and 18 monthly payments of approximately $13,889 beginning in January 2004. Under the agreement, we accelerated the vesting and extended the time in which Dr. Ono may exercise options to purchase 187,500 shares of our common stock and extended the time in which Dr. Ono may exercise vested options to purchase 812,500 shares of common stock. In addition, options to purchase 800,000 shares of our common stock were cancelled pursuant to the terms thereof. Dr. Ono also released Synta, its stockholders, directors, officers, and employees from all claims he may have had against them.

Employee Benefit Plans

2001 Stock Plan

        Our 2001 Stock Plan was adopted by our board of directors and approved by our stockholders in July 2001. In December 2003, our board of directors and stockholders approved amendments to our 2001 Stock Plan. Under this plan, we may grant incentive stock options, nonqualified stock options and restricted and unrestricted stock awards. A maximum of 15,000,000 shares of common stock are authorized for issuance under our 2001 Stock Plan.

        In accordance with the terms of the 2001 Stock Plan, our board of directors has authorized our compensation committee to administer our 2001 Stock Plan.

        Our board of directors or any committee to which the board of directors delegates authority may, with the consent of the affected plan participants, amend outstanding awards.

        Upon a merger or other reorganization event, our board of directors, or the board of directors of any corporation assuming our obligations, may, in their sole discretion, take any one or more of the following actions pursuant to our 2001 Stock Plan, as to some or all outstanding options:

•
provide that all outstanding options shall be assumed or substituted by the successor corporation;

•
terminate all unexercised outstanding options immediately prior to the consummation of such transaction unless exercised by the optionee;

•
in the event of a merger pursuant to which holders of our common stock will receive a cash payment for each share surrendered in the merger, make or provide for a cash payment to the optionees equal to the difference between the merger price times the number of shares of our common stock subject to such outstanding options (to the extent then exercisable at prices not in excess of the merger price), and the aggregate exercise price of all such outstanding options, in exchange for the termination of such options; and

•
provide that all or any outstanding options shall become exercisable in full immediately prior to such event.

        Pursuant to our 2001 Stock Plan, upon a merger or other reorganization event, any securities, cash or other property received in exchange for shares of restricted stock shall continue to be governed by the provisions of any restricted stock agreement pursuant to which such restricted stock was issued.

80

        As of March 14, 2005, 1,758,663 shares have been issued upon the exercise of options and the grant of stock awards under this plan, 11,489,899 shares are subject to outstanding options under this plan, and 1,751,438 shares are available for future grant under this plan.

Limitation of Officers' and Directors' Liability and Indemnification

        The Delaware General Corporation Law authorizes corporations to limit or eliminate, subject to certain conditions, the personal liability of directors to corporations and their stockholders for monetary damages for breach of their fiduciary duties. Our restated certificate of incorporation and restated bylaws limit the liability of our directors to the fullest extent permitted by Delaware law.

        We have obtained director and officer liability insurance to cover liabilities our directors and officers may incur in connection with their services to us, including matters arising under the Securities Act. Our restated certificate of incorporation and restated bylaws also provide that we will indemnify any of our directors and officers who, by reason of the fact that he or she is one of our officers or directors, is involved in a legal proceeding of any nature. We will repay certain expenses incurred by a director or officer in connection with any civil or criminal action or proceeding, specifically including actions by us or in our name (derivative suits). Such indemnifiable expenses include, to the maximum extent permitted by law, attorney's fees, judgments, civil or criminal fines, settlement amounts and other expenses customarily incurred in connection with legal proceedings. A director or officer will not receive indemnification if he or she is found not to have acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, our best interest. Prior to the completion of this offering, we plan to enter into agreements to indemnify our directors and officers. These agreements, among other things, will indemnify our directors and officers for certain expenses, including attorneys' fees, judgments, fines, and settlement amounts incurred by any such person in any action or proceeding, including any action by us arising out of such person's services as our director or officer, any of our subsidiaries from time to time or any other company or enterprise to which the person provides services at our request. We believe that these provisions and agreements are necessary to attract and retain qualified persons as directors and officers.

        Such limitation of liability and indemnification does not affect the availability of equitable remedies. In addition, we have been advised that in the opinion of the SEC, indemnification for liabilities arising under the Securities Act is against public policy as expressed in the Securities Act and is therefore unenforceable.

        There is no pending litigation or proceeding involving any of our directors, officers, employees or agents in which indemnification will be required or permitted. We are not aware of any threatened litigation or proceeding that may result in a claim for such indemnification.

81

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

        The following is a description of the transactions we have engaged in (1) since January 1, 2002 with our directors and officers and beneficial owners of more than five percent of our voting securities and their affiliates and (2) since our inception in March 2000 with our founders, Dr. Safi R. Bahcall and Dr. Lan Bo Chen.

Issuance of Common Stock to Our Founders

        In July of 2001, in connection with the initial capitalization of Synta, we issued an aggregate of 20,400,000 shares of common stock to our founders, Dr. Bahcall and Dr. Chen, at a purchase price of $0.0001 per share as follows:
Name

	 	Number of Shares of
Common Stock

	 	Aggregate
Purchase Price

	
Safi R. Bahcall, Ph.D.	 	8,000,000	 	$	800	
Lan Bo Chen, Ph.D.	 	12,400,000	 	 	1,240	
Dr. Bahcall is also our President and Chief Executive Officer, a director and a beneficial owner of more than five percent of our voting securities. Dr. Chen is also a director and a beneficial owner of more than five percent of our voting securities. The purchase price per share was determined by the board of directors to be fair market value based on, among other things, the fact that Synta had just commenced operations.

Private Placements of Our Common Stock

        During the period from July 2001 to December 2001, we issued an aggregate of 6,800,000 shares of our common stock to 21 investors at a purchase price of $0.50 per share, including an aggregate of 1,400,000 shares to the following directors, officers, and beneficial owners of more than five percent of our voting securities, and their affiliates:
Name

	 	Number of Shares of
Common Stock

	 	Aggregate
Purchase Price

	
John and Neta Bahcall	 	200,000	 	$	100,000	
Gollust Trust II	 	200,000	 	 	100,000	
Wyandanch Partners, LP	 	1,000,000	 	 	500,000	
John and Neta Bahcall are the parents of Dr. Bahcall. Keith R. Gollust, one of our directors, is the settlor for Gollust Trust II, a trust established for the benefit of Mr. Gollust's minor children, and is the president and sole stockholder of Gollust Management, Inc., which is the general partner of Wyandanch Partners, LP. The purchase price per share was the fair market value as determined by arms-length negotiations between sophisticated investors and Synta's management and board of directors, based on factors such as our stage of development and valuations of similarly situated private biopharmaceutical companies.

        During the periods from April 2002 through May 2002 and from November 2002 through March 2003, we issued an aggregate of 22,969,505 shares of our common stock to 48 investors at a purchase price of $2.7108 per share, including an aggregate of 12,356,132 shares to the following directors, officers, and beneficial owners of more than five percent of our voting securities, and their affiliates:
Name

	 	Number of Shares of
Common Stock

	 	Aggregate
Purchase Price

	
Keith R. Gollust	 	368,895	 	$	1,000,000	
CxSynta, LLC	 	11,987,237	 	 	32,495,000	
82

CxSynta, LLC is a beneficial owner of more than five percent of our voting securities and an affiliated investment vehicle of the Caxton Corporation. Bruce Kovner, one of our directors, is the Chairman of the Caxton Corporation. The purchase price per share was the fair market value as determined by arms-length negotiations between sophisticated investors and Synta's management and board of directors, based on factors such as our stage of development and valuations of similarly situated private biopharmaceutical companies.

        During the period from October 2003 through January 2004, we issued an aggregate of 12,500,000 shares of our common stock to 43 investors at a purchase price of $4.00 per share, including an aggregate of 5,525,000 shares to the following directors, officers, and beneficial owners of more than five percent of our voting securities, and their affiliates:
Name

	 	Number of Shares of
Common Stock

	 	Aggregate
Purchase Price

	
Robert N. Wilson	 	125,000	 	$	500,000	
CxSynta, LLC	 	5,000,000	 	 	20,000,000	
Wyandanch Partners, LP	 	400,000	 	 	1,600,000	
Robert N. Wilson is one of our directors. The purchase price per share was the fair market value as determined by arms-length negotiations between sophisticated investors and Synta's management and board of directors, based on factors such as our stage of development and valuations of similarly situated private biopharmaceutical companies.

        In November 2004, we issued an aggregate of 16,000,000 shares of our common stock to 76 investors at a purchase price of $5.00 per share, including an aggregate of 6,223,289 shares to the following directors, officers, and beneficial owners of more than five percent of our voting securities, and their affiliates:
Name

	 	Number of Shares of
Common Stock

	 	Aggregate
Purchase Price

	
LAJ Holdings LLC	 	200,000	 	$	1,000,000	
Robert N. Wilson	 	500,000	 	 	2,500,000	
Bruce Kovner	 	48,236	 	 	241,180	
CxSynta, LLC	 	4,721,764	 	 	23,608,820	
Wyandanch Partners, LP	 	753,289	 	 	3,766,445	
Lin-Huey Chen, the spouse of Dr. Chen, is the managing member of LAJ Holdings LLC. The purchase price per share was the fair market value as determined by arms-length negotiations between sophisticated investors and Synta's management and board of directors, based on factors such as our stage of development and valuations of similarly situated private biopharmaceutical companies.

83

Issuance of Restricted Stock to Employees

        On December 21, 2004, we granted an aggregate of 1,460,000 shares of restricted common stock to certain officers and key employees at a purchase price of $0.0001 per share as a reward for their service and as a long-term incentive, including an aggregate of 980,000 shares to the following officers:
Name of Holder

	 	Number of
Registrable Shares

	
Safi R. Bahcall, Ph.D.	 	200,000	
Keizo Koya, Ph.D.	 	160,000	
John A. McCarthy, Jr. 	 	100,000	
Matthew L. Sherman, M.D.	 	160,000	
James G. Barsoum, Ph.D.	 	160,000	
Keith S. Ehrlich	 	100,000	
Wendy E. Rieder, Esq.	 	100,000	
These restricted shares of common stock are subject to repurchase by us at a repurchase price of $0.0001 per share if the officer is no longer employed by us. This right of repurchase lapses as to 50% of the shares on January 4, 2007 and the remaining 50% on the earlier of January 4, 2009 or the date the FDA approves an NDA for one of our drug candidates. The fair value of the common stock issued was determined to be $5.50 per share.

Acquisition of Principia Associates, Inc. and SBR Pharmaceuticals Corp.

        In September 2002, we acquired Principia Associates, Inc. and its subsidiary SBR Pharmaceuticals Corp. In this transaction, Principia became a wholly owned subsidiary of Synta as we acquired all of the outstanding capital stock of Principia in exchange for an aggregate of 4,939,500 shares of our common stock and warrants to purchase an aggregate of 959,126 shares of our common stock at a purchase price of $0.50 per share. The consideration paid in this transaction was determined through negotiations between the shareholders of Principia and the management and independent directors of Synta, based on factors such as the early stage potential of the compounds under development, the assets acquired, and the price paid by Principia to acquire SBR Pharmaceuticals Corp. in July 2002. CxSynta, LLC and Mr. Gollust owned a majority of the outstanding shares of Principia and received the following consideration in exchange for their Principia shares in this transaction:
Principia Shareholders

	 	Principia Shares

	 	Synta Shares
Issued

	 	Warrants
Issued

	
CxSynta, LLC	 	500,000	 	1,899,808	 	575,476	
Keith R. Gollust	 	300,000	 	1,139,884	 	115,095	

	 	

	 	

	
 	Total:	 	800,000	 	3,039,692	 	690,571	

	 	

	 	

	
        Prior to this transaction, in July of 2002, Principia had acquired 98.8% of the outstanding capital stock of SBR Pharmaceuticals Corp., formerly Shionogi BioResearch Corp., at a purchase price of $0.3267973 per share, for an aggregate purchase price of approximately $12.2 million. Dr. Chen and affiliates of Dr. Chen were shareholders of Shionogi and received the following consideration in the transaction:
Shionogi Shareholders

	 	Shionogi Shares

	 	Aggregate Purchase Price

	
Lan Bo Chen, Ph.D.	 	1,140,000	 	$	372,549	
Lin-Huey Chen	 	4,800,000	 	 	1,568,627	
Lan Bo Chen and Lin-Huey Chen Irrevocable Trust dated 12/29/95	 	860,000	 	 	281,046	
84

The Lan Bo Chen and Lin-Huey Chen Irrevocable Trust is for the benefit of Dr. Chen, his spouse and family.

        In addition, in August and September 2002, we loaned a total of $1.0 million to SBR Pharmaceuticals Corp. pursuant to two promissory notes with fixed interest rates of 7%. These notes were due on December 31, 2002 but were forgiven in connection with our acquisition of Principia described above. In December 2002, we paid the liability for the remaining 1.2% of the outstanding capital stock of SBR Pharmaceuticals, and Principia and SBR were merged with Principia as the surviving corporation, which was renamed SBR Pharmaceuticals Corp. We then merged this wholly owned subsidiary with and into Synta. We believe that the transactions described above were entered into on terms no less favorable to us than we could have obtained from unrelated third parties.

Acquisition of Diagon Genetics, Inc.

        In December of 2002, we acquired Diagon Genetics, Inc. through the merger of Diagon with and into our wholly owned merger subsidiary, DGN Genetics Acquisition Corp., for consideration of approximately $13.5 million, consisting of 3,145,854 shares of our common stock at a per share value of $2.7108 and $5.0 million in cash. Dr. Bahcall, Dr. Chen, the Ann Chen Trust and the Jane Chen Trust, owned all of the outstanding capital stock of Diagon and received the following consideration in exchange for their Diagon shares in this transaction:
Shareholder

	 	Diagon Shares

	 	Synta Shares Issued

	 	Cash Paid

	
Safi R. Bahcall, Ph.D.	 	1,009	 	1,227,601	 	$	1,222,220	
Lan Bo Chen, Ph.D.	 	838	 	—	 	 	3,777,780	
Ann Chen Trust, and Jane Chen Trust, Lin-Huey Chen co-trustee	 	1,153	 	1,918,253	 	 	—	

	 	

	 	

	
 	Total:	 	3,000	 	3,145,854	 	$	5,000,000	

	 	

	 	

	
The Ann Chen Trust and Jane Chen Trust are for the benefit of Dr. Chen's daughters. Dr. Bahcall was also a member of the board of directors, the President and the Secretary of Diagon, and Dr. Chen was also a member of the board of directors of Diagon. The consideration paid in this transaction was determined through negotiation between the shareholders of Diagon and the management and independent directors of Synta, based on factors such as the value of intellectual property and technologies to be acquired and an assessment of potential future cash flows from products that could be developed using the technologies acquired, and the valuations of similarly situated privately held biopharmaceutical companies. In December 2002, the wholly owned subsidiary resulting from this transaction was merged with and into Synta. We believe this transaction was entered into on terms no less favorable to us than we could have obtained from unrelated third parties.

Acquisition of the Assets of Cancer Genomics, Inc., Kava Pharmaceuticals, Inc., and SinglePixel Biomedical, Inc.

        In January of 2004, we acquired substantially all of the assets of each of Cancer Genomics, Inc., Kava Pharmaceuticals, Inc., and SinglePixel Biomedical, Inc. in a single transaction for consideration of approximately $2.2 million, consisting of 553,344 shares of our common stock, apportioned 25% to Cancer Genomics, 50% to Kava Pharmaceuticals, and 25% to SinglePixel Biomedical, at a per share value of $4.00 and the assumption of SinglePixel Biomedical, Inc.'s responsibilities under a Dana-Farber Cancer Institute license agreement. In addition, we are required to make cash payments to Kava Pharmaceuticals and SinglePixel Biomedical, respectively, if certain milestones regarding such company's technology are achieved. Further, if commercialization is achieved from products or services covered by a Cancer Genomics or Kava Pharmaceuticals patent we may owe royalties on the gross revenue achieved by such a product.

85

        Pursuant to the Asset Purchase Agreement the shareholders of Kava Pharmaceuticals have an option to repurchase the technology and intellectual property for $750,000 if within 30 months following the sale we have not instituted clinical trials. We have not instituted clinical trials to date and cannot predict whether we will do so in the future. The Kava Pharmaceuticals technology is unrelated to our current clinical programs or our programs in development. Dr. Chen and his affiliates hold a non-voting membership interest in an unrelated entity CMAC, LLC, that is the majority stockholder of these three companies. Dr. Chen and his affiliates own substantially all of an entity, Three L Enterprises, that was a greater than 10% stockholder in Cancer Genomics, Inc., and SinglePixel Biomedical, Inc. The consideration paid in, and the terms of, this transaction were determined through negotiation between the shareholders of these entities and the management and independent directors of Synta, based on factors such as the value of intellectual property and technologies to be acquired and an assessment of potential future cash flows from products that could be developed using the technologies acquired, and the valuations of similarly situated privately held biopharmaceutical companies. We believe this transaction was entered into on terms no less favorable to us than we could have obtained from unrelated third parties.

License Agreement with SBR

        In April 2002, we entered into an exclusive license agreement with SBR for certain small molecule technology and know-how. Pursuant to this license, we paid SBR an initial fee of $1.0 million, and were obligated to make milestone payments and pay royalties. At the time of this transaction, Dr. Chen and his affiliates were significant shareholders of SBR as described above. This agreement was terminated in connection with our acquisition of Principia described above. We believe this transaction was entered into on terms no less favorable to us than we could have obtained from unrelated third parties.

Sublease with Affiliated Entities of Dr. Lan Bo Chen

        In October 2001, we entered into an arrangement to sublet office space from Munchi BioTherapeutics Corp., formerly known as Asiana Pharmaceuticals Corporation, an entity affiliated with and controlled by Dr. Chen. Three L Enterprises is the sole stockholder of this entity. Under the terms of this oral arrangement, we pay the monthly lease fees payable pursuant to the underlying lease, and we are obligated to pay the lease fees through the termination of the lease on May 30, 2009. In the alternative, we may find another tenant to sublet the space, but we are obligated to pay any difference between the monthly rent paid by the other tenant and the amount owed under the lease. Pursuant to this arrangement, we paid a total of approximately $14,000, $174,000, $194,000, and $213,000 in 2001, 2002, 2003, and 2004, respectively. We are engaged in final negotiations regarding the assignment of the lease to us. We believe this transaction was entered into on terms no less favorable than we could have obtained from unrelated third parties.

Consulting Agreement with Dr. Lan Bo Chen

        In 2002, we entered into an oral consulting agreement with Dr. Chen pursuant to which Dr. Chen provides consulting services as mutually determined by us and Dr. Chen from time to time. This consulting agreement has no definitive term. Under the terms of the agreement, we provide compensation to Dr. Chen of $25,000 per month. Dr. Chen was paid $75,000, $300,000 and $300,000 in 2002, 2003 and 2004, respectively, under this arrangement.

Agreement and Release with Dr. Lan Bo Chen

        In January 2005, we entered into an Agreement and Release with Dr. Chen whereby we resolved all outstanding matters regarding various oral understandings and arrangements between Dr. Chen and Synta, including arrangements relating to (1) the assignment by Dr. Chen of the benefit of his interests resulting from our acquisition of the assets of Cancer Genomics, Inc., Kava Pharmaceuticals, Inc., and SinglePixel Biomedical, Inc., (2) Dr. Chen's assignment of inventions, non-competition, non-solicitation and

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confidentiality agreements with us, and (3) a general release by Dr. Chen of any and all claims that Dr. Chen may have had against us. Pursuant to this agreement we will pay Dr. Chen $500,000 payable in $25,000 installments quarterly for five years.

Investor Rights Agreement

        Upon completion of this offering, pursuant to an Amended and Restated Investor Rights Agreement dated December 31, 2002 by and among Synta and certain stockholders, as amended on January 11, 2005, the holders of 34,293,361 shares of our common stock and 1,018,750 shares of our common stock issuable upon the exercise of options, are entitled to registration rights with respect to the shares of common stock held by them. These rights are provided under the terms of an investor rights agreement, as amended, between us and these shareholders. These shareholders include the following directors, beneficial owners of more than five percent of our voting securities, and their affiliates:
Name of Holder

	 	Number of
Registrable Shares

	
CxSynta, LLC	 	24,284,285	
Gollust Trust II	 	200,000	
Wyandanch Partners, LP	 	3,662,068	
Keith R. Gollust(1)	 	918,731	
Bruce Kovner(2)	 	551,872	

	
 	Total:	 	29,616,956	

	

(1)
Consists of 118,731 shares of common stock and 800,000 shares of common stock issuable upon the exercise of options.

(2)
Consists of 333,122 shares of common stock and 218,750 shares of common stock issuable upon the exercise of options.

See "Description of Capital Stock — Registration Rights" for a more detailed description of these registration rights. Other than the registration rights set forth above, there are no provisions of the Amended and Restated Investor Rights Agreement, as amended, that will remain in effect after completion of this offering.

Indemnification Arrangements

        Our restated certificate of incorporation and restated bylaws to be effective upon completion of this offering provide that we will indemnify our directors and officers to the fullest extent permitted by Delaware law. In addition, we expect to enter into indemnification agreements with each of our directors and executive officers prior to completion of the offering. See "Management — Limitation of Officers' and Directors' Liability and Indemnification" for a more detailed description of these indemnification arrangements.

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PRINCIPAL STOCKHOLDERS

        The following table sets forth certain information regarding the beneficial ownership of our common stock as of March 14, 2005, and as adjusted to reflect the sale of our common stock offered by this prospectus by:

•
the executive officers named in the summary compensation table;

•
each of our directors;

•
all of our current directors and executive officers as a group; and

•
each stockholder known by us to own beneficially more than five percent of our common stock.

        Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the securities. Shares of common stock that may be acquired by an individual or group within 60 days of March 14, 2005, pursuant to the exercise of options or warrants, are deemed to be outstanding for the purpose of computing the percentage ownership of such individual or group, but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person shown in the table. Percentage of ownership is based on 90,484,218 shares of common stock outstanding on March 14, 2005 and            shares of common stock outstanding after the completion of this offering.

        Except as indicated in footnotes to this table, we believe that the stockholders named in this table have sole voting and investment power with respect to all shares of common stock shown to be beneficially owned by them, based on information provided to us by such stockholders. Unless otherwise indicated, the address for each director and executive officer listed is: c/o Synta Pharmaceuticals Corp., 45 Hartwell Avenue, Lexington, Massachusetts 02421.

	 	Percentage of Common Stock
Beneficially Owned

	 	
Beneficial Owner

	 	Number of Shares
Beneficially Owned

	 	Before Offering

	 	After Offering

	 	
Directors and Executive Officers	 	 	 	 	 	 	 	
Safi R. Bahcall, Ph.D.(1)	 	8,962,601	 	9.9	%	 	 	
Keizo Koya, Ph.D.(2)	 	735,000	 	*	 	 	 	
Matthew L. Sherman, M.D.(3)	 	269,375	 	*	 	 	 	
James G. Barsoum, Ph.D.(4)	 	322,500	 	*	 	 	 	
Keith S. Ehrlich(5)	 	152,606	 	*	 	 	 	
Keith R. Gollust(6)	 	4,530,799	 	5.0	 	 	 	
Lan Bo Chen, Ph.D.(7)	 	13,851,587	 	15.3	 	 	 	
Bruce Kovner(8)	 	24,679,907	 	27.3	 	 	 	
William S. Reardon, C.P.A.(9)	 	1,818	 	*	 	 	 	
Robert N. Wilson(10)	 	863,011	 	*	 	 	 	
All current executive officers and directors as a group (12 persons)(11)	 	54,736,704	 	59.3	 	 	 	

Five Percent Stockholders	

 	

 	
 	
CxSynta LLC
c/o Caxton Corporation
Princeton Plaza, Building 2
731 Alexander Road
Princeton, NJ 08540(12)	 	24,284,285	 	26.8	 	 	 	
Lin-Huey Chen
184 East Emerson Road
Lexington, MA 02420(13)	 	13,851,587	 	15.3	 	 	 	

*
Represents beneficial ownership of less than 1% of the shares of Common Stock.

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(1)
Represents shares of common stock owned of record by Dr. Bahcall. The amount excludes an aggregate of 440,000 shares of common stock of which 60,000 shares are owned of record by the Safi R. Bahcall Irrevocable Trust, the trustee of which is Dr. Bahcall's mother and of which Dr. Bahcall is the beneficiary; 260,000 shares are owned of record by the Neta Bahcall Grantor Retained Annuity Trust, the trustee of which is Dr. Bahcall's father and of which Dr. Bahcall is a beneficiary; 60,000 shares owned of record by the Dan O. Bahcall Irrevocable Trust, the trustee of which is Dr. Bahcall's mother and of which Dr. Bahcall's brother is the beneficiary; and 60,000 shares are owned of record by the Orli G. Bahcall Irrevocable Trust, the trustee of which is Dr. Bahcall's mother and of which Dr. Bahcall's sister is the beneficiary. Dr. Bahcall disclaims beneficial ownership of the shares held by these trusts.

(2)
Consists of 160,000 shares of common stock owned of record by and 575,000 shares of common stock issuable upon the exercise of options exercisable within 60 days of March 14, 2005 held by Dr. Koya.

(3)
Consists of 160,000 shares of common stock owned of record by and 109,375 shares of common stock issuable upon the exercise of options exercisable within 60 days of March 14, 2005 held by Dr. Sherman.

(4)
Consists of 160,000 shares of common stock owned of record by and 162,500 shares of common stock issuable upon the exercise of options exercisable within 60 days of March 14, 2005 held by Dr. Barsoum.

(5)
Consists of 100,000 shares of common stock owned of record by and 52,606 shares of common stock issuable upon the exercise of options exercisable within 60 days of March 14, 2005 held by Mr. Ehrlich.

(6)
Consists of 118,731 shares of common stock owned of record by and 550,000 shares of common stock issuable upon the exercise of options exercisable within 60 days of March 14, 2005 held by Mr. Gollust; 200,000 shares of common stock owned of record by the Gollust Trust II, a trust established for the benefit of Mr. Gollust's minor children; and 3,662,068 shares of common stock owned of record by Wyandanch Partners, L.P. Mr. Gollust is president and sole stockholder of Gollust Management, Inc., which is the general partner of Wyandanch Partners, L.P.

(7)
Consists of 2,743,472 shares of common stock owned of record by Dr. Chen; 500,000 shares of common stock owned of record by the Lan Bo Chen 2004 GRAT; 568,895 shares of common stock owned of record by LAJ Holdings LLC, the manager of which is Dr. Chen's spouse; 8,016,066 shares of common stock owned of record by the Wisteria Trust, the trustee of which is Dr. Chen's spouse; 967,127 shares of common stock owned of record by the Ann Chen Trust, a co-trustee of which is Dr. Chen's spouse; 967,127 shares of common stock owned of record by the Jane Chen Trust, a co-trustee of which is Dr. Chen's spouse; 37,500 shares of common stock owned of record by the Chen Grandchildren's Trust, a co-trustee of which is Dr. Chen's spouse; 21,000 shares of common stock owned of record by the Alexander Chen Wu 2002 Irrevocable Trust, a co-trustee of which is Dr. Chen's spouse; an aggregate of 26,000 shares of common stock owned of record by Dr. Chen's two daughters; and 4,400 shares of common stock owned of record by the Allison Chen Wu 2004 Irrevocable Trust, a co-trustee of which is Dr. Chen's spouse. See note 13.

(8)
Consists of 333,122 shares of common stock owned of record by and 62,500 shares of common stock issuable upon the exercise of options exercisable within 60 days of March 14, 2005 held by Mr. Kovner; and 24,284,285 shares of common stock owned of record by CxSynta LLC. Caxton Corporation is the managing member of CxSynta LLC and Bruce Kovner is the chairman of Caxton Corporation. See note 12.

(9)
Represents shares of common stock owned of record by Mr. Reardon.

(10)
Consists of 753,636 shares of common stock owned of record by and 109,375 shares of common stock issuable upon the exercise of options exercisable within 60 days of March 14, 2005 held by Mr. Wilson.

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(11)
Consists of the shares of common stock set forth in footnotes 1 through 10 and 200,000 shares of common stock owned of record by, and 167,500 shares of common stock issuable upon the exercise of options exercisable within 60 days of March 14, 2005 held by, two executive officers not named in the table.

(12)
Represents 24,284,285 shares of common stock owned of record by CxSynta LLC. Caxton Corporation is the managing member of CxSynta LLC and Bruce Kovner is the chairman of Caxton Corporation. See note 8.

(13)
Consists of 2,743,472 shares of common stock owned of record by Ms. Chen's spouse, Dr. Chen; 500,000 shares of common stock owned of record by the Lan Bo Chen 2004 GRAT, the granter of which is Ms. Chen's spouse; 568,895 shares of common stock owned of record by LAJ Holdings LLC, of which Ms. Chen is the manager; 8,016,066 shares of common stock owned of record by the Wisteria Trust, of which Ms. Chen is the trustee; 967,127 shares of common stock owned of record by the Ann Chen Trust, of which Ms. Chen is a co-trustee; 967,127 shares of common stock owned of record by the Jane Chen Trust, of which Ms. Chen is a co-trustee; 37,500 shares of common stock owned of record by the Chen Grandchildren's Trust, of which Ms. Chen is a co-trustee; 21,000 shares of common stock owned of record by the Alexander Chen Wu 2002 Irrevocable Trust, of which Ms. Chen is a co-trustee; an aggregate of 26,000 shares of common stock owned of record by Ms. Chen's two daughters; and 4,400 shares of common stock owned of record by the Allison Chen Wu 2004 Irrevocable Trust, of which Ms. Chen is a co-trustee. See note 7.

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DESCRIPTION OF CAPITAL STOCK

        Upon completion of this offering, we will be authorized to issue            shares of common stock, $0.0001 par value per share, and 5,000,000 shares of preferred stock, $0.0001 par value per share, and there will be            shares of common stock and no shares of preferred stock outstanding. As of March 14, 2005, we had 90,484,218 shares of common stock outstanding held of record by 169 stockholders, and there were outstanding options to purchase 11,789,899 shares of common stock.

Common Stock

        Holders of common stock are entitled to one vote for each share held of record on all matters submitted to a vote of the stockholders, and do not have cumulative voting rights. Subject to preferences that may be applicable to any outstanding shares of preferred stock, holders of common stock are entitled to receive ratably such dividends, if any, as may be declared from time to time by our board of directors out of funds legally available for dividend payments. All outstanding shares of common stock are fully paid and nonassessable, and the shares of common stock to be issued upon completion of this offering will be fully paid and nonassessable. The holders of common stock have no preferences or rights of conversion, exchange, pre-emption or other subscription rights. There are no redemption or sinking fund provisions applicable to the common stock. In the event of any liquidation, dissolution or winding-up of our affairs, holders of common stock will be entitled to share ratably in our assets that are remaining after payment or provision for payment of all of our debts and obligations and after liquidation payments to holders of outstanding shares of preferred stock, if any.

Preferred Stock

        Preferred stock, if issued, would have priority over the common stock with respect to dividends and other distributions, including the distribution of assets upon liquidation. Our board of directors has the authority, without further stockholder authorization, to issue from time to time shares of preferred stock in one or more series and to fix the terms, limitations, relative rights and preferences, and variations of each series. Although we have no present plans to issue any shares of preferred stock, the issuance of shares of preferred stock, or the issuance of rights to purchase such shares, could decrease the amount of earnings and assets available for distribution to the holders of common stock, could adversely affect the rights and powers, including voting rights, of the common stock, and could have the effect of delaying, deterring, or preventing a change in control of us or an unsolicited acquisition proposal.

Registration Rights

        The holders of 34,293,361 shares of our common stock and 1,018,750 shares of our common stock issuable upon the exercise of options are entitled to certain registration rights with respect to these securities as set forth in an agreement between us and the holders of these securities. We are generally required to pay all expenses incurred in connection with registrations effected in connection with the following rights, excluding underwriting discounts and commissions, and fees and expenses of counsel to the registering security holders.

        Demand Rights.    Beginning upon the expiration of the lock-up agreements entered into by the holders of these registrable securities in connection with this offering, as described below in the section entitled "Shares Eligible for Future Sale — Lock-Up Agreements," subject to specified limitations, the holders of not less than 60% of these registrable securities may require that we register all or a portion of these securities for sale under the Securities Act, if the anticipated aggregate offering price of such securities is at least $15,000,000. We may be required to effect up to two such registrations. Stockholders with these registration rights who are not part of an initial registration demand are entitled to notice and are entitled to include their shares of common stock in the registration.

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        Piggyback Rights.    If at any time after the expiration of the lock-up agreements entered into by the holders of these registrable securities in connection with this offering, we propose to register any of our equity securities under the Securities Act, other than in connection with:

•
a registration relating solely to our stock option plans or other employee benefit plans, or

•
a registration relating solely to a business combination or merger involving us,

the holders of these registrable securities are entitled to notice of such registration and are entitled to include their shares of common stock in the registration. Under certain circumstances, the underwriters, if any, may limit the number of shares included in any such registration.

        Form S-3 Rights.    If we become eligible to file registration statements on Form S-3, subject to specified limitations, a holder of these registrable securities can require us to register all or a portion of its registrable securities on Form S-3, if the anticipated aggregate offering price of such securities is at least $10,000,000. We may not be required to effect more than two such registrations in any rolling 12-month period. Stockholders with these registration rights who are not part of an initial registration demand are entitled to notice and are entitled to include their shares of common stock in the registration.

Anti-Takeover Provisions

        The provisions of (1) Delaware law, (2) our restated certificate of incorporation to be effective upon completion of this offering, and (3) our restated bylaws to be effective upon completion of this offering discussed below could discourage or make it more difficult to accomplish a proxy contest or other change in our management or the acquisition of control by a holder of a substantial amount of our voting stock. It is possible that these provisions could make it more difficult to accomplish, or could deter, transactions that stockholders may otherwise consider to be in their best interests or the best interests of the company. These provisions are intended to enhance the likelihood of continuity and stability in the composition of our board of directors and in the policies formulated by the board of directors and to discourage certain types of transactions that may involve an actual or threatened change of control of us. These provisions are designed to reduce our vulnerability to an unsolicited acquisition proposal. The provisions also are intended to discourage certain tactics that may be used in proxy fights. Such provisions also may have the effect of preventing changes in our management.

        Delaware Statutory Business Combinations Provision.    We are subject to the anti-takeover provisions of Section 203 of the Delaware General Corporations Law. In general, Section 203 prohibits a publicly held Delaware corporation from engaging in a "business combination" with an "interested stockholder" for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is, or the transaction in which the person became an interested stockholder was, approved in a prescribed manner or another prescribed exception applies. For purposes of Section 203, a "business combination" is defined broadly to include a merger, asset sale or other transaction resulting in a financial benefit to the interested stockholder, and, subject to certain exceptions, an "interested stockholder" is a person who, together with his or her affiliates and associates, owns (or within three years prior, did own) 15% or more of the corporation's voting stock.

        Classified Board of Directors; Removal of Directors for Cause.    Our restated certificate of incorporation and restated bylaws provide that upon completion of this offering, our board of directors will be divided into three classes, with the term of office of the first class to expire at the first annual meeting of stockholders following the initial classification of directors, the term of office of the second class to expire at the second annual meeting of stockholders following the initial classification of directors, and the term of office of the third class to expire at the third annual meeting of stockholders following the initial classification of directors. At each annual meeting of stockholders, directors elected to succeed those directors whose terms expire will be elected for a three-year term of office. All directors elected to our classified board of directors will serve until the election and qualification of their respective successors or

92

their earlier resignation or removal. The board of directors is authorized to create new directorships and to fill such positions so created and is permitted to specify the class to which any such new position is assigned. The person filling such position would serve for the term applicable to that class. The board of directors (or its remaining members, even if less than a quorum) is also empowered to fill vacancies on the board of directors occurring for any reason for the remainder of the term of the class of directors in which the vacancy occurred. Members of the board of directors may only be removed for cause and only by the affirmative vote of 80% of our outstanding voting stock. These provisions are likely to increase the time required for stockholders to change the composition of the board of directors. For example, in general, at least two annual meetings will be necessary for stockholders to effect a change in a majority of the members of the board of directors.

        Advance Notice Provisions for Stockholder Proposals and Stockholder Nominations of Directors.    Our restated bylaws provide that, for nominations to the board of directors or for other business to be properly brought by a stockholder before a meeting of stockholders, the stockholder must first have given timely notice of the proposal in writing to our Secretary. For an annual meeting, a stockholder's notice generally must be delivered not less than 45 days nor more than 75 days prior to the anniversary of the mailing date of the proxy statement for the previous year's annual meeting. Detailed requirements as to the form of the notice and information required in the notice are specified in the restated bylaws. If it is determined that business was not properly brought before a meeting in accordance with our bylaws, such business will not be conducted at the meeting.

        Special Meetings of Stockholders.    Special meetings of the stockholders may be called only by our board of directors pursuant to a resolution adopted by a majority of the total number of directors.

        No Stockholder Action by Written Consent.    Our restated certificate of incorporation and restated bylaws do not permit our stockholders to act by written consent. As a result, any action to be effected by our stockholders must be effected at a duly called annual or special meeting of the stockholders.

        Super-Majority Stockholder Vote Required for Certain Actions.    The Delaware General Corporation Law provides generally that the affirmative vote of a majority of the shares entitled to vote on any matter is required to amend a corporation's certificate of incorporation or bylaws, unless the corporation's certificate of incorporation or bylaws, as the case may be, requires a greater percentage. Our restated certificate of incorporation requires the affirmative vote of the holders of at least 80% of our outstanding voting stock to amend or repeal any of the provisions discussed in this section of this prospectus entitled "Anti-Takeover Provisions." This 80% stockholder vote would be in addition to any separate class vote that might in the future be required pursuant to the terms of any preferred stock that might then be outstanding. In addition, an 80% vote is also required for any amendment to, or repeal of, our restated bylaws by the stockholders. Our restated bylaws may be amended or repealed by a vote of a majority of the total number of directors.

Transfer Agent and Registrar

        The transfer agent and registrar for the common stock will be            .

Listing

        We have applied to list our common stock on the Nasdaq National Market under the symbol "SNTA."

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SHARES ELIGIBLE FOR FUTURE SALE

        Prior to this offering, there has been no market for our common stock. Future sales of substantial amounts of our common stock in the public market could adversely affect market prices prevailing from time to time. Furthermore, because only a limited number of shares will be available for sale shortly after this offering due to existing contractual and legal restrictions on resale as described below, there may be sales of substantial amounts of our common stock in the public market after the restrictions lapse. This may adversely affect the prevailing market price and our ability to raise equity capital in the future.

        Upon completion of this offering, we will have            shares of common stock outstanding, assuming no exercise of any outstanding options outstanding. Of these shares, the             shares sold in this offering will be freely transferable without restriction or registration under the Securities Act, except for any shares purchased by one of our existing "affiliates," as that term is defined in Rule 144 under the Securities Act. The remaining            shares of common stock existing are "restricted shares" as defined in Rule 144. Restricted shares may be sold in the public market only if registered or if they qualify for an exemption from registration under Rules 144 or 701 of the Securities Act, as described below. As a result of the contractual 180-day lock-up period described below and the provisions of Rules 144 and 701, these shares will be available for sale into the public market as follows:
Number of Shares

	 	Date Available for Sale Into the Public Market

	
 	 	After 180 days* from the date of this prospectus (subject, in some cases, to volume limitations).	

 	
At various times after 180 days* from the date of this prospectus (subject, in some cases, to volume limitations).	

*
This 180-day period corresponds to the end of the lock-up period described below in "Lock-Up Agreements." This lock-up period may be extended as described below.

Rule 144

        In general, under Rule 144 as currently in effect, beginning 90 days after this offering, a person, or persons whose shares are aggregated, who owns shares that were purchased from us, or any affiliate, at least one year previously, is entitled to sell within any three-month period a number of shares that does not exceed the greater of (1) 1% of our then-outstanding shares of common stock, which will equal approximately            shares immediately after this offering, or (2) the average weekly trading volume of our common stock on the Nasdaq National Market during the four calendar weeks preceding the filing of a notice of the sale on Form 144. Sales under Rule 144 are also subject to manner of sale provisions, notice requirements, and the availability of current public information about us. We are unable to estimate the number of shares that will be sold under Rule 144 since this will depend on the market price for our common stock, the personal circumstances of the stockholder and other factors.

Rule 144(k)

        Under Rule 144(k), a person who is not deemed to have been one of our affiliates at any time during the three months preceding a sale, and who owns shares within the definition of "restricted securities" under Rule 144 that were purchased from us, or any affiliate, at least two years previously, would be entitled to sell shares under Rule 144(k) without regard to the volume limitations, manner of sale provisions, public information requirements or notice requirements described above.

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Rule 701

        In general, under Rule 701, any of our employees, directors, officers, consultants or advisors who purchase shares from us in connection with a compensatory stock or option plan or other written agreement before the effective date of this offering are entitled to resell such shares 90 days after the effective date of this offering in reliance on Rule 144, without having to comply with the holding period requirements or other restrictions contained in Rule 701.

        The SEC has indicated that Rule 701 will apply to typical stock options granted by an issuer before it becomes subject to the reporting requirements of the Securities Exchange Act, along with the shares acquired upon exercise of such options, including exercises after the date of this prospectus. Securities issued in reliance on Rule 701 are restricted securities and, subject to the contractual restrictions described above, beginning 90 days after the date of this prospectus, may be sold by persons other than "affiliates," as defined in Rule 144, subject only to the manner of sale provisions of Rule 144 and by "affiliates" under Rule 144 without compliance with its one-year minimum holding period requirement.

Registration Rights

        Upon completion of this offering, the holders of 34,293,361 shares of our common stock and 1,018,750 shares of our common stock issuable upon the exercise of options or their transferees, will be entitled to various rights with respect to the registration of these shares under the Securities Act. Registration of these shares under the Securities Act would result in these shares becoming freely tradable without restriction under the Securities Act immediately upon the effectiveness of the registration, except for shares held by affiliates.

Stock Options

        As of March 14, 2005, there were options outstanding to purchase 11,789,899 shares of common stock, including options to purchase 300,000 shares of common stock granted outside of our stock plans, and 1,751,438 shares of common stock were available for future option grants under our stock plans.

        Upon completion of this offering, we intend to file a registration statement on Form S-8 under the Securities Act covering all shares of common stock subject to outstanding options or issuable pursuant to our stock plans. Subject to Rule 144 volume limitations applicable to affiliates, shares registered under any registration statements will be available for sale in the open market, except to the extent that the shares are subject to vesting restrictions with us or the contractual restrictions described below.

Lock-Up Agreements

        The holders of substantially all of our currently outstanding stock have agreed that, without the prior written consent of Morgan Stanley & Co. Incorporated on behalf of the underwriters and subject to the exceptions described in the section entitled "Underwriters" in this prospectus, they will not, during the period ending 180 days after the date of this prospectus, subject to a possible extension as described below:

•
offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any shares of our common stock or any securities convertible into or exercisable or exchangeable for shares of our common stock; or

•
enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of our common stock,

whether any transaction described above is to be settled by delivery of shares of our common stock or such other securities, in cash or otherwise. Morgan Stanley does not have any pre-established conditions to waiving the terms of the lock-up agreements. Any determination to release any shares subject to the

95

lock-up agreements would be based on a number of factors at the time of determination, including but not necessarily limited to the market price of the common stock, the liquidity of the trading market for the common stock, general market conditions, the number of shares proposed to be sold and the timing, purpose and terms of the proposed sale.

        The lock-up agreements also provide that, if we issue an earnings release or if material news or a material event relating to our company occurs during the last 17 days of the 180-day restricted period or if prior to the expiration of the 180-day restricted period we announce that we will release earnings results during the 16-day period beginning on the last day of the 180-day period, the restricted period will continue for the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event.

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UNDERWRITERS

        Under the terms and subject to the conditions contained in an underwriting agreement dated the date of this prospectus, the underwriters named below, for whom Morgan Stanley & Co. Incorporated, Lehman Brothers Inc., and Lazard Frères & Co. LLC are acting as representatives, have severally agreed to purchase, and we have agreed to sell to them, severally, the number of shares indicated below:
Name

	 	Number of
Shares

	
Morgan Stanley & Co. Incorporated	 	 	
Lehman Brothers Inc. 	 	 	
Lazard Frères & Co. LLC	 	 	

	
 	Total	 	 	

	
        The underwriters are offering the shares of common stock subject to their acceptance of the shares from us and subject to prior sale. The underwriting agreement provides that the obligations of the several underwriters to pay for and accept delivery of the shares of common stock offered by this prospectus are subject to the approval of specified legal matters by their counsel and to other conditions. The underwriters are obligated to take and pay for all of the shares of common stock offered by this prospectus if any such shares are taken. However, the underwriters are not required to take or pay for the shares covered by the underwriters' over-allotment option described below.

        The underwriters initially propose to offer part of the shares of common stock directly to the public at the public offering price listed on the cover page of this prospectus and part to certain dealers at a price that represents a concession not in excess of $                  per share under the public offering price. No underwriter may allow, and no dealer may reallow, any concession to other underwriters or to certain dealers. After the initial offering of the shares of common stock, the offering price and other selling terms may from time to time be varied by the representatives.

        We have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to an aggregate of additional shares of common stock at the public offering price listed on the cover page of this prospectus, less underwriting discounts and commissions. The underwriters may exercise this option solely for the purpose of covering over-allotments, if any, made in connection with the offering of the shares of common stock offered by this prospectus. To the extent the option is exercised, each underwriter will become obligated, subject to certain conditions, to purchase approximately the same percentage of the additional shares of common stock as the number listed next to the underwriter's name in the preceding table bears to the total number of shares of common stock listed next to the names of all underwriters in the preceding table. If the underwriters' option is exercised in full, the total price to the public would be $                  , the total underwriters' discounts and commissions would be $                                           and the total proceeds to us would be $                  .

        The underwriters have informed us that they do not intend sales to discretionary accounts to exceed five percent of the total number of shares of common stock offered by them.

        We and all of our directors and officers and holders of substantially all of our outstanding stock have agreed that, without the prior written consent of Morgan Stanley & Co. Incorporated on behalf of the underwriters, we and they will not, during the period ending 180 days after the date of this prospectus:

•
offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of directly or indirectly, any shares of our common stock or any securities convertible into or exercisable or exchangeable for shares of our common stock; or

97

•
enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of shares of our common stock,

whether any transaction described above is to be settled by delivery of shares of our common stock or such other securities, in cash or otherwise.

        The 180-day restricted period described in the preceding paragraph will be extended if:

•
during the last 17 days of the 180-day restricted period we issue an earnings release or material news or a material event relating to our company occurs; or

•
prior to the expiration of the 180-day restricted period, we announce that we will release earnings results during the 16-day period beginning on the last day of the 180-day period,

in which case the restrictions described in the preceding paragraph will continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event.

        These restrictions do not apply to:

•
the sale of shares to the underwriters;

•
the issuance by us of shares of our common stock upon the exercise of an option or a warrant or the conversion of a security outstanding on the date of this prospectus of which the underwriters have been advised in writing;

•
the issuance by us of shares or options to purchase shares of our common stock pursuant to our stock plans, provided that the recipient of the shares agrees to be subject to the restrictions described above;

•
transactions by any person other than us relating to shares of common stock or other securities acquired in open market transactions after the completion of the offering of the shares, provided that no filing by any party under the Exchange Act will be required or will be voluntarily made in connection with subsequent sales of common stock or other securities acquired in such open market transactions;

•
transfers of shares or securities convertible into shares as a gift or charitable contribution, or by will or intestacy;

•
transfers of shares or securities convertible into shares to any trust the sole beneficiaries of which are the transferee or a member of the immediate family of the transferee; or

•
transfers or securities convertible into shares to certain entities or persons affiliated with the stockholder;

provided that in the case of each of the last three transactions, each donee, distributee, transferee, and recipient agrees to be subject to the restrictions described in the immediately preceding paragraph, no filing under Section 16 of the Securities Exchange Act of 1934, as amended, is required in connection with these transactions, other than a filing on a Form 5 made after the expiration of the 180-day period, and no transaction includes a disposition for value.

98

        The following table shows the underwriting discounts and commissions that we are to pay to the underwriters in connection with this offering. These amounts are shown assuming both no exercise and full exercise of the underwriters' option to purchase additional shares of our common stock.
 
	 	Paid by Synta Pharmaceuticals

	
 
	 	No Exercise

	 	Full Exercise

	
Per share	 	$	 	 	$	 	

	 	

	
 	Total	 	$	 	 	$	 	

	 	

	
        In addition, we estimate that the expenses of this offering payable by us, other than underwriting discounts and commissions, will be $                  .

        In order to facilitate the offering of the common stock, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of the common stock. Specifically, the underwriters may sell more shares than they are obligated to purchase under the underwriting agreement, creating a short position. A short sale is covered if the short position is no greater than the number of shares available for purchase by the underwriters under the over-allotment option. The underwriters can close out a covered short sale by exercising the over-allotment option or purchasing shares in the open market. In determining the source of shares to close out a covered short sale, the underwriters will consider, among other things, the open market price of shares compared to the price available under the over-allotment option. The underwriters may also sell shares in excess of the over-allotment option, creating a naked short position. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common stock in the open market after pricing that could adversely affect investors who purchase in this offering. In addition, to stabilize the price of the common stock, the underwriters may bid for, and purchase, shares of common stock in the open market. Finally, the underwriting syndicate may reclaim selling concessions allowed to an underwriter or a dealer for distributing the common stock in this offering, if the syndicate repurchases previously distributed common stock in transactions to cover syndicate short positions or to stabilize the price of the common stock. Any of these activities may stabilize or maintain the market price of the common stock above independent market levels. The underwriters are not required to engage in these activities, and may end any of these activities at any time.

        We have applied for quotation of our common stock on the Nasdaq National Market under the symbol "SNTA."

        We and the underwriters have agreed to indemnify each other against certain liabilities, including liabilities under the Securities Act.

Pricing of the Offering

        Prior to the offering, there has been no public market for our common stock. The initial public offering price will be determined by negotiations between us and the representatives. Among the factors to be considered in determining the initial public offering price of the shares will be our future prospects and those of our industry in general, our sales, earnings, and other financial operating information in recent periods, and the price-earnings ratios, price-sales ratios, market prices of securities and financial and operating information of companies engaged in activities similar to ours. The estimated initial public offering price range set forth on the cover page of this preliminary prospectus is subject to change as a result of market conditions and other factors.

99

LEGAL MATTERS

        The validity of the issuance of the common stock offered by us in this offering will be passed upon for us by Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., Boston, Massachusetts. Ropes & Gray LLP, Boston, Massachusetts, has acted as counsel for the underwriters in connection with certain legal matters related to this offering.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

        The consolidated financial statements of Synta Pharmaceuticals Corp. as of December 31, 2003 and 2004, and for each of the years in the three-year period ended December 31, 2004 and for the period from inception (March 10, 2000) through December 31, 2004, the consolidated financial statements of Principia Associates, Inc. as of September 20, 2002 and for the period from inception (June 17, 2002) through September 20, 2002, and the financial statements of SBR Pharmaceuticals Corp. as of July 31, 2002 and for the seven months ended July 31, 2002, have been included herein and in the registration statement in reliance upon the reports of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION

        We have filed with the SEC a registration statement on Form S-1 under the Securities Act, with respect to the common stock offered by this prospectus. This prospectus, which is part of the registration statement, omits certain information, exhibits, schedules, and undertakings set forth in the registration statement. For further information pertaining to us and our common stock, reference is made to the registration statement and the exhibits and schedules to the registration statement. Statements contained in this prospectus as to the contents or provisions of any documents referred to in this prospectus are not necessarily complete, and in each instance where a copy of the document has been filed as an exhibit to the registration statement, reference is made to the exhibit for a more complete description of the matters involved.

        You may read and copy all or any portion of the registration statement without charge at the public reference room of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of the registration statement may be obtained from the SEC at prescribed rates from the public reference room of the SEC at such address. You may obtain information regarding the operation of the public reference room by calling 1-800-SEC-0330. In addition, registration statements and certain other filings made with the SEC electronically are publicly available through the SEC's web site at http://www.sec.gov. The registration statement, including all exhibits and amendments to the registration statement, has been filed electronically with the SEC.

        Upon completion of this offering, we will become subject to the information and periodic reporting requirements of the Securities Exchange Act and, accordingly, will file annual reports containing financial statements audited by an independent public accounting firm, quarterly reports containing unaudited financial data, current reports, proxy statements and other information with the SEC. You will be able to inspect and copy such periodic reports, proxy statements, and other information at the SEC's public reference room, and the web site of the SEC referred to above.

100

INDEX TO FINANCIAL STATEMENTS

SYNTA PHARMACEUTICALS CORP.
(A Development-Stage Company)
 
	 	Page

	

SYNTA PHARMACEUTICALS CORP.
(A Development-Stage Company)
Years ended December 31, 2002, 2003, and 2004	

Report of Independent Registered Public Accounting Firm	
 	
F-2	
Consolidated Financial Statements:	 	 	
 	Balance Sheets	 	F-3	
 	Statements of Operations	 	F-4	
 	Statements of Stockholders' Equity (Deficit) and Comprehensive Loss	 	F-5	
 	Statements of Cash Flows	 	F-7	
 	Notes to Financial Statements	 	F-8	

PRINCIPIA ASSOCIATES, INC.
(A Development-Stage Company)
Period from inception (June 17, 2002) to September 20, 2002	

Report of Independent Registered Public Accounting Firm	
 	
F-30	
Consolidated Financial Statements:	 	 	
 	Balance Sheet	 	F-31	
 	Statement of Operations	 	F-32	
 	Statement of Stockholders' Equity	 	F-33	
 	Statement of Cash Flows	 	F-34	
 	Notes to Financial Statements	 	F-35	

SBR PHARMACEUTICALS CORP.
(Formerly Shionogi BioResearch Corp.)
Seven months ended July 31, 2002	

Report of Independent Registered Public Accounting Firm	
 	
F-42	
Financial Statements:	 	 	
 	Balance Sheet	 	F-43	
 	Statement of Operations	 	F-44	
 	Statement of Stockholders' Equity	 	F-45	
 	Statement of Cash Flows	 	F-46	
 	Notes to Financial Statements	 	F-47	
F-1

Report of Independent Registered Public Accounting Firm

The Board of Directors
Synta Pharmaceuticals Corp.:

        We have audited the accompanying consolidated balance sheets of Synta Pharmaceuticals Corp. (the Company), a development-stage company, as of December 31, 2003 and 2004, and the related consolidated statements of operations, stockholders' equity (deficit) and comprehensive loss, and cash flows for each of the years in the three-year period ended December 31, 2004 and the period from inception (March 10, 2000) through December 31, 2004. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

        We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Synta Pharmaceuticals Corp. as of December 31, 2003 and 2004, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2004, and the period from inception (March 10, 2000) through December 31, 2004, in conformity with United States generally accepted accounting principles.

/s/ KPMG LLP

Boston, Massachusetts
February 4, 2005

F-2

SYNTA PHARMACEUTICALS CORP.
(A Development-Stage Company)

Consolidated Balance Sheets

(in thousands, except share and per share amounts)
 
	 	December 31

	 	
 
	 	2003

	 	2004

	 	
Assets	 	 	 	 	 	 	 	
Current assets:	 	 	 	 	 	 	 	
 	Cash and cash equivalents	 	$	36,062	 	$	42,736	 	
 	Restricted cash	 	 	345	 	 	457	 	
 	Marketable securities available-for-sale	 	 	40,164	 	 	82,232	 	
 	Prepaid expenses and other current assets	 	 	489	 	 	597	 	

	 	

	 	
 	 	 	Total current assets	 	 	77,060	 	 	126,022	 	
Property and equipment, net	 	 	3,245	 	 	4,797	 	
Deferred offering costs	 	 	—	 	 	1,085	 	
Other assets	 	 	82	 	 	115	 	

	 	

	 	
 	 	 	Total assets	 	$	80,387	 	$	132,019	 	

	 	

	 	
Liabilities and Stockholders' Equity	 	 	 	 	 	 	 	
Current liabilities:	 	 	 	 	 	 	 	
 	Accounts payable	 	$	209	 	$	2,885	 	
 	Accrued expenses	 	 	2,942	 	 	8,996	 	
 	Capital lease obligations—current	 	 	—	 	 	537	 	
 	Deferred revenue	 	 	345	 	 	457	 	

	 	

	 	
 	 	 	Total current liabilities	 	 	3,496	 	 	12,875	 	
 	Capital lease obligations—long-term	 	 	—	 	 	1,188	 	

	 	

	 	
 	 	 	Total liabilities	 	 	3,496	 	 	14,063	 	

	 	

	 	
Commitments and contingencies (notes 11 and 15)	 	 	 	 	 	 	 	

Stockholders' equity	

 	

 	
 	
 	Common stock, par value $0.0001 per share.	 	 	 	 	 	 	 	
 	 	Authorized 150,000,000 shares; 71,194,811 shares issued and outstanding and 125,000 subscribed shares at December 31, 2003 and 90,202,937 shares issued and outstanding at December 31, 2004	 	 	7	 	 	9	 	
 	Additional paid-in capital	 	 	144,149	 	 	238,923	 	
 	Deferred compensation	 	 	(2,307	)	 	(10,435	)	
 	Stock subscription receivable	 	 	(500	)	 	—	 	
 	Accumulated other comprehensive income (loss)	 	 	33	 	 	(116	)	
 	Deficit accumulated during the development stage	 	 	(64,491	)	 	(110,425	)	

	 	

	 	
 	 	 	Total stockholders' equity	 	 	76,891	 	 	117,956	 	

	 	

	 	
 	 	 	Total liabilities and stockholders' equity	 	$	80,387	 	$	132,019	 	

	 	

	 	
See accompanying notes to consolidated financial statements.

F-3

SYNTA PHARMACEUTICALS CORP.
(A Development-Stage Company)

Consolidated Statements of Operations

(in thousands, except share and per share amounts)

	 	 
	 	 
	 	Period from
inception
(March 10,
2000)
through
December 31,
2004

	 	 	
 
	 	Years ended December 31

	 	 	 	 	 	
 
	 	2002

	 	2003

	 	2004

	 	 	 	 	 	
Research grant revenue	 	$	—	 	$	1,304	 	$	173	 	$	1,477	 	 	 	

	 	

	 	

	 	

	 	 	 	
Operating expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Research and development	 	 	7,292	 	 	24,337	 	 	38,136	 	 	70,042	 	 	 	
 	In-process research and development	 	 	18,088	 	 	—	 	 	1,583	 	 	19,671	 	 	 	
 	General and administrative	 	 	1,569	 	 	5,261	 	 	7,383	 	 	14,415	 	 	 	
 	Other compensation expense(1)	 	 	9,315	 	 	—	 	 	—	 	 	9,315	 	 	 	

	 	

	 	

	 	

	 	 	 	
 	 	 	Total operating expenses	 	 	36,264	 	 	29,598	 	 	47,102	 	 	113,443	 	 	 	

	 	

	 	

	 	

	 	 	 	
 	 	 	Loss from operations	 	 	(36,264	)	 	(28,294	)	 	(46,929	)	 	(111,966	)	 	 	
Other income:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Investment income, net	 	 	110	 	 	416	 	 	995	 	 	1,541	 	 	 	

	 	

	 	

	 	

	 	 	 	
 	 	 	Net loss	 	$	(36,154	)	$	(27,878	)	$	(45,934	)	$	(110,425	)	 	 	

	 	

	 	

	 	

	 	 	 	

Basic and diluted weighted average common shares outstanding	

33,114,565	

60,096,198	

74,815,599	

 	
 	 	 	
Basic and diluted net loss per common share	 	$	(1.09	)	$	(0.46	)	$	(0.61	)	 	 	 	 	 	

(1)
Excluded from general and administrative expense.

See accompanying notes to consolidated financial statements.

F-4

SYNTA PHARMACEUTICALS CORP.
(A Development-Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit) and Comprehensive Loss
(in thousands, except share amounts)

	 	 

	 	 
	 	 
	 	Deficit
accumulated
during the
development
stage

	 	 

 
	 	Common stock

	 	 

	 	Accumulated
other
comprehensive
income (loss)

	 	 	 	 

 
	 	 	 	Additional
paid-in
capital

	 	Deferred
compensation

	 	Stock
subscription
receivable

	 	 	 	 	 	Total
stockholders'
equity (deficit)

	 	Comprehensive
loss

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 
	 	Shares

	 	Amount

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance at inception	 	—	 	$	—	 	$	—	 	$	—	 	$	—	 	$	—	 	$	—	 	$	—	 	$	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Net loss	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	(78	)	 	(78	)	 	(78	)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

	 	

	 	

	 	

	 	

	 	

	 	

	 	

	 	

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance at December 31, 2000	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	(78	)	 	(78	)	$	(78	)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Issuance of common shares to founders	 	20,400,000	 	 	2	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	2	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Issuance of common shares	 	6,800,000	 	 	1	 	 	3,399	 	 	—	 	 	(225	)	 	—	 	 	—	 	 	3,175	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Issuance and remeasurement of stock options for services	 	—	 	 	—	 	 	120	 	 	(120	)	 	—	 	 	—	 	 	—	 	 	—	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Compensation expense related to stock options for services	 	—	 	 	—	 	 	—	 	 	26	 	 	—	 	 	—	 	 	—	 	 	26	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Net loss	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	(381	)	 	(381	)	 	(381	)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

	 	

	 	

	 	

	 	

	 	

	 	

	 	

	 	

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance at December 31, 2001	 	27,200,000	 	 	3	 	 	3,519	 	 	(94	)	 	(225	)	 	—	 	 	(459	)	 	2,744	 	$	(381	)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Issuance of common shares	 	14,252,230	 	 	1	 	 	38,634	 	 	—	 	 	—	 	 	—	 	 	—	 	 	38,635	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Issuance of common stock and warrants for Principia	 	4,939,500	 	 	1	 	 	15,859	 	 	—	 	 	—	 	 	—	 	 	—	 	 	15,860	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Proceeds from stock subscription	 	—	 	 	—	 	 	—	 	 	—	 	 	225	 	 	—	 	 	—	 	 	225	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Issuance of common stock for licenses	 	384,447	 	 	—	 	 	1,042	 	 	—	 	 	—	 	 	—	 	 	—	 	 	1,042	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Issuance of common stock for Diagon	 	3,145,854	 	 	—	 	 	8,525	 	 	—	 	 	—	 	 	—	 	 	—	 	 	8,525	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Issuance and remeasurement of stock options for services	 	—	 	 	—	 	 	851	 	 	(851	)	 	—	 	 	—	 	 	—	 	 	—	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Compensation expense related to stock options for services	 	—	 	 	—	 	 	—	 	 	274	 	 	—	 	 	—	 	 	—	 	 	274	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Net loss	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	(36,154	)	 	(36,154	)	 	(36,154	)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

	 	

	 	

	 	

	 	

	 	

	 	

	 	

	 	

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance at December 31, 2002	 	49,922,031	 	 	5	 	 	68,430	 	 	(671	)	 	—	 	 	—	 	 	(36,613	)	 	31,151	 	$	(36,154	)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Issuance of common shares, net	 	20,467,275	 	 	2	 	 	70,478	 	 	—	 	 	—	 	 	—	 	 	—	 	 	70,480	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Amount due from stock subscription	 	—	 	 	—	 	 	500	 	 	—	 	 	(500	)	 	—	 	 	—	 	 	—	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Issuance of common stock for licenses	 	73,779	 	 	—	 	 	200	 	 	—	 	 	—	 	 	—	 	 	—	 	 	200	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Exercise of stock warrants	 	575,476	 	 	—	 	 	288	 	 	—	 	 	—	 	 	—	 	 	—	 	 	288	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Exercise of stock options	 	156,250	 	 	—	 	 	423	 	 	—	 	 	—	 	 	—	 	 	—	 	 	423	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Modification of employee stock options	 	—	 	 	—	 	 	1,289	 	 	—	 	 	—	 	 	—	 	 	—	 	 	1,289	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Issuance and remeasurement of stock options for services	 	—	 	 	—	 	 	2,541	 	 	(2,541	)	 	—	 	 	—	 	 	—	 	 	—	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Compensation expense related to stock options for services	 	—	 	 	—	 	 	—	 	 	905	 	 	—	 	 	—	 	 	—	 	 	905	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Unrealized gain on marketable securities	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	33	 	 	—	 	 	33	 	 	33	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Net loss	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	(27,878	)	 	(27,878	)	 	(27,878	)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

	 	

	 	

	 	

	 	

	 	

	 	

	 	

	 	

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance at December 31, 2003	 	71,194,811	 	 	7	 	 	144,149	 	 	(2,307	)	 	(500	)	 	33	 	 	(64,491	)	 	76,891	 	$	(27,845	)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
See accompanying notes to consolidated financial statements.

F-5

SYNTA PHARMACEUTICALS CORP.
(A Development-Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit) and Comprehensive Loss (Continued)
(in thousands, except share amounts)

	 	 

	 	 
	 	 
	 	Deficit
accumulated
during the
development
stage

	 	 

 
	 	Common stock

	 	 

	 	Accumulated
other
comprehensive
income (loss)

	 	 	 	 

 
	 	 	 	Additional
paid-in
capital

	 	Deferred
compensation

	 	Stock
subscription
receivable

	 	 	 	 	 	Total
stockholders'
equity (deficit)

	 	Comprehensive
loss

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 
	 	Shares

	 	Amount

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Issuance of common shares under stock subscription	 	750,000	 	$	—	 	$	2,493	 	$	—	 	$	500	 	$	—	 	$	—	 	$	2,993	 	$	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Issuance of common shares, net	 	16,000,000	 	 	2	 	 	79,898	 	 	—	 	 	—	 	 	—	 	 	—	 	 	79,900	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Issuance of common stock in connection with acquisition	 	553,344	 	 	—	 	 	2,213	 	 	—	 	 	—	 	 	—	 	 	—	 	 	2,213	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Issuance of restricted common shares	 	1,460,000	 	 	—	 	 	8,030	 	 	(8,030	)	 	—	 	 	—	 	 	—	 	 	—	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Issuance stock options at less than fair value	 	—	 	 	—	 	 	471	 	 	(471	)	 	—	 	 	—	 	 	—	 	 	—	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Exercise of stock options	 	129,687	 	 	—	 	 	352	 	 	—	 	 	—	 	 	—	 	 	—	 	 	352	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Exercise of stock warrants	 	115,095	 	 	—	 	 	58	 	 	—	 	 	—	 	 	—	 	 	—	 	 	58	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Issuance and remeasurement of stock options for services	 	—	 	 	—	 	 	1,259	 	 	(1,259	)	 	—	 	 	—	 	 	—	 	 	—	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Compensation expense related to stock options for services	 	—	 	 	—	 	 	—	 	 	1,331	 	 	—	 	 	—	 	 	—	 	 	1,331	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Compensation expense related to issuance of stock options and restricted stock below fair value	 	—	 	 	—	 	 	—	 	 	301	 	 	—	 	 	—	 	 	—	 	 	301	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Unrealized loss on marketable securities	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	(149	)	 	—	 	 	(149	)	 	(149	)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Net loss	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	(45,934	)	 	(45,934	)	 	(45,934	)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

	 	

	 	

	 	

	 	

	 	

	 	

	 	

	 	

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance at December 31, 2004	 	90,202,937	 	$	9	 	$	238,923	 	$	(10,435	)	$	—	 	$	(116	)	$	(110,425	)	$	117,956	 	$	(46,083	)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

	 	

	 	

	 	

	 	

	 	

	 	

	 	

	 	

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
See accompanying notes to consolidated financial statements.

F-6

SYNTA PHARMACEUTICALS CORP.
(A Development-Stage Company)

Consolidated Statements of Cash Flows

(in thousands)

	 	 
	 	 
	 	Period from
inception
(March 10,
2000)
through
December 31,
2004

	 	 	
 
	 	Years ended December 31

	 	 	 	 	 	
 
	 	2002

	 	2003

	 	2004

	 	 	 	 	 	
Cash flows from operating activities:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Net loss	 	$	(36,154	)	$	(27,878	)	$	(45,934	)	$	(110,425	)	 	 	
 	Adjustments to reconcile net loss to net cash used in operating activities:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	In-process research and development	 	 	18,088	 	 	—	 	 	1,583	 	 	19,671	 	 	 	
 	 	Common stock issued for licenses	 	 	1,042	 	 	200	 	 	—	 	 	1,242	 	 	 	
 	 	Other stock-related compensation expense	 	 	9,589	 	 	2,194	 	 	1,632	 	 	13,441	 	 	 	
 	 	Depreciation and amortization	 	 	292	 	 	1,006	 	 	1,547	 	 	2,847	 	 	 	
 	 	Changes in operating assets and liabilities, net of acquisitions:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	Restricted cash	 	 	—	 	 	(345	)	 	(112	)	 	(457	)	 	 	
 	 	 	Prepaid expenses and other current assets	 	 	(53	)	 	(344	)	 	(108	)	 	(337	)	 	 	
 	 	 	Other assets	 	 	(27	)	 	13	 	 	(33	)	 	(48	)	 	 	
 	 	 	Accounts payable	 	 	33	 	 	202	 	 	2,041	 	 	2,305	 	 	 	
 	 	 	Accrued expenses	 	 	880	 	 	995	 	 	5,477	 	 	7,166	 	 	 	
 	 	 	Deferred revenue	 	 	—	 	 	345	 	 	112	 	 	457	 	 	 	

	 	

	 	

	 	

	 	 	 	
 	 	 	 	Net cash used in operating activities	 	 	(6,310	)	 	(23,612	)	 	(33,795	)	 	(64,138	)	 	 	

	 	

	 	

	 	

	 	 	 	
Cash flows from investing activities:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Cash paid for acquisitions, net of cash acquired	 	 	(5,586	)	 	—	 	 	—	 	 	(5,586	)	 	 	
 	Advances issued to related parties	 	 	(500	)	 	—	 	 	—	 	 	(1,630	)	 	 	
 	Purchases of marketable securities	 	 	—	 	 	(47,916	)	 	(124,711	)	 	(172,627	)	 	 	
 	Sales and maturities of marketable securities	 	 	—	 	 	7,785	 	 	82,494	 	 	90,279	 	 	 	
 	Repayment of advances from related parties	 	 	1,000	 	 	500	 	 	—	 	 	1,630	 	 	 	
 	Purchases of property and equipment	 	 	(200	)	 	(769	)	 	(1,594	)	 	(2,611	)	 	 	

	 	

	 	

	 	

	 	 	 	
 	 	 	 	Net cash used in investing activities	 	 	(5,286	)	 	(40,400	)	 	(43,811	)	 	(90,545	)	 	 	

	 	

	 	

	 	

	 	 	 	
Cash flows from financing activities:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Proceeds from issuance of common stock and warrants, net	 	 	38,860	 	 	70,768	 	 	82,951	 	 	195,756	 	 	 	
 	Proceeds from exercise of stock options	 	 	—	 	 	424	 	 	352	 	 	776	 	 	 	
 	Proceeds from sale—leaseback of property and equipment	 	 	—	 	 	—	 	 	1,317	 	 	1,317	 	 	 	
 	Payment of capital lease obligation	 	 	(20	)	 	(70	)	 	(153	)	 	(243	)	 	 	
 	Payment of deferred offering costs	 	 	—	 	 	—	 	 	(187	)	 	(187	)	 	 	

	 	

	 	

	 	

	 	 	 	
 	 	 	 	Net cash provided by financing activities	 	 	38,840	 	 	71,122	 	 	84,280	 	 	197,419	 	 	 	

	 	

	 	

	 	

	 	 	 	
 	 	 	 	Net increase in cash and cash equivalents	 	 	27,244	 	 	7,110	 	 	6,674	 	 	42,736	 	 	 	
Cash and cash equivalents at beginning of period	 	 	1,708	 	 	28,952	 	 	36,062	 	 	—	 	 	 	

	 	

	 	

	 	

	 	 	 	
Cash and cash equivalents at end of period	 	$	28,952	 	$	36,062	 	$	42,736	 	$	42,736	 	 	 	

	 	

	 	

	 	

	 	 	 	
Supplemental disclosure of cash flow information:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Purchase of equipment under capital lease	 	 	—	 	 	—	 	$	1,878	 	$	1,878	 	 	 	
 	Cash paid for interest	 	 	—	 	 	—	 	$	19	 	$	19	 	 	 	
See accompanying notes to consolidated financial statements.

F-7

SYNTA PHARMACEUTICALS CORP.
(A Development-Stage Company)

Notes to Consolidated Financial Statements

(1) Nature of Business

        Synta Pharmaceuticals Corp. (the Company), formerly Neutra Pharmaceuticals Corp., was incorporated in March 2000 and commenced operations in July 2001. The Company is an emerging pharmaceutical company focusing on discovering, developing, and commercializing novel drugs for inflammatory disease, cancer and diabetes.

        The Company is subject to risks common to emerging companies in the drug development and pharmaceutical industry including, but not limited to, uncertainty of product development and commercialization, lack of marketing and sales history, dependence on key personnel, uncertainty of market acceptance of products, product liability, uncertain protection of proprietary technology, potential inability to raise additional financing and compliance with FDA and other government regulations.

(2) Summary of Significant Accounting Policies

Basis of Presentation

        Since its inception, the Company has devoted its efforts to research, product development, and securing financing. Although the Company's planned principal operations have commenced, it has not earned significant revenue. Accordingly, the consolidated financial statements are presented in accordance with Statement of Financial Accounting Standards (SFAS) No. 7, Accounting and Reporting by Development-Stage Enterprises.

Principles of Consolidation

        The consolidated financial statements include the financial statements of Synta Pharmaceuticals Corp. and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Reclassification in the Preparation of Financial Statements

        Certain amounts in prior years' consolidated financial statements have been reclassified to conform with the current presentation. These reclassifications had no effect on the Company's reported net loss or financial position.

Use of Estimates

        The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Significant items subject to such estimates and assumptions include recoverability of long-lived and deferred tax assets, valuation of acquired in-process research and development, measurement of stock-based compensation, and the fair value of the Company's common stock. The Company bases its estimates on historical experience and various other assumptions that management believes to be reasonable under the circumstances. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates.

F-8

Cash and Cash Equivalents

        Cash equivalents include money market funds and marketable securities. The Company considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. Changes in cash and cash equivalents may be affected by shifts in investment portfolio maturities, as well as actual cash disbursements.

Marketable Securities

        The Company considers its marketable securities available-for-sale in accordance with SFAS No. 115,Accounting for Certain Investments in Debt and Equity Securities . Marketable securities consist of investments in high-grade corporate, government and government agency obligations that are classified as available-for-sale. Since these securities are available to fund current operations they are classified as current assets on the consolidated balance sheet. Marketable securities are stated at fair value, including accrued interest, with their unrealized gains and losses included as a component of accumulated other comprehensive income (loss), which is a separate component of stockholders' equity, until such gains and losses are realized. The fair value of these securities is based on quoted market prices. If a decline in value is considered other-than-temporary, based on available evidence, the unrealized loss is transferred from other comprehensive income (loss) to the consolidated statement of operations. Realized gains and losses are determined on the specific identification method.

        During the year ended December 31, 2004, the Company recorded no realized gains and losses on marketable securities. There were no charges to write down marketable securities in 2004.

Credit Risk and Concentrations

        Financial instruments that potentially subject the Company to a concentration of credit risk consist of money market funds and marketable securities. Deposits with banks may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand and, therefore, bear minimal risk. Marketable securities consist of investments in high-grade corporate, government and government agency obligations. The Company's policy for investments in marketable securities, approved by the board of directors, establishes guidelines relating to diversification and maturities that allows the Company to manage risk.

Fair Value of Financial Instruments

        The carrying amounts of the Company's financial instruments, which include cash equivalents, marketable securities, and capital lease obligations, approximate their fair values.

Property and Equipment

        Property and equipment is carried at cost and depreciated using the straight-line method over the estimated useful lives of the related assets, which range from three to five years. Leasehold improvements are amortized over the lesser of the lease term or estimated useful life.

F-9

Research and Development Costs

        Research and development costs are expensed as incurred in accordance with SFAS No. 2,Accounting for Research and Development Costs. Research and development costs are comprised of costs incurred in performing research and development activities, including salaries, benefits, facilities, research-related overhead, clinical trial costs, contracted services, technology acquisition license fees, and other external costs.

Patents

        Costs to secure and defend patents are expensed as incurred and are classified as general and administrative expense in the Company's consolidated statements of operations. Patent expenses were approximately $158,000, $628,000, $1,605,000 and $2,391,000 for the years ended December 31, 2002, 2003, 2004, and for the period from inception (March 10, 2000) through December 31, 2004, respectively.

Income Taxes

        The Company accounts for income taxes in accordance with SFAS No. 109,Accounting for Income Taxes. Deferred tax assets and liabilities are determined based on differences between financial reporting and income tax basis of assets and liabilities, as well as net operating loss carryforwards, and are measured using the enacted tax rates and laws that are expected to be in effect when the differences reverse. Deferred tax assets may be reduced by a valuation allowance to reflect the uncertainty associated with their ultimate realization.

Impairment of Long-Lived Assets

        The Company accounts for the impairment and disposition of long-lived assets in accordance with SFAS No. 144,Accounting for the Impairment or Disposal of Long-Lived Assets  (SFAS 144). In accordance with SFAS 144, management assesses the potential impairments of its long-lived assets whenever events or changes in circumstances indicate that an asset's carrying value may not be recoverable. If the carrying value exceeds the undiscounted future cash flows estimated to result from the use and eventual disposition of the asset, the Company writes down the asset to its estimated fair value. Management believes that no long-lived assets were impaired as of December 31, 2003 and 2004.

Revenue Recognition

        Revenues to date have been generated by research grant contracts and, accordingly, the Company recognizes revenue in accordance with the Securities and Exchange Commission's (SEC) Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements  (SAB 101), as amended by Staff Accounting Bulletin No. 104, Revenue Recognition  (SAB 104). Revenues from research contracts are recognized in the period the related services are performed and the reimbursable costs are incurred. The Company is a development-stage enterprise, and no revenues have been derived to date from its principal operations.

Stock-Based Compensation

        The Company accounts for stock-based employee compensation arrangements using the intrinsic value method in accordance with Accounting Principles Board Opinion (APB) No. 25, Accounting for Stock

F-10

Issued to Employees, and complies with the disclosure provisions of SFAS No. 123,Accounting for Stock-Based Compensation, as amended by SFAS No. 148 , Accounting for Stock-Based Compensation—Transition and Disclosure—An Amendment of SFAS No. 123  (SFAS 148). Under APB No. 25, compensation cost is recognized based on the difference, if any, on the date of grant between the fair value of the Company's common stock and the exercise price of stock options granted or the purchase price of restricted stock. Under SFAS No. 123, compensation cost is measured at the grant date based on the fair value of the award and is recognized on a pro rata basis over the service period, which is usually the vesting period.

        The Company provides the disclosure requirements of SFAS No. 148. If compensation expense for the Company's stock-based compensation plan had been determined based on the fair value at the grant dates as calculated in accordance with SFAS No. 123, the Company's net loss would approximate the pro forma amounts below:

	 	 
	 	 
	 	Period from
inception
(March 10,
2000)
through
December 31,
2004

	 	 	
 
	 	Years ended December 31

	 	 	 	 	 	
 
	 	2002

	 	2003

	 	2004

	 	 	 	 	 	
 
	 	(in thousands, except per share amounts)

Net loss, as reported	 	$	(36,154	)	$	(27,878	)	$	(45,934	)	$	(110,425	)	 	 	
Add: stock-based employee compensation expense determined under the fair value method	 	 	(409	)	 	(2,567	)	 	(1,113	)	 	(4,090	)	 	 	
Deduct: stock-based employee compensation expense included in reported net loss	 	 	—	 	 	1,419	 	 	301	 	 	1,720	 	 	 	

	 	

	 	

	 	

	 	 	 	
Pro forma net loss	 	$	(36,563	)	$	(29,026	)	$	(46,746	)	$	(112,795	)	 	 	

	 	

	 	

	 	

	 	 	 	
Basic and diluted net loss per common share, as reported	 	$	(1.09	)	$	(0.46	)	$	(0.61	)	 	 	 	 	 	
Basic and diluted net loss per common share, pro forma	 	 	(1.10	)	 	(0.48	)	 	(0.62	)	 	 	 	 	 	
        The Company has estimated the fair value of its granted stock options and restricted stock awards using the Black-Scholes model by applying a present value approach which does not consider expected volatility of the underlying stock (minimum value method) using the following weighted average assumptions:

	 	 
	 	 
	 	Period from
inception
(March 10,
2000)
through
December 31,
2004

	 	 	
 
	 	Years ended December 31

	 	 	 	 	 	
 
	 	2002

	 	2003

	 	2004

	 	 	 	 	 	
Risk-free interest rate	 	3.34	%	2.51	%	4.14	%	3.45	%	 	 	
Expected life	 	5 years	 	5 years	 	5 years	 	5 years	 	 	 	
Volatility	 	—	 	—	 	—	 	—	 	 	 	
Expected dividend yield	 	—	 	—	 	—	 	—	 	 	 	
F-11

        The weighted average fair value per share of options and restricted stock granted during 2002, 2003, and 2004 was $0.37, $0.33 and $2.52, respectively.

        Equity instruments issued to nonemployees are accounted for in accordance with the provisions of SFAS No. 123 and Emerging Issues Task Force Issue (EITF) No. 96-18, Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with Selling Goods or Services .

Comprehensive Income (Loss)

        SFAS No. 130,Reporting Comprehensive Income, requires that all components of comprehensive income (loss) be disclosed in the consolidated financial statements. Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions, and other events and circumstances from non-owner sources. Changes in unrealized gains (losses) on marketable securities represents the only difference between the Company's net loss and comprehensive loss.

Segment Reporting

        The Company has adopted SFAS No. 131,Disclosure About Segments of an Enterprise and Related Information, which requires companies to report selected information about operating segments, as well as enterprise-wide disclosures about products, services, geographical area, and major customers. Operating segments are determined based on the way management organizes its business for making operating decisions and assessing performance. The Company has only one operating segment, the discovery, development and commercialization of drug products.

Basic and Diluted Net Loss Per Common Share

        Net loss per share is computed based on the guidance of SFAS No. 128,Earnings Per Share, requiring companies to report both basic net loss per common share, which is computed using the weighted average number of common shares outstanding during the period, and diluted net loss per common share, which is computed using the weighted average number of common shares outstanding and the weighted average dilutive potential common shares outstanding using the treasury stock method. However, for all periods presented, diluted net loss per share is the same as basic net loss per share as the inclusion of weighted average shares of unvested restricted common stock and common stock issuable upon the exercise of stock options and warrants would be anti-dilutive. In addition, the weighted average number of shares of unvested restricted common stock is excluded from basic weighted average common shares outstanding.

        The following table summarizes securities outstanding as of each year-end which were not included in the calculation of diluted net loss per share as their inclusion would be anti-dilutive.
 
	 	December 31

	
 
	 	2002

	 	2003

	 	2004

	
Common stock options	 	5,559,224	 	7,695,474	 	10,088,099	
Common stock warrants	 	959,126	 	383,650	 	268,555	
Unvested restricted common stock	 	—	 	—	 	1,460,000	
F-12

Recent Accounting Pronouncements

        In December 2004, the Financial Accounting Standards Board (FASB) issued SFAS No. 123R,Share-Based Payment: an amendment of FASB Statements No. 123 and 95  (SFAS 123R), which requires companies to measure and recognize compensation expense for all stock-based payments at fair value. SFAS 123R is effective for all interim and annual periods beginning after June 15, 2005 and, thus, will be effective for us beginning with the third quarter of 2005. Early adoption is encouraged and retroactive application of the provisions of SFAS 123R to the beginning of the fiscal year that includes the effective date is permitted, but not required. We are currently evaluating the impact of SFAS 123R on our financial position and results of operations. See note 2 for information related to the pro forma effects on our reported net loss and net loss per share of applying the fair value recognition provisions of the previous SFAS No. 123 to stock-based employee compensation.

        In January 2003, the FASB issued FASB Interpretation No. 46 (FIN 46),Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51 , and in December 2003, issued a revised FIN 46 (FIN 46R) which addresses the period of adoption of FIN 46R for entities created before January 31, 2003. FIN 46R provides a new consolidation model which determines control and consolidation based on potential variability in gains and losses. The provisions of FIN 46R are effective for enterprises with variable interest entities created after January 31, 2003. The Company adopted the provisions of FIN 46R in the first quarter of 2004 and the adoption did not have a material impact on the consolidated financial statements.

(3) Acquisitions

Principia Associates, Inc.

        In September 2002, the Company acquired all of the outstanding capital stock of Principia Associates, Inc. (Principia) and its wholly-owned subsidiary, SBR Pharmaceuticals Corp. (formerly Shionogi BioResearch Corp.) (SBR) in exchange for an aggregate of 4,939,500 shares of common stock of the Company together with warrants to purchase an aggregate of 959,126 shares of common stock of the Company, forgiveness of a $1.0 million short-term promissory notes receivable and cash of approximately $268,000. Total value of consideration paid was approximately $16.9 million. Principia was formed and held by three stockholders of the Company. On July 31, 2002, Principia and members of the Company's board of directors, together with their respective affiliates, acquired a majority of the common stock of SBR. The Company's scientific founder, a member of the board of directors and major shareholder of the Company, previously owned approximately 20% of SBR.

        The common stock of the Company was valued at $2.71 per share, its fair value as determined by the Company's board of directors, for an aggregate value of approximately $13.4 million. The common stock purchase warrants, which expire in 2005, have an exercise price of $0.50 per share. The warrants were valued at approximately $2.2 million using the Black-Scholes valuation pricing model, with the following assumptions: risk-free interest rate of 2.3%, volatility of 75%, and a life of three years.

F-13

        The following table summarizes the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition (in thousands):
Current assets, including cash of $922	 	$	995	
In-process research and development	 	 	13,888	
Property and equipment	 	 	3,527	
Other assets	 	 	67	

	
 	Total assets acquired	 	 	18,477	
Liabilities assumed	 	 	1,617	

	
 	Net assets acquired	 	$	16,860	

	
        For accounting purposes, the transaction was treated as an acquisition of assets and not a business combination because Principia did not meet the definition of a business under EITF 98-3, Determination Whether a Nonmonetary Transaction Involves Receipt of Productive Assets or of a Business . The purchase price was allocated to assets acquired and liabilities assumed based on management's analysis and estimates of fair values. Management's estimates of fair value are based on assumptions believed to be reasonable, but which are inherently uncertain and unpredictable. The acquired in-process research and development (IPR&D) was valued at $11.7 million. The remaining excess purchase price over the identified tangible and intangible assets and liabilities assumed was approximately $2.2 million. The excess amount was allocated to the acquired intangible assets, resulting in approximately $13.9 million being assigned to IPR&D assets that were written off at the date of acquisition in accordance with FASB Interpretation No. 4, Applicability of FASB Statement No. 2 to Business Combinations Accounted for by the Purchase Method .

        The value assigned to IPR&D related to research projects for which technological feasibility had not yet been established and no future alternative uses existed. The fair value was determined using the income approach, which discounts expected future cash flows from projects under development to their net present value using a risk-adjusted rate. Each project was analyzed to determine the utilization of core technology; the complexity, cost and time to complete development; any alternative future use or current technological feasibility; and the stage of completion. Future cash flows were estimated, taking into account the expected life cycles of the product and the underlying technology, relevant market sizes and industry trends. The estimated net cash flows from these products were based on management's estimates of related revenues, cost of goods sold, R&D costs, selling, general and administrative costs, and income taxes. Discount rates ranging from 30% to 40% were utilized based on the nature of the technology of the products, the stage of completion of the projects, the complexity of the development effort and the risks associated with reaching technological feasibility of the projects.

        SBR had three products under development at the acquisition date, contributing 59%, 23%, and 18% of the total IPR&D value. The products under development are intended to result in therapeutic products in the areas of oncology and autoimmune disease. Commercialization of any product is not anticipated for several years.

F-14

Diagon Genetics, Inc.

        In December 2002, the Company acquired all of the outstanding capital stock of Diagon Genetics, Inc. (Diagon). The purchase price of approximately $13.5 million consisted of 3,145,854 shares of common stock at a per share value of $2.71 and $5.0 million in cash. Diagon was previously owned by the Company's Chief Executive Officer and scientific founder, both of whom are board members and significant shareholders of the Company.

        For accounting purposes, the transaction did not constitute a business combination because Diagon did not meet the definition of a business under EITF No. 98-3, Determining Whether a Nonmonetary Transaction Involves Receipt of Productive Assets or of a Business . At the time, Diagon's activities consisted of owning the rights to the development of certain intellectual property that might be used to develop therapeutic drug products. Commercialization of any product is not anticipated for several years. The Company allocated the purchase price to the fair value of the acquired assets and liabilities. As a result, the Company recorded in-process research and development of $4.2 million, which was written off at the date of acquisition. As noted above, Diagon was previously owned by the Company's Chief Executive Officer and its scientific founder, both members of the Company's board of directors, therefore the remaining excess purchase price of $9.3 million was charged to operations as other compensation expense in the accompanying consolidated statement of operations.

        The value assigned to IPR&D related to research projects for which technological feasibility had not yet been established and no future alternative uses existed. The fair value was determined using the income approach, which discounts expected future cash flows from projects under development to their net present value using a risk-adjusted rate. Each project was analyzed to determine the utilization of core technology; the complexity, cost and time to complete development; any alternative future use or current technological feasibility; and the stage of completion. Future cash flows were estimated, taking into account the expected life cycles of the product and the underlying technology, relevant market sizes and industry trends. The estimated net cash flows from these products were based on management's estimates of related revenues, cost of goods sold, R&D costs, selling, general and administrative costs, and income taxes. A discount rate of 30% was utilized based on the nature of the technology of the products, the stage of completion of the projects, the complexity of the development effort and the risks associated with reaching technological feasibility of the projects.

        The Company had three products under development at the acquisition date, contributing 66%, 29%, and 5% of the total IPR&D value. The products under development are intended to result in therapeutic products in the areas of oncology, autoimmune disease, and allergy. Commercialization of any product is not anticipated for several years.

Cancer Genomics, Inc., Kava Pharmaceuticals, Inc. and SinglePixel Biomedical, Inc.

        In January 2004, the Company acquired certain assets of Cancer Genomics, Inc., Kava Pharmaceuticals, Inc. (Kava) and SinglePixel Biomedical, Inc. (collectively, CKS) in a single transaction. Direct and indirect shareholders in these companies included the Company's scientific founder, who is also a board member, as well as three current or former Company executives. The purchase price of approximately $2.2 million consisted of 553,344 shares of the Company's common stock. In addition, the Company is required to make cash payments of up to $2.0 million if certain milestones are achieved. If

F-15

commercialization is achieved, the Company will be required to pay royalties on the gross sales of any payment of service covered by the acquired technology. Under the terms of the Asset Purchase Agreement, if within 30 months following the sale, the Company has not initiated clinical trials for a Kava product, then the shareholders of Kava have the option to repurchase the intellectual property from the Company for $750,000 for a period of three months after the 30 month period ends. The intellectual property acquired from Kava is unrelated to our current clinical programs or our programs in development.

        The following table summarizes the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition (in thousands):
In-process research and development	 	$	1,583	 	
Property and equipment (including capitalized software)	 	 	736	 	

	 	
 	Total assets acquired	 	 	2,319	 	

Liabilities assumed	

(106	
)	

	 	
 	Net assets acquired	 	$	2,213	 	

	 	
        The purchase price was allocated to assets acquired and liabilities assumed based on management's analysis and estimates of fair values. Management's estimates of fair value are based on assumptions believed to be reasonable, but which are inherently uncertain and unpredictable. The acquired IPR&D was initially valued at approximately $0.5 million. The remaining excess purchase price over the identified tangible and intangible assets and liabilities assumed was approximately $1.1 million. The excess amount was allocated to the acquired intangible assets, resulting in approximately $1.6 million being assigned to IPR&D assets that were written off at the date of acquisition in accordance with FASB Interpretation No. 4. The Kava IPR&D pertained to the small-molecule pharmaceutical for the treatment of anxiety and general pain. The initial value of the Kava IPR&D was based on the cost approach. During 2002, after an initial investment to advance the technology, the Company ceased further funding of the project.

F-16

(4) Marketable Securities

        A summary of available-for-sale marketable securities held by the Company as of December 31, 2003 and 2004 is as follows:
 
	 	December 31, 2003

	
 
	 	Cost

	 	Unrealized
gains

	 	Unrealized
losses

	 	Fair
value

	
 
	 	(in thousands)

Cash and cash equivalents:	 	 	 	 	 	 	 	 	 	 	 	 	
 	Cash and money market funds	 	$	34,547	 	$	—	 	$	—	 	$	34,547	
 	Marketable securities with original maturities of less than 3 months	 	 	1,515	 	 	—	 	 	—	 	 	1,515	

	 	

	 	

	 	

	
 	 	 	Total cash and cash equivalents	 	 	36,062	 	 	—	 	 	—	 	 	36,062	

	 	

	 	

	 	

	
Marketable securities:	 	 	 	 	 	 	 	 	 	 	 	 	
 	Corporate bonds:	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Due within 1 year	 	 	18,227	 	 	—	 	 	(10	)	 	18,217	
 	 	Due within 1 to 2 years	 	 	16,521	 	 	25	 	 	(2	)	 	16,544	

	 	

	 	

	 	

	
 	 	 	34,748	 	 	25	 	 	(12	)	 	34,761	

	 	

	 	

	 	

	
Government agency bonds:	 	 	 	 	 	 	 	 	 	 	 	 	
 	Due within 1 year	 	 	5,383	 	 	20	 	 	—	 	 	5,403	
 	Due within 1 to 2 years	 	 	—	 	 	—	 	 	—	 	 	—	

	 	

	 	

	 	

	
 	 	 	5,383	 	 	20	 	 	—	 	 	5,403	

	 	

	 	

	 	

	
 	 	 	Total marketable securities	 	 	40,131	 	 	45	 	 	(12	)	 	40,164	

	 	

	 	

	 	

	
 	 	 	Total cash, cash equivalents and marketable securities	 	$	76,193	 	$	45	 	$	(12	)	$	76,226	

	 	

	 	

	 	

	
 
	 	December 31, 2004

	
 
	 	Cost

	 	Unrealized
gains

	 	Unrealized
losses

	 	Fair
value

	
 
	 	(in thousands)

Cash and cash equivalents:	 	 	 	 	 	 	 	 	 	 	 	 	
 	Cash and money market funds	 	$	25,381	 	$	 	 	$	 	 	$	25,381	
 	Marketable securities with original maturities of less than 3 months	 	 	17,355	 	 	—	 	 	—	 	 	17,355	

	 	

	 	

	 	

	
 	 	 	Total cash and cash equivalents	 	 	42,736	 	 	 	 	 	 	 	 	42,736	

	 	

	 	

	 	

	
Marketable securities:	 	 	 	 	 	 	 	 	 	 	 	 	
 	Corporate bonds:	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Due within 1 year	 	 	59,805	 	 	—	 	 	(59	)	 	59,746	
 	 	Due within 1 to 2 years	 	 	16,093	 	 	—	 	 	(57	)	 	16,036	

	 	

	 	

	 	

	
 	 	 	75,898	 	 	—	 	 	(116	)	 	75,782	

	 	

	 	

	 	

	
Government agency bonds:	 	 	 	 	 	 	 	 	 	 	 	 	
 	Due within 1 year	 	 	6,450	 	 	—	 	 	—	 	 	6,450	
 	Due within 1 to 2 years	 	 	—	 	 	—	 	 	—	 	 	—	

	 	

	 	

	 	

	
 	 	 	6,450	 	 	—	 	 	—	 	 	6,450	

	 	

	 	

	 	

	
 	 	 	Total marketable securities	 	 	82,348	 	 	—	 	 	(116	)	 	82,232	

	 	

	 	

	 	

	
 	 	 	Total cash, cash equivalents and marketable securities	 	$	125,084	 	$	—	 	$	(116	)	$	124,968	

	 	

	 	

	 	

	
F-17

(5) Property and Equipment

        Property and equipment consist of the following at December 31:
 
	 	2003

	 	2004

	 	
 
	 	(in thousands)

Laboratory equipment	 	$	2,488	 	$	3,422	 	
Leasehold improvements	 	 	1,841	 	 	1,841	 	
Office equipment	 	 	122	 	 	232	 	
Equipment under capital lease	 	 	—	 	 	1,878	 	
Furniture and fixtures	 	 	100	 	 	100	 	

	 	

	 	
 	 	 	4,551	 	 	7,473	 	
Less accumulated depreciation and amortization	 	 	(1,306	)	 	(2,676	)	

	 	

	 	
 	 	$	3,245	 	$	4,797	 	

	 	

	 	
        Depreciation and amortization expenses of property and equipment were approximately $292,000, $1,006,000, $1,547,000 and $2,847,000 for the years ended December 31, 2002, 2003, 2004, and for the period from inception (March 10, 2000) through December 31, 2004, respectively. The net book value and accumulated depreciation of equipment under capital lease was $1,752,000 and $126,000, respectively, at December 31, 2004.

(6) Stockholders' Equity

Capital Stock—Authorized Shares

        In October 2004, the Company's stockholders approved an increase in the number of authorized shares of common stock from 100,000,000 shares to 150,000,000 shares, each share having a $0.0001 par value. As of December 31, 2004, 90,202,937 shares of common stock were issued and outstanding.

        Each common stockholder is entitled to one vote for each share of stock held. The common stock will vote together with all other classes and series of stock of the Company as a single class on all actions to be taken by the Company's stockholders. Each share of common stock is entitled to receive dividends, as and when declared by the Company's board of directors.

        The Company has never declared cash dividends on any of its capital stock and does not expect to do so in the foreseeable future.

        On December 13, 2002, the Company entered into an Amended and Restated Investor Rights Agreement (the Investor Rights Agreement) with its three largest stockholders and their affiliates exclusive of the founders (the Investors). The Investors Rights Agreement grants certain rights and privileges to and places certain restrictions upon the Investors, including: (i) grants the Investor a right of first refusal to purchase the Investor's pro rata share of any private securities offering by the Company, so long as such Investor owns at least 5% of the Company's outstanding common stock; (ii) piggyback registration rights with respect to any registration by the Company of its securities in preparation for a public offering, with priority over other Company stockholders; (iii) demand registration rights commencing 180 days after a public offering in which such Investor did not exercise its piggyback registration rights, allowing the Investor to demand that the Company register the Investor's securities so long as the value of such securities equals or exceeds $5.0 million; and (iv) places restrictions upon the

F-18

Investors' abilities to transfer, contract to transfer, or enter into any swap agreement related to the Company's securities starting from the date of an initial public offering and ending up to 180 days later, provided that all of the Company's directors, executive officers, and 1% or greater shareholders agree to similar restrictions. Finally, the Company bears certain information reporting and indemnification obligations with respect to the Investors and the registration of the Company's securities, and the Investors bear certain indemnification obligations to the Company with respect to the registration of the Investor's Company securities.

Issuance of Common Stock

        In July 2001, the Company issued 20,400,000 shares of its common stock to its founding members for $0.0001 per share.

        Between July and December 2001, the Company sold 6,800,000 shares of its common stock at $0.50 per share (the A Round Financing) through a stock subscription, resulting in gross proceeds of $3.4 million. As of December 31, 2001, the Company had a stock subscription receivable of $225,000, which was received in 2002.

        During 2002, the Company sold 14,252,230 shares of its common stock at $2.7108 per share (the B Round Financing), resulting in gross proceeds of approximately $38.6 million.

        In July and December 2002, the Company issued an aggregate of 384,447 shares of its common stock, plus $30,000 of cash, in exchange for exclusive royalty-bearing licenses for certain patent rights. The aggregate value of the stock and cash consideration of $1,072,000 was charged immediately to research and development costs.

        Between January and March 2003, the Company completed the B Round Financing by issuing 8,717,275 shares of common stock at $2.7108 per share, which in gross proceeds of approximately $23.6 million.

        In March 2003, the Company issued 73,779 shares of its common stock, plus $40,000 cash, in exchange for an exclusive royalty-bearing license for certain patent rights. The total value of the consideration paid of $240,000 was expensed immediately to research and development costs (see note 11).

        In September 2003, the Company commenced the sale of 12,500,000 shares of its common stock at $4.00 per share (the C Round Financing). Through December 31, 2003, the Company had issued 11,750,000 shares, resulting in gross proceeds of $47.0 million. In addition, 125,000 shares of common stock were subscribed but unissued. The stock subscription receivable of $500,000 is reflected as a component of stockholders' equity on the accompanying consolidated balance sheet. The remaining 750,000 shares of common stock were issued in January 2004, which resulted in additional gross proceeds of $3.0 million.

        In January 2004, the Company received the proceeds under a stock subscription for 750,000 shares of its common stock at $4.00 per share, for net proceeds of $2,993,000 (C Round Financing).

        In January 2004, the Company issued 553,344 shares of its common stock in exchange for the net assets of CKS (see note 3).

        In November 2004, the Company sold 16,000,000 shares of its common stock at $5.00 per share, for net proceeds of $79,900,000.

F-19

Issuance of Restricted Stock

        In December 2004, the Company sold and issued 1,460,000 restricted shares of common stock to its officers and certain employees at par value. Holders of the restricted shares employed by the Company in January 2007 will become vested in 50% of the restricted stock. The remaining 50% vests upon the earlier of January 2009 or the approval of the Company's first New Drug Application (NDA) by the Food and Drug Administration (FDA). The excess of the fair value over the purchase price of the common stock at the date of issuance, an aggregate of approximately $8.0 million, has been recorded as deferred compensation and will be amortized and expensed ratably over the estimated vesting period.

Warrants

        In September 2002, the Company issued warrants to purchase an aggregate of 959,126 shares of its common stock at an exercise price of $0.50 per share and with an expiration date of September 19, 2005, in connection with its acquisition of Principia (see note 3). In December 2003, warrants to purchase 575,476 shares of the Company's common stock were exercised, resulting in proceeds of $288,000. In November 2004, warrants to purchase 115,095 shares of the Company's common stock were exercised, resulting in proceeds of $58,000. At December 31, 2004, the Company had outstanding warrants to purchase 268,555 shares of common stock at an exercise price of $0.50 per share and with an expiration date of September 19, 2005. These warrants were fully exercised in January 2005, resulting in proceeds to the Company of $134,000.

(7) 2001 Stock Option Plan

        In July 2001, the Company adopted the Synta Pharmaceuticals Corp. 2001 Stock Plan (the 2001 Stock Option Plan). The 2001 Stock Option Plan provides for the grant of incentive stock options, nonstatutory stock options and restricted stock to employees, officers, directors and consultants to the Company. A total of 15,000,000 shares of common stock have been reserved for issuance under the 2001 Stock Option Plan. The administration of the 2001 Stock Option Plan is under the general supervision of the board of directors. The exercise price of the stock options will be determined by the board of directors, provided that incentive stock options will be granted at not less than fair market value of the common stock on the date of grant and will expire no later than ten years from the date the option is granted. As of December 31, 2004, the Company had options outstanding to purchase 10,088,099 shares of its common stock, including options to purchase 300,000 shares of the Company's common stock granted outside of the 2001 Stock Option Plan, had issued 1,460,000 restricted shares of common stock and had 3,465,964 shares available for future issuances under the 2001 Stock Option Plan.

F-20

        The Company's stock option activity for the years ended December 31, 2002, 2003, and 2004 is as follows:
 
	 	2002

	 	2003

	 	2004

	
 
	 	Shares

	 	Weighted
average
exercise
price

	 	Shares

	 	Weighted
average
exercise
price

	 	Shares

	 	Weighted
average
exercise
price

	
Outstanding at January 1	 	554,550	 	$	0.50	 	5,559,224	 	$	2.42	 	7,695,474	 	$	2.54	
Granted	 	5,454,674	 	 	2.46	 	3,156,000	 	 	2.82	 	3,067,875	 	 	3.93	
Exercised	 	—	 	 	—	 	(156,250	)	 	2.71	 	(129,687	)	 	2.71	
Cancelled	 	(450,000	)	 	0.50	 	(863,500	)	 	2.69	 	(545,563	)	 	2.77	

	 	 	 	 	

	 	 	 	 	

	 	 	 	
Outstanding at December 31	 	5,559,224	 	 	2.42	 	7,695,474	 	 	2.54	 	10,088,099	 	 	2.95	

	 	 	 	 	

	 	 	 	 	

	 	 	 	
Exercisable at December 31	 	1,386,291	 	$	2.22	 	2,985,610	 	$	2.37	 	5,246,149	 	$	2.48	
        The following table summarizes information about stock options outstanding at December 31, 2004:
 
	 	Options outstanding

	 	Options exercisable

	
Exercise price

	 	Number
outstanding

	 	Weighted
average
remaining
contractual
life

	 	Weighted
average
exercise
price

	 	Number
exercisable

	 	Weighted
average
exercise
price

	
$0.50	 	659,050	 	6.91	 	$	0.50	 	580,925	 	$	0.50	
  2.71	 	6,546,424	 	8.12	 	 	2.71	 	4,587,724	 	 	2.71	
  4.00	 	2,713,625	 	9.38	 	 	4.00	 	77,500	 	 	4.00	
  5.00	 	169,000	 	9.98	 	 	5.00	 	—	 	 	—	

	 	 	 	 	 	 	

	 	 	 	
 	 	10,088,099	 	8.41	 	 	 	 	5,246,149	 	 	 	

	 	 	 	 	 	 	

	 	 	 	
        In 2002, 2003, and 2004, the Company issued stock options to purchase 548,674, 457,400, and 226,000 shares of common stock, respectively, to nonemployee consultants, including its scientific advisors. The compensation expense is recorded over the respective vesting periods and is subject to variable accounting treatment prior to vesting, whereby the Company remeasures the fair value of the options at the end of each reporting period using the Black-Scholes valuation pricing model including estimated volatility. Compensation expense related to these options was approximately $274,000, $775,000, $1,331,000 and $2,406,000 for the years ended December 31, 2002, 2003, 2004, and for the period from inception (March 10, 2000) through December 31, 2004, respectively.

        In connection with a separation agreement with a former officer in 2003 that was memorialized in 2004, the Company accelerated the vesting and extended the time in which the officer may exercise options to purchase 187,500 shares of the Company's common stock and extended the time in which the officer may exercise vested options to purchase an additional 812,500 shares of the Company's common stock. In addition, options to purchase 800,000 shares of the Company's common stock were cancelled pursuant to the terms thereof. The Company recorded a non-cash compensation charge of approximately $1,289,000 related to the modification of the options. In addition, the Company agreed to pay the officer an aggregate of $450,000 during 2004 and 2005. In 2003, the Company recorded a total charge of approximately $1.7 million to research and development.

F-21

        The following table outlines the stock option grants and issuance of restricted stock during 2004:
Recipient

	 	Month Issued
or Granted

	 	Shares

	 	Per Share
Exercise/
Purchase
Price

	 	Per Share
Fair Value

	 	Per Share
Intrinsic Value

	
Grants of stock options:	 	 	 	 	 	 	 	 	 	 	
 	Employees	 	February 2004	 	52,000	 	4.00	 	4.00	 	—	
 	Advisory board member	 	February 2004	 	100,000	 	4.00	 	4.00	 	—	
 	Employees and officers	 	May 2004	 	1,723,875	 	4.00	 	4.00	 	—	
 	Advisory board members	 	May 2004	 	50,000	 	4.00	 	4.00	 	—	
 	Board member	 	May 2004	 	300,000	 	2.71	 	4.00	 	1.29	
 	Employees	 	August 2004	 	415,000	 	4.00	 	4.00	 	—	
 	Board member	 	August 2004	 	60,000	 	4.00	 	4.00	 	—	
 	Advisory board member	 	August 2004	 	16,000	 	4.00	 	4.00	 	—	
 	Employees	 	September 2004	 	182,000	 	4.00	 	4.00	 	—	
 	Employees	 	December 2004	 	169,000	 	5.00	 	5.50	 	0.50	

Issuance of Restricted Stock to employees	
 	
December 2004	
 	
1,460,000	
 	
0.01	
 	
5.50	
 	
5.49	

	 	 	 	 	 	 	
Total	 	 	 	3,067,875	 	 	 	 	 	 	

	 	 	 	 	 	 	
(8) Employee Stock Purchase Plan

       In December 2002, the Company's board of directors adopted a noncompensatory Employee Stock Purchase Plan (the ESPP). Under the ESPP, employees of the Company who elect to participate may purchase the Company's common stock at a 15% discount from the fair market value. The Company may exclude employees who have not been employed with the Company for at least two years from participating in any offering period under the ESPP at the discretion of the board of directors. The ESPP permits an enrolled employee to make contributions to purchase shares of the Company's common stock by having withheld from his or her salary an amount between 1% and 15% of compensation. The total number of shares of common stock that may be issued under the ESPP is 368,894. As of December 31, 2004, no shares of common stock have been issued under the ESPP. The ESPP was terminated in January, 2005.

(9) Accrued Expenses

        Accrued expenses consist of the following at December 31:
 
	 	2003

	 	2004

	
 
	 	(in thousands)

Contracted research costs	 	$	1,649	 	$	6,372	
Compensation and benefits	 	 	900	 	 	647	
Professional fees	 	 	232	 	 	1,413	
Other	 	 	161	 	 	564	

	 	

	
 	 	$	2,942	 	$	8,996	

	 	

	
F-22

(10) Income Taxes

        Differences between the actual tax benefit and tax benefit computed using the United States federal income tax rate is as follows:

	 	 
	 	 
	 	Period from
inception
(March 10,
2000)
through
December 31,
2004

	 	 	
 
	 	Years ended December 31

	 	 	 	 	 	
 
	 	2002

	 	2003

	 	2004

	 	 	 	 	 	
 
	 	(in thousands)

Income tax benefit at statutory rate	 	$	(12,654	)	$	(9,478	)	$	(15,618	)	$	(37,911	)	 	 	
In-process research and development	 	 	6,331	 	 	—	 	 	—	 	 	6,331	 	 	 	
Stock-based compensation	 	 	3,272	 	 	438	 	 	—	 	 	3,710	 	 	 	
Tax credits	 	 	(1,067	)	 	(425	)	 	(1,434	)	 	(2,935	)	 	 	
Other	 	 	3	 	 	370	 	 	20	 	 	393	 	 	 	
Change in valuation allowance	 	 	4,115	 	 	9,095	 	 	17,032	 	 	30,412	 	 	 	

	 	

	 	

	 	

	 	 	 	
 	Income tax benefit	 	$	—	 	$	—	 	$	—	 	$	—	 	 	 	

	 	

	 	

	 	

	 	 	 	
        The effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities at December 31, are presented below:
 
	 	2003

	 	2004

	 	
 
	 	(in thousands)

Deferred tax assets:	 	 	 	 	 	 	 	
 	Federal and state net operating loss carryforwards	 	$	21,427	 	$	35,679	 	
 	Federal and state research and experimentation credits	 	 	1,822	 	 	4,132	 	
 	Licenses	 	 	918	 	 	851	 	
 	Depreciation and amortization	 	 	428	 	 	1,223	 	
 	Deferred compensation	 	 	551	 	 	1,261	 	
 	Other	 	 	418	 	 	275	 	

	 	

	 	
 	 	Deferred tax assets	 	 	25,564	 	 	43,421	 	
Less valuation allowance	 	 	(25,564	)	 	(43,421	)	

	 	

	 	
 	 	Net deferred tax assets	 	$	—	 	$	—	 	

	 	

	 	
        The valuation allowance for deferred tax assets was approximately $25,564,000 and $43,421,000 as of December 31, 2003 and 2004, respectively. The increase in the total valuation allowance for the years ended December 31, 2002, 2003, 2004, and for the period from inception (March 10, 2000) through December 31, 2004 was approximately $15,078,000, $10,271,000, $17,857,000, and $43,421,000, respectively. The Company has established valuation allowances against its deferred tax assets because management believes that, after considering all of the available objective evidence, both historical and perspective, the realization of the deferred tax assets does not meet the "more likely than not" criteria under SFAS No. 109.

        The Company completed an analysis to determine if there were changes in ownership, as defined by Section 382 of the Internal Revenue Code, that would limit its ability to utilize certain net operating loss and tax credit carryforwards. The Company determined that it experienced an ownership change, as

F-23

defined by Section 382, in connection with its acquisition of Principia Associates, Inc. on September 20, 2002. As a result, the utilization of the Company's federal tax net operating loss carryforwards generated prior to the ownership change is limited. As of December 31, 2004, the Company has net operating loss carryforwards for U.S. federal tax purposes of approximately $85,472,000 million, after taking into consideration net operating losses expected to expire unused as a result of Section 382 limitations, and the remainder will expire in varying amounts through 2024 unless utilized. At December 31, 2004, the Company has state net operating loss carryforwards of approximately $69,669,000 million, which will expire through 2009 unless utilized. The utilization of these net operating loss carryforwards may be further limited if the Company experiences future ownership changes as defined in Section 382 of the Internal Revenue Code. At December 31, 2004, the Company had approximately $3,351,000 and $781,000, respectively, in federal and state research and development credits.

(11) Commitments and Contingencies

Leases

        The Company leases its laboratory and office space for its headquarters facility under a non-cancelable operating lease expiring in November 2006. This lease agreement contains a five-year renewal option. In June 2004, the Company entered into a noncancelable operating lease for additional laboratory and office space through January 2008.

        The Company subleased laboratory and office space from its scientific founder, who is a major shareholder of the Company, under a tenant-at-will arrangement. In May 2004, in agreement with the Company, the scientific founder exercised a five-year renewal option under the lease. The Company expects that the lease will be assigned to the Company in February 2005. The renewed noncancelable operating lease agreement expires in May 2009.

        The Company entered into a noncancelable operating lease for an additional office facility in January 2005. The lease has a two-year term with a one-year renewal option.

        In November 2004, the Company entered into an agreement for an equipment lease line of credit. Under the agreement, the Company may periodically directly lease, or sell and lease-back, up to $3.0 million of equipment, with payment periods of 36 or 48 months and a $1.00 purchase option at the end of each lease period. The lease rates are based upon a fixed base interest rate plus the respective prevailing 36- or 48-month U.S. Treasury Bill interest rates at the time of each funding. The leases will be accounted for as capital leases. In November 2004, the Company sold and leased back under this agreement approximately $1.3 million of its previously purchased equipment, of which approximately $1.0 million and $0.3 million were capitalized and will be paid over 36 and 48 months, respectively. As a result, the Company recorded a deferred gain of approximately $209,000 which is being amortized over the applicable lease period. The Company also leases certain vehicles and equipment under various other non-cancelable capital and operating leases.

F-24

        Future minimum payments, excluding operating costs and taxes, under the Company's capital and non-cancelable operating leases, and including the office facility lease entered into in January 2005, are approximately as follows (in thousands):
 
	 	Capital leases

	 	Operating leases

	
Years ended December 31,	 	 	 	 	 	 	
 	2005	 	$	670	 	$	1,880	
 	2006	 	 	670	 	 	1,846	
 	2007	 	 	545	 	 	931	
 	2008	 	 	88	 	 	267	
 	2009	 	 	3	 	 	87	

	 	

	
Total minimum lease payments	 	 	1,976	 	$	5,011	

	
Less: amount representing interest	 	 	251	 	 	 	

	 	 	 	
 	Present value of minimum capital lease payments	 	 	1,725	 	 	 	
 	Less current portions of capital lease obligations	 	 	537	 	 	 	

	 	 	 	
Capital lease obligations—long term	 	$	1,188	 	 	 	

	 	 	 	
        Rent expense was approximately $318,000, $718,000, $1,033,000 and $2,085,000 for the years ended December 31, 2002, 2003, 2004, and for the period from inception (March 10, 2000) through December 31, 2004, respectively, including rent paid for the lease from its scientific founder in the amounts of approximately $174,000, $194,000, $213,000 and $595,000, respectively.

License Agreements

Queen's Medical Center

        In March 2003, the Company entered into an exclusive, royalty-bearing license agreement with Queen's Medical Center (QMC) for certain technology related to ion channel technologies. The Company paid QMC cash of $40,000 and issued 73,779 shares of its common stock. The total consideration paid of approximately $240,000 was expensed immediately to research and development costs. Under the terms of the Agreement, if certain milestones are met, the Company is obligated to make cash payments of up to an aggregate of $1.0 million. If commercialization is achieved, the Company will be required to pay royalties to QMC on the net sales of any product using the licensed technologies. In the event the Company grants a sublicense of the licensed technology, the Company is obligated to compensate QMC a percentage of all fees received from the sublicense.

        Through December 31, 2004, no milestone, royalty, or sublicense payments had been earned by or paid to QMC.

Beth Israel Deaconess Medical Center

        In connection with its acquisition of Diagon in December 2002 (see note 3), the Company acquired two exclusive licenses relating primarily to monoclonal antibodies and ion channel technologies, respectively, in return for payment of cash and 184,447 shares of its common stock to Beth Israel Deaconess Medical Center (Beth Israel). The total value of the stock of $500,000 was expensed immediately by the Company to research and development costs. Under the terms of the licenses, if certain

F-25

milestones are met, the Company is required to make cash payments up to an aggregate of $2.0 million. If commercialization is achieved, the Company will be required to pay royalties on the net sales of any product using the licensed technologies. In the event the Company grants a sublicense of the licensed technologies, the Company is obligated to compensate Beth Israel a percentage of all fees received from the sublicense.

        As a result of the Diagon acquisition, the Company also assumed an exclusive license with Beth Israel to specific know-how relating to certain calcium channels. Under the terms of the agreement, if certain milestones are met, the Company is required to make cash payments up to an aggregate of $800,000. If commercialization is achieved, the Company will be required to pay royalties on the net sales of any product using the licensed know-how.

        Through December 31, 2004, no milestone, royalty or sublicense payments had been earned by or paid to Beth Israel.

Dana-Farber Cancer Institute

        In July 2002, the Company entered into an exclusive license agreement with Dana-Farber Cancer Institute (DFCI) for certain patent rights relating to the use of immune system modulators with other agents for use against cancer. The Company paid DFCI cash of approximately $30,000 and issued 200,000 shares of its common stock. The total consideration paid of approximately $572,000 was expensed immediately to research and development costs. Under the terms of the agreement, if certain milestones are met, the Company is required to make cash payments up to an aggregate of $600,000. If commercialization is achieved, the Company will be required to pay nominal royalties on the net sales of any product using the licensed technologies.

        Through December 31, 2004, no milestone, royalty or sublicense payments had been earned by or paid to DFCI.

SBR Pharmaceuticals Corp.

        In April 2002, the Company entered into an exclusive license agreement with SBR for certain patent rights relating to a potential cancer product. The Company paid $1.0 million to SBR which was immediately expensed to research and development costs. Under the agreement, the Company was obligated for milestone payments and royalties in the event of commercialization, none of which have been earned or paid. In September 2002, the Company acquired Principia, a related party, who in July 2002 acquired a majority of the outstanding stock of SBR (see note 3).

Consulting Agreements

        In July 2002, the Company entered into a consulting agreement with a member of its scientific advisory board (SAB), which was amended and restated effective January 1, 2004. The agreement has an initial term of two years from the amendment date and automatically extends for additional one-year terms unless thirty days' written notice is given by either party. In addition to an annual consulting fee, in the event the Company executes a transaction during the first two years of the consulting agreement in which the Company grants a license or other right of certain defined intellectual property, the SAB member is entitled to a one-time bonus payment of $150,000 and a portion of any up-front license fee, milestone

F-26

payments or equity payments to purchase the Company's common stock over a certain defined amount related to the license transaction. The bonus and milestone payments may be paid in either cash or common stock, at the Company's discretion. In addition, the Company will pay QMC a portion of any committed research payments received by the Company that directly relate to the intellectual property, provided that the research agreement with QMC remains in effect when such payment is received by the Company. The SAB member may be entitled to a retention bonus of $1.0 million in the event the Company is acquired or there is a sale of substantially all of the assets related to the consulting agreement, subject to certain limitations.

        In October 2002, the Company entered into a consulting agreement with an SAB member for scientific advisory services which was amended in October 2003. Under the amended consulting agreement, the term is four years from the effective date of the amendment, and for a one-time payment of $400,000, a one-time bonus payment based on the achievement of a certain performance milestone was eliminated. In addition to an annual consulting fee, the consultant is entitled a bonus payment of a portion of any up-front or milestone payments received by the Company related to calcium channel technology during the four-year term of the amended agreement.

Guarantees

        As permitted under Delaware law, the Company's Certificate of Incorporation and Bylaws provide that the Company will indemnify certain of its officers and directors for certain claims asserted against them in connection with their service as an officer or director. The maximum potential amount of future payments that the Company could be required to make under these indemnification provisions is unlimited. However, the Company has purchased a directors' and officers' liability insurance policy that reduces its monetary exposure and enables it to recover a portion of any future amounts paid. The Company believes the estimated fair value of these indemnification arrangements is minimal.

        The Company customarily agrees in the ordinary course of its business to indemnification provisions in agreements with clinical trials investigators in its drug development programs, in sponsored research agreements with academic and not-for-profit institutions, in various comparable agreements involving parties performing services for the Company in the ordinary course of business, and in its real estate leases. The Company also expects to agree to certain indemnification provisions in any drug discovery and development collaboration agreements. With respect to the Company's clinical trials and sponsored research agreements, these indemnification provisions typically apply to any claim asserted against the investigator or the investigator's institution relating to personal injury or property damage, violations of law or certain breaches of the Company's contractual obligations arising out of the research or clinical testing of the Company's compounds or drug candidates. With respect to lease agreements, the indemnification provisions typically apply to claims asserted against the landlord relating to personal injury or property damage caused by the Company, to violations of law by the Company or to certain breaches of the Company's contractual obligations. The indemnification provisions appearing in collaboration agreements are similar, but in addition provide some limited indemnification for its collaborator in the event of third-party claims alleging infringement of intellectual property rights. In each of the cases above, the term of these indemnification provisions generally survives the termination of the agreement, although the provision has the most relevance during the contract term and for a short period of time thereafter. The maximum potential amount of future payments that the Company could be required to make under these provisions is generally unlimited. The Company purchased insurance policies covering personal

F-27

injury, property damage and general liability that reduce its exposure for indemnification and would enable it in many cases to recover a portion of any future amounts paid. The Company has never paid any material amounts to defend lawsuits or settle claims related to these indemnification provisions. Accordingly, the Company believes the estimated fair value of these indemnification arrangements is minimal.

(12) Related Party Transactions

        The Company pays its scientific founder and a member of the board consulting fees of approximately $25,000 per month. Total consulting fees paid in 2002, 2003 and 2004 were approximately $75,000, $300,000 and $300,000, respectively.

        During 2001 and 2002, the Company contracted with a company owned by the Company's scientific founder, board member and significant shareholder to provide drug development testing services. Amounts advanced under this arrangement totaled $1.0 million and $500,000 as of December 31, 2001 and 2002, respectively. During 2002 and 2003, all advances were paid back to the Company as no services were ever performed.

        On August 23, 2002 and September 11, 2002, the Company issued two promissory notes receivable of $500,000 each to SBR (a wholly-owned subsidiary of Principia). The promissory notes had a fixed interest rate of 7% and were due on December 31, 2002. The promissory notes were forgiven in connection with the Company's acquisition of Principia (see note 3).

(13) Retirement Plan

        In 2003, the Company implemented a 401(k) retirement plan (the Synta 401(k) Plan) in which substantially all of its permanent employees are eligible to participate. Participants may contribute a percentage of their annual compensation to the plan, subject to statutory limitations. The Company may declare discretionary matching contributions to the Synta 401(k) Plan. As of December 31, 2004, the Company had not declared any matching contributions since inception of the plan.

(14) Research Grant Contracts

        In August 2002, the Company was awarded a $250,000 government contract with the Office of Naval Research to perform scientific research services related to the monitoring of biological agents. In 2003, the Company performed all services and received full funding, and recognized $250,000 as research grant revenue for services performed under the terms of the contract.

        In September 2002, the Company was appointed as a subcontractor to a contract awarded by the Defense Advanced Research Projects Agency (DARPA). The Company's subcontract award totaled $1.2 million and requires the Company to provide scientific services utilizing expertise in immunology, screening and diagnostics. No services were performed in 2002. During 2003, the Company had recognized approximately $1.0 million of research grant revenue for services performed under the terms of the subcontract, which ran through March 31, 2004.

        In May 2003, the Company was awarded a $500,000 government contract with DARPA to perform research services associated with performance enhancement. As of December 31, 2003, the Company had recognized approximately $43,000 of research grant revenue for services performed under the terms of the

F-28

contract, which expired in September 2004. In addition, the Company recorded deferred revenue of approximately $457,000, which represents advance payments received under this contract. In accordance to the terms of the DARPA contract, the advance payments received by the Company are deposited in a separate interest-bearing account and are recorded as restricted cash as of December 31, 2004.

(15) Subsequent Event

Scientific Founders' Agreement and Release

        In January 2005, the Company entered into an Agreement and Release with its scientific founder, who is a board member, whereby all outstanding matters regarding various oral understandings and arrangements between the scientific founder and the Company were resolved, including arrangements relating to (1) the assignment by the scientific founder of the benefit of his interests resulting from the Company's acquisition of the net assets of CKS, (2) the scientific founder's assignment of inventions, non-competition, non-solicitation and confidentiality agreements with the Company, and (3) a release by the scientific founder of any and all claims that the scientific founder may have had against the Company. Pursuant to this agreement, the Company is paying the scientific founder $500,000, payable in $25,000 installments quarterly for five years.

F-29

Report of Independent Registered Public Accounting Firm

The Board of Directors
Synta Pharmaceuticals Corp.:

        We have audited the accompanying consolidated balance sheet of Principia Associates, Inc. (the Company), a development-stage company, as of September 20, 2002, and the related consolidated statements of operations, stockholders' equity and cash flows for the period from inception (June 17, 2002) through September 20, 2002. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

        We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

        In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Principia Associates, Inc. as of September 20, 2002, and the results of their operations and their cash flows for the period from inception (June 17, 2002) through September 20, 2002 in conformity with United States generally accepted accounting principles.

        As discussed in note 11, the Company was acquired by Synta Pharmaceuticals Corp. in September 2002.

/s/ KPMG LLP

Boston, Massachusetts
December 1, 2004

F-30

PRINCIPIA ASSOCIATES, INC.
(A Development-Stage Company)

Consolidated Balance Sheet

September 20, 2002

(in thousands, except share and per share amounts)
Assets	 	 	 	 	
Current assets:	 	 	 	 	
 	Cash and cash equivalents	 	$	1,097	 	
 	Advance to related party	 	 	500	 	
 	Prepaid expenses and other current assets	 	 	74	 	

	 	
 	 	Total current assets	 	 	1,671	 	
Property and equipment, net	 	 	3,315	 	
Security deposits	 	 	67	 	

	 	
 	 	$	5,053	 	

	 	
Liabilities and Stockholders' Equity	 	 	 	 	
Current liabilities:	 	 	 	 	
 	Notes payable to related party	 	$	1,000	 	
 	Accounts payable	 	 	2,109	 	
 	Accrued expenses	 	 	167	 	
 	Acquisition payables	 	 	518	 	
 	Current maturities of capital lease obligation	 	 	82	 	

	 	
 	 	Total current liabilities	 	 	3,876	 	
Long-term liabilities:	 	 	 	 	
 	Capital lease obligation, less current maturities	 	 	7	 	

	 	
 	 	Total liabilities	 	 	3,883	 	

	 	
Stockholders' equity:	 	 	 	 	
 	Common stock, $0.01 par value. Authorized 2,000,100 shares; issued and outstanding 1,300,000 shares	 	 	13	 	
 	Additional paid-in capital	 	 	12,987	 	
 	Deficit accumulated during the development stage	 	 	(11,830	)	

	 	
 	 	Total stockholders' equity	 	 	1,170	 	

	 	
 	 	$	5,053	 	

	 	
See accompanying notes to consolidated financial statements.

F-31

PRINCIPIA ASSOCIATES, INC.
(A Development-Stage Company)

Consolidated Statement of Operations

Period from inception (June 17, 2002) to September 20, 2002

(in thousands)
Operating expenses:	 	 	 	 	
 	In-process research and development	 	$	9,551	 	
 	Research and development expenses	 	 	1,949	 	
 	General and administrative expenses	 	 	335	 	

	 	
 	 	Total operating expenses	 	 	11,835	 	

	 	
 	 	Loss from operations	 	 	(11,835	)	
Other income (expense):	 	 	 	 	
 	Interest expense	 	 	(1	)	
 	Interest income	 	 	6	 	

	 	
 	 	Net loss	 	$	(11,830	)	

	 	
See accompanying notes to consolidated financial statements.

F-32

PRINCIPIA ASSOCIATES, INC.
(A Development-Stage Company)

Consolidated Statement of Stockholders' Equity

Period from inception (June 17, 2002) to September 20, 2002

(in thousands, except share amounts)
 
	 	Common stock

	 	 
	 	Deficit
accumulated
during the
development
stage

	 	 

	 	Number
of shares

	 	Amount

	 	Additional
paid-in
capital

	 	 	 	Total
stockholders'
equity

	 	 	 	 	
Issuance of common shares	 	1,300,000	 	$	13	 	$	12,987	 	$	—	 	$	13,000	 	 	 	 	
Net loss	 	—	 	 	—	 	 	—	 	 	(11,830	)	 	(11,830	)	 	 	 	

	 	

	 	

	 	

	 	

	 	 	 	 	
Balance at September 20, 2002	 	1,300,000	 	$	13	 	$	12,987	 	$	(11,830	)	$	1,170	 	 	 	 	

	 	

	 	

	 	

	 	

	 	 	 	 	
See accompanying notes to consolidated financial statements.

F-33

PRINCIPIA ASSOCIATES, INC.
(A Development-Stage Company)

Consolidated Statement of Cash Flows

Period from inception (June 17, 2002) to September 20, 2002

(in thousands)
Cash flows from operating activities:	 	 	 	 	
 	Net loss	 	$	(11,830	)	
 	Adjustments to reconcile net loss to net cash used by operating activities:	 	 	 	 	
 	 	In-process research and development	 	 	9,551	 	
 	 	Depreciation and amortization expense	 	 	191	 	
 	 	Changes in operating assets and liabilities:	 	 	 	 	
 	 	 	Prepaid expenses and other current assets	 	 	20	 	
 	 	 	Accounts payable	 	 	780	 	
 	 	 	Accrued expenses	 	 	30	 	

	 	
 	 	 	 	Net cash used by operating activities	 	 	(1,258	)	

	 	
Cash flows from investing activities:	 	 	 	 	
 	Cash paid for acquisition, net of cash acquired	 	 	(11,603	)	
 	Capital expenditures	 	 	(29	)	

	 	
 	 	 	 	Net cash used by investing activities	 	 	(11,632	)	

	 	
Cash flows from financing activities:	 	 	 	 	
 	Proceeds from issuance of common stock	 	 	13,000	 	
 	Proceeds from notes payable to related party	 	 	1,000	 	
 	Principal payments of capital lease obligation	 	 	(13	)	

	 	
 	 	 	 	Net cash provided by financing activities	 	 	13,987	 	

	 	
 	 	 	 	Net increase in cash and cash equivalents	 	 	1,097	 	
Cash and cash equivalents at beginning of period	 	 	—	 	

	 	
Cash and cash equivalents at end of period	 	$	1,097	 	

	 	
Supplemental disclosures of cash flow information:	 	 	 	 	
 	Cash paid during the year:	 	 	 	 	
 	 	Interest expense	 	$	2	 	
See accompanying notes to consolidated financial statements.

F-34

PRINCIPIA ASSOCIATES, INC.
(A Development-Stage Company)

Notes to Consolidated Financial Statements

September 20, 2002

(1) Nature of Business

        Principia Associates, Inc. (the Company) was incorporated in Delaware on June 17, 2002. Business operations effectively commenced with the acquisition of SBR Pharmaceuticals Corp. (formerly Shionogi BioResearch Corp.) (SBR) on July 31, 2002. SBR conducted research and development activities related to the treatment of various diseases. All of SBR's funding came from its majority stockholder, Shionogi & Co. Ltd. In September 2002, the Company was acquired by Synta Pharmaceuticals Corp. (Synta) (see note 9). The three shareholders of the Company are principal shareholders and board members of Synta.

        The Company was subject to risks common to emerging companies in the drug development and pharmaceutical industry including, but not limited to, uncertainty of product development and commercialization, lack of marketing and sales history, dependence on key personnel, uncertainty of market acceptance of products, product liability, uncertain protection of proprietary technology, potential inability to raise additional financing and compliance with FDA and other government regulations.

(2) Summary of Significant Accounting Policies

Principles of Consolidation

        The consolidated financial statements include the financial statements of Principia Associates, Inc. and its subsidiary, SBR. All significant intercompany balances and transactions have been eliminated in consolidation.

Basis of Presentation

        Since its inception, the Company devoted its efforts to research, product development, and securing financing. The Company's planned principal operations had not commenced. Accordingly, the consolidated financial statements are presented in accordance with Statement of Financial Accounting Standards (SFAS) No. 7, Accounting and Reporting by Development-Stage Enterprises.

Use of Estimates

        The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Significant items subject to such estimates and assumptions include recoverability of long-lived and deferred tax assets, measurement of stock-based compensation, and the fair value of the Company's common stock. The Company bases its estimates on historical experience and various other assumptions that management believes to be reasonable under the circumstances. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates.

Cash and Cash Equivalents

        Cash equivalents include money market funds, which are valued at cost plus accrued interest. The Company considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents.

F-35

Credit Risk and Concentrations

        Financial instruments that potentially subject the Company to a concentration of credit risk consist of money market funds. Deposits with banks may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand and, therefore, bear minimal risk.

Fair Value of Financial Instruments

        The carrying amounts of the Company's financial instruments, which include cash equivalents, capital leases and long-term debt, approximate their fair values.

Property and Equipment

        Property and equipment are stated at cost. Depreciation on property and equipment is calculated on the straight-line method over the estimated useful lives of the assets, which range from five to ten years. Equipment held under capital leases is amortized on a straight-line basis over the shorter of the lease term or estimated useful life of the asset. Amortization of assets held under capital leases is included in depreciation expense and amortization expense.

Research and Development Costs

        Research and development costs are expensed as incurred in accordance with SFAS No. 2,Accounting for Research and Development Costs. Research and development costs are comprised of costs incurred in performing research and development activities, including salaries, benefits, facilities, research-related overhead, contract services and other external costs.

Patents

        Costs to secure and defend patents are expensed as incurred and are classified as general and administrative expenses in the Company's statements of operations.

Income Taxes

        The Company accounts for income taxes in accordance with SFAS No. 109,Accounting for Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income in the period that includes the enactment date.

Impairment of Long-Lived Assets

        The Company accounts for the impairment and disposition of long-lived assets in accordance with SFAS No. 144,Accounting for the Impairment or Disposal of Long-Lived Assets  (SFAS 144). In accordance with SFAS 144, management assesses the potential impairments of its long-lived assets whenever events of

F-36

changes in circumstances indicate that an asset's carrying value may not be recoverable. If the carrying value exceeds the undiscounted future cash flows estimated to result from the use and eventual disposition of the asset, the Company will write down the asset to its estimated fair value.

Comprehensive Income (Loss)

        SFAS No. 130,Reporting Comprehensive Income, requires that all components of comprehensive income (loss) be disclosed in the consolidated financial statements. Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions, and other events and circumstances. For the period presented, the Company's comprehensive loss is equal to its net loss reported in the accompanying consolidated statements of operations.

Segment Reporting

        The Company adopted SFAS No. 131,Disclosure About Segments of an Enterprise and Related Information, which requires companies to report selected information about operating segments, as well as enterprise-wide disclosures about products, services, geographical area, and major customers. Operating segments are determined based on the way management organizes its business for making operating decisions and assessing performance. The Company had only one operating segment, the discovery, development and commercialization of drug products.

(3) Acquisition of SBR Pharmaceuticals Corp.

        On July 31, 2002, the Company purchased 98.8% of the outstanding stock of SBR Pharmaceuticals Corp. (formerly Shionogi BioResearch Corp.) (SBR) from its shareholders in exchange for an aggregate of approximately $12.2 million in cash and agreed to purchase the remaining outstanding shares and certain stock options for approximately $268,000. The Company incurred transaction-related costs of approximately $250,000 consisting exclusively of legal costs. The scientific founder of Synta, who is a majority shareholder and a board member, was a 20% shareholder of SBR.

        The following table summarizes the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition (in thousands):
Current assets, including cash of $619	 	$	1,212	
In-process research and development	 	 	9,551	
Property and equipment	 	 	3,478	
Other assets	 	 	67	

	
 	Total assets acquired	 	 	14,308	
Liabilities assumed	 	 	1,568	

	
 	Net assets acquired	 	$	12,740	

	
        For accounting purposes, the transaction was treated as an acquisition of assets and not a business combination because SBR did not meet the definition of a business under EITF 98-3, Determination Whether a Nonmonetary Transaction Involves Receipt of Productive Assets or of a Business . The purchase

F-37

price was allocated to assets acquired and liabilities assumed based on management's analysis and estimates of fair values. Management's estimates of fair value are based on assumptions believed to be reasonable, but which are inherently uncertain and unpredictable. The acquired in-process research and development (IPR&D) was valued at $9.6 million. The IPR&D assets were written off at the date of acquisition in accordance with Financial Accounting Standards Board (FASB) Interpretation No. 4, Applicability of FASB Statement No. 2 to Business Combinations Accounted for by the Purchase Method .

        The value assigned to IPR&D related to research projects for which technological feasibility had not yet been established and no future alternative uses existed. The fair value was determined using the income approach, which discounts expected future cash flows from projects under development to their net present value using a risk-adjusted rate. Each project was analyzed to determine the utilization of core technology; the complexity, cost and time to complete development; any alternative future use or current technological feasibility; and the stage of completion. Future cash flows were estimated, taking into account the expected life cycles of the product and the underlying technology, relevant market sizes and industry trends. The estimated net cash flows from these products were based on management's estimates of related revenues, cost of goods sold, R&D costs, selling, general and administrative costs, and income taxes. Discount rates ranging from 30% to 40% were utilized based on the nature of the technology of the products, the stage of completion of the projects, the complexity of the development effort and the risks associated with reaching technological feasibility of the projects.

        The Company had three products under development at the acquisition date, contributing 59%, 23%, and 18% of the total IPR&D value. The products under development are intended to result in therapeutic products in the areas of oncology, autoimmune disease, and allergy. Commercialization of any product is not anticipated for several years.

(4) Property and Equipment

        Property and equipment is comprised of the following at September 20, 2002 (in thousands):
Furniture and equipment	 	$	1,604	 	
Leasehold improvements	 	 	1,903	 	

	 	
 	 	 	3,507	 	
Less accumulated depreciation and amortization	 	 	(192	)	

	 	
 	Net property and equipment	 	$	3,315	 	

	 	
(5) Accrued Expenses

        Accrued expenses consist of the following at September 20, 2002 (in thousands):
Compensation and benefits	 	$	132	
Professional fees	 	 	30	
Other	 	 	5	

	
 	 	$	167	

	
F-38

(6) Stockholders' Equity

        In August 2002, the Company issued 1,300,000 shares of its common stock for proceeds of $13,000,000.

(7) Leases

        The Company is obligated under a capital lease for certain lab equipment that expires in September 2003. At September 20, 2002, the gross amount of machinery and equipment and related accumulated amortization recorded under the capital lease is as follows (in thousands):
Equipment	 	$	126	 	
 	Less accumulated amortization	 	 	(8	)	

	 	
 	 	$	118	 	

	 	
        The Company also has several operating leases that expire at various dates through 2006. Rental expense for operating leases was approximately $75,000 for the period from inception (June 17, 2002) through September 20, 2002.

        Future minimum lease payments under noncancelable operating leases and future minimum capital lease payments as of September 20, 2002 are as follows:
 
	 	Capital
leases

	 	Operating
leases

	
 
	 	(in thousands)

Periods ending December 31:	 	 	 	 	 	 	
 	2002 (remaining period through December 31, 2002)	 	$	22	 	$	139	
 	2003	 	 	72	 	 	486	
 	2004	 	 	—	 	 	482	
 	2005	 	 	—	 	 	481	
 	2006	 	 	—	 	 	481	

	 	

	
 	 	Total minimum lease payments	 	 	94	 	$	2,069	

	
 	Less amount representing interest	 	 	(5	)	 	 	

	 	 	 	
 	 	Present value of net minimum lease obligation	 	 	89	 	 	 	
 	Less current portion	 	 	(82	)	 	 	

	 	 	 	
 	 	Long-term capital lease obligation	 	$	7	 	 	 	

	 	 	 	
F-39

(8) Income Taxes

        Differences between the actual tax benefit and the tax benefit computed using the U.S. federal income tax rate of 34% is as follows for the period from inception (June 17, 2002) through September 20, 2002 (in thousands):
Income tax benefit at statutory rate	 	$	(4,023	)	
In-process research and development	 	 	3,247	 	
Nondeductible expenses	 	 	2	 	
Change in valuation allowance	 	 	774	 	

	 	
 	Income tax expense	 	$	—	 	

	 	
        The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at September 20, 2002 are presented below (in thousands):
Deferred tax assets:	 	 	 	 	
 	Net operating loss carryforwards	 	$	8,587	 	
 	Compensated absences and others	 	 	46	 	
 	Tax credits carryforwards	 	 	622	 	
 	Charitable contribution carryover	 	 	3	 	
 	Depreciation and amortization	 	 	493	 	

	 	
 	 	Total gross deferred tax assets	 	 	9,751	 	
 	Less valuation allowance	 	 	(9,751	)	

	 	
 	 	Net deferred tax assets	 	$	—	 	

	 	
        The valuation allowance was approximately $9,751,000 at September 20, 2002. The Company has recorded a full valuation allowance against its deferred tax assets since management believes that after considering all the available evidence, both positive and negative, it is not more likely than not that the deferred tax assets will be realized.

        At September 20, 2002, the Company has net operating loss carryforwards for federal income tax purposes of approximately $24.7 million which are available to offset future federal taxable income, if any, expiring in various years through 2022 and a state net operating loss carryforward of approximately $2.2 million expiring in 2007.

        The Company's ability to utilize its net operating loss and credit carryforwards may be limited if the Company experiences an ownership change as defined in Section 382 of the Internal Revenue Code. Generally, an ownership change occurs when the ownership percentage of 5% or greater stockholders increases by more than 50% over a three-year period. The Company has not determined the extent of this provision on the utilization of the net operating loss and credit carryforwards.

F-40

(9) Related-Party Transactions

License Agreement

        In April 2002, SBR entered into an exclusive license agreement with Synta. Under the terms of the agreement, SBR received $1,000,000 for licensing certain of its technology. In addition, as a result of the acquisition of SBR, the Company is entitled to other payments totaling $14.0 million depending on the achievement of certain milestones in the research and development process by Synta. The Company is also eligible to receive royalties from the net sales upon communication of the licensed product from Synta.

Notes Payable

        In August 2002 and September 2002, the Company issued promissory notes payable totaling $1,000,000 to Synta to fund the Company's operations. The promissory notes had a fixed interest rate of 7% and were due on December 31, 2002. The promissory notes were forgiven in connection with the Synta's acquisition of the Company (see note 11).

Advance to Related Party

        During 2002, SBR contracted with a company owned by its scientific founder, board member and significant shareholder to provide drug development testing services. The former board member and significant shareholder of SBR is the scientific founder, board member and significant shareholder of Synta. Amounts advanced under this arrangement totaled $500,000. As of September 20, 2002, no services had yet been performed under this contract.

(10) Retirement Plan

        The Company has a defined contribution 401(k) plan (the Plan). The Plan covers substantially all employees of the Company. The Company has elected not to contribute to the Plan for the period from inception (June 17, 2002) through September 20, 2002, and accordingly, has not recorded any pension expense in the accompanying consolidated statement of operations.

(11) Subsequent Event

Sale of Company

        On September 20, 2002, Synta acquired all of the outstanding shares of the Company's common stock from its shareholders in exchange for 4,939,500 shares of its common stock together with warrants to purchase an aggregate of 959,126 shares of Synta common stock, forgiveness of the $1,000,000 short-term promissory notes payable and cash of approximately $268,000. The total value of the consideration was approximately $16.9 million. The three shareholders of the Company are principal shareholders and board members of Synta (see note 1).

F-41

Report of Independent Registered Public Accounting Firm

The Board of Directors
Synta Pharmaceuticals Corp.:

        We have audited the accompanying balance sheet of SBR Pharmaceuticals Corp. (the Company) as of July 31, 2002, and the related statements of operations, stockholders' equity and cash flows for the seven months ended July 31, 2002. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

        We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

        In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of SBR Pharmaceuticals Corp. as of July 31, 2002, and the results of its operations and its cash flows for the seven months ended July 31, 2002 in conformity with United States generally accepted accounting principles.

        As discussed in note 12, the Company was acquired by Principia Associates, Inc. on July 31, 2002.

/s/ KPMG LLP

Boston, Massachusetts
December 1, 2004

F-42

SBR PHARMACEUTICALS CORP.

Balance Sheet

(in thousands, except share and per share amounts)
 
	 	July 31,
2002

	 	
Assets	 	 	 	 	
Current assets:	 	 	 	 	
 	Cash and cash equivalents	 	$	619	 	
 	Advance to related party	 	 	500	 	
 	Prepaid expenses and other current assets	 	 	95	 	

	 	
 	 	 	1,214	 	
Property and equipment, net	 	 	3,478	 	
Security deposits	 	 	67	 	

	 	
 	 	$	4,759	 	

	 	
Liabilities and Stockholders' Equity	 	 	 	 	
Current liabilities:	 	 	 	 	
 	Accounts payable	 	$	1,329	 	
 	Accrued expenses	 	 	137	 	
 	Current maturities of capital lease obligation	 	 	81	 	

	 	
 	 	 	1,547	 	
Long-term liabilities:	 	 	 	 	
 	Capital lease obligation, less current maturities	 	 	21	 	

	 	
 	 	 	1,568	 	

	 	
Stockholders' equity	 	 	 	 	
 	Common stock, $0.01 par value. Authorized 40,000,000 shares; issued and outstanding 37,855,200 shares	 	 	379	 	
Additional paid-in capital	 	 	54,027	 	
Accumulated deficit	 	 	(51,215	)	

	 	
 	 	 	3,191	 	

	 	
 	 	$	4,759	 	

	 	
See accompanying notes to financial statements.

F-43

SBR PHARMACEUTICALS CORP.

Statement of Operations

(in thousands)
 
	 	Seven
months ended
July 31,
2002

	 	
License revenue	 	$	1,000	 	

	 	
Operating expenses:	 	 	 	 	
 	Research and development expenses	 	 	5,057	 	
 	General and administrative expenses	 	 	1,344	 	

	 	
 	 	Total operating expenses	 	 	6,401	 	

	 	
 	 	Loss from operations	 	 	(5,401	)	
Other income (expense):	 	 	 	 	
 	Interest income	 	 	13	 	
 	Interest expense	 	 	(12	)	

	 	
 	 	Net loss	 	$	(5,400	)	

	 	
See accompanying notes to financial statements.

F-44

SBR PHARMACEUTICALS CORP.

Statement of Stockholders' Equity

Seven months ended July 31, 2002

(in thousands, except share amounts)
 
	 	Common stock

	 	 

	 	
 
	 	Number
of shares

	 	Amount

	 	Additional
paid-in
capital

	 	Accumulated
deficit

	 	Total
stockholders'
equity

	 	
Balance at December 31, 2001	 	37,834,800	 	$	378	 	$	51,526	 	$	(45,815	)	$	6,089	 	
 	Amounts received from majority stockholder under research and development agreement	 	—	 	 	—	 	 	2,500	 	 	—	 	 	2,500	 	
 	Exercise of stock options	 	20,400	 	 	1	 	 	1	 	 	—	 	 	2	 	
 	Net loss	 	—	 	 	—	 	 	—	 	 	(5,400	)	 	(5,400	)	

	 	

	 	

	 	

	 	

	 	
Balance at July 31, 2002	 	37,855,200	 	$	379	 	$	54,027	 	$	(51,215	)	$	3,191	 	

	 	

	 	

	 	

	 	

	 	
See accompanying notes to financial statements.

F-45

SBR PHARMACEUTICALS CORP.

Statement of Cash Flows

(in thousands)
 
	 	Seven
months ended
July 31,
2002

	 	
Cash flows from operating activities:	 	 	 	 	
 	Net loss	 	$	(5,400	)	
 	Adjustments to reconcile net loss to net cash used by operating activities:	 	 	 	 	
 	 	Depreciation and amortization expense	 	 	1,118	 	
 	 	Changes in operating assets and liabilities:	 	 	 	 	
 	 	 	Advance to related party	 	 	(500	)	
 	 	 	Prepaid expenses and other current assets	 	 	(5	)	
 	 	 	Accounts payable	 	 	1,279	 	
 	 	 	Accrued expenses	 	 	(119	)	

	 	
 	 	 	 	Net cash used by operating activities	 	 	(3,627	)	

	 	
Cash flows from investing activity:	 	 	 	 	
 	Capital expenditures	 	 	(305	)	

	 	
 	 	 	 	Net cash used by investing activity	 	 	(305	)	

	 	
Cash flows from financing activities:	 	 	 	 	
 	Amounts received from majority stockholder under capital and research and development agreements	 	 	2,500	 	
 	Amounts received from exercise of stock options	 	 	2	 	
 	Payments of long-term debt	 	 	(250	)	
 	Payments of capital lease obligation	 	 	(44	)	

	 	
 	 	 	 	Net cash provided by financing activities	 	 	2,208	 	

	 	
 	 	 	 	Net decrease in cash and cash equivalents	 	 	(1,724	)	
Cash and cash equivalents at beginning of period	 	 	2,343	 	

	 	
Cash and cash equivalents at end of period	 	$	619	 	

	 	
Supplemental disclosures of cash flow information:	 	 	 	 	
 	Cash paid during the year:	 	 	 	 	
 	 	Interest expense	 	$	12	 	
See accompanying notes to financial statements.

F-46

SBR PHARMACEUTICALS CORP.

Notes to Financial Statements

July 31, 2002

(1) Nature of Business

        SBR Pharmaceuticals Corp. (formerly Shionogi BioResearch Corp.) (the Company) was formed to conduct research and development activities related to the treatment of various diseases. In order to fund the initial stages of operations, the Company entered into a research and development agreement and a capital agreement with Shionogi & Co. Ltd., (the majority stockholder) (see notes 8 and 12).

        The Company was subject to risks common to emerging companies in the drug development and pharmaceutical industry including, but not limited to, uncertainty of product development and commercialization, lack of marketing and sales history, dependence on key personnel, uncertainty of market acceptance of products, product liability, uncertain protection of proprietary technology, potential inability to raise additional financing and compliance with FDA and other government regulations.

        On July 31, 2002, the Company was acquired by Principia Associates, Inc. (see note 12).

(2) Summary of Significant Accounting Policies

Use of Estimates

        The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Significant items subject to such estimates and assumptions include recoverability of long-lived and deferred tax assets, measurement of stock-based compensation, and the fair value of the Company's common stock. The Company bases its estimates on historical experience and various other assumptions that management believes to be reasonable under the circumstances. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates.

Cash and Cash Equivalents

        Cash equivalents include money market funds, which are valued at cost plus accrued interest. The Company considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents.

Credit Risk and Concentrations

        Financial instruments that potentially subject the Company to a concentration of credit risk consist of money market funds. Deposits with banks may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand and, therefore, bear minimal risk.

Fair Value of Financial Instruments

        The carrying amounts of the Company's financial instruments, which include cash equivalents, capital leases and long-term debt, approximate their fair values.

Property and Equipment

        Property and equipment are stated at cost. Depreciation on property and equipment is calculated on the straight-line method over the estimated useful lives of the assets, which range from five to ten years.

F-47

Equipment held under capital leases is amortized on a straight-line basis over the shorter of the lease term or estimated useful life of the asset. Amortization of assets held under capital leases is included in depreciation and amortization expense.

Research and Development Costs

        Research and development costs are expensed as incurred in accordance with SFAS No. 2,Accounting for Research and Development Costs. Research and development costs are comprised of costs incurred in performing research and development activities, including salaries, benefits, facilities, research-related overhead, contracted services and other external costs.

Patents

        Costs to secure and defend patents are expensed as incurred and are classified as general and administrative expenses in the Company's statements of operations.

Income Taxes

        The Company accounts for income taxes in accordance with SFAS No. 109,Accounting for Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income in the period that includes the enactment date.

Impairment of Long-Lived Assets

        The Company accounts for the impairment and disposition of long-lived assets in accordance with SFAS No. 144,Accounting for the Impairment or Disposal of Long-Lived Assets  (SFAS 144). In accordance with SFAS 144, management assesses the potential impairments of its long-lived assets whenever events of changes in circumstances indicate that an asset's carrying value may not be recoverable. If the carrying value exceeds the undiscounted future cash flows estimated to result from the use and eventual disposition of the asset the Company writes down the asset to its estimated fair value. Management believes that no long-lived assets were impaired as of July 31, 2002.

Revenue Recognition

        The Company follows the revenue recognition criteria outlined in Staff Accounting Bulletin (SAB) No. 101,Revenue Recognition in Financial Statements , as revised by SAB No. 104, Revenue Recognition , and Emerging Issues Task Force (EITF) Issue 00-21 Revenue Arrangements with Multiple Deliverables  (EITF Issue 00-21). Accordingly, revenues from licensing agreements are recognized based on the performance requirements of the agreement. Nonrefundable up-front fees, where the Company has an ongoing involvement or performance obligation, would be recorded as deferred revenue in the balance sheet and amortized into collaboration revenue in the statement of operations over the term of the performance obligation.

F-48

        Funding from research and development services with the majority stockholder is not recognized as contract revenue in the accompanying statements of operations in accordance with Statement of Financial Accounting Standards (SFAS) No. 68, Research and Development Arrangements . Under SFAS No. 68, there is a presumption that transactions between significant related parties creates an arrangement where the funded party may have to repay the funding party.

Stock-Based Compensation

        The Company accounts for stock-based employee compensation arrangements using the intrinsic value method in accordance with Accounting Principle Board Opinion (APB) No. 25, Accounting for Stock Issued to Employees , and complies with the disclosure provisions of SFAS No. 123, Accounting for Stock-Based Compensation . Under APB No. 25, compensation cost is recognized based on the difference, if any, on the date of grant between the fair value of the Company's common stock and the exercise price of stock options granted. Under SFAS No. 123, compensation cost is measured at the grant date based on the fair value of the award and is recognized on a pro rata basis over the service period, which is usually the vesting period.

        If compensation expense for the Company's stock-based compensation plan had been determined based on the fair value at the grant dates as calculated in accordance with SFAS No. 123, the Company's net loss would have increased by an immaterial amount.

        Equity instruments issued to nonemployees are accounted for in accordance with the provisions of SFAS No. 123 and Emerging Issues Task Force Issue (EITF) No. 96-18, Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with Selling Goods or Services .

Comprehensive Income (Loss)

        SFAS No. 130,Reporting Comprehensive Income, requires that all components of comprehensive income (loss) be disclosed in the consolidated financial statements. Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions, and other events and circumstances. For the period presented, the Company's comprehensive loss is equal to its net loss reported in the accompanying statement of operations.

Segment Reporting

        The Company has adopted SFAS No. 131,Disclosure About Segments of an Enterprise and Related Information, which requires companies to report selected information about operating segments, as well as enterprise-wide disclosures about products, services, geographical area, and major customers. Operating segments are determined based on the way management organizes its business for making operating decisions and assessing performance. The Company has only one operating segment, the discovery, development and commercialization of drug products.

F-49

(3) Property and Equipment

        Property and equipment is comprised of the following (in thousands):
 
	 	July 31,
2002

	 	
Furniture and equipment	 	$	6,262	 	
Leasehold improvements	 	 	3,740	 	

	 	
 	 	 	10,002	 	
Less accumulated depreciation and amortization	 	 	(6,524	)	

	 	
 	Net property and equipment	 	$	3,478	 	

	 	
(4) Accrued Expenses

        Accrued expenses consist of the following (in thousands):
 
	 	July 31,
2002

	
Compensation and benefits	 	$	133	
Other	 	 	4	

	
 	 	$	137	

	
(5) Leases

        The Company is obligated under various capital leases for furniture and equipment that expire at various dates through 2003. The gross amount of equipment and related accumulated amortization recorded under a capital lease are as follows (in thousands):
 
	 	July 31,
2002

	
Furniture and equipment	 	$	290	
Less accumulated amortization	 	 	164	

	
 	 	$	126	

	
        The Company also has several operating leases that expire at various dates through 2006. Rental expense for operating leases is approximately $307,000 for the seven months ended July 31, 2002.

F-50

        Future minimum lease payments under noncancelable operating leases and future minimum capital lease payments as of July 31, 2002 are as follows:
 
	 	Capital
leases

	 	Operating
leases

	
 
	 	(in thousands)

Periods ending December 31:	 	 	 	 	 	 	
 	2002 (through December 31, 2002)	 	$	36	 	$	208	
 	2003	 	 	73	 	 	486	
 	2004	 	 	—	 	 	482	
 	2005	 	 	—	 	 	482	
 	2006	 	 	—	 	 	481	

	 	

	
 	 	Total minimum lease payments	 	 	109	 	$	2,139	

	
 	Less amount representing interest	 	 	(7	)	 	 	

	 	 	 	
 	 	Present value of net minimum lease obligations	 	 	102	 	 	 	
 	Less current portion	 	 	(81	)	 	 	

	 	 	 	
 	 	Long-term capital lease obligation	 	$	21	 	 	 	

	 	 	 	
(6) Long-Term Debt

        In 1997, the Company entered into a loan agreement with the majority stockholder to borrow $5,000,000 for fixed asset acquisitions. As of December 31, 2001, the outstanding principal balance related to this agreement was $250,000. Interest on borrowings outstanding accrued at a rate of 6.63%. Principal payments of $250,000 plus interest are due on a quarterly basis. The final principal payment on the loan was paid in March 2002.

(7) Income Taxes

        Differences between the actual tax benefit and the tax benefit computed using the U.S. federal income tax rate of 34% is as follows (in thousands):
 
	 	Seven
months ended
July 31, 2002

	 	
Income tax benefit at statutory rate	 	$	(1,836	)	
Additional paid-in capital recognition	 	 	850	 	
Nondeductible expenses	 	 	6	 	
Change in valuation allowance	 	 	980	 	

	 	
 	Income tax expense	 	$	—	 	

	 	
F-51

        The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below (in thousands):
 
	 	July 31,
2002

	 	
Deferred tax assets:	 	 	 	 	
 	Net operating loss carryforwards	 	$	9,633	 	
 	Tax credits carryforwards	 	 	1,403	 	
 	Mass Corp. start-up cost	 	 	28	 	
 	Compensated absences	 	 	6	 	
 	Charitable contribution carryover	 	 	3	 	
 	Plant and equipment, due to difference in depreciation	 	 	462	 	

	 	
 	 	Total gross deferred tax assets	 	 	11,535	 	
Less valuation allowance	 	 	(11,535	)	

	 	
 	 	Net deferred tax assets	 	$	—	 	

	 	
        The net change in the total valuation allowance for the seven months ended July 31, 2002 was an increase of approximately $951,000. The Company has recorded a full valuation allowance against its deferred tax assets since management believes that, after considering all of the available objective evidence, both positive and negative, the realization of the deferred tax assets does not meet the "more likely than not" criteria under SFAS No. 109.

        At July 31, 2002, the Company has net operating loss carryforwards for federal income tax purposes of approximately $22.5 million which are available to offset future federal taxable income, if any, expiring in various years through 2022 and a state net operating loss carryforward of approximately $21.0 million expiring in various years through 2007. Pursuant to the Tax Reform Act of 1986, annual utilization of the Company's net operating loss carryforwards and other tax attributes may be limited if the Company experiences an ownership change as defined in Section 382 of the Internal Revenue Code. Generally, an ownership change occurs when the ownership percentage of 5% or greater stockholders increased by more than 50% over a three-year period. The Company has not determined the extent of this provision on the utilization of the loss and credit carryforwards (see note 12).

(8) Related Party Transactions

        During 1997, the Company entered into a research and development agreement with the majority stockholder. Under the terms of the agreement, the Company will provide certain research and development services in return for specified funding. Total cash payments under the contract of $50,000,000 will be received in quarterly installments of $1,250,000 through the year ended 2006.

        Additionally, in 1997 the Company entered into a capital agreement with the majority stockholder. Under the terms of the agreement, the majority stockholder will contribute total cash payments of $50,000,000 to the Company to be received in quarterly installments of $1,250,000 through the year ended 2006. The Company received no funding during the seven months ended July 31, 2002 related to this agreement. This agreement terminated effective April 1, 2002.

F-52

        Effective April 1, 2002, the majority stockholder and the Company have signed an Amended and Restated Research Funding Agreement, which replaces the prior research development agreements. Under the terms of the agreement, the Company shall proceed working on its research projects. Subject to the approval of the Company's board of directors, the Company may seek or enter into other agreements for contract research or take on other research projects, whether funded by third parties or self-funded. Total cash payments under the new contract of $10,000,000 will be received in quarterly installments of $1,250,000 through March 2004, beginning April 1, 2002 (see note 12).

        The Company received $2,500,000 during the seven months ended July 31, 2002 in funding under the research and development agreements. Such amounts have been recorded in the accompanying financial statements as additional paid-in capital.

        In anticipation of a possible initial public offering, the majority shareholder granted a call option to the Company to purchase 11,000,000 shares of the common stock, $0.01 par value, which represents 27.5% of the Company's authorized shares. The exercise price for the call option is $1.15 per share subject to adjustment in event of the subdivision, split-up or combination of the option shares.

        During 2002, the Company contracted with a company owned by the Company's scientific founder, board member and significant shareholder to provide drug development testing services. Amounts advanced under this arrangement totaled $500,000. As of July 31, 2002 no services had yet been performed under this contract.

(9) License Agreement

        In April 2002, the Company entered into an exclusive license agreement with Synta Pharmaceuticals Corp. (Synta). Under the terms of the license agreement, the Company granted and transferred a license and know-how related to certain small molecule technology to Synta. Synta paid an initial nonrefundable fee of $1,000,000. The Company is also entitled to other payments totaling $14,000,000 depending on the achievement of certain milestones in the research and development process by Synta. In addition, after the first commercial sale of a licensed product covered by the agreement, the Company is eligible to receive a royalty of 3.5% of the net sales from Synta.

(10) Stock Option Plan

        In 1997, the Company adopted the Shionogi BioResearch Corp. Incentive Stock Option Plan (the Plan). The Plan provides for the grant of stock options to employees, officers, directors, consultants and advisors to the Company. The terms of the options will be determined by the board of directors. Stock options are granted with an exercise price equal to the fair value of the underlying common stock at the date of grant. Options granted under the Plan will generally vest over a five year period. A total of 4,600,000 shares of common stock have been reserved for issuance under the Plan.

F-53

        Summary of stock option activity is presented below:
 
	 	Seven months
ended July 31, 2002

	
 
	 	Shares

	 	Weighted
average
exercise
price

	
Outstanding at beginning of period	 	1,250,334	 	$	0.05	
 	Granted	 	—	 	 	—	
 	Exercised	 	(20,400	)	 	0.08	
 	Canceled	 	(12,000	)	 	0.25	

	 	

	
Outstanding at end of period	 	1,217,934	 	$	0.07	

	 	

	
Options exercisable at end of period	 	1,062,471	 	 	 	

Weighted average fair value of options granted during the period	

 	
 	
—	

Weighted average remaining contractual life	

 	
 	
6.4 years	
        The following table summarizes information about stock options outstanding at July 31, 2002:
Price range

	 	Outstanding
options

	 	Weighted
average
price

	 	Weighted
average
remaining
contractual
life

	 	Exercisable
options

	 	Weighted
average
price

	
$0.01	 	908,600	 	$	0.01	 	5.59	 	895,000	 	$	0.01	
  0.25	 	309,334	 	 	0.25	 	8.69	 	167,471	 	 	0.25	

	 	 	 	 	 	 	

	 	 	 	
 	 	1,217,934	 	 	 	 	 	 	1,062,471	 	 	 	

	 	 	 	 	 	 	

	 	 	 	
(11) Retirement Plan

        In October 1997, the Company adopted a defined contribution 401(k) plan (the Plan). The Plan covers substantially all employees of the Company. The Company has elected not to contribute to the Plan for the seven months ended July 31, 2002, and accordingly, has not recorded any expense in the accompanying statement of operations.

(12) Subsequent Event

Sale of Company

        On July 31, 2002, Principia Associates, Inc. acquired the Company from its shareholders for approximately $12.5 million in cash.

        Effective at the closing date, the Amended and Restated Research Funding Agreement, dated as of April 1, 2002, by and between the majority stockholder and the Company was terminated. In addition, the Call Option Agreement by and between the majority stockholder and the Company was also terminated (see note 8).

F-54

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution.

        The following table sets forth an itemization of the various costs and expenses, all of which we will pay, in connection with the issuance and distribution of the securities being registered. All of the amounts shown are estimated except the SEC Registration Fee, the Nasdaq National Market Listing Fee and the NASD Filing Fee.
SEC Registration Fee	 	$	13,536	
Nasdaq National Market Listing Fee	 	 	*	
NASD Filing Fee	 	 	12,000	
Printing and Engraving Fees	 	 	*	
Legal Fees and Expenses	 	 	*	
Accounting Fees and Expenses	 	 	*	
Blue Sky Fees and Expenses	 	 	*	
Transfer Agent and Registrar Fees	 	 	*	
Miscellaneous	 	 	*	

	
 	Total	 	$	*	

	

*
To be filed by amendment.
Item 14. Indemnification of Directors and Officers.

        Our restated certificate of incorporation and restated bylaws provide that each person who was or is made a party or is threatened to be made a party to or is otherwise involved (including, without limitation, as a witness) in any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or she is or was a director or an officer of Synta Pharmaceuticals Corp. or is or was serving at our request as a director, officer, or trustee of another corporation, or of a partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan, whether the basis of such proceeding is alleged action in an official capacity as a director, officer or trustee or in any other capacity while serving as a director, officer or trustee, shall be indemnified and held harmless by us to the fullest extent authorized by the Delaware General Corporation Law against all expense, liability and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered by such.

        Section 145 of the Delaware General Corporation Law permits a corporation to indemnify any director or officer of the corporation against expenses (including attorney's fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with any action, suit or proceeding brought by reason of the fact that such person is or was a director or officer of the corporation, if such person acted in good faith and in a manner that he reasonably believed to be in, or not opposed to, the best interests of the corporation, and, with respect to any criminal action or proceeding, if he or she had no reason to believe his or her conduct was unlawful. In a derivative action, ( i.e ., one brought by or on behalf of the corporation), indemnification may be provided only for expenses actually and reasonably incurred by any director or officer in connection with the defense or settlement of such an action or suit if such person acted in good faith and in a manner that he or she reasonably believed to be in, or not opposed to, the best interests of the corporation, except that no indemnification shall be provided if such person shall have been adjudged to be liable to the corporation, unless and only to the extent that the court in which the action or suit was brought shall determine that the defendant is fairly and reasonably entitled to indemnity for such expenses despite such adjudication of liability.

II-1

        Pursuant to Section 102(b)(7) of the Delaware General Corporation Law, Article NINTH of our restated certificate of incorporation eliminates the liability of a director to us or our stockholders for monetary damages for such a breach of fiduciary duty as a director, except for liabilities arising:

•
from any breach of the director's duty of loyalty to us or our stockholders;

•
from acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;

•
under Section 174 of the Delaware General Corporation Law; and

•
from any transaction from which the director derived an improper personal benefit.

        We carry insurance policies insuring our directors and officers against certain liabilities that they may incur in their capacity as directors and officers. In addition, we expect to enter into indemnification agreements with each of our directors and executive officers prior to completion of the offering.

        Additionally, reference is made to the Underwriting Agreement filed as Exhibit 1.1 hereto, which provides for indemnification by the underwriters of Synta Pharmaceuticals Corp., our directors and officers who sign the registration statement and persons who control Synta Pharmaceuticals Corp., under certain circumstances.
Item 15. Recent Sales of Unregistered Securities.

        Since January 18, 2002, we have sold the following securities that were not registered under the Securities Act. The following information gives effect to a one-for-                        reverse split of our common stock to be effected prior to the completion of this offering.

(a)   Issuances of Capital Stock and Warrants

        Set forth below is information regarding shares of our common stock issued and warrants granted, by us since January 18, 2002. Also included is the consideration, if any, received by us for such shares and warrants.

1.
Between April 15, 2002 and May 16, 2002, we issued and sold 4,426,738 shares of our common stock at a purchase price per share of $2.7108 to two accredited investors for an aggregate purchase price of $12,000,000.00.

2.
On July 25, 2002, we issued 200,000 shares of our common stock with an aggregate value of $542,160.00 to a private research institute as consideration for a license of technology from such research institute.

3.
Between November 7, 2002 and March 27, 2003, we issued and sold 18,542,767 shares of our common stock at a purchase price per share of $2.7108 to 48 accredited investors for an aggregate purchase price of $50,265,732.78.

4.
On September 20, 2002, we issued 4,939,500 shares of our common stock with an aggregate value of $13,389,996.60, and granted warrants to purchase 959,126 shares of our common stock with an aggregate value of approximately $2,200,000.00 to the former stockholders of a privately held corporation as consideration for our acquisition of such corporation.

5.
On December 30, 2002, we issued 3,145,854 shares of our common stock with an aggregate value of $8,527,781.02 to the former stockholders of a privately held corporation as consideration for our acquisition of such corporation.

6.
On December 30, 2002, we issued 184,447 shares of our common stock with an aggregate value of $499,998.92 to a medical center as consideration for a license of technology from such medical center.

II-2

7.
On March 27, 2003, we issued 73,779 shares of our common stock with an aggregate value of $200,000.11 to a privately held company as consideration for a license of technology from such company.

8.
Between October 15, 2003 and January 22, 2004, we issued and sold 12,500,000 shares of our common stock at a purchase price per share of $4.00 to 43 accredited investors for an aggregate purchase price of $50,000,000.00.

9.
On December 17, 2003, we issued 575,476 shares of our common stock upon the exercise of warrants to an accredited investor for an aggregate purchase price of $287,738.00.

10.
On January 9, 2004, we issued 553,344 shares of our common stock with an aggregate value of $2,213,376.00 to three privately held corporations as consideration for our acquisition of certain assets from such corporations.

11.
On November 10, 2004, we issued and sold 16,000,000 shares of our common stock at a purchase price per share of $5.00 to 76 accredited investors for an aggregate purchase price of $80,000,000.00.

12.
On November 15, 2004, we issued 115,095 shares of our common stock upon the exercise of warrants to an accredited investor for an aggregate purchase price of $57,547.50.

13.
On December 21, 2004, we issued 1,460,000 shares of restricted common stock to certain officers at a purchase price of $0.0001 per share for an aggregate purchase price of $146.00.

14.
On January 11, 2005, we issued 268,555 shares of our common stock upon the exercise of warrants to an accredited investor for an aggregate purchase price of $134,277.50.

15.
On January 18, 2005, we issued 12,726 shares of restricted common stock to our non-employee directors as compensation for services as a director at a purchase price of $0.0001 per share for an aggregate purchase price of $1.27.

        All of these issuances were made in reliance on Section 4(2) of the Securities Act or Regulation D promulgated thereunder as sales not involving a public offering. The recipients of securities in each of the above-referenced transactions represented their intentions to acquire the securities for investment purposes only and not with a view to, or for sale in connection with, any distribution thereof and appropriate legends were affixed to the instruments representing such securities issued in such transactions. All recipients either received adequate information about us or had, through their relationship with us, adequate access to such information.

(b) Certain Grants and Exercises of Stock Options

        The sale and issuance of the securities described below were deemed to be exempt from registration under the Securities Act in reliance on Rule 701 promulgated under Section 3(b) of the Securities Act, as transactions by an issuer not involving a public offering or transactions pursuant to compensatory benefit plans and contracts relating to compensation as provided under Rule 701.

        Pursuant to our stock plans and certain stand-alone stock option agreements, we have issued options to purchase an aggregate of 13,934,899 shares of common stock. Of these options:

•
options to purchase 1,859,063 shares of common stock have been canceled or lapsed without being exercised;

•
options to purchase 285,937 shares of common stock have been exercised; and

•
options to purchase a total of 11,789,899 shares of common stock are currently outstanding, at a weighted average exercise price of $3.32 per share.

II-3

Item 16. Exhibits and Financial Statement Schedules.

(a)    Exhibits
Exhibit
Number

	 	Description of Exhibit

	
*1.1	 	Form of Underwriting Agreement.	
†3.1	 	Certificate of Incorporation, as amended, of the Registrant.	
*3.2	 	Restated Certificate of Incorporation of the Registrant to be filed upon completion of this offering.	
†3.3	 	Bylaws, as amended, of the Registrant.	
*3.4	 	Restated Bylaws of the Registrant to be effective upon completion of this offering.	
*4.1	 	Form of Common Stock Certificate.	
†4.2.1	 	Amended and Restated Investor Rights Agreement dated December 13, 2002, by and among the Registrant and certain stockholders of the Registrant.	
†4.2.2	 	First Amendment, dated January 11, 2005, to the Amended and Restated Investor Rights Agreement, dated December 13, 2002, by and among the Registrant and certain stockholders of the Registrant.	
*5.1	 	Opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., counsel to the Registrant, with respect to the legality of securities being registered.	
†10.1	 	2001 Stock Plan.	
*10.2	 	[Reserved.]	
†10.3	 	Director Compensation Policy.	
†10.4	 	Non-Qualified Stock Option Agreement, dated May 27, 2004, by and between the Registrant and Keith R. Gollust.	
†10.5	 	Duffy Hartwell Limited Partnership Commercial Lease, dated November 4, 1996, by and between Duffy Hartwell Limited Partnership and Shionogi BioResearch Corp.	
@10.6	 	Lease of 125 Hartwell Avenue, Lexington, MA, dated October 26, 1992, by and between Fuji ImmunoPharmaceuticals Corp. and 125 Hartwell Trust, as amended by First Amendment dated January 31, 1993, Second Amendment dated October 1, 1997, Third Amendment dated November 1, 2002, Assignment and Assumption of Lease and Consent of Release by Landlord and Fourth Amendment of Lease, dated July 9, 2004, and Fifth Amendment, dated October 22, 2004.	
@10.7	 	Pinnacle Properties Management, Inc. Standard Form Commercial Lease, dated May 31, 1999, by and between 6-8 Preston Court, L.L.C. and Asiana Pharmaceuticals Corporation, as amended by Amendment to Lease #1, dated July 31, 2000, Amendment to Lease #2, dated November 26, 2001, and Amendment to Lease #3, dated December 2003.	
†10.8	 	Lease, dated January 13, 2005, by and between the Registrant and Mortimer B. Zuckerman and Edward H. Linde, Trustees of 91 Hartwell Avenue Trust.	
@10.9	 	Stock Exchange Agreement, dated September 9, 2002, by and among the Registrant, Principia Associates, Inc. and certain stockholders of Principia Associates, Inc.	
@10.10	 	Agreement of Merger, dated December 27, 2002, by and among the Registrant, DGN Genetics Acquisition Corp., Diagon Genetics, Inc. and certain stockholders of Diagon Genetics, Inc.	
@**10.11	 	Asset Purchase Agreement, dated December 17, 2003, by and among the Registrant, Cancer Genomics, Inc., Kava Pharmaceuticals, Inc., SinglePixel Biomedical, Inc. and CMAC, LLC.	
†10.12	 	Letter Agreement, dated April 21, 2004, by and between the Registrant and Dr. Mitsunori Ono.	
†10.13	 	Letter Agreement, dated May 7, 2004, by and between the Registrant and John A. McCarthy, Jr.	
†10.14	 	Letter Agreement, dated February 18, 2004, by and between the Registrant and Dr. Matthew L. Sherman.	
†10.15	 	Letter Agreement, dated October 12, 2002, by and between the Registrant and Dr. Keizo Koya.	
†10.16	 	Letter Agreement, dated January 22, 2003, by and between the Registrant and Dr. James Barsoum.	
†10.17	 	Letter Agreement, dated February 19, 2004, by and between the Registrant and Keith Ehrlich.	
†10.18	 	Letter Agreement, dated January 14, 2003, by and between the Registrant and Wendy E. Rieder.	
@10.19	 	Master Lease Agreement, dated November 10, 2004, by and between the Registrant and General Electric Capital Corporation.	
†10.20	 	Agreement and Release, dated January 14, 2005, by and among the Registrant and Dr. Lan Bo Chen.	
†21.1	 	List of Subsidiaries.	
23.1	 	Consents of KPMG LLP, Independent Registered Public Accounting Firm.	
*23.2	 	Consent of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. (see Exhibit 5.1).	
†24.1	 	Powers of Attorney.	

*
To be filed by amendment.

**
Confidential treatment has been requested for portions of this exhibit.

†
Previously filed.

@
Replaces previously filed exhibit.

II-4

(b)    Financial Statement Schedules

        Financial Statement Schedules are omitted because the information is included in our financial statements or notes to those financial statements.
Item 17. Undertakings

        The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the Underwriting Agreement, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

        Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described under Item 14 above, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

        The undersigned registrant hereby undertakes that:

(1)
For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(2)
For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

II-5

SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has duly caused this Amendment No. 2 to this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Lexington, Massachusetts, on March 17, 2005.

 	
By:	
/s/  SAFI R. BAHCALL      

Safi R. Bahcall, Ph.D.
President and Chief Executive Officer	
        Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 2 to this registration statement has been signed by the following persons in the capacities held on the dates indicated.
Signature

	 	Title

	 	Date

	

 	

 	
/s/  SAFI R. BAHCALL      

Safi R. Bahcall, Ph.D.	 	President, Chief Executive Officer and Director (principal executive officer)	 	March 17, 2005	

/s/  JOHN A. MCCARTHY, JR.      

John A. McCarthy, Jr.	
 	
Senior Vice President, Corporate Development and Chief Financial Officer (principal financial officer)	
 	
March 17, 2005	

*

Keith S. Ehrlich	
 	
Vice President, Finance and Administration (principal accounting officer)	
 	
March 17, 2005	

*

Keith R. Gollust	
 	
Chairman of the Board	
 	
March 17, 2005	

*

Lan Bo Chen, Ph.D.	
 	
Director	
 	
March 17, 2005	

*

Bruce Kovner	
 	
Director	
 	
March 17, 2005	

*

William S. Reardon, C.P.A.	
 	
Director	
 	
March 17, 2005	

*

Robert N. Wilson	
 	
Director	
 	
March 17, 2005	
*By:	 	/s/  JOHN A. MCCARTHY, JR.      

Attorney-in-fact	 	 	 	 	
II-6

EXHIBIT INDEX
Exhibit
Number

	 	Description of Exhibit

	
*1.1	 	Form of Underwriting Agreement.	
†3.1	 	Certificate of Incorporation, as amended, of the Registrant.	
*3.2	 	Restated Certificate of Incorporation of the Registrant to be filed upon completion of this offering.	
†3.3	 	Bylaws, as amended, of the Registrant.	
*3.4	 	Restated Bylaws of the Registrant to be effective upon completion of this offering.	
*4.1	 	Form of Common Stock Certificate.	
†4.2.1	 	Amended and Restated Investor Rights Agreement dated December 13, 2002, by and among the Registrant and certain stockholders of the Registrant.	
†4.2.2	 	First Amendment, dated January 11, 2005, to the Amended and Restated Investor Rights Agreement, dated December 13, 2002, by and among the Registrant and certain stockholders of the Registrant.	
*5.1	 	Opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., counsel to the Registrant, with respect to the legality of securities being registered.	
†10.1	 	2001 Stock Plan.	
*10.2	 	[Reserved.]	
†10.3	 	Director Compensation Policy.	
†10.4	 	Non-Qualified Stock Option Agreement, dated May 27, 2004, by and between the Registrant and Keith R. Gollust.	
†10.5	 	Duffy Hartwell Limited Partnership Commercial Lease, dated November 4, 1996, by and between Duffy Hartwell Limited Partnership and Shionogi BioResearch Corp.	
@10.6	 	Lease of 125 Hartwell Avenue, Lexington, MA, dated October 26, 1992, by and between Fuji ImmunoPharmaceuticals Corp. and 125 Hartwell Trust, as amended by First Amendment dated January 31, 1993, Second Amendment dated October 1, 1997, Third Amendment dated November 1, 2002, Assignment and Assumption of Lease and Consent of Release by Landlord and Fourth Amendment of Lease, dated July 9, 2004, and Fifth Amendment, dated October 22, 2004.	
@10.7	 	Pinnacle Properties Management, Inc. Standard Form Commercial Lease, dated May 31, 1999, by and between 6-8 Preston Court, L.L.C. and Asiana Pharmaceuticals Corporation, as amended by Amendment to Lease #1, dated July 31, 2000, Amendment to Lease #2, dated November 26, 2001, and Amendment to Lease #3, dated December 2003.	
†10.8	 	Lease, dated January 13, 2005, by and between the Registrant and Mortimer B. Zuckerman and Edward H. Linde, Trustees of 91 Hartwell Avenue Trust.	
@10.9	 	Stock Exchange Agreement, dated September 9, 2002, by and among the Registrant, Principia Associates, Inc. and certain stockholders of Principia Associates, Inc.	
@10.10	 	Agreement of Merger, dated December 27, 2002, by and among the Registrant, DGN Genetics Acquisition Corp., Diagon Genetics, Inc. and certain stockholders of Diagon Genetics, Inc.	
@**10.11	 	Asset Purchase Agreement, dated December 17, 2003, by and among the Registrant, Cancer Genomics, Inc., Kava Pharmaceuticals, Inc., SinglePixel Biomedical, Inc. and CMAC, LLC.	
†10.12	 	Letter Agreement, dated April 21, 2004, by and between the Registrant and Dr. Mitsunori Ono.	
†10.13	 	Letter Agreement, dated May 7, 2004, by and between the Registrant and John A. McCarthy, Jr.	
†10.14	 	Letter Agreement, dated February 18, 2004, by and between the Registrant and Dr. Matthew L. Sherman.	
†10.15	 	Letter Agreement, dated October 12, 2002, by and between the Registrant and Dr. Keizo Koya.	
†10.16	 	Letter Agreement, dated January 22, 2003, by and between the Registrant and Dr. James Barsoum.	
†10.17	 	Letter Agreement, dated February 19, 2004, by and between the Registrant and Keith Ehrlich.	
†10.18	 	Letter Agreement, dated January 14, 2003, by and between the Registrant and Wendy E. Rieder.	
@10.19	 	Master Lease Agreement, dated November 10, 2004, by and between the Registrant and General Electric Capital Corporation.	
†10.20	 	Agreement and Release, dated January 14, 2005, by and among the Registrant and Dr. Lan Bo Chen.	
†21.1	 	List of Subsidiaries.	
23.1	 	Consents of KPMG LLP, Independent Registered Public Accounting Firm.	
*23.2	 	Consent of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. (see Exhibit 5.1).	
†24.1	 	Powers of Attorney.	

*
To be filed by amendment.

**
Confidential treatment has been requested for portions of this exhibit.

†
Previously filed.

@
Replaces previously filed exhibit.

QuickLinks
TABLE OF CONTENTS
PROSPECTUS SUMMARY
Synta Pharmaceuticals Corp.
RISK FACTORS
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
USE OF PROCEEDS
DIVIDEND POLICY
CAPITALIZATION
DILUTION
SELECTED HISTORICAL FINANCIAL AND OPERATING DATA (in thousands, except per share amounts)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
BUSINESS
MANAGEMENT
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
PRINCIPAL STOCKHOLDERS
DESCRIPTION OF CAPITAL STOCK
SHARES ELIGIBLE FOR FUTURE SALE
UNDERWRITERS
LEGAL MATTERS
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
WHERE YOU CAN FIND MORE INFORMATION
INDEX TO FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm
SYNTA PHARMACEUTICALS CORP. (A Development-Stage Company) Consolidated Balance Sheets (in thousands, except share and per share amounts)
SYNTA PHARMACEUTICALS CORP. (A Development-Stage Company) Consolidated Statements of Operations (in thousands, except share and per share amounts)
Consolidated Statements of Stockholders' Equity (Deficit) and Comprehensive Loss
SYNTA PHARMACEUTICALS CORP. (A Development-Stage Company) Consolidated Statements of Cash Flows (in thousands)
SYNTA PHARMACEUTICALS CORP. (A Development-Stage Company) Notes to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
PRINCIPIA ASSOCIATES, INC. (A Development-Stage Company) Consolidated Balance Sheet September 20, 2002 (in thousands, except share and per share amounts)
PRINCIPIA ASSOCIATES, INC. (A Development-Stage Company) Consolidated Statement of Operations Period from inception (June 17, 2002) to September 20, 2002 (in thousands)
PRINCIPIA ASSOCIATES, INC. (A Development-Stage Company) Consolidated Statement of Stockholders' Equity Period from inception (June 17, 2002) to September 20, 2002 (in thousands, except share amounts)
PRINCIPIA ASSOCIATES, INC. (A Development-Stage Company) Consolidated Statement of Cash Flows Period from inception (June 17, 2002) to September 20, 2002 (in thousands)
PRINCIPIA ASSOCIATES, INC. (A Development-Stage Company) Notes to Consolidated Financial Statements September 20, 2002
Report of Independent Registered Public Accounting Firm
SBR PHARMACEUTICALS CORP. Balance Sheet (in thousands, except share and per share amounts)
SBR PHARMACEUTICALS CORP. Statement of Operations (in thousands)
SBR PHARMACEUTICALS CORP. Statement of Stockholders' Equity Seven months ended July 31, 2002 (in thousands, except share amounts)
SBR PHARMACEUTICALS CORP. Statement of Cash Flows (in thousands)
SBR PHARMACEUTICALS CORP. Notes to Financial Statements July 31, 2002
PART II INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
Item 14. Indemnification of Directors and Officers.
Item 15. Recent Sales of Unregistered Securities.
Item 16. Exhibits and Financial Statement Schedules.
Item 17. Undertakings
SIGNATURES
EXHIBIT INDEX

Exhibit 10.6

LEASE OF

125 HARTWELL AVENUE
LEXINGTON, MASSACHUSETTS

Section
Number                                          Caption                                 Page
------                                                                                  ----

EXHIBIT 1
1.           REFERENCE DATA...............................................................
2.           LEASE OF PREMISES............................................................
3.           BASIC RENT...................................................................
4.           COVENANT BY LANDLORD OF TENANT'S QUIET ENJOYMENT.............................
5.           RENT COMMENCEMENT DATE.......................................................
6.           PREPARATION OF THE PREMISES..................................................
7.           USE..........................................................................
8.           IMPROVEMENTS AND ALTERATIONS.................................................
9.           ASSIGNMENT AND SUBLETTING....................................................
10.          REPAIRS AND MAINTENANCE BY LANDLORD..........................................
11.          REPAIRS AND MAINTENANCE BY TENANT............................................
12.          SERVICES, UTILITIES, SUPPLIES AND FACILITIES.................................
13.          INTERRUPTION OR CURTAILMENT OF BUILDING SERVICES.............................
14.          BUILDING EXPENSE.............................................................
15.          INSURANCE....................................................................
16.          INDEMNITIES OF TENANT AND LANDLORD...........................................
17.          TENANT'S RISK................................................................
18.          LANDLORD'S ACCESS RIGHTS.....................................................
19.          CONDEMNATION.................................................................
20.          CASUALTY.....................................................................
21.          TENANT'S DEFAULT.............................................................
22.          LANDLORD'S DEFAULT...........................................................
23.          LIMITATIONS ON LIABILITY.....................................................
24.          RULES AND REGULATIONS........................................................
25.          NOTICE.......................................................................
26.          LANDLORD'S TITLE AND CONFORMITY WITH LEGAL
REQUIREMENTS.................................................................
27           SUBORDINATION AND NON-DISTURBANCE............................................
28.          ESTOPPEL CERTIFICATE.........................................................
29.          REMEDYING TENANT DEFAULTS....................................................
30.          REASONABLE CONSENT...........................................................
31.          HOLDING OVER.................................................................
32.          SURRENDER OF PREMISES........................................................
33.          ARBITRATION..................................................................
34.          BROKERAGE....................................................................
35.          GOVERNING LAW................................................................
36.          TENANT'S OPTION TO EXTEND THE TERM OF LEASE..................................

37.          DEFINITION OF FAIR MARKET RENTAL VALUE.......................................
38.          TENANT'S RIGHT OF FIRST OFFER................................................
39.          FORCE MAJEURE................................................................
40.          ENVIRONMENTAL

CONCERNS.......................................................
41.          SIGNS........................................................................
42.          NOTICE OF LEASE..............................................................
43.          CHANGE OF NAME...............................................................
44.          MISCELLANEOUS PROVISIONS.....................................................
45.          BINDING AGREEMENT............................................................
46.          ENTIRE AGREEMENT.............................................................

EXHIBIT 1       Lease Reference Data
EXHIBIT 2       Building Expense Base
EXHIBIT 3       Plans showing the Premises, the parking area, the so-called RFO Premises,
and Tenant's Approved Floor Plan
EXHIBIT 4       Items of Tenant's Work to be paid from the Proceeds of Landlord's
Contribution
EXHIBIT 5       125 Hartwell Avenue Fact Sheet
EXHIBIT 6       Rules and Regulations
EXHIBIT 7       Cleaning Specifications
EXHIBIT S       Certificate of Landlord's Insurance
EXHIBIT 9       Notice of Lease
EXHIBIT 10      Plans for Additional Bathrooms

LEASE

THIS INSTRUMENT IS A LEASE, dated as of the Execution Date stated in
Exhibit 1, in which Landlord and Tenant are the parties named in said Exhibit,
and which relates to space in the Building. The parties to this instrument
hereby agree with each other as follows:

1.     REFERENCE DATA. All Exhibits attached to this Lease are hereby
incorporated herein and made a part hereof.

2.     LEASE OF PREMISES. Landlord hereby demises and leases to Tenant
for the Term of the Lease and upon the terms and conditions hereinafter set
forth, and Tenant hereby accepts from Landlord, the Premises described in
Exhibit 1 and shown on Exhibit 3 (Exhibit 3 hereto shall show the Premises, the
parking area and the so-called RFO Premises, and shall include the Tenant's
Approved Floor Plan described in Section 6(b) below). Excepted and excluded from
the Premises are the ceiling, floor, perimeter walls and exterior windows,
except the inner surfaces of each thereof, but the entry doors (and related
glass and finish work) to the Premises are a part thereof; and Tenant agrees
that Landlord shall have the right to place in the premises (but in such manner
so as not to unreasonably interfere with Tenant's use of the Premises) utility
lines, pipes, equipment and the like, in, over, upon and through the Premises
provided that such items are located in the central core of the Building, above
ceiling surfaces, below floor surfaces and within perimeter walls, no material
reduction in square footage of the Premises shall result, and Landlord shall
provide Tenant with reasonable advance written notice of the foregoing. Tenant
shall have as appurtenant to the Premises the right, in common with others
entitled thereto, to use the first floor loading dock at the rear of the
Building, the elevator located at the rear of the Building, the common hallway
dividing the second floor of the Building, common walks leading to and from the
Building, parking at the parking lots serving the Building, and all other
appurtenant rights or easements available to the Property. Tenant shall also
have as appurtenant to the Premises the exclusive right to use the bathrooms and
showers located in the center of the second floor of the Building. The Landlord,
at no additional charge to Tenant, shall provide and maintain, for the use of
the Tenant's employees and invitees, a total of forty-one (41) parking spaces
(allocated at the ratio of 3.8 spaces per 1,000 square feet of leased Premises)
in a paved parking area located adjacent to the Building as shown on Exhibit 3;
provided that in the event Tenant exercises any rights arising under Section 38
hereof relating to so-called "RFO Premises" or otherwise leases additional space
within the Building, then the Tenant shall thereupon become entitled to the use
of additional parking spaces at the ratio of 3.8 spaces per 1,000 square feet of
so-called RFO Premises or other additional leased space. In the event that other
tenants in the Building or other persons utilize the parking spaces of the
Property, in a general way, which prevents Tenant from generally using the
above-referenced 41 parking spaces (as they may be increased from time to time)
allocable to Tenant, then Tenant shall have the right to require Landlord to
specifically designate that appropriate number of parking spaces allocable to
Tenant for the sole and exclusive use of Tenant.

3.     BASIC RENT. Tenant agrees to pay to Landlord, commencing on the
Rent Commencement Date, the Basic Rent (sometimes hereinafter "rent") set forth
in Exhibit 1. Tenant's obligation to pay all charges for utilities and other
items specified in Section 12 shall commence to accrue as of the Execution Date.
Such Basic Rent shall be payable in equal monthly installments, in advance, on
the first day of each calendar month during the Term of this

Lease, at such address as Landlord shall from time to time designate by notice.
Basic Rent for any period of less than one month shall be apportioned based on
the number of days in that month. In the event that any installment of Basic
Rent is not paid within ten (10) days after the same shall have become due,
Tenant shall pay, at Landlord's request, an administrative fee equal to 1% of
the overdue payment.

4.     COVENANT BY LANDLORD OF TENANT'S QUIET ENJOYMENT. In consideration
for payment by the Tenant of the Basic Rent so long as the Tenant pays the Basic
Rent reserved under this Lease and fulfills its obligations hereunder, the
Tenant shall peaceably hold and quietly enjoy the leased Premises without
interruption by reason of claims asserted by the Landlord or any other person,
firm, corporation or other entity claiming under Landlord, subject always to the
terms and conditions of this Lease.

5.     RENT COMMENCEMENT DATE. The Rent Commencement Date shall be the
earlier of (i) February 1, 1993 or (ii) the day on which Tenant shall occupy all
or any part of the Premises for the conduct of business.

6.     PREPARATION OF THE PREMISES.

(a)    BY TENANT. Tenant shall, at Tenant's sole cost and expense,
subject to the provisions of paragraph (e) of this Section 6, prepare the
Premises for Tenant's occupancy (except as described in Section 6(f)). Landlord
shall have no obligation to perform any construction work to prepare the
Premises for Tenant's occupancy. As of the date hereof, Landlord hereby delivers
to Tenant and Tenant hereby accepts from Landlord the Premises in the condition
in which they are in, "as is," as of the date hereof. Tenant shall have access
to the Premises from and after the date hereof in order to perform its work
("Tenant's Work") in the Premises, subject to the other terms and conditions of
this Lease, including, without limitation, Sections 15, 16 and 17. Tenant shall
use all reasonable diligence to perform Tenant's Work in a timely manner.

(b)    PLANS. Tenant shall prepare all necessary plans and working
drawings ("Tenant's Plans") reflecting all of Tenant's Work. The cost to prepare
and revise Tenant's Plans as necessary shall be borne solely by Tenant. Tenant's
Plans shall be subject to review and approval by Landlord, which shall not be
unreasonably withheld or delayed. Tenant shall use all reasonable diligence to
prepare Tenant's Plans in a timely manner for Landlord's review. If Landlord
shall disapprove such Tenant's Plans, it shall state in reasonable detail the
grounds for its disapproval, and Tenant shall revise its Plans and resubmit same
for Landlord's review. Tenant shall make no material changes to Tenant's Plans
except upon prior written notice to Landlord setting forth such changes.
Landlord shall respond to Tenant's submission of its Plans within five (5)
business days of receiving Tenant's Plans. Landlord shall respond to any
resubmission of Tenant's Plans with revisions in response to Landlord's
disapproval of Tenant's Plans within two (2) business days of receiving Tenant's
resubmission of Plans. Landlord shall respond to any other revisions of Tenant's
Plans within three (3) business days of receiving them from Tenant. Landlord
hereby approves the floor plan of the Premises ("Tenant's Approved Floor Plan")
attached hereto as part of Exhibit 3; Tenant's Approved Floor Plan shall
constitute a part of Tenant's Plans.

2

(c)    TERMINATION. If Landlord shall fail to respond to the
submission of Tenant's Plans (or changes thereto) within the applicable time
periods specified above, then Tenant, upon a written notice of one (l) business
day to Landlord, shall have the option to proceed with the changes as if
Landlord had agreed thereto, or to terminate the Lease, provided that if
Landlord shall respond to the submission in respect of Tenant's Plans in
question by the end of such business day then Tenant's notice shall be of no
force or effect.

(d)    CONSTRUCTION. Tenant shall diligently proceed with
construction of the Premises substantially in accordance with Tenant's Plans
(and any amendments thereto approved or deemed approved by Landlord as
hereinabove provided), utilizing Tenant's Contractor named in Exhibit 1, who has
been approved by Landlord, or such other contractors as Tenant may engage with
Landlord's prior consent, which consent shall not be unreasonably withheld or
delayed. All work shall be of a good and workmanlike quality, utilizing
materials at least equal to the materials specified in Part C of Exhibit 5 of
the Lease. Tenant shall, at its own cost and expense, obtain all permits needed
to construct the Premises for its occupancy and to occupy the Premises for the
uses specified in Exhibit 1. Prior to the commencement of Tenant's Work, all
contractors shall provide Landlord and Tenant with reasonable evidence of
insurance coverage, including policies of comprehensive general liability
insurance in a combined single limit of not less than $2,000,000.00, workers'
compensation coverage in the statutory amounts, and automobile liability
insurance. Tenant shall pay for all labor and materials supplied to it promptly
and shall permit no contractor's or material supplier's lien to be filed against
the Premises, the Building or the Property. If any such lien shall be filed,
Tenant shall promptly cause such lien to be discharged, by paying such claimed
amounts or by bonding over the lien in a manner satisfactory to Landlord. If
Tenant shall fail to discharge any such lien within ten (10) days of filing,
Landlord may, but shall not be obligated to, pay the amount of such claim and
thereby discharge the lien. Tenant shall promptly reimburse Landlord therefor
upon demand and Landlord shall have the same right to enforce collection of such
reimbursement (together with interest thereon at the rate provided for in
Section 29 below) as to enforce collection of unpaid amounts of Basic Rent,
escalations or other charges due under the Lease.

(e)    LANDLORD'S CONTRIBUTION. Notwithstanding anything to the
contrary the foregoing contained, Landlord shall contribute an amount up to
$54,900 ("Landlord's Contribution") expressly for the purchase and installation
of the items of work set forth in Exhibit 4 of this Lease, which Tenant shall
purchase and install as part of Tenant's Work. All such items set forth in
Exhibit 4 shall be at least equal to the quality of items set forth in Part C of
Exhibit 5. Landlord's Contribution shall be used for no purpose other than for
the purchase and installation of the items listed in Exhibit 4. Landlord shall
pay amounts on account of Landlord's Contribution directly to contractors or
suppliers upon receiving from Tenant actual vendor invoices for labor and/or
materials billed to Tenant. There shall be no credit due Tenant for any unused
portion of Landlord's Contribution.

(f)    LANDLORD'S SPRINKLER WORK. Notwithstanding the foregoing,
Landlord shall, at its own cost and expense, install the sprinkler system as
described in Exhibit 5 for the Premises and a fire protection system as required
by all applicable federal, state or local requirements for the Premises, to the
extent applicable to general office space. With respect to additional
sprinkler/fire protection requirements, if any, necessitated by Tenant's
particular use of the Premises, at Tenant's election, either (i) Tenant shall
make such installations as are

3

necessary to conform to such additional requirements at Tenant's expense, or
(ii) Landlord shall make such additional installations, and Tenant shall
reimburse Landlord (as additional rent hereunder) for the costs and expenses
incurred by Landlord in performing such additional work, upon receiving from
Landlord copies of actual invoices from Landlord's contractor(s) or other
evidence of the cost thereof reasonably satisfactory to Tenant. Landlord's
sprinkler installation shall be commenced by Landlord promptly after approval of
Tenant's Plans, and shall be coordinated with Tenant's work so as not to
unreasonably interfere with or delay the completion of Tenant's Work.

(g)    ADDITIONAL CONSTRUCTION. Notwithstanding anything to the
contrary in the Lease contained, if after the date of this Lease, Landlord shall
enter into one or more leases or occupancy agreements with third parties
demising all or part of the balance of the second (2nd) floor of the Building
(this Lease being the only lease of second floor space as of the date hereof),
then Landlord shall, at Tenant's cost and expense, construct on the second (2nd)
floor separate men's and women's bathrooms (in finishes equal to those in the
existing bathrooms) and one or more corridors as necessary for access to such
premises and to such bathrooms from such premises for the exclusive use of
Landlord and such third parties. All such work shall be performed substantially
in accordance with Exhibit 10. Such additional construction work shall be
performed by Landlord as and when required so that the same shall be completed
in conjunction with the completion of any work required to prepare such leased
premises by Landlord for occupancy by such other tenants or occupants. Tenant
shall reimburse Landlord (as additional rent hereunder) for all costs and
expenses incurred by Landlord in performing such work, upon receiving from
Landlord copies of actual invoices from contractors, suppliers and/or vendors
for labor and/or materials furnished with respect to such work or other evidence
of the cost thereof reasonably satisfactory to Tenant; provided, however, that
in no event shall Tenant's costs and expenses under this Section 6(g) exceed the
amount of $17,500.00.

(h)    INSPECTION BY LANDLORD. Upon substantial completion of
Tenant's Work, Tenant shall give notice thereof to Landlord, and shall afford
Landlord the opportunity to participate with Tenant in the preparation of a
punchlist for Tenant's Contractor. Upon completion of such punchlist items,
Tenant shall give Landlord notice thereof and an opportunity to inspect Tenant's
Work; and thereafter, (except for latent defects) Landlord shall be deemed to
have accepted Tenant's Work as having been performed in accordance with the
requirements of this Lease applicable thereto, unless and except to the extent
that Landlord notifies Tenant of defects therein or other items requiring
correction within ten (10) days after Tenant notifies Landlord of the final
completion of Tenant's work.

7.     USE. Tenant agrees that it shall use and occupy the Premises
during the Term only for the Permitted Uses described in Exhibit 1. Tenant
shall, in its use of the Premises, comply with the requirements of all
applicable governmental laws, rules and regulations, and shall obtain (and keep
in full force and effect) all required licenses and permits therefor. Tenant
shall not permit any use of the Premises which will make voidable any insurance
on the Property, or on the contents of the Property, or which shall be contrary
to any law or regulation from time to time established by the New England Fire
Insurance Rating Association, or any similar body succeeding to its powers.
Tenant shall within 10 days after demand reimburse Landlord for all extra
insurance premiums caused by Tenant's use of the Premises other than for
Permitted Uses. If any governmental license or permit, including, without
limitation, a certificate

4

of occupancy shall be required for the proper and lawful conduct of Tenant's
business, Tenant, at its expense, shall duly procure and thereafter maintain and
comply with such license or permit and submit the same to inspection by
Landlord. To the extent reasonably necessary or expedient to obtain such license
or permit, Landlord agrees to cooperate with Tenant in procuring such license or
permit.

8.     IMPROVEMENTS AND ALTERATIONS. Subject to the further provisions of
this Section 8, Tenant shall make no additional (i.e., in addition to the items
shown on Tenant's Plans in respect of the initial preparation of the Premises)
alterations or improvements to the Premises except in each case, (i) at Tenant's
sole cost and expense, (ii) with the prior written consent of Landlord, (iii) in
accordance with complete plans and specifications, presented to Landlord for
Landlord's prior approval, and (iv) performed by contractors approved by
Landlord and in accordance with all applicable laws, rules and ordinances and
otherwise in accordance with the other terms, provisions and conditions of the
Lease. All approvals required to be obtained from Landlord pursuant to the
foregoing by Tenant shall not be unreasonably withheld or delayed. Without
limiting Landlord's right of review, Landlord may disapprove any proposed
alteration or improvement which, in Landlord's reasonable opinion, may adversely
affect any of the Building's exterior, common areas, structure or systems.
Notwithstanding the foregoing for any alteration or improvement which Tenant may
propose and which shall not, in Landlord's reasonable opinion, affect the
Building's exterior, common areas, structure or systems, and which shall not
exceed an aggregate "completed-job" cost of $5,000.00 per alteration, Tenant
shall not be required to obtain Landlord's prior written consent, provided
Tenant shall first notify Landlord of the proposed alteration or improvement and
present complete plans and specifications therefor. All alterations or
improvements shall be performed by Tenant in accordance with the applicable
provisions of Section 6(d) of this Lease. If any alteration or improvement which
Tenant shall make shall result in any increase in the real estate taxes upon the
Property, then Tenant shall pay the entire increase in such taxes attributed to
such alteration or improvement. All fixtures (whether or not attached) and
equipment installed by or at the expense of Tenant (including, without
limitation, fixtures and equipment installed by Tenant at its expense as part of
Tenant's Work) shall remain the property of the Tenant and in case of damage or
destruction thereto by fire or other causes, the Tenant shall have the right to
recover the value thereof as its own loss from any insurance company with which
it has insured the same, or to claim an award in the event of condemnation,
notwithstanding that any of such things might be considered a part of the
Premises, subject to the provisions of Section 19. Tenant may remove all or any
of such fixtures and equipment at any time during the term, provided Tenant
repairs any damage to the Premises caused by the installation, presence or
removal thereof, or, at its option, Tenant may abandon the same, in whole or in
part, to Landlord. Tenant shall not be required to remove pipes, wires and the
like from the walls, ceilings or floors, provided the Tenant properly cuts,
disconnects and caps such pipes and wires and seals them off, if necessary, in a
safe and lawful manner.

9.     ASSIGNMENT AND SUBLETTING.

(a).   Upon prior written notice to Landlord, Tenant may assign
this Lease or sublet all or any part of the Premises at any time during the term
hereof (or any extension thereof) without the consent of the Landlord to a
division, department, subsidiary or corporation a majority of the stock of which
is controlled by Tenant, provided such entity remains in the

5

same relationship with Tenant after such transfer, or to an entity created by
merger, split-off, reorganization or by governmental action relating to Tenant
or in the event of the acquisition of Tenant or of substantially all of its
assets by another party. (Any entity referred to in this paragraph (a) is
sometimes hereinafter called a "Fuji Successor.")

(b)    In all other cases not involving entities described in
paragraph (a) of this Section 9, the prior written consent of Landlord shall be
required prior to any assignment of this Lease or sublease by Tenant of all or
any portion of the Premises, or other transfer of Tenant's leasehold interest.
Such consent by Landlord shall not be unreasonably withheld or delayed;
provided, however, Landlord shall not be deemed to be unreasonable in
withholding its consent to a proposed assignment, subletting or other transfer
if (i) the proposed assignee or subtenant (or a related or controlled entity) is
then a tenant in the Building, unless such proposed assignee or subtenant
requires expansion premises in addition to, rather than in substitution for, the
other premises in the Building then occupied by such proposed assignee or
subtenant (or a related or controlled entity), and/or (ii) Tenant is then in
default of its obligations under this Lease.

(c)    Landlord agrees that if Tenant assigns or transfers this
Lease to anyone other than a Fuji Successor, Tenant shall be given a copy of any
notice of default given by Landlord to any assignee or transferee, and Tenant
shall have the right to avoid termination of this Lease by curing such default
within the applicable notice and grace periods provided under Section 21 below,
and in such event Tenant shall have the right to recover possession of the
Premises, provided that it cures such defaults within the applicable notice and
grace periods as aforesaid.

(d)    No subletting or assignment shall relieve Tenant of its
primary obligation as party-Tenant hereunder. No subletting or assignment
pursuant to this Section 9 shall affect or vary the Permitted Uses. No consent,
once given by Landlord, shall negate the obligation to obtain Landlord's
consent, when required, to any subsequent assignment or subletting whatsoever.

(e)    Landlord may, whether or not Landlord's Consent is
required, require such assignee, sublessee or transferee to expressly assume the
covenants, terms and conditions of the Lease.

(f)    Tenant hereby agrees to reimburse Landlord for the
reasonable amount of any legal and other out-of-pocket expenses incurred by
Landlord in connection with any request by Tenant for Landlord's consent
required under this Section 9 or in connection with any transfer or assignment
permitted hereunder.

(g)    In the event that Tenant assigns or transfers this Lease or
subleases all or any part of the Premises, Tenant shall pay to Landlord (as
additional rent) twenty-five percent (25%) of the Profits (as hereinafter
defined), if any, earned by Tenant in connection with such assignment or
sublease, as and when received by Tenant. "Profits" shall mean, the excess, if
any, of (a) the rent and additional rent (including, without limitation,
payments on account of escalation) and any other consideration received by
Tenant on account of or in connection with the assignment, transfer or
subletting in question over (b) the rent and additional rent (including, without
limitation, payments on account of escalation) payable by Tenant under this
Lease in

6

respect of the Premises or portion thereof in question (calculated on a per
square foot basis in the case of a subletting of less than all of the Premises).
Profits shall be calculated on a gross basis as aforesaid, without regard to the
costs and expenses incurred by Tenant in connection with the assignment,
transfer or subletting in question or in connection with entering into this
Lease or preparing the Premises for occupancy by Tenant or by any assignee or
sublessee.

10.    REPAIRS AND MAINTENANCE BY LANDLORD. Landlord represents that as
of the date hereof, the parking facility and all Building and Property service
systems (including, without limitation, plumbing and electrical lines and
equipment, heating, ventilating and air conditioning systems, boilers and
elevators) are in good repair and condition. Notwithstanding anything to the
contrary contained herein, Tenant shall pay all costs associated with the
maintenance or repair of, or any changes to, any of the foregoing, the need for
which arises from Tenant's construction to prepare the Premises for its
occupancy or subsequent alteration or improvement for Tenant's use and benefit.

During the term of this Lease, Landlord shall maintain, repair and
replace, as necessary, and keep in good order, safe and clean condition: (1) the
plumbing, sprinkler, HVAC, electric and mechanical lines and equipment
associated therewith, and elevators and boilers, all of which are located in or
serve the Premises, common areas of the building and the parking facility;
broken glass; (2) underground utility lines and transformers and interior and
exterior structure of the Building, including the roof, exterior doors and
windows and lateral support to the Building and parking facility; (3) the
interior walls, ceilings and floors of the common areas of the Building, and
floor coverings (including carpets and tiles) of the common areas of the
Building; (4) repair and replacement of the interior walls, ceilings and floors
of the Premises due to latent defects and any negligent act or omission of
Landlord, its agents, contractors, employees and invitees; (5) the exterior
improvements to the land, including ditches, shrubbery, landscaping and fencing;
(6) the common areas located within or outside the Building, including the
common entrances, corridors, doors and windows, loading dock, stairways and
lavatory facilities and the parking facility and access ways therefor; and (7)
all lawns and landscaped areas of the Property, which shall be watered,
fertilized and trimmed. Landlord shall provide for removal of snow and ice from,
and sanding of, the sidewalks, parking lots, access driveways and walkways as
necessitated by weather conditions and shall provide for parking lot lighting
and shall repair and maintain the parking lot and the lighting serving the same
as reasonably necessary. The Landlord shall perform all repairs and restoration
required arising from the provisions of section 19, "Casualty," and Section 20,
"Condemnation," subject to the limitations set forth therein.

Notwithstanding anything to the contrary in the foregoing
contained, Landlord shall have no obligation to repair, maintain or replace (a)
any equipment or systems installed by or at the expense of Tenant, or (b) any
damage to the Premises, the Building or the Property caused by Tenant, its
agents or employees.

The Landlord shall comply with all rules, regulations, orders,
laws, ordinances and legal requirements and standards issued thereunder, all
insofar as any of the sane shall relate to the use of the Building for general
office purposes.

7

Landlord shall be responsible for providing those specific
cleaning, janitorial and trash removal services for the Premises as described on
Exhibit 7 hereto. If Landlord shall have failed to make or proceed with due
diligence to make any necessary or appropriate repairs or fulfill any
maintenance responsibilities set forth in this Lease within two (2) business
days after notice thereof from Tenant, Tenant shall have the right, upon a
subsequent written notice of not less than two (2) business days to Landlord, to
undertake and perform such repair(s), provided, however, that if Landlord shall
commence such repair(s) during such second two (2) business day period and
thereafter diligently pursue same to completion, Tenant shall not have the right
to continue to undertake such repair(s). Landlord shall pay all costs of such
repairs required of Landlord under this Section 10 and which may be made by
Tenant as permitted hereby upon the presentation of bona fide contractor
invoices therefor. Landlord shall have no liability to Tenant for any loss or
damage to Tenant or its property resulting from Tenant's performance of any
repair or maintenance on behalf of Landlord pursuant to its rights hereunder.

All costs and expenses incurred by the Landlord under this
Section 10 which are incurred in, furtherance of the Landlord's repair and
maintenance responsibilities hereunder and are defined as Operating Costs
hereunder shall be included in Operating Costs under Section 14 below, subject
to the specific limitations and exclusions set forth in Section 14.

11.    REPAIRS AND MAINTENANCE BY TENANT. Subject to the provisions
herein, Tenant shall keep and maintain all portions of the Premises, including,
without limitation, all equipment and systems installed by or at the expense of
Tenant, in good order and repair, in a clean and orderly condition, free of
accumulation of dirt, rubbish and other debris. Tenant shall be responsible (up
to the amount of Landlord's deductible in the case of an insured loss) for the
cost of repairs which may be made necessary by reason of damage to the Building
or the Property caused by any act or neglect of Tenant or its agents, employees,
contractors or invitees (including any damage by fire or any other casualty
arising therefrom). Tenant shall not be liable for such insured costs above such
deductible. Tenant shall comply with all applicable rules, regulations, orders,
laws, ordinances and legal requirements (including, without limitation, the
Occupational Safety and Health Act, as amended) and standards issued thereunder,
all insofar as any of the same shall relate to Tenant's use of the Premises
and/or the conduct of its business therein.

12.    SERVICE, UTILITIES, SUPPLIES AND FACILITIES.

(a)    In addition to the repair and maintenance by Landlord as
stated in Section 10 hereof, Landlord shall furnish to the Tenant the following
services, utilities, supplies and facilities:

(1)    Access to the Premises twenty-four (24) hours a day,
seven (7) days a week. Access to the Premises shall be subject to a
reasonable security system installed by Tenant as part of Tenant's
construction o the Premises. Landlord shall, at Landlord's cost and
expense in addition to the amount of Landlord's Contribution, purchase
and install one (1) card key access device at the rear entrance to the
Building for use by Tenant and all other tenants occupying space in the
Building. Such device shall be consistent with like systems generally in
use in similar buildings in the greater Boston area. Landlord agrees to
hire Tenant's security contractor to install such system (at a cost

8

to Landlord not to exceed commercially competitive rates) so as to
reasonably coordinate the operation of such Building access system with
Tenant's security system to be installed in the Premises by Tenant.
Landlord acknowledges the particular security needs of Tenant and shall
make reasonable efforts to accommodate such needs in Landlord's
compliance with the provisions of this Lease and their application to
Tenant.

(2)    Freight and passenger elevator service for the use
of the Tenant, in common with others entitled thereto.

(3)    Heat in accordance with seasonal requirements on
Mondays through Saturdays (except legal holidays) from 8:00 a.m. to 9:00
p.m. and at such additional times as may be requested by Tenant from time
to time upon reasonable advance notice to Landlord. Landlord's cost of
supplying such additional service shall be paid by the Tenant or
alternatively shall be shared proportionately between the Tenant and
other tenants, if any, who request such service. Any such costs for
additional heating services whether requested by Tenant or other tenants
in the Building shall not be included in Operating costs but calculated
as a separate charge to Tenant, and/or other tenants, by Landlord.

(4)    Cleaning and janitor services including removal of
refuse and rubbish and furnishing washroom supplies, as set forth in
Exhibit 7.

(5)    Hot and cold running water as supplied by the city
or town or other supplier. If Tenant uses water for anything other than
ordinary lavatory and drinking purposes, Landlord may assess a reasonable
charge for the additional water so used, or install a water meter and
thereby measure Tenant's water consumption for an purposes. In the latter
event, Tenant shall pay the cost of the meter and the cost of the
installation thereof and shall keep such meter and installation equipment
in good working order and repair. Tenant agrees to pay for water
consumed, as shown on said meter, together with the sewer charges based
on such meter charges, as and when bills are rendered, and in default of
making such payment, Landlord may pay such charges and collect the same
from Tenant as an additional charge.

(6)    Electricity for all common areas in the Building and
parking area lighting.

(7)    Provision, installation, and replacement of all
necessary light bulbs, tubes, lighting fixtures, and ballasts.

(8)    Vermin extermination.

(9)    The existing facilities for the Tenant's loading,
unloading, delivery and pick-up activity including access thereto in
common with others entitled thereto. The Tenant may use such facilities
without providing the Landlord with notice on business days (i.e.,
Mondays through Fridays, except legal holidays) from 8:00 a.m. to 6:00
p.m. At all other times the Tenant shall give the Landlord reasonable
advance notice.

9

Except for items to be charged directly to Tenant as expressly provided above,
all costs and expenses incurred by the Landlord under this paragraph (a) shall
be included in Operating Costs under Section 14 below, subject to the specific
limitations and exclusions set forth in Section 14.

(b)    Tenant shall contract directly with the electric utility
supplier to furnish electric current to the Premises through the existing
utility facilities serving the Building for lighting, outlets and the operation
of the air conditioning system serving the Premises. The consumption of such
electricity shall be measured by a separate Premises electric meter which Tenant
shall install. Tenant shall pay all charges as reflected on such meter directly
to the utility supplier. Tenant shall maintain and keep such meter in good order
and repair throughout the term.

(c)    The parties agree and acknowledge that the air conditioning
system which serves the Premises serves the entire second floor of the Building.
Until such time as another tenant(s) occupies all or any portion of the
remainder of the second floor, Tenant shall pay for the entire cost of operating
such air conditioning system, as provided in paragraph (b) above. From and after
the date on which another tenant(s) occupy(ies) all or part of the balance of
the second floor, Landlord shall reimburse Tenant on a monthly basis for the pro
rata portion of the cost of electricity to operate such air conditioning system
fairly allocable to such other tenant(s).

13.    INTERRUPTION OR CURTAILMENT OF BUILDING SERVICES.

(a)    Landlord shall have the right to interrupt, curtail, stop
or suspend the operation of the Building's plumbing and electrical systems and
any other Building services or utilities in the case of emergency or accident,
or for the purpose of making any repairs, alteration, or improvement to the
Building or Premises, or in the case of Force Majeure or other event beyond
Landlord's reasonable control; provided however, that in any such case where it
is possible, Landlord shall provide to Tenant reasonable prior written notice
thereof and Tenant shall have the option to consult and meet with and accompany
Landlord and/or any of his agents or contractors during such period(s).

(b)    Notwithstanding anything to the contrary in this Lease
contained, if the Premises shall lack any service which Landlord is required to
provide hereunder or if Tenant's use and occupancy of the Premises be adversely
affected by any of the Landlord's actions or inactions arising in connection
with the situations described in paragraph (a) above, (in either case) rendering
the Premises or a portion thereof untenantable for a period of five (5)
consecutive business days, then, provided that such condition or Landlord's
inability to cure such condition is not caused by the fault or neglect of Tenant
or Tenant's agents, employees, contractors, or invitees, nor by events arising
from Force Majeure, as defined in section 39, Basic Rent shall thereafter be
abated in proportion to such untenantability until the day such condition is
completely corrected. In the case where the cause of such interruption arises
from an event of Force Majeure (i.e., but not due to the fault or neglect of
Tenant, its agents, contractors, employees or invitees), Tenant's right to such
abatement shall commence from and after the twenty-first (21st) consecutive day
of such interruption. If such interruption continuer for thirty (30) consecutive
days (forty-five (45) consecutive days in the case of an interruption caused by
Force Majeure), for any reason other than the fault or neglect of Tenant, its
agents, contractor, employees or invitees, then Tenant shall have the right and
option, in addition to the right to

10

continue abatement of rent, from and after such date, to terminate this Lease by
giving Landlord a written thirty (30) day termination notice, and in such event,
the Lease shall terminate on the thirtieth (30th) day after the giving of the
notice without further obligation or liability on the part of either party,
provided however that if Landlord shall have corrected the condition previously
rendering the Premises or a portion thereof untenantable by such thirtieth
(30th) day, this Lease shall not terminate and Tenant's notice of such
termination shall be of no further force or effect.

14.    BUILDING EXPENSES.

(a)    DEFINITIONS. For the purposes of this Section 14, the
following terms shall have the following respective meanings:

(i)    YEAR: Each calendar year in which any part of the
Term of this Lease shall fall.

(ii)   OPERATING COSTS: "Operating Costs" are defined as
those costs and expenses incurred by Landlord to operate, repair and
maintain the Building and the Property as required by this Lease, and in
the manner in which similar properties in the area in which the Property
is located are operated, and shall include the following:

(a)    Costs and expenses directly related to the
Building for repairing, maintaining, operating and cleaning the
tenant and common areas, and for removing snow, ice and debris,
costs of property, liability and business interruption insurance,
and associated equipment, tools and supplies.

(b)    Costs and expenses of repairing paving,
curbs, walkways, landscaping (including replanting and replacing
flowers and other plantings), common and public lighting
facilities in the Building and the Property.

(c)    Electricity for lighting the common and
public areas, and fuel used in heating, ventilating and
air-conditioning the Building (exclusive of electricity for air
conditioning furnished to the Premises and to the premises of
other tenants, the cost of which shall not be included in
Operating Costs).

(d)    Maintenance and repair of mechanical and
electrical equipment, including, without limitation, heating,
ventilating and air-conditioning equipment in the Building (not
including supplemental HVAC units installed by or at the expense
of Tenant).

(e)    Window cleaning and janitor service,
including janitor equipment and supplies for the common and public
areas.

(f)    Maintenance of elevators, rest rooms,
lobbies, hallways and other common and public areas of the
Building.

(g)    Building management fees in a sum equal to
the amounts customarily and reasonably charged by management firms
for similar properties in the area in which the Property is
located.

11

Operating Costs shall not include: expenses for any capital
repairs, replacements or improvements (capital repairs and/or capital
expenditures shall include, without limitation, any repair which under Internal
Revenue Code regulations would be amortized or depreciated over a period of
three (3) years or greater); expenses for which the Landlord is reimbursed or
indemnified (either by an insurer, condemnor, tenant or otherwise); expenses
incurred in leasing or procuring tenants (including, without limitation, lease
commissions, brokerage fees, advertising expenses and expenses of renovating
space for current or prospective lessees or tenants), or any expenses or
payments arising in any way in connection with the preparation, negotiation,
and/or enforcement of the provisions of any lease of space in the Building or
Property, including any professional fees; interest, principal, or any other
payments or charges of any sort or nature on any mortgage or mortgages,
including any professional fees related thereto, and rental or other charges
under any ground or underlying lease or leases; depreciation, amortization,
and/or other non-cash charges; wages, salaries or other compensation paid for
clerks or attendants in concessions or newsstands operated by the Landlord; the
cost of any work or service performed for or facilities furnished to a tenant at
the tenant's cost; the cost of correcting defects (latent or otherwise) in the
construction of the Building or in the Building equipment, except that
conditions (not occasioned by construction defects) resulting from ordinary wear
and tear shall not be deemed defects; salaries and fringe benefits and other
costs of personnel above the grade of building supervisor; the cost of
installing, operating and maintaining a specialty improvement including, without
limitation, an observatory or broadcasting, cafeteria or dining facility, or
athletic, luncheon or recreational club; and any cost or expense representing an
amount paid to a related corporation or other entity which is in excess of the
amount which would be paid in the absence of such relationship; any income,
estate, franchise, succession, inheritance, use, occupancy, gross receipts,
rental or capital gains taxes, or any other taxes.

If Tenant shall assume responsibility for its own cleaning
of the Premises, premises cleaning costs shall be excluded from Operating Costs,
and in such event, the Building Expense Base shall be reduced by the cost of
premises cleaning included therein.

If less than all of the Building Rentable Area was occupied
by tenants during any Year or if Landlord did not incur Operating costs with
respect to all tenants during any Year, then each of said Costs shall be
reasonably adjusted and extrapolated by Landlord on an item-by-item basis (i.e.,
those which vary in accordance with the extent of occupancy or the provision of
services, as the case may be) to the estimated Operating Costs that would have
been incurred if the Building had been fully occupied for such Year and such
Costs had been incurred in respect of all tenants; and such extrapolated amount
shall, for the purposes hereof, be deemed to be the operating Costs for such
Year.

(iii)  TAXES. The real estate taxes and other taxes, levies
and assessments imposed upon the Building and the Property and upon any personal
property of Landlord used solely and exclusively in the operation thereof;
betterment assessments apportioned over the longest payment period permitted by
law (including interest thereon); charges, fees and assessments for police, fire
or other governmental services or purported benefits to the Building; service or
user payments in lieu of taxes; and any and all other taxes, levies,
betterments, assessments and charges arising from the ownership, leasing,
operating, use or occupancy of the Building or based upon rentals derived
therefrom, which are or shall be

12

imposed by National, State, Municipal or other authorities having jurisdiction.
As of the Execution Date, Taxes shall not include any income, estate, franchise,
succession, inheritance, use, occupancy, gross receipts, rental, capital gains
or profit tax, provided, however, that any tax, excise, fee, levy, charge or
assessment, however described, that may in the future be levied or assessed as a
substitute for or in addition to (in whole or in part) any tax, levy or
assessment which would otherwise constitute Taxes, whether or not now customary
or in the contemplation of the parties on the Execution Date of this Lease,
shall constitute Taxes, but only to the extent calculated as if the Building and
the Property were the only real estate owned by Landlord. Taxes shall also
include reasonable, actual out-of-pocket expenses of tax abatement or other
proceedings contesting assessments or levies, or any professional fees related
thereto. Although Taxes in Massachusetts are payable on the basis of a July 1 -
June 30 fiscal/tax year, for the purposes of this Section, Taxes shall be
computed on a calendar year basis, based upon the sum of one-half (1/2) the
Taxes payable in respect of each applicable fiscal/tax year. (For example, Taxes
for 1993 would be 1/2 the Taxes in respect of the 1993 fiscal/tax year, plus 1/2
the Taxes in respect of the 1994 fiscal/tax years.)

If the real estate taxes are reduced after the Tenant has paid its
proportionate share thereof, and provided Tenant shall not then be in default of
any monetary obligation under this Lease, beyond any applicable grace period,
the Landlord will pay to the Tenant or the Tenant will be credited with the
Tenant's proportionate share of the reduction. Any real estate tax increase or
decrease during the term of this Lease shall be apportioned so that the Tenant
shall pay or receive its proportionate share of only that portion of the real
estate tax increase or decrease as falls within the term.

Notwithstanding anything herein contained to the contrary,
Landlord shall bear the cost of and pay when due all special assessments and
real estate taxes resulting from assessments attributable to redesign and
expansion or renovation of the Building or Property, except for any improvements
or facilities or changes to the Building or Property as are made or requested by
Tenant.

(iv)   BUILDING EXPENSES: The sum of Operating Costs plus
Taxes. Provided, however, for purposes hereof, in no event shall Building
Expenses in any Year exceed the Building Expense Cap (as hereinafter defined)
for such Year.

(v)    BUILDING EXPENSE CAP: For 1993, the Building Expense
Cap shall be $198,720.00. Thereafter, the Building Expense Cap shall be
increased each Year so as to be equal to one hundred fifteen percent (115%) of
the Building Expense Cap for the prior Year (e.g., the Building Expense Cap for
1994 shall be $228,528.00.)

(vi)   BUILDING EXPENSE BASE: The amount set forth on
Exhibit 1. Landlord hereby represents that the Building Expense Base set forth
on Exhibit 2 hereto is Landlord's good faith estimate of all Operating Costs
Landlord anticipates incurring for the Building for the Year 1993 on an
annualized basis if the Building were fully occupied.

(vii)  TENANT'S PROPORTIONATE SHARE: The fraction or
percentage set forth on Exhibit 1, being the Premises Rentable Area divided by
the Building Rentable Area.

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(b)    TENANT'S PAYMENTS.

(i)    If in any Year of the term of this Lease, as it may
be extended, Building Expenses (subject to the Building Expense Cap as
hereinabove provided) shall exceed the Building Expense Base (the amount of such
excess being hereinafter defined as the "Excess Building Expense"), Tenant shall
pay to Landlord, as additional rent, a Building Expense Escalation Charge in an
amount equal to the product of (i) such Excess Building Expense multiplied by
(ii) Tenant's Proportionate Share, such amount to be paid by Tenant to be
apportioned for any Year in which the Rent Commencement Date occurs or the Term
of this Lease ends.

(ii)   Tenant's Building Expense Escalation charge, if any,
for 1993, shall be paid by Tenant to Landlord within thirty (30) days after
Tenant is billed therefor; Landlord may render such bill not earlier than
January 1, 1994. Commencing January 1, 1994, estimated payments by Tenant on
account of amounts due hereunder shall be made monthly in advance on the first
day of each month. The monthly amount so to be paid to Landlord shall be
sufficient to provide Landlord by the end of each Year a sum equal to Tenant's
required payments, as reasonably estimated by Landlord from time to time during
each year, on account of Building Expense Escalation Charges for such Year. Such
estimate shall be based on the actual Building Expenses for the prior year.
Landlord shall have the right from time to time during the course of the Year to
adjust the amount of Tenant's estimated payments based upon the most recent data
with respect to Building Expenses then available (e.g., Landlord's receipt of a
new Tax bill).

(iii)  Not later than four (4) months following the end of
each Year during the term of this Lease and any extensions thereof, Landlord
shall cause its actual Building Expenses to be audited by an independent
certified public accountant; such statement may be prepared by Landlord and
certified by one of the trustees of Landlord, and in any event, shall be sent by
Landlord to Tenant within thirty (30) days after the end of such four (4) month
period. In such statement, Landlord shall duly note any cost or expense
representing an amount paid to a related corporation or other entity. Landlord
shall, at Tenant's request, to be made not later than the date which is sixty
(60) days after Tenant's receipt of Landlord's statement, make available to
Tenant for inspection and examination at the office of Landlord all the books
and records that relate to such statement. Tenant shall complete such audit
within ninety (90) days after Tenant advises Landlord of its intention to do so
as aforesaid, and any Year so audited or reviewed by Tenant shall thereafter be
closed to further audit.

(iv)   If estimated payments previously made for any
particular Year by Tenant exceed Tenant's required payment on account thereof
for such Year, according to such statement, Landlord shall promptly refund such
overpayment, but, if the required payments on account thereof for such Year are
greater than the estimated payments (if any) previously made on account thereof
for such Year, Tenant shall make payment to Landlord within 30 days after being
so advised by Landlord. Landlord's and Tenant's obligations with respect to
adjusting Building Expense Escalation Charges for the Year in which the Term of
this Lease ends shall survive the expiration or sooner termination of this
Lease. In no event shall Tenant be entitled to receive a refund or credit (other
than in respect of payments, if any, made by Tenant on account

14

of estimated Building Expense Escalation Charges for such Year) if in any Year
Building Expenses are less than the Building Expense Base.

(c)    TAX CONTEST. If Landlord will not be adversely affected
thereby, either through the imposition of a lien upon the Property or otherwise,
and provided that Tenant shall have paid to Landlord all amounts due in respect
of Tenant's Building Expense Escalation Charge and is not otherwise in monetary
or material non-monetary default under this Lease, Tenant shall have the right,
by appropriate proceedings, if Landlord shall fail or refuse to do so, to
protest or contest any assessment or reassessment for real estate taxes, or any
special assessment, or the validity of either, or of any change in assessments.
At Tenant's request, from time to time, Landlord shall provide to Tenant copies
of all bills for taxes and assessments, as the case may be, received by
Landlord. In the contest or proceedings, Tenant may act in its own name and/or
the name of Landlord and the Landlord will, at Tenant's request and provided
Landlord is not put to any expense thereby, cooperate with Tenant in any way
Tenant may reasonably require in connection with such contest. Any contest
conducted by Tenant hereunder shall be at Tenant's expense and, in the event any
penalties, interest or late charges become payable with respect to the real
estate taxes as the result of such contest or protest, Tenant shall reimburse
Landlord for the same. However, Landlord shall be solely responsible for any
penalties, interest or late charges imposed on the Landlord through no fault of
Tenant.

15.    INSURANCE.

(a)    LANDLORD'S INSURANCE. Landlord shall, from and after the
date hereof and throughout the term of this Lease, as it may be extended,
maintain a policy of comprehensive public liability insurance of at least
$2,000,000 and property damage insurance covering the Building and Property
(excluding Tenant's Work, any alterations or improvements made to the Premises
by Tenant pursuant to Section 8 and, if applicable, Tenant's RFO Work referred
to in Section 38 below [all of the foregoing being hereinafter called "Tenant's
Improvements"]) against loss, damage or destruction caused by fire with extended
coverage. (A certificate of Landlord's present insurance coverage is attached
hereto as Exhibit 8.) Fire and extended coverage shall equal at least ninety
(90%) percent of the replacement cost of the Building (exclusive of Tenant's
Improvements, as aforesaid) above foundations. Each such policy of insurance
shall be non-cancelable and non-amendable without thirty (30) days prior notice
to Tenant. Landlord shall provide to Tenant duplicate originals or certificates
of all insurance coverages required to be maintained by Landlord hereunder.

(b)    TENANT'S INSURANCE. Tenant shall, from and after the date
hereof and throughout the term of this Lease, as it may be extended, maintain a
policy of comprehensive public liability insurance of at least $2,000,000 and
property insurance for Tenant's Improvements and for Tenant's personal property,
equipment, furnishings and fixtures in an amount equal to at least ninety (90%)
percent of the replacement cost thereof. For purposes hereof and other
applicable provisions of this Lease (including, without limitation, Sections
16(b) and 17), Tenant's property (and phrases of similar import) shall include
property leased, as well as owned, by Tenant. Landlord (and such other persons
as Landlord may designate by notice to Tenant from time to time) shall be named
as insureds on Tenant's liability insurance. Each such policy of liability
insurance shall be non-cancellable and non-amendable with respect to Landlord
and Landlord's said designees without thirty (30) days prior notice to Landlord
and

15

its designees. Tenant shall provide to Landlord and Landlord's designees
duplicate originals or certificates of all insurance coverages required to be
maintained by Tenant hereunder.

(c)    SUBROGATION. Landlord and Tenant shall each cause all
policies of fire, extended coverage, and other physical damage insurance
covering the Premises, the Building, Tenant's Improvements, and any property in
the Building to contain a clause or endorsement denying the insurer any rights
of subrogation against the other party. Notwithstanding any provisions of this
Lease to the contrary, Landlord and Tenant respectively waive all claims and
rights to recover against the other for injury or loss due to hazards covered by
insurance, except as to Tenant's obligations with respect to Landlord's
deductible as set forth in the second sentence of Section 11.

16.    INDEMNITIES OF TENANT AND LANDLORD.

(a)    TENANT INDEMNITY. Subject to Section 15(c), and except to
the extent arising from a negligent or wilfull act or omission on the part of
Landlord, its agents, employees, invitees or contractors, Tenant agrees to
defend, indemnify and save harmless Landlord, Landlord's Agent (identified on
Exhibit 1) and any mortgagee or ground lessor of which Tenant is given notice
from and against all loss, liability, damage, costs, expenses and claims of
whatever nature arising (i) from any accident, injury or damage to any person or
to the property of any person in the Premises; or (ii) from any accident, injury
or damage to persons or property occurring outside of the Premises but in or
about the Building or on the Property, where such accident, damage or injury
outside of the Premises results or is claimed to have resulted from a negligent
or willful act or omission on the part of Tenant or Tenant's agents or
employees. Landlord shall notify Tenant of such loss, etc. when Landlord learns
of any such matter it understands involves Tenant and (subject to the approval
of Landlord's insurer) Tenant shall have the right to assume the defense thereof
with reputable and qualified legal counsel reasonably acceptable to Landlord.

(b)    LANDLORD INDEMNITY. Subject to Sections 15(c) and 17, and
except to the extent arising from a negligent or wilfull act or omission on the
part of Tenant, its agents, employees, invitees or contractors, Landlord agrees
to defend, indemnify and save harmless Tenant from and against all loss,
liability, damage, costs, expenses and claims of whatever nature arising (i)
from any accident, injury or damage to any persons or to the property of any
person (other than Tenant) in the Premises, or (ii) from any accident, injury or
damage to persons or to the property of any person (other than Tenant) occurring
outside of the Premises but in or about the Building or occurring elsewhere on
the Property, where such accident, damage or injury in the Premises or outside
the Premises results or is claimed to have resulted from a negligent or wilfull
act or omission on the part of the Landlord or its agents or employees. Tenant
shall notify Landlord of such loss, etc., when Tenant learns of any such matter
it understands involves Landlord and (subject to the approval of Tenant's
insurer) Landlord shall have the right to assume the defense thereof with
reputable and qualified legal counsel reasonably acceptable to Tenant.

17.    TENANT'S RISK. Tenant agrees to use and occupy the Premises at
Tenant's own risk. Tenant shall maintain insurance in respect of its personal
property, business fixtures and leasehold improvements and Landlord shall have
no responsibility or liability for any loss of or

16

damage to any of the same, or for any inconvenience, annoyance, interruption or
injury to business arising from Landlord's making any repairs or changes which
Landlord is permitted by this Lease, or required by law, to make in or to any
portion of the Premises or other sections of the Building or Property, except to
the extent arising from a negligent or wilfull act or omission on the part of
Landlord, its agents, employees or contractors, provided that Landlord shall
bear such responsibility only for ordinary office and research and development
property, as hereinafter defined, and provided further that Landlord's
responsibility hereunder shall also be subject to Section 15(c). For purposes
hereof, "ordinary office and research and development property" shall mean such
property as is customarily found in office/r&d facilities comparable to Tenant's
Premises in the greater Boston area and shall exclude property of a rare or
exotic nature, works of art and the like. Tenant agrees that Landlord shall not
be responsible or liable to tenant, or to those claiming by, through or under
Tenant, for any loss or damage that may be occasioned by or through the acts or
omissions of persons occupying adjoining premises or any other part of the
Building or the Property.

18.    LANDLORD'S ACCESS RIGHTS.

(a)    Upon reasonable prior written notice to Tenant, except
that no such notice shall be required in the case of an emergency, and subject
to all of the relevant provisions of Section 13, Landlord shall have the right
to enter the Premises at reasonable hours for the purpose of inspecting or
making repairs to the same, and to show the Premises to prospective or existing
mortgagees, purchasers or, during the last nine (9) months of the term of this
Lease, to prospective tenants. Except were not possible by reason of an
emergency, Tenant shall have the right to accompany any such parties during such
period(s).

(b)    Tenant acknowledges that the only access to the balance of
the second floor of the Building will be through Tenant's reception area until
such time (if ever) as Landlord constructs the corridor(s) contemplated by
Section 6(g) above. Accordingly, until such corridor(s) are constructed,
Landlord reserves, and Tenant agrees that Landlord shall have, an unlimited
right of access during business hours (and without notice to Tenant, except that
Landlord shall use reasonable efforts to give Tenant prior oral notice of
Landlord's intention to enter the Premises pursuant to this paragraph (b))
through Tenant's reception area to the balance of the second floor of the
Building for the purpose of showing such space to existing or prospective
tenants, mortgagees, purchasers and others, for making inspections, repairs and
replacements, and for constructing such space for occupancy by others. Landlord
shall exercise such access rights in a manner so as to minimize interference
with the conduct of Tenant's business in the Premises.

19.    CONDEMNATION.

(a)    If at any time during the Term or any extension thereof the
whole of the Building and Property shall be taken for any public or quasi-public
use, under any statute, or by right of eminent domain, then except as provided
in paragraph (c), this Lease shall terminate as of the date Tenant is scheduled
to be deprived of possession by reason of such taking. If less than all of the
Building and Property shall be so taken and in the Tenant's reasonable, bona
fide business judgment, exercised in good faith, the remaining part is
insufficient for the conduct of the Tenant's business, the Tenant may, by notice
to the Landlord given within ninety (90) days

17

after notice of such taking, terminate this Lease. If the Tenant exercises its
option, this Lease and the term hereof shall end on the date Tenant is scheduled
to be deprived of possession by reason of such taking, and the rent and
additional rent shall be apportioned and paid to such date and Tenant shall have
no further liability or obligation to Landlord.

(b)    If less than all of the Building and Property shall be
taken and Tenant does not elect to terminate this Lease pursuant to paragraph
(a) above, this Lease shall remain unaffected, except that the Tenant shall be
entitled to a pro-rata abatement of rent and additional rent based on the
proportion which the area of the Premises so taken bears to the area of the
Premises demised hereunder immediately prior to such taking.

(c)    If the use and occupancy of the whole or any part of the
Building or Property is temporarily taken for a public or quasi-public use for a
period of more than three (3) months but less than the balance of the term, at
the Tenant's option to be exercised in writing and delivered to the Landlord not
later than ninety (90) days after the date the Tenant is notified of such
taking, this Lease and the term hereby granted shall terminate on the date
specified in the Tenant's notice or shall continue in full force and effect. If
the Lease remains in effect, the Tenant shall be entitled to a proportional
abatement of rent and additional rent in the manner and to the extent provided
in paragraph (b).

(d)    In the event of a taking hereunder, the Tenant shall be
entitled, if allowed by law, to appear, claim, prove and receive in the
condemnation proceeding (1) the unamortized value (calculated on a straight-line
basis over the remainder of the then current term of the Lease, including any
extension terms the option for which Tenant has exercised as of the date of such
taking) of the improvements and alterations to the Premises as made by Tenant at
the Tenant's expense but regardless of whether the improvements and alterations
might be considered a part of the premises or shall be or become the property of
the Landlord under the terms of this Lease; (2) the value of the Tenant's
fixtures; (3) the cost of relocation; and (4) special awards or allowances
provided by law to tenants (other than for the value of Tenant's leasehold) in
the event their rental space is taken by eminent domain; provided, however, that
the amount of the award due Landlord as a result of such taking shall not be
reduced by Tenant's claims and that Tenant's claims shall in all events be
subject and subordinate to the rights of Landlord's mortgagee(s). Except for any
award specifically referred to in the preceding sentence which Tenant is
entitled to claim, there are expressly reserved to Landlord all rights to
compensation and damages created, accrued or accruing by reason of any such
taking, in implementation and confirmation of which Tenant does hereby
acknowledge that Landlord shall be entitled to receive all such compensation and
damages, grant to Landlord all and whatever rights (if any) Tenant may have to
such compensation and damages, and agree to execute and deliver all and whatever
further instruments of assignment as Landlord may from time to time request.

(e)    If there is a taking hereunder and this Lease is continued,
the Landlord shall, at its expense, but limited to the amount of condemnation
proceeds made available to it by the taking authority and the holder of any
mortgage or lessor under any ground lease on the Property, proceed with
reasonable diligence to repair, alter and restore the Building (and Property, if
relevant) as a complete architectural unit of substantially the same
proportionate usefulness, design and construction existing immediately prior to
the date of taking.

18

(f)    Taking by condemnation or eminent domain hereunder shall
include the exercise of any similar governmental power and any sale, transfer or
other disposition to the condemning authority of the Building or Property in
lieu or under threat of condemnations.

20.    CASUALTY.

(a)    If any portion of the Premises, the common areas of the
Building or Building equipment or systems serving the Premises or common areas
(hereinafter collectively referred to as the "damaged property") shall incur
minor damage by reason of fire or other casualty, Landlord will restore such
damaged property (excluding Tenant's Improvements, which shall be restored by
Tenant) to substantially their condition immediately prior to such damage for
Tenant's use and occupancy as speedily as possible. If, for any reason, such
restoration shall not be completed by Landlord within one hundred twenty (120)
days after such damage shall have occurred, Tenant shall have the right to
terminate this Lease by giving a thirty (30) day termination to Landlord. Upon
giving of such notice, this Lease shall cease and come to an end as of said
thirtieth (30th) day after the giving of notice without further obligation of
liability on the part of either party, unless by the said thirtieth (30th) day
Landlord shall have completed such restoration, in which event Tenant's
termination notice shall be void and of no further force or effect.
Notwithstanding anything to the contrary contained in this Section 20,
Landlord's obligation to restore any damage shall be limited to the amount of
any insurance proceeds made available to Landlord by any holder of a mortgage or
lessor under any ground lease on the Property.

(b)    If damaged property shall be substantially damaged by fire
or other casualty ("substantial damage" meaning damage which Landlord reasonably
anticipates cannot be restored substantially to the condition they were in
immediately prior to such fire or casualty within one hundred twenty [120] days
after the occurrence thereof) Landlord shall have the right to terminate this
Lease. Landlord shall notify Tenant in writing of its determination to terminate
this Lease or restore the damaged property within thirty (30) days of such fire
or casualty. The term of this Lease may be so terminated not earlier than twenty
(20) days after delivery of Landlord's termination notice nor later than thirty
(30) days thereafter. If Landlord shall not elect to terminate this Lease but
if, in the opinion of Tenant, the operation of Tenant's business in the Premises
in the normal course is materially adversely affected, then, within fourteen
(14) days of its receipt of Landlord's notice of its election to restore the
damaged property, Tenant shall request a written engineering estimate of
Landlord as to the length of time needed to restore the damaged property. Within
fifteen (15) days of such request, Landlord shall submit to Tenant a reasonable
engineering estimate as to the estimated length of time to complete such
repairs. If such estimate shall exceed one hundred twenty (120) days from the
date of such casualty, Tenant may elect, by a notice sent within fifteen (15)
days after Tenant's receipt of such estimate, to terminate this Lease. If such
estimate shall fall within the one hundred twenty (120) day limit, Tenant shall
have no such right to terminate and Landlord shall, subject to the provisions of
this Section 20, proceed with due diligence and promptness to

19

substantially complete the repairs or restoration (excluding property to be
restored by Tenant, as provided in paragraph (a) above) within such one hundred
twenty (120) day period. If Landlord's estimate exceeds 120 days as aforesaid
but Tenant, although having the right to do so, does not elect to terminate this
Lease within 15 days after receipt of such estimate as aforesaid, then and in
such event, Landlord shall, subject to the provisions of this Section 20,
proceed with due diligence and promptness to substantially complete the repairs
or restoration (excluding property to be restored by Tenant, as provided in
paragraph (a) above) within the period set forth in Landlord's estimate. If, for
any reason, such restoration shall not be completed by Landlord within the
period set forth in Landlord's estimate (or, if longer, within one hundred
twenty (120) days after such damage shall have occurred), Tenant shall have the
right to terminate this Lease by giving a thirty (30) day termination to
Landlord. Upon giving of such notice, this Lease shall cease and come to an end
as of said thirtieth (30th) day after the giving of notice without further
obligation or liability on the part of either party, unless by the said
thirtieth (30th) day Landlord shall have completed such restoration, in which
event Tenant's termination notice shall be void and of no further force or
effect.

(c)    Pending Landlord's restoration of the damaged property
(excluding property to be restored by Tenant, as provided in paragraph (a)
above) or termination of this Lease as aforesaid, Tenant shall be entitled to a
proportionate abatement of rent and additional rent payable during the period
commencing on the date of the damage and ending on the date the damaged property
is restored as aforesaid or this Lease is terminated, as the case may be. The
extent of rental abatement shall be based upon the portion of the Premises
rendered untenantable, unfit or inaccessible for use by Tenant during such
period. If this Lease is terminated pursuant to paragraphs (a) or (b) above,
then rent and additional rent (as the same may have been abated pursuant to the
preceding sentence) shall be apportioned as of the date of termination and all
prepaid rent and additional rent, if any, in respect of periods from and after
the effective termination date shall be repaid.

21.    TENANT'S DEFAULT. Tenant shall be in default under this Lease
in the event that Tenant (a) shall fail to make any payment of money (including,
without limitation, Basic Rent and Building Expense Escalation Charges) when it
is due hereunder and such failure shall continue for ten (10) days after written
notice from Landlord to Tenant, or (b) shall fail or neglect to perform or
observe any other covenant or obligation under this Lease and Tenant shall fail
to remedy the same within thirty (30) days after written notice from Landlord to
Tenant specifying such failure or neglect, or if such failure is of such nature
that Tenant cannot reasonably remedy the same within such 30-day period, Tenant
shall fail to commence promptly to remedy the same and to prosecute such remedy
to completion with diligence and continuity, or (c) shall commence
reorganization, bankruptcy or insolvency proceedings or, in case any such
proceedings are brought against Tenant, if the same are not dismissed within
sixty (60) days or if any assignment shall be made of all or substantially all
of Tenant's property for the benefit of creditors.

If Tenant shall be in default under this Lease, Landlord shall have all
rights and remedies as are available at law or in equity. Such remedies shall
include, without limitation, the right to evict Tenant, take exclusive
possession of the Premises, continue to collect Basic Rent, Building expense
Escalation Charges and other charges, terminate the Lease, obtain a judgment for
all damages that might flow from a breach or termination of this Lease, re-let
the Premises or any part thereof and make any repairs or alterations to the
Premises, but not including alterations or repairs not reasonably necessary for
Landlord to seek mitigation of damages arising in connection with Tenant's
default. In the event of termination by reason of default by Tenant, Landlord
shall be obligated to use all reasonable efforts to mitigate any and all damages
therefrom. For purposes hereof, "reasonable efforts" shall mean listing the
Premises with a

20

commercial property broker who in the ordinary course deals with similar
properties; but Landlord shall in no event be required to re-let the Premises in
lieu of leasing other space in the Building. Tenant shall pay Landlord's
reasonable actual out-of-pocket costs of enforcing this Lease, including,
without limitation, reasonable attorneys' fees and costs, as additional rent.

At any time within one (1) year after termination of this Lease for
Tenant's default, as liquidated damages and in lieu of all other damages beyond
the date of demand hereunder, at Landlord's election, Tenant shall pay to
Landlord an amount equal to Basic Rent, Building Expense Charges and other sums
payable under this Lease which would have been payable hereunder for the period
of one (1) year from the date of Landlord's election had this Lease remained in
effect (assuming, for the purpose of this sentence, that Building Expense
Charges payable by Tenant for said one year period would be in an amount equal
to the Building Expense charges required for the year immediately preceding the
Year in which such election is made).

22.    LANDLORD'S DEFAULT. Landlord shall be in default under this
Lease in the event that Landlord shall have failed to perform any of its
obligations hereunder within thirty (30) days of notice thereof by Tenant to
Landlord and to any mortgagee or ground lessor whose names and addresses have
been previously given by written notice to Tenant, or if such failure is of such
nature that Landlord cannot reasonably remedy the same within thirty (30) days,
Landlord shall have failed promptly to commence to remedy the same and to
prosecute such remedy with diligence and continuity.

23.    LIMITATIONS ON LIABILITY.

(a)    LANDLORD'S LIABILITY. With respect to the Landlord's
obligations as Landlord hereunder, Tenant agrees, in the event of breach of any
of the terms and conditions of this Lease, to look solely to the Landlord's
interest in the Property for recovery of any judgment from Landlord; it being
specifically agreed that in no event shall Landlord (original or successor), or
any of the officers, trustees, directors, partners, beneficiaries, stockholders
or other principals or representatives, and the like, disclosed or undisclosed,
thereof, ever be personally liable for any such judgment, or other liability or
for the payment of any monetary obligation to Tenant arising out of a breach of
any of the terms and conditions of this Lease with respect to the Landlord's
obligations as Landlord hereunder. In no event shall Landlord (original or
successor) or any such officers, etc., as aforesaid, ever be liable for indirect
or consequential damages arising from whatever cause.

(b)    TENANT'S LIABILITY. Landlord agrees, in the event of breach
of any of the terms and conditions of this Lease, to look solely to the Tenant
for recovery of any judgment from Tenant; it being specifically agreed that in
no event shall any recourse under any provisions of this Lease otherwise
permitted by any statute or rule of law or decision be had against any of
Tenant's past, present, or future incorporators, subscribers, stockholders,
officers, or directors, partners, beneficiaries, trustees, representatives, or
principal(s), whether disclosed or undisclosed, and the like, either directly or
through such entity

24.    RULES AND REGULATIONS. Tenant shall abide by rules and regulations
from time to time reasonably established by Landlord, it being agreed that such
rules and regulations will be established and applied by Landlord in a
non-discriminatory fashion. Landlord agrees to use

21

reasonable efforts to insure that any such rules and regulations are uniformly
enforced, but Landlord shall not be liable to Tenant for violation of the same
by any other tenant or occupant of the Building, or persons having business with
them. The current rules and regulations are attached to this Lease as Exhibit 6.
In the event that there shall be a conflict between such rules and regulations
and the provisions of this Lease, the provisions of this Lease shall control.
The Rules and Regulations shall not be applicable to Tenant to the extent that
any such rule or regulation unreasonably interferes with the Tenant's
contemplated use of the Premises (including Tenant's Work) or with Tenant's
particular security requirements. Without limiting the generality of the
foregoing, notwithstanding such Rules and Regulations: (i) Tenant may keep on
the Premises animals or birds, etc. necessary for the conduct of its business
therein, provided that Tenant complies with all laws and other legal
requirements applicable thereto and that Tenant shall keep such animals or
birds, etc. appropriately caged (or otherwise restricted) so as to avoid escape
or other annoyance or disturbance to other occupants of the Building; and (ii)
chemicals, combustible or otherwise, shall be permitted on the Premises as
necessary for the conduct of Tenant's business therein, subject to the
provisions of Section 40(b), which shall be applicable thereto.

25.    NOTICE. Whenever, by the terms of this Lease, notices, requests,
consents and approvals shall or may be given either to Landlord or to Tenant,
they shall be in writing and shall be delivered in hand or sent by express,
registered or certified mail, return receipt requested, postage prepaid:

If intended for Landlord, addressed to Landlord at Landlord's
Original Address as stated in Exhibit 1 (or to such other address or
addresses as may from time to time hereafter be designated by
Landlord by like notice).

If intended for Tenant, addressed to Tenant at Tenant's original
Address as stated in Exhibit 1 until the Rent Commencement Date and
thereafter to the Premises (or to such other address or addresses as
may from time to time hereafter be designated by Tenant by like
notice).

All such notices shall be effective (i) when hand-delivered or (ii) if mailed,
when deposited in the United States Mail within the Continental United States,
provided that the same are received in ordinary course at the address to which
the same were sent.

26.    LANDLORD'S TITLE AND CONFORMITY WITH LEGAL REQUIREMENTS. Landlord
covenants as a condition of this Lease that it has good marketable fee title to
the Building and Property subject to the encumbrances listed as of the date
hereof on Certificate of Title No. 161435 filed with the Middlesex South
Registry District of the Land Court in Book 937, Page 85, and that Landlord has
the right to make this Lease for the term aforesaid; that the provisions of this
Lease do not conflict with or violate the provisions of existing agreements
between Landlord and third parties; that, to the best knowledge of Landlord, the
Premises and Property are in conformity with all applicable legal requirements,
including, without limitation, zoning and planning ordinances, and do not
violate applicable restrictions, if any; that as of the date of this Lease,
there are no claims, lawsuits, judgments or similar matters affecting the
Premises, Building or the Property in connection with the title, zoning and
planning ordinances or environmental matters, and that Landlord will notify
Tenant within five (5) business days of discovery of any

22

such claims, causes of action, lawsuits, controversies or judgments which would
affect this Lease or Tenant's use and occupancy of the Premises; and that
Landlord will deliver actual possession of the Premises to Tenant free of all
tenants and occupants and in accordance with all terms and conditions of this
Lease.

27.    SUBORDINATION AND NON-DISTURBANCE. Tenant acknowledges and agrees
that this Lease shall be subordinate to any mortgage or ground lease from time
to time encumbering the Premises, whether executed and delivered prior to or
subsequent to the date of this Lease, if the holder of such mortgage or ground
lease shall so elect. If this Lease is subordinate to any mortgage or ground
lease and the holder thereof (or successor) shall succeed to the interest of
Landlord, at the election of such holder (or successor) Tenant shall attorn to
such holder and this Lease shall continue in full force and effect between such
holder (or successor) and Tenant. Tenant agrees to execute such instruments of
subordination or attornment in confirmation of the foregoing agreement as such
holder (or successor) may reasonably request.

(b)    Notwithstanding anything to the contrary in the foregoing
contained, the above provided subordination shall be effective only if the
encumbering mortgage or ground lease documentation (as the case may be)
provides, or if the mortgagee or ground lessor (as the case may be) agrees by a
written instrument in recordable form and otherwise in the customary form of
such mortgagee or ground lessor and in form reasonably acceptable to Tenant,
that, INTER ALIA, as long as Tenant shall not be in default, beyond the
expiration of applicable grace periods, of the obligations on its part to be
kept and performed under the terms of this Lease, this Lease will not be
affected and Tenant's possession hereunder will not be disturbed by any default
in, termination and/or foreclosure of, such mortgage and/or ground lease (as the
case may be). For purposes of the preceding sentence, Tenant agrees (without
limitation) that the form of non-disturbance agreement which Tenant enters into
with the present mortgagee, Lexington Savings Bank, will be acceptable to Tenant
with respect to future mortgagees.

28.    ESTOPPEL CERTIFICATE. Either party shall at any time and from time
to time within ten (10) days of the other party's request, execute and deliver
an estoppel certificate affirming this Lease, indicating whether there are any
defaults hereunder and addressing such other matters as the requesting party,
its lender(s) or prospective purchaser(s) or investors may reasonably require.

29.    REMEDYING TENANT DEFAULTS. Landlord shall have the right, but not
the obligation, to pay such sums or take such action as may be necessary or
appropriate by reasons of the failure or neglect of Tenant to perform any of the
provisions of this Lease, and in such event, Tenant agrees to reimburse Landlord
within fifteen (15) days after demand for all reasonable costs and expenses so
inquired by Landlord, together with interest thereon at a rate equal to 12% per
annum. Any payment of Basic Rent, Building Expense Charges or other sums payable
hereunder not paid within ten (10) days the same shall have become due shall
bear interest at the rate as aforesaid from the date thereof and shall be
payable within fifteen (15) days after demand. by Landlord, as additional rent.

30.    REASONABLE CONSENT. Whenever any provision of this Lease states
that the consent, approval or acceptance of either Landlord or Tenant is
required, such consent, approval or acceptance shall not be unreasonably
withheld.

23

31.    HOLDING OVER. Any holding over by Tenant after the expiration or
sooner termination of the Term of this Lease shall be treated as a daily
tenancy at sufferance at a rate equal to two (2) times the sum of (i) Basic Rent
then in effect plus (ii) Building Expense Charges and all other charges herein
provided for (prorated on a daily basis). Tenant shall also pay to Landlord all
damages, direct and/or indirect (including, without limitation, the loss of a
tenant and of rental income) sustained by reason of any such holding over.
Otherwise, such holding over shall be on the terms and conditions set forth in
this Lease as far as applicable.

32.    SURRENDER OF PREMISES. Upon the expiration or earlier termination
of the Term of this Lease, Tenant shall peaceably quit and surrender to Landlord
the Premises in neat and clean condition and otherwise in the same condition as
Tenant is required to surrender and return the Premises to Landlord pursuant to
Section 8 and to maintain the Premises pursuant to Section 11 above, excepting
only as to Tenant's maintenance obligations, reasonable wear and tear and damage
by fire or other casualty.

33.    ARBITRATION. In the event that any dispute should arise between
the parties hereto as to the validity of this Lease or as to the construction,
enforcement or performance of this Lease, such dispute, subject to the
provisions of this Section 33, shall be settled by arbitration before a single
arbitrator conducted at Boston, Massachusetts, in accordance with the Commercial
Arbitration Rules of the American Arbitration Association. As to any dispute
involving the payment of money, however, no arbitration shall be permitted until
the party with the payment obligation in question shall have paid such money in
dispute, under protest (and reserving its rights), in full to the other party.
No refusal to pay any amount coupled with a call for arbitration shall be deemed
to negate any of the provisions of default set forth in the Lease. The decision
of the arbitrator shall be final and binding on all parties thereto, and
judgment upon any award entered in such proceeding may be entered in any court
having jurisdiction thereof. The unsuccessful party to such arbitration shall
pay to the successful party all costs and expenses, including, without
limitation, reasonable attorneys' fees, incurred therein by such successful
party and such costs, expenses and attorneys' fees shall be included in and as
part of such judgment or award. The determination of the arbitrator shall be
conclusive on the matter of which party is successful for purposes hereof.

In no event, however, shall this Section 33 be deemed to preclude a party
hereto from instituting legal action seeking relief in the nature of a
restraining order, an injunction or the like in order to protect his or its
rights pending the outcome of an arbitration hereunder. With respect to matters
submitted to arbitration the parties shall continue to perform their obligations
hereunder relative to said matters pending resolution of the dispute by
arbitration. Nothing in this Section 33 shall prevent Tenant's continued
occupancy of the Premises during the term of this Lease and the pendency of any
arbitration proceedings, provided Tenant is not otherwise in default (beyond the
expiration of any applicable notice and grace periods) under this Lease.

34.    BROKERAGE. Landlord and Tenant each represent to the other that
they nave not entered into any agreement or incurred any obligation in
connection with this transaction which might result in the obligation to pay a
brokerage commission to any broker other than the Landlord's agreement with the
broker listed in Exhibit 1. Landlord shall pay all fees and commissions due to
such broker in connection with this transaction. Each party shall indemnify and
hold the other party harmless from and against any claim or demand by any broker
or other

24

person for bringing about this Lease who claims to have dealt with such
indemnifying party, including all expenses incurred in defending any such claim
or demand (including reasonable attorneys' fees).

35.    GOVERNING LAW. This Lease shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts.

36.    TENANT'S OPTION TO EXTEND THE TERM OF LEASE.

(a)    On the condition, which condition Landlord may waive, at
its election, by written notice to Tenant at any time, that Tenant is not in
default after the expiration of applicable notice and grace periods of its
covenants and obligations under this Lease both as of the time of option
exercise and as of the commencement of the hereinafter described additional
term, Tenant shall have the option to extend the term of this Lease for two (2)
additional successive five (5) year terms, each such additional term commencing
as of the day after the expiration of the initial term or immediately preceding
the first additional term, as the case may be. Tenant may exercise such option
to extend by giving Landlord written notice on or after the date twenty-four
(24) months prior to the expiration date of the original term of this Lease or
of the first additional term (as the case may be) and on or before the date
which is six (6) months prior to the expiration date of this original term of
this Lease or of the first additional term (as the case may be). Upon the timely
giving of such notice, the term of this Lease shall be deemed extended upon all
of the terms and conditions of this Lease, except that the Basic Rent and
Building Expense Base during such additional term shall be as hereinafter set
forth, (ii) Section 6 shall not be applicable thereto, and (iii) the Rent
Commencement Date in respect of each such additional term shall be the first day
thereof. If Tenant fails to give timely notice, as aforesaid, Tenant shall have
no further right to extend the term of this Lease, time being of the essence of
this Section 36(a). It and when Tenant exercises its first and/or second
extension option hereunder, Landlord shall, at no cost to Tenant, and prior to
the commencement of the first and, applicable, second extension term, repaint
the Premises, with two coats of paint of quality and type to match existing
paint. The options to extend described herein shall be applicable to any "RFO
Premises" leased by Tenant pursuant to Section 38 below.

(b)    BASIC RENT. The Basic Rent during the additional term shall
be the Fair Market Rental Value, as defined in paragraph (a) of Section 37, as
of the commencement of the then applicable additional term, of the Premises then
demised to Tenant; provided, however, that in no event shall the sum of the
applicable Basic Rent and Building Expense Escalation Charges for the Premises
then demised to Tenant, to be payable during such additional term, be less than
sum of the Basic Rent and Building Expense Escalation Charges for such Premises
which were payable immediately preceding the commencement of each such
additional term.

(c)    Tenant shall have no further option to extend the term of
this Lease other than the two (2) successive five (5) year additional terms
herein provided.

(d)    Notwithstanding the fact that upon Tenant's exercise of
the herein options to extend the term of the Lease such extensions shall be
self-executing, as aforesaid, the parties shall promptly execute a lease
amendment reflecting each such additional term after Tenant exercises the
applicable option, except that the Basic Rent payable in respect of each such

25

additional term and the figure for the Building Expense Base need not be set
forth in the applicable amendment. Subsequently, after such Basic Rent and the
figure for the Building Expense Base are determined, the parties shall execute a
written agreement confirming the same. The execution of such lease amendment
shall not be deemed to waive any of the conditions to Tenant's exercise of its
rights under paragraph (a) of this Section 36, unless otherwise specifically
provided in such lease amendment.

37.    DEFINITION OF FAIR MARKET RENTAL VALUE. For the purpose of this
Lease:

(a)    "Fair Market Rental Value" shall be computed as of the date
in question at the then current annual rental charge (i.e., the sum of Basic
Rent plus escalation and other charges), including provisions for subsequent
increases and other adjustments for leases and agreements to lease then
currently being negotiated or executed in comparable general office space (but
not comparable lab space as built by Tenant hereunder at its own cost and
expense) located in 125 Hartwell Avenue, Lexington, Massachusetts, or if no new
leases or agreements to lease are then currently being negotiated or executed in
the Building, the Fair Market Rental Value shall be determined by reference to
bona fide offers being made by Landlord to prospective tenants for the lease of
comparable general office space (but not comparable lab space as built by Tenant
hereunder at its own cost and expense) in the Building; or if there are no
prospective tenants to whom Landlord may make such offers, then Fair Market
Rental Value shall be determined by reference to new leases or agreements to
lease then currently being negotiated or executed for comparable general office
space (but not comparable lab space as built by Tenant hereunder at its own cost
and expense) located elsewhere in office/research and development buildings aged
and otherwise equipped comparably with the Building located within a two (2)
mile radius of the Building. In determining Fair Market Rental Value, the
following factors, among others, shall be taken into account and given effect:
size, location of premises, lease term, condition of building and services
provided by the Landlord.

(b)    DISPUTE AS TO FAIR MARKET RENTAL VALUE. Landlord shall
initially designate Fair Market Rental Value and Landlord shall furnish data in
support of such designation. If Tenant disagrees with Landlord's designation of
a Fair Market Rental Value, Tenant shall have the right, by written notice given
within thirty (30) days after Tenant has been notified of Landlord's
designation, to submit such Fair Market Rental Value to arbitration. Fair Market
Rental value shall be submitted to arbitration as follows: Fair Market Rental
Value shall be determined by impartial arbitrators, one to be chosen by the
Landlord, one to be chosen by Tenant and a third to be selected, if necessary,
as below provided. The unanimous written decision of the two first chosen,
without selection and participation of a third arbitrator, or otherwise, the
written decision of a majority of three arbitrators chosen and selected as
aforesaid, shall be conclusive and binding upon Landlord and Tenant. Landlord
and Tenant shall each notify the other of its chosen arbitrator within ten (10)
days following the call for arbitration and, unless such two arbitrators shall
have reached a unanimous decision within thirty (30) days after their
designation, they shall so notify the American Arbitration Association (or such
organization as may succeed to said Association) and request said Association to
select an impartial third arbitrator to determine Fair Market Rental Value as
herein defined. Such third arbitrator and the first two chosen shall, subject to
commercial arbitration rules of the American Arbitration Association, hear the
parties and their evidence and render their decision within thirty (30) days
following the conclusion of such hearing and notify Landlord and Tenant thereof.
Landlord and

26

Tenant shall bear the expense of the third arbitrator (if any) equally. The
decision of the arbitrators shall be final and binding of the parties and
judgment thereon may be entered in the Superior Court having jurisdiction over
the Premises; and the parties consent to the jurisdiction of such court and
further agree that any process or notice of motion or other application to the
court or a judge thereof may be served outside the Commonwealth of Massachusetts
by registered mail or by personal service, provided a reasonable time for
appearance is allowed. If the dispute between the parties as to a Fair Market
Rental Value has not been resolved before the commencement of Tenant's
obligation to pay rent based upon such Fair Market Rental Value, then Tenant
shall pay Basic Rent and other charges under the Lease in respect of the
premises in question based upon the Fair Market Rental Value designated by
Landlord until either the agreement of the parties as to the Fair Market Rental
Value, or the decision of the arbitrators, as the case may be, at which time
Tenant shall pay any underpayment of rent and other charges to Landlord, or
Landlord shall refund any overpayment of rent and other charges to Tenant.

38.    TENANT'S RIGHT OF FIRST OFFER. On the conditions (which conditions
Landlord may waive, at its election, by written notice to Tenant at any time)
(i) that Tenant is not in default after the expiration of applicable notice and
grace periods of its covenants and obligations under the Lease, (ii) that Fuji
ImmunoPharmaceuticals Corp. and/or a Fuji Successor itself is occupying at least
fifty percent (50%) of the premises then demised to Tenant (in the case of (i)
and (ii), both at the time that Landlord is required to give Landlord's Notice,
as hereinafter defined, and as of the Commencement Date in respect of the RFO
Premises in question), (iii) that Fuji ImmunoPharmaceuticals Corp and/or a Fuji
Successor will itself occupy the RFO Premises in question, and (iv) that if
there are two (2) years or less remaining in the then applicable term of the
Lease, Tenant shall have previously or simultaneously with the valid exercise of
its rights hereunder exercised its next applicable extension option, Tenant
shall have the following rights to lease RFO Premises, as hereinafter defined,
when such RFO Premises become available for lease to Tenant, as hereinafter
defined. In no event shall Tenant have any rights under this Section 38 on or
after the date on which there shall be less than two (2) full years remaining in
the Term of this Lease, unless Tenant shall have validly exercised any remaining
applicable extension option, as aforesaid. It Tenant exercises its second
extension option under Section 36, Tenant's rights under this Section 38 shall
lapse as of the third (3rd) anniversary of the commencement date of such second
additional term.

(a)    DEFINITION OF RFO PREMISES. "RFO Premises" shall be defined
as any separately demised area which is situated within the second floor of 125
Hartwell Avenue, Lexington, Massachusetts, and which becomes available for lease
to Tenant, as hereinafter defined, during the term of this Lease, as the same
may be extended. For the purposes of this paragraph (a), an area shall be deemed
to be "available for lease to Tenant" if, during the term of this Lease,
Landlord, in its sole judgment, determines that such area will become available
for leasing to Tenant (i.e., when Landlord determines that the then current
tenant of such RFO Premises will vacate such RFO Premises, or any portion
thereof, and when Landlord intends to offer such premises for lease). In no
event shall Tenant have any such rights under this Section 38 in respect of
Landlord's initial leasing (after the date hereof) of any space on the second
floor of 125 Hartwell Avenue.

(b)    EXERCISE OF RIGHT TO LEASE RFO PREMISES. Landlord shall
give Tenant written notice ("Landlord's Notice") at the time that Landlord
determines, as aforesaid, that RFO

27

Premises will become available for lease to Tenant. Landlord's Notice shall set
forth Landlord's designation of the Fair Market Rental Value (as hereinabove
defined) applicable to such RFO Premises, the estimated date on which Landlord
expects to deliver such RFO Premises to Tenant, and the exact location of such
RFO Premises. Tenant shall have the right, exercisable upon written notice
("Tenant's Exercise Notice") given to Landlord within thirty (30) days after the
receipt of Landlord's Notice, to lease such RFO Premises. If Tenant fails timely
to give Tenant's Exercise Notice, Tenant shall have no further right of lease
such RFO Premises pursuant to this paragraph (b). Upon the timely giving of
Tenant's Exercise Notice, Landlord shall lease and demise to Tenant and Tenant
shall hire and take from Landlord, such RFO premises, upon all of the same terms
and conditions of the Lease (including the options to extend described in
Section 36 hereof) except as hereinafter set forth.

(c)    LEASE PROVISIONS APPLYING TO RFO PREMISES. The leasing to
Tenant of any RFO Premises shall be upon all of the same terms and conditions of
the Lease, including, without limitation, Building Expense Base, except as
follows:

(1)    COMMENCEMENT DATE. The Commencement Date in respect
of any RFO Premises shall be the earlier of (A) ninety (90) days after the later
of (x) the estimated delivery date in respect of such RFO Premises as set forth
in Landlord's Notice, or (y) the date that Landlord actually delivers such RFO
Premises to Tenant, or (B) the date on which Tenant shall occupy all or any
portion of such RFO Premises for the conduct of its business therein.

(2)    RENT COMMENCEMENT DATE. The Rent Commencement Date
in respect of any RFO Premises shall be the Commencement Date in respect of such
RFO Premises.

(3)    TERMINATION DATE. The Termination Date in respect of
any RFO Premises shall be the Termination Date set forth on Exhibit 1 of the
Lease, as the same may be or may have been extended by Tenant pursuant to
Section 36.

(4)    BASIC RENT. The Basic Rent rental rate in respect of
any RFO Premises shall be based upon ninety percent (90%) of the Fair Market
Rental Value, as defined in Section 37 of this Lease, of such RFO Premises as of
the Commencement Date in respect of such RFO Premises; provided, however, that
in no event shall the sum of the applicable Basic Rent rental rate and Building
Escalation charges per square foot of rentable area of the RFO Premises be less
than the average, if any (weighted on a square foot basis) of the sum of the
applicable Basic Rent rental rate and Building Escalation Charges, per square
foot in effect, as of such Commencement Date, in respect of the remainder of the
Premises then demised to Tenant.

(5)    CONDITION OF RFO PREMISES; TENANT'S RFO WORK. Tenant
shall take any RFO Premises "as-is" in its then (i.e., as of the date of
premises delivery) state of construction, finish, and decoration, without any
obligation on the part of Landlord to construct or prepare any RFO Premises for
Tenant's occupancy. Accordingly, Section 6 shall not apply to the RFO Premises.
However, upon Tenant's exercise of its option to lease RFO Premises and delivery
of such RFO Premises by Landlord to Tenant, Tenant shall have the right, subject
to Landlord's approval of the plans therefor and to the other provisions of
Section 8 above, to make such alterations and improvements to the RFO Premises
as Tenant deems reasonably necessary for its use and occupancy thereof
("Tenant's RFO Work").

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(d)    EXECUTION OF LEASE AMENDMENTS. Notwithstanding the
fact that Tenant's exercise of the above-described option to lease RFO Premises
shall be self-executing, as aforesaid, the parties hereby agree promptly to
execute a lease amendment reflecting the addition of any RFO Premises, except
that the Basic Rent payable in respect of any such RFO Premises may not be as
set forth in such amendment. At the time that such Basic Rent is determined, the
parties shall execute a written agreement confirming the same. The execution of
such lease amendments shall not be deemed to waive any of the conditions to
Tenant's exercise of the herein option to lease RFO Premises, unless otherwise
specifically provided in such lease amendments.

39.    FORCE MAJEURE. As used in this Lease, "Force Majeure" shall mean,
collectively and individually, strike, lock-out or other labor trouble, fire or
other casualty, governmental preemption of priorities or other controls in
connection with a national or other public emergency or shortages of fuel,
supplies or labor; breakdown; accident; or because of war or other emergency, or
for any cause beyond the reasonable control of the party obligated to, but
prevented from performing. In no event, however, shall Force Majeure apply to
nonpayment of monetary obligations.

40.    ENVIRONMENTAL CONCERNS.

(a)    Landlord represents, warrants and covenants to the best of
its knowledge and belief that (i) Landlord has not caused or permitted any
activity to take place on, in, or under the Premises which has generated,
manufactured, refined, transported, treated, stored, handled, disposed,
transferred, produced, cleaned up or processed any oil, hazardous or toxic
substances or materials, except in compliance with all applicable federal, state
and local laws, regulations, ordinances and orders, and has not caused or
permitted and has no knowledge of any discharge, release, storage, or disposal
of any oil, hazardous or toxic substances or materials, on, in or under the
Premises in violation of any such laws, etc; (ii) Landlord is in compliance with
all federal, state and local requirements relating to protection of health or
the environment in connection with its ownership or use of the Premises; (iii)
there is no action, suit, lien or other proceeding brought by or threatened by
any governmental agency against Landlord or the Premises to enforce any law,
regulation, ordinance or order relating to protection of health or the
environment or any lien, litigation or other proceeding brought or threatened
against the Landlord or the Premises, or any settlements reached by any
person(s) or group(s) alleging the presence, disposal, release, or threatened
release of any oil, hazardous or toxic substance or material, or on arising from
any activity conducted on the Premises; (iv) there are no underground tanks
located on or under the Premises; and (v) there are no PCBs or PCB contaminated
material or asbestos contained in or otherwise present on, in or under the
Premises.

(b)    Tenant shall not (either with or without negligence) cause
or permit the illegal escape, disposal or release of any biologically or
chemically active or other hazardous substances or materials. Tenant shall not
allow the storage or use of such substances or materials in any manner not
sanctioned by law or by the highest reasonable standards prevailing in the
industry for the storage and use of such substances or materials, nor allow to
be brought onto the Property and into the Building and such materials or
substances except to use in the ordinary course of Tenant's business, and then
only after written notice is given to Landlord of the identity of such
substances or materials, except that no such notice need be given with respect
to

29

ordinary cleaning fluids and other materials ordinarily used incident to routine
business office purposes. If and to the extent that, in such notice, Tenant
advises Landlord that the information contained therein constitutes Tenant's
trade secrets, Landlord shall keep such information confidential; provided,
however, the foregoing confidentiality provisions shall not prevent or restrict
Landlord from disclosing such information to Landlord's environmental
consultants, Landlord's existing or prospective mortgagee(s), or to any
governmental authority having jurisdiction with respect to environmental
matters, or as may be otherwise required by any applicable law, rule or
regulation. Without limitation, hazardous substances and materials shall include
those described in the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C., Section 9601 et seq., the Resource
Conservation and Recovery Act, as amended, 42 U.S.C., Section 6901 et seq., any
applicable state or local laws and the regulations adopted under these acts. If
any governmental agency shall ever require testing to ascertain whether or not
there has been any release or that there exists the threat of any release of
hazardous materials as a result of the act or omission of Tenant (or anyone
claiming by, through or under Tenant), its (or their) agents, employees or
contractors, then the reasonable costs thereof shall be paid by Tenant. In
addition, Tenant shall execute affidavits, representations and the like from
time to time at Landlord's reasonable request concerning Tenant's best knowledge
and belief regarding the presence of hazardous substances or materials on the
Premises. In all events, Tenant shall indemnify Landlord in the manner elsewhere
provided in this Lease from any release of hazardous materials on the Premises
occurring while Tenant is in possession, or elsewhere if caused by Tenant or
persons acting under Tenant. The within covenants shall survive the expiration
or earlier termination of the lease term.

41.    SIGNS.

(a)    Subject to Landlord's prior approval, not to be
unreasonably withheld or delayed, Tenant may place (i) Tenant-identification
signs on the entrance doors to the Premises, and (ii) a Tenant-identification
sign on the existing small brick wall located by the driveway entry to the
Property. The Tenant's name, and the name of each division, subsidiary or
affiliate thereof occupying space in the Building, shall be affixed to a
directory board in the Building to be provided by the Landlord at the Landlord'
s expense.

(b)    If Tenant shall occupy the entire second (2nd) floor of
the Building, or otherwise occupy fifty percent (50%) of the Building Rentable
Area, Tenant shall be permitted either to place a Tenant-identification sign on
the exterior of the Building or to construct a free-standing
Tenant-identification sign on the Property, provided that Tenant shall obtain
and maintain in full force and effect all governmental approvals, licenses,
permits and the like required with respect to the installation and/or
maintenance of such sign. Provided further, however, Landlord shall have the
right to pre-approve the location, size and other design features of any such
sign to be installed by Tenant pursuant to this paragraph (b).

(c)    At the expiration or earlier termination of the Term of
this Lease, Tenant shall, at its sole cost and expense, remove any signs
installed by Tenant in or upon the Premises, the Building and/or the Property,
and repair any damage thereto caused by the installation, presence and/or
removal of such sign(s).

30

42.    NOTICE OF LEASE. The parties hereto shall in the form attached
hereto as Exhibit 9 execute a notice of this Lease (including any options or
extensions thereof) for recording purposes. The Tenant shall pay all costs of
recording.

43.    CHANGE OF NAME. If at any time after the execution of this Lease
the Landlord desire to change the existing name of the Building or the
exterior signs now affixed to the Building or the Property, the Landlord shall
notify the Tenant at least sixty (60) days prior to the date of such a change.
If the proposed new name or sign identifies, or in the Tenant's reasonable
judgment may be associated with, a competitor of the Tenant, the Tenant may
require Landlord to refrain from changing the existing name of the Building or
the affixation to the Building or the Property of a new sign.

44.    MISCELLANEOUS PROVISIONS. The Section and paragraph headings
throughout this instrument, and the Table of Contents, are for convenience and
reference only, and shall not be used to construe this Lease; the provisions of
this Lease shall be construed against both parties in accordance with the
language hereof and no prior statements, representations or agreements not
expressly incorporated herein shall be given effect for this purpose; no remedy
or election given by any provision in this Lease shall be deemed exclusive
unless so indicated, but each shall, wherever possible, be cumulative in
addition to all other remedies in law or equity which either party may have
arising out of the default of the other party and failure to cure such default
within the applicable grace period; each provision hereof shall be deemed both a
covenant and a condition running with the land; failure of either party to cure
a default of the other under this Lease shall not render such non-defaulting
party in any way liable therefor, or relieve the defaulting party from any of
its obligations hereunder; the acceptance of possession of the Premises by the
Tenant shall not be deemed a waiver of any of the obligations under this Lease
to be performed by the Landlord; the Landlord hereby covenants that the Tenant
may deal with any person, firm or corporation for services, supplies, materials,
labor, equipment, transportation, tools, machinery and any other similar or
dissimilar services or items in connection with the use and occupation of the
Premises and any work performed therein, subject to express right of Landlord,
under other provisions of this Lease, to review and approve the selection of any
of the foregoing.

45.    BINDING AGREEMENT. This Lease shall bind and inure to the benefit
of the parties hereto and their respective executors, distributees, heirs,
representatives, successors and assigns.

46.    ENTIRE AGREEMENT. This Lease contains the entire agreement of the
parties and may not be modified except by an instrument in writing which is
signed by both parties. No prior statements, representations or agreements not
expressly incorporated therein or herein shall be given effect for this purpose.

31

IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be duly
executed, under seal, by persons hereunto duly authorized, in multiple copies,
each to be considered an original hereof, as of the Execution Date state in
Exhibit 1.

LANDLORD:                                 TENANT:

125 HARTWELL TRUST                        FUJI IMMUNOPHARMACEUTICALS
CORP.

By: /S/ MICHAEL L. COLANGELO              By: /S/ STEPHEN D. GILLIES
--------------------------------          ------------------------------
Michael L. Colangelo,                     Stephen D. Gillies,
As Trustee and Not Individually           President
Hereunto Duly Authorized

32

EXHIBIT 1, SHEET 1

125 Hartwell Avenue
Lexington, Massachusetts
(the "Building")

BASIC PROVISIONS
AND
LEASE REFERENCE DATA

Execution Date:     October 26, 1992

TENANT              Fuji ImmunoPharmaceuticals Corp.
and Original
Address:            a Delaware corporation
(description of business organization

400 Brookline Avenue, Suite 8F
Boston, Massachusetts  02115
(principal place of business-original address)

LANDLORD            125 Hartwell Trust, under a declaration of trust dated
and Original        February 20, 1980 and filed with the Middlesex South
Address:            Registry District of the Land Court as Document No. 600788,
as amended. Mailing Address-- c/o Lexington Management
Incorporated, 62 Massachusetts Avenue, Lexington, MA 02173,
Attention: President

BUILDING:           The building in the town of Lexington, Middlesex County,
Massachusetts, known as and numbered 125 Hartwell Avenue,
and shown as Lot 2 on Land Court Plan No. 23467C, a copy of
which is filed in the Registry of Deeds for the South
Registry District of Middlesex County in Registration Book
852, Page 189, with Certificate of Title No. 144539.

PROPERTY:           The Building and the Land Parcel on which it is located
(including adjacent sidewalks and parking areas).

EXHIBIT 1, SHEET 2

125 Hartwell Avenue
Lexington, Massachusetts
(the "Building")

BASIC PROVISIONS
AND
LEASE REFERENCE DATA

ESTIMATED RENT
COMMENCEMENT        February 1, 1993
DATE:

TERM:               The period commencing (the 'Commencement Date") on the Rent
Commencement Date and expiring on the date immediately
preceding the fifth (5th) anniversary of the Rent
Commencement Date, provided that it the Rent Commencement
Date occurs on any day other than the first day of a
calendar month, the expiration date ("Termination Date")
shall be the last day of the calendar month in which the
fifth (5th) anniversary of the Rent Commencement Date shall
fall, subject to the terms and conditions hereof, including
options to extend.

PREMISES            10,980 (+/-50) square feet of Premises Rentable Area in the
DESCRIPTION AND     Building, substantially as shown on Exhibit 3. The Premises
AREA:               are subject to expansion as provided in Article 38 below.

BUILDING            38,400 square feet.
RENTABLE AREA:

BASIC RENT:         $104,310.00 per year ($8,692.50 per month).

SECURITY DEPOSIT:   N/A

PERMITTED USES:     To be used and occupied by the Tenant for office, research
and development; engineering, education and training of the
Tenant's customers and employees; light assembly and
manufacturing; processing, packaging, marketing, sales and
all other uses or activities incidental or related thereto.

34

EXHIBIT 1, SHEET 3

125 Hartwell Avenue
Lexington, Massachusetts
(the "Building")

BASIC PROVISIONS
AND
LEASE REFERENCE DATA

TENANT'S            10,980 S/F divided by 38,400 S/F or 28.59%
PROPORTIONATE
SHARE:

BUILDING EXPENSE    $172,800.00
BASE:

BROKER:             Ian Grant, Spaulding & Slye Colliers
High Street Tower
125 High Street
16th Floor
Boston, MA  02110

LANDLORD'S          Lexington Management Incorporated
AGENT:              62 Massachusetts Avenue, Lexington, MA  02173

TENANT'S            H. Randolph Lewis
CONSTRUCTION        Olson Lewis
REPRESENTATIVE:     17 Elm Street
Manchester, MA  01944

TENANT'S            Kaplan Corporation, Contractors and Builders
CONTRACTOR:         116 Harvard Street
Brookline, MA  02146

LANDLORD:                                 TENANT:

125 HARTWELL TRUST                        FUJI IMMUNOPHARMACEUTICALS
CORP.

By: /S/ MICHAEL L. COLANGELO              By: /S/ STEPHEN D. GILLIES
--------------------------------          ---------------------------
Michael L. Colangelo, As Trustee          Dr. Stephen D. Gillies,
and Not Individually                      President

35

EXHIBIT 2

125 HARTWELL AVENUE

LEXINGTON, MASSACHUSETTS

BUILDING EXPENSE BASE

BUILDING SIZE - 38,400 RSF

ESTIMATED
COST            PSF
------------   -----------

1.      Property Taxes                        $   75,000       $  1.96
2.      Boston Gas (Heat & Hot Water)         $    7,890           .21
3.      Electricity (House Panel)             $    3,800           .10
4.      Ground Maintenance                    $    8,210           .21
5.      HVAC Maintenance                      $    6,750           .18
6.      Janitorial & Trash Removal            $   38,500       $  1.00
7.      Insurance                             $    6,080           .16
8.      Maintenance & Repairs                 $    4,068           .10
9.      Sewer & Water                         $    3,072           .08
10.     Property Management                   $   19,200           .50
-----------    -----------
TOTAL BUILDING (TAX & OPERATING) EXPENSES     $  172,800       $  4.50

EXHIBIT 3

FLOOR PLANS

EXHIBIT 4

ITEMS OF TENANT'S WORK TO
BE PAID FROM THE PROCEEDS
OF LANDLORD'S CONTRIBUTION

The following items shall be performed, purchased and/or installed, as the
case may be, in the Premises by Tenant and paid for utilizing Landlord's
Contribution, all as set forth in Section 6(e) of the Lease:

1.   new carpet or vinyl composition tile, as Tenant may elect, throughout
the Premises;

2.   repaint all existing walls;

3.   replace broken or damaged acoustical ceiling titles; and

4.   repair or adjust, as appropriate, the existing Building mechanical
systems, consistent with Tenant's requirements contained in Tenant's Plans.

EXHIBIT 5

125 HARTWELL AVENUE
LEXINGTON, MASSACHUSETTS
FACT SHEET

A.   GENERAL

1.   Site                                      4.1 Acres, . 5 Acres
Conservation Land

2.   Building Area                             38,400 rentable square feet/2
floors

3.   Parking                                   140 spaces or 3.8:1 ratio
including 11 visitor spaces and
4 handicapped

4.   Developer Owner                           125 Hartwell Trust

5.   Management                                Lexington Management
Incorporated

B.   CONSTRUCTION MATERIALS INFORMATION

1.   Floor Loading Capacity                    Floor 1 - Slab on grade-150 psf
Floor 2 - 50 psf - Partitions

2.   Glass                                     PPG 1" Solar Cool reflective
insulated glass set in
individual black anodized
frames.

3.   Brick                                     Glen Gery "Dark Ironspot"
4" X 8" utility.

4.   Roof                                      Carlisle .060 EPDM elastomeric
sheet roofing fully adhered
non-ballasted to 2" ISG
insulation.

5.   HVAC System                               Heat is provided through
perimeter baseboard radiation
supplied by a gas fired forced
hot water boiler. Ventilation
and cooling is supplied by two
45 ton roof top variable air
volume units with economizer
cycles. The air distribution
system is medium pressure
through overhead insulated duct
work with variable air.

-Exhibit 5-1-

6.   Sprinklers                                A light service (office/R&D)
wet sprinkler system is
provided throughout.

7.   Electrical Service                        1200 AMP 480/277 Volt - 3 phase
4 wire.

8.   Lobby                                     Features atrium with natural
plant boxes and bench seating,
brick paver flooring, and brick
walls.

9.   Service Core                              Stairs, rest rooms, showers,
freight elevator, boiler and
maintenance rooms are located
in the central service core.

10.  Loading                                   One truck height loading dock
at rear of building.

11.  Drinking Fountain                         One handicapped accessible
drinking fountain per floor.

C.   STANDARDS FOR MATERIALS FOR
NEW TENANT FIT-UP (to be provided by Tenant)

1.   Lighting                                  Columbia "Parabolume" low
brightness 2X4 fixtures with
energy saving ballasts.

2.   Doors                                     Interior doors will be solid
core birch paint grade wood
paneled in welded metal door
frames. Size - 3' X 7'0".

3.    Hardware                                  Entrance Door: Sargent lever
handled mortise handset.
Interior Doors: Sargent 7 line
lever handled, latchsets or
equivalent. Hinges: Stanley 4
Knuckle Butts, 1 1/2 pair per
frame. Finish: Brushed
Chrome.

4.   Ceiling                                   Exposed 'T' 24" X 48" X 5/8"
thick lay in acoustical panel
system. Armstrong "Shasta".
Ceiling heights to be finished
at 8'6". Volume units to
control space temperature.

5.   Flooring                                  Philadelphia "Evolution" 32 oz.
Commercial continuous filament
nylon carpet, or Armstrong

-Exhibit 5-2-

"Excellon" vinyl composition
tile.

6.   Paint                                     Benjamin Moore latex "eggshell"
wall paint. Benjamin Moore
"semi gloss" oil paint on all
doors and frames.

7.   Sun Control                               1" Levelor Horizontal Blinds at
all Exterior Glass.

-Exhibit 5-3-

EXHIBIT 6

RULES AND REGULATIONS

Tenant shall comply with the following Rules and Regulations and with such
other reasonable Rules and Regulations as Landlord may promulgate for the
Building and the Park:

(1)  The sidewalks, entrances, driveways, stairways and halls shall not be
obstructed or encumbered by any tenant or used for any purpose other than for
ingress to and egress from the leased Premises and for delivery of merchandise
and equipment in a prompt and efficient manner using loading docks and
passageways designated for such delivery by Landlord. There shall not be used in
any space, either by any tenant or by jobbers or others in the delivery or
receipt of merchandise, any hand trucks, except those equipped with rubber tires
and sideguards.

(2)  The water and wash closets and plumbing fixtures shall not be used for
any purposes other than those for which they were designed or constructed and no
sweepings, rubbish, rags, or acids or other substances shall be deposited
therein, and the expense of any breakage, stoppage or damage resulting from the
violation of this rule shall be borne by the tenant who, or whose agents,
employees or visitors, shall have caused it.

(3)  No carpet, rug or other article shall be hung or shaken out of any 
window of the Building; and no tenant shall sweep or throw or permit to be 
swept or thrown from the leased Premises any dirt or other substances out of 
the doors or windows or stairways of the Building and no tenant shall use, 
keep or permit to be used or kept any foul or noxious gas or substance in its 
leased Premises or permit or suffer its leased Premises to be occupied or 
used in a manner offensive or objectionable to Landlord or other occupants of 
the Building by reason of noise, odors and/or vibrations, or interfere in any 
way with other tenants or those having business therein, nor shall any 
animals or birds be kept in or about the Building, except that Tenant may 
keep animals or birds, etc. on the Premises necessary for the conduct of its 
business therein, subject to the conditions set forth in clause (i) of the 
last sentence of Section 24 of the Lease to which these Rules and Regulations 
are attached.

(4)  No awnings or other projections shall be attached to the outside walls
of the Building without the prior written consent of the Landlord.

(5)  No sign, advertisement, notice or other lettering shall be exhibited,
inscribed, painted or affixed by any tenant on any part of the outside of the
lease Premises or the Building or the inside of the leased Premises if the same
is visible from the outside of the leased Premises without prior written consent
of the Landlord. In the event of the violation of the foregoing by

-Exhibit 6-1-

any tenant, Landlord may remove same without any liability, and may charge the
expense incurred by such removal to the tenant(s) violating this rule.

(6)  No tenant shall mark, paint, drill into, or in any way deface any part
of the leased Premises or the Building of which they form a part. No boring,
cutting or stringing of wires shall be permitted, except with the prior written
consent of Landlord, and as Landlord may direct. No tenant shall lay linoleum,
or other similar floor covering, so that the same shall come in direct contact
with the floor of the leased Premises, and, if linoleum or other similar floor
covering is desired to be used, an interlining of builder's deadening felt shall
be first affixed to the floor, by a paste or other material, soluble in water,
the use of cement or other similar adhesive material being expressly prohibited.

(7)  No additional locks or bolts of any kind shall be placed upon any of
the doors or windows by any tenant, nor shall any changes be made in existing
locks or mechanism thereof. Each tenant must, upon the termination of its
tenancy, restore to Landlord all keys of stores, offices and electrical rooms,
either furnished to, or otherwise procured by, such tenant, and in the event of
the loss of any keys so furnished, such tenant shall pay to Landlord the cost
thereof.

(8)  Freight, furniture, business equipment, merchandise and bulky matter
of any description shall be delivered to and removed from the leased Premises
only on loading dock(s) in the rear of the leased Premises.

(9)  Canvassing, soliciting and peddling in the Building and the Park is
prohibited and each tenant shall cooperate to prevent the same.

(10) Landlord shall have the right to prohibit any advertising by any
tenant which, in Landlord's opinion, tends to impair the reputation of the
Building or its desirability as a Building for offices, research and development
and light assembly, and upon written notice from Landlord, such tenant shall
refrain from or discontinue such advertising.

(11) No tenant shall bring or permit to be brought or kept in or on the
leased Premises, any inflammable, combustible or explosive fluid, material,
chemical or substance, without the prior written consent of Landlord, which
consent will not be unreasonably withheld or delayed (except that chemicals,
combustible or otherwise, shall be permitted on the Premises, without Landlord's
consent, as necessary for the conduct of Tenant's business therein, subject to
the provisions of Section 40(b) of the Lease to which these Rules and
Regulations are attached), or cause or permit any odors of cooking or other
processes, or any unusual or other objectionable odors to permeate in or emanate
from the leased Premises.

-Exhibit 6-2-

EXHIBIT 7

CLEANING SPECIFICATIONS

1.   CLEANING: Cleaning and janitor services as provided below:

A:   OFFICE AREAS.

Daily (Monday through Friday, inclusive, holiday excepted):

1.   Empty and clean all waste receptacles and ash trays and remove waste
material from the Premises; wash receptacles as necessary.

2.   Sweep and dust mop all uncarpeted areas using a dust treated mop.

3.   Vacuum all rugs and carpeted areas.

4.   Hand dust and wipe clean with treated cloths all horizontal surfaces,
including furniture, office equipment, window sills, chair rails, convector
tops, door ledges, base boards, and grill work, within normal reach.

5.   Wash clean all water fountains and adjacent floor areas.

6.   Upon completion of cleaning, all lights will be turned off and all doors
locked, leaving the Premises in an orderly condition.

Weekly:

1.   Brush and hand dust all carpet edges or other areas non-accessible to
vacuum attachments.

2.   Remove all finger marks from private entrance doors, light switches and
doorways.

3.   Dust all ventilating, air conditioning, louvers and grills.

Every Month or When Needed:

1.   All resilient tile floors to be washed or cleaned with dry system cleaner.

Quarterly:

1.   Dusting of accessible surfaces not reached by daily cleaning.

2.   Move and vacuum clean underneath all furniture that can reasonably be
moved.

-Exhibit 7-1-

3.   Clean inside of all windows as needed. Clean outside of all windows weather
permitting.

B.   LAVATORIES.

Daily (Monday through Friday, inclusive, holiday excepted):

1.   Sweep and wash floors.

2.   Wash and polish all mirrors, powder shelves, bright work, flushometers,
piping and toilet seat hinges.

3.   Wash both sides of all toilet seats.

4.   Wash all basins, bowls and urinals.

5.   Dust all partitions, tile walls, dispensers and receptacles.

6.   Dust and clean all powder room fixtures.

7.   Empty and clean paper towel and sanitary disposal receptacles.

8.   Remove waste paper and refuse from the Premises.

9.   Refill tissue holders, soap dispensers, towel dispenser, sanitary
dispensers, materials to be furnished by Lessor.

Monthly:

1.   Machine scrub lavatory floors.

2.   Wash all partitions and tile walls in lavatories.

C.   MAIN LOBBIES, ELEVATORS, STAIR WELLS AND COMMON CORRIDORS

Daily (Monday through Friday, inclusive, holidays excepted):

1.   Sweep and wash all floors, empty and clean waste receptacles, dispose of
waste.

2.   Wash all rubber mats.

3.   Clean elevators, wash or vacuum floors, wipe down walls and doors.

4.   Clean any metal work inside lobbies.

5.   Clean any metal work surrounding Building entrance doors.

6.   Clean glass in the common areas, including interior of elevator cabs and
entrance vestibules, but excluding glass in atriums.

-Exhibit 7-2-

Monthly:

1.   All resilient tile floors in public areas to be washed and waxed or cleaned
with dry system cleaner.

-Exhibit 7-3-

EXHIBIT 8

[ILLEGIBLE] ORD. CERTIFICATE OF INSURANCE                                                                  ISSUE DATE (MM/DD/YY)
10/14/92
------------------------------------------------------------------------------------------------------------------------------------
THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE
CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED
BY THE POLICIES BELOW.
[ILLEGIBLE] E A STEVENS CO INC            ------------------------------------------------------------------------------------------
[ILLEGIBLE] 389 MAIN ST BOX 188                                              COMPANIES AFFORDING COVERAGE
[ILLEGIBLE] MALDEN       MA 02148-5076    ------------------------------------------------------------------------------------------
COMPANY A       CONTINENTAL INS COS
LETTER
------------------------------------------------------------------------------------------
----------------------------------------- COMPANY B
LETTER
------------------------------------------------------------------------------------------
[ILLEGIBLE] LEXINGTON MANAGEMENT          COMPANY C       CONTINENTAL INS COS
[ILLEGIBLE] 62 MASSACHUSETTS AV           LETTER
[ILLEGIBLE] LEXINGTON    MA 02173         ------------------------------------------------------------------------------------------
COMPANY D
LETTER
------------------------------------------------------------------------------------------
COMPANY E       CONTINENTAL INS COS
LETTER
------------------------------------------------------------------------------------------------------------------------------------
[ILLEGIBLE]
------------------------------------------------------------------------------------------------------------------------------------

[ILLEGIBLE] IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN
ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD [ILLEGIBLE] DATED,
NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER
DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN,
THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE
TERMS, [ILLEGIBLE] AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN
REDUCED BY PAID CLAIMS.

POLICY EFFECTIVE  POLICY EXPIRATION
TYPE OF INSURANCE                     POLICY NUMBER   DATE (MM/DD/YY)   DATE (MM/DD/YY)                 LIMITS
------------------------------------------------------------------------------------------------------------------------------------

[ILLEGIBLE] LIABILITY                    0610096893           7/15/92            7/15/93   GENERAL AGGREGATE             $ 2,000,000
-----------------------------------------
[ILLEGIBLE] COMMERCIAL GENERAL                                                             PRODUCTS COMP/OF AGG.         $ 2,000,000
LIABILITY
-----------------------------------------
[ILLEGIBLE] / / CLAIMS MADE /X/ OCCUR.                                                     PERSONAL & ADV. INJURY        $ 1,000,000
-----------------------------------------
[ILLEGIBLE] OWNER'S & CONTRACTOR'S                                                         EACH OCCURENCE                $ 1,000,000
[ILLEGIBLE]
-----------------------------------------
FIRE DAMAGE (Any one          $    50,000
[ILLEGIBLE])
-----------------------------------------
MED. EXPENSE (Any             $     5,000
[ILLEGIBLE])
------------------------------------------------------------------------------------------------------------------------------------
[ILLEGIBLE] LIABILITY                                                                      COMBINED SINGLE               $
LIMIT
[ILLEGIBLE] AUTO                                                                           -----------------------------------------

[ILLEGIBLE] ALL OWNED AUTOS                                                                BODILY INJURY                 $
([ILLEGIBLE])
[ILLEGIBLE] SCHEDULED AUTOS                                                                -----------------------------------------

[ILLEGIBLE] HIRED AUTOS                                                                    BODILY INJURY                 $
PER ACCIDENT
[ILLEGIBLE] NON-OWNED AUTOS                                                                -----------------------------------------

[ILLEGIBLE] GARAGE LIABILITY                                                               PROPERTY DAMAGE               $
------------------------------------------------------------------------------------------------------------------------------------
[ILLEGIBLE] LIABILITY                    0610096893           7/15/92            7/15/93   EACH OCCURRENCE               $ 2,000,000
-----------------------------------------
UMBRELLA FORM                                                                              AGGREGATE                     $ 2,000,000
-----------------------------------------
[ILLEGIBLE] OTHER THAN UMBRELLA FORM                                                       [ILLEGIBLE]
------------------------------------------------------------------------------------------------------------------------------------
STATUTORY LIMITS
[ILLEGIBLE] WORKER'S COMPENSATION                                                          -----------------------------------------
EACH ACCIDENT                 $
AND                                                                               -----------------------------------------
DISEASE--POLICY LIMIT         $
[ILLEGIBLE] EMPLOYERS' LIABILITY                                                           -----------------------------------------
DISEASE--EACH EMPLOYEE        $
------------------------------------------------------------------------------------------------------------------------------------
0610096893           7/15/92            7/15/93
[ILLEGIBLE] PROPERTY
------------------------------------------------------------------------------------------------------------------------------------
[ILLEGIBLE] OF OPERATIONS/LOCATIONS/VEHICLES/SPECIAL ITEMS
[ILLEGIBLE] 125 HARTWELL AVE LEXINGTON MA BLANKET BLDG LIMIT @ $13391000 DED $1000 [ILLEGIBLE] REPLACEMENT COST COVERAGE AGREED
AMOUNT CLAUSE LOSS OF RENT COVERAGE @ [ILLEGIBLE] 000 BLDG LIMIT FOR LOCATION @ $2671000
------------------------------------------------------------------------------------------------------------------------------------
[ILLEGIBLE] HOLDER                                      CANCELLATION
------------------------------------------------------------------------------------------------------------------------------------
SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE
[ILLEGIBLE] FUJI - IMMUNO - PHARMACEUTICAL               EXPIRATION DATE THEREOF, THE ISSUING COMPANY WILL ENDEAVOR TO MAIL 30 DAYS
[ILLEGIBLE] 125 HARTWELL AVE                             WRITTEN NOTICE TO THE CERTIFICATE HOLDER NAMED TO THE LEFT, BUT FAILURE TO
[ILLEGIBLE] LEXINGTON MA01940                            MAIL SUCH NOTICE SHALL IMPOSE NO OBLIGATION OR LIABILITY OF ANY KIND UPON
THE COMPANY, ITS AGENTS OR REPRESENTATIVES.
---------------------------------------------------------------------------
AUTHORIZED [ILLEGIBLE]
/s/ [ILLEGIBLE]

EXHIBIT 9

NOTICE OF LEASE

In accordance with Massachusetts General Laws
Chapter 185, Section 71

Date of Execution:         October 23, 1992

Description of
Premises Leased:           10, 980 (+/- 50) square feet of Premises in the
building in the Town of Lexington, Middlesex County,
Massachusetts, known as and numbered 125 Hartwell
Avenue. Said building is located on land shown as Lot
2 on Land Court Plan No. 23467C, a copy of which is
filed in the Registry of Deeds for the South Registry
District of Middlesex County in Registration Book
852, Page 189, with Certificate of Title No. 144539.

Term:                      The period commencing on the Rent Commencement Date
(as defined in the Lease) and expiring on the date
immediately preceding the fifth (5th) anniversary of
the Rent Commencement Date, provided that if the Rent
Commencement Date occurs on any day other than the
first day of a calendar month, the expiration date
("Termination Date") shall be the last day of the
calender month in which the fifth (5th) anniversary
of the Rent Commencement Date shall fall, subject to
rights of extension as described herein.

Estimated Rent Commencement Date is February 1, 1993.

Rights of Extension and
Expansion:                 Two consecutive five (5) year options to extend the
Lease term. Rights of first refusal to lease
additional promises on the 2nd floor of the Building
after the initial leasing thereof.

This Notice of Lease has been executed for recording purposes only, and shall
not be deemed to amend or supplement the Lease. In the event of any conflict
between the provisions of this Notice of Lease and the provisions of the Lease,
the provisions of the Lease shall control.

-Exhibit 9-1-

Signed, sealed and delivered this 23rd day of October, 1992.

LESSOR

125 HARTWELL TRUST*

By:
-----------------------------------------
Michael L. Colangelo, as Trustee
of 125 Hartwell Trust and not
individually

LESSEE

FUJI IMMUNOPHARMACEUTICALS CORP.

By:
-----------------------------------------
Stephen D. Gillies, President

*125 Hartwell Trust, under a declaration of trust dated February 20, 1980 and
filed with the Middlesex South Registry District of the Land Court as Document
No. 600788, as amended; Mailing Address - c/o, Lexington Management
Incorporated, 62 Massachusetts Avenue, Lexington, NA 02173, Attention:
President.

COMMONWEALTH OF MASSACHUSETTS

______________, SS.                                         October ____, 1992

Then personally appeared before me the above-named Michael L. Colangelo,
Trustee of the 125 Hartwell Trust and acknowledged the foregoing to be his free
act and deed as Trustee, as of the date first above written.

-----------------------------------------
Notary Public
(Seal)                                 My Commission Expires:

-Exhibit 9-2-

COMMONWEALTH OF MASSACHUSETTS

_____________, SS.                                           October ___, 1992

Then personally appeared before me the above-named Stephen D. Gillies,
President of Fuji ImmunoPharmaceuticals Corp., and acknowledged the foregoing to
be his free act and deed and the duly authorized free act and deed of Fuji
ImmunoPharmaceuticals Corp., as of the date first above written.

-------------------------------------------
Notary Public
(Seal)                             My Commission Expires:

-Exhibit 9-3-

EXHIBIT 10

FLOOR PLAN

125 Hartwell Avenue

Lexington, Massachusetts
(the "Building")

FIRST AMENDMENT
As of January 31, 1993

LANDLORD:                  125 Hartwell Trust

TENANT:                    Fuji ImmunoPharmaceuticals Corp.

EXISTING PREMISES:         An area containing 1.0,980 (+/-50) square
feet of Premises Rentable Area located on
the second (2nd) floor of the Building,
substantially as shown on Exhibit 3 to the
Lease.

ORIGINAL  LEASE EXECUTION DATE:      October 26, 1992
LEASE
DATA:     PREVIOUS LEASE             None
AMENDMENTS:

ADDITIONALPREMISES:        An area containing 8,830 square feet of
Premises Rentable Area located on the
second (2nd) floor of the Building,
substantially as shown as the "RFO
Premises" on Exhibit 3 to the Lease.

WHEREAS, Tenant desires to lease additional premises in the Building, to
wit, the Additional Premises; and

WHEREAS, Landlord is willing to lease the Additional Premises to Tenant
on the terms and conditions hereinafter set forth.

NOW THEREFORE, the above-described lease (the "Lease") is hereby amended
as follows:

1.     MATTERS PERTAINING TO THE EXISTING PREMISES.

Landlord and Tenant wish to confirm certain understandings with
respect to the Existing Premises.

Accordingly, Landlord and Tenant hereby acknowledge and agree that:

A.     The Commencement Pate in respect of the Existing Premises
shall be February 1, 1993.

B.     The Rent Commencement Date in respect of the Existing
Premises shall be February 1, 1993.

C.     The Termination Date in respect of the Existing Premises
shall be January 31, 1998, subject to the options to extend set forth in Section
36 of the Lease.

D.     The Basic Rent in respect of the Existing Premises shall be
increased to $115,290.00 per year (i.e., $9,607.50 per month).

E.     Section 6(g) of the Lease is hereby deleted in its
entirety.

F.     The following clause (10) is hereby added to Section 12(a)
of the Lease before the last sentence thereof:

(10) Air conditioning in accordance with seasonal
requirements on Mondays' through Fridays (except legal
holidays) from 8:00 am. to 6:00 p.m. and at such additional
times as may be requested by Tenant from tine to time upon
reasonable advance notice to Landlord. Landlord's cost of
supplying such additional service shall be paid by Tenant
or alternatively shall be shared proportionately between
Tenant and other tenants, if any who request such service.
Any such costs for additional air conditioning services
whether requested by Tenant or other tenants in the
Building shall not be included in Operating Costs but
calculated as a separate charge to Tenant, and/or other
tenants, by Landlord.

G.     The first sentence of section 12(b) of the Lease is hereby
deleted and replaced by the following:

Tenant shall contract directly with the electric utility
supplier to furnish electric current to the Premises
through the existing utility facilities serving the
Building for lighting, outlets and equipment installed by
Tenant.

H.     Section 12(c) of the Lease is hereby deleted in its
entirety.

I.     The parenthetical at the end of clause (a) of Section 14(a)
(ii) of the Lease is hereby deleted in its entirety.

J.     The Building Expense Base in respect of the Existing
premises shall be increased to $211,200.00. In furtherance thereof:

(i)    Exhibit 2 to the Lease is hereby deleted and
replaced by Exhibit 2 attached hereto and made a part hereof; and

(ii)   The figures "$198,720.00" and "$228,528.00" as they
appear in Section 14(a) (v) of the Lease are hereby deleted and the figures
"$242,880.00" and "$279,312.00", respectively, are inserted, in place thereof.

2

K.     Tenant has installed supplemental roof-top HVAC units to
provide additional heat and air conditioning to the Existing Premises. Such
units have been separately metered by Tenant for gas and electricity. Tenant
shall pay all charges as reflected on such meters directly to the applicable
utility suppliers. Tenant shall maintain and keep such meters in good condition
and repair throughout the Text of the Leans. Landlord and Tenant further
acknowledge and agree that any supplemental roof-top HVAC units which Tenant
intends to install to provide additional heat end air conditioning to the
Additional Premises (which installation shall be subject to the terms and
conditions of the Lease, as hereby amended) shall be connected by Tenant to the
meters measuring the consumption of gas and electricity with respect to the
roof-top HVAC units serving the Existing Premises, and Tenant shall pay all
charges as reflected on such meters directly to the applicable utility
suppliers, as aforesaid.

L.     Section 18(b) of the Lease is hereby deleted in its
entirety.

2.     DEMISE OF ADDITIONAL PREMISES

Landlord hereby demises and leases to Tenant, and Tenant hereby
hires and takes from Landlord, the Additional Premises. Said demise of the
Additional Premises shall be upon all of the same tens and conditions of the
Lease (as hereby amended) applicable to the Existing Premises (including,
without limitation, the Commencement Pate of February 1, 1993, the Rent
Commencement Date of February 1, 1993, the Termination Date of January 11, 1998
(which shall be subject to the options to extend set forth in Section 36 of the
Lease), and the Building Expense Base of $211,200.00), except as follows:

A.     The Basic Rent payable in respect of the Additional
Premises shall be as follows:

(i)    For the period commencing on the Rent Commencement
Date (i.e., February 1, 1993) and ending on January 31, 1994, an amount (the
"Base Additional Premises Rental Amount") equal to $39,735.00 per year (i.e.,
$3,311.25 per month). Notwithstanding anything to the contrary herein contained,
if Tenant shall occupy any portion of the Additional Premises for the conduct of
its business prior to February 1, 1994, then the Base Additional Premises Rental
Amount for the period from the date that Tenant first occupies such portion of
the Additional Premises for the conduct of its business through January 31, 1994
shall be increased by the product of (I) Seven Dollars ($7.00) per square foot
of Premises Rentable Area per year, multiplied by (II) the number of square feet
of Premises Rentable Area of such portion of the Additional Premises occupied by
Tenant for the conduct of its business (e.g., if Tenant occupies 4,415 square
feet of Premises Rentable Area of the Additional Premises on August 1, 1993,
then the Base Additional Premises Rental Amount as of August 1, 1993 shall be
increased from $39,735.00 per year to $70,640.00 per year); and

(ii)   For the period commencing on February 1, 1994 and
ending on the Termination Date (i.e., January 31, 1998), $101,545.00 per year
(i.e., $8,462.08 per month).

Accordingly, the Basic Rent payable in respect of all premises demised by Tenant
under the Lease (i.e., the Existing Premises and the Additional Premises) shall
be as follows:

3

(x)    For the period commencing on the Rent -
Commencement Date and ending on January 31, 1994, an annual amount equal to the
sum of (A) $115,290.00, plus (B) the Base Additional Premises Rental Amount (as
and to the extent the same may be increased in accordance with clause (i)
above); and

(y)    For the period commencing on February 1, 1994
and ending on the Termination Pate, $216,835.00 per year (i.e., $18,069.58 per
month).

B      Tenant's Proportionate Share in respect of the Additional
Premises shall be 8,830 S/F divided-by 36,400 S/F, or 23.00%. Accordingly,
Tenant's Proportionate Share in respect of all premises demised by Tenant under
the Lease (i.e., the Existing Premises and the Additional Premises) shall be
51.59%.

C.     In accordance with section 2 of the Lease, Tenant shall, by
reason of the demise of the Additional Premises, be entitled to an additional
thirty-four (34) parking spaces in the paved parking area located adjacent to
the Building as shown cm Exhibit 3 to the Lease, the use of which spaces shall
be subject to the same tens and conditions of the Lease applicable to the
original forty-one (41) spaces provided to Tenant incident to its lease of the
Existing Premises. Accordingly, the total number of parking spaces which
Landlord shall provide and maintain for the use of Tenant's employees and
invitees pursuant to Section 2 of the Lease shall be seventy-five (75).

D.     Section 6 at the Lease shall not apply to the Additional
Premises, except to the extent otherwise provided in Paragraph 3 of this First
Amendment.

E.     Any other provisions of the Lease inconsistent with this
First Amendment or the state of facts contemplated hereby.

3.     CONDITION OF ADDITIONAL PREMISES

A.     Tenant hereby accepts the Additional Premises in their
"as-is" condition (i.e., in the condition which they are in as of the
Commencement Date in respect of the Additional Premises) without any obligation
on the part of Landlord to prepare or construct the Additional Premises for
Tenant's occupancy. Tenant shall, at Tenant's sole cost and expense, subject to
the provisions of subparagraph C below, prepare the Additional Premises for
Tenant's occupancy (except as described in subparagraph D below). Tenant shall
use all reasonable diligence to perform its work ("Tenant's Additional Premises
Work") in the Additional Premises in a timely manner.

B.     Tenant's Additional Premises Work shall be performed by
Tenant subject to, in accordance with and upon the same terms and conditions of
sections 6(b), (c), (d) and (h) of the Lease applicable to the performance of
Tenant's Work in the Existing Premises, except as follows:

(i)    The last sentence of Section 6(b) of the Lease shall
have no force or effect upon, nor applicability to, the Additional Premises or
Tenant's Additional Premises Work. Tenant shall have the right, subject to the
terms and conditions of Sections 6(b), (c), (d)

4

and (h) end the other relevant provisions of the Lease (as hereby amended), to
install supplemental roof-top HVAC units to provide additional beat and air
conditioning to the Additional Premises.

(ii)   Tenant's termination right set forth in Section 6(c)
of the Lease, as it relates to Tenant's Additional Premises Work, shall apply
only to the Additional Premises and not the Existing Premises (i.e., in the
event that such right of termination arises in connection with the performance
of Tenant's Additional Premises Work, Tenant shall have the right to terminate
the Tern of the Lease only in respect of the Additional Premises)

(iii)  Tenant's general contractor and all so-called "major
trade" subcontractors (which shall include, but-not be limited to, electrical,
HVAC, plumbing, drywall and acoustical ceiling subcontractors) and such other
contractors as Tenant intends to engage in connection with the performance of
Tenant's Additional Premises Work shall be subject to Landlord's prior consent,
which consent shall not be unreasonably withheld or delayed For purposes hereof,
the term "Tenant's Contractor" as used in sections 6(d) and (h) of the Lease
shall mean the general contractor (to be approved by Landlord, as aforesaid)
which Tenant shall engage in connection with the performance of Tenant's
Additional Premises Work.

(iv)   Tenant hereby acknowledges that, unlike the
situation with respect to the performance of Tenant's Work for the Existing
Premises, the portion of the first (1st) floor of the Building over which the
Additional Premises are located is, and during the construction of Tenant's
Additional Premises Work will be, occupied by another tenant (the "First Floor
Tenant"). Accordingly, and without limiting anything contained in Section 6(d)
of the Lease, Tenant agrees to perform Tenant's Additional Premises Work, and to
cause its contractors to perform Tenant's Additional Premises Work, in a manner
which will not materially interfere with the use and occupancy of such portion
of the first (1st) floor of the Building by the First Floor Tenant. If any
portion of Tenant's Additional Premises Work will, in Landlord's reasonable
judgment, materially interfere with the business operations of the First Floor
Tenant (such as, but not limited to, penetrations into the floor of the
Additional Premises), Landlord shall have the right to require such portion of
Tenant's Additional Premises Work to be performed during non-business hours. To
assist Landlord in determining whether any portion of Tenant's Additional
Premises Work will materially interfere with the business operations of the
First Floor Tenant, Tenant shall provide Landlord with a reasonably detailed
construction schedule setting forth the date(s) and times on and during which it
is anticipated that each portion of Tenant's Additional Premises Work will be
performed. Such construction schedule shall be given to Landlord prior to the
commencement of Tenant's Additional Premises Work, and Tenant shall promptly
advise Landlord of any change in or deviation from such schedule and submit to
Landlord a revised construction schedule reflecting any such change or
deviation. Tenant agrees that the second and third sentences of Section 11 of
the Lease shall, without limitation, apply to any damage to the premises or the
property of the First Floor Tenant caused by or attributable to the performance
of Tenant's Additional Premises Work, and that the provisions of clause (ii) of
the first sentence of Section 16(a) of the Lease, as well as the provisions of
the last sentence of Section 16(a) of the Lease, shall, without limitation,
apply to any liability to the First Floor Tenant with respect thereto.

5

C.     Landlord shall contribute an amount up to $44,150.00
("Landlord's Additional Praises Contribution") expressly for the purchase and
installation of the items of work set forth in Exhibit 4 to the Lease, which
Tenant shall purchase and install as part of Tenant's Additional Premises Work.
An such items set forth in said Exhibit 4 shall be at least equal to the quality
of items set forth in Part C of Exhibit 5 to the Lease. Landlord's Additional
Premises contribution shall be used for no purpose other than for the purchase
and installation of the items listed in said Exhibit 4. Landlord shall pay
amounts on account of Landlord's Additional Premises Contribution directly to
contractors or suppliers upon receiving from Tenant actual vendor invoices for
labor and/or materials billed to Tenant. There shall be no credit due Tenant for
any unused portion of Landlord's Additional Premises Contribution. Section 6(e)
of the Lease shall not apply to the Additional Premises; but nothing herein
shall relieve Landlord of its obligation to contribute Landlord's Contribution
as provided in said Section 6(e) with respect to the performance of Tenant's
Work in the Existing Premises.

D.     Notwithstanding the foregoing, Landlord shall, at its own
cost and expense, install a sprinkler system as described in Exhibit 5 to the
Lease for the Additional Premises and a firs protection system as required by
all applicable federal, state or local requirements for the Additional Premises,
to the extent applicable to general office space. The last two sentences of
Section 6(f) of the Lease shall apply to the Additional Premises and Tenant's
Additional Premises Work, MUTATIS MUTANDIS.

4.     TENANT'S RIGHT OF FIRST OFFER

As Tenant's lease Of the Additional Premises constitutes the
remaining space on the second (2nd) floor of the Building, Section 38 at the
Lease is hereby deleted from the Lease in its entirety.

5.     PREMISES

Unless the context otherwise requires (e.g., in Section 6 of the
Lease), the term "Premises" as used in the Lease (as hereby amended) shall refer
to both the Existing Premises and the Additional Premises.

6.     HEADINGS

Titles and paragraph headings are for reference purposes and for
convenience of the parties only and shall have no bearing upon, nor force or
effect in respect of, the interpretation and application of the substantive
provisions in this First Amendment contained.

6

As hereby amended, the Lease is ratified, approved and confirmed in all
respects.

EXECUTED under seal as of the date first written above.

LANDLORD:                                 TENTANT:

125 HARTWELL TRUST                        FUJI IMMUNOPHARMACEUTICALS
CORP.

By:  /S/ MICHAEL L. COLANGELO             By:  /S/ DR. STEPHEN D. GILLIES
--------------------------------          ------------------------------
Michael L. Colangelo, As Trustee          Dr. Stephen D. Gillies,
and Not Individually                      President

7

EXHIBIT 2

125 HARTWELL AVENUE

LEXINGTON, MASSACHUSETTS

BUILDING EXPENSE BASE

BUILDING SIZE - 38,400 RSF

ESTIMATED
COST         PSF
---------   --------

1.      Property Taxes                                 $  75,200   $   1.96
2.      Boston Gas (Heat & Hot Water)                      7,890        .21
3.      Boston Edison (Cooling)                           38,400       1.00
4.      Electricity (House Panel)                          3,800        .10
5.      Grounds Maintenance                                8,240        .21
6.      HVAC Maintenance                                   6,750        .18
7.      Janitorial & Trash Removal                        38,500       1.00
8.      Insurance                                          6,080        .16
9.      Maintenance & Repairs                              4,068        .10
10.     Sewer & Water                                      3,072        .08
11.     Property Management                               19,200        .50
--------   --------
TOTAL BUILDING (TAX & OPERATING) EXPENSES              $ 211,200   $   5.50

125 Hartwell Avenue
Lexington, Massachusetts
(the "Building")

SECOND AMENDMENT
October 1, 1997

LANDLORD:                  125 Hartwell Trust, under a declaration of
trust dated February 20, 1980 and filed
with the Middlesex South Registry District
of the Land Court as Document No. 600788,
as amended

TENANT:                    Fuji ImmunoPharmaceuticals Corp., a
Delaware corporation

PREMISES:                  Approximately 19,810 square feet of
Premises Rentable Area on the second (2nd)
floor of the Building, consisting of
approximately 10,980 square feet of
Premises Rentable Area under the original
Lease shown as the leased premises on
EXISTING                             Exhibit 3 thereto, plus approximately 8,830
LEASE                                square feet of Premises Rentable Area added
DATA:                                by the First Amendment referred to below
shown as the "RFO Premises" on said Exhibit
3.

LEASE EXECUTION DATE:      October 26, 1992

TERMINATION DATE:          January 31, 1998

PREVIOUS LEASE             First Amendment dated as of January
AMENDMENTS:                31, 1993

EXTENDED TERMINATION       January 31, 2003 (subject to Tenant's
DATE:                      option to further extend the Term pursuant
to Section 36 of the lease)

WHEREAS, Tenant has, by notice dated July 28, 1997, a copy of which is
attached hereto as Exhibit A, exercised its option to extend the Term of the
lease for the first five-(5)-year additional term provided for in Section 36 of
the lease;

WHEREAS, the parties have agreed upon the Basic Rent and the Building
Expense Base for such additional term pursuant to Sections 36 and 37 of the
Lease; and

WHEREAS, the parties wish to confirm such lease extension, Basic Rent and
Building Expense Base and the other terms and conditions to apply during such
additional term.

NOW THEREFORE, the parties hereby agree that the above referenced lease,
as amended by the aforesaid First Amendment (collectively, the "Lease"), is
hereby further amended as follows (capitalized terms used herein without
definition shall have the meanings ascribed to them in the Lease):

1.     EXTENSION OF TERM OF LEASE

The Term of the Lease is hereby extended for an additional term
commencing as of February 1, 1998 and expiring as of January 31, 2003. The
demise of the Premises for such additional term shall be upon all of the same
terms and conditions of the Lease in effect immediately preceding the
commencement of such additional term, except as fol1ows:

A.     The Basic Rent payable in respect of the Premises during the
additional term shall be $495,250.00 per annum (i.e., $41,270.83 per month).
Tenant's obligation to pay Basic Rent at such new rate and to pay all other
charges under the Lease with respect to the additional term shall commence on
February 1, 1998. The current Basic Rent and charges under the Lease shall
remain in effect prior to said date.

B.     The Building Expense Base during the additional term shall be the
actual amount of Building Expenses for calendar year 1997. Further in such
regard, the Building Expense Cap for calendar year 1998 shall be one hundred
fifteen percent (115%) of the Building Expenses for calendar year 1997.
Thereafter, the Building Expense Cap shall be increased each Year so as to equal
one hundred fifteen percent (115%) of the Building Expense Cap for the prior
Year. Building Expense Escalation Charges payable by Tenant in respect of the
additional term shall be calculated using such revised Building Expense Base,
and Building Expenses during such additional term shall be subject to the
applicable Building Expense Cap as set forth above.

C.     Landlord shall have no obligation to renovate or construct any new
improvements in the Premises (or to provide any construction allowance or
contribution or the like) for or with respect to Tenant's occupancy during the
additional term.

D.     In the event any of the provisions of the Lease are Inconsistent
with this Second Amendment or the state of facts contemplated hereby, the
provisions of this Second Amendment shall control.

Without limiting the foregoing, Tenant shall have its remaining option to
further extend the Term of the Lease for one (1) additional five (5) year period
(i.e., February 1, 2003 through January 31, 2008) subject to and in accordance
with Section 36 of the Lease.

2.     BROKER

If any commission, fee or other compensation shall be due, with respect
to this Second Amendment and the extension of the Term effected hereby, to the
original brokers who were paid a commission by Landlord at the time of the
execution and delivery of the original Lease

(the "Original Brokers"), Landlord shall pay the Original Broker such
commission, fee or compensation. Tenant shall indemnify and hold Landlord (and
its trustees, beneficiaries, agents and employees) harmless of and from all
claims that may be made by any person (other than the Original Brokers) against
Landlord (or its trustees, beneficiaries, agents or employees) for brokerage or
other compensation in the nature of brokerage with respect to this Second
Amendment on account or arising out of Tenant's dealings with such person.

As amended by this Second Amendment, the Lease is hereby ratified,
approved and confirmed in all respects.

WHEREFORE, the parties have hereunto set their hands and seals as of the
date first above written.

LANDLORD:                                         TENTANT:

FUJI IMMUNOPHARMACEUTICALS
CORP.

/S/ MICHAEL L. COLANGELO                     /S/ DR. STEPHEN D. GILLIES
------------------------------------------   -----------------------------------
Michael L. Colangelo, signing as Trustee     Name:  Stephen D. Gillies
of 125 Hartwell Trust and not individually   Title: President
and without recourse against the Trustee     Hereunto Duly Authorized
personally or his assets

EXHIBIT A

FIP

FUJI IMMUNOPHARMACEUTICALS CORP.

July 28, 1997

Mr.Steven Colangelo
Lexington Management Incorporated
125 Hartwell Ave.
Lexington, MA 02173

Dear Steve:

As you know, the first term of Fuji ImmunoPharmaceuticals Corp.'s(FIP's)
lease with you at 125 Hartwell Ave. will expire on January 31, 1998.

I am writing to inform you of FIP's formal intention to extend it's lease
with the 125 Hartwell Trust for another five year term, pursuant to Section
36 of the Lease. It is my understanding that the terms contained in the
original lease document will all stay the same with the expectation of the
lease rate and base building expenses. I would like to arrange a meeting
with you in the near future to discuss FIP'S extension and to get some idea
of the current market rents in the Lexington area.

I would like to thank you for all your support during FIP's first five
years. We look forward to our continued relationship with you.

Sincerely,

/s/ Bryan G.Keaney
Bryan G.Keaney
Director of Finance and Administration

125 Hartwell Avenue - Lexington, MA 02173
Tel: 617-861-5300 - Fax: 617-861-5301

125 Hartwell Avenue
Lexington, Massachusetts
(the "Building")

THIRD AMENDMENT
November 1, 2002

LANDLORD:                  125 Hartwell Trust, under a declaration of
trust dated February 20, 1980 and filed
with the Middlesex South Registry District
of the Land Court as Document No. 600788,
as amended

ASSIGNOR:                  EMD Lexigen Research Center Corp. (formerly
known as Lexigen Pharmaceuticals Corp. and
before that Fuji ImmunoPharmaceuticals
Corp.), a Delaware corporation

TENANT OR                  EMD Pharmaceuticals, Inc., a Delaware
ASSIGNEE:                  corporation

PREMISES:                  Approximately 19,810 square feet of
Premises Rentable Area on the second (2nd)
floor of the Building, consisting of
approximately 10,980 square feet of
Premises Rentable Area under the original
Lease shown as the leased premises on
EXISTING                             Exhibit 3 thereto, plus approximately 8,830
LEASE                                square feet of Premises Rentable Area added
DATA:                                by the First Amendment referred to below
shown as the "RFO Premises" on said
Exhibit 3

LEASE EXECUTION DATE:      October 26, 1992

TERMINATION DATE:          January 31, 2003

PREVIOUS LEASE             First Amendment dated as of January 31,
AMENDMENTS:                1993 Second Amendment dated October 1, 1997

EXTENDED TERMINATION       January 31, 2008
DATE:

WHEREAS, Assignor has, by notice dated July 29, 2002, a copy of which is
attached hereto as EXHIBIT A, exercised its option to extend the Term of the
above-referenced lease, as amended by the aforesaid First Amendment and Second
Amendment (collectively, the "Lease"), for the second five-(5)-year additional
term provided for in Section 36 of the Lease;

WHEREAS, Assignor desires to assign its interest in the Lease to Assignee
arid Assignee desires to accept such assignment;

WHEREAS, the parties have agreed upon the Basic Rent and the Building
Expense Base for such additional term pursuant to Sections 36 and 37 of the
Lease and Landlord is willing to consent to Assignor's assignment of its
interest in the Lease to Assignee; and

WHEREAS, the parties wish to confirm such assignment of the Lease and to
confirm such lease extension, Basic Rent and Building Expense Base and the other
terms and conditions to apply during such additional term

NOW TEEREFORE, the parties hereby agree that the Lease is hereby amended
as follows (capitalized terms used herein without definition shall have the
meanings ascribed to them in the Lease):

1.     ASSIGNMENT AND ASSUMPTION OF LEASE

A.     Effective as of November 1, 2002, Assignor hereby assigns all of
its right, title and interest in and to the Lease (as hereby amended) to
Assignee.

B.     For the express benefit of Landlord, Assignee hereby assumes all
of the obligations of Assignor under the Lease (as hereby amended) and agrees to
perform and keep all covenants, conditions and agreements of Assignor under the
Lease (as hereby amended). Without limiting the foregoing, Assignee agrees that
the provisions of Section 9 of the Lease shall apply to all future proposed
assignments of Assignee's interest in the Lease and to all future proposed
subleases of the Premises.

C.     In consideration of the foregoing agreements by Assignee, and
without in any way diminishing the primary liability of Assignor as party-tenant
under the Lease (as hereby amended), Landlord hereby consents and agrees to the
foregoing assignment by Assignor to Assignee. Said consent by Landlord shall not
constitute a waiver of the obligation of the tenant under the Lease to obtain
Landlord's consent to any subsequent assignment or sublease of or under the
Lease, if and to the extent that such consent is required by the Lease.

2.     EXTENSION OF TERM OF LEASE

The Term of the Lease is hereby extended for an additional term
commencing as of February 1, 2003 and expiring as of January 31, 2008. The
demise of the Premises for such additional term shall be upon all of the same
terms and conditions of the Lease in effect immediately preceding the
commencement of such additional term (including, without limitation, the Basic
Rent payable in the amount of $495,250.00 per annum (i.e., $41,270.83 per month)
and the Building Expense Base equal to the actual amount of Building Expenses
for

calendar year 1997, subject to the provisions of Paragraph 1B of the Second
Amendment to the Lease), except as follows:

A.     Tenant shall have no right to extend the Term of the Lease beyond
January 31, 2008.

B.     Except for Landlord's obligation to repaint the Premises as
required by Section 36(a) of the Lease, which obligation Tenant acknowledges has
been satisfied by Landlord, Landlord shall have no obligation to renovate or
construct any new improvements in the Premises (or to provide any construction
allowance or contribution or the like) for or with respect to Tenant's occupancy
during the additional term.

C.     In the event any of the provisions of the Lease are inconsistent
with this Third Amendment or the state of facts contemplated hereby, the
provisions of this Third Amendment shall control.

Tenant acknowledges that (i) its current monthly payment of Basic Rent and
Building Expense Escalation Charges under the Lease is based upon an annual rate
of $26.70 per square foot of Premises Rentable Area, (ii) such annual rate is
comprised of $25.00 per square foot of Premises Rentable Area on account of
Basic Rent and $1.70 per square foot of Premises Rentable Area on account of
Building Expense Escalation Charges, and (iii) Tenant's payments on account of
Building Expense Escalation Charges are subject to adjustment and year-end
reconciliation pursuant to Section 14(b) of the Lease.

3.     BROKER

Tenant represents and warrants to Landlord that it has not dealt with any
broker or agent in connection with this Third Amendment or the extension of the
Term effected hereby. Tenant shall indemnify and hold Landlord (and its
trustees, beneficiaries, agents and employees) harmless of and from all claims
that may be made by any person against Landlord (or its trustees, beneficiaries,
agents or employees) for brokerage or other compensation in the nature of
brokerage with respect to this Third Amendment on account or arising out of
Tenant's dealings with such person.

As amended by this Third Amendment, the Lease is hereby ratified,
approved and confirmed in all respects.

WHEREFORE, the parties have hereunto set their hands and seals as of the
date first above written.

LANDLORD:                                    ASSIGNOR:

EMD LEXIGEN RESEARCH CENTER
CORP.

/S/ STEVEN COLANGELO                    By: /S/  STEPHEN D. GILLIES
----------------------------------------         -----------------------------
Steven Colangelo, signing as Trustee of          Name:  Stephen D. Gillies
125 Hartwell Trust and not individually          Title: President
and without recourse against the Trustee         Hereunto Duly Authorized
personally or his assets

ASSIGNEE:

By:   /S/ ILLEGIBLE
-----------------------------
Name:
Title:
Hereunto Duly Authorized

EXHIBIT A

[LEXIGEN PHARMACEUTICALS CORP. LOGO]

July 29, 2002

Mr.Steven Colangelo
125 Hartwell Trust
125 Hartwell Ave
Lexington, MA 02421
CERTIFIED MAIL, RETURN RECEIPT REQUESTED

RE:  Extension of Lease at 125 Hartwell Avenue

Dear Steve:

As you know, EMD-Lexigen Research Center Corp.'s, formerly Lexigen
Pharmaceuticals Corp.'s ("Lexigen's") Lease with 125 Hartwell Trust for
space at 125 Hartwell Avenue-Second Floor, will expire on January 31, 2003.
As previously communicated verbally, it is Lexigen's intention to extend
for an additional term, as provided in Section 36 of the Lease. This letter
is intended as formal notification of Lexigen's intention to extend.

I would also like to inform you that Lexigen, pursuant to Section 9(a) of
the Lease, intends to assign its right in the Lease to EMD Pharmaceuticals,
Inc., a directly affiliated company with Lexigen. I wanted to inform you of
this now, as it may be easier to take care of the Assignment in conjunction
with the Lease Extension.

I will be in touch within the next couple of weeks to begin discussions to
determine the appropriate terms of the Lease Extension. I look forward to
working with you on this matter and look forward to a continued mutually
beneficial relationship between our companies.

Sincerely yours,

/s/ Jason M. Walsh
Jason M. Walsh
Director of Operations and Administration

CC:  Dr. Richard Schoenfeld, VP Supply Chain, EMD Pharmaceuticals, Inc.
Ms. Gilda Thomas, Esq., General Counsel, EMD Pharmaceuticals, Inc.

LEXIGEN PHARMACEUTICALS CORP.        TEL: [ILLEGIBLE]

ASSIGNMENT AND ASSUMPTION OF LEASE
AND CONSENT OF AND RELEASE BY LANDLORD
AND FOURTH AMENDMENT TO LEASE

THIS ASSIGNMENT AND ASSUMPTION OF LEASE AND CONSENT OF AND RELEASE BY
LANDLORD AND FOURTH AMENDMENT TO LEASE (this "Agreement") is made and entered as
of July 9, 2004. the ("Effective Date") by and among EMD Pharmaceuticals, Inc.,
a Delaware corporation ("Assignor"), Synta Pharmaceuticals Corp., a Delaware
corporation ("Assignee"), and 125 Hartwell Trust, under Declaration of Trust
dated February 20, 1980 and filed with the Middlesex South Registry District of
the Land Court as Document No. 600788, as amended ("Landlord"). Assignor,
Assignee and Landlord are sometimes referred to herein individually as a "Party"
and collectively as the "Parties".

RECITALS

A.     Assignor, as successor by assignment to EMD Lexigen Research
Center Corp. (formerly known as Lexigen Pharmaceuticals Corp. and before that
Fuji ImmunoPharmaceuticals Corp.), as tenant, and Landlord, as landlord, are
parties to that certain Lease dated as of October 26, 1992, as amended by First
Amendment dated as of January 31, 1993, Second Amendment dated October 1, 1997,
and Third Amendment dated November 1, 2002 (as so amended and collectively, the
"Lease").

B.     Assignor desires to assign to Assignee all of Assignor's right,
title, and interest in and to the Lease on and after the Effective Date (as
hereinafter defined) and to delegate to Assignee all of Assignor's obligations
under the Lease from and after the Effective Date pursuant to the terms of this
Agreement, and Assignee has agreed to accept the foregoing assignment and to
assume all of Assignor's obligations under the Lease pursuant to the terms of
this Agreement on and after the Effective Date.

C.     Landlord has agreed to consent to the assignment and assumption
set forth herein pursuant to the terms of this Agreement and to release Assignor
from any continuing liability under the Lease except as hereinafter provided.

D.     Landlord has agreed to lease to Assignee during the Assignment
Period (as hereinafter defined) certain equipment and other personal property
presently located in the Premises and sold to Landlord by Assignor as of the
Effective Date, and, in consideration thereof, Assignee has agreed to pay to
Landlord monthly rent for the lease of such equipment and other personal
property.

E.     Landlord has agreed to lease to Assignee during the Assignment
Period as part of the Premises certain tenant improvements made to the Premises
by Assignor and sold to Landlord by Assignor as of the Effective Date, and, in
consideration thereof, Assignee has agreed to pay to Landlord monthly rent for
the lease of such tenant improvements.

NOW, THEREFORE, in consideration of the recitals (which, by this
reference, are incorporated into the operative provisions of this Agreement),
the mutual agreements set forth

herein, and other good and valuable consideration, the receipt and legal
sufficiency of which are hereby acknowledged, the Parties, intending to be
legally bound, agree as follows:

1.     ASSIGNMENT OF LEASE. Subject to the provisions of this Agreement,
Assignor, as of the Effective Date, hereby sells, assigns, grants, and conveys
to Assignee all of Assignor's right, title, and interest in and to the Lease
(including, without limitation, all of Assignor's rights regarding parking and
signage) and the estate created thereby, and delegates to Assignee all of the
obligations of Assignor as tenant under the Lease arising on and after the
Effective Date.

2.     ASSUMPTION OF OBLIGATIONS. Subject to the provisions of this
Agreement, Assignee, as of the Effective Date, hereby accepts the assignment of
Assignor's right, title, and interest in and to the Lease and the estate created
thereby and assumes and agrees to be bound by the Lease and all of the
obligations of the tenant thereunder arising on and after the Effective Date.

3.     EFFECTIVE DATE. The assignment, delegation, acceptance, and
assumption set forth in Paragraphs 1 and 2 hereof shall be effective on the
Effective Date; provided, however, Assignee's obligation to pay Basic Rent (as
defined in the Lease) required to be paid under the Lease and additional rent
required to be paid under Section 14 of the Lease shall not begin until the Rent
Commencement Date (as hereinafter defined), Assignor remaining liable for
payment of Basic Rent required to be. paid under the Lease and additional rent
required to be paid under Section 14. of the Lease through the day prior to the
Rent Commencement Date. Assignee is expressly liable as of the Effective Date
for payment and performance of all obligations of the tenant under the Lease
arising on and after the Effective Date other than payment of Basic Rent
required to be paid under the Lease and additional rent required to be paid
under Section 14 of the Lease as provided in the preceding proviso. In
furtherance of the foregoing, Assignee acknowledges that Assignor shall
terminate the insurance it is required to carry under, the Lease as of 11:59
p.m. of the day before the Effective Date, and Assignee shall have in effect not
later than midnight of the Effective Date the insurance coverages required to be
carried by the tenant under the Lease. Assignor has delivered the Premises to
the Assignee as of the Effective Date broom clean, free of all tenants or other
occupants, free of all equipment and other personal property (except for the
Included Property (as hereinafter defined)) and with the Included Property and
all laboratory space within the Premises decommissioned in accordance with all
applicable laws, rules, and regulations and with the standards set forth on
EXHIBIT A attached hereto and incorporated herein by reference (the
"Decommissioning Standards"). Assignee has examined the Premises and, subject to
Paragraph 4.5 below, accepts the Premises in its condition as of the Effective
Date. As used herein, the phrase "Rent Commencement Date" shall mean August 8,
2004. Basic Rent required to be paid under the Lease and additional rent
required to be paid under Section 14 of the Lease shall be prorated between
Assignor and Assignee as of the Rent Commencement Date.

4.     REPRESENTATIONS OF ASSIGNOR AND INDEMNIFICATION BY ASSIGNOR. To
induce Assignee to assume the obligations of Assignor under the Lease on and
after the Effective Date as provided herein, Assignor represents and warrants to
Assignee the following matters, all of which are true and correct as of the date
hereof and all of which will be true and correct on the Effective Date and
further indemnifies Assignee as set forth below:

4.1.   AUTHORITY. Assignor has the authority to enter into this
Agreement and to assign the rights and to delegate the obligations
of Assignor under the Lease to Assignee. The officers of Assignor
who have executed this Agreement are duly authorized to do so and
to bind Assignor to the covenants, representations, warranties,
and agreements of Assignor set forth in this Agreement. There are
no provisions contained in any law, rule, or regulation of any
federal, state, or local governmental authority having
jurisdiction over Assignor, or in any instrument or agreement to
which Assignor is a party or by which it is bound, which would
prohibit, limit, or adversely affect the actions or obligations of
Assignor set forth in this Agreement. No consent of any party
other than the Parties to this Agreement is required for the
assignment and delegation set forth in Paragraph 1 hereof.

4.2.   COMPLIANCE WITH LEASE. Through the day before the Effective
Date; (i) Assignor has observed and faithfully performed all of
its obligations as tenant under, or set forth in, the Lease; (ii)
Assignor is not in default under the Lease; (iii) Landlord is not
in default under the Lease; and (iv) Assignor has not exercised
any right to terminate the Lease reserved unto Assignor under the
Lease as the result of an uncured default by Landlord.

4.3.   NO OTHER ASSIGNMENTS. Except as set forth herein, Assignor
has not assigned, sold, pledged, hypothecated, mortgaged, or
otherwise transferred its interest in and to the Premises or in or
to its rights under the Lease to any person.

4.4.   LEASE. Attached hereto as EXHIBIT B, and by this reference
made a part hereof, is a true, correct, and complete copy of the
Lease and all amendments thereto, which Lease is in full force and
effect on the date hereof. There are no material oral agreements
or understandings between Assignor and Landlord which relate to
the Lease or the obligations of the parties thereunder that would
be binding upon Assignee. The current term of the Lease is
scheduled to expire on January 31, 2008. The Basic Rent and
additional rent (to the extent additional rent is determinable and
currently due) required to be paid by the tenant under the Lease
has been paid through July 31, 2004.

4.5.   INDEMNIFICATION OF ASSIGNEE. Assignor shall and does
indemnify and hold Assignee harmless from and against any and all
loss, liability, charge, cost, damages, fees, and expenses in
connection with: (i) any and all liability of Assignor which
arises under or pursuant to the obligations of Assignor set forth
in the Lease and which relates specifically to those obligations
which have accrued and have become due and payable in or for the
period prior to the Effective Date; (ii) any injury to any person
or damage to any property which occurs in the Premises prior to
the Effective Date and which results from the negligence or
willful misconduct of Assignor or its agents, guests, invitees, or
employees; and (iii) any failure of Assignor to have
decommissioned the Included Property and the Premises in
accordance with all applicable laws, rules, and regulations.

4.6    PREMISES. Assignor represents and warrants to Assignee that
the Premises are presently in good and clean order and condition.
Except for the foregoing representation and warranty and except as
otherwise provided in this Paragraph 4 or in Paragraph 3 above,
Assignor makes no warranty or representation as to the condition
of the Premises nor its compliance with applicable laws, rules,
and regulations, and the Premises shall be delivered to Assignee
"as is, where is, with all defects." Assignee agrees that in
entering into this Agreement, it has relied upon its own
investigation of the condition of the Premises and the suitability
of the Premises for Assignee's intended uses and not upon any
warranty or representation of Assignor except for the warranties
or representations set forth in this Agreement.

5.     REPRESENTATIONS OF ASSIGNEE AND INDEMNIFICATION BY ASSIGNEE. To
induce Assignor to assign to Assignee Assignor's rights under the Lease on and
after the Effective Date as provided herein, Assignee represents and warrants to
Assignor the following matters, all of which are true and correct as of the date
hereof and all of which will be true and correct on the Effective Date and
further indemnifies Assignor as set forth below:

5.1.   AUTHORITY. Assignee has the authority to enter into this
Agreement and to accept the assignment of Assignor's interest in
the Lease arising on and after the Effective Date and to assume
the obligations of Assignor set forth therein arising on and after
the Effective Date. The officers of Assignee who have executed
this Agreement are duly authorized to do so and to bind Assignee
to the covenants, representations, warranties, and agreements of
Assignee set forth in this Agreement. There are no provisions
contained in any law, rule, or regulation of any federal, state,
or local governmental authority having jurisdiction over Assignee,
or in any instrument or agreement to which Assignee is a party or
by which it is bound, which would prohibit, limit, or adversely
affect the actions or obligations of Assignee set forth in this
Agreement. No consent of any party other than the Parties to this
Agreement is required for the acceptance and assumption set forth
in Paragraph 2 hereof.

5.2.   COMPLIANCE WITH LEASE. From and after the Effective Date,
Assignee shall observe and faithfully perform all of the
obligations of tenant under, or set forth in, the Lease arising on
or after the Effective Date.

5.3    INDEMNIFICATION OF ASSIGNOR. Assignee shall and does
indemnify and hold Assignor harmless from and against all loss,
liability, charge, cost, damages, fees, and expense in connection
with: (i) any and all liability of Assignee which arises under or
pursuant to the obligations of Assignee set forth in the Lease and
which is applicable to the period from and after the Effective
Date; and (ii) any injury to any person or damage to any property
which occurs in or about the Premises from and after the Effective
Date.

6.     ADJUSTMENT OF CHARGES. Upon receipt from Landlord of supporting
documentation therefor, Assignor and Assignee agree, promptly and upon demand
made by either Assignor or Assignee, to prorate as appropriate any payments or
expenses made or to be

made, or received or to be received, in connection with the Lease so
that Assignor shall incur all expenses and receive the benefit of all payments
and reimbursements to Landlord to be made under the Lease attributable to the
period prior to the Rent Commencement Date and so that Assignee shall be
responsible for all such expenses and entitled to the benefit of all such
payments and reimbursements to the extent attributable to the period on and
after the Rent Commencement date.

7.     REPRESENTATIONS OF ASSIGNOR AND ASSIGNEE WITH RESPECT TO THE
INCLUDED PROPERTY AND ASSIGNOR'S IMPROVEMENTS. Assignor and Assignee represent
and warrant to Landlord that neither of them has encumbered or granted a lien or
security interest in any of the Included Property or the Assignor's Improvements
(as hereinafter defined) nor shall either of them grant a lien or security
interest in the Included Property or the Assignor's Improvements.

8.     CONSENT OF AND RELEASE BY LANDLORD; LANDLORD'S REPRESENTATIONS. By
its execution of this Agreement, Landlord consents to the assignment and
assumption contained in Paragraphs 1 and 2 of this Agreement and as of the
Effective Date releases Assignor of any liability under the Lease accruing or
arising on and after the Effective Date, it being understood and agreed that
Assignor shall remain liable for any obligations under the Lease accruing or
arising prior to the Effective Date, including (without limitation) any
liability for underpayments on account of Building Expense Escalation Charges
(as defined in the Lease) for the period prior to the Effective Date, as well as
the obligation to pay Basic Rent and Building Expense Escalation Charges (and
any underpayments on account thereof) through the day prior to the Rent
Commencement Date. Landlord does not release Assignor, and Assignor acknowledges
its continuing liability, for any liability for breach of this Agreement by
Assignor or any other agreement to which Landlord and Assignor are parties.
Assignor shall and does indemnify and hold Landlord harmless from and against
any and all loss, liability, charge, cost, damages, fees, and expenses in
connection with any failure by Assignor to have decommissioned the Included
Property and the Premises in accordance with the Decommissioning Standards and
all applicable laws, rules, and regulations. Landlord agrees that, from and
after the Effective Date, the address for any notice to the tenant required
under the Lease shall be Synta Pharmaceuticals Corp., 45 Hartwell Avenue,
Lexington, Massachusetts 02421, Attention: Chief Financial Officer.

Landlord represents and warrants to Assignee and Assignor that:

(a)    attached hereto as EXHIBIT B is a true, correct and complete copy
of the Lease and all amendments thereto, which Lease is in full
force and effect on the date hereof;

(b)    there are no oral agreements or understandings between Assignor
and Landlord which relate to the Lease or the obligations of the
parties thereunder;

(c)    to the knowledge of Landlord without investigation or inquiry,
there are no defaults of Assignor under the Lease;

(d)    the current term of the Lease is scheduled to expire on January
31, 2008;

(e)    the Basic Rent and the Building Expense Escalation Charge required
to be paid by the tenant under the Lease have been paid through
July 31, 2004, subject to reconciliation of the Building Expense
Escalation Charge for calendar year 2004;

(f)    no broker or agent or other person has represented Landlord in
connection with this Agreement and the transactions contemplated
hereby; and

(g)    there are no mortgages encumbering the Property (as defined in the
Lease) or any portion thereof other than that granted to
Mortgagee.

9.     MISCELLANEOUS PROVISIONS.

9.1.   GOVERNING LAW. This Agreement shall be governed by, and
enforced, construed, and interpreted under, the laws and judicial
decisions of the Commonwealth of Massachusetts.

9.2.   BINDING EFFECT. This Agreement shall be binding upon, and
shall inure to the benefit of, the Parties, and their respective
heirs, executors, successors, and permitted assigns.

9.3.   BROKERS. Assignee and Assignor each represents and warrants
to the other that no broker or agent or other person other than
Spaulding and Slye/Colliers International as to Assignor and
Richards Barry Joyce & Partners LLC as to Assignee (the "Brokers")
has represented Assignor or Assignee in connection with this
Agreement and the transactions contemplated hereby, and that no
commissions, fees, or compensation of any kind are due or payable
in connection herewith to any such person or entity except for the
Brokers. Each party agrees to indemnify and hold the other
harmless from and against any claim for any such commission, fee
or other form of compensation by any such party or entity except
for the Brokers claiming through the indemnifying party. Assignor
shall pay the commissions payable to the Brokers in connection
with this Agreement.

9.4.   ENTIRE AGREEMENT; AMENDMENT. Except with respect to the
agreements set forth in the Lease, this Agreement contains the
entire agreement among the Parties, and there are no oral
agreements or understandings among the Parties, with respect to
the subject matter hereof. This Agreement may not be amended
except by a writing signed by the Party against whom such
amendment is to be enforced.

9.5.   FURTHER ASSURANCES. Assignor and Assignee agree to
cooperate with each other with respect to the subject matter
hereof, and each agrees to execute such other instruments and
agreements as may reasonably be required by the other to evidence
further the intent of Assignor and Assignee with respect to the
subject matter hereof.

10.    NON-DISTURBANCE AGREEMENT. Assignor shall exercise reasonable
efforts to deliver to Assignee before the Rent Commencement Date a letter or
other memorandum from

The Manufacturers Life Insurance Company (USA), Landlord's mortgagee
("Mortgagee"), stating that Assignee is entitled to the benefits of the
Subordination, Non-Disturbance and Attornment Agreement dated as of May 5, 1998
among Landlord, Assignor's predecessor in interest, and Mortgagee. Such letter
or other memorandum shall be in form and content reasonably acceptable to
Assignee. If Assignor is unable to obtain such letter or memorandum in form and
content reasonably acceptable to Assignee, then Assignor shall defend,
indemnify, and hold harmless Assignee from and against any and all liability,
charge, or expense, including reasonable attorneys' fees, actually incurred by
Assignee as a result of the exercise by Mortgagee (or any successor-in-interest
to Mortgagee) of any rights or remedies it may have as a result of default or
non-performance by Landlord (or any successor-in-interest to Landlord) under any
agreement it has with Mortgagee.

11.    INCLUDED PROPERTY. During the period from the Effective Date
through and including the expiration or earlier termination of the term of the
Lease (the "Assignment Period"), Landlord hereby leases to Assignee (and its
permitted successors and assigns), and Assignee leases from Landlord, the
equipment and other personal property owned by Landlord and described on EXHIBIT
C attached hereto and incorporated herein by this reference (collectively, the
"Included Property"). During the Assignment Period, Assignee shall maintain the
Included Property in a reasonably clean and working condition. If any of the
Included Property shall be damaged or destroyed as a result of the act or
omission of Assignee or its agents, employees, contractors, or permitted
subtenants or other occupants, then Assignee shall reimburse Landlord for the
cost incurred by Landlord to repair or replace such Included Property except to
the extent that such cost would be recoverable under a commercially reasonable
insurance policy covering the full replacement cost of the Included Property,
although Assignee shall be liable for the amount of any commercially reasonable
deductible. Assignee shall pay Landlord the cost of insurance coverage obtained
by Landlord with respect to the Included Property within thirty, (30) days of
receipt from time to time of Landlord's invoice therefor. Assignee is not
required to replace any of the Included Property that becomes worn out or
obsolete. Landlord and Assignee agree that Assignee shall deliver to Landlord
the Included Property at the end of the Assignment Period in the same condition
it was in on the Effective Date, ordinary wear and tear and damage due to fire
or other casualty excepted, and upon expiration or earlier termination of the
term of the Lease, the Included Property shall no longer be leased to Assignee
pursuant to the terms of this Agreement. Notwithstanding the foregoing, to the
extent that any of the Included Property or the Premises has been used after the
Effective Date for chemical, biological, or radioactive substances, such
Included Property and/or the Premises, as applicable, shall be decommissioned by
Assignee in accordance with all applicable laws, rules, and regulations and with
the Decommissioning Standards upon its delivery to Landlord, and Section 40 of
the Lease is accordingly amended to require such decommissioning upon expiration
or earlier termination of the term of the Lease.

12.    ASSIGNOR'S IMPROVEMENTS. During the Assignment Period, Landlord
shall lease to Assignee (and its permitted successors and assigns), and Assignee
shall lease from Landlord, the Assignor's Improvements. As of the Rent
Commencement Date (but not prior thereto), Assignee shall pay to Landlord as
additional rent for the right to use the Assignor's Improvements and the
Included Property during the Assignment Period the sum of $11,555.83 per month
(the "Monthly Improvements Rent"). Assignee shall pay the Monthly Improvements
Rent by separate check

payable to Landlord, Monthly Improvements Rent being additional rent and not a
component of Basic Rent. The Monthly Improvements Rent shall be paid by Assignee
to Landlord commencing on the Rent Commencement Date (rent for any partial month
to be prorated) and continuing thereafter through January 31, 2008 at the same
time and in the same manner as payments of Basic Rent and shall be subject to
the overdue payment charge in Section 3 of the Lease and the interest charge in
Section 29 of the Lease. Failure by Assignee to pay any installment of Monthly
Improvements Rent when due and payable shall be a default under this Agreement
and the Lease, and if Assignee defaults in the payment of Monthly Improvements
Rent after passage of the notice and cure period provided in Section 21 of the
Lease, then Landlord shall be entitled to exercise any and all rights or
remedies Landlord may have under the Lease or applicable law as a result of such
default, including, without limitation, the right to collect from Assignee the
Monthly Improvements Rent payable through January 31, 2008. Notwithstanding
anything in this Agreement, for purposes of Sections 13(b), 19, and 20 of the
Lease, Monthly Improvements Rent shall be considered part of Basic Rent. As used
herein, the phrase "Assignor's Improvements" shall mean any and all alterations,
additions, and improvements to the Premises performed by or on behalf of the
tenant under the Lease before the Effective Date.

IN WITNESS WHEREOF, the Parties, upon authority duly given, have executed
this Agreement as a sealed instrument as of the date first written above.

ASSIGNOR:

EMD Pharmaceuticals, Inc.,
a Delaware corporation

By: /S/ GILDA M. THOMAS
---------------------------------------
Name: Gilda M. Thomas
Title: Vice President and General Counsel

ASSIGNEE:

SYNTA Pharmaceuticals Corp.,
a Delaware corporation

By: /S/ KEITH EHRLICH
---------------------------------------
Name: Keith Ehrlich
Title: Vice President, Finance and Administration

LANDLORD:

125 Hartwell Trust

By: /S/ STEVEN COLANGELO
---------------------------------------
Name: Steven Colangelo
Title: As Trustee and not individually

EXHIBIT A

DECOMMISSIONING STANDARDS

STANDARDS FOR DECOMMISSIONING OF SPACE AT 125 HARTWELL AVENUE

Section 1 - Purpose

The purpose of decommissioning of space is to make safe the decommissioned space
and to provide assurances of proper cleaning and decontamination of said space
for the next occupant. The purpose of setting forth actions taken with respect
to decontamination of space is to document the actions taken and to allow the
owner or the next occupant to make their own judgment with respect to the
sufficiency of such actions.

Section 2 - Activities & Schedule

The following are the specific actions to be taken with respect to the
decommissioning of said space.

Chemicals - (Removal & Disposal)

-  All hazardous or toxic chemicals are to be removed from the space before
the expiration or earlier termination of the Lease or other mutually
agreed deadline except for any cleaning materials under the control of
the landlord's or tenant's cleaning contractor.
-  The decommissioner shall hire a licensed contractor to pack, remove, and
transport to a new location all usable chemicals. PROCESS AND/OR RESULTS
ARE TO BE DOCUMENTED.
-  The decommissioner shall hire a licensed contractor to pack, remove, and
transport for proper disposal all unusable chemicals. PROCESS AND/OR
RESULTS ARE TO BE DOCUMENTED.
-  The decommissioner shall hire a licensed contractor to remove and
dispose properly all limestone chips in the Wastewater Neutralization
Tank. The contractor will clean the tank and replace with fresh
limestone. PROCESS AND/OR RESULTS ARE TO BE DOCUMENTED.

Biological Materials - (Removal & Disposal)

-  All biological materials will be removed from the space before the
expiration or earlier termination of the Lease or other mutually agreed
deadline.
-  The decommissioner shall hire a licensed contractor to pack, remove, and
transport to a new location all usable biological materials. PROCESS
AND/OR RESULTS ARE TO BE DOCUMENTED.
-  The decommissioner shall hire a licensed contractor to pack, remove, and
transport for proper disposal all unusable biological materials. PROCESS
AND/OR RESULTS ARE TO BE DOCUMENTED.
-  Decontamination of Storage Equipment and Work Surfaces detailed below.

10

Radioactive Materials - Disposition

-  The decommissioner shall hire a licensed contractor to perform wipe
tests and provide count results to the extent required by applicable
law.
-  Wipe tests will be performed prior to the expiration or earlier
termination of the Lease or other mutually agreed deadline. PROCESS
AND/OR RESULTS ARE TO BE DOCUMENTED.

Equipment -

-  All Equipment listed on Exhibit C will be decontaminated prior to the
expiration or earlier termination of the Lease or other mutually agreed
deadline.
-  Chemical Fume Hoods will be steam cleaned using an organic peroxide
vapor on the outside and inside of the cabinet by a licensed contractor.
NOTE: STEAM CLEANING WILL BE PERFORMED TO ALL EXPOSED SURFACES. NO
DUCTWORK OR ELEMENTS ABOVE THE SUSPENDED CEILING WILL BE TREATED. Each
Fume Hood will have attached a decontamination sheet signed by the
contractor. PROCESS AND/OR RESULTS ARE TO BE DOCUMENTED.
-  Biological Safety Cabinets will be decontaminated by a licensed
contractor using paraformaldehyde gas and post-treatment cleaning. NO
DUCTWORK OR ELEMENTS ABOVE THE SUSPENDED CEILING WILL BE TREATED.
PROCESS AND/OR RESULTS ARE TO BE DOCUMENTED.
-  Warm and Cold Room Interiors and Door Fronts will be steam cleaned using
an organic peroxide vapor. PROCESS AND/OR RESULTS ARE TO BE DOCUMENTED.

General Laboratory Space

-  The decommissioner shall hire a licensed contractor to wipe down all
Laboratory Floors and Countertops will a 10% bleach solution or
equivalent. PROCESS AND/OR RESULTS ARE TO BE DOCUMENTED.
-  All Laboratory space to be wiped down prior to the expiration or earlier
termination of the Lease or other mutually agreed deadline.

11

EXHIBIT B

TRUE CORRECT AND COMPLETE COPY OF THE LEASE

12

[MANULIFE FINANCIAL LOGO]

July 9, 2004

VIA TELECOPIER AND FIRST CLASS MAIL

Steven Colangelo, Trustee of 125 Hartwell Trust
125 Hartwell Avenue
Lexington, MA 02173

Synta Pharmaceuticals Corp.
45 Hartwell Avenue
Lexington, Massachusetts 02421
Attention: Chief Financial Officer

Re:  Assignment and Assumption of Lease
125 Hartwell Avenue
Lexington, Massachusetts
MORTGAGE ACCOUNT NO. 826501

Dear Sirs:

The Manufacturers Life Insurance Company (U.S.A.) ("Manulife") is the mortgagee
under the Mortgage, Security Agreement and Fixture Filing from Steven Colangelo,
trustee of 125 Hartwell Trust (the "Mortgagor"), encumbering property generally
known as 125 Hartwell Avenue, Lexington, Massachusetts and filed with the
Middlesex South Registry District of the Land Court as Document No. 1064641 (the
"Mortgage"). Lexigen Pharmaceuticals Corp. (f/k/a Fuji ImmunoPharmaceuticals
Corp.), Mortgagor, and Manulife are parties to that certain Subordination,
Non-Disturbance and Attornment Agreement dated as of May 5, 1998 (the "SNDA").
We understand that EMD Pharmaceuticals Inc. ("EMD"), as the successor tenant
under that certain Lease dated as of October 26, 1992, as amended by First
Amendment dated as of January 31, 1993, Second Amendment dated October 1, 1997,
and Third Amendment dated November 1, 2002 (as so amended and collectively, the
"Lease" and being the lease referenced in the SNDA), will assign its interest as
tenant under the Lease to Synta Pharmaceuticals Corp. ("Synta") pursuant to the
attached Assignment and Assumption of Lease and Consent of and Release by
Mortgagor and Fourth Amendment to Lease (the "Assignment").

Manulife hereby approves the form and substance of the Assignment, expressly
including the Mortgagor's consent to the assignment of the Lease to Synta, the
release of EMD from liability under the Lease as and to the extent provided in
the Assignment, and the assumption by Synta of the tenant's obligations under
the Lease arising on and after the Effective Date (as defined in the Assignment)
as and to the extent provided in the Assignment.

Manulife also hereby agrees that Synta shall to entitled to the benefits of the
SNDA as if Synta were the Tenant named therein.

Manulife's approval and agreement pursuant to this letter are expressly
conditioned upon receipt, no later than July 16, 2004, of a $1,000.00 Lease
Approval Fee, together with fully executed copies of this letter, the
Assignment, and all other documentation pertaining to the assignment, assumption
and release.

The Manufacturers Life Insurance Company
Boston Mortgage Branch
118 Huntington Avenue, Suite 6900, Boston, MA 02116
Phone: (617) 238-0880 Fax: (617) 238-0585                       www.manulife.com

Manulife Financial and the block design are registered services marks and
trademarks of The Manufacturers Life Insurance Company and are used by it and
its affiliates including Manulife Financial Corporation.

125 Hartwell Ave.
Mortgage Account No. 826501
Page 2

Time is of the essence hereof.

Very truly yours,

THE MANUFACTURERS LIFE INSURANCE COMPANY (U.S.A.)

/s/ IAN S. [ILLEGIBLE]
Ian S. [ILLEGIBLE]
Regional Manager

Cc:      John Van [ILLEGIBLE]
Robert Mack, Esq.
Delia Williams

Attachment

Agreed and accepted by:

ASSIGNOR:

EMD Pharmaceuticals, Inc.,
a Delaware corporation

By:    /s/ Gilda M. Thomas
--------------------------
Name:  Gilda M. Thomas
Title: Vice President and General Counsel

ASSIGNEE:

SYNTA Pharmaceuticals Corp.,
a Delaware corporation

By:    /s/ Keith Ehrlich
----------------------------
Name:  Keith Ehrlich
Title: Vice President, Finance and Administration

MORTGAGOR:

125 Hartwell Trust

By:    /s/ Steven Colangelo
----------------------------
Name:  Steven Colangelo
Title: As Trustee and not individually

125 Hartwell Avenue
Lexington, Massachusetts 02421
(the "Building")

FIFTH AMENDMENT
October 22, 2002

LANDLORD:                  125 Hartwell Trust, under a declaration of
trust dated February 20, 1980 and filed
with the Middlesex South Registry District
of the Land Court as Document No. 600788,
as amended

TENANT:                    Synta Pharmaceuticals Corp., a Delaware
corporation, successor-by-assignment to EMD
Pharmaceuticals, Inc.

PREMISES:                  Approximately 19,810 square feet of
Premises Rentable Area on the second (2nd)
floor of the Building, consisting of
approximately 10,980 square feet of
Premises Rentable Area under the original
EXISTING                             Lease shown as the leased premises on
LEASE                                Exhibit 3 thereto, plus approximately 8,830
DATA:                                square feet of Premises Rentable Area added
by the First Amendment referred to below
shown as the "RFO Premises" on said
Exhibit 3

LEASE EXECUTION DATE:      October 26, 1992

TERMINATION DATE:          January 31, 2003

PREVIOUS LEASE             First Amendment dated as of January 31,
AMENDMENTS:                1993 Second Amendment dated October 1, 1997
Third Amendment dated November 1, 2002
Assignment and Assumption of Lease and
Consent of Release by Landlord and Fourth
Amendment to Lease dated as of July 9, 2004

ADDITIONAL PREMISES:       Approximately 2,670 square feet of Premises
Rentable Area on the first (1st) floor of
the Building, substantially as shown
cross-hatched on EXHIBIT A attached hereto
and mace a part hereof

WHEREAS, Tenant desires to lease additional space in the Building; and

WHEREAS, Landlord is willing to lease additional space in the Building to
Tenant upon the terms and conditions hereinafter set forth.

NOW THEREFORE, the parties hereby agree that the above-described lease,
as previously amended (the "Lease"), is hereby further amended as follows
(capitalized terms used herein without definition shall have the meanings
ascribed to them in the Lease):

1.     DEMISE OF ADDITIONAL PREMISES

Landlord hereby demises and leases to Tenant, and Tenant hereby accepts
and leases from Landlord, the Additional Premises for a Term commencing as of
the Commencement Date in respect of the Additional Premises (as hereinafter
defined) and expiring on January 31, 2008. The demise of the Additional Premises
shall otherwise be upon and governed by the terms and conditions of the Lease
(as hereby amended), except as follows or as otherwise provided in this
Amendment:

A.     The Commencement Date in respect of the Additional Premises shall
be the earlier of (i) the first date on which Tenant occupies all or any part of
the Additional Premises for the conduct of business, or (ii) the date on which
Landlord's Work (as hereinafter defined) shall be (or be deemed to be)
substantially (i.e., complete except for so-called "punch list" items and other
work to be undertaken by Landlord which does not materially impair Tenant's use
of the Additional Premises for the Permitted Uses (collectively, the "Punchlist
Work")), as reasonably determined by Landlord. Landlord shall complete all
Punchlist Work within thirty (30) days after the substantial completion of
Landlord's Work. If Tenant (or any agent, employee or contractor of Tenant)
causes any delay in the preparation of any drawings, plans or specifications or
the performance or substantial completion of Landlord's Work, then Landlord's
Work shall be deemed to have been substantially completed on the date that
Landlord's Work would have been substantially completed but for such delay.
Landlord shall notify Tenant of any such delay promptly after Landlord becomes
aware of the same. Landlord shall use reasonable efforts to cause Landlord's
Work to be substantially completed on or before the date (the "Estimated
Substantial Completion Date") which is sixty (60) days after the execution and
delivery of this Amendment, but Tenant shall not have any claim against
Landlord, and Landlord shall have no liability to Tenant, if Landlord's Work
shall not be substantially completed by the Estimated Substantial Completion
Date. The parties shall confirm in writing the Commencement Date in respect of
the Additional Premises as soon as it is known.

B.     Basic Rent payable in respect of the Additional Premises shall be
$60,075.00 per year (i.e., $5,006.25 per month).

C.     The Building Expense Base applicable to the Additional Premises
shall be the actual amount of Building Expenses for calendar year 2004.

D.     Tenant shall have no obligation to pay for electricity for lights
and plugs in the Additional Premises.

E.     Tenant's Proportionate Share in respect of the Additional Premises
shall be 6.95%.

F.     Tenant shall, by reason of the demise of the Additional Premises,
be entitled to an additional ten (10) parking spaces in the paved parking area
located adjacent to the Building. The use of such spaces shall be subject to the
same terms and conditions of the Lease as are applicable to Tenant's use of the
other parking spaces provided to Tenant under the Lease. Accordingly, the total
number of parking spaces which Landlord shall provide and maintain for the use
of Tenant's employees and invitees pursuant to Section 2 of the Lease shall be
eighty-five (85).

2.     LANDLORD'S WORK IN RESPECT OF ADDITIONAL RREMISES

Landlord agrees to perform, at Landlord's expense (except as otherwise
provided herein), the work within the Additional Premises described in or shown
on, and substantially in accordance with, the space plan attached hereto as
EXHIBIT B and made a part hereof (the "Space Plan") using Building standard
materials, finishes and mechanical and electrical improvements ("Landlord's
Work"). Landlord's Work shall also include the installation of one (1) teledata
outlet device per office in the Additional Premises and the wiring associated
therewith. Except for Landlord's Work, Tenant shall accept the Additional
Premises "as is" and Tenant acknowledges that it has had an opportunity to
inspect the Additional Premises and that Landlord has made no representation or
warranty as to the condition of the Additional Premises.

Landlord agrees to undertake construction of the Additional Premises in
accordance with the provisions hereof in a good and workmanlike fashion and in
compliance with applicable laws, rules and regulations.

In the event that Tenant shall request in writing and Landlord shall
approve work not presently described on or contemplated by the Space Plan, then
Landlord shall render to Tenant an estimate of the additional cost of such work
(and any cost associated with new or revised plans and/or specifications
required to be prepared by reason of such work), and Tenant shall pay such
amount to Landlord prior to Landlord having any obligation to undertake any such
work; provided, however, that Tenant shall be responsible for any delays in the
performance or substantial completion of Landlord's Work on account of any such
work requested by Tenant in writing.

3.     MODIFICATION TO LEASE

Effective as of the date hereof the following language is hereby inserted
at the end of the first sentence of Section 22 of the Lease:

; and in no event shall Tenant have the right to terminate
or cancel this Lease or to withhold or abate rent or to
set-off any claim or damages against rent as a result of
any default or breach by Landlord of its

covenants or obligations or any representations, warranties
or promises hereunder, except as may otherwise be expressly
set forth, herein.

4.     BROKER

Each party (the "indemnifying party") represents and warrants to the
other party that it has not dealt with any broker or agent in connection with
this Amendment or the leasing of the Additional Premises. The indemnifying party
shall indemnify and hold the other party (and such other party's trustees,
beneficiaries, agents and employees) harmless of and from, all claims that may
be made by any person against such other party (or its trustees, beneficiaries,
agents or employees) for brokerage or other compensation in the nature of
brokerage with respect to Amendment on account or arising out of the
indemnifying party's dealings with such person.

As amended by this Fifth Amendment, the Lease is hereby ratified,
approved and confirmed in all respects.

WHEREFORE, the parties have hereunto set their hands and seals as of the
date first above written.

LANDLORD:                                       TENANT:

SYNTA PHARMACEUTICALS CORP.

/S/ STEVEN COLANGELO                        By:   /S/ KEITH EHRLICH
-----------------------------------------           ----------------------------
Steven Colangelo, signing as                        Name:  Keith Ehrlich
Trustee of 125 Hartwell Trust and not               Title:  V.P. Finance
individually and without recourse                   Hereunto Duly Authorized
against and Trustee personally or his assets

EXHIBIT A

FLOOR PLAN

EXHIBIT B

FLOOR PLAN

Exhibit 10.7

PINNACLE PROPERTIES MANAGEMENT, INC.
STANDARD FORM
COMMERCIAL LEASE

In consideration of the covenants herein contained, 6-8 PRESTON COURT, L.L.C., a
Delaware limited liability company, ("LESSOR"), does hereby lease to Asiana
Pharmaceuticals Corporation, a Delaware corporation ("LESSEE"), the following
described premises, (the "leased premises"): approximately 4,000 square feet as
depicted on Exhibit "A" located at 8-A Preston Court, Bedford, MA 01730 to have
and hold the leased premises for a term of five (5) years commencing at noon on
June 1, 1999 and ending at noon on May 30, 2004 unless sooner terminated as
herein provided. LESSOR and LESSEE now covenant and agree that the following
terms and conditions shall govern this lease during the term hereof and for such
further time as LESSEE shall hold the leased premises.

1. RENT. LESSEE shall pay to LESSOR base rent of seventy-one thousand eight
hundred U.S. Dollars ($71,800.00) per year, drawn on a U.S. Bank, in monthly
installments of $5,983.33 payable on the first day in each calendar month in
advance, without demand or any right of set-off or deduction whatsoever, the
first monthly payment to be made upon LESSEE's execution of this lease,
including payment in advance of appropriate fractions of a monthly payment for
any portion of a month at the commencement or end of said lease term. All
payments shall be made to LESSOR or LESSOR's agent: 6-8 Preston Court, L.L.C.
c/o Pinnacle Properties Management Inc., 3740 Beach Blvd., Suite 306,
Jacksonville, FL 32207, or at such other place as LESSOR shall from time to time
in writing designate. The amount of base rent due during each calendar year of
this lease and any extensions thereof shall be annually increased by the
increase in the "Cost of Living" as shown by the Consumer Price Index (Boston,
Massachusetts, All Items, All Urban Consumers), United States Department of
Labor, Bureau of Labor Statistics (the "Index"). All such adjustments shall take
place with the rent due on January 1 of each year during the lease term. The
base month from which to determine the amount of each increase in the Index
shall be January 1999, which figure shall be compared with the figure for
November 1999, and each November thereafter to determine the percentage increase
(if any). The increase will be multiplied by the base rent to determine the
increased base rent (if any) to be paid during the following calendar year. In
the event that the Consumer Price Index as presently computed is discontinued as
a measure of "Cost of Living" changes, any adjustment shall then be made on the
basis of a comparable index then in general use as selected by LESSOR.

2. SECURITY DEPOSIT. LESSEE shall pay to LESSOR a security deposit in the amount
of eleven thousand eight hundred dollars ($11,800.00) upon the execution of this
lease by LESSEE, which shall be held, as security for LESSEE's performance as
herein provided and refunded to LESSEE without interest at the end of this lease
subject to LESSEE's satisfactory compliance with the conditions hereof. LESSEE
may not apply the security deposit to payment of any rent. In the event of any
default or breach of this lease by LESSEE, LESSOR may apply the security deposit
first to any unamortized improvements completed for LESSEE's occupancy, then to
offset any outstanding invoice or other payment due to LESSOR, with the balance
applied to outstanding rent. If all or any portion of the security deposit is
applied to cure a default or breach during the term of the lease, (i) such
application of the security deposit shall not constitute a waiver of such
default or deprive LESSOR of any other remedy LESSOR may have

on account of such default, and (ii) LESSEE shall be responsible for immediately
restoring said deposit to its full original amount and failure to do so shall be
considered a substantial default under this lease. LESSEE's failure to remit the
full security deposit or any portion thereof when due shall also constitute a
substantial lease default. LESSOR may deliver the Security Deposit to the
purchaser of LESSOR's interest in the leased premises in the event such interest
is sold, and thereupon LESSOR shall be discharged from any further liability
with respect to such Security Deposit.

3. USE OF PREMISES. LESSEE shall use the leased premises only for the purpose of
executive and administrative offices, research & development, and storage.

4. ADDITIONAL RENT AND TAX ESCALATION. LESSEE shall pay to LESSOR as additional
rent per annum ("Additional Rent") a proportionate share (9.02%) of any increase
in the Operating Costs (defined below) in the building (including the related
land, driveways, parking facilities, and similar improvements) of which the
leased premises are a part (hereinafter called the building), for a given
calendar year over the actual Operating Costs in the building for the calendar
year 1999 (the "Operating Expense Stop"). LESSOR may collect such amount in a
lump sum, which shall be due within thirty (30) days after LESSOR furnishes to
LESSEE the Operating Costs and Tax Statement (defined below). Alternatively,
LESSOR may make a good faith estimate of the Additional Rent to be due by LESSEE
for any calendar year or part thereof during the lease term, and LESSEE shall
pay to LESSOR at the commencement of the lease and on the first day of each
calendar month thereafter, an amount equal to the estimated Additional Rent for
such calendar year or part thereof divided by the number of months therein. From
time to time, LESSOR may estimate and re-estimate the Additional Rent to be due
by LESSEE and deliver a copy of the estimate or re-estimate to LESSEE.
Thereafter, the monthly installments of Additional Rent payable to LESSEE shall
be appropriately adjusted in accordance with the estimations so that, by the end
of the calendar year in question, LESSEE shall have paid all of the Additional
Rent as estimated by LESSOR. Any amounts paid based on such an estimate shall be
subject to adjustment as herein provided when actual Operating Costs are
available for each calendar year. The term "Operating Costs" shall mean all
expenses and disbursements that LESSOR incurs in connection with the ownership,
operation, and maintenance of the building including, but not limited to, the
following costs: a) wages and salaries (including management fees) of all
employees engaged in the operation, maintenance, and security of the building,
including taxes, insurance, and benefits relating thereto; b) all supplies and
materials used in the operation, maintenance, repair, replacement, and security
of the building; c) costs for improvements made to the building which, although
capital in nature, are expected to reduce the normal operating costs of the
building, as well as capital improvements made in order to comply with any law
hereafter promulgated by any governmental authority, as amortized over the
useful economic life of such improvements as determined by LESSOR in its
reasonable discretion; d) cost of all utilities, except the cost of utilities
reimbursable to LESSOR by the building's tenants; e) insurance expenses; f)
repairs, replacements, and general maintenance of the building; and g) service
or maintenance contracts with independent contractors for the operation,
maintenance, repair, replacement, or security of the building (including,
without limitation, alarm service, window cleaning, and elevator maintenance).

LESSEE shall also pay to LESSOR as additional rent a proportionate share (9.02%)
(based on square footage leased by LESSEE as compared with the total leasable
square footage of the

building) of any increase in the Taxes ("Tax Escalation") levied against the
land and building. LESSEE shall pay the Tax Escalation in the same manner as
provided above for Additional Rent with regard to Operating Costs. The base from
which to determine the amount of any increase in taxes shall be the rate and the
assessment in effect as of fiscal year 1999 ("Real Estate Tax Stop"). `Taxes"
shall mean taxes, assessments, and governmental charges whether federal, state,
county or municipal, and whether they be by taxing districts or authorities
presently taxing or by others, subsequently created or otherwise, and any other
taxes and assessments attributable to the building (or its operation),
excluding, however, penalties and interest thereon and federal and state taxes
on income (if the present method of taxation changes so that in lieu of the
whole or any part of any Taxes, there is levied on LESSOR a capital tax directly
on the rents received therefrom or a franchise tax, assessment, or charge based,
in whole or in part, upon such rents for the building, then all such taxes,
assessments, or charges, or the part thereof so based, shall be deemed to be
included within the term "Taxes" for purposes hereof).

By April 1 of each calendar year, or as soon thereafter as practicable, LESSOR
shall furnish to LESSEE a statement of Operating Costs and Taxes for the
previous year (the "Operating Costs and Tax Statement"). With respect to any
calendar year or partial calendar year in which the building is not occupied to
the extent of 95% of the leasable area thereof, the Operating Costs for such
period shall, for the purposes hereof, be increased to the amount which would
have been incurred had the building been occupied to the extent of 95% of the
rental area thereof. If the Operating Costs and Tax Statement reveals that
LESSEE paid more for Operating Costs than the actual Additional Rent and more
for Taxes than Tax Escalation for the year for which such statement was
prepared, then LESSOR shall promptly credit LESSEE for such excess; likewise, if
LESSEE paid less than the actual Additional Rent or Tax Escalation due, then
LESSEE Shall promptly pay LESSOR such deficiency, within thirty (30) days after
receiving notice from LESSOR of the amount of such deficiency.

5. UTILITIES. LESSEE may utilize the existing equipment serving the leased
premises to heat the leased premises in season and cool all office areas between
May 1 and November 1. LESSEE shall pay all charges for utilities used on the
leased premises, including electricity, gas, oil, water, and sewer. LESSEE shall
pay the utility provider or LESSOR, as applicable, for all such utility charges
as determined either by separate meters serving the leased premises or as a
proportionate share of the utility charges as determined by LESSOR if not
separately metered. LESSEE shall also pay LESSOR a proportionate share of any
other fees and charges relating in any way to utility use at the building. No
plumbing, construction or electrical work of any type shall be conducted by
LESSEE or its agents without LESSOR's prior written approval and LESSEE
obtaining the appropriate municipal permit.

6. COMPLIANCE WITH LAWS. LESSEE acknowledges that no trade, occupation, activity
or work shall be conducted in the leased premises or use made thereof which may
be unlawful, improper, noisy, offensive, or contrary to any applicable statute,
law, regulation, restriction, ordinance or bylaw. LESSEE shall keep all
employees working in the leased premises covered by Worker's Compensation
Insurance and shall obtain any licenses and permits necessary for LESSEE's
occupancy. LESSEE shall comply with all Federal, state, municipal and other
laws, ordinances, rules and regulations applicable to the leased premises and
the business conducted therein and LESSEE shall comply with the rules and
recommendations of landlord's insurance carriers. Any cost for alterations.
additions or improvements required to

modify the common areas of the building in conjunction with any applicable law,
regulation, including the Americans With Disabilities Act, shall be paid by
LESSOR. Such alterations, additions, or improvements shall be made in the sole
discretion of LESSOR. Any alterations, additions or improvements required to
modify the leased premises in conjunction with any law or regulation, including
the American's With Disabilities Act, shall be approved by LESSOR and paid by
LESSEE.

7. FIRE, CASUALTY, EMINENT DOMAIN. Should a substantial portion of the leased
premises, or of the property of which they are a part, be substantially damaged
by fire or other casualty, or be taken by eminent domain, LESSOR may elect to
terminate this lease. When such fire, casualty, or taking renders the leased
premises substantially unsuitable for their intended use, a just and
proportionate abatement of rent shall be made, and LESSEE may elect to terminate
this lease if: (a) LESSOR fails to give written notice within thirty (30) days
of such fire, casualty or taking of its intention to restore the leased
premises, or (b) LESSOR fails to restore the leased premises to a condition
substantially suitable for their intended use within one hundred eighty (180)
days of said fire, casualty or taking. LESSOR reserves all rights for damages or
injury to the leased premises for any taking by eminent domain and LESSEE shall
release the entire condemnation award, and LESSEE hereby assigns to LESSOR all
of LESSEE's interest therein.

8. FIRE INSURANCE. LESSEE shall not permit any use of the leased premises which
will adversely affect or make voidable any insurance on the property of which
the leased premises are a part, or on the contents of said property, or which
shall be contrary to any law or regulation from time to time established by the
Insurance Services Office (or successor), local Fire Department, LESSOR's
insurer, or any similar body. LESSEE shall on demand reimburse LESSOR, and all
other tenants, all extra insurance premiums caused by LESSEE's use of the leased
premises. LESSEE shall not vacate the leased premises or permit same to be
unoccupied other than during LESSEE's customary non-business days or hours.

9. MAINTENANCE OF PREMISES. LESSOR will be responsible for all structural and
roof maintenance of the leased premises but specifically excluding damage caused
by the careless, malicious, willful, or negligent acts of LESSEE or others,
chemical, water or corrosion damage from any source, and maintenance of the
space heating, ventilating, and cooling units exclusively serving the leased
premises (collectively, the "HVAC Unit") and of any non "building standard"
leasehold improvements.

LESSOR shall not be deemed to have breached its obligation to make the repairs
required to be made by LESSOR unless LESSOR fails to make the same within a
reasonable period (taking into consideration the type of repair involved) after
receiving written notice from LESSEE of the need therefor. LESSEE agrees to
maintain at its expense the HVAC Unit and all other aspects of the leased
premises in the same condition as they are at the commencement of the term or as
they may be put in during the term of this lease, normal wear and tear and
damage by fire or other casualty only excepted, and whenever necessary, to
replace light bulbs, plate glass and other glass therein, acknowledging that the
leased premises are now in good order and the light bulbs and glass whole. If
LESSOR so directs, LESSEE shall enter into a preventive maintenance/service
contract acceptable to LESSOR with a maintenance contractor acceptable to LESSOR
at LESSEE's sole cost and expense for servicing all air conditioning, heating,

ventilating, and other equipment or other equipment located within or serving
the leased premises. LESSEE will properly control or vent all solvents,
degreasers, smoke, odors, etc. and shall not cause the area surrounding the
leased premises to be in anything other than a neat and clean condition,
depositing all waste in appropriate receptacles. LESSEE shall be solely
responsible for any damage to plumbing equipment, sanitary lines, or any other
portion of the building which results from the discharge or use of any acid or
corrosive substance by LESSEE. LESSEE shall not permit the leased premises to be
overloaded, damaged, stripped or defaced, nor suffer any waste, and will not
keep animals within the leased premises. LESSEE will protect any carpet with
plastic or masonite chair pads under any rolling chairs. Unless heat is provided
at LESSOR's expense, LESSEE shall maintain sufficient heat to prevent freezing
of pipes or other damage. Any increase in air conditioning equipment or
electrical capacity, or any installation and/or maintenance of equipment which
is necessitated by some specific aspect of LESSEE's use of the leased premises
shall be at LESSEE's expense. All maintenance provided by LESSOR shall be during
LESSOR's normal business hours.

10. ALTERATIONS. LESSEE shall not make structural alterations or additions of
any kind to the leased premises, but may make nonstructural alterations provided
LESSOR consents thereto in writing. All such allowed alterations shall be at
LESSEE's expense and shall conform to LESSOR's construction specifications. If
LESSOR or LESSOR's agent provides any services or maintenance for LESSEE in
connection with such alterations or otherwise under this lease, any just invoice
of LESSOR or its contractors will be promptly paid by LESSEE. LESSEE shall not
permit any mechanics' liens, or similar liens, to remain upon the leased
premises in connection with work of any character performed or claimed to have
been performed at the direction of LESSEE and shall cause any such lien to be
released or removed forthwith without cost to LESSOR. Any alterations or
additions shall become part of the leased premises and the property of LESSOR.
Any alterations completed by LESSOR shall be LESSOR's "building standard" unless
noted otherwise. LESSOR shall have the right at any time to change the size,
area, level and location of parking areas, stairs, walkways, pathways,
entrances, driveways, landscaped areas or other common areas of the building.

11. ASSIGNMENT OR SUBLEASING. LESSEE shall not voluntarily, involuntarily or by
operation of law assign or encumber this lease or sublet or allow any other firm
or individual to occupy the whole or any part of the leased premises without
LESSOR's prior written consent such consent shall not be unreasonably withheld.
Notwithstanding such assignment or subleasing, LESSEE and GUARANTOR shall remain
liable to LESSOR for the payment of all rent and for the full performance of the
covenants and conditions of this lease. LESSEE shall pay LESSOR promptly for
legal and administrative expenses incurred by LESSOR in connection with any
consent requested hereunder by LESSEE. LESSEE shall be deemed to be in default
hereunder if the cumulative total of more than forty-nine percent (49%) of
LESSEE's stock, partnership interest or membership interest (as applicable)
shall be transferred in any manner during the term of this lease to other than
the present holders thereof or the spouse or lineal descendant of any present
holder who is a natural person. If LESSOR conveys or transfers its interest in
the building, upon such conveyance or transfer, LESSOR (and in the case of any
subsequent conveyances or transfers, the then grantor or transferor) shall be
entirely released from all liability with respect to the performance of any
obligation on the part of the landlord to be performed hereunder from and after
the date of such conveyance or transfer.

12. SUBORDINATION. This lease shall be subject and subordinate to any and all
mortgages and other instruments in the nature of a mortgage, now or at any time
hereafter, and LESSEE shall, when requested, promptly execute and deliver such
written instruments as shall be requested to show the subordination of this
lease to said mortgages or other such instruments in the nature of a mortgage.
Notwithstanding the foregoing, if the mortgagee elects to have this lease
superior to such mortgage, then upon mortgagee's request LESSEE shall execute,
acknowledge and deliver an instrument, in form used by said mortgagee, effecting
such priority. In the event proceedings are brought for foreclosure of, or the
exercise of a power of sale under any such mortgage, LESSEE shall attorn to the
purchaser upon any such foreclosure or sale and recognize such purchaser as
landlord under this lease. LESSEE, upon request from LESSOR or any successor in
interest, shall execute, acknowledge and deliver such instruments as are
required to effect the intent of this section.

13. LESSOR'S ACCESS. LESSOR or agents of LESSOR may at any reasonable time enter
to view the leased premises, to make repairs and alterations as LESSOR should
elect to do for the leased premises, the common areas or any other portions of
the building, to make repairs which LESSEE is required but has failed to do, and
to show the leased premises to others.

14. SNOW REMOVAL. The plowing of snow from all roadways and unobstructed parking
areas shall be the sole responsibility of LESSOR, the expense of which shall be
included in Operating Costs. The control of snow and ice on all walkways, steps,
and loading areas serving the leased premises and all other areas not readily
accessible to plows unless they serve multiple tenants shall be the sole
responsibility of LESSEE. Notwithstanding the foregoing, however, LESSEE shall
hold LESSOR harmless from any and all claims by LESSEE's agents,
representatives, employees, callers or invitees for damage or personal injury
resulting in any way from snow or ice on any area serving the leased premises.

15. ACCESS AND PARKING. LESSEE shall have the right to use parking facilities
provided for the leased premises in common with others entitled to the use
thereof. Said parking area plus any stairs, walkways, elevators or other common
areas shall in all cases be considered a part of the leased premises when they
are used by LESSEE or LESSEE's employees, agents, callers or invitees. LESSEE
will not obstruct in any manner any portion of the building or the walkways or
approaches to the building, and will conform to all rules and regulations now or
hereafter made by LESSOR for parking, and for the care, use, or alteration of
the building, its facilities and approaches. LESSEE further warrants that LESSEE
will not permit any employee or visitor to violate this or any other covenant or
obligation of LESSEE. No unattended parking will be permitted between 7:00 PM
and 7:00 AM without LESSOR's prior written approval, and from December 1 through
March 31 annually, such parking shall be permitted only in those areas
specifically designated for assigned overnight parking. Unregistered or disabled
vehicles, or storage trailers of any type, may not be parked at any time. LESSOR
may tow, at LESSEE's sole risk and expense, any misparked vehicle belonging to
LESSEE or LESSEE's agents, employees, invitees or callers, at any time. LESSOR
shall not be responsible for providing any security services for the leased
premises.

16. LIABILITY. LESSEE shall be solely responsible as between LESSOR and LESSEE
for deaths or personal injuries to all persons whomsoever occurring in or on the
leased premises (including any common areas that are considered part of the
leased premises hereunder) from

whatever cause arising, and damage to property to whomsoever belonging arising
out of the use, control, condition or occupation of the leased premises by
LESSEE; and LESSEE agrees to indemnify and save harmless LESSOR from any and all
liability, including but not limited to costs, expenses, damages, causes of
action, claims, judgments and attorney's fees of any kind which may be asserted
against or incurred by LESSOR as a result of any occurrence in or about the
leased premises or by reason of LESSEE's use or occupancy of the leased
premises, or by reason of a failure of LESSEE to perform any of its obligations
under this lease, or otherwise caused by or in any way growing out of any
matters aforesaid, except for death, personal injuries or property damage solely
and directly resulting from the gross negligence or willful misconduct of
LESSOR.

17. INSURANCE. LESSEE will secure and carry at its own expense worker's
compensation insurance at the minimum statutory amount, comprehensive general
public liability insurance under which LESSOR and LESSEE are named insureds,
against any claims based on bodily injury (including death) or property damage
arising out of the condition of the leased premises (including any common areas
that are considered part of the leased premises hereunder) or their use by
LESSEE, such policy to insure LESSEE, LESSOR and OWNER against any claim up to
Two Million Dollars (2,000,000) in the case of any one accident involving bodily
injury (including death), and up to Two Million Dollars ($2,000,000) against any
claim for damage to property and containing a contractual endorsement covering
LESSEE's indemnity obligation under this section. LESSOR and OWNER shall be
included in each such policy as additional insureds using ISO form CG 20 26 11
85 or some other form approved by LESSOR. LESSEE will file with LESSOR prior to
occupancy certificates and any applicable riders or endorsements showing that
such insurance is in force, and thereafter will file renewal certificates prior
to the expiration of any such policies. All such insurance certificates shall
provide that such policies shall not be cancelled without at least ten (10) days
prior written notice to each insured. In the event LESSEE shall fail to provide
or maintain such insurance at any time during the term of this lease, then
LESSOR may elect to contract for such insurance at LESSEE's expense. Anything in
this lease to the contrary notwithstanding, it is agreed that each party (the
"Releasing Party") hereby releases the other (the "Released Party") from any
liability from which the Released Party would, but for this section, have had to
the Releasing Party during the term of this lease, resulting from the occurrence
of any accident or occurrence or casualty (i) which is or would be covered by a
policy of physical hazard insurance of the type commonly referred to as an
"all-risk" policy affording coverage for the perils (u) of fire; (v) of
windstorm, (w) of flood, (x) of earthquake, (y) covered by broad form extended
coverage insurance as included in the standard form used in the Commonwealth of
Massachusetts, including, in particular without limitation, sprinkler leakage,
and (z) of explosion of steam pressure boilers and other similar apparatus
located in, on or about the building (irrespective of whether such coverage is
carried by the Releasing Party); or (ii) covered by any other casualty or
property damage insurance being carried by the Releasing Party at the time of
such occurrence, which accident, occurrence or casualty may have resulted in
whole or in part from any act or neglect of the Released Party, its officers,
agents or employees; provided, however, the release here and above set forth
shall become inoperative and null and void if the Releasing Party wishes to
place the appropriate insurance with an insurance company which (y) takes the
position that the existence of such release vitiates or would adversely affect
the policy so insuring the Releasing Party in a substantial manner and notice
thereof is given to the Released Party, or (z) requires the payment of a higher
premium by reason of the existence of such release, unless in the latter case
the

Released Party within ten (10) days after notice thereof from the Releasing
Party pays such increase in premium.

18. SIGNS. LESSOR authorizes, and LESSEE at LESSEE's expense agrees to erect,
signage for the leased premises in accordance with all applicable governmental
regulations and with LESSOR's building standards for style, size, location, etc.
LESSEE shall obtain the prior written consent of LESSOR before erecting any sign
on the leased premises, which consent shall include approval as to size,
wording, design, and location. LESSOR may remove and dispose of any sign not
approved, erected or displayed in conformance with this lease.

19. BROKERAGE. LESSEE warrants and represents to LESSOR that LESSEE has dealt
with no broker or third person except Brad Spencer of Grubb & Ellis who will be
paid by LESSOR in accordance with LESSOR's standard fee schedule with respect to
this lease and LESSEE agrees to indemnify LESSOR against any brokerage claims
arising by virtue of this lease. LESSOR warrants and represents to LESSEE that
LESSOR has employed no exclusive broker or agent in connection with the letting
of the leased premises.

20. DEFAULT AND ACCELERATION OF RENT. In the event that: (a) any assignment for
the benefit of creditors, trust mortgage, receivership or other insolvency
proceeding shall be made or instituted with respect to LESSEE or LESSEE's
property; (b) LESSEE shall default in the observance or performance of any of
LESSEE's covenants, agreements, or obligations hereunder, other than substantial
monetary payments as provided below, and such default shall not be corrected
within ten (10) days after written notice thereof; or (c) LESSEE vacates the
leased premises for twenty (20) consecutive days, then LESSOR shall have the
right thereafter, while such default continues and without demand or further
notice, at LESSOR's option, either (i) to terminate this lease, or (ii) without
terminating this lease, to take possession of the leased premises, with or
without process of law, using such force as may be necessary to remove all
persons and personal property therefrom, and in the event of such re-entry
without termination, LESSOR may (but shall have no obligation to do so) lease
the leased premises for the remainder of the term or for a lesser longer period
on such terms and conditions as LESSOR, in its sole judgment, deems advisable
and for the purpose of such re-letting, LESSOR is hereby authorized to make such
repairs and alterations as LESSOR deems necessary. Notwithstanding any
re-letting without termination, (y) LESSEE shall remain liable for payment of
the base rent, Additional Rent and all other charges and for the performance of
all other obligations to be performed by LESSEE under this lease, and (z) LESSOR
may at any time thereafter elect to terminate this lease for such previous
breach. The rentals received from such re-letting shall first be applied to the
expenses of such re-letting (including alteration and repair expenses and
reasonable brokerage and attorneys' fees); and second to the payment of rent and
other charges due and paid hereunder. LESSEE shall not be entitled to receive
any surplus funds received by LESSOR from such re-letting. If such funds from
the re-letting are less than those required to be paid by LESSEE or under for
any month, such deficiency shall be calculated and payable monthly by LESSEE.
LESSOR shall also be entitled to collect from LESSEE any other loss or damage
which LESSOR may sustain by reason of LESSEE's default under this lease. In
addition to the foregoing, LESSOR shall have all other rights and remedies
available to it at law or in equity. If LESSEE shall default in the payment of
the security deposit, rent, taxes, substantial invoice from LESSOR or LESSOR's
agent for goods and/or services or other sum herein specified, and such default
shall continue for ten (10) days after written notice thereof, and,

because both parties agree that nonpayment of said sums when due is a
substantial breach of the lease, and, because the payment of rent in monthly
installments is for the sole benefit and convenience of LESSEE, then in addition
to the foregoing remedies the entire balance of rent which is due hereunder
shall become immediately due and payable as liquidated damages. LESSOR, without
being under any obligation to do so and without thereby waiving any default, may
remedy any such default of LESSEE for the account and at the expense of LESSEE.
If LESSOR pays or incurs any obligations for the payment of money in connection
therewith, such sums paid or obligations incurred plus interest and costs, shall
be paid to LESSOR by LESSEE as additional rent. Any sums received by LESSOR from
or on behalf of LESSEE at any time shall be applied first to any unamortized
improvements completed for LESSEE's occupancy, then to offset any outstanding
invoice or other payment due to LESSOR, with the balance applied to outstanding
rent. LESSEE agrees to pay reasonable attorney's fees and/or administrative
costs incurred by LESSOR in enforcing any or all obligations of LESSEE under
this lease at any time. LESSEE shall pay LESSOR interest at the rate of eighteen
percent (18%) per annum on any payment from LESSEE to LESSOR which is past due.
If LESSEE fails to perform any obligations on its part to be performed under
this lease, LESSOR shall have the right (i) if no emergency exists, to perform
the same after giving ten (10) days notice to LESSEE; and (ii) in any emergency
situation perform the same immediately without notice or delay. LESSEE shall on
demand reimburse LESSOR for costs incurred by LESSOR in rectifying LESSEE's
defaults as aforesaid, including reasonable attorneys' fees. Except for the
gross negligence or willful misconduct by LESSOR, LESSOR shall not be liable or
in any way responsible for any loss, inconvenience or damage resulting to LESSEE
for any action taken by LESSOR pursuant to this section.

21. NOTICE. Any notice from LESSOR to LESSEE relating to the leased premises or
to the occupancy thereof shall be deemed duly served when left at the leased
premises addressed to LESSEE, or served by constable, or sent to the leased
premises by certified mail, return receipt requested, postage prepaid, addressed
to LESSEE, or by nationally recognized overnight delivery. Any notice from
LESSEE to LESSOR relating to the leased premises or to the occupancy thereof
shall be deemed duly served when served by constable, or delivered to LESSOR by
certified mail, return receipt requested, postage prepaid, or by nationally
recognized overnight delivery addressed to LESSOR c/o Pinnacle Properties
Management, Inc. at 56 Roland Street, Boston, MA 02129 or at LESSOR's last
designated address with a copy to Frank P. Brady, Esq., Polsinelli, White,
Vardeman & Shalton, 7500 College Boulevard, Suite 750, Overland Park, KS 66210.
No oral notice or representation shall have any force or effect. Time is of the
essence in service of any notice.

22. OCCUPANCY. In the event that LESSEE takes possession of said leased premises
prior to the start of said term, LESSEE will perform and observe all of LESSEE's
covenants from the date upon which LESSEE takes possession except the obligation
for the payment of extra rent for any period of less than one month. LESSEE
shall not remove LESSEE's goods or property from the leased premises other than
in the ordinary and usual course of business, without having first paid and
satisfied LESSOR for all rent which may become due during the entire term of
this lease. LESSOR shall have the right to relocate LESSEE to another facility
upon prior written notice to LESSEE and on terms comparable to those herein. If
LESSOR relocates LESSEE, LESSOR shall reimburse LESSEE for LESSEE's reasonable
out-of-pocket expenses for moving LESSEE's furniture, equipment, and supplies
from the leased premises to the relocation space

and for reprinting LESSEE's stationery of the same quality and quantity as
LESSEE's stationery supply on hand immediately before LESSOR's notice to LESSEE
of the exercise of this relocation right. Upon such relocation, the relocation
space shall be deemed to be the leased premises and the terms of the lease shall
remain in full force and shall apply to the relocation space. In the event that
LESSEE continues to occupy or control all or any part of the leased premises
after the agreed termination of this lease without the written permission of
LESSOR, then LESSEE shall be liable to LESSOR for any and all loss, damages or
expenses incurred by LESSOR, and all other terms of this lease shall continue to
apply except that rent shall be due in full monthly installments at a rate of
one hundred fifty percent (150%) of that which would otherwise be due under this
lease, it being understood between the parties that such extended occupancy is
as a tenant at sufferance and is solely for the benefit and convenience of
LESSEE and as such has greater rental value. LESSEE's control or occupancy of
all or any part of the leased premises beyond noon on the last day of any
monthly rental period shall constitute LESSEE's occupancy for an entire
additional month, and increased rent as provided in this section shall be due
and payable immediately in advance. LESSOR's acceptance of any payments from
LESSEE during such extended occupancy shall not alter LESSEE's status as a
tenant at sufferance.

23. FIRE PREVENTION. LESSEE agrees to use every reasonable precaution against
fire and agrees to provide and maintain approved, labeled fire extinguishers,
emergency lighting equipment, and exit signs and complete any other
modifications within the leased premises as required or recommended by the
Insurance Services Office (or successor organization), OSHA, the local Fire
Department, or any similar body.

24. OUTSIDE AREA. No goods, equipment, or things of any type or description
shall be held or stored outside the leased premises at any time without prior
written consent from LESSOR. Any goods, equipment or things left outside the
leased premises without LESSOR's prior written consent shall be deemed abandoned
and may be removed at LESSEE's expense without notice by LESSOR. LESSEE shall
have a building standard size dumpster in a location approved by LESSOR,
provided and serviced at LESSEE's expense by whichever disposal firm may from
time to time be designated by LESSOR, unless a shared dumpster or compactor is
provided by LESSOR, in which case LESSEE shall pay its proportionate share of
any costs associated therewith.

25. ENVIRONMENT. LESSEE will so conduct and operate the leased premises as not
to interfere in any way with the use and enjoyment of other portions of the same
or neighboring buildings by others by reason of odors, smoke, smells, noise,
pets, accumulation of garbage or trash, vermin or other pests, or otherwise, and
will at its expense employ a professional pest control service if necessary.
LESSEE agrees to maintain efficient and effective devices for preventing damage
to heating equipment from solvents, degreasers, cutting oils, propellants, etc.
which may be present at the leased premises. No hazardous materials or wastes
shall be stored, disposed of, or allowed to remain at the leased premises at any
time, and LESSEE shall be solely responsible for any and all corrosion or other
damage associated with the use, storage and/or disposal of same by LESSEE.
LESSEE agrees not to unreasonably or unlawfully introduce any hazard or toxic
materials onto the leased premises without (a) first obtaining LESSOR's written
consent, and (b) complying with all applicable Federal, state and local laws or
ordinances pertaining to the transportation, storage, use or disposal of such
materials, including but not

limited to, obtaining proper permits. If LESSEE's transportation, storage, use
or disposal of hazardous or toxic materials on the leased premises results in
(i) contamination of the soil or surface or ground water or (ii) loss or damage
to persons or property, then LESSEE agrees (1) to notify LESSOR immediately of
any contamination, claim of contamination, loss or damage, (2) after
consultation and approval by LESSOR, to clean-up, at LESSEE's sole expense,
contamination in full compliance with all applicable statutes, regulations and
standards, and (3) to indemnify, defend and hold LESSOR harmless from and
against any claims, suits, causes of action, costs and fees, including
reasonable attorneys' fees arising from or connected with any such
contamination, claim of contamination, loss, damage or clean-up. This provision
shall survive termination of this lease.

26. RESPONSIBILITY. LESSOR shall not be held liable to anyone for loss or damage
caused in any way by the use, leakage, seepage or escape of water from any
source, or for the cessation of any service rendered customarily to said leased
premises or buildings, or agreed to by the terms of this lease, due to any
accident, the making of repairs, alterations or improvements, labor
difficulties, weather conditions, mechanical breakdowns, trouble or scarcity in
obtaining fuel, electricity, service or supplies from the sources from which
they are usually obtained for said building, or any cause beyond LESSOR's
immediate control.

27. SURRENDER. LESSEE shall at the termination of this lease remove all of
LESSEE's goods and effects from the leased premises. LESSEE shall deliver to
LESSOR the leased premises and all keys and locks thereto, all fixtures and
equipment connected therewith, and all alterations, additions and improvements
made to or upon the leased premises, whether completed by LESSEE, LESSOR, or
others, including but not limited to any offices, partitions (except movable
partitions supplied and installed by LESSEE), window blinds, floor coverings
(including computer floors), plumbing and plumbing fixtures, air conditioning
equipment and ductwork of any type, exhaust fans or heaters, water coolers,
burglar alarms, telephone wiring, telephone equipment, air or gas distribution
piping, compressors, overhead cranes, hoists, trolleys or conveyors, counters,
shelving or signs attached to walls or floors, all electrical work, including
but not limited to lighting fixtures of any type, wiring, conduit, EMT,
transformers, distribution panels, bus ducts, raceways, outlets and disconnects,
and furnishings (except kitchen-type appliances supplied and installed by
LESSEE) or equipment which have been bolted, welded, nailed, screwed, glued or
otherwise attached to any wall, floor or ceiling, or which have been directly
wired to any portion of the electrical system or which have been plumbed to the
water supply, drainage or venting systems serving the leased premises. LESSEE
shall deliver the leased premises sanitized from any chemicals or other
contaminants, and broom clean and in the same condition as they were at the
commencement of this lease or any prior lease between the parties for the leased
premises, or as they were modified during said term with LESSOR's written
consent, reasonable wear and tear and damage by fire or other casualty only
excepted. In the event of LESSEE's failure to remove any of LESSEE's property
from the leased premises upon termination of the lease, LESSOR is hereby
authorized, without liability to LESSEE for loss or damage thereto, and at the
sole risk of LESSEE, to remove and store any such property at LESSEE's expense,
or to retain same under LESSOR's control, or to sell at public or private sale
(without notice), any or all of the property not so removed and to apply the net
proceeds of such sale to the payment of any sum due hereunder, or to destroy
such abandoned property. In no case shall the leased premises be deemed
surrendered to LESSOR

until the termination date provided herein or such other date as may be
specified in a written agreement between the parties, notwithstanding the
delivery of any keys to LESSOR.

28. GENERAL. (a) The invalidity or unenforceability of any provision of this
lease shall not affect or render invalid or unenforceable any other provision
hereof. (b) The obligations of this lease shall run with the land, and this
lease shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns, except that LESSOR shall be liable only
for obligations occurring while lessor, owner, or master lessee of the leased
premises. (c) Any action or proceeding arising out of the subject matter of this
lease shall be brought by LESSEE within one year after the cause of action has
occurred and only in a court of the Commonwealth of Massachusetts. (d) If LESSOR
is acting under or as agent for any trust or corporation, the obligations of
LESSOR shall be binding upon the trust or corporation, but not upon any trustee,
officer, director, shareholder, or beneficiary of the trust or corporation
individually. (f) This lease is made and delivered in the Commonwealth of
Massachusetts, and shall be interpreted, construed, and enforced in accordance
with the laws thereof. (g) This lease was the result of negotiations between
parties of equal bargaining strength, and when executed by both parties shall
constitute the entire agreement between said parties. No other oral or written
representation shall have any effect hereon, and this agreement may not be
altered, extended or amended except by written agreement attached hereto or as
otherwise provided herein. (h) Notwithstanding any other statements herein,
LESSOR makes no warranty, express or implied, concerning the suitability of the
leased premises for LESSEE's intended use. (i) LESSEE agrees that if LESSOR does
not deliver possession of the leased premises as herein provided for any reason,
LESSOR shall not be liable for any damages to LESSEE for such failure, but
LESSOR agrees to use reasonable efforts to deliver possession to LESSEE at the
earliest possible date, and a proportionate abatement of rent for such time as
LESSEE may be deprived of possession of said leased premises shall be LESSEE's
sole remedy. (j) Neither the submission of this lease form, nor the prospective
acceptance of the security deposit and/or rent shall constitute a reservation of
or option for the leased premises, or an offer to lease, it being expressly
understood and agreed that this lease shall not bind either party in any manner
whatsoever until it has been executed by both parties. (k) LESSEE shall not be
entitled to exercise any option contained herein if LESSEE is in default of any
terms or conditions hereof. (1) The headings in this lease are for convenience
only and shall not be considered part of the terms hereof. (m) No endorsement by
LESSEE on any check shall bind LESSOR in any way.

29. SECURITY AGREEMENT. LESSEE hereby grants LESSOR a continuing security
interest in all existing or hereafter acquired property of LESSEE which is in
the leased premises to secure the payment of rent, the cost of leasehold
improvements, and the performance of any other obligations of LESSEE under this
lease. Default in the payment or performance of any of LESSEE's obligations
hereunder is a default under this security agreement, and shall entitle LESSOR
to immediately exercise all of the rights and remedies of a secured party under
the Uniform Commercial Code. LESSEE also agrees to execute a UCC-1 Financing
Statement and any other financing agreement required by LESSOR in connection
with this security interest.

30. WAIVERS, ETC. No consent or waiver, express or implied, by LESSOR, to or of
any breach of any covenant, condition or duty of LESSEE shall be construed as a
consent or waiver to or of any other breach of the same or any other covenant,
condition or duty. If LESSEE is several persons, several corporations or a
partnership, LESSEE's obligations are joint or

partnership and also several. Unless repugnant to the context, "LESSOR" and
"LESSEE" mean the person or persons, natural or corporate, named above as LESSOR
and as LESSEE respectively, and their respective heirs, executors,
administrators, successors and assigns.

31. AUTOMATIC FIVE YEAR EXTENSIONS. This lease, including all terms, conditions,
escalations, etc. shall be automatically extended for additional successive
periods of five (5) years each unless LESSOR or LESSEE shall serve written
notice, either party to the other, of either party's desire not to so extend the
lease. The time for serving such written notice shall be not more than twelve
(12) months or less than six (6) months prior to the expiration of the then
current lease period. Time is of the essence.

32. JURY TRIAL. LESSOR and LESSEE hereby waive any and all rights to a jury
trial in any summary process or eviction proceeding in any way arising out of
the lease.

33. ESTOPPEL CERTIFICATES. From time to time, LESSEE shall furnish to any party
designated by LESSOR, within ten (10) days after a request therefor, a
certificate signed by LESSEE confirming and containing such factual
certifications and representations as to this lease as LESSOR may reasonably
request.

34. CORPORATE APPROVAL. Concurrently with its execution of the lease, LESSEE
shall provide LESSOR with duly authorized and executed corporate resolutions (in
form and substance satisfactory to LESSOR) authorizing the entering into and
consummation of the transactions contemplated by this lease and designating the
corporate or other officer or officers to execute this lease on behalf of
LESSEE.

35. FINANCIAL REPORTS. Within fifteen (15) days after LESSOR's request, LESSEE
shall furnish LESSEE's most recent audited financial statements (including any
notes to them) to LESSOR, or, if no such audited statements have been prepared,
such other financial statements (and notes to them) as may have been prepared by
an independent certified public accountant or, failing those, LESSEE's
internally prepared financial statements. LESSEE will discuss its financial
statements with LESSOR and will give LESSOR access to LESSEE's books and records
in order to enable LESSOR to verify the financial statements. LESSOR will not
disclose any aspect of LESSEE's financial statements that LESSEE designates to
LESSOR as confidential except (i) to LESSOR's lenders or prospective purchasers
of the property, (ii) in litigation between LESSOR and LESSEE, and (iii) if
required by court order.

36. CONFIDENTIALITY. LESSEE acknowledges that the terms and conditions of this
lease are to remain confidential for the LESSOR's benefit, and may not be
disclosed by LESSEE to anyone, by any manner or means, directly or indirectly,
without LESSOR's prior written consent.

37. LEGAL EXPENSE; REMEDIES CUMULATIVE. In case suit should be brought because
of the breach by LESSEE of any of its obligations under this lease, LESSOR shall
be entitled to recover all expenses incurred in connection with such breach,
including reasonable attorneys' fees. LESSOR's rights and remedies shall be
cumulative and may be exercised and enforced concurrently, and no right or
remedy of LESSOR shall be deemed to be exclusive of any other right or remedy it
may have.

38. LIMITATION ON LESSOR'S LIABILITY. Notwithstanding anything set forth in this
lease to the contrary, it is agreed that LESSEE shall look solely to the equity
of LESSOR in the building for the satisfaction of the remedies of LESSEE in the
event of a breach by LESSOR of any of the provisions of this lease, and LESSOR
shall not be liable for any such breach except to the extent of LESSOR's equity
in the building.

39. ADDITIONAL PROVISIONS. (Continued on attached rider if necessary.)

LESSOR at no additional cost to LESSEE, shall perform the following work at the
leased premises: 
Remove the existing tile in the rear portion of the leased premises;
Replace the existing carpet in the existing office area and perimeter
offices with new carpet and vinyl cove base; and
Perform punchlist items including: installing covers over existing electrical
outlets, replacing damaged ceiling tiles, and painting the back double metal
doors.

LESSOR, at LESSOR's option, may construct up to an additional 10,000 square feet
onto the existing building as shown on Exhibit "B" attached hereto ("Potential
Addition") that may temporarily or permanently affect LESSEE's access to and
from its tenant entry door and may involve relocating LESSEE's tenant entry
door. In the event that the LESSOR makes the Potential Addition, LESSEE's
proportionate share of Operating Costs and Taxes shall be equitably adjusted to
reflect the new square footage of the building. In such event, LESSOR shall
diligently pursue the completion of the Potential Addition and shall use
reasonable efforts to complete the Potential Addition without undue delay and in
a manner which does not materially and unreasonably affect LESSEE's use,
enjoyment and occupation of the leased premises.

IN WITNESS WHEREOF, LESSOR AND LESSEE have hereunto set their hands and common
seals and intend to be legally bound hereby this 13th day of May

LESSOR:  6-8 PRESTON COURT, L.L.C.
LESSEE: ASIANA PHARMACEUTICALS CORPORATION

By: PINNACLE PROPERTIES MANAGEMENT, INC., its manager

/s/ FREDERICK D. KEEFE
President, Pinnacle Properties Management, Inc.

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

/s/ LAN BO CHEN                                          By:
--------------------------------------------------
President Asiana Pharmaceuticals

GUARANTY

IN CONSIDERATION of the making of the above lease by 6-8 Preston Court, L.L.C
with Asiana Pharmaceuticals Corporation at the request of the undersigned and in
reliance on this

guaranty, the undersigned (GUARANTOR) hereby personally guarantees the prompt
payment of rent by LESSEE and the performance by LESSEE of all the terms,
conditions, covenants and agreements of the lease, any amendments thereto and
any extensions or assignments thereof, and the undersigned promises to pay all
expenses, including reasonable attorney's fees, incurred by LESSOR in enforcing
all obligations of LESSEE under the lease or incurred by LESSOR in enforcing
this guaranty. LESSOR's consent to any assignments, subleases, amendments and
extensions by LESSEE or to any compromise or release of LESSEE's liability
hereunder, with or without notice to the undersigned, or LESSOR's failure to
notify the undersigned of any default and/or reinstatement of the lease by
LESSEE, shall not relieve the undersigned from liability as GUARANTOR.

IN WITNESS WHEREOF, the undersigned GUARANTOR has hereunto set his/her/its hand
and common seal intending to be legally bound hereby this 13th day of May.

12/98

/s/ LAN BO CHEN
-----------------------------------------

ADDENDUM

This Addendum shall constitute an integral part of the Lease ("Lease")
of even date herewith between 6-8 Preston Court, L.L.C. ("Lessor") and Asiana
Pharmaceuticals Corporation ("Lessee") with respect to the Premises commonly
known as 8A Preston Court. To the extent any of the terms and conditions set
forth in this Addendum are inconsistent with the terms and conditions set forth
in the Lease, the terms and conditions of this Addendum shall supercede the
terms and conditions of the Lease and the terms and conditions of this Addendum
shall govern.

The parties agree as follows:

1. Lessee shall immediately provide Lessor with telephonic notice,
which shall promptly be confirmed by written notice, of any and all spillage,
discharge, release and disposal of Hazardous Material onto or within the
Premises, including the soils and subsurface waters thereof, which by law must
be reported to any federal, state or local agency, and any injuries or damages
resulting directly or indirectly therefrom. Further, Lessee shall deliver to
Lessor each and every notice or order, when said order or notice identifies a
violation which may have the potential to adversely impact the Premises,
received from any federal, state or local agency concerning Hazardous Material
and the possession, use and/or accumulation thereof promptly upon receipt of
each such notice or order by Lessee. Lessor shall have the right, upon
reasonable notice, to inspect and copy each and every notice or order received
from any federal, state or local agency concerning Hazardous Material and the
possession, use and/or accumulation thereof.

2. Lessee shall be responsible for and shall indemnify, protect, defend
and hold harmless Lessor and Lessor's Agents (defined as Lessor's members,
employees, agents, contractors, licensees or invitees) from any and all
liability, damages, injuries, causes of action, claims, judgments, costs,
penalties, fines, losses, and expenses which arise during or after the term of
this Lease and which result from Lessee's or from Lessee's Agents (defined as
Lessee's assignees, sublessees, employees, agents, contractors, licensees, or
invitees) receiving, handling, use, storage, accumulation, transportation,
generation, spillage, migration, discharge, release or disposal of Hazardous
Material in, upon or about the Premises, including without limitation (i)
diminution in value of the Premises, (ii) damages for the loss or restriction on
use of any portion or amenity of the Premises, (iii) damages arising from any
adverse impact on marketing of space in the Building, (iv) damages and the costs
of remedial work to other property in the vicinity of the Premises owned by
Lessor or an affiliate of Lessor, and (v) consultant fees, expert fees, and
attorneys' fees.

3. The indemnification pursuant to the preceding Section 2 includes,
without limiting the generality of Section 2, reasonable costs incurred in
connection with any investigation of site conditions, cleanup, remedial, removal
or restoration work required by any federal, state or local governmental agency
or political subdivision because of Hazardous Material present in the soil,
subsoil, ground water, or elsewhere on, under or about the Premises, or on,
under or about any other property in the vicinity of the Premises owned by
Lessor or an affiliate of Lessor. Without limiting the foregoing, if the
presence of any Hazardous Material on the Premises caused or permitted by Lessee
results in any contamination of the Premises, or underlying soil or groundwater,
Lessee shall promptly take all actions at its sole expense as are

necessary to return the Premises to the condition existing prior to the
introduction of any such Hazardous Material, provided that Lessor's approval of
such action shall first be obtained, which approval shall not be unreasonably
withheld so long as such actions would not potentially have any material adverse
long-term or short-term effect on the Premises, except that Lessee shall not be
required to obtain Lessor's prior approval of any action of an emergency nature
reasonably required or any action mandated by a governmental authority, but
Lessee shall give Lessor prompt notice thereof.

4. Notwithstanding other provisions of this Addendum, it shall be a
default under this Lease, and Lessor shall have the right to terminate the Lease
and/or pursue its other remedies under the Lease, in the event that (i) Lessee's
use of the Premises for the generation, storage, use, treatment or disposal of
Hazardous Material is in a manner or for a purpose prohibited by applicable law
unless Lessee is diligently pursuing compliance with such law, (ii) Lessee has
been required by any governmental authority to take remedial action in
connection with Hazardous Material contaminating the Premises if the
contamination resulted from Lessee's action or use of the Premises, unless
Lessee is diligently pursuing compliance with such requirement, or (iii) Lessee
is subject to an enforcement order issued by any governmental authority in
connection with the use, disposal or storage of a Hazardous Material on the
Premises, unless Lessee is diligently seeking compliance with such enforcement
order.

5. At any time prior to the expiration or earlier termination of the
term of the Lease, Lessor shall have the right to enter upon the Premises at all
reasonable times and at reasonable intervals in order to conduct appropriate
tests regarding the presence, use and storage of Hazardous Material, and to
inspect Lessee's records with regard thereto. Lessee will pay the reasonable
costs of any such test which demonstrates that contamination in excess of
permissible levels has occurred and such contamination was caused by use of the
Premises during the term of the Lease. Lessee shall correct any deficiencies
identified in any such tests in accordance with its obligations under this
Addendum.

6. Lessee shall at its own expense cause an environmental site
assessment of the Premises to be conducted and a report thereof delivered to
Lessor upon the expiration or earlier termination of the Lease. This report
shall consist of a visual inspection of the premises for visible signs of
possible contamination and an inspection of records regarding the generation,
storage, use, disposal, and transport of Hazardous Materials within the Premises
during Lessee's occupancy (hereinafter referred to as the "Exit Report"), or a
more complete and broader report only if so recommended in the Exit Report to
investigate areas of possible contamination. Lessee shall correct any
deficiencies identified in such report in accordance with its obligations under
this Addendum prior to the expiration or earlier termination of this Lease.

7. Lessee's obligations under this Addendum shall survive the
termination of the Lease. Should Lessee employ any period of time after the
expiration or earlier termination of this Lease, to complete the removal from
the Premises of any such Hazardous Material, Lessee shall be a Lessee at
sufferance subject to the provisions of Section 22 of the Lease.

8. As used herein, the term "Hazardous Material" means any hazardous or
toxic substance, material or:waste which is or becomes regulated by any local
governmental authority, the State of Massachusetts or the United States
Government.

9. If Lessee shall request Lessor's consent to any assignment of this
Lease or to any subletting of all or any part of the Premises, Lessee shall
submit to Lessor with such request the name of the proposed assignee or
subLessee, such information concerning its business, financial responsibility
and standing as Lessor may reasonably require, and the consideration and rents
(and terms and conditions thereof) to be paid for and the effective date of the
proposed assignment or subletting. Upon receipt of such request and all such
information, Lessor shall have the right (without limiting Lessor's right of
consent in respect of such assignment or subletting), by giving notice to Lessee
within fifteen ;(15) days thereafter, (oseq level3 \*romanoio) to terminate this
Lease if the request is for an assignment or a subletting of all the Premises,
or (oseq level3 \*romanoiio) if such request is to sublet a portion of the
Premises only, to terminate this Lease with respect to such portion. If Lessor
exercises its right to terminate this Lease, the effective date of termination
shall be set forth in Lessor's notice to Lessee, but such date shall not be
earlier than the effective date of the proposed assignment or subletting nor
later than ninety (90) days thereafter. If Lessor so elects to terminate this
Lease, Lessee shall continue to pay the Rent and other charges hereunder to
Lessor until the effective date of termination, on which date Lessee will
surrender possession of the Premises, or the portion thereof subject to such
right of termination, to Lessor in accordance with the provisions hereof. If
Lessor shall terminate this Lease as to a portion of the Premises only, then
following such termination the Rent and Additional Rent shall be reduced in the
same proportion as the number of square feet of net rentable footage in such
portion of the Premises bears to the number of square feet of net rentable
footage in the Premises immediately prior to such termination.

10. oseq level2 \h \rO ooseq level3 \h \r0 o If Lessee shall request
Lessor consent to an assignment of this Lease and Lessor shall consent thereto,
the assignee ("Assignee") shall pay directly to Lessor, as additional rent
hereunder, at such times as Assignee shall have agreed to pay Lessee, an amount
equal to any consideration Assignee shall have agreed to pay Lessee on account
of such assignment. If Assignee shall fail to pay Lessor any such consideration
when due, such failure shall constitute a default under this Lease.

11. If Lessee shall request Lessor's consent to a subletting of the
Premises or any part thereof and Lessor shall consent thereto, Lessee shall pay
Lessor as Additional Rent, in addition to the Rent and other charges payable
hereunder, an amount equal to any consideration paid by the subtenant to Lessee
in excess of (oseq level3 \*romanoio) the Rent and other charges payable
hereunder if all of the Premises are so sublet, or (*seq level3 \*romanoiio) if
less than all, of the Premises are so sublet, the Rent and other charges payable
hereunder allocable to the portion of the Premises so sublet based on the number
of square feet of net useable footage the Premises so sublet to the total number
of square feet of net useable footage in the Premises. The foregoing amount
shall be determined monthly and paid by Lessee to Lessor on the first day of
each calendar month in advance during the term of such sublease. If Lessee shall
fail to pay Lessor any such consideration, such failure shall be a default under
this Lease.

IN WITNESS WHEREOF, the parties execute this Addendum on the 31st day
of May, 1999.

LESSOR:

6-8 PRESTON COURT, L.L.C.,
a Delaware limited liability company

By: Pinnacle Properties Management, Inc., its manager

By:    /s/ FRED KEEFE
Name:  Fred Keefe
Title: President

LESSEE:

ASIANA PHARMACEUTICALS CORPORATION

By:    /s/ LAN BO CHEN
Name:  Lan Bo Chen
Title: Founder

EXHIBIT A

FLOOR PLAN

EXHIBIT B

FLOOR PLAN

PINNACLE PROPERTIES MANAGEMENT

STANDARD FORM

AMENDMENT TO LEASE #1

IN CONNECTION WITH A LEASE CURRENTLY IN EFFECT BETWEEN THE PARTIES AT 8-A
PRESTON COURT, BEDFORD, MASSACHUSETTS, EXECUTED ON MAY 13, 1999 AND TERMINATING
MAY 30, 2004, AND IN CONSIDERATION OF THE MUTUAL BENEFITS TO BE DERIVED
HEREFROM, 6-8 PRESTON COURT, L.L.C., LESSOR AND ASIANA PHARMACEUTICALS
CORPORATION, LESSEE, HEREBY AGREE TO AMEND SAID LEASE AS FOLLOWS:

1. Provided LESSOR is able to obtain a building permit and all other permits and
approvals required from the City of Bedford, then LESSOR shall have the right at
LESSOR's sole option and at LESSOR's sole expense to construct up to an
additional 10,000 square feet of office space onto the existing Building, as
shown on Exhibit "A" attached hereto ("Addition") that may temporarily or
permanently affect LESSEE's access to and from its existing front entry door.

2. If LESSOR chooses to construct the Addition, then upon substantial completion
of the Addition, LESSEE shall lease 1,700 square feet (including common area)
additional as shown cross hatched on Exhibit "B" attached hereto ("Expansion
Space"). LESSEE's Proportionate Share of Operating Costs and Taxes shall be
equitably adjusted to reflect the new square footage of the Building and the
Expansion Space. The Expansion Space shall be finished at LESSOR's expense as
office space with LESSOR's building standard materials to consist of: carpeting
throughout, two partitioned offices, acoustical tile ceilings, standard
lighting, fire protection sprinklers, standard heating and cooling capacity, and
110V convenience electrical wall outlets at regular intervals. The Expansion
Space shall also be painted according to LESSOR's standards. All other terms,
conditions and covenants of this lease shall apply to the Expansion Space.

3. The Security Deposit referred to in Section 2 of the lease shall be increased
to $19,152.00 from $11,800.00. LESSEE shall pay the balance of $7,352.00 upon
substantial completion.

4. LESSEE and LESSOR each warrants and represents to the other party that it has
dealt with no broker or third person with respect to this lease amendment and
LESSEE and LESSOR each agrees to indemnify the other party against any brokerage
claims arising by any person or entity claiming by, through or under such party.

5. Commencing upon substantial completion of the Expansion Space, the lease
shall he amended and modified so that the adjusted base rent shall be increased
by $44,115.00 annually, from a total of $71,800.00 to an annual base rent of
$115,915.00, or $9,659.58 per month. Annual base rent for the purpose of
computing any future escalations thereon shall be $115,915.00.

6. Time is of the essence with respect to this Amendment.

EXCEPT AS SPECIFICALLY AMENDED HEREBY, THE LEASE AND ALL THE TERMS, CONDITIONS
AND COVENANTS CONTAINED THEREIN SHALL REMAIN IN FULL FORCE AND EFFECT AND ARE
HEREBY FULLY RATIFIED AND CONFIRMED. THIS AMENDMENT SHALL BE EFFECTIVE UPON FULL
EXECUTION AND SHALL

CONTINUE THROUGH THE BALANCE OF THE LEASE AND ANY EXTENSIONS THEREOF UNLESS
FURTHER MODIFIED BY WRITTEN AMENDMENT(S).

In Witness Whereof, LESSOR and LESSEE have hereunto set their hands and common
seals this 31st day of July, 2000.

LESSOR: 52 & 56 ROLAND STREET, L.L.C.           LESSEE: ASIANA PHARMACEUTICALS
CORPORATION

BY: PINNACLE PROPERTIES
MANAGEMENT, L.L.C., ITS MANAGER

By:      /s/ FREDERICK D. KEEFE                 By:    /s/ BRYAN G. KEANEY
-------------------------------------               ------------------------
Frederick D. Keefe, President and Member        Name:  BRYAN G. KEANEY
------------------------
Title: CHIEF FINANCIAL OFFICER

EXHIBIT A

FLOOR PLAN

EXHIBIT B

FLOOR PLAN

PINNACLE PROPERTIES MANAGEMENT, L.L.C.

STANDARD FORM

AMENDMENT TO LEASE #2

IN CONNECTION WITH A LEASE CURRENTLY IN EFFECT BETWEEN THE PARTIES AT 8-A
PRESTON COURT, BEDFORD, MASSACHUSETTS, EXECUTED ON MAY 13, 1999 AND TERMINATING
MAY 30, 2004, AND IN CONSIDERATION OF THE MUTUAL BENEFITS TO BE DERIVED
HEREFROM, 6-8 PRESTON COURT, L.L.C., LESSOR AND ASIANA PHARMACEUTICALS
CORPORATION, LESSEE, HEREBY AGREE TO AMEND SAID LEASE AS FOLLOWS:

1. LESSEE shall lease the approximately 3,000 square feet (including common
area) additional as shown cross hatched on Exhibit "A" attached hereto
("Expansion Space") upon substantial completion of LESSOR's Work in the
Expansion Space. LESSEE's Proportionate Share of Operating Costs and Taxes shall
be equitably adjusted to reflect the new square footage of the Building and the
Expansion Space. The Expansion Space shall be finished at LESSOR's expense as
office space with LESSOR's building standard materials consisting solely of the
following ("LESSOR's Work"): carpeting throughout the front portion of the
Expansion Space, one partitioned office, acoustical tile ceilings, standard
painting, standard lighting, fire protection sprinklers, standard heating and
cooling capacity, and 110V convenience electrical wall outlets at regular
intervals. All other terms, conditions and covenants of this lease shall apply
to the Expansion Space.

2. The Security Deposit referred to in Section 2. of the lease shall be
increased to $28,832.00 from $19,152.00. LESSEE shall pay the balance of
$9,680.00 upon substantial completion of LESSOR's Work in the Expansion Space.

3. LESSEE and LESSOR each warrants and represents to the other party that it has
dealt with no broker or third person with respect to this lease amendment and
LESSEE and LESSOR each agrees to indemnify the other party against any brokerage
claims arising by any person or entity claiming by, through or under such party.

4. Commencing upon substantial completion of LESSOR's Work in the Expansion
Space, the lease shall be amended and modified so that the adjusted base rent
shall be increased by $54,085.00 annually, from a total of $115,915.00 to an
annual base rent of $170,000.00, or $14,166.67 per month. Annual base rent for
the purpose of computing any escalations thereon shall be $170,000.00.

5. Time is of the essence with respect to this Amendment.

EXCEPT AS SPECIFICALLY AMENDED HEREBY, THE LEASE AND ALL THE TERMS, CONDITIONS
AND COVENANTS CONTAINED THEREIN SHALL REMAIN IN FULL FORCE AND EFFECT AND ARE
HEREBY FULLY RATIFIED AND CONFIRMED. THIS AMENDMENT SHALL BE EFFECTIVE UPON FULL
EXECUTION AND SHALL CONTINUE THROUGH THE BALANCE OF THE LEASE AND ANY EXTENSIONS
THEREOF UNLESS FURTHER MODIFIED BY WRITTEN AMENDMENT(S).

In Witness Whereof, LESSOR and LESSEE have hereunto set their hands and common
seals this 26th day of November 2001.

LESSOR: 6-8 PRESTON COURT, L.L.C.                 LESSEE: ASIANA PHARMACEUTICALS
CORPORATION

BY: PINNACLE PROPERTIES
MANAGEMENT, L.L.C., ITS MANAGING MEMBER

By:      /s/ FREDERICK D. KEEFE                   By:     /s/ BRYAN G. KEANEY
-------------------------------------                  ----------------------
Frederick D. Keefe, President and Member          Name:   BRYAN G. KEANEY  
----------------------
Title:  CFO
----------------------

EXHIBIT A

FLOOR PLAN

PINNACLE PROPERTIES MANAGEMENT, L.L.C.

STANDARD FORM

AMENDMENT TO LEASE #3

IN CONNECTION WITH A LEASE CURRENTLY IN EFFECT BETWEEN THE PARTIES AT 8-A
PRESTON COURT, BEDFORD, MASSACHUSETTS, EXECUTED ON MAY 13, 1999 AND TERMINATING
MAY 30, 2004 ("LEASE"), AND IN CONSIDERATION OF THE MUTUAL BENEFITS TO BE
DERIVED HEREFROM, 6-8 PRESTON COURT, L.L.C., LESSOR AND ASIANA PHARMACEUTICALS
CORPORATION, LESSEE, HEREBY AGREE TO AMEND SAID LEASE AS FOLLOWS:

1. The leased premises shall be referred to as 6-A Preston Court rather than 8-A
Preston Court.

2. Per Section 31 of the Lease, the current lease term is hereby extended for an
additional five year term ("Extended Term") and shall now terminate on May 30,
2009 instead of on May 30, 2004. The base rent shall be in accordance with the
existing Lease and amendments including all escalations.

3. LESSEE shall accept the leased premises in "AS IS" "WHERE IS" condition,
without warranty or representation.

4. Notwithstanding anything in the Lease to the contrary, LESSEE may assign the
Lease or sublease all or part of the leased premises (a "PERMITTED TRANSFER") to
the following types of entities (a "PERMITTED TRANSFEREE") with written notice
to LESSOR but without the written consent of LESSOR: (1) an Affiliate (as
hereinafter defined) of LESSEE; (2) any corporation, limited partnership,
limited liability partnership, limited liability company or other business
entity in which or with which LESSEE, or its corporate successors or assigns, is
merged or consolidated, in accordance with applicable statutory provisions
governing merger and consolidation of business entities, so long as (A) LESSEE's
obligations hereunder are assumed by the entity surviving such merger or created
by such consolidation; and (B) the Tangible Net Worth (as hereinafter defined)
of the surviving or created entity is not less than the Tangible Net Worth of
LESSEE as of the date hereof; or (3) any corporation, limited partnership,
limited liability partnership, limited liability company or other business
entity acquiring all or substantially all of LESSEE's assets if such entity's
Tangible Net Worth after such acquisition is not less than the Tangible Net
Worth of LESSEE as of the date hereof. LESSEE shall promptly notify LESSOR of
any such Permitted Transfer. LESSEE shall remain liable for the performance of
all of the obligations of LESSEE hereunder, or if LESSEE no longer exists
because of a merger, consolidation, or acquisition, the surviving or acquiring
entity shall expressly assume in writing the obligations of LESSEE hereunder.
Additionally, the Permitted Transferee shall comply with all of the terms and
conditions of this Lease. No later than 30 days after the effective date of any
Permitted Transfer, LESSEE agrees to furnish LESSOR with (A) copies of the
instrument effecting the Permitted Transfer, (B) documentation establishing
LESSEE's satisfaction of the requirements set forth above applicable to any such
Permitted Transfer, and (C) evidence of insurance as required under the Lease
with respect to the Permitted Transferee. "TANGIBLE NET WORTH" means the excess
of total assets over total liabilities, in each case as

determined in accordance with generally accepted accounting principles
consistently applied ("GAAP"), excluding, however, from the determination of
total assets all assets which would be classified as intangible assets under
GAAP including goodwill, licenses, patents, trademarks, trade names, copyrights,
and franchises. "Affiliate" means any person or entity which, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with the party in question.

5. LESSEE represents that Munchi BioTherapeutics Corp. (a Delaware corporation)
has succeeded to the interests of Asiana Pharmaceuticals Corporation (a
Massachusetts corporation) as LESSEE of the leased premises, and Munchi
BioTherapeutics Corp. hereby assumes all obligations and liabilities of the
LESSEE under the Lease.

6. LESSOR agrees to maintain casualty insurance in a commercially reasonable
amount for the building of which the leased premises are a part.

7. LESSEE'S agreement to subordinate this Lease to any and all future mortgages
and/or other future instruments in the nature of a mortgage, is conditional upon
LESSOR using reasonable efforts and due diligence to obtain the future
mortgagee's agreement that LESSEE's possession will not thereafter be disturbed
so long as LESSEE is not in default in the payment of rent or other covenants or
obligations hereof.

8. In Section 21 of the Lease, the notice address for Frank Brady is changed to
the following: Frank Brady, Esq., Pinnacle Properties Management,. LLC, 10955
Lowell Avenue, Suite 600, Overland Park, KS 66210. Additionally, the following
is added at the end of the first sentence: "with a copy to Bryan Keaney, Synta
Pharmaceuticals, Inc., 45 Hartwell Avenue, Lexington, MA 02421".

9. The first, third, fourth and fifth sentences of Section 22 of the Lease are
hereby deleted.

10. In Section 25 of the Lease, the phrase "no hazardous materials or waste
shall be stored, disposed of, or allowed to remain at the leased premises at any
time, and" is hereby replaced with "no hazardous materials or waste shall be
stored, disposed of, or allowed to remain at the leased premises at any time
except in compliance with all applicable statutes, regulations, ordinances and
the like, and".

11. Per Section 35 of the Lease, provided LESSEE is not in default of the Lease,
LESSEE will not be required to provide financial statements more than one time
per year if requested by LESSOR.

12. Section 36 of the Lease is hereby deleted in its entirety.

13. Section 37 of the Lease shall be amended by the addition of the following
language to the end of that section: "The prevailing party may recover from the
non prevailing party reasonable attorney's fees."

14. LESSEE warrants and represents to LESSOR that it has not employed a broker
or third person with respect to this lease amendment and LESSEE agrees to
indemnify LESSOR against any brokerage claims arising by any person or entity
claiming by, through or under LESSEE.

15. Time is of the essence with respect to this lease amendment.

EXCEPT AS SPECIFICALLY AMENDED HEREBY, THE LEASE AND ALL THE TERMS, CONDITIONS
AND COVENANTS CONTAINED THEREIN SHALL REMAIN IN FULL FORCE AND EFFECT AND ARE
HEREBY FULLY RATIFIED AND CONFIRMED. THIS LEASE AMENDMENT SHALL BE EFFECTIVE
UPON FULL EXECUTION AND SHALL CONTINUE THROUGH THE BALANCE OF THE LEASE AND ANY
EXTENSIONS THEREOF UNLESS FURTHER MODIFIED BY WRITTEN AMENDMENT(S).

In Witness Whereof, LESSOR and LESSEE have hereunto set their hands and common
seals this day of December 2003.

LESSOR: 6-8 PRESTON COURT, L.L.C.                 LESSEE: ASIANA PHARMACEUTICALS
CORPORATION

BY: PINNACLE PROPERTIES
MANAGEMENT, L.L.C., ITS MANAGING MEMBER

By:                                               By:    /s/ LAN BO CHEN
-------------------------------------                 -----------------------
Frederick D. Keefe, President and Member          Name:  LAN BO CHEN
-----------------------
Title: FOUNDER
-----------------------

LESSEE: MUNCHI BIOTHERAPEUTICS
CORP.

By:    /s/ LAN BO CHEN
-----------------------
Name:  LAN BO CHEN
-----------------------
Title: FOUNDER
-----------------------

Exhibit 10.9

STOCK EXCHANGE AGREEMENT

This Stock Exchange Agreement (this "AGREEMENT") is made and entered into
as of September 9, 2002 by and among CxSynta LLC, Keith R. Gollust, and Mountain
Trail Investments, LLC (each a "SELLER" and collectively, "SELLERS"), Principia
Associates, Inc., a Delaware corporation ("PRINCIPIA"), and Synta
Pharmaceuticals Corp., a Delaware corporation ("SYNTA").

W I T N E S S E T H:

WHEREAS, Sellers own all of the outstanding Common Stock , $.01 par value
per share ("PRINCIPIA SHARES"), which shares represent all of the outstanding
capital stock of Principia, and desire to exchange the Principia Shares for
shares of the Common Stock , $.0001 par value per share ("SYNTA SHARES"), of
Synta and warrants for additional shares of Synta Shares;

WHEREAS, Principia is the owner of thirty seven million four hundred
thousand (37,400,000) shares of the Common Stock, $.01 par value per share (the
"SBR SHARES"), of SBR Pharmaceuticals Corp., a Delaware corporation ("SBR"),
which SBR Shares represent all of the shares of capital stock of SBR owned
beneficially or of record by Principia; and

WHEREAS, Synta desires to receive, acquire and accept from Sellers, and
Sellers desire to assign, transfer and deliver to Synta, the Principia Shares,
upon the terms and subject to the conditions set forth herein;

NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

ARTICLE I
EXCHANGE AND PURCHASE OF SHARES

Section 1.1    EXCHANGE OF SHARES. At the Closing, subject to the terms and
conditions of this Agreement, Sellers, as the legal and beneficial owners of the
Principia Shares, shall transfer, assign convey and deliver, or cause to be
transferred, conveyed and delivered, the Principia Shares to Synta, free and
clear of all liens and encumbrances, and Synta shall accept the transfer and
assignment of the Principia Shares.

Section 1.2    DELIVERY OF PRINCIPIA SHARES. At the Closing, Sellers shall
deliver to Synta stock certificates representing the Principia Shares together
with stock powers duly endorsed by Sellers in favor of Synta, and Principia
shall promptly issue a new stock certificate representing the Principia Shares
in the name of Synta or its designee upon delivery by Synta of the
aforementioned stock certificates and stock powers to the transfer agent for
Principia.

Section 1.3    ISSUANCE OF SYNTA SHARES. At the Closing, in consideration
for the contribution of the Principia Shares to Synta as set forth in Section
1.1 and 1.2 hereof, Synta shall deliver to Sellers an aggregate of four million
nine hundred thirty nine thousand five hundred eighty one (4,939,500) shares of
Synta Shares, together with three year warrants for the purchase of an aggregate
of nine hundred fifty nine thousand one hundred twenty-six (959,126)

shares of Synta Shares, in the form attached hereto as EXHIBIT A (collectively,
the "SYNTA WARRANTS"). The number of shares of Synta Shares to be issued to each
Seller and the number of shares of Synta shares subject to the Synta Warrant to
be granted to each Seller is set forth on EXHIBIT B attached hereto.

ARTICLE II
CLOSING

Section 2.1    CLOSING. The closing of the transactions contemplated hereby
(the "CLOSING") shall take place at the offices of Nixon Peabody LLP, 101
Federal Street, Boston, MA 02110-1832, or at such other place as may be agreed
to by Sellers and Synta, at 10:00 AM (Boston time) on or before September 20,
2002, or on such other date as may be agreed upon in writing by Sellers and
Synta if subsequent to September 20, 2002 (the "CLOSING DATE").

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS

Each of the Sellers hereby severally represents and warrants to Synta as
follows:

Section 3.1    TITLE TO SHARES. Such Seller owns of record and
beneficially, free and clear of all encumbrances, and has good title to the
number of Principia Shares as set forth on EXHIBIT B attached hereto. Such
Seller is not a party to any agreement, trust or other arrangement that in any
way restricts such Seller's ability to perform its obligations under this
Agreement, including, without limitation, voting or transferring such Seller's
Principia Shares.

Section 3.2    NO CONFLICT. The execution, delivery and performance of this
Agreement by such Seller does not and will not (a) conflict with or violate any
law or governmental order applicable to such Seller or any of such Seller's
respective assets, properties or businesses or (b) conflict with, result in any
breach of, constitute a default (or event which with the giving of notice or
lapse of time, or both, would become a default) under, require any consent
under, or give to others any rights of termination, amendment, acceleration,
suspension, revocation or cancellation of, or result in the creation of any
encumbrance on any of the Principia Shares owned by such Seller pursuant to, any
note, bond, mortgage or indenture, contract, agreement, lease, sublease,
license, permit, franchise or other instrument or arrangement to which such
Seller is a party or by which any of the Principia Shares owned by such Seller
is bound or affected, which would adversely affect the ability of such Seller to
carry out its obligations under, and to consummate the transactions contemplated
by, this Agreement.

Section 3.3    GOVERNMENTAL CONSENTS AND APPROVALS. The execution, delivery
and performance of this Agreement by such Seller does not and will not require
any consent, approval, authorization or other order of, action by, filing with
or notification to, any governmental authority.

Section 3.4    LITIGATION. No action, suit, investigation or proceeding by
or against such Seller is pending or, to the knowledge of each Seller,
threatened before any court, arbitrator or administrative agency, which could
reasonably be expected to affect the legality, validity or enforceability of
this Agreement or the consummation of the transactions contemplated by this
Agreement.

Section 3.5    SECURITIES ACT. The Synta Shares and Warrant issued by Synta
to such Seller pursuant to this Agreement are being acquired by such Seller for
investment only and not with a view to any public distribution thereof, and such
Seller will not offer to sell or otherwise dispose of the Synta Shares or
Warrant so acquired by him in violation of any of the registration requirements
of the Securities Act of 1933, as amended, or any applicable state blue sky
laws.

Section 3.6    NO BROKER. No broker, finder or investment banker is
entitled to any brokerage, finders or other fee or commission in connection with
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Sellers.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PRINCIPIA

Principia hereby represents and warrants to Synta as follows:

Section 4.1    ORGANIZATION, GOOD STANDING AND AUTHORITY OF PRINCIPIA.
Principia is a corporation duly organized, validly existing and in corporate
good standing under the laws of the State of Delaware. Principia has full
corporate power and authority to enter into this Agreement. The execution and
delivery of this Agreement, and the consummation of the transactions
contemplated hereby, have been duly authorized by the Board of Directors of
Principia and no other proceedings or actions on the part of Principia are
necessary to authorize this Agreement and the transactions contemplated hereby.
This Agreement constitutes the valid and binding obligation of Principia,
enforceable in accordance with its terms.

Section 4.2    CAPITAL STOCK OF PRINCIPIA. The authorized capital stock of
Principia consists of Two Million One Hundred (2,000,100) shares of Principia
Shares. As of the date hereof, One Million Three Hundred Thousand (1,300,000)
shares of Principia Shares are issued and outstanding, all of which are validly
issued, fully paid and nonassessable. None of the issued and outstanding shares
of Principia Shares were issued in violation of any preemptive rights. There are
no options, warrants, convertible securities or other rights, agreements,
arrangements or commitments of any character relating to the Principia Shares or
obligating Principia to issue, sell or assign the Principia Shares, or any other
interest in, Principia Shares. There are no outstanding contractual obligations
of Principia to repurchase, redeem or otherwise acquire any shares of Principia
Shares or to provide funds to, or make any investment (in the form of a loan,
capital contribution or otherwise) in, any other person.

Section 4.3    FINANCIAL STATEMENTS. The unaudited balance sheet of
Principia as of August 31, 2002 and the related statement of income for the
period then ended, complete and correct copies of which have been delivered to
Synta, fairly present the financial position of Principia as at such date and
the results of operations of Principia for the period then ended, in each case
in accordance with U.S. generally accepted accounting principles ("GAAP")
consistently applied for the period covered (subject to the normal year-end
adjustments).

Section 4.4    NO MATERIAL ADVERSE CHANGE. Since August 31, 2002, there has
been no material adverse change in the properties, business, prospects, results
of operations or financial condition of Principia.

Section 4.5    NO DEFAULT; NO CONFLICT WITH OTHER INSTRUMENTS. Principia is
not in default under or in violation of any provision of its Certificate of
Incorporation or By-Laws. To its knowledge, based upon the representations made
in the Stock Purchase Agreement, Principia is not in default under or in
violation of any material indenture, mortgage, deed of trust, note, debenture,
or any material agreement, lease, or other instrument or contract to which it is
a party or by which it or any of it properties or assets is bound or any
judgment, decree, order, statute, rule or regulation to which it is subject or
by which it or any of its properties or assets is bound. To its knowledge, based
upon the representations made in the Stock Purchase Agreement, the execution,
delivery and performance of this Agreement, and the consummation by Principia of
the transactions contemplated hereby do not and will not constitute a default
under any of (a) the terms, conditions or provisions of the Certificate of
Incorporation or By-Laws of Principia or (b) any material indenture, mortgage,
deed of trust, note, debenture, agreement, lease or other material instrument or
material contract or any such judgment, decree, order, statute, rule or
regulation with respect to which Principia is a party or subject or result in
the creation of any lien, charge or encumbrance on any of the properties or
assets of Principia.

Section 4.6    SUBSIDIARIES; OWNERSHIP OF SBR SHARES. Principia has no
subsidiaries other than SBR. To its knowledge, Principia has good and marketable
title to the SBR Shares free and clear of any and all restrictions, liens,
charges, encumbrances, options and adverse claims or rights whatsoever, except
as provided by applicable federal and state securities laws. To its knowledge,
based upon the representations made in the Stock Purchase Agreement, Principia
owns ninety-eight and eight-tenths percent (98.80%) of the issued and
outstanding capital stock of SBR and all the issued and outstanding shares of
capital stock of SBR are duly authorized, validly issued, fully paid and
nonassessable.

Section 4.7    ORGANIZATION, GOOD STANDING AND AUTHORITY OF SBR. Based upon
the representations made in the Stock Purchase Agreement (as defined in Section
7.1 of this Agreement), SBR is a corporation duly organized, validly existing
and in corporate good standing under the laws of the State of Delaware and has
the requisite power and authority to own all of its properties and assets and to
carry on its business as it is now being conducted. Based upon the
representations made in the Stock Purchase Agreement, SBR is duly qualified to
do business and is in corporate good standing in each jurisdiction in which it
owns or leases property or engages in any activity which would require it to
qualify to do business as a foreign corporation, except such jurisdictions where
the failure to so qualify would not have a material adverse effect on the
business, condition (financial or otherwise), results of operations, rights,
properties, assets or prospects of SBR.

Section 4.8    CERTIFICATE AND BY-LAWS, ETC., OF SBR. Based upon the
representations made in the Stock Purchase Agreement, Principia has delivered to
Synta true, accurate and complete copies of the Certificate of Incorporation and
By-Laws of SBR and such Certificate of Incorporation and By-Laws are in full
force and effect.

Section 4.9    NO DEFAULT; NO CONFLICT WITH OTHER INSTRUMENTS. To
Principia's knowledge, based upon the representations made in the Stock Purchase
Agreement, SBR is not,

and by reason of the consummation of the transactions contemplated by this
Agreement will not be, in default under or in violation of any material
indenture, mortgage, deed of trust, note, debenture, or any material agreement,
lease, or other material instrument or material contract to which it is a party
or by which it or any of its properties or assets is bound or any judgment,
decree, order, statute, rule or regulation to which it is subject or by which it
or any of its properties or assets are bound. To Principia's knowledge, based
upon the representations made in the Stock Purchase Agreement, the consummation
of the transactions contemplated by this Agreement will not result in the
creation of any lien, charge or encumbrance on any of the properties or assets
of SBR or on the SBR Shares.

Section 4.10   CAPITAL STOCK OF SBR. Based upon the representations made in
the Stock Purchase Agreement, the authorized capital stock of SBR consists of
forty million (40,000,000) shares of Common Stock, $.01 par value per share
("SBR COMMON STOCK"). Based upon the representations made in the Stock Purchase
Agreement, thirty seven million eight hundred fifty five thousand two hundred
(37,855,200) shares of SBR Common Stock are issued and outstanding, all of which
are validly issued, fully paid and nonassessable, and seven hundred two thousand
three hundred thirty four (702,334) shares of SBR Common Stock are reserved for
issuance pursuant to stock options granted pursuant to SBR's 1997 Stock Option
Incentive Plan. Based upon the representations made in the Stock Purchase
Agreement, none of the issued and outstanding shares of SBR Common Stock was
issued in violation of any preemptive rights. Based upon the representations
made in the Stock Purchase Agreement, except for the aforementioned stock
options issued under the SBR Stock Option Incentive Plan, there are no options,
warrants, convertible securities or other rights, agreements, arrangements or
commitments of any character relating to the SBR Shares or obligating either
Principia or SBR to issue, sell or assign the SBR Shares or any SBR Common
Stock, or any other interest in, SBR. Based upon the representations made in the
Stock Purchase Agreement, there are no outstanding contractual obligations of
SBR to repurchase, redeem or otherwise acquire any shares of SBR Common Stock or
to provide funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in, any other person.

Section 4.11   LITIGATION. Based upon the representations made in the Stock
Purchase Agreement, (a) no action, suit, investigation or proceeding is pending
or, to Principia's knowledge, threatened before any court, arbitrator or
administrative agency against or affecting Principia or SBR, (b) no action,
suit, investigation or proceeding is pending or, to Principia's knowledge,
threatened before any court, arbitrator or administrative agency against or
affecting Principia or SBR that could have the effect of delaying or hindering
the transactions contemplated in this Agreement and (c) to Principia's
knowledge, neither Principia nor SBR is in default with respect to any judgment,
order, writ, injunction or decree of any court or any administrative agency.

Section 4.12   REQUIRED CONSENTS AND APPROVALS. Except for the
authorization of Principia's Board of Directors and stockholders, the execution
and delivery of this Agreement by Principia does not, and the performance of
this Agreement by Principia will not, require any consent, approval, order,
authorization, registration, qualification or designation from any governmental
authority or pursuant to any agreement or other instrument by which Principia,
or any of its respective properties or assets, is bound except (a) for such
consents, approvals, orders, authorizations, registrations, qualifications or
designations that have already been obtained and are in full force and effect on
the date hereof, and (b) where the failure to obtain such consents,

approvals, orders, authorizations, registrations, qualifications or designations
would not prevent or delay the consummation of the transactions contemplated by
this Agreement, or otherwise prevent Principia from performing its obligations
under this Agreement.

ARTICLE V
REPRESENTATIONS, WARRANTIES OF SYNTA

Synta represents and warrants to Sellers as follows:

Section 5.1    ORGANIZATION, GOOD STANDING AND AUTHORITY OF SYNTA. Synta is
a corporation duly organized, validly existing and in corporate good standing
under the laws of the State of Delaware and has the requisite power and
authority to own, lease and operate all its properties and assets and to carry
on its business as it is now being conducted. Synta is duly qualified to do
business and is in corporate good standing in each jurisdiction in which it owns
or leases property or engages in any activity which would require it to qualify
to do business as a foreign corporation, except such jurisdictions where the
failure to so qualify would not have a material adverse effect on the business,
condition (financial or otherwise), results of operations, rights, properties,
assets or prospects of Synta.

Section 5.2    AUTHORIZATION. Synta has full corporate power and authority
to enter into this Agreement and to carry out its obligations hereunder. The
execution and delivery of this Agreement, and the consummation of the
transactions contemplated hereby have been duly authorized by the Board of
Directors of Synta and no other proceedings or actions on the part of Synta are
necessary to authorize this Agreement and the transactions contemplated hereby.
This Agreement constitutes a valid and binding obligation of Synta, enforceable
in accordance with its terms.

Section 5.3    CERTIFICATE AND BY-LAWS, ETC., OF SYNTA. Synta has delivered
to Principia true, accurate and complete copies of the Certificate of
Incorporation and By-Laws of Synta. Such Certificate of Incorporation and
By-Laws are in full force and effect.

Section 5.4    NO DEFAULT; NO CONFLICT WITH OTHER INSTRUMENTS. Synta is not
in default under or in violation of any provision of its Certificate of
Incorporation or By-Laws. Synta is not in default under or in violation of any
material indenture, mortgage, deed of trust, note, debenture, or any material
agreement, lease, or other instrument or contract to which it is a party or by
which it or any of it properties or assets is bound or any judgment, decree,
order, statute, rule or regulation to which it is subject or by which it or any
of its properties or assets is bound. The execution, delivery and performance of
this Agreement, and the consummation by Synta of the transactions contemplated
hereby do not and will not constitute a default under any of (a) the terms,
conditions or provisions of the Certificate of Incorporation or By-Laws of Synta
or (b) any material indenture, mortgage, deed of trust, note, debenture,
agreement, lease or other material instrument or material contract or any such
judgment, decree, order, statute, rule or regulation with respect to which Synta
is a party or subject or result in the creation of any lien, charge or
encumbrance on any of the properties or assets of Synta.

Section 5.5    CAPITAL STOCK OF SYNTA. The authorized capital stock of
Synta consists of one hundred million (100,000,000) shares of Synta Common
Stock. As of the date hereof, thirty

one million eight hundred twenty six thousand seven hundred thirty eight
(31,826,738) shares of Synta Common Stock are issued and outstanding, all of
which are validly issued, fully paid and nonassessable, and two million two
hundred eighty four thousand five hundred fifty (2,284,550) shares of Synta
Common Stock are reserved for issuance pursuant to stock options granted
pursuant to Synta's 2001 Stock Plan. None of the issued and outstanding shares
of Synta Common Stock was issued in violation of any preemptive rights. Except
for the aforementioned stock options issued under the Synta 2001 Stock Plan,
there are no options, warrants, convertible securities or other rights,
agreements, arrangements or commitments of any character relating to the Synta
Common Stock or obligating Synta to issue or sell any Synta Common Stock, or any
other interest in, Synta. There are no outstanding contractual obligations of
Synta to repurchase, redeem or otherwise acquire any shares of Synta Common
Stock or to provide funds to, or make any investment (in the form of a loan,
capital contribution or otherwise) in, any other person. Upon consummation of
the transactions contemplated by this Agreement and issuance of the Synta Shares
in the name of each Seller in the stock records of Synta, assuming the exercise
of the Synta Warrants (but excluding Synta Shares, if any, owned by the Sellers
prior to the Closing Date), the Sellers will own in aggregate fourteen and
seventy-five hundredths percent (14.75%) of the issued and outstanding capital
stock of Synta, as calculated on a fully-diluted basis, free and clear of any
and all mortgages, pledges, liens, security interests, charges, claims,
equitable interests, encumbrances, restrictions on transfer, conditional sale or
other title retention device or arrangement, transfer right for the payment of
any liability, or restriction on the creation of the foregoing. Upon
consummation of the transactions contemplated by this Agreement, the Synta
Shares will be fully paid and nonassessable. All the issued and outstanding
shares of capital stock of Synta are duly authorized, validly issued, fully paid
and nonassessable.

Section 5.6    LITIGATION. There are no actions, suits, or proceedings
pending, or to the knowledge of Synta threatened, against Synta by any person
which question the validity, legality or propriety of the transactions
contemplated by this Agreement.

Section 5.7    REQUIRED CONSENTS AND APPROVALS. Except for the
authorization of Synta's Board of Directors and stockholders, the execution and
delivery of this Agreement by Synta does not, and the performance of this
Agreement by Synta will not, require any consent, approval, order,
authorization, registration, qualification or designation from any governmental
authority or pursuant to any agreement or other instrument by which Synta or any
of its properties is bound except (a) for such consents, approvals, orders,
authorizations, registrations, qualifications or designations that have already
been obtained and are in full force and effect on the date hereof, and (b) where
the failure to obtain such consents, approvals, orders, authorizations,
registrations, qualifications or designations would not prevent or delay the
consummation of the transactions contemplated by this Agreement or otherwise
prevent Synta from performing its obligations under this Agreement.

Section 5.8    SECURITIES ACT. The Principia Shares transferred and
assigned to Synta pursuant to this Agreement are being acquired for investment
only and not with a view to any public distribution thereof, and Synta will not
offer to sell or otherwise dispose of the Principia Shares so acquired by it in
violation of any of the registration requirements of the Securities Act of 1933
or any applicable state blue sky laws.

Section 5.9    NO BROKER. No broker, finder or investment banker is entitle
to any brokerage, finders or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Synta.

ARTICLE VI
CONDITIONS TO CLOSING

6.1  CONDITIONS OF SYNTA'S PERFORMANCE. The performance by Synta of its
obligations under this Agreement shall be subject to the fulfillment, as
determined by Synta, in its reasonable judgment, of each of the conditions
specified below:

(a)  each of the Sellers shall have performed and complied in all material
respects with his or its obligations under this Agreement required to be
performed by him or it at or prior to the Closing.

(b)  the representations and warranties of each of the Sellers and
Principia shall be true and correct in all material respects when made and as of
the Closing with the same effect as though made at and as of the Closing;

(c)  Synta shall have received from Principia:

(i)    a certificate, duly executed by an authorized officer,
certifying that the representations and warranties of Principia set forth in
this Agreement are true and correct in all material respects when made and as of
the Closing with the same effect as though made at and as of the Closing; and

(ii)   satisfactory evidence that the representatives of Principia
executing and delivering this Agreement are authorized to do so.

(d)  Synta shall have received from each of the Sellers: a certificate,
duly executed by such Seller, certifying that the representations and warranties
of such Seller set forth in this Agreement are true and correct in all material
respects when made and as of the Closing with the same effect as though made at
and as of the Closing;

(e)  Synta shall have received the written resignation of each member of
the Board of Directors of Principia and each of the officers of Principia.

6.2  CONDITIONS OF SELLERS' PERFORMANCE. The performance by each of the
Sellers of his or its obligations under this Agreement shall be subject to the
fulfillment, as determined by such Seller, in his or its reasonable judgment, of
each of the conditions specified below:

(a)  Synta shall have performed and complied in all material respects with
its obligations under this Agreement required to be performed by it at or prior
to the Closing; and

(b)  the Sellers shall have received from Synta:

(i)    a certificate, duly executed by an authorized officer of Synta,
certifying that the representations and warranties of Synta set forth in this
Agreement are true and correct in

all material respects when made and as of the Closing with the same effect as
though made at and as of the Closing; and

(ii)   satisfactory evidence that the representatives of Synta
executing and delivering this Agreement are authorized to do so.

ARTICLE VII
OTHER AGREEMENTS

Section 7.1    PURCHASE OF SBR SHARES BY SYNTA. Promptly following the
Closing, Synta shall cause SBR to be merged with and into Principia, and in
connection therewith Synta shall have Principia give notice to each of the other
stockholders of SBR that Principia will purchase, for a purchase price of
$.3267973 per share, all of the shares of the SBR Shares owned by such other
stockholders of SBR substantially on the terms contemplated by Section 6.14 of
the Stock Purchase Agreement dated as of July 31, 2002 pursuant to which
Principia purchased the SBR Shares (the "STOCK PURCHASE AGREEMENT"). A copy of
the Stock Purchase Agreement has been provided to Synta previously.

Section 7.2    INDEMNIFICATION OF SELLERS. Synta hereby covenants and
agrees to indemnify, protect, defend and save harmless each Seller from and
against any and all damages, losses, liabilities, obligations, penalties,
claims, litigation, demands, judgments, suits, actions, proceedings, costs,
disbursements and expenses (including, without limitation, attorneys' expenses
and disbursements) of any kind or nature whatsoever (a "Loss") which may at any
time be imposed upon, incurred by or asserted or awarded against any Seller (an
"Indemnitee") relating to, resulting from or arising out of the Stock Purchase
Agreement or Principia's acquisition of the SBR Shares, provided such Loss was
not due to the Indemnitee's willful misconduct. Indemnitee shall give to Synta
notice in writing as soon as reasonably practicable under the circumstances of
the commencement of any action, suit or proceeding or of any claim threatened to
be made against Indemnitee for which Indemnitee proposes to demand
indemnification under this Section 7.2. Failure to notify Synta shall not
relieve Synta from any liability which it may have to Indemnitee if such failure
does not materially adversely affect Synta or its ability to defend any such
action, suit or proceeding. With respect to any action, suit or proceeding as to
which Indemnitee gives notice, Synta shall have the right to assume control of
the defense, compromise or settlement thereof, including at its own expense,
employment of counsel reasonably satisfactory to Indemnitee, provided that the
outcome includes the complete general release of the Indemnitee. In the event
Synta does not notify Indemnitee in writing that it intends to assume control of
such defense within thirty (30) days after Indemnitee has given Synta notice
thereof, Indemnitee may undertake such defense. Synta shall not be liable to
indemnify Indemnitee under this Agreement for any amounts paid in settlement of
any action, suit or proceeding or claim threatened to be made against Indemnitee
effected without Synta's prior written consent. Synta shall not settle any
action, suit or proceeding or threatened claim without Indemnitee's prior
written consent. Neither Synta nor Indemnitee will unreasonably withhold its or
his consent to any proposed settlement. Synta shall not be obligated to
indemnify any Indemnitee for any consequential or other indirect damages of any
kind other than as set forth in this Section 7.2.

ARTICLE VIII

OTHER PROVISIONS

Section 8.1    GOVERNING LAW AND JURISDICTION. This Agreement and the
rights and obligations of the parties hereunder shall be governed by and
construed according to the laws of the State of Delaware without regard to
choice of law principles.

Section 8.2    NOTICES. Unless otherwise provided herein, all notices
required or permitted by the terms hereof shall be in writing. Any written
notice shall become effective when received. All notices and other
communications hereunder shall be deemed to have been duly given if hand
delivered or mailed, by certified or registered mail, return receipt requested,
postage prepaid, by overnight delivery service or by facsimile (with receipt
confirmed and hard copy to follow) to the respective parties at the following
addresses, or at such other address for a party as shall be specified in a
notice given in accordance with this Section:

If to Sellers, to:

CxSynta LLC
c/o Caxton Corporation
731 Alexander Road, Bldg. 2
Princeton, NJ  08540
Attn: Scott Bernstein, Esq.
Facsimile:  (609) 419-9040

Keith R. Gollust
c/o Gollust Management, Inc.
500 Park Avenue, Suite 510
New York, NY  10022
Facsimile:

Mountain Trail Investments, LLC
865 South Figueroa St., Suite 700
Los Angeles, CA  90017
Attn:  Jonathan D. Jaffrey
Facsimile:

if to Principia, to:

Principia Associates, Inc.
731 Alexander Road, Bldg. 2
Princeton, NJ  08540
Attn: Scott Bernstein, Esq.
Facsimile: (609) 419-9040

and, if to Synta, to:

Synta Pharmaceuticals Corp.
45 Hartwell Avenue
Lexington, MA  02421
Attn: Dr. Safi R. Bahcall
Facsimile: (781) 274-8228

with a copy to:

Nixon Peabody LLP
101 Federal Street
Boston, MA  02110-1832
Attn: Michael K. Barron, Esq.
Facsimile: (866) 947-1784

Section 8.3    AMENDMENT AND ALTERATION. No amendment or alternation of the
terms of this Agreement shall be valid or binding unless made in writing signed
by an authorized representative of each of the parties to this Agreement
specifically referring to this Agreement.

Section 8.4    BINDING AGREEMENT/ASSIGNMENT. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, successors, permitted assigns and legal
representatives; PROVIDED, HOWEVER, that neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto without the prior written consent of each of the other parties,
which consent shall not unreasonably be delayed, conditioned or withheld.

Section 8.5    COUNTERPARTS; COPIES. This Agreement may be executed
simultaneously 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. For purposes of this Agreement, any copy, facsimile or
telecommunication or other reliable reproduction of a writing, transmission or
signature may be substituted and used in lieu of the original writing,
transmission or signature for any and all purposes for which the original
writing, transmission or signature could be used, provided that receipt of such
copy, facsimile telecommunication or other reproduction shall have been
confirmed by the sending party.

Section 8.6    EXPENSES. Except as otherwise specified in this Agreement,
each party hereto shall bear its or his own expenses incurred in connection with
the negotiation, execution and performance of this Agreement.

Section 8.7    CERTAIN RULES OF CONSTRUCTION. The headings in the Sections
and paragraphs of this Agreement are inserted for convenience only and shall not
constitute a part of this Agreement or in any way modify, amend or affect its
provisions. This Agreement is the result of negotiations between the parties and
shall not be deemed or construed as having been drafted by any one party.

Section 8.8    TAX CONSEQUENCES. Synta, Principia and the Sellers are each
relying on the advice of their own tax advisors as to the tax effects of the
transactions contemplated by this Agreement. No party is making any
representation or warranty regarding the tax effects of such transactions to any
other party; PROVIDED, HOWEVER, that the parties shall cooperate and take such
actions and execute and deliver such documents and instruments as may be
necessary to insure that the transactions contemplated hereby qualify as a
tax-free reorganization pursuant to all applicable federal, state, local or
foreign tax laws.

Section 8.9    INTEGRATION. This Agreement represents the entire agreement
among the parties hereto with respect to the subject matter hereof and
supersedes any prior agreements, negotiations, discussions or understandings
with respect to the subject matter hereof.

Section 8.10   EXCLUSIVITY. Sellers will not, for the period beginning on
the date hereof until the earlier to occur of the Closing or December 31, 2002,
directly or indirectly (a) solicit or initiate the submission of proposals or
offers from any person other than Synta for, (b) participate in any discussions
other than with Synta pertaining to, or (c) furnish any information to any
person other than Synta relating to, any acquisition or purchase of all or
substantially all of the material assets of, or any equity interest in Principia
(including without limitation the Principia Shares or), SBR, the SBR Shares, or
a merger, consolidation or business combination involving Principia or SBR.

Section 8.11   FURTHER ASSURANCES. Each party hereto shall do and perform
or cause to be done and performed all further acts and things and shall execute
and deliver all other agreements, certificates, instruments and documents as any
other party hereto reasonably may request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

Section 8.12   SURVIVAL. The representations and warranties of the parties
hereto contained in this Agreement shall survive until the first anniversary of
the date of the Closing. The right to indemnification set forth in Section 7.2
shall not be affected by this Section 8.12.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]

IN WITNESS WHEREOF, Synta and Principia have caused this Agreement to be
executed by their respective duly authorized officers, under seal, as of the
date first set forth above.

SELLERS

CxSYNTA LLC

By:     /S/ PETER D'ANGELO
---------------------------------

Print Name:   Peter D'Angelo
-------------------------

Title:  PRESIDENT
------------------------------

/S/ KEITH R. GOLLUST
------------------------------------
Keith R. Gollust

MOUNTAIN TRAIL INVESTMENTS, LLC

By:     /S/ RICHARD N. FOSTER
---------------------------------

Print Name:   R.N. Foster
-------------------------

Title:  PARTNER
------------------------------

PRINCIPIA ASSOCIATES, INC.

By:     /S/ BRUCE KOVNER
---------------------------------

Print Name:   Bruce Kovner
-------------------------

Title:  CHAIRMAN
------------------------------

SYNTA PHARMACEUTICALS CORP.

By:     /S/ SAFI BAHCALL
---------------------------------

Print Name:   Safi Bahcall
-------------------------

Title:  CHIEF EXECUTIVE OFFICER
------------------------------

Signature Page to Stock Exchange and Purchase Agreement

EXHIBIT A

FORM OF SYNTA WARRANT

THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND, ACCORDINGLY, MAY NOT
BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT (i) UPON EFFECTIVE
REGISTRATION UNDER THE SECURITIES ACT OF 1933 AND ANY APPLICABLE STATE
SECURITIES LAW, OR (ii) UPON ACCEPTANCE BY THE COMPANY OF AN OPINION OF COUNSEL
IN SUCH FORM AND BY SUCH COUNSEL, OR OTHER DOCUMENTATION, AS SHALL BE
SATISFACTORY TO COUNSEL FOR THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

Right to Purchase ______ Shares of
Common Stock of Synta Pharmaceuticals Corp.

SYNTA PHARMACEUTICALS CORP.

Common Stock Purchase Warrant

SYNTA PHARMACEUTICALS CORP., a Delaware corporation (the "COMPANY"),
hereby certifies that, for value received, _______________________ is entitled,
subject to the terms set forth below, to purchase from the Company at any time
or from time to time after 12:00 midnight on __________, 2002 and before 5:00
P.M., Boston time, on ___________, 2005 up to _________________________________
(_______) fully paid and nonassessable shares of Common Stock, par value $0.0001
per share ("COMMON STOCK"), of the Company, at a purchase price per share of
$0.50 (such purchase price per share, as adjusted from time to time as herein
provided, is referred to herein as the "PURCHASE PRICE"). The number and
character of such shares of Common Stock and the Purchase Price are subject to
adjustment as provided herein. The term "COMPANY" shall include Synta
Pharmaceuticals Corp., and any corporation which shall succeed or assume the
obligations of the Company hereunder.

1.   EXERCISE OF WARRANT. This Warrant may be exercised from time to
time in whole or in part by the holder hereof by surrender of this Warrant, with
the form of notice of exercise at the end hereof duly executed by such holder,
to the Company at its principal office, accompanied by payment, if applicable,
in cash or by certified or official bank check payable to the order of the
Company, in the amount obtained by multiplying the number of shares of Common
Stock for which this Warrant is then exercisable by the Purchase Price then in
effect. This Warrant shall expire and be of no further force or effect on
____________, 2005.

2.   DELIVERY OF STOCK CERTIFICATES, ETC., ON EXERCISE. As soon as
practicable after the exercise of this Warrant, the Company will cause to be
issued in the name of and delivered to the holder hereof, and/or the designee or
designees specified by the holder on the notice of exercise, a certificate or
certificates for the number of fully paid and nonassessable shares of Common
Stock to which such holder and/or any such designee(s) shall be entitled on such
exercise, plus, in lieu of any fractional share to which such holder would
otherwise be entitled, cash equal to such fraction multiplied by the then
current market value of one full share, together with any other stock or other
securities and property (including cash, where applicable) to which such holder
is entitled upon such exercise pursuant to

Section 1 or otherwise. In the event of a partial exercise of this Warrant by
the holder hereof, on surrender for exchange of this Warrant, properly endorsed,
to the Company, the Company at its expense will issue and deliver to or on the
order of the holder thereof a new Warrant of like tenor, in the name of such
holder, calling in the aggregate on the face thereof for the number of shares of
Common Stock representing the balance of the shares of Common Stock represented
hereby following such exercise and delivery of shares of Common Stock.

3.   NET ISSUE EXERCISE. Notwithstanding any provisions herein to the
contrary, if the fair market value of one share of the Company's Common Stock
(or whatever securities are issuable upon exercise of this Warrant at the time)
is greater than the Purchase Price (at the date of calculation as set forth
below), then, in lieu of exercising this Warrant for cash, the holder may elect
a "NET ISSUE EXERCISE", pursuant to which the holder will receive shares equal
to the value (as determined below) of this Warrant (or the portion thereof being
exercised), in which event the Company shall issue to the holder and/or the
holder's designee(s) a number of shares of Common Stock computed using the
following formula:

X = Y(A-B)
-----
A

Where:                    X =  the number of shares of Common Stock to be
issued to the Holder;

Y = the number of shares of Common Stock
purchasable under the Warrant or, if only a
portion of the Warrant is being exercised, the
portion of the Warrant being exercised;

A = the fair market value of one share of the
Company's Common Stock (at the date of such
calculation); and

B = Purchase Price in effect (at the date of such
calculation).

For purposes of the above calculation, the fair market value of one share of
Common Stock shall be determined by the Company's Board of Directors in good
faith. To exercise this Warrant pursuant to this Section 3, the holder must
surrender this Warrant at the principal office of the Company together with the
properly endorsed Form of Subscription and notice of such election.

4.   REORGANIZATION. CONSOLIDATION. MERGER, ETC.

(a)  In case at any time or from time to time, the Company shall, (i)
effect a reorganization of the capital stock of the Company, (ii) consolidate
with or merge into any other person, (iii) sell all or substantially all of its
assets or have all or substantially all of its stock sold (or converted into
other property by virtue of a reverse merger) or (iv) dissolve or liquidate
(each a "MAJOR TRANSACTION") then, in each such case, the Company will use best
efforts to ensure that the acquiring entity (as applicable) assumes this Warrant
or issues a comparable substitute warrant so that the holder of this Warrant, on
the exercise of this Warrant or such substitute warrant, shall receive, in lieu
of the Common Stock issuable on such exercise prior to such transaction, the
stock and other securities and property (including cash) to which such holder
would have been entitled upon consummation of such transaction if such holder
had so exercised this Warrant, immediately prior thereto, all subject to further
adjustment thereafter as

2

provided in Section 5. In each such case, appropriate adjustment (as determined
in good faith by the Board of Directors of the Company) shall be made in the
application of the provisions herein set forth with respect to the rights and
interests thereafter of the holder of this Warrant to the end that the
provisions set forth herein (including those relating to adjustments of the
Purchase Price) shall thereafter be applicable, as near as reasonably may be, in
relation to any shares or other property deliverable upon the exercise hereof as
if this Warrant had been exercised immediately prior to such transaction.

(b)  Notwithstanding the foregoing or anything in this Warrant to the
contrary, in connection with a Major Transaction, if the Company, despite its
best efforts, is not successful in obtaining the assumption or substitution of
this Warrant, the Company will give notice to the holder that this Warrant will
terminate if not exercised prior to or simultaneously with the closing or
consummation of such Major Transaction. Any such notice shall be in writing,
shall describe with specificity the consideration to be received in such Major
Transaction and shall be given in accordance with Section 7 at least thirty (30)
days before the closing or consummation of such Major Transaction. If the holder
fails to exercise this Warrant prior to simultaneously with the closing or
consummation of such Major Transaction, this Warrant shall terminate and be of
no further force or effect.

5.   ADJUSTMENT FOR STOCK SPLIT OR STOCK DIVIDEND. In the event that the
Company shall (a) declare a dividend or issue additional shares of the Common
Stock (or other securities convertible into shares of Common Stock) in any other
type of distribution on outstanding Common Stock, (b) subdivide its outstanding
shares of Common Stock, or (c) combine its outstanding shares of the Common
Stock into a smaller number of shares of the Common Stock, then, in each such
event, the Purchase Price shall, simultaneously with the happening of such
event, be adjusted by multiplying the then Purchase Price by a fraction, the
numerator of which shall be the number of shares of Common Stock (which number
shall not include the shares of Preferred Stock (or other security of the
Company convertible into Common Stock) on an as-converted basis) outstanding
immediately prior to such event and the denominator of which shall be the number
of shares of Common Stock (which number shall not include the shares of
Preferred Stock (or other security of the Company convertible into Common Stock)
on an as-converted basis) outstanding immediately after such event, and the
product so obtained shall thereafter be the Purchase Price then in effect. The
Purchase Price, as so adjusted, shall be readjusted in the same manner upon the
happening of any successive event or events described herein in this Section 5.
The holder of this Warrant shall thereafter, on the exercise hereof as provided
in Section 1 or otherwise, be entitled to receive that number of shares of
Common Stock determined by multiplying the number of shares of Common Stock
which would otherwise (but for the provisions of this Section 5) be issuable on
such exercise by a fraction of which (x) the numerator is the Purchase Price
which would otherwise (but for the provisions of this Section 5) be in effect,
and (y) the denominator is the Purchase Price in effect on the date of such
exercise. Upon any adjustment of the Purchase Price or any increase or decrease
in the number of shares purchasable upon the exercise of this Warrant, the
Company shall give written notice thereof to holder in accordance with Section 7
below. The notice shall be signed by the Company's chief financial officer and
shall state the Purchase Price resulting from such adjustment and the increase
or decrease, if any, in the number of shares purchasable at such price upon the
exercise of this Warrant, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based.

6.   CERTAIN EVENTS. If any change in the outstanding Common Stock of the
Company or any other event occurs as to which the other provisions of this
Warrant are not strictly applicable or if strictly applicable would not fairly
protect the purchase rights of the holder in accordance with such provisions,
then the Board of Directors of the Company shall make an adjustment in the
number and class of shares available under this Warrant, the Purchase Price or
the application of such provisions, so the holder upon

3

exercise for the same aggregate purchase price would obtain the total number,
class and kind of shares as it would have owned had this Warrant been exercised
prior to the event and had the holder continued to hold such shares until after
the event requiring adjustment.

7.   NOTICES. Any notice pursuant to this Warrant by the Company or by the
holder shall be in writing and shall be deemed to have been duly given: (a) on
the date of delivery if delivered by hand, (b) on the date of delivery or
refusal indicated on the return receipt if delivered or mailed by certified
mail, return receipt requested, postage prepaid, (c) on the date of delivery if
sent by nationally recognized overnight delivery service, or (d) on the date of
transmission if sent by facsimile (with receipt confirmed and hard copy to
follow):

(i)  If to the holder, addressed to _________________________________
Attention: ____________. Facsimile: (__)________.

(ii) If to the Company, addressed to it at Synta Pharmaceuticals
Corp., 45 Hartwell Avenue, Lexington, MA 02421, Attention: Dr. Safi R. Bahcall.
Facsimile: (530) 323-7045.

A party may from time to time change the address to which notices to it are to
be delivered or mailed hereunder by notice in accordance herewith to the other
party.

8.   RESERVATION OF STOCK, ETC., ISSUABLE ON EXERCISE OF WARRANT. The
Company will at all times reserve and keep available, solely for issuance and
delivery on the exercise of this Warrant, all shares of Common Stock from time
to time issuable on the exercise of this Warrant. The Company covenants and
agrees that all shares of Common Stock that may be issued upon the exercise of
the rights represented by this Warrant will, upon issuance, be duly authorized,
validly issued, fully paid and nonassessable and free from all preemptive rights
of any stockholder and free of all taxes, liens and charges with respect to the
issue thereof.

9.   REPLACEMENT OF WARRANT. On receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of this Warrant
and, in the case of any such loss, theft or destruction of this Warrant, on
delivery of an indemnity agreement or security reasonably satisfactory in form
and amount to the Company or, in the case of any such mutilation, on surrender
and cancellation of such Warrant, the Company at its expense will execute and
deliver, in lieu thereof, a new Warrant of like tenor.

10.  NO IMPAIRMENT. The Company will not avoid or seek to avoid the
observance or performance of any of the terms of the Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the holder of this Warrant against impairment.

11.  NEGOTIABILITY, ETC. This Warrant may not be assigned or transferred
without the prior written consent of the Company (which consent shall not be
unreasonably withheld).

12.  BINDING EFFECT ON SUCCESSORS. This Warrant shall be binding upon any
corporation succeeding the Company by merger, consolidation or acquisition of
all or substantially all of the Company's assets. All of the obligations of the
Company relating to Common Stock issuable upon the exercise of this Warrant
shall survive the exercise and termination of this Warrant. All of the covenants
and agreements of the Company shall inure to the benefit of the permitted
successors and assigns of the holder.

4

13.  MISCELLANEOUS. This Warrant and a certain Stock Exchange Agreement
dated ____________ constitute the full and entire understanding and agreement
between the parties with respect to the subject matter hereof. This Warrant and
any term hereof may be changed, waived or discharged only by an instrument in
writing signed by the party against which enforcement of such change, waiver,
discharge or termination is sought. This Warrant shall be construed and enforced
in accordance with and governed by the laws of the State of Delaware without
regard to its choice of law principles. The headings in this Warrant are for
purposes of reference only, and shall not limit or otherwise affect any of the
terms hereof. This Warrant is being executed as an instrument under seal. The
invalidity or unenforceability of any provision hereof shall in no way affect
the validity or enforceability of any other provision.

The Company has caused this Warrant to be signed by its duly authorized officer
as of _____________________

SYNTA PHARMACEUTICALS CORP.

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

Print:
----------------------

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

5

NOTICE OF EXERCISE
(To be signed only on exercise of Warrant)

TO: SYNTA PHARMACEUTICALS CORP.

1.   The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise this Warrant for, and to purchase thereunder, _____________
shares of Common Stock, $.0001 par value per share ("COMMON STOCK"), of SYNTA
PHARMACEUTICALS CORP., and herewith makes payment of $_____________ therefor.

OR

2.   The undersigned, the holder of the within Warrant, hereby irrevocably
elects to convert ___% of the value of the Warrant pursuant to the provisions of
Section 3 of the Warrant.

Please issue a certificate or certificates representing said number of
shares of Common Stock in the name of the undersigned or in the name(s) of the
undersigned and/or the undersigned designees as specified below:

Name                     Address                  # Shares/%
--------------------------------------------------------------------------------

Dated:
-------------------------        -----------------------------------------
(Signature must conform to name of holder
as specified on the face of the Warrant)

Address:
---------------------------------

---------------------------------

EXHIBIT B

PRINCIPIA STOCKHOLDERS

No. of Principia                                           No. of Synta Shares
Name                   Shares              No. of Synta Shares            subject to Synta Warrant
----                   ------              -------------------            ------------------------

CxSynta LLC                    500,000                   1,899,808                          575,476

Keith R. Gollust               300,000                   1,139,884                          115,095

Mountain Trail                 500,000                   1,899,808                          268,555
Investments, LCC

Exhibit 10.10

AGREEMENT OF MERGER

This Agreement of Merger (this "Agreement") is made and entered into as of
December 27, 2002 by and among Synta Pharmaceuticals Corp., a Delaware
corporation ("Synta"), DGN Genetics Acquisition Corp., a Delaware corporation
(the "Merger Sub", and together with Synta, the "Buyers"), Diagon Genetics,
Inc., a Delaware corporation ("Diagon"), and Dr. Safi R. Bahcall, Dr. Lan Bo
Chen and Lin-Huey Chen and Lynn T. Lee, Trustees for the Lan Bo Chen and
Lin-Huey Chen Irrevocable Trust dtd 12/19/95 (each a "Stockholder" and
collectively, the "Stockholders").

W I T N E S S E T H:

WHEREAS, the Stockholders collectively own all of the issued and
outstanding shares of the capital stock (the "Stock") of Diagon as set forth in
EXHIBIT A hereto;

WHEREAS, the respective boards of directors of Synta, the Merger Sub and
Diagon have approved the merger of Diagon with and into the Merger Sub (the
"Merger"), pursuant to and subject to the conditions set forth herein and in
accordance with the laws of the State of Delaware;

WHEREAS, subsequent to the Merger and prior to January 1, 2003, Synta
intends to merge the Merger Sub with and into Synta in accordance with the laws
of the State of Delaware; and

WHEREAS, Synta, the Merger Sub, Diagon and the Stockholders desire to make
certain representations, warranties and agreements in connection with the
Merger;

NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

ARTICLE I
THE MERGER

Section 1.1    THE MERGER. At the Effective Time (as defined in
Section 1.2), Diagon shall be merged with and into the Merger Sub (Diagon
together with Merger Sub, the "Constituent Corporations") in accordance with the
applicable provisions of the Delaware General Corporation Law ("DGCL"), and the
separate existence of Diagon shall thereupon cease; and the Merger Sub, as the
surviving corporation in the Merger (the "Surviving Corporation"), shall
continue its corporate existence in accordance with the DGCL.

Section 1.2    EFFECTIVE TIME OF THE MERGER. At the Closing, the
Merger Sub shall cause the Merger to be consummated by filing with the Secretary
of State of Delaware an appropriate Certificate of Merger (the "Certificate of
Merger") duly executed in accordance with this Agreement and the DGCL. The date
and time at which the Certificate of Merger is filed is referred to herein as
the "Effective Time"

Section 1.3    CERTIFICATE OF INCORPORATION. The Certificate of
Incorporation of the Merger Sub as in effect at the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation; PROVIDED, HOWEVER,
that Article 1 of the Certificate of Incorporation shall be amended to read as
follows: "The name of the corporation is Diagon Genetics, Inc."

Section 1.4    BY-LAWS. The by-laws of Merger Sub as in effect at the
Effective Time shall be the by-laws of the Surviving Corporation.

Section 1.5    DIRECTORS AND OFFICERS. The directors and officers of
the Surviving Corporation at the Effective Time shall be the directors and
officers of Merger Sub in office immediately prior to the Effective Time, each
to serve in accordance with the by-laws of the Surviving Corporation.

Section 1.6    RIGHTS AND LIABILITIES OF SURVIVING CORPORATION. At the
Effective Time, the Surviving Corporation shall succeed to all the properties
and assets of the Constituent Corporations and to all debts, choses in action
and other interests due or belonging to the Constituent Corporations and shall
be subject to and responsible for all the debts, liabilities and duties of the
Constituent Corporations in accordance with Section 259 of the DGCL.

Section 1.7    CONVERSION OF SHARES. At the Effective Time, by virtue
of the Merger and without any action on the part of the holder of any securities
of the Constituent Corporations:

(a) each share of Stock then outstanding, and all rights with respect
thereto, shall be converted into and represent the right to receive the Merger
Consideration as defined in Section 2.2;

(b) each share of Stock, if any, held in Diagon's treasury shall be
canceled and retired without payment of any consideration therefor; and

(c) each outstanding stock option, warrant or other right, if any, to
purchase shares of the capital stock of Diagon, whether or not then exercisable
or vested, shall be canceled and no cash or other consideration shall be paid or
delivered in exchange therefor.

ARTICLE II
CLOSING; MERGER CONSIDERATION

Section 2.1    CLOSING. The closing of the transactions contemplated
hereby (the "Closing") shall take place at the offices of Nixon Peabody LLP, 101
Federal Street, Boston, MA 02110-1832, or at such other place as may be agreed
to by Stockholders and Synta, at 10:00 AM (Boston time) on or before December
27, 2002, or on such other date as may be agreed upon in writing by Stockholders
and Synta if subsequent to December 27, 2002 (the "Closing Date").

1

Section 2.2    MERGER CONSIDERATION. Each Stockholder shall receive
for his Stock the number of shares of Common Stock, $.0001 par value per share,
of Synta ("Synta Shares") and cash payment set forth opposite his name on
EXHIBIT A (the "Merger Consideration"). The cash payment shall be made to each
Stockholder either via wire transfer of immediately available funds to the
account of the Stockholder, if such information has previously been provided to
Synta, or via check made payable to the order of the Stockholder. The method of
payment shall be determined by Synta in its discretion.

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS

Diagon and each of the Stockholders hereby jointly and severally represent
and warrant to the Buyers as follows:

Section 3.1    TITLE TO SHARES. Each Stockholder owns of record and
beneficially, free and clear of all encumbrances, and has good title to the
number of shares of Stock as set forth on EXHIBIT A attached hereto. No
Stockholder is a party to any agreement, trust or other arrangement that in any
way restricts such Stockholder's ability to perform its obligations under this
Agreement, including, without limitation, voting or transferring such
Stockholder's shares of Stock.

Section 3.2    NO CONFLICT. The execution, delivery and performance of this
Agreement by each Stockholder does not and will not (a) conflict with or violate
any law or governmental order applicable to such Stockholder or any of such
Stockholder's respective assets, properties or businesses or (b) conflict with,
result in any breach of, constitute a default (or event which with the giving of
notice or lapse of time, or both, would become a default) under, require any
consent under, or give to others any rights of termination, amendment,
acceleration, suspension, revocation or cancellation of, or result in the
creation of any encumbrance on any of the shares of Stock owned by such
Stockholder pursuant to, any note, bond, mortgage or indenture, contract,
agreement, lease, sublease, license, permit, franchise or other instrument or
arrangement to which such Stockholder is a party or by which any of the shares
of Stock owned by such Stockholder is bound or affected, which would adversely
affect the ability of such Stockholder to carry out its obligations under, and
to consummate the transactions contemplated by, this Agreement.

Section 3.3    GOVERNMENTAL CONSENTS AND APPROVALS. The execution, delivery
and performance of this Agreement by each Stockholder does not and will not
require any consent, approval, authorization or other order of, action by,
filing with or notification to, any governmental authority.

2

Section 3.4    LITIGATION. No action, suit, investigation or proceeding by
or against any Stockholder is pending or, to the knowledge of any Stockholder,
threatened before any court, arbitrator or administrative agency, which could
reasonably be expected to affect the legality, validity or enforceability of
this Agreement or the consummation of the transactions contemplated by this
Agreement.

Section 3.5    SECURITIES ACT. The Synta Shares issued by Synta to each
Stockholder pursuant to this Agreement are being acquired by such Stockholder
for investment only and not with a view to any public distribution thereof, and
such Stockholder will not offer to sell or otherwise dispose of the Synta Shares
so acquired by such Stockholder in violation of any of the registration
requirements of the Securities Act of 1933, as amended, or any applicable state
blue sky laws.

Section 3.6    NO BROKER. No broker, finder or investment banker is
entitled to any brokerage, finders or other fee or commission in connection with
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of any Stockholder or Diagon.

Section 3.7    ORGANIZATION, GOOD STANDING AND AUTHORITY OF DIAGON.
Diagon is a corporation duly organized, validly existing and in corporate good
standing under the laws of the State of Delaware. The execution and delivery of
this Agreement, and the consummation of the transactions contemplated hereby
have been duly authorized by Board of Directors of Diagon and, as set forth in
Section 3.14 hereof, by the Stockholders and no other proceedings or actions on
the part of Diagon is necessary to authorize this Agreement and the transactions
contemplated hereby except as set forth in Section 3.14 hereof. This Agreement
constitutes a valid and binding obligation of Diagon, enforceable in accordance
with its terms.

Section 3.8    CAPITAL STOCK OF DIAGON. The authorized capital stock of
Diagon consists of forty million (40,000,000) shares of Common Stock, $.0001 par
value per share (the "Diagon Common Stock"). As of the date hereof, three
thousand (3,000) shares of Diagon Common Stock are issued and outstanding, all
of which are validly issued, fully paid and nonassessable. None of the issued
and outstanding shares of Diagon Common Stock were issued in violation of any
preemptive rights. There are no options, warrants, convertible securities or
other rights, agreements, arrangements or commitments of any character relating
to the Stock or obligating Diagon to issue, sell or assign the Stock, or any
other interest in, the Stock. There are no outstanding contractual obligations
of Diagon to repurchase, redeem or otherwise acquire any shares of the Stock or
to provide funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in, any other person.

Section 3.9    FINANCIAL STATEMENTS OF DIAGON. The unaudited balance
sheet of Diagon as of November 30, 2002 and the related statement of income for
the period then ended, complete and correct copies of which have been delivered
to Synta previously, fairly present the financial position of Diagon as at such
date and the results of operations of Diagon for the period then ended, in each
case in accordance with U.S. generally accepted accounting principles
consistently applied for the period covered (subject to the normal year-end
adjustments).

3

Section 3.10   NO MATERIAL ADVERSE CHANGE. Since November 30, 2002,
there has been no material adverse change in the properties, business,
prospects, results of operations or financial condition of Diagon.

Section 3.11   NO DEFAULT; NO CONFLICT WITH OTHER INSTRUMENTS. Diagon is
not in default under or in violation of any provision of its charter or by-laws.
Diagon is not in default under or in violation of any material indenture,
mortgage, deed of trust, note, debenture, or any material agreement, lease, or
other instrument or contract to which it is a party or by which it or any of it
properties or assets is bound or any judgment, decree, order, statute, rule or
regulation to which it is subject or by which it or any of its properties or
assets is bound. The performance of this Agreement and the consummation of the
transactions contemplated hereby do not and will not constitute a default under
any material indenture, mortgage, deed of trust, note, debenture, agreement,
lease or other material instrument or material contract or any such judgment,
decree, order, statute, rule or regulation with respect to which Diagon is a
party or subject or result in the creation of any lien, charge or encumbrance on
any of the properties or assets of Diagon.

Section 3.12   SUBSIDIARIES. Diagon has no subsidiaries.

Section 3.13   LITIGATION. There is (a) no action, suit, investigation or
proceeding pending or, to any Stockholder's knowledge, threatened before any
court, arbitrator or administrative agency against or affecting Diagon, (b) no
action, suit, investigation or proceeding pending or, to any Stockholder's
knowledge, threatened before any court, arbitrator or administrative agency
against or affecting Diagon that could have the effect of delaying or hindering
the transactions contemplated in this Agreement and (c) to any Stockholder's
knowledge, no default with respect to any judgment, order, writ, injunction or
decree of any court or any administrative agency against or affecting Diagon
that could have the effect of delaying or hindering the transaction contemplated
in this Agreement.

Section 3.14   REQUIRED CONSENTS AND APPROVALS. The performance of this
Agreement will not require any consent, approval, order, authorization,
registration, qualification or designation from any governmental authority or
pursuant to any agreement or other instrument by which Diagon, or any of its
properties or assets, is bound except (a) for such consents, approvals, orders,
authorizations, registrations, qualifications or designations that have already
been obtained and are in full force and effect on the date hereof, and (b) where
the failure to obtain such consents, approvals, orders, authorizations,
registrations, qualifications or designations would not prevent or delay the
consummation of the transactions contemplated by this Agreement, or otherwise
prevent the Stockholders from performing their obligations under this Agreement.
Each of the Stockholders agrees that the execution and delivery of this
Agreement shall constitute his vote for adoption of this Agreement in accordance
with, and his written waiver of any notice required by or appraisal rights with
respect to the transactions contemplated hereby arising under, the DGCL.

4

ARTICLE IV
REPRESENTATIONS, WARRANTIES OF BUYERS

Buyers jointly and severally represent and warrant to Stockholders as
follows:

Section 4.1    ORGANIZATION, GOOD STANDING AND AUTHORITY OF THE BUYERS.
Each of the Buyers is a corporation duly organized, validly existing and in
corporate good standing under the laws of the State of Delaware and has the
requisite power and authority to own, lease and operate all its properties and
assets and to carry on its business as it is now being conducted. Each of the
Buyers is duly qualified to do business and is in corporate good standing in
each jurisdiction in which it owns or leases property or engages in any activity
which would require it to qualify to do business as a foreign corporation,
except such jurisdictions where the failure to so qualify would not have a
material adverse effect on the business, condition (financial or otherwise),
results of operations, rights, properties, assets or prospects of the Buyers.

Section 4.2    AUTHORIZATION. Each of the Buyers has full corporate power
and authority to enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement, and the consummation of
the transactions contemplated hereby have been duly authorized by the Board of
Directors of Synta and by the Board of Directors and sole stockholder of the
Merger Sub and no other proceedings or actions on the part of each of the Buyers
are necessary to authorize this Agreement and the transactions contemplated
hereby. This Agreement constitutes a valid and binding obligation of each of the
Buyers, enforceable in accordance with its terms.

Section 4.3    NO VIOLATION. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
violate any provisions of the charter or by-laws of either of the Buyers, or
violate, or be in conflict with, or allow the termination of, or constitute a
default under, or cause the acceleration of the maturity of, or create a lien
under, any material debt or obligation pursuant to any material agreement or
commitment to which such Buyer is a party or by which such Buyer is bound, or,
to the knowledge of such Buyer, violate any statute or law or any judgment,
decree, order, regulation or rule of any governmental authority to which such
Buyer is subject.

Section 4.4    CONSENTS AND APPROVALS OF GOVERNMENTAL AUTHORITIES. Except
for consents, approvals or authorizations which if not received or declarations,
filings or registrations which if not made, would not have a material adverse
effect on the business, results of operations or financial condition of the
Buyers or impede the consummation of the transactions contemplated by this
Agreement in any material respect, no consent, approval or authorization of, or
declaration, filing or registration with, any governmental authority is required
to be made or obtained by either of the Buyers in connection with the execution,
delivery and performance of this Agreement or the transactions contemplated
hereby.

Section 4.5    BROKERS', FINDERS' FEES, ETC. Neither of the Buyers has
employed any broker, finder, investment banker or financial advisor as to whom
either Buyer may have any obligation to pay any brokerage or finders' fees,
commissions or similar compensation in connection with the transactions
contemplated hereby.

5

Section 4.6    LITIGATION. There is no action, proceeding or investigation
pending or threatened against either of the Buyers, which, if adversely
determined, would adversely affect the Buyers' performance under this Agreement
or the consummation of the transactions contemplated hereby.

ARTICLE V
CONDITIONS TO CLOSING

5.1  CONDITIONS OF BUYERS' PERFORMANCE. The performance by the Buyers under
this Agreement shall be subject to the fulfillment, as determined by the Buyers,
in their reasonable judgment, of each of the conditions specified below:

(a)  each of the Stockholders shall have performed and complied in all
material respects with his obligations under this Agreement required to be
performed by such Stockholder at or prior to the Closing;

(b)  the representations and warranties of Diagon and each of the
Stockholders shall be true and correct in all material respects when made and as
of the Closing with the same effect as though made at and as of the Closing;

(c)  the Buyers shall have received from Diagon and each of the
Stockholders: a certificate, duly executed by such Stockholder, certifying that
the representations and warranties of such Stockholder set forth in this
Agreement are true and correct in all material respects when made and as of the
Closing with the same effect as though made at and as of the Closing; and

(d)  the Buyers shall have received the written resignation of each member
of the Board of Directors of Diagon and each of the officers of Diagon.

5.2  CONDITIONS OF STOCKHOLDERS' PERFORMANCE. The performance by each of
the Stockholders of such Stockholder's obligations under this Agreement shall be
subject to the fulfillment, as determined by such Stockholder, in his reasonable
judgment, of each of the conditions specified below:

(a)  the Buyers shall have performed and complied in all material respects
with their obligations under this Agreement required to be performed by it at or
prior to the Closing; and

(b)  the Stockholders shall have received from the Buyers:

(i)    a certificate, duly executed by an authorized officer of each
of the Buyers, certifying that the representations and warranties of each of the
Buyers set forth in this Agreement are true and correct in all material respects
when made and as of the Closing with the same effect as though made at and as of
the Closing; and

6

(ii)   satisfactory evidence that the representatives of each of the
Buyers executing and delivering this Agreement are authorized to do so.

ARTICLE VI
INDEMNIFICATION

Section 6.1    INDEMNIFICATION BY STOCKHOLDERS. Subject to Section 6.3
hereof, from and after the Closing, the Stockholders hereby jointly and
severally covenant and agree to indemnify, protect, defend and save harmless
each of the Buyers from and against any and all damages, losses, liabilities,
obligations, penalties, claims, litigation, demands, judgments, suits, actions,
proceedings, costs, disbursements and expenses (including, without limitation,
reasonable attorneys' expenses and disbursements) of any kind or nature
whatsoever (a "LOSS") arising out of or incurred with respect to (a) any breach
of any or all of the Stockholders' representations and warranties in this
Agreement or any certificate delivered at the Closing, or (b) the breach or
nonperformance of any covenant or obligation to be performed by the Stockholders
hereunder or under any agreement executed in connection herewith, provided such
Loss was not due to a Buyer's willful misconduct.

Section 6.2    INDEMNIFICATION OF THE STOCKHOLDERS. Subject to Section 6.3
hereof, from and after the Closing, the Buyers shall indemnify and hold harmless
the Stockholders (and their respective legatees, heirs, and legal
representatives) from and against any and all Loss arising out of or incurred
with respect to (a) any breach of any or all of the Buyers' representations and
warranties in this Agreement or any certificate delivered at the Closing, or (b)
the breach or nonperformance of any covenant or obligation to be performed by
the Buyers hereunder or under any agreement executed in connection herewith,
provided such Loss was not due to a Stockholder's willful misconduct.

Section 6.3    CONDITIONS TO INDEMNIFICATION. An indemnified party (an
"Indemnitee") shall give to the indemnifying party (an "Indemnitor") notice in
writing as soon as reasonably practicable under the circumstances of the
commencement of any action, suit or proceeding or of any claim threatened to be
made against Indemnitee for which Indemnitee proposes to demand indemnification
under this Article 6. Failure to notify Indemnitor shall not relieve the
Indemnitor from any liability which he may have to Indemnitee if such failure
does not materially adversely affect Indemnitor or his ability to defend any
such action, suit or proceeding. With respect to any action, suit or proceeding
as to which Indemnitee gives notice, Indemnitor shall have the right to assume
control of the defense, compromise or settlement thereof, including at
Indemnitor's own expense, employment of counsel reasonably satisfactory to
Indemnitee, provided that the outcome includes the complete general release of
the Indemnitee. In the event Indemnitor does not notify Indemnitee in writing
that he intends to assume control of such defense within thirty (30) days after
Indemnitee has given Indemnitor notice thereof, Indemnitee may undertake such
defense. Indemnitor shall not be liable to indemnify Indemnitee under this
Agreement for any amounts paid in settlement of any action, suit or proceeding
or claim threatened to be made against Indemnitee effected without Indemnitor's
prior written consent. Indemnitee shall not settle any action, suit or
proceeding or threatened claim without Indemnitor's prior written consent.
Neither Indemnitor nor Indemnitee

7

will unreasonably withhold his consent to any proposed settlement. Indemnitor
shall not be obligated to indemnify any Indemnitee for any consequential or
other indirect damages of any kind other than as set forth in this Article 6.

ARTICLE VII
OTHER AGREEMENTS

Section 7.1    ISSUANCE OF SYNTA SHARES TO BETH ISRAEL. Subsequent to the
Closing, in accordance with that certain License Agreement by and between Diagon
and Beth Israel Deaconess Medical Center, Inc., a Massachusetts nonprofit
corporation ("Beth Israel"), dated November 15, 2002, and that certain
additional License Agreement, also by and between Diagon and Beth Israel, dated
November 15, 2002, Synta shall deliver to Beth Israel an aggregate of one
hundred eighty-four thousand, four hundred forty-seven (184,447) shares of Synta
Shares, provided that Synta and Beth Israel have entered into a mutually
acceptable Stock Transfer Agreement with regard to such Synta Shares.

Section 7.2    MERGER OF SURVIVING CORPORATION WITH AND INTO SYNTA.
Subsequent to the Merger and prior to January 1, 2003, Synta shall use
reasonable efforts to merge the Surviving Corporation with and into Synta
pursuant to Section 253 of the DGCL, with Synta being the surviving corporation.

ARTICLE VIII
OTHER PROVISIONS

Section 8.1    GOVERNING LAW AND JURISDICTION. This Agreement and the
rights and obligations of the parties hereunder shall be governed by and
construed according to the laws of the State of Delaware without regard to
choice of law principles.

Section 8.2    NOTICES. Unless otherwise provided herein, all notices
required or permitted by the terms hereof shall be in writing. Any written
notice shall become effective when received. All notices and other
communications hereunder shall be deemed to have been duly given if hand
delivered or mailed, by certified or registered mail, return receipt requested,
postage prepaid, by overnight delivery service or by facsimile (with receipt
confirmed and hard copy to follow) to the respective parties at the following
addresses, or at such other address for a party as shall be specified in a
notice given in accordance with this Section:

If to Stockholders, to:

Dr. Lan Bo Chen
184 East Emerson Road
Lexington, MA  02420
Facsimile:  (781) 863-5917

Lin-Huey Chen and Lynn T. Lee,
Trustees for the Lan Bo Chen and Lin-
Huey Chen Irrevocable Trust dated December 19, 1995

8

c/o Mrs. Lin-Huey Chen
184 East Emerson Road
Lexington, MA  02420
Facsimile:  (781) 863-5917

Dr. Safi R. Bahcall
140 West 69th Street
#111C
New York, NY  10023
Facsimile: (530) 323-7045

and, if to Synta or the Merger Sub, to:

Synta Pharmaceuticals Corp.
45 Hartwell Avenue
Lexington, MA  02421
Attn: Dr. Safi R. Bahcall
Facsimile: (781) 274-8228

with a copy to:

Nixon Peabody LLP
101 Federal Street
Boston, MA  02110
Attn:  Michael K. Barron, Esq.
Facsimile: (866) 947-1784

Section 8.3    AMENDMENT AND ALTERATION. No amendment or alteration of
the terms of this Agreement shall be valid or binding unless made in writing
signed by an authorized representative of each of the parties to this Agreement
specifically referring to this Agreement.

Section 8.4    BINDING AGREEMENT/ASSIGNMENT. This Agreement and all of
the provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, successors, permitted assigns and
legal representatives; PROVIDED, HOWEVER, that neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any of the
parties hereto without the prior written consent of each of the other parties,
which consent shall not unreasonably be delayed, conditioned or withheld.

Section 8.5    COUNTERPARTS; COPIES. This Agreement may be executed
simultaneously 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. For purposes of this Agreement, any copy, facsimile or
telecommunication or other reliable reproduction of a writing, transmission or
signature may be substituted and used in lieu of the original writing,
transmission or signature for any and all purposes for which the original
writing, transmission or signature could be used, provided that receipt of such
copy, facsimile telecommunication or other reproduction shall have been
confirmed by the sending party.

9

Section 8.6    EXPENSES. Except as otherwise specified in this
Agreement, each party hereto shall bear his own expenses incurred in connection
with the negotiation, execution and performance of this Agreement.

Section 8.7    CERTAIN RULES OF CONSTRUCTION. The headings in the
Sections and paragraphs of this Agreement are inserted for convenience only and
shall not constitute a part of this Agreement or in any way modify, amend or
affect its provisions. Terms used in the singular shall be read in the plural,
and vice versa, and terms used in the masculine gender shall be read in the
feminine or neuter gender when the context so requires, and vice versa. This
Agreement is the result of negotiations between the parties and shall not be
deemed or construed as having been drafted by any one party.

Section 8.8    TAX CONSEQUENCES. Buyers and the Stockholders are each
relying on the advice of their own tax advisors as to the tax effects of the
transactions contemplated by this Agreement. No party is making any
representation or warranty regarding the tax effects of such transactions to any
other party; PROVIDED, HOWEVER, that the parties shall cooperate and take such
actions and execute and deliver such documents and instruments as may be
necessary to insure that the transactions contemplated hereby qualify as a
tax-free reorganization pursuant to all applicable federal, state, local or
foreign tax laws.

Section 8.9    INTEGRATION. This Agreement represents the entire
agreement among the parties hereto with respect to the subject matter hereof and
supersedes any prior agreements, negotiations, discussions or understandings,
whether written or oral, with respect to the subject matter hereof.

Section 8.10   FURTHER ASSURANCES. Each party hereto shall do and
perform or cause to be done and performed all further acts and things and shall
execute and deliver all other agreements, certificates, instruments and
documents as any other party hereto reasonably may request in order to carry out
the intent and accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.

Section 8.11   SURVIVAL. The representations and warranties and rights
to indemnification of the parties hereto contained in this Agreement shall
survive eighteen (18) months from the date of the Closing.

Section 8.12   SEVERABILITY. The provisions of this Agreement shall be
deemed severable, and if any part of any provision is held to be illegal, void,
voidable, invalid, non-binding or unenforceable in its entirety or partially or
as to any party, for any reason, such provision may be changed, consistent with
the intent of the parties hereto, to the extent reasonably necessary to make the
provision, as so changed, legal, valid, binding and enforceable. If any
provision of this Agreement is held to be illegal, void, voidable, invalid,
non-binding or unenforceable in its entirety or partially or as to any party,
for any reason, and if such provision cannot be changed consistent with the
intent of the parties hereto to make it fully legal, valid, binding and
enforceable, then such provisions will be stricken from this Agreement, and the
remaining

10

provisions of this Agreement shall not in any way be affected or impaired, but
shall remain in full force and effect.

Section 8.13   CONFLICT WAIVER. The parties to this Agreement hereby
acknowledge that (i) Nixon Peabody LLP ("NP") has represented the interests of
Synta and Merger Sub (the "Represented Parties") in connection with this
Agreement and the transactions contemplated by this Agreement; (ii) the business
terms of the transactions contemplated by this Agreement have been primarily
negotiated between the Represented Parties and the other parties to this
Agreement (the "Other Parties"); (iii) the parties have requested that NP draft
the Agreement and assist in the implementation of the Merger; (iv) because of
the amicable relationship of the parties, NP has agreed to draft the Agreement
and assist in the implementation of the Merger; (v) each of the Other Parties
has been advised by NP to retain his own independent attorney to review this
Agreement and that each of the Other Parties is entitled to the undivided
loyalty of an attorney that will act in a manner designed solely to further his
best interest; (vi) each of the Other Parties has been advised by NP that his
individual interests in this Agreement and the transactions contemplated by this
Agreement may conflict with and/or be adverse to the interests of the
Represented Parties or one or more of the Other Parties; (vii) NP cannot advise
the Other Parties individually with respect to his personal interests against
the Represented Parties or one or more of the Other Parties, as each of the
Other Parties would expect from his own attorney; and (viii) communications by
Represented Parties and each of the Other Parties with NP may not be protected
by the attorney-client privilege if litigation arises between any of the parties
to this Agreement in connection with this Agreement or the transactions
contemplated by this Agreement; and (ix) NP's advice to the Represented Parties
may be potentially adverse to the interests of one or more of the Other Parties.
Each of the Other Parties hereby waives any conflict of interest presented by
NP's representation of the Represented Parties in connection with this Agreement
and the transactions contemplated by this Agreement. In agreeing to this waiver,
each of the Other Parties acknowledges that he has had the opportunity to
consult with separate legal counsel of his own choice.

REMAINDER OF PAGE INTENTIALLY LEFT BLANK. SIGNATURE PAGE FOLLOWS.

11

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

SYNTA PHARMACEUTICALS CORP.                  STOCKHOLDERS:

By:      /S/ DR.SAFI R. BAHCALL                    /S/ DR. LAN BO CHEN
---------------------------------------   -----------------------------------
Dr. Lan Bo Chen
Print Name:   Safi R. Bahcall
-------------------------------

Title:   CHIEF EXECUTIVE OFFICER                   /S/ DR. SAFI R. BAHCALL
------------------------------------   -----------------------------------
Dr. Safi R. Bahcall

LIN-HUEY CHEN AND LYNN T. LEE,
DGN GENETICS ACQUISITION CORP.               TRUSTEES FOR THE LAN BO
CHEN IRREVOCABLE TRUST DATED
By:      /S/ BRYAN G. KEANEY                 DECEMBER 19, 1995
---------------------------------------

Print Name:   Bryan G. Keaney                   /S/ LIN-HUEY CHEN, TRUSTEE
-------------------------------   -----------------------------------
Lin-Huey Chen, Trustee

Title:   PRESIDENT
------------------------------------
/S/ LYNN T. LEE
-----------------------------------
DIAGON GENETICS, INC.                        Lynn T. Lee

By:      /S/ DR. SAFI R. BAHCALL
---------------------------------------

Print Name:   Safi R. Bahcall
-------------------------------

Title:   CHIEF EXECUTIVE OFFICER
------------------------------------

Signature Page to Agreement of Merger

12

EXHIBIT A

DIAGON STOCKHOLDERS

Name                           No. of Diagon Shares          No. of Synta Shares            Cash Payment
----                           --------------------          -------------------           ---------------

Dr. Lan Bo Chen                            838                            0                     $  3,777,780.00

Lin-Huey Chen and Lynn T. Lee,            1153                        1,918,253                 $          0.00
Trustees for the Lan Bo Chen and
Lin-Huey Chen Irrecovable Trust
dated December 19, 1995

Dr. Safi R. Bahcall                       1009                        1,227,601                 $  1,222,220.00

Exhibit 10.11

SYNTA PHARMACEUTICALS CORP. HAS REQUESTED THAT THE MARKED PORTIONS OF THIS 
DOCUMENT BE ACCORDED CONFIDENTIAL TREATMENT PURSUANT TO RULE 406 UNDER THE 
SECURITIES ACT OF 1933, AS AMENDED.

[*] DENOTES WHERE CONFIDENTIAL MATERIALS HAVE BEEN OMITTED AND FILED 
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

ASSET PURCHASE AGREEMENT

Asset Purchase Agreement dated as of December 17, 2003, by and among SYNTA
PHARMACEUTICALS CORP., a Delaware corporation ("Buyer"), CANCER GENOMICS, INC.,
a Delaware corporation ("CG"), KAVA PHARMACEUTICALS, INC., a Delaware
corporation ("Kava"), SINGLEPIXEL BIOMEDICAL, INC., a Delaware corporation
("SinglePixel"; CG, Kava and SinglePixel shall singly and collectively be
referred to herein as a "Seller" or "Sellers") and CMAC, LLC, a Delaware limited
liability company ("Stockholder").

This Agreement sets forth the terms and conditions upon which the Buyer
will purchase from the Sellers, and Sellers (each severally and not jointly)
will sell to the Buyer, all the assets of such Sellers (other than the Retained
Assets, as hereinafter defined) and the business and goodwill of the Sellers as
a going concern, subject to those liabilities of the Sellers which are
specifically hereinafter described, for the consideration provided herein.

In all instances, except where otherwise provided, each Seller's rights and
obligations hereunder shall be deemed several and not joint among the Sellers.

In consideration of the foregoing, the mutual representations, warranties
and covenants set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties to
this Agreement hereby agree as follows:

ARTICLE I

DEFINITIONS

1.1  DEFINITIONS. For the purposes of this Agreement, all capitalized words
or expressions used in this Agreement shall have the meanings specified in this
Article I (such meanings to be equally applicable to both the singular and
plural forms of the terms defined):

"AFFILIATE" means when used with respect to any Person, if such Person is a
corporation, any officer or director thereof and any Person which is, directly
or indirectly, the beneficial owner (by itself or as part of any group) of more
than fifty percent (50%) of any class of any Equity Security thereof, and, if
such beneficial owner is a partnership, any general or limited partner thereof,
or if such beneficial owner is a corporation, any Person controlling, controlled
by or under common control with such beneficial owner, or any officer or
director of such beneficial owner or of any corporation occupying any such
control relationship.

"AGREEMENT" means this Asset Purchase Agreement (together with all Exhibits
and Schedules hereto) as in effect from time to time.

"BUSINESS DAY" means any day, excluding Saturday, Sunday and any other day
on which commercial banks in Boston, Massachusetts are authorized or required by
law to close.

1

"CHARTER" means the Certificate of Incorporation, Articles of Incorporation
or Organization or other organizational document of a corporation, as amended
and restated through the date hereof.

"CLAIM" means an action, suit, proceeding, hearing, investigation,
litigation, charge, complaint, claim or demand.

"CODE" means the Internal Revenue Code of 1986, and the regulations,
rulings, and court decisions in respect thereof, all as the same shall be in
effect at the time.

"COMMISSION" means the Securities and Exchange Commission and any other
similar or successor agency of the federal government administering the
Securities Act or the Exchange Act.

"ENVIRONMENTAL ACTION" means any administrative, regulatory or judicial
action, suit, demand, claim, notice of non-compliance or violation,
investigation, request for information, proceeding, consent order or consent
agreement relating in any way to any Environmental Law or any Environmental
Permit.

"ENVIRONMENTAL LAW" means any applicable federal, state or local law,
statute, rule, regulation, or ordinance relating to the environment, human
health or safety from pollution or other environmental degradation or Hazardous
Materials.

"EQUITY SECURITY" shall have the meaning given to such term in Section
3(a)(ii) of the Exchange Act.

"ERISA" means the Employee Retirement Income Security Act of 1974, and any
similar or successor federal statute, and the rules, regulations and
interpretations thereunder, all as the same shall be in effect at the time.

"EXCHANGE ACT" means the Securities Exchange Act of 1934, and the rules and
regulations and interpretations of the Commission thereunder, all as the same
shall be in effect at the time.

"GAAP" means generally accepted accounting principles, consistently
applied.

"LIEN" means, with respect to any asset, any mortgage, deed of trust,
pledge, hypothecation, assignment, security interest, lien, charge, restriction,
adverse claim by a third party, title defect or encumbrance of any kind.

"MATERIAL ADVERSE EFFECT" means a material adverse impact or effect on the
assets of a Seller or of the Buyer, as the case may be.

"OFFICER'S CERTIFICATE" means a certificate signed in the name of a
corporation by its President, Chief Executive Officer, Treasurer, Chief
Financial Officer, or, if so specified, the Secretary, acting in his or her
official capacity.

2

"PERSON" means any individual, firm, partnership, association, trust,
corporation, limited liability company, governmental body or other entity.

"PURCHASE DOCUMENTS" means this Agreement, the Non-Competition Agreements,
the Bills of Sale, the Instruments of Assumption, the Patent Assignments, the
Kava Pharmaceutical License Agreement and any other certificate, document,
instrument, stock power, or agreement executed in connection therewith.

"SECURITIES ACT" means the Securities Act of 1933 and the rules,
regulations and interpretations of the Commission thereunder, all as the same
shall be in effect at the time.

"SUBSIDIARY" means, with respect to any Person, any corporation,
association or other entity of which such Person owns at least a majority in
interest of the outstanding capital stock or other Equity Securities having by
the terms thereof voting power under ordinary circumstances to elect a majority
of the directors, managers or trustees thereof.

"TAX" means any federal, state, local or foreign tax of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not.

"TAX RETURN" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.

"TO STOCKHOLDER'S KNOWLEDGE", "KNOWN TO STOCKHOLDER", "TO THE KNOWLEDGE OF
THE STOCKHOLDER" and words of similar import means the actual knowledge of any
of Michael R.L. Astor, Joel W. McCleary, Nicholas N. Noon and Todd A. Klibansky
as of the date hereof.

"VALID CLAIM" shall mean a claim in an issued, unexpired patent or in a
pending patent application within the Kava Patents, Single Pixel Patents or CG
Patents that (a) has not been finally cancelled, withdrawn, abandoned or
rejected by any administrative agency or other body of competent jurisdiction,
(b) has not been revoked, held invalid, or declared unpatentable or
unenforceable in a decision of a court or other body of competent jurisdiction
that is unappealable or uappealed within the time allowed for appeal, (c) has
not been rendered unenforceable through disclaimer or otherwise, (d) is not lost
through an interference proceeding or (e) to the extent pending, has not been
pending for longer than five (5) years from the filing date of the earliest
patent application from which the pending application claims priority, provided
that subsequent to such five (5) year period, if the pending claim is issued as
a claim of an issued and unexpired patent within the Kava Patents, Single Pixel
Patents or CG Patents, such claim shall be considered thereafter as a Valid
Claim hereunder.

3

The following terms are defined in the following Sections of this
Agreement:

Term                                              Section
----                                              -------

Agreement                                         Recitals
Assumed Liabilities                               2.1
Bills of Sale                                     2.8
Business                                          2.1
Buyer                                             Recitals
Closing                                           2.7
Closing Date                                      2.7
Seller Financial Statements                       3.4
Gross Revenues                                    2.5(b)
Indemnifying Party                                8.5
Instruments of Assumption                         2.9
Losses                                            8.2
Necessary Permits                                 3.13
Non-Competition Agreements                        6.1
Patent Assignment                                 6.1
Plan                                              3.15(a)
Purchased Assets                                  2.1
Purchase Price                                    2.2
Retained Assets                                   2.2
Retained Liabilities                              2.4
Stockholder                                       Recitals

ARTICLE II

PURCHASE AND SALE OF ASSETS

2.1  PURCHASE OF ASSETS. Upon the terms and subject to the conditions
contained in this Agreement, at the Closing (as defined in Section 2.7 below),
each Seller shall sell, assign, transfer and convey to Buyer, and Buyer shall
purchase, acquire and accept from each Seller, the business of the respective
Sellers as a going concern (the "Business"), including all of the Sellers'
assets of every kind and description as set forth on SCHEDULE 2.1 hereto (the
"Purchased Assets") (other than those assets included in the Retained Assets as
defined in Section 2.2 below), and subject only to the liabilities and
obligations of the Sellers which are defined in Section 2.3 (the "Assumed
Liabilities"). The Purchased Assets include, without limitation, all assets,
rights, interests and properties of the Sellers (other than those assets
included in the Retained Assets as defined in Section 2.2).

2.2  RETAINED ASSETS. The Sellers will each retain ownership only of such
Seller's cash and cash equivalents on hand and in banks, minute and stock record
books, journals, ledgers and books of original entry and such Seller's rights
under the Purchase Documents (collectively, the "Retained Assets").

4

2.3  ASSUMED LIABILITIES. The Buyer shall assume and agree to pay, perform
and discharge the Assumed Liabilities, and will pay, perform and discharge the
Assumed Liabilities as they become due. The Assumed Liabilities shall consist of
the liabilities of the Sellers listed on SCHEDULE 2.3 attached hereto.

2.4  RETAINED LIABILITIES. The liabilities and obligations which shall be
retained by each of the Sellers (the "Retained Liabilities") shall consist of
all liabilities of such Seller other than Assumed Liabilities, including,
without limitation, the following:

(a)  all liabilities of each Seller relating to indebtedness for
borrowed money whether or not such liabilities are reflected on the Seller
Financial Statements;

(b)  all liabilities of each Seller or the Stockholder resulting from,
constituting or relating to a breach of any of the representations, warranties,
covenants or agreements of the such Seller or the Stockholder under this
Agreement;

(c)  all liabilities of each Seller for Taxes, including any gain and
income from the sale of the Assets and other transactions contemplated herein;

(d)  all liabilities for all environmental, ecological, health,
safety, products liability (except as specifically referred to herein) or other
claims pertaining to the Business or the Purchased Assets which relate to time
periods or events occurring on or prior to the Closing Date;

(e)  all liabilities of each Seller arising in connection with its
operations unrelated to the Business and all liabilities (including any
liability pursuant to any claim, litigation or proceeding) in connection with
the operation of the Business prior to the Closing except as otherwise
specifically provided herein and any liability of such Seller based on its
tortuous or illegal conduct;

(f)  any liability or obligation incurred by each Seller in connection
with the negotiation, execution or performance of this Agreement, including,
without limitation, all legal, accounting, brokers', finders' and other
professional fees and expenses;

(g)  all liabilities incurred by each Seller after the Closing Date;

(h)  all liabilities or obligations associated with a Seller's
employees, including but not limited to any liability or obligation under or
with respect to any collective bargaining agreement, employment agreement,
unemployment or workers' compensation laws, or any liability or obligation
arising from the decision of Buyer not to offer employment to any such
employees; and

(i)  all liabilities and obligations arising out of, resulting from,
or relating to any employee benefit plan, program, or arrangement maintained or
contributed to by each Seller,

5

or any entity which is or has been aggregated with such Seller for purposes of
section 414 of the Code or section 4001 of ERISA.

2.5  PURCHASE PRICE. Upon the terms and subject to the conditions contained
in this Agreement, and in consideration of the sale, assignment, transfer and
delivery of the Purchased Assets and covenants not to compete received from the
Sellers and the Stockholder, Buyer will issue to the Sellers an aggregate of
553,344 shares of the Buyer's common stock, par value $0.0001 per share ("Common
Stock" and the "Consideration Shares", and together with the adjustments set
forth below, the "Purchase Price"). The Consideration Shares shall be
apportioned among the Sellers as follows: 25% to CG, 50% to Kava and 25% to
SinglePixel. Delivery of stock certificates representing the Consideration
Shares shall be made to each of the Sellers at the Closing. The parties agree
that the Purchase Price represents fair consideration and reasonably equivalent
value for the Purchased Assets.

(a)  ADJUSTMENTS FOR MILESTONES. Buyer shall make a one-time only
payment:

(i)  to Kava, or any of its assignees, of [*] payable in either
cash or shares of the Buyer's Common Stock (at the discretion of the Buyer
and, if such payment is in Common Stock, valued at the then current fair
market value of the Common Stock) in a single payment by wire transfer or
delivery of shares of Common Stock to an account designated in writing by
Kava, or any of its assignees, to Buyer within sixty (60) days of the
commencement by Buyer of a Phase III (or other pivotal) clinical trial for
any drug candidate, the manufacture, use or sale of which infringes one or
more Valid Claims of the Kava Patents (a "Kava Drug Candidate"). For 
purposes of this Agreement, "Kava Patents" shall mean any and all patent
filings assigned to Kava or to which Kava has or will have any right, 
title or interest, including the issued patents and pending patent
applications under the Kava IP (as defined in SCHEDULE 2.1), and all 
non-provisionals, divisionals, continuations, continuations-in-part and 
all patents issuing on any of the foregoing, and all foreign counterparts
thereof; together with all registrations, reissues, re-examinations, 
supplemental protection certificates and extensions thereof and all 
foreign counterparts thereof. In the event that Buyer commences a Phase 
III (or other pivotal) clinical trial for a drug candidate, the 
manufacture, use of sale of which does not infringe one or more Valid 
Claims of the Kava Patents at the time of the commencement of such 
clinical trial but the manufacture, use or sale of which later infringes
one or more Valid Claims of the Kava Patents, then Buyer shall make such
one-time only payment under this subsection (i) of Section 2.5(a) within 
sixty (60) days of the drug candidate becoming a Kava Drug Candidate under
this Agreement; and

(ii) to SinglePixel, or any of its assignees, [*] payable in
either cash or shares of the Buyer's Common Stock (at the discretion of
the Buyer and, if such payment is in Common Stock, valued at the then
current fair market value of the Common Stock) in a single payment by wire
transfer or delivery of shares of Common Stock to an account designated in
writing by SinglePixel, or any of its assignees, to Buyer within sixty
(60) days of the receipt by Buyer of approval by the Federal Drug
Administration of any SinglePixel diagnostic product, the

6

manufacture, use or sale of which infringes one or more Valid Claims of the
SinglePixel Patents (a "SinglePixel Product"). For purposes of this
Agreement, "SinglePixel Patents" shall mean any and all patent filings
assigned to SinglePixel or to which SinglePixel has or will have any right,
title or interest, including the issued patents and pending patent
applications identified under the SinglePixel IP (as defined in SCHEDULE
2.1), and all non-provisionals, divisionals, continuations,
continuations-in-part and all patents issuing on any of the foregoing, and
all foreign counterparts thereof; together with all registrations,
reissues, re-examinations, supplemental protection certificates and
extensions thereof. In the event that Buyer receives approval by the
Federal Drug Administration of any SinglePixel diagnostic product, the
manufacture, use or sale of which does not infringes one or more Valid
Claims of the SinglePixel Patents at the time of receipt of such approval
but the manufacture, use or sale of which later infringes one or more Valid
Claims of the SinglePixel Patents, then Buyer shall make such one-time only
payment under this subsection (ii) of Section 2.5(a) within sixty (60) days
of the SinglePixel diagnostic product becoming a SinglePixel Product under
this Agreement. For purposes of this Section 2.5, the term "diagnostic
product" means any product which is intended to predict, detect or identify
a disease, determine the presence of a pathologic condition or monitor the
course of disease or therapy in humans or other animals.

(b)  ROYALTIES FOR CERTAIN PATENTS. In the event that Buyer 
obtains revenue or other measurable economic benefit ("Gross Revenues") from 
products or services covered by a Valid Claim in any Kava Patent or CG Patent 
(the "Kava Products", and the "CG Products", respectively), Buyer shall pay 
to Kava or CG, or any of their assignees, as the case may be, a percentage of 
the Gross Revenues received by Buyer or such licensee from sales of such Kava 
Product or CG Product as follows: (i) [*]% of Gross Revenues of the Kava 
Product, and (ii) [*]% of Gross Revenues of the CG Product. The amount of 
such Gross Revenues shall be proportionately adjusted to reflect the 
exclusion of the contribution of ingredients or components not directly 
related to the Kava Product and/or CG Product, but in no case less than [*]% 
of the rates specified above. Any payments by Buyer pursuant to this 
subsection shall be made by cash or check within ninety (90) days of the end 
of each fiscal year of Buyer in which any applicable sale is made. The 
obligations under this section shall continue on a country-by-country basis 
until the later of (1) the expiration date, as such date may be modified or 
extended, of the last-to-expire patent of the relevant Kava IP or CG IP (as 
the case may be) in such country, or (2) ten (10) years from first commercial 
sale of the Kava Product or CG Product. For purposes of this Section 2.5, "CG 
Patents" shall mean any and all patent filings assigned to CG or to which CG 
has or will have any right, title or interest, including the issued patents 
and pending patent applications identified under the CG IP (as defined in 
SCHEDULE 2.1), and all non-provisionals, divisionals, continuations, 
continuations-in-part; and all patents issuing on any of the foregoing, and 
all foreign counterparts thereof; together with all registrations, reissues, 
re-examinations, supplemental protection certificates and extensions thereof.

(c)  THIRD PARTY ROYALTY OFFSET. In the event that in any royalty
period, Buyer, in order to sell any Kava Product or CG Product in any country,
makes royalty payments to one or more third parties ("Third Party Payments") as
consideration for a license to an issued patent or patents owned by such third
party(ies), in the absence of which the Kava Product or CG Product could not
legally be made, used or sold in such country, then Buyer shall have the right

7

to reduce the royalties otherwise due pursuant to Section 2.5(b) above for 
such Kava Product or CG Product by [*]% of such Third Party Payments. 
Notwithstanding the foregoing, such reductions under this subsection (c) 
shall in no event reduce such royalty for such Kava Product or CG Product in 
any such country to less than [*]% of the rates otherwise specified above.

2.6  ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated
among the Purchased Assets and the covenants not to compete received from the
Sellers and the Stockholder as set forth in SCHEDULE 2.6 attached hereto. The
Sellers and Buyer shall be bound by such allocation for all purposes and to
account for and report the purchase and sale contemplated hereby for all
financial, accounting and Tax purposes in accordance with such allocation.

2.7  TIME AND PLACE OF CLOSING. The closing of the transactions described
in Sections 2.1 through 2.6 above (the "Closing") shall take place at the
offices of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., at 11:00 a.m. on
January 9, 2004, or at such other place or time as the parties hereto may agree.
The date and time at which the Closing actually occurs is hereinafter referred
to as the "Closing Date."

2.8  EXECUTION AND DELIVERY OF DOCUMENTS OF TITLE BY THE SELLERS. At the
Closing, each Seller shall execute and deliver to Buyer the form of Bill of Sale
attached hereto as EXHIBIT A and such deeds, conveyances, bills of sale,
certificates of title, assignments, assurances and other instruments and
documents as Buyer may reasonably request in order to effect the sale,
conveyance, and transfer of the Purchased Assets from the Sellers to the Buyer.
Such instruments and documents shall be sufficient to convey to Buyer good and
merchantable title in all of the Purchased Assets. Each Seller will, from time
to time after the Closing Date, take such additional actions and execute and
deliver such further documents as Buyer may reasonably request in order more
effectively to sell, transfer and convey the Purchased Assets to Buyer and to
place Buyer in position to operate and control all of the Purchased Assets.

2.9  EXECUTION AND DELIVERY OF DOCUMENTS BY BUYER. At the Closing, Buyer
shall execute and deliver to each Seller an Instrument of Assumption in the form
attached hereto as EXHIBIT B, and such other documents as the Sellers may
reasonably request in order to evidence Buyer's assumption of the Assumed
Liabilities. Buyer will, from time to time after the Closing Date, take such
additional action and deliver such further documents as the Sellers may
reasonably request in order effectively to assume the Assumed Liabilities.

2.10 CONSENT TO ASSIGNMENT. Upon the terms, and subject to the conditions
set forth in this Agreement, each Seller hereby assigns to the Buyer all of the
Purchased Assets which are capable of assignment without the consent of other
parties.

Insofar as any Purchased Asset is not assignable to the Buyer without the
agreement of or novation by or consent to the assignment from another party and
no such agreement, novation or consent has been obtained by such Seller on or
prior to Closing Date, this Agreement shall not constitute an assignment or
attempted assignment if such assignment or attempted assignment would constitute
a breach of Seller's obligations related to such Purchased Asset. In the event
that consent or novation is required to such assignment:

8

(a)  the Seller shall use all reasonable endeavors to cooperate with
the Buyer in its efforts to procure such novation or assignment as aforesaid.
The reasonable costs of any such novation or assignment shall be paid by the
Buyer;

(b)  unless and until any such Purchased Asset shall be novated or
assigned as aforesaid the Seller shall hold such Purchased Asset and any moneys,
goods or other benefits received thereunder as agent of the Buyer and the Buyer
shall (if such sub-contracting is permissible and lawful under such Purchased
Asset in question) as the Seller's sub-contractor perform all the obligations of
the Seller under such Purchased Asset;

(c)  unless and until any such Purchased Asset shall be novated or
assigned, the Seller will (so far as it lawfully may) give such assistance to
the Buyer (and at the Buyer's cost) as the Buyer may reasonably require to
enable the Buyer to enforce its rights under such Purchased Asset and (without
limitation) will provide access to all relevant books, documents and other
information in relation to such Purchased Asset as the Buyer may reasonably
require from time to time.

ARTICLE III

REPRESENTATIONS AND WARRANTIES
OF THE SELLERS AND THE STOCKHOLDER

Each Seller and the Stockholder each hereby represents and warrants to
Buyer as follows:

3.1  ORGANIZATION AND QUALIFICATION. Each Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Stockholder is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware. The
Stockholder and each Seller have full power and authority to own, use and lease
their properties and to conduct their business as currently conducted and as
proposed to be conducted. The copies of the Stockholder's operating agreement,
as amended to date and certified by an officer of the Stockholder and delivered
to Buyer's counsel prior to the Closing, is true, complete and correct. The
copies of each Seller's Charter and By-Laws, as amended to date, in each case
certified by their respective Secretaries and delivered to Buyer's counsel prior
to the Closing, are true, complete and correct.

3.2  AUTHORITY; NO VIOLATION. Each Seller and the Stockholder has all
requisite corporate power and authority to enter into this Agreement and to
carry out the transactions contemplated hereby. The execution, delivery and
performance of this Agreement by each Seller and the Stockholder have been duly
and validly authorized and approved by all necessary corporate action. This
Agreement constitutes the legal and binding obligation of each Seller and the
Stockholder, enforceable against each of them in accordance with its terms. The
entering into of this Agreement by the Stockholder and each Seller does not, and
the consummation by such Seller and the Stockholder of the transactions
contemplated hereby, including specifically the transfer of the Purchased Assets
to Buyer by such Seller, will not violate the provisions of (a) to the knowledge
of the Stockholder, any applicable federal, state, local or foreign laws, (b)
such

9

Seller's or Stockholder's respective Charter, By-Laws or operating agreement, as
the case may be, or (c) any provision of, or result in a default or acceleration
of any obligation under, or result in any change in the rights or obligations of
such Seller or the Stockholder under, any Lien, contract, agreement, license,
lease, instrument, indenture, order, arbitration award, judgment, or decree to
which such Seller or the Stockholder is a party or by which any of them is
bound, or to which any property of such Seller or the Stockholder is subject.

3.3  SUBSIDIARIES. Each Seller represents and warrants that it has no
Subsidiaries.

3.4  SELLER FINANCIAL STATEMENTS. Attached hereto as SCHEDULE 3.4 are
unaudited consolidating balance sheets as of June 30, 2003 (collectively, the
"Seller Financial Statements") for each Seller. The Seller Financial Statements
have been prepared in accordance with GAAP applied on a consistent basis
throughout the periods covered thereby. The Stockholder represents and warrants
that the Seller Financial Statements fairly present the financial condition and
the results of operation of each Seller and that there are no assets of the
Sellers that are not included in the Seller Financial Statements, except for
assets of any Seller that are not required by GAAP to be included in the Seller
Financial Statements.

3.5  ABSENCE OF CERTAIN CHANGES. Except as otherwise disclosed in SCHEDULE
3.5 attached hereto, since June 30, 2003, there has not been:

(a)  any material change in the business, operations, assets,
liabilities, prospects or condition (financial or otherwise) of any Seller;

(b)  any obligation or liability incurred by a Seller other than
obligations and liabilities incurred in the ordinary course of business for an
amount not more than $5,000 in each case or $15,000 in the aggregate;

(c)  any Lien placed on any of the Sellers' properties or assets which
remains in existence on the date hereof or any payment or discharge of a
material Lien or liability of the Sellers not disclosed on the Seller Financial
Statements or incurred in the ordinary course of business;

(d)  any purchase, sale, lease, assignment, transfer or other
disposition, or any agreement or other arrangement for the purchase, sale,
lease, assignment, transfer or other disposition, of any part of the Sellers'
properties or assets, other than purchases for and sales from inventory in the
ordinary course of business, except for fixed assets purchased or other capital
expenditures made in amounts not exceeding $5,000 for any single item and
$25,000 in the aggregate for all such items;

(e)  any damage, destruction or loss, whether or not covered by
insurance, adversely affecting a Seller's properties, assets or business;

(f)  any declaration, setting aside or payment of any dividend on, or
the making of any other distribution in respect of, any Equity Security of a
Seller, or any direct or

10

indirect redemption, purchase or other acquisition by a Seller of any of its own
Equity Securities, or any issuance by a Seller of any Equity Security;

(g)  any labor trouble or claim of unfair labor practices involving a
Seller; any change in the employment contracts of or compensation payable or to
become payable by a Seller to any of its current or former officers, directors,
employees, consultants, or agents, or any bonus payment, loan or arrangement
made to or with respect to any of such officers, directors, employees,
consultants, or agents; or any change in coverage vesting, or benefits available
under any Plan;

(h)  any change with respect to a Seller's management or supervisory
personnel;

(i)  any contracts, licenses, leases or agreements entered into by a
Seller which are outside the ordinary course of business or which obligate such
Seller for more than $5,000 in any one case or more than $25,000 in the
aggregate or any cancellation, termination, modification, or acceleration by any
party to any contract, license, lease or agreement involving more than $10,000
to which any such Seller is a party or by which any of them is bound;

(j)  any amendment or other change (or any authorization to make such
an amendment or change) to such Seller's Charter or By-Laws, except as required
in connection with the consummation of the transactions contemplated hereby;

(k)  any postponement or delay in payment of any accounts payable or
other liability of such Seller except in the ordinary course of business
consistent with prior practices;

(l)  any cancellation, waiver, compromise or release of any right or
claim either involving more than $10,000 or outside the ordinary course of
business consistent with prior practices;

(m)  any other occurrence, action, failure to act or transaction
involving a Seller other than transactions in the ordinary course of business
consistent with prior practices.

3.6  TITLE, SUFFICIENCY AND CONDITION OF ASSETS. Except as disclosed in
SCHEDULE 3.6 hereto, each Seller has good and marketable title to, or a valid
leasehold interest in, all of the Purchased Assets, free and clear of all Liens,
and free of any material infractions or non-compliance with applicable laws and
regulations (collectively, "Defects") and the sale and delivery of the Purchased
Assets to Buyer pursuant hereto shall vest in Buyer good and marketable title
thereto, free and clear of any and all Liens or Defects, other than as disclosed
in SCHEDULE 3.6 hereto or as may be created by Buyer. The Stockholder and each
Seller shall each, prior to the Closing, use their best efforts to cure at their
expense any Defect identified by Buyer. Each Seller owns or leases all property
and assets necessary for the conduct of their respective businesses as such
businesses are presently conducted and are proposed to be conducted, and all
such property and assets are included in the Purchased Assets. To the knowledge
of the Stockholder and except as disclosed in SCHEDULE 3.6 hereto, all tangible
properties and assets owned or leased by such Seller and contained in the
Purchased Assets are in good operating

11

condition and repair, ordinary wear and tear excepted, have been well
maintained, and conform with all applicable laws, statutes, ordinances, rules
and regulations.

3.7  INTELLECTUAL PROPERTY. All patents, patent applications, proprietary
designs, copyrights, trade names, servicemarks, trademarks and trademark
applications and proprietary know how which are currently owned by or licensed
to each Seller are listed in SCHEDULE 3.7 attached hereto ("Intellectual
Property"). Except as set forth in SCHEDULE 3.7, the Intellectual Property is
all of the intellectual property necessary for the operation of the Business as
it is currently conducted. All of each Seller's patents, patent applications and
trademarks have been registered in, filed in or issued by the United States
Patent Office or the corresponding offices of other countries identified in
SCHEDULE 3.7, and have been properly maintained and renewed in accordance with
all applicable laws and regulations in the United States and each such country.
To the knowledge of the Stockholder, all of the issued patents within the
Intellectual Property are currently in compliance with applicable formal legal
requirements (including payment of filing, examination or maintenance fees) and
are valid and enforceable. Except as set forth in SCHEDULE 3.7 and to the
knowledge of the Stockholder, the Intellectual Property's use does not require
the consent of or payment to any other Person. To the knowledge of the
Stockholder and except as set forth in SCHEDULE 3.7, the Intellectual Property
is freely transferable and owned exclusively by each Seller, free and clear of
any Liens. To the knowledge of the Stockholder and except as set forth in
SCHEDULE 3.7, (a) no other Person has an interest in or right or license to use,
or the right to license any other Person to use, any of the Intellectual
Property, (b) there are no claims or demands of any other Person pertaining
thereto and no proceedings have been instituted, or are pending or, to the
knowledge of the Stockholder, threatened, which challenge any Seller's rights in
respect thereof, (c) none of the Intellectual Property is being infringed by
another Person or is subject to any outstanding order, decree, ruling, charge,
injunction, judgment or stipulation, and (d) no Claim has been made or, to the
knowledge of the Stockholder, is threatened charging such Seller with
infringement of any adversely held Intellectual Property. With respect to all
know-how that is included as part of the Intellectual Property, to the knowledge
of the Stockholder, each Seller has taken all reasonable precautions to protect
the secrecy, confidentiality and value of such know-how (including the
enforcement by each Seller of a policy requiring each employee or contractor to
execute proprietary information and confidentiality agreements substantially in
the form of such Seller's standard form, a copy of which has been provided to
Buyer).

3.8  CONTRACTS. Except for contracts, commitments, leases, licenses, plans
and agreements described in SCHEDULE 3.8 attached hereto, no Seller is a party
to or subject to:

(a)  any plan or contract regarding or providing for bonuses,
pensions, options, stock purchases, deferred compensation, severance benefits
retirement payments, profit sharing, stock appreciation, collective bargaining
or the like, or any contract or agreement with any labor union;

(b)  any employment or consulting contract or contract for personal
services not terminable at will by such Seller without penalty to the Seller;

12

(c)  any contract or agreement for the purchase of any commodity,
product, material, supplies, equipment or other personal property, or for the
receipt of any service, other than purchase orders entered into in the ordinary
course of business for less than $5,000 each and which in the aggregate do not
exceed $25,000;

(d)  any contract or agreement for the purchase or lease of any fixed
asset, whether or not such purchase or lease is in the ordinary course of
business, for a price in excess of $5,000;

(e)  any contract or agreement for the sale of any commodity, product,
material, equipment, or other personal property, or the furnishing by such
Seller of any service, other than contracts with customers entered into in the
ordinary course of business;

(f)  any contract or agreement providing for the purchase of all or
substantially all of its requirements of a particular product from a supplier,
or for periodic minimum purchases of a particular product from a supplier;

(g)  any contract or agreement concerning a partnership or joint
venture with one or more Persons;

(h)  any confidentiality agreement or any non-competition agreement or
other contract or agreement containing covenants limiting such Seller's freedom
to compete in any line of business or in any location or with any Person;

(i)  any license agreement (as licensor or licensee);

(j)  any contract or agreement with the Stockholder or any present or
former officer, director, consultant, agent or stockholder of such Seller or
with any Affiliate of any of them;

(k)  any loan agreement, indenture, note, bond, debenture or any other
document or agreement evidencing a capitalized lease obligation or Indebtedness
to any Person;

(l)  any agreement of guaranty, indemnification, or other similar
commitment with respect to the obligations or liabilities of any other Person
(other than lawful indemnification provisions contained in the Charters and
By-Laws of such Seller); or

(m)  any other agreement or contract (or group or related agreements
or contracts) under which the consequences of a default or termination could
have a Material Adverse Effect or the performance of which involves
consideration paid or received by the Seller in excess of $5,000.

Copies of all such contracts, commitments, plans, leases, licenses and
agreements have been provided to Buyer prior to the execution of this Agreement,
and all such copies are true, correct and complete and have been subject to no
amendment, extension or other modification as of the date hereof, except such as
are described in SCHEDULE 3.8. Except as listed and described

13

in SCHEDULE 3.8, none of the Sellers, or to the knowledge of the Stockholder,
any other Person, is in default under any such contract, commitment, plan,
lease, license or agreement and each such contact, commitment, plan, lease,
license or agreement is in full force and effect and is valid and enforceable in
accordance with its terms.

3.9  COMPLIANCE WITH LAWS. Each Seller has conducted and is conducting its
business in compliance with applicable federal, state, local or foreign laws,
statutes, ordinances, regulations, rules or orders or other requirements of any
governmental, regulatory or administrative agency or authority or court or other
tribunal relating to it. None of the Sellers are now charged with, and to the
knowledge of the Stockholder, is not now under investigation with respect to,
any possible violation of any applicable law, statute, ordinance, regulation,
rule, order or requirement relating to any of the foregoing. Each Seller has all
licenses, permits, franchises, orders, approvals, accreditations, written
waivers and other authorizations as are necessary in order to enable it to own
and conduct its business as currently conducted and as proposed to be conducted
and to occupy and use its real and personal properties without incurring any
material liability ("Necessary Permits"), except for such licenses, permits,
franchises, orders, approvals, accreditations, written waivers and other
authorizations as would not reasonably be expected to have a Material Adverse
Effect. Except as set forth in SCHEDULE 3.9, no registration, filing,
application, notice, transfer, consent, approval, order, qualification, waiver
or other action of any kind is required by virtue of the execution and delivery
of this Agreement or the consummation of the transactions contemplated hereby to
effect the transfer to Buyer of such Necessary Permits. To the knowledge of the
Stockholder, each Seller is in full compliance with the terms and conditions of
all Necessary Permits.

3.10 LITIGATION. Except as disclosed on SCHEDULE 3.10 attached hereto, (a)
there is no Claim pending or, to the knowledge of the Stockholder, threatened
(or, to the knowledge of the Stockholder, any facts which could lead to such a
Claim) by, against, affecting or regarding the Business or the Sellers or the
Stockholder or their respective businesses, properties or assets, at law or in
equity, before any federal, state, local or foreign court or any other
governmental or administrative agency or tribunal or any arbitrator or
arbitration panel, and (b) there are no judgments, orders, rulings, charges,
decrees, injunctions, notices of violation or other mandates against or
affecting the Business or the Sellers or the Stockholder with respect to the
businesses, properties or assets of a Seller. Nothing listed on SCHEDULE 3.10,
either individually or when aggregated with other listings on such Schedule,
would reasonably be expected to have a Material Adverse Effect.

3.11 TAXES, EMPLOYEE BENEFITS AND ENVIRONMENTAL.

(a)  The Stockholder is not aware of any dispute or Claim concerning
any liability for Taxes of any Seller.

(b)  No Seller has a profit sharing, 401(k), disability, medical,
dental, severance pay, vacation pay, sick pay, deferred compensation, incentive
compensation, fringe benefit, stay-with-bonus, change of control agreement, or
other employee benefit plan, program, or agreement (other than stock option
plans), including without limitation, any employee benefit plan as defined in
section 3(3) of ERISA, which is maintained or contributed to by a Seller, or

14

under which such Seller has any liability or contingent liability.

(c)  The use and operation by each Seller and by all past owners and
operators, of all facilities and properties used in the business of each Seller
have been, and will be on the Closing Date, in compliance in all material
respects with all Environmental Laws, and no Environmental Action has been
filed, commenced, or, to the knowledge of the Sellers and the Stockholder,
threatened with or against any of them alleging any failure so to comply.

3.12 DISCLOSURE OF MATERIAL INFORMATION. This Agreement (including the
Schedules and Exhibits hereto) does not contain, with respect to each Seller or
the Stockholder, any untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein not misleading in light
of the circumstances under which they were made. There is no fact known to the
Stockholder which has or would reasonably be expected in the future to result in
a Material Adverse Effect and which has not been set forth in this Agreement or
previously disclosed in writing to the Buyer.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer hereby represents and warrants to each Seller and the Stockholder as
follows:

4.1  ORGANIZATION AND QUALIFICATION. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
with full power and authority to own, use or lease its properties and to conduct
its business as such properties are owned, used or leased and as such business
is conducted.

4.2  AUTHORITY. Buyer has the requisite corporate power and authority to
enter into this Agreement and to carry out the transactions contemplated hereby.
The execution, delivery and performance of this Agreement by Buyer have been
duly and validly authorized and approved by all necessary corporate action on
the part of Buyer, and this Agreement constitutes the legal and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms.
Assuming the accuracy of the representations and warranties of the Sellers and
the Stockholder hereunder and to the best knowledge of Buyer, the entering into
of this Agreement by Buyer does not, and the consummation by Buyer of the
transactions contemplated hereby will not, violate the provisions of (a) any
applicable laws of the United States or any other state or jurisdiction in which
Buyer does business, (b) the Charter or By-Laws of Buyer or (c) any provision
of, or result in a default or acceleration of any obligation under, or result in
any change in the rights or obligations of Buyer under, any mortgage, Lien,
lease, agreement, contract, instrument, order, arbitration award, judgment, or
decree to which Buyer is a party or by which Buyer is bound, or to which any
property of Buyer is subject.

4.3  BROKERS. Neither Buyer nor anyone acting on its behalf has engaged,
retained or incurred any liability to any broker, investment banker, finder or
agent or has agreed to pay any brokerage fees, commissions, finder's fees or
other fees with respect to the purchase of

15

Purchased Assets, the issuance of the Consideration Shares, this Agreement or
the transactions contemplated hereby.

4.4  BUYER FINANCIAL STATEMENTS. Attached hereto as SCHEDULE 4.4 are the
following financial statements (collectively the "Buyer Financial Statements"):
unaudited consolidated balance sheets and statements of income, changes in
stockholders' equity and cash flow as of and for the fiscal year ended December
31, 2002 of the Buyer. The Buyer Financial Statements have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby, present fairly the financial condition of the Buyer as of such
dates and the results of operations of the Buyer for such periods, are correct
and complete, and are consistent with the books and records of the Buyer, except
that the Buyer Financial Statements may not contain all footnotes required by
GAAP and are subject to normal year-end audit adjustments.

4.5  FINANCIAL CONDITION. Since the date of the Buyer Financial Statements,
there have been no subsequent events having a material adverse effect on Buyer's
business, results of operations or financial condition. Buyer represents that as
of the date of this Agreement, it currently has in excess of $50 million in a
combination of cash, cash equivalents and amounts committed under investor
subscription agreements.

4.6  ONE CLASS OF STOCK. Buyer has one class of capital stock outstanding,
and Buyer's certificate of incorporation, as amended or restated through the
date hereof, authorizes no class of capital stock senior to the Buyer's Common
Stock in terms of liquidation, dividend or redemption rights.

4.7  LITIGATION. Except as disclosed on SCHEDULE 4.7 attached hereto, (a)
there is no Claim pending or, to the knowledge of the Buyer, threatened (or, to
the knowledge of the Buyer, any facts which could lead to such a Claim) by,
against, affecting or regarding the Buyer or its business, properties or assets,
at law or in equity, before any federal, state, local or foreign court or any
other governmental or administrative agency or tribunal or any arbitrator or
arbitration panel that would reasonably be expected in the future to have a
Material Adverse Effect, and (b) there are no judgments, orders, rulings,
charges, decrees, injunctions, notices of violation or other mandates against or
affecting the Buyer with respect to the business, properties or assets of the
Buyer.

4.8  DISCLOSURE OF MATERIAL INFORMATION. This Agreement (including the
Schedules and Exhibits hereto) does not contain, with respect to the Buyer, any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements therein not misleading in light of the circumstances
under which they were made.

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ARTICLE V

COVENANTS

5.1  COVENANTS OF THE SELLERS AND THE STOCKHOLDER. Each Seller and the
Stockholder shall keep, perform and fully discharge the following covenants and
agreements:

(a)  INTERIM CONDUCT OF BUSINESS. From the date hereof until the
Closing, each Seller shall operate its business consistent with prior practice
immediately before the date hereof and in the ordinary course of business
(except as may be authorized pursuant to this Agreement or as set forth on
SCHEDULE 5.1(a) hereto). Without limiting the generality of the foregoing, from
the date hereof until the Closing, except for transactions contemplated by this
Agreement or expressly approved in writing by Buyer, no Seller shall:

(i)     enter into or amend any employment, bonus, severance, or
retirement contract or arrangement, or increase any compensation
payable or to become payable to any person other than in the ordinary
course of business consistent with prior practice;

(ii)    purchase, lease or otherwise acquire any real estate or
any interest therein;

(iii)   declare, set aside or pay any dividend or make any other
distribution with respect to any Equity Security or authorize for
issuance, issue, sell or deliver any of its own Equity Securities or
split, combine or reclassify any class of Equity Security or redeem or
otherwise acquire, directly or indirectly, any of its Equity
Securities;

(iv)    merge or consolidate with or agree to merge or
consolidate with, or purchase or agree to purchase all or
substantially all of the assets of, acquire securities of or otherwise
acquire any Person;

(v)     sell, lease or otherwise dispose of or agree to sell,
lease or otherwise dispose of any of its assets, properties, rights or
claims, whether tangible or intangible, except in the ordinary course
of business consistent with prior practice;

(vi)    incur any liability, guaranty or obligation (fixed or
contingent) other than in the ordinary course of business consistent
with prior practice or make any investment in excess of $5,000,
whether singly or in the aggregate, in property, plant and equipment
and other items of capital expenditure;

(vii)   place or permit to be placed any Lien on any of its
assets or properties, other than statutory Liens arising in the
ordinary course of business;

17

(viii)  make or authorize any amendments or changes to its
Charter or By-Laws; or

(ix)    abandon any part of its business not abandoned as of the
date hereof.

(b)  ACCESS. Each Seller shall, upon reasonable notice, give Buyer and
its representatives full and free access to all properties, assets, books,
contracts, commitments and records of such Seller during reasonable business
hours and shall promptly furnish Buyer with all financial and operating data and
other information as to the history, ownership, Affiliates, business, operations
and properties of such Seller as Buyer may from time to time reasonably request.

(c)  TRANSFER OF NECESSARY PERMITS. From and after the date hereof
through to the Closing Date and following the Closing, each Seller will use
reasonable commercial efforts to effect the transfer to Buyer of all of the
Necessary Permits and all other permits, licenses (except the DFCI License
Agreement), and leases which are associated with the Business as presently
conducted, to the extent the same are by their terms transferable.

(d)  RETAINED LIABILITIES. From and after the date hereof through to
the Closing Date and following the Closing, each Seller agrees to pay, perform
and fully discharge all of the Retained Liabilities.

(e)  SATISFACTION OF CONDITIONS. Each Seller and the Stockholder shall
use their best efforts to accomplish the satisfaction of the conditions
precedent to Closing contained in Section 6.1 herein on or prior to the Closing
Date.

(f)  NO SOLICITATION, CONFIDENTIALITY, ETC. Prior to the termination
of this Agreement pursuant to Article VII hereof, no Seller or the Stockholder
will (i) solicit or negotiate with respect to any inquiries or proposals
relating to (x) the possible direct or indirect acquisition of any Equity
Security of any Seller or of all or a portion of the Purchased Assets or
Business or (y) any merger, consolidation, joint venture or business combination
with any Seller or (ii) discuss or disclose either this Agreement or other
confidential information pertaining to any Seller with any Person (except as may
be required by law or except as may be required in connection with the
transactions contemplated by this Agreement to Affiliates, officers, directors,
employees and agents of such Seller or any stockholder) without the prior
written approval of Buyer. Buyer acknowledges that the prior distribution of
material regarding the Sellers to interested parties shall not be deemed to
violate this Section 5.1(g). The Sellers and the Stockholder shall advise such
parties of the existence of this Agreement and shall refrain from entering into
further discussions with such parties concerning the sale of any Seller to the
extent otherwise prohibited by this Section 5.1(g).

(g)  ACCURACY OF REPRESENTATIONS AND WARRANTIES. Without the prior
written consent of Buyer, the Stockholder and each Seller will not take any
action from the date hereof to the Closing Date, whether as an officer, director
or stockholder of such Seller or otherwise,

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that would cause any representation or warranty of such Seller or the
Stockholder contained in this Agreement to become untrue or cause the breach of
any agreement hereof or covenant contained herein. The Stockholder and each
Seller will promptly bring to the attention of Buyer any facts which come to its
attention that would cause any of the representations and warranties of such
Seller or the Stockholder to be untrue or materially misleading in any respect.

(h)  TAX MATTERS. The Stockholder shall be responsible for and shall
cause to be prepared and duly filed all Tax Returns relating to Taxes of each
Seller.

5.2  COVENANTS OF BUYER, THE SELLERS AND THE STOCKHOLDER. The parties
hereto hereby agree to keep, perform and fully discharge the following covenants
and agreements:

(a)  WAIVER OF COMPLIANCE WITH THE BULK SALES ACT. In connection with
the transactions contemplated hereby, the parties hereby waive compliance with
the provisions of Article 6 of the Uniform Commercial Code - Bulk Transfers and
the Bulk Sales Act and any other applicable United States, Mexican, state or
provincial bulk sales act or statute ("Bulk Sales Acts"). Each Seller shall
remove any and all Liens against the Purchased Assets as a result of payments
made by such Seller to others. Each Seller and the Stockholder, severally but
not jointly, shall indemnify and hold the Buyer harmless from and against any
and all liabilities under the Bulk Sales Acts.

(b)  BUY-BACK OPTION. If, within thirty (30) months following the
Closing Date, Buyer has not initiated clinical trials for a Kava Product, then
Kava shall have the option to repurchase the Kava IP from Buyer for the sum of
Seven Hundred Fifty Thousand Dollars ($750,000) in cash (the "Buy-Back Option").
The Buyer shall deliver a written notice to Kava or any of its authorized
assignees or designees within one month after the start of any such clinical
trial for a product derived from the Kava IP. Kava shall be permitted to assign
the Buy-Back Option to the Stockholder or any member or designee of Stockholder
upon providing written notice to Buyer. The Buy-Back Option shall be exercisable
by Kava or any of its authorized assignees or designees for a period of three
(3) months after said thirty (30) month period ends by providing written notice
of exercise to Buyer. If Kava or any of its authorized assignees or designees
fails to provide such notice within such period, the Buy-Back Option shall
terminate and be of no further force or effect. The Buyer agrees to notify Kava,
or its assignee, when this clinical trial requirement has been satisfied.

5.3  ADDITIONAL COVENANTS.

(a)  CUSTOMERS AND OTHER BUSINESS RELATIONSHIPS. After the Closing,
Sellers will cooperate with Buyer in its efforts to continue and maintain for
the benefit of Buyer those business relationships of Seller existing prior to
the Closing and relating to the Business to be operated by Buyer after the
Closing, including relationships with lessors, regulatory authorities,
licensors, customers, suppliers and others, and Sellers will use reasonable
commercial efforts to satisfy the Retained Liabilities in a manner that is not
detrimental to any of such relationships. After the Closing, Sellers will refer
to Buyer all inquiries relating to the Business. Neither Seller nor any of its
officers, agents or shareholders shall take any action that would reasonably be
expected to diminish the value of the Purchased Assets after the Closing or that
would interfere

19

with the business of Buyer to be engaged in after the Closing, including
disparaging the name or business of Buyer.

(b)  FURTHER ASSURANCES. The parties shall cooperate reasonably with
each other and with their respective representatives in connection with any
steps required to be taken as part of their respective obligations under this
Agreement, and shall (i) furnish upon request to each other such further
information; (ii) execute and deliver to each other such other documents; and
(iii) do such other acts and things, all as the other Party may reasonably
request as is necessary to carry out the intent of this Agreement and the
transactions contemplated hereby.

5.4  COVENANTS OF BUYER. The Buyer hereby agrees to keep, perform and fully
discharge the following covenants and agreements:

(a)  PROGRESS REPORTS. Beginning twelve months after the Closing Date
and annually thereafter, Buyer shall submit to Stockholder a progress report
summarizing Buyer's activities related to the development and testing of
products relating to the Kava IP, CG IP and the SinglePixel IP and the obtaining
of governmental approvals necessary for marketing same.

(b)  ROYALTY REPORT. After the first commercial sale anywhere in the
world of a Kava Product or CG Product, Buyer shall make quarterly royalty
reports to Stockholder for such Kava Product or CG Product (as the case may be)
no later than forty-five (45) days after the end of each such quarter. Each such
royalty report will cover Buyer's most recently completed calendar quarter and
shall include the units sold, gross revenue and royalties payable by Buyer to
the Sellers, or any of their assignees, itemized by product.

(c)  RIGHT TO AUDIT. Buyer shall keep full and accurate books and
records in sufficient detail so that all amounts due and payable to any Seller
or the Stockholder hereunder can be properly determined. Such books and records
shall be preserved for at least three years from the date of entry to which they
pertain. Such books and records shall be open to inspection at any reasonable
time during business hours not more often than once each calendar year by an
independent certified public accountant selected by the Stockholder for the sole
purpose of verifying reports and payments hereunder. Such independent certified
public accountant shall report the findings of his or her inspection to the
Stockholder but shall under no circumstances report any information other than
information related to the accuracy of such reports and payments. All fees and
expenses of such inspection shall be borne by the Stockholder; provided that, if
such inspection determines that gross revenue reported to Stockholder pursuant
to Section 5.4(b) of this agreement is understated in any quarter by five
percent (5%) or more, then Buyer shall bear all the fees and expenses of such
inspection.

ARTICLE VI

CLOSING CONDITIONS

6.1  CONDITIONS TO OBLIGATIONS OF BUYER. The obligations of Buyer to
consummate this Agreement and the transactions contemplated hereby are subject
to the fulfillment, prior to or at

20

the Closing, of the following conditions precedent, subject to a bring-down of
the disclosure schedules.

(a)  REPRESENTATIONS, WARRANTIES AND COVENANTS. Each of the
representations and warranties of the Sellers and the Stockholder contained in
this Agreement shall remain true and correct in all material respects at the
Closing Date as fully as if made on the Closing Date (other than the
representations and warranties that contain an express materiality
qualification, which shall be true and correct in all respects); each Seller and
the Stockholder shall have performed in all material respects, on or before the
Closing Date, all of its respective obligations under this Agreement and the
other Purchase Documents which by the terms thereof are to be performed on or
before the Closing Date; and each Seller and the Stockholder shall have
delivered to Buyer an Officer's Certificate dated the Closing Date of such
Seller and the Stockholder to such effect.

(b)  PURCHASE PERMITTED BY APPLICABLE LAWS; LEGAL INVESTMENT. Buyer's
purchase of and payment for the Purchased Assets (a) shall not be prohibited by
any applicable law or governmental order, rule, ruling, regulation, release or
interpretation (b) shall not constitute a fraudulent or voidable conveyance
under any applicable law and (c) shall be permitted by all applicable laws,
statutes, ordinances, regulations and rules of the jurisdictions to which Buyer
is subject.

(c)  PROCEEDINGS SATISFACTORY. All proceedings taken in connection
with the purchase and sale of the Purchased Assets, all of the other Purchase
Documents and all documents and papers relating thereto, shall be in form and
substance reasonably satisfactory to Buyer.

(d)  CONSENTS - PERMITS. Each Seller shall have received (and there
shall be in full force and effect) all material consents (except with respect to
the DFCI License Agreement), approvals, licenses, permits, orders and other
authorizations of, and shall have made (and there shall be in full force and
effect) all such filings, registrations, qualifications and declarations with,
any Person pursuant to any applicable law, statute, ordinance regulation or rule
or pursuant to any agreement, order or decree to which such Seller is a party or
to which it is subject, in connection with the transactions contemplated by this
Agreement and the sale of the Purchased Assets.

(e)  CORPORATE DOCUMENTS. Each Seller shall have delivered to Buyer:

(i)     an Officer's Certificate of the Secretary of each Seller
and the managing member of the Stockholder certifying (x) the incumbency and
genuineness of signatures of all officers of the Stockholder and the Sellers, as
the case may be, executing this Agreement, any document delivered by the
Stockholder and the Sellers at the Closing and any other document, instrument or
agreement executed in connection herewith, (y) the truth and correctness of
resolutions of the Sellers and the Stockholder authorizing the entry by the
Sellers and the Stockholder into this Agreement and the transactions
contemplated hereby and (z) the truth, correctness and completeness of the
By-Laws of the Sellers and the Stockholder;

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(ii)    the certificate of formation of the Stockholder and the
Charter of each Seller certified as of a recent date by the Secretary of State
of the State of Delaware; and

(iii)   certificates of corporate good standing and legal
existence of each of the Stockholder and each Seller as of a recent date from
the Secretary of State of the State of Delaware.

(f)  BILLS OF SALE. Each Seller shall have executed and delivered to
the Buyer a Bill of Sale in the form of EXHIBIT A attached hereto.

(g)  INSTRUMENTS OF ASSUMPTION. The Buyer and each Seller shall have
executed and delivered an Instrument of Assumption in the form of EXHIBIT B
attached hereto.

(h)  TRANSFER OF NECESSARY PERMITS. All of the Necessary Permits
(except any Permit with respect to the DFCI License Agreement) shall have been
transferred to or obtained by Buyer on or before the Closing Date

(i)  NON-COMPETITION AGREEMENTS. Each Seller and the Stockholder shall
have executed and delivered to Buyer non-competition, non-solicitation and
non-disclosure agreements in substantially the form of EXHIBIT C attached hereto
(the "Non-Competition Agreements").

(j)  PATENT ASSIGNMENTS. Each Seller shall have executed and delivered
to Buyer a patent assignment in substantially the form of EXHIBIT D attached
hereto (the "Patent Assignments").

6.2  CONDITIONS TO OBLIGATIONS OF THE SELLERS AND THE STOCKHOLDER. The
obligations of each Seller and the Stockholder to consummate this Agreement and
the transactions contemplated hereby are subject to the fulfillment, prior to or
at the Closing, of the following conditions precedent:

(a)  REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of Buyer in this Agreement shall remain true and correct in all
material respects at the Closing Date as fully as if made on the Closing Date
(other than the representations and warranties that contain an express
materiality qualification, which shall be true and correct in all respects, and
Buyer shall, on or before the Closing Date, have performed, in all material
respects, all of its obligations under this Agreement and the Other Purchase
Documents which by the terms thereof are to be performed by it on or before the
Closing Date; and Buyer shall have delivered an Officer's Certificate to counsel
for the Sellers dated the Closing Date to such effect.

(b)  LICENSE GRANT BY BUYER. Buyer shall have executed and delivered
to Kava an exclusive, perpetual, assignable, fully paid-up, royalty-free license
to use the Kava IP solely for liquid beverages (including "shooters") in
substantially the form of EXHIBIT E attached hereto (the "Kava Pharmaceutical
License Agreement").

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ARTICLE VII

TERMINATION

7.1  TERMINATION OF AGREEMENT. This Agreement and the transactions
contemplated hereby may (at the option of the party having the right to do so)
be terminated at any time on or prior to the Closing Date by:

(a)  MUTUAL CONSENT. By mutual written consent of Buyer and a Seller;

(b)  COURT ORDER. By Buyer, a Seller or the Stockholder if any court
of competent jurisdiction shall have issued an order pursuant to the request of
a third party restraining, enjoining or otherwise prohibiting the consummation
of the transactions contemplated by this Agreement;

(c)  FAILURE TO CLOSE BY JANUARY 31, 2004. By Buyer or the Stockholder
if the transactions contemplated hereby shall not have been consummated on or
before January 31, 2004, PROVIDED, HOWEVER, that such right to terminate this
Agreement shall not be available to any party whose failure to fulfill any
obligation of this Agreement has been the cause of, or resulted in, the failure
of the transactions contemplated hereby to be consummated on or before such
date;

(d)  TERMINATION BY STOCKHOLDER. By the Stockholder upon notice to
Buyer at any time prior to the Closing Date, if (i) a condition to the
performance of a Seller set forth in Section 6.2 hereof shall not be fulfilled
at the time specified for the fulfillment thereof, (ii) a material default under
or a material breach of this Agreement shall be made by Buyer, or (iii) any
representation or warranty set forth in this Agreement or in any instrument
delivered by Buyer pursuant hereto shall be materially false or misleading; or

(e)  TERMINATION BY BUYER. By Buyer by notice to a Seller at any time
prior to the Closing Date, if (i) a condition to the performance of Buyer set
forth in Section 6.1 hereof shall not be fulfilled at the time specified for the
fulfillment thereof, (ii) a default under or a breach of this Agreement shall be
made by such Seller or the Stockholder, or (iii) any representation set forth in
this Agreement or in any instrument delivered by such Seller or the Stockholder
pursuant hereto shall be false or misleading.

7.2  EFFECT OF TERMINATION AND RIGHT TO PROCEED. If this Agreement is
terminated pursuant to this Article VII, then except as provided below, all
further obligations of Buyer, such Seller(s) and the Stockholder under this
Agreement shall terminate without further liability of Buyer or any Affiliate
thereof to the Stockholder or such Seller(s) or of the Stockholder or such
Seller(s) to Buyer or any Affiliate thereof, except with respect to the
obligations set forth in Sections 7.1, 9.1, 9.2 and 9.12, and except, in the
case of termination pursuant to Section 7.1(d) or Section 7.1(e), as to
liability for misrepresentation, breach or default in connection with any
warranty, representation, covenant or obligation given, occurring or arising to
the date of termination. In addition, anything in this Agreement to the contrary
notwithstanding, if any of the conditions to obligations specified in Sections
5.1, 5.2 or 5.3

23

hereof have not been satisfied, Buyer, in addition to any other rights which it
may have, shall have the right to waive its rights to have such conditions
satisfied and elect to proceed with the transactions contemplated hereby and, if
any of the conditions to the obligations of a Seller and the Stockholder
specified in Section 5.4 hereof have not been satisfied, such Seller and the
Stockholders in addition to any other rights which may be available to them,
shall have the right to waive their rights to have such conditions satisfied and
elect to proceed with the transactions contemplated hereby.

ARTICLE VIII

INDEMNIFICATION

8.1  SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Each and every such
representation and warranty set forth in this Agreement shall survive until the
first anniversary of the Closing Date, except for representations and warranties
relating to the Intellectual Property, which shall survive until the second
anniversary of the Closing Date.

8.2  INDEMNIFICATION BY THE SELLERS AND THE STOCKHOLDER. Each Seller and
the Stockholder shall indemnify, defend and hold Buyer, its officers, directors,
employees, owners, agents and Affiliates, harmless from and in respect of any
and all losses, damages, costs and expenses of any kind and nature whatsoever
(including, without limitation, interest and penalties, reasonable expenses of
investigation and court costs, reasonable attorneys' fees and disbursements and
the reasonable fees and disbursements of other professionals) which may be
sustained or suffered by any of them (collectively, "Losses"), arising out of,
resulting from or pertaining to any breach or inaccuracy of any representation
or warranty or the breach of or failure to perform any warranty, covenant,
undertaking or other agreement of a Seller or the Stockholder contained in this
Agreement or any other Purchase Document; PROVIDED, HOWEVER, that the maximum
liability of a Seller and the Stockholder pursuant to this Section 8.2 shall be
limited to the Purchase Price and all other payments received by such Seller and
the Stockholder hereunder.

8.3  INDEMNIFICATION BY BUYER. Buyer shall indemnify, defend and hold each
of the Sellers and the Stockholder, their respective officers, directors,
employees, consultants, owners, agents and Affiliates, harmless from and in
respect of any and all Losses which may be sustained or suffered by any of them
arising out of or resulting from any breach or inaccuracy of any representation
or warranty or the breach of or failure to perform any warranty, covenant,
undertaking or other agreement of Buyer contained in this Agreement or any other
Purchase Document.

8.4  MINIMUM INDEMNIFICATION; MATERIALITY. Notwithstanding anything to the
contrary contained herein, no party hereto shall be entitled to recover from any
other party unless and until the total of all claims for indemnity or damages
with respect to any inaccuracy or breach of any such representations or
warranties or breach of or default in the performance of any covenants,
undertakings or other agreements, whether such claims are brought under this
Article VIII or otherwise, exceeds $50,000, in which case such parties shall be
entitled to recover the total amount of such claims.

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8.5  NOTICE AND OPPORTUNITY TO DEFEND. If there occurs an event which a
party asserts is an indemnifiable event pursuant to Section 8.2 or 8.3, the
parties seeking indemnification shall promptly notify the other parties
obligated to provide indemnification (collectively, the "Indemnifying Party").
If such event involves (a) any Claim or (b) the commencement of any action, suit
or proceeding by a third person, the party seeking indemnification will give
such Indemnifying Party prompt written notice of such Claim or the commencement
of such action, suit or proceeding, PROVIDED, HOWEVER, that the failure to
provide prompt notice as provided herein will relieve the Indemnifying Party of
its obligations hereunder only to the extent that such failure prejudices the
Indemnifying Party hereunder. In case any such action, suit or proceeding shall
be brought against any party seeking indemnification and it shall notify the
Indemnifying Party of the commencement thereof, the Indemnifying Party shall be
entitled to participate therein and, to the extent that it desires to do so, to
assume the defense thereof, with counsel reasonably satisfactory to such party
seeking indemnification and, after notice from the Indemnifying Party to such
party seeking indemnification of such election so to assume the defense thereof,
the Indemnifying Party shall not be liable to the party seeking indemnification
hereunder for any attorneys' fees or any other expenses, in each case
subsequently incurred by such party, in connection with the defense of such
action, suit or proceeding. The party seeking indemnification agrees to
cooperate fully with the Indemnifying Party and its counsel in the defense
against any such action, suit or proceeding. In any event, the party seeking
indemnification shall have the right to participate at its own expense in the
defense of such action, suit or proceeding. In no event shall an Indemnifying
Party be liable for any settlement or compromise effected without its prior
consent. If, however, the party seeking indemnification refuses its consent to a
BONA FIDE offer of settlement which the Indemnifying Party wishes to accept
(which must include the unconditional release of the parties seeking
indemnification from all liability with respect to the Claim at issue), the
party seeking indemnification may continue to pursue such matter, free of any
participation by the Indemnifying Party, at the sole expense of the party
seeking indemnification. In such event, the obligation of the Indemnifying Party
to the party seeking indemnification shall be equal to the lesser of (i) the
amount of the offer or settlement which the party seeking indemnification
refused to accept plus the costs and expenses of such party prior to the date
the Indemnifying Party notifies the party seeking indemnification of the offer
of settlement and (ii) the actual out-of-pocket amount the party seeking
indemnification is obligated to pay as a result of such party's continuing to
pursue such matter.

ARTICLE IX

MISCELLANEOUS

9.1  FEES AND EXPENSES. Each of the parties hereto will pay and discharge
its own expenses and fees in connection of with the negotiation of and entry
into this Agreement and the consummation of the transactions contemplated
hereby.

9.2  NOTICES. All notices, requests, demands, consents and communications
necessary or required under this Agreement or any other Purchase Document shall
be made in the manner specified, or, if not specified, shall be delivered by
hand or sent by registered or certified mail, return receipt requested, or by
telecopy (receipt confirmed) to:

25

if to Buyer:

Synta Pharmaceuticals Corp.
45 Hartwell Ave.
Lexington, MA 02421
Attention: Chief Executive Officer
Facsimile Transmission Number: (781) 274-8228

with a copy to:

Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
One Financial Center
Boston, MA 02111
Attention: Jeffrey Wiesen, Esq.
Facsimile Transmission Number: (617) 542-2241

if to CG, Kava or SinglePixel:

Peregrine Financial Corporation
84 State Street
Boston, MA 02109
Attention: Todd Klibansky
Facsimile Transmission Number: (617) 523-2289

with a copy to:

Testa, Hurwitz & Thibeault, LLP
125 High Street
Boston, MA 02105
Attention: Rufus King, Esq.
Facsimile Transmission Number: (617) 248-7282

if to Stockholder:

CMAC, LLC
84 State Street
Boston, MA 02109
Attention: Todd Klibansky
Facsimile Transmission Number: (617) 523-2289

with a copy to:

Testa, Hurwitz & Thibeault, LLP
125 High Street
Boston, MA 02105
Attention: Rufus King, Esq.
Facsimile Transmission Number: (617) 248-7282

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All such notices, requests, demands, consents and other communications
shall be deemed to have been duly given or sent two (2) days following the date
on which mailed, or on the date on which delivered by hand or by facsimile
transmission (receipt confirmed), as the case may be, and addressed as
aforesaid.

9.3  SUCCESSORS AND ASSIGNS. Except as otherwise expressly set forth
herein, all covenants and agreements set forth in this Agreement and made by or
on behalf of any of the parties hereto shall bind and inure to the benefit of
the successors and assigns of such party, whether or not so expressed, except
that the Sellers and the Stockholder may not assign or transfer, other than to
the Stockholder or any Affiliate of Stockholder, any of their respective rights
or obligations under this Agreement without the consent in writing of Buyer.

9.4  COUNTERPARTS, ETC. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
together shall constitute one and the same instrument, and it shall not be
necessary in making proof of this Agreement to produce or account for more than
one such counterpart. The headings of the sections and paragraphs of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be part of this Agreement. If any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason in any
jurisdiction, the validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions hereof shall not be in any
way impaired or affected, it being intended that each of parties' rights and
privileges shall be enforceable to the fullest extent permitted by law, and any
such invalidity, illegality and unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.

9.5  TAX MATTERS.

(a)  Each Seller will timely file all federal, state, local and
foreign tax reports and returns for any period which ends on or prior to the
Closing Date and which are required to be filed to reflect the operations of
such Seller. All such reports and returns shall be submitted to Buyer for review
at least thirty (30) days prior to filing such reports and returns. Buyer shall
be entitled to participate in the preparation of such reports and returns. All
such reports and returns will be prepared and filed using tax accounting methods
and principles which are substantially consistent with those used in the returns
and reports of taxes for such Seller for preceding tax periods unless Buyer
agrees otherwise. Any item of income, deduction or credit to be included in any
such tax return or report shall be based on the permanent records (including
work papers) of such Seller. Buyer shall prepare and file on behalf of such
Seller all federal, state, local and foreign tax reports and returns for any
period which ends after the Closing Date and which are required to be filed to
reflect the operations of such Seller attributable to a period prior to the
Closing Date.

(b)  All refunds of taxes attributable to any or all years or periods
(or portions thereof) ending prior to the Closing Date or attributable to any
taxable year or period which ends at or after the Closing Date, to the extent
that the refund is attributable to the operations of such

27

Seller up to the Closing Date (as determined on the basis of the permanent
records of such Seller), shall belong to and be retained by such Seller.

(c)  The parties hereto shall, and shall cause such Seller to, provide
such necessary information as any other party hereto may reasonably request in
connection with the preparation of such parties' Tax Returns, or to respond to
or contest any audit, prosecute any claim for refund or credit or otherwise
satisfy any requirements relating to Taxes of such Seller.

(d)  Each Seller shall pay all real property transfer Taxes, sales
Taxes, stock transfer Taxes, documentary stamp Taxes, recording charges and
other similar Taxes resulting from, arising under or in connection with the
transfer of the Purchased Assets or any other related transaction under the
Agreement.

(e)  The obligations of each Seller set forth in the Agreement
relating to Taxes shall, except as otherwise agreed in writing, be unconditional
and absolute and shall remain in effect without limitation as to time or amount
of recovery by Buyer until thirty (30) days after the expiration of the
applicable statute of limitations governing the Taxes to which such obligations
relate (after giving effect to any agreement extending or tolling such statute
of limitations).

9.6  GOVERNING LAW. THIS AGREEMENT, INCLUDING THE VALIDITY HEREOF AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER, SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY IN SUCH STATE (WITHOUT
GIVING EFFECT TO THE CONFLICTS OF LAWS PROVISIONS THEREOF).

9.7  ENTIRE AGREEMENT. This Agreement, including the Schedules and Exhibits
referred to herein, is complete, and all promises, representations,
understandings, warranties and agreements with reference to the subject matter
hereof, and all inducements to the making of this Agreement relied upon by all
the parties hereto, have been expressed herein or in said Schedules or Exhibits.
This Agreement, including the Schedules and Exhibits referred to herein,
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior agreements, understandings and
negotiations, both written and oral, between the parties with respect to the
subject matter hereof. None of the provisions of this Agreement, including the
Schedules and Exhibits referred to herein, is intended to confer upon any Person
other than the parties hereto any rights or remedies hereunder. This Agreement
may not be amended except by an instrument in writing signed on behalf of each
Seller, Buyer and the Stockholder.

[Remainder of Page Intentionally Left Blank]

28

IN WITNESS WHEREOF the parties hereto have executed this Asset Purchase
Agreement under seal as of the date first set forth above.

ATTEST:                             SYNTA PHARMACEUTICALS CORP.

/s/ WENDY E. RIEDER                 By: /s/ SAFI BAHCALL
-----------------------                -----------------------
Chief Executive Officer

ATTEST:                             CANCER GENOMICS, INC.

By: /s/ TODD KLIBANSKY
----------------------------           -----------------------
Treasurer

ATTEST:                             KAVA PHARMACEUTICALS, INC.

By:  /s/ TODD KLIBANSKY
----------------------------           -----------------------
Treasurer

ATTEST:                             SINGLEPIXEL BIOMEDICAL, INC.

By:  /s/ TODD KLIBANSKY
----------------------------           -----------------------
Treasurer

ATTEST:                             CMAC, LLC

By:  /s/ TODD KLIBANSKY
----------------------------           -----------------------
Treasurer

29

EXHIBIT A

FORM OF BILL OF SALE

KNOW ALL PERSONS THAT_____________, a________corporation (the "Seller").
acting pursuant to that certain Asset Purchase Agreement (the "Agreement"),
dated and effective as of____________, by and between the Seller and Synta
Pharmaceuticals Corp., a Delaware corporation (the "Buyer"), for consideration
specified in the Agreement, the receipt and sufficiency of which are hereby
acknowledged, does hereby bargain, sell, transfer, assign and deliver unto the
Buyer all of the Purchased Assets but specifically excluding the Retained
Assets. All Capitalized terms used but not defined herein shall have the
meanings set forth in the Agreement.

The Purchased Assets shall include the following:

[TO BE COMPLETED]

TO HAVE AND TO HOLD, all and singular, the Purchased Assets hereby
assigned, transferred, and delivered unto Buyer, its successors and assigns, for
its own use and behalf forever.

The representations and warranties of the Seller and the Buyer set forth in
the Agreement are hereby incorporated herein by reference and made a part
hereof. The indemnification obligations of the parties set forth in Article VIII
of the Agreement shall, as provided and subject to the limitations contained in
the Agreement, survive the execution and delivery of this Bill of Sale and the
consummation of the transactions effected hereby and thereby. Nothing contained
herein is intended to supercede the covenants, representations and warranties
regarding the Purchased Assets contained in the Agreement, which representations
and warranties shall survive the execution and delivery of this Bill of Sale as
set forth in the Agreement.

This Bill of Sale and the Agreement (including the schedules and exhibits
thereto) constitute the entire agreement between the parties in connection with
the Purchased Assets and may be amended only by a writing signed by an
authorized representative of each party. This Bill of Sale shall be binding upon
and shall inure to the benefit of the parties hereto and their respective legal
representatives, successors and permitted assigns.

This Bill of Sale shall be governed by and construed in accordance with the
laws of the State of Delaware to the full extent permitted by applicable law,
without giving effect to the conflict of laws principles thereof.

All capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to them in the Agreement. The use of any singular term shall
include the plural and vice versa.

The Seller hereby covenants and agrees that it will, at the request of the
Buyer, execute and deliver such other instruments of conveyance, assignment and
transfer and take such other action as Buyer may reasonably request to vest in
Buyer the Company's entire right, title and interest in

Exh. A-1

and to the Purchased Assets being transferred hereby, provided that Buyer shall
bear the reasonable and documented costs in connection with the taking of such
actions and the execution and delivery of such documents.

[SIGNATURE PAGE FOLLOWS]

Exh. A-2

IN WITNESS WHEREOF, Seller has executed this Bill of Sale dated and
effective as of the ____day of _________,2003.

SELLER:

[NAME]

BY:
-------------------------
Name:
Title:

Exh. A-3

EXHIBIT B

FORM OF INSTRUMENT OF ASSUMPTION

This INSTRUMENT OF ASSUMPTION dated__________is executed and delivered by
___________________, a _______corporation, (hereinafter referred to as
"Seller"), to SYNTA PHARMACEUTICALS CORP., a Delaware corporation (hereinafter
referred to as "Buyer"). All capitalized words and terms used in this Instrument
of Assumption and not defined herein shall have the respective meanings ascribed
to them in that certain Asset Purchase Agreement, dated as of___________(the
"Agreement"), among Buyer, Seller and the other parties named therein.

WHEREAS, pursuant to the Agreement, the Seller has agreed to sell, convey,
assign, transfer and deliver to the Buyer all of the Purchased Assets;

WHEREAS, in consideration therefore, the Agreement requires the Purchaser
to assume the Assumed Liabilities;

NOW, THEREFORE, for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Purchaser hereby agrees as
follows:

1.   The Seller hereby assigns to the Buyer, and the Buyer hereby assumes
and agrees to perform, pay and discharge when due all of the Assumed
Liabilities.

2.   Nothing herein shall be deemed to deprive the Buyer of any defenses,
set-offs or counterclaims which the Seller may have had or which the Buyer shall
have with respect to any of the obligations, liabilities and commitments hereby
assumed (the "Defenses and Claims"). The Seller hereby transfers, conveys and
assigns to the Buyer all Defenses and Claims.

3.   This instrument shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts.

4.   This instrument may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. Delivery by telecopy by a party of a copy of an
executed counterpart hereof shall constitute execution and delivery hereof by
such party.

5.   This instrument shall inure to the benefit of, and shall be binding
upon, Buyer and Seller and their respective successors and assigns.

6.   Any amendments to this instalment shall be made only in writing,
signed by the parties hereto.

Exh. B-1

IN WITNESS WHEREOF, the undersigned, have executed this instrument as of
the date first written above.

Seller:
---------------------

By:
---------------------------
Name:
Title:

BUYER:       SYNTA PHARMACEUTICALS CORP.

By:
---------------------------
Name:
Title:

Exh. B-2

EXHIBIT C

FORM OF NON-COMPETITION, NON-SOLICITATION AND
CONFIDENTIALITY AGREEMENT

NON-COMPETITION, NON-SOLICITATION AND CONFIDENTIALITY AGREEMENT (the
"Agreement"), dated as of [____________], 2003, by and among Synta
Pharmaceuticals Corp., a Delaware corporation ("Buyer"), [____________], Inc., a
Delaware corporation (the "Seller"), and CMAC, LLC, a Delaware limited liability
company ("Stockholder"). Each capitalized term used but not defined herein shall
have the meaning set forth in the Asset Purchase Agreement (defined below).

WITNESSETH:

WHEREAS, the Buyer, the Seller and the Stockholder have entered into a
Asset Purchase Agreement, dated as of [____________], 2003 (the "Asset Purchase
Agreement"), pursuant to which the Seller shall sell to the Buyer and the Buyer
shall purchase from the Seller certain assets of the Seller as more specifically
set forth therein;

WHEREAS, the Stockholder, by virtue of, among other things, the
Stockholder's status as the majority stockholder of the Seller, is in possession
of certain confidential and proprietary information relating to the Seller;

WHEREAS, the Seller is engaged in the business of [____________] (the
"Business");

WHEREAS, it is a condition to the obligations of the Buyer under the Asset
Purchase Agreement that the Seller and Stockholder enter into this Agreement;
and

WHEREAS, the Seller and Stockholder have agreed to enter into this
Agreement in consideration of the Buyer's acts as contemplated by the Asset
Purchase Agreement.

NOW, THEREFORE, in consideration of the foregoing and the mutual promises
herein contained and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Buyer, the Seller and the
Stockholder agree as follows:

1.  MATERIALITY. The Seller and Stockholder hereby agree that a portion of
the Purchase Price (as defined in the Asset Purchase Agreement) is being paid
to protect the goodwill of the Seller, which includes the confidential
information, trade secrets and know-how of the Seller. Accordingly, the Seller
and Stockholder hereby agree that the covenants set forth in this Agreement
form a material and substantial part of the transactions contemplated by the
Asset Purchase Agreement to protect the confidential information, trade
secrets and know-how of the Seller and that the Seller and Stockholder have
entered into this Agreement in order to induce the Buyer to enter into the
Asset Purchase Agreement.

2.  STOCKHOLDER AND SELLER NON-COMPETE.

(a) The Seller and Stockholder acknowledge and agree with respect to the
Seller that the Business of the Seller is conducted around the world (the
"Territory"), and that the Seller's

Exh. C-1

reputation and goodwill are an integral part of its business success throughout
the Territory. If the Stockholder or Seller deprives the Buyer of any of the
Seller's goodwill or in any manner utilizes its reputation and goodwill in
competition with the Business, the Buyer will be deprived of the benefits it has
bargained for pursuant to the Asset Purchase Agreement. Accordingly, as an
inducement for the Buyer to enter into the Asset Purchase Agreement, the Seller
and Stockholder agree that during the period beginning on the Closing Date and
ending on the second anniversary of the Closing Date (the "Non-Competition
Period") the Seller and Stockholder shall not (and shall cause their Affiliates
not to), without the Buyer's prior written consent, directly or indirectly, own,
manage, operate, join, control or participate in the ownership, management,
operation or control of, or be connected as a director, officer, employee,
partner, consultant or otherwise with, or permit the Seller's or Stockholder's
name to be used by or in connection with, any Person that, directly or
indirectly, competes with the Buyer in the Business (as conducted by the Buyer)
in the Territory (any such Person being a "Competitive Business").

(b) Notwithstanding anything to the contrary in subclause (a), the
Stockholder may be a passive owner (which shall not prohibit the exercise of any
rights as a shareholder) of not more than 5% of the outstanding stock of any
class of any Competitive Business.

3.  NON-SOLICITATION. During the period beginning on the Closing Date and
ending on the second anniversary of the Closing Date (the "Restricted
Period"), the Seller and Stockholder shall not (and shall cause their
Affiliates not to) (i) solicit, raid, entice, induce or contact, or attempt to
solicit, raid, entice, induce or contact, any Person that is a customer of the
Buyer[Business] immediately after the Closing (as defined in the Asset
Purchase Agreement) to become a customer of any other Person for services
which are the same as, or competitive with, those services sold, rendered or
otherwise made available to customers by the Seller as of the Closing Date or
by the Buyer on and after the Closing Date, or approach any such Person for
such purpose or authorize the taking of such actions by any other Person or
assist or participate with any such Person in taking such action, or (ii)
solicit, raid, entice, induce or contact, or attempt to solicit, raid, entice,
induce or contact any Person that currently is or at any time during the
Restricted Period shall be (or, in the case of termination is at the time of
termination), an employee, agent or consultant of or to the Seller or the
Buyer, as the case may be, to do anything from which the Seller or Stockholder
is restricted by reason of this SECTION 3, and the Seller and Stockholder
shall not (and shall cause the their Affiliates not to) approach any such
employee, agent or consultant for such purpose or authorize or participate in
the taking of such Person in taking such action. The term "customer" shall
include: (i) customers of the Seller or Buyer existing immediately prior to
the Closing; (ii) customers that have used the products and services of the
Seller within the one (1) year period prior to the Closing Date; and (iii) any
prospective customers identified as such by the BuyerSeller prior to the
Closing Date.

4.  NON-DISPARAGEMENT. During the Restricted Period, the Seller and
Stockholder shall not make any statement or other communication that impugns
or attacks the reputation or character of the Business or damages the goodwill
of the BuyerSeller or theits Business, take any action that would interfere
with any contractual or customer or supplier relationships conveyed to the
Buyer as part of the Purchased Assets, including but not limited to any

Exh. C-2

action that would result in a diminution of business, or otherwise take any
action that is detrimental to the best interests of the Business or the
Purchased Assets.

5.  CONFIDENTIALITY. The Seller and Stockholder covenant and agree that
neither the Seller nor Stockholder shall at any time, directly or indirectly,
disclose any secret or confidential information that the Seller or Stockholder
has about the other, including information that the Seller or Stockholder may
learn or has learned by reason of prior ownership of the Purchased Assets or
the Stockholder's ownership of Seller securities, or use any such information
in a manner detrimental to the interests of the Buyer, unless (i) such
information becomes known to the public generally through no fault of the
Seller and Stockholder, (ii) disclosure is required by law or the order of any
governmental authority under color of law; or (iii) the disclosing party
reasonably believes that such disclosure is required in connection with the
defense of a lawsuit against the disclosing party, provided that prior to
disclosing any information pursuant to clause (i)-(iii) above, the Seller
and/or Stockholder shall give prior written notice thereof to the Buyer and
provide Buyer with the opportunity to contest such disclosure and shall
cooperate with the efforts to prevent such disclosure. The Seller and
Stockholder acknowledge that the right to maintain the secrecy of the trade
secrets, know-how and confidential information related to the Purchased Assets
constitutes a proprietary right that the Buyer is entitled to protect and that
the disclosure, or improper use, of the trade secrets, know-how or the
confidential information of the Seller through the Closing Date or related to
the Purchased Assets by the Seller and/or Stockholder will cause irreparable
harm to the Buyer. The term "confidential information" includes, without
limitation, information not previously disclosed to the public or to the
trade, including without limitation information about Seller's products,
facilities, methods, trade secrets and other intellectual property, software,
source code, systems, procedures, manuals, confidential reports, product price
lists, customer lists, financial information (including the revenues, costs or
profits associated with any of the Seller's products), business plans,
prospects or opportunities.

6.  ENFORCEABILITY.

(a) The Seller and Stockholder agree that a breach of the covenants
contained in this Agreement will cause irreparable damage to the Buyer, the
exact amount of which will be difficult to ascertain, and that the remedies at
law (including, without limitation, a claim for monetary damages) for any such
breach will be inadequate. In the event of the breach or a threatened breach by
the Seller or Stockholder of any of the provisions of this Agreement, the Buyer,
in addition and supplementary to other rights and remedies existing in its
favor, may apply to any court of law or equity of competent jurisdiction for
specific performance and/or injunctive or other relief in order to enforce or
prevent any violations of the provisions hereof (without posting a bond or other
security). In addition, in the event of an actual breach or violation by the
Seller or Stockholder of this Agreement, the Non-Competition Period and the
Restricted Period with respect to the Seller or Stockholder, as the case may be,
shall be tolled until such breach or violation has been duly cured.

(b) Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in

Exh. C-3

any jurisdiction, such invalidity, illegality or unenforceability will not
affect any other provision or any other jurisdiction, but this Agreement shall
be reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein. More
specifically, if any court determines that the non-competition restrictions set
forth in SECTION 2 of this Agreement are unenforceable by reason of extending
the Non-Competition Period for too great a period of time, over too great a
geographical scope or otherwise, the parties to this Agreement specifically
agree and authorize such court to rewrite this Agreement to reflect the maximum
time, geographical and/or other restrictions permitted under applicable law to
be reasonable and enforceable.

7.  REASONABLE RESTRAINT. The parties agree that the foregoing covenants
impose a reasonable restraint on the Seller and Stockholder in light of the
activities and business of the parties on the date of execution of this
Agreement and the transactions contemplated in the Asset Purchase Agreement;
but it is also the intent that such covenants be construed and enforced in
accordance with the changing activities and business of the Buyer throughout
the term of this Agreement.

8.  COUNTERPARTS. This Agreement may be executed in counterparts, any one
of which need not contain the signatures of more than one party, but all such
counterparts taken together will constitute one and the same instrument.
Signatures may be exchanged by telecopy and each party to this Agreement
agrees that it will be bound by its own telecopied signature and that it
accepts the telecopied signatures of the other parties to this Agreement.

9.  CAPTIONS. The captions used in this Agreement are for convenience of
reference only, do not constitute a part of this Agreement and will not be
deemed to limit, characterize or in any way affect any provision of this
Agreement. All provisions of this Agreement will be enforced and construed as
if no caption had been used in this Agreement.

10. BINDING EFFECT; AMENDMENT. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective heirs,
legal representatives, successors and permitted assigns. Neither the Seller
nor Stockholder may assign its rights or obligations under this Agreement. The
rights of the Buyer under this Agreement may be assigned to any of the
Affiliates of the Buyer and to any third party that purchases the stock or
assets of the Buyer. Each party hereto represents and warrants that this
Agreement has been duly and validly authorized, executed and delivered by such
party and constitutes a valid and binding obligation of such party,
enforceable against such party in accordance with its terms. This Agreement
may be amended only by a writing signed by the parties hereto.

11. GOVERNING LAW. This Agreement shall be subject to and governed by the
laws of the CommonwealthState of Massachusetts. The parties hereto agree that
venue and jurisdiction with respect to any matter arising under this
Agreement shall be exclusively in the state or federal courts, as applicable,
located in the CommonwealthState of Massachusetts. Each party submits to the
jurisdiction of such courts in the CommonwealthState of Massachusetts with
respect to any claims or controversies arising under this Agreement.

12. NO STRICT CONSTRUCTION. The parties hereto have participated jointly
in the negotiation and drafting of this Agreement. In the event an ambiguity
or question of intent or

Exh. C-4

interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties hereto, and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any of the
provisions of this Agreement.

13. NOTICE. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Notices, requests, demands,
claims and other communications to the parties hereto shall, unless another
address is set forth in writing, be sent to the address or telecopy number set
forth below:

If to Buyer:
Synta Pharmaceuticals Corp.
45 Hartwell Avenue
Lexington, MA 02421
Attention:
Facsimile Transmisssion Number:

with a copy to:
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
One Financial Center
Boston, MA 02111
Attention: Jeffrey Wiesen, Esq.
Facsimile Transmission Number: (617) 542-2241

If to Seller:
Peregrine Financial Corporation
84 State Street
Boston, MA 02109
Attention: Todd Klibansky
Facsimile Transmission Number: (617) 523-2289

with a copy to:

Testa, Hurwitz & Thibeault, LLP
125 High Street
Boston, MA 02105
Attention: Rufus King, Esq.
Facsimile Transmission Number: (617) 248-7282

If to the Stockholder:
CMAC, LLC
84 State Street
Boston, MA 02109
Attention: Todd Klibansky
Facsimile Transmission Number: (617) 523-2289

Exh. C-5

with a copy to:

Testa, Hurwitz & Thibeault, LLP
125 High Street
Boston, MA 02105
Attention: Rufus King, Esq.
Facsimile Transmission Number: (617) 248-7282

Any party may send any notice, request, demand, claim, or other communication
hereundcr to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Parties
notice in the manner herein set forth.

14. Notwithstanding any of the foregoing, as used in this Agreement in
connection with the term "Stockholder", the term "Affiliates" shall not include
any member of the Stockholder or any principals of any members of the
Stockholder.

[Signature Page Follows]

IN WITNESS WHEREOF, each of the parties has caused this Non-Competition,
Non-Solicitation and Confidentiality Agreement to be duly executed, all as of
the day and year first above written.

BUYER:

SYNTA PHARMACEUTICALS CORP.

By:
-----------------------
Name:
Title:

SELLER:

[NAME OF ENTITY]

By:
-----------------------
Name:
Title:

Exh. C-6

STOCKHOLDER:

CMAC, LLC

By:
-----------------------
Name:
Title:

Exh. C-7

EXHIBIT D

FORM OF PATENT ASSIGNMENT

This PATENT ASSIGNMENT is made as of______________, 200__ by
______________________, an individual with his principal residence at
__________________________________________("ASSIGNOR").

RECITALS

WHEREAS, Assignor is the beneficial owner of all rights, title and
interests in a certain United States Patent as identified on SCHEDULE I attached
hereto (the "PATENT");

WHEREAS, pursuant to the Transaction Agreement dated as of______________,
_____________________ (the "TRANSACTION AGREEMENT") by and among
Assignor,________________________, a _______________________("ASSIGNEE") and the
Investor named therein, Assignor has agreed to transfer certain of its assets
and the intellectual property rights thereto, including, without limitation, the
Patent, to Assignee; and

WHEREAS, Assignee desires to acquire all rights, title and interests in, to
and under said Patent.

NOW, THEREFORE, for good and valuable consideration set forth in the
Transaction Agreement, the receipt and sufficiency of which is hereby
acknowledged by Assignor,

1.  Assignor hereby conveys, assigns, transfers and delivers absolutely to
Assignee, its successors and assigns free from encumbrances, (i) all rights,
title and interests throughout the world in, to and under the Patent, and the
underlying inventions described therein and any United States or foreign
reissues, divisions, renewals, extensions, provisionals, continuations and
continuations-in-part thereof, and substitutes therefor, and all letters patent
of the United States which have been or may be granted thereon and all foreign
counterparts thereof, together with all rights and powers arising or accrued
therefrom including, without limitation, the right to sue and recover damages
and other remedies for future or past infringements of the Patent and to fully
and entirely stand in the place of Assignor in all matters related thereto and
(ii) the right to apply for, prosecute and obtain patent or similar protection
throughout the world in respect of the inventions claimed in the Patents
including the right to claim priority therefrom to the intent that the grant of
any patents or similar protection shall be in the name of and vest in the
Assignee. Assignor agrees to take such further action and to execute such
additional documents as may be necessary to perfect Assignee's title in and to
the Patent and all foreign counterparts thereof. In addition, Assignor hereby
conveys, assigns, transfers and delivers to Assignee, its successors and
assigns, all of its right, title and interest throughout the world in and to all
lab notes, prototypes, product definition, market analysis, marketing studies,
draft patent applications, any and all correspondence with the United States
Patent and Trademark Office or any foreign patent office, trade secrets,
nondisclosure agreements, invention agreements, noncompete agreements and any
other document recording the secret knowledge of Assignor relating to the
Patent.

Exh. D-1

2.  Assignor hereby requests the Commissioner of Patents and Trademarks
(the "COMMISSIONER") to record this Patent Assignment to Assignee. Assignor
hereby further requests the Commissioner to issue any and all letters patent of
the United States or derived from the Patent to Assignee as assignee of the
entire interest. Assignor hereby covenants that the Commissioner has full right
to convey the entire interest herein assigned, and that Assignor has not
executed, and will not execute, any agreements inconsistent herewith.

3.  GENERAL PROVISIONS. This Agreement will be governed by, and construed
and enforced in accordance with, the substantive laws of the State of Delaware,
without regard to its principles of conflicts of laws. This Agreement may not be
supplemented, altered or modified in any manner except by a writing signed by
both parties hereto. The failure of either party to enforce any terms or
provisions of this Assignment will not waive any rights under such terms and
provisions. This Agreement may be executed by facsimile signature and in
counterparts, each of which will be an original and all of which when taken
together will constitute one and the same Instrument.

IN WITNESS WHEREOF, the undersigned has caused this Patent Assignment to be
executed as of the day and year first written above.

ASSIGNOR

----------------------------

THE COMMONWEALTH OF MASSACHUSETTS

County of                  )

On this the____________day of_______________, 200__before me personally
appeared ________________to me personally known, and known to me to be the
person who signed the foregoing assignment, and acknowledged the signing of same
as his free act and deed.

---------------------------------
Notary Public
My commission expires____________

Acknowledged and accepted:
ASSIGNEE

BY:
------------------------------
Name:
Title:

Exh. D-2

SCHEDULE I
TO
PATENT ASSIGNMENT

U.S. PATENT NO.    TITLE                                              ISSUE DATE

Exh. D-3

EXHIBIT E

FORM OF LICENSE AGREEMENT

This Agreement (together with Exhibit A attached hereto, this "Agreement")
is made and entered into as of the_________day of_____________, 2003
(the "Effective Date"), by and between SYNTA PHARMACEUTICALS, INC. ("LICENSOR"),
organized and existing under the laws of the state of Delaware, having its
principal office at 45 Hartwell Avenue, Lexington, Massachusetts 02421, and KAVA
PHARMACEUTICALS, INC. ("LICENSEE"), a corporation organized and existing under
the laws of the state of Delaware, having its principal office at 84 State
Street, Suite 900, Boston, Massachusetts 02109.

WHEREAS, LICENSOR, as of the closing of an asset sale between the parties
concurrently herewith, is the owner of certain PATENT RIGHTS, and the LICENSOR
has the right to grant licenses under such PATENT RIGHTS; and

WHEREAS, LICENSEE desires to obtain certain licenses under the PATENT
RIGHTS upon the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto, intending to be legally bound, agree as
follows:

ARTICLE 1 - DEFINITIONS

For purposes of this Agreement, the following words and phrases shall
have the following meanings:

1.1  AFFILIATE shall mean any business entity which directly or indirectly
is the legal or beneficial owner of, or controls greater than fifty-percent
(50%) of the issued and voting capital stock or other share participation of a
party hereto.

1.2  CONFIDENTIAL INFORMATION shall mean information, including but not
limited to, regarding existing or proposed research, development efforts,
business or products; marketing and distribution data, methods, plans and
efforts; the identities of and the course of dealing with actual and prospective
customers, contractors and suppliers; and any other materials that have not been
made available to the general public. Information in written form shall be

Exh. E-1

marked "Confidential" in order to qualify for such treatment. Information in
other than written form shall be confirmed in writing within thirty (30) days of
disclosure in order to qualify for such treatment.

1.3  FIELD shall mean the development, manufacture and sale of kava kava
extracts, and components thereof, for use in beverages and drink formulations.

1.4  LICENSED PRODUCT shall mean any product or part thereof which is:

(a)  covered in whole or in part by an issued, unexpired or pending
claim contained in the PATENT RIGHTS in the country in which any such product or
part thereof is made, used or sold; or

(b)  manufactured by using, or is employed to practice, a process
which is covered in whole or in part by an issued, unexpired claim or a pending
claim contained in the PATENT RIGHTS in the country in which such process is
used or in which such product or part thereof is used or sold.

1.5  PATENT RIGHTS shall mean LICENSOR intellectual property described
below:

(a)  The United States and foreign patents (including, reissues,
reexaminations, conversions, patents of addition, and extensions thereof)
and/or patent applications listed in EXHIBIT A;

(b)  United States and foreign patents (including, reissues,
reexaminations, conversions, patents of addition, and extensions thereof)
issued from the applications listed in Exhibit A and from divisionals,
continuations, and continuations-in-part of these applications;

(c)  Claims of U.S. and foreign continuation-in-part
applications, and of the resulting patents, which are directed to subject
matter specifically described in the U.S. and foreign applications listed
in Exhibit A;

(d)  Claims of all foreign patent applications, and of the
resulting patents, which are directed to subject matter specifically
described in the United States patents and/or patent applications described
in (a), (b) or (c) above.

1.6  SUBLICENSEE shall mean any third party to whom LICENSEE grants a
sublicense of some or all of the rights granted to LICENSEE pursuant to Article
2 hereof.

Exh. E-2

1.7  TERM shall have the meaning set forth in Section 7.1, hereof.

1.8  TERRITORY shall mean worldwide.

ARTICLE 2 - GRANT

2.1  LICENSE GRANT. LICENSOR for the sum of ten (US$ 10.00) U.S. dollars
and other good and valuable consideration the receipt of which is hereby
acknowledged, hereby grants to LICENSEE, subject to the terms and conditions of
this Agreement, a fully paid-up and royalty- free right and exclusive license,
including the right to grant sublicenses in accordance with Section 2.2 below,
under the PATENT RIGHTS to make, have made, use and sell LICENSED PRODUCTS in
the FIELD during the TERM in the TERRITORY.

2.2  RIGHT TO SUBLICENSE. LICENSEE shall have the right to grant to any
SUBLICENSEE sublicenses to all or any portion of its rights under the license
granted pursuant to this Article 2; PROVIDED, HOWEVER, that (a) LICENSOR shall
be notified in writing of any and all potential sublicenses, and (b) any and all
sublicenses shall be consistent with the terms and conditions of this Agreement.

2.3  RETAINED RIGHTS. LICENSOR hereby retains the right to practice the
PATENT RIGHTS for any and all uses outside of the FIELD.

ARTICLE 3 - CONFIDENTIALITY

3.1  Each party will maintain the confidential nature of CONFIDENTIAL
INFORMATION it receives from the other and shall, at a minimum, take those
precautions that it utilizes to protect its own confidential information, but
not less than a commercially reasonable standard of care, and shall refrain from
using any of the CONFIDENTIAL INFORMATION except in connection with this
Agreement. The foregoing provisions shall not apply to any information that is:
(i) generally available to the public immediately prior to the time of
disclosure; (it) becomes available to the public in compliance with provisions
of this Agreement; (iii) is independently developed by the receiving party as
demonstrated by written evidence, (iv) is received from a third party, provided
that such third party did not receive the information by any unauthorized
disclosure; or (v) is disclosed in compliance with an order of an administrative
or regulatory agency or court of competent jurisdiction. This obligation of
confidentiality will

Exh. E-3

commence on the Effective Date and continue until five (5) years after the
expiration or termination of this Agreement.

3.2  In the event that any party is requested or required (by oral question
or request for information or documents in any legal proceeding, interrogatory,
subpoena, civil investigative demand, or similar process) to disclose any
CONFIDENTIAL INFORMATION, that party will notify the other promptly of the
request or requirement so that the other party or parties may seek an
appropriate protective order. A party may disclose the CONFIDENTIAL INFORMATION
subject to order of an administrative or regulatory agency or court of competent
jurisdiction; provided, however, that such party shall use its best efforts to
obtain, at the request of the other party, a protective order or other assurance
that confidential treatment will be accorded to such portion of the CONFIDENTIAL
INFORMATION required to be disclosed.

3.3  For the purposes of this Article 3, a "party" is specifically deemed
to include any AFFILIATE thereof.

ARTICLE 4 - INTELLECTUAL PROPERTY

4.1  PATENT FILING, PROSECUTION AND MAINTENANCE. Subject to the other
terms of this Article 4, LICENSOR shall be solely responsible for preparing,
filing, prosecuting, obtaining and maintaining, at its sole cost, expense and
discretion, all PATENT RIGHTS in all countries. LICENSOR will keep LICENSEE
reasonably informed of the status of all actions it takes with respect to the
PATENT RIGHTS that are licensed to LICENSEE hereunder. LICENSOR shall also
provide written notice to LICENSEE prior to taking or failing to take any such
action that would reasonably be expected to affect the scope or validity of the
PATENT RIGHTS licensed to LICENSEE hereunder, such that LICENSEE has a
reasonable opportunity to review and provide comment. If LICENSOR determines in
its sole discretion not to undertake the filing of any patent application or
submission with respect to any of the PATENT RIGHTS licensed to LICENSEE
hereunder, then it shall give LICENSEE prompt written notice of same, at which
time LICENSEE may undertake such filing at its own expense, in LICENSOR's name.

ARTICLE 5 - INFRINGEMENT ACTIONS

Exh. E-4

5.1  NOTICE OF INFRINGEMENT. If, during the TERM, either party learns of
any actual, alleged or threatened infringement by a third party of any PATENT
RIGHTS, such party shall promptly notify the other party and shall provide such
other party with all available evidence of such infringement.

5.2  RIGHTS OF PARTIES. LICENSOR shall have the first right (but not the
obligation), at its own expense and with legal counsel of its own choice, to
bring suit (or take other appropriate legal action) against any actual, alleged
or threatened infringement of the PATENT RIGHTS. LICENSEE shall have the right,
at its own expense, to be represented in any such action by LICENSOR by counsel
of LICENSEE's own choice; PROVIDED, HOWEVER, that under no circumstances shall
the foregoing affect the right of LICENSOR to control the suit as described in
the first sentence of this Section 5.2. If LICENSOR does not file any action or
proceeding against any material infringement of the PATENT RIGHTS within the
FIELD within six (6) months after the later of (i) LICENSOR's notice to LICENSEE
under Section 5.1 above. (ii) LICENSEE's notice to LICENSOR under Section 5.1
above, or (iii) a written request from LICENSEE to take action with respect to
such infringement, then LICENSEE shall have the right (but not the obligation),
at its own expense, to bring suit (or take other appropriate legal action)
against such actual, alleged or threatened infringement, with legal counsel of
its own choice, but shall not be permitted to settle any such suit without the
prior consent of LICENSOR, which consent shall not be unreasonably withheld. Any
damages, monetary awards or other amounts recovered, whether by judgment or
settlement, pursuant to any suit, proceeding or other legal action taken under
this Section 5.2, shall applied as follows:

(a)  first, to reimburse the parties for their respective costs and
expenses (including reasonable attorneys' fees and costs) incurred in
prosecuting such enforcement action;

(b)  second, to LICENSEE in reimbursement for any lost sales
associated with LICENSED PRODUCTS directly attributable to such
infringement; and

(c)  third, any amounts remaining shall be allocated as follows: (a)
if LICENSOR is the party bringing such suit or proceeding or taking such
other legal action, one hundred percent (100%) to LICENSOR, (b) if LICENSEE
is the party bringing such suit or

Exh. E-5

proceeding or taking such other legal action, one hundred percent (100%) to
LICENSEE, and (c) if the suit is brought jointly by the parties, fifty percent
(50%) to each party.

If a party brings any such action or proceeding hereunder, the other party
agrees to be joined as party plaintiff if necessary to prosecute such action or
proceeding, and to give the party bringing such action or proceeding reasonable
assistance and authority to file and prosecute the suit; PROVIDED, HOWEVER, that
neither party shall be required to transfer any right, title or interest in or
to any property to the other party or any third party to confer standing on a
party hereunder.

ARTICLE 6 - INDEMNIFICATION / LIMITATION OF LIABILITY

6.1  LICENSEE shall at all times during the term of this Agreement and
thereafter indemnify, defend and hold LICENSOR, its trustees, officers,
employees and affiliates harmless against all claims and expenses, including
legal expenses and reasonable attorneys' fees, arising out of the death of or
injury to any person or persons or out of any damage to property or the
environment, and against any other claim, proceeding, demand, expense and
liability of any kind whatsoever resulting from the clinical investigation,
production, manufacture, sale, use, lease, consumption or advertisement of any
LICENSED PRODUCT by LICENSEE or any AFFILIATE of LICENSEE or any SUBLICENSEE,
unless directly caused by the gross negligence or willful misconduct of
LICENSOR.

6.2  EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, LICENSOR
MAKES NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESS
OR IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY, FITNESS
FOR A PARTICULAR PURPOSE, AND VALIDITY OF PATENT RIGHTS CLAIMS, ISSUED OR
PENDING. NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED AS A REPRESENTATION OR
WARRANTY GIVEN BY LICENSOR THAT THE PRACTICE BY LICENSEE OF THE LICENSE
GRANTED HEREUNDER SHALL NOT INFRINGE THE PATENT RIGHTS OF ANY THIRD PARTY.

Exh. E-6

ARTICLE 7 - TERMINATION

7.1  TERM. Unless earlier terminated as provided herein, the term of this
Agreement shall commence on the Effective Date and shall continue until the last
to expire patent or patent claim under the PATENT RIGHTS (the "TERM").

7.2  LICENSOR shall have the right to terminate this Agreement if LICENSEE
shall default in the performance of any of the obligations herein contained and
such default has not been cured within ninety (90) days after receiving written
notice thereof from LICENSOR.

7.3  In the event this Agreement is terminated for any reason, then upon
the request by a disclosing party, the receiving party will promptly return or
certify the destruction of all CONFIDENTIAL INFORMATION it received from the
disclosing party along with all copies made by the receiving party. Upon such a
request, the disclosing party's CONFIDENTIAL INFORMATION contained on data
storage media shall be certified as being deleted there from.

7.4  Upon termination of this Agreement, neither party shall be released
from any obligation that matured prior to the effective date of such
termination; provided, LICENSEE and any SUBLICENSEE may, for a period of six (6)
months or such longer time period (if any) on which the parties mutually agree
in writing, sell all LICENSED PRODUCTS which LICENSEE (or any SUBLICENSEE)
produced prior to the effective date of such termination. Without limitation of
the foregoing, the provisions of Articles 3, and 6 shall survive termination of
this Agreement.

ARTICLE 8 - NOTICES

8.1  Any notice or communication pursuant to this Agreement shall be
sufficiently made or given if sent by certified or registered mail, postage
prepaid, or by overnight courier, with proof of delivery by receipt, addressed
to the address below or as either party shall designate by written notice to the
other party.

In the case of LICENSOR:

SYNTA PHARMACEUTICALS, INC.
45 Hartwell Avenue
Lexington, Massachusetts 02421
Attention: President

Exh. E-7

In the case of LICENSEE:

Peregrine Financial Corporation
Attn: Mr. Todd Klibansky
84 State Street, Suite 900
Boston, Massachusetts 02109

ARTICLE 9 - MISCELLANEOUS

9.1  This Agreement is not assignable without the prior written consent of
LICENSOR and any attempt to do so shall be null and void; however, LICENSEE may,
upon prior written notice to LICENSOR, assign this Agreement and all its rights
and obligations hereunder to a third party, including Drinks That Work, Inc.,
solely in connection with the LICENSEE'S winding-down and liquidation of its
business. This Agreement may be assigned by LICENSOR provided that any successor
in interest assumes all rights and obligations of LICENSOR hereunder.

9.2  This Agreement may not be amended or modified except by the execution
of a written instrument signed by the parties hereto.

9.3  Nothing in this Agreement shall be construed to deem either party as
agent for the other.

9.4  This Agreement shall be governed, interpreted and construed in
accordance with the laws of the Commonwealth of Massachusetts, irrespective of
choice of laws provisions. Both parties shall use reasonable efforts to resolve
by mutual agreement any disputes, controversies, claims or difference which may
arise from, under, out of or in connection with this Agreement. If such
disputes, controversies, claims or differences cannot be settled between the
parties, any dispute resolution proceeding shall take place in the United
States, but if either party files a claim in a state or federal court, such
claim shall be filed in the state or federal courts in the Commonwealth of
Massachusetts. Nothing herein shall alter or affect any other rights either
party may have to redress any breach or act of the other party.

9.5  Nothing contained in this Agreement shall be construed as conferring
upon either party any right to use in advertising, publicity or other
promotional activities any name, trade name, trademark, or other designation of
the other party, including any contraction, abbreviation, or simulation of any
of the foregoing. Without the express written approval of the other party,

Exh. E-8

neither party shall use any designation of the other party in any promotional
activity associated with this Agreement, including without limitation, any
LICENSED PRODUCT. Neither party shall issue any press release or make any public
statement in regard to this Agreement without the prior written approval of the
other party.

9.6  If one or more of the provisions of this Agreement shall be held
invalid, illegal or unenforceable, the remaining provisions shall not in any way
be affected or impaired thereby. In the event any provision is held illegal or
unenforceable, the parties shall use reasonable efforts to substitute a valid,
legal and enforceable provision which, insofar as is practical, implements
purposes of the provision held invalid, illegal or unenforceable.

9.7  Failure at any time to require performance of any of the provisions
herein shall not waive or diminish a party's right thereafter to demand
compliance therewith or with any other provision. Waiver of any default shall
not waive any other default. A party shall not be deemed to have waived any
rights hereunder unless such waiver is in writing and signed by a duly
authorized officer of the party making such waiver.

9.8  The parties acknowledge that this Agreement sets forth the entire
understanding and intentions of the parties hereto as to the subject matter
hereof and supersedes all previous understandings between the parties, written
or oral, regarding such subject matter.

[The remainder of this page left intentionally blank.]

Exh. E-9

IN WITNESS WHEREOF, the parties have set their hands and seals as of the
date set forth on the first page hereof.

For LICENSOR                     For LICENSEE

SYNTA PHARMACEUTICALS, INC.      KAVA PHARMACEUTICALS, INC.

------------------------       -----------------------

Name:                          Name:

Title:                         Title:

Exh. E-10

EXHIBIT A

COUNTRY                  SERIAL NUMBERS                     FILING DETAILS
----------------------   --------------------------------   -------------------------

United States            Patent Appln. No. 09/584,220       Filed May 31, 2000
United States            Patent Appln. No. 09/962,514       Filed September 24, 2001
United States            Patent Appln. No. 10/396,117       Filed March 25, 2003
International PCT        Patent      Appln.       No.       Filed June 1, 2000
Taiwan                   Patent Appln. No. 89112231         Filed June 21, 2000
United States            Patent Appln. No. 09/853,304       Filed May 11, 2001
United States            Patent Appln. No. 10/010,201       Filed November 30, 2001
United States            Patent Appln. No. 60/311,437       Filed August 10, 2001
United States            Patent Appln. No. 10/214,624       Filed August 8, 2002
PCT                      Patent      Appln.       No.       Filed August 8, 2002
Taiwan                   Patent Appln. No. 91117959         Filed August 9, 2002
United States            Patent Appln. No. 09/923,462       Filed August 6, 2001
PCT                      Patent      Appln.       No.       Filed August 5, 2002
Taiwan                   Patent Appln. No. 91117646         Filed August 6, 2002
United States            Patent Appln. No. 60/328,986       Filed October 12, 2001
United States            Patent Appln. No. 10/269,722       Filed October 11, 2002
PCT                      Patent      Appln.       No.       Filed October 15, 2002
United States            Patent Appln. No. 60/351,167       Filed January 22, 2002
United States            Patent Appln. No. 10/349,194       Filed January 22, 2003
PCT                      Patent      Appln        No.       Filed May 13, 2002
Taiwan                   Patent Appln No. 91109804          Filed May 10, 2002
United States            Patent Appln. No. 60/359,864       Filed February 27, 2002
United States            Patent Appln. No. 10/376,800       Filed February 27, 2003
PCT                      Patent      Appln.       No.       Filed February 27, 2003

TRA 1862567v2

Exh. E-11

Exhibit 10.19

MASTER LEASE AGREEMENT
(QUASI)
DATED AS OF NOVEMBER 10, 2004 ("AGREEMENT")

THIS AGREEMENT is between General Electric Capital Corporation (together with
its successors and assigns, if any, "Lessor") and Synta Pharmaceuticals Corp.
("Lessee"). Lessor has an office at 83 WOOSTER HEIGHTS ROAD, DANBURY, CT 06810.
Lessee is a corporation organized and existing under the laws of state of
Delaware. Lessee's mailing address and chief place of business is 45 HARTWELL
AVENUE, LEXINGTON, MA 02421. This Agreement contains the general terms that
apply to the leasing of Equipment from Lessor to Lessee. Additional terms that
apply the Equipment (term, rent, options, etc.) shall be contained on a schedule
("Schedule").

1.   LEASING:

(a)  Lessor agrees to lease to Lessee, and Lessee agrees to lease from Lessor,
the equipment and other property ("EQUIPMENT") described in any Schedule signed
by both parties.

(b)  Lessor shall purchase Equipment from the manufacturer or supplier
("SUPPLIER") and lease it to Lessee if on or before the Last Delivery Date
(specified in the Schedule) Lessor receives (i) a Schedule for the Equipment,
(ii) evidence of insurance which complies with the requirements of Section 8,
and (iii) such other documents as Lessor may reasonably request. Each of the
documents required above must be in form and substance satisfactory to Lessor.
Lessor hereby appoints Lessee its agent for inspection and acceptance of the
Equipment from the Supplier. Once the Schedule is signed, the Lessee may not
cancel the Schedule.

2.   TERM, RENT AND PAYMENT:

(a)  The rent payable for the Equipment and Lessee's right to use the Equipment
shall begin on the earlier of (i) the date when the Lessee signs the Schedule
and accepts the Equipment or (ii) when Lessee has accepted the Equipment under a
Certificate of Acceptance ("LEASE COMMENCEMENT DATE"). The term of this
Agreement shall be the period specified in the applicable Schedule. The word
"term" shall include all basic and any renewal terms.

(b)  Lessee shall pay rent to Lessor at its address stated above, except as
otherwise directed by Lessor. Rent payments shall be in the amount set forth in,
and due as stated in the applicable Schedule. If any Advance Rent (as stated in
the Schedule) is payable, it shall be due when the Lessee signs the Schedule.
Advance Rent shall be applied to the first rent payment. In no event shall any
Advance Rent or any other rent payments be refunded to Lessee. If rent is not
paid within ten (10) days of its due date, Lessee agrees to pay a late charge of
five cents ($.05) per dollar on, and in addition to, the amount of such rent but
not exceeding the lawful maximum, if any.

3.   TAXES:

(a)  If permitted by law, Lessee shall report and pay promptly all taxes, fees
and assessments due, imposed, assessed or levied against Lessor or Lessee on
account of any Equipment (or purchase, ownership, delivery, leasing, possession,
use or operation thereof) by any

governmental entity or taxing authority during or related to the term of this
Agreement, including, without limitation, all license and registration fees, and
all sales, use, personal property, excise, franchise, stamp or other taxes,
imposts, duties and charges, together with any penalties, fines or interest
thereon(collectively "TAXES"). Lessee shall have no liability for Taxes imposed
by the United States of America or any State or political subdivision thereof or
any foreign jurisdiction which are on or measured by the net income of Lessor,
and any such Taxes are excluded from "Taxes" as such term is used throughout
this Agreement. Lessee shall promptly reimburse Lessor (on an after tax basis)
for any Taxes charged to or assessed against Lessor. Lessee shall send Lessor a
copy of each report or return and evidence of Lessees payment of Taxes upon
request.

(b)  Lessee's obligations, and Lessor's rights and privileges, contained in this
Section 3 shall survive the expiration or other termination of this Agreement.

4.   REPORTS:

(a)  If any tax or other lien shall attach to any Equipment, Lessee will notify
Lessor in writing, within ten (10) days after Lessee becomes aware of the tax or
lien. The notice shall include the full particulars of the tax or lien and the
location of such Equipment on the date of the notice.

(b)  Lessee will deliver to Lessor financial statements as follows: If Lessee is
a privately held company, then Lessee agrees to provide quarterly financial
statements, certified by Lessee's president or chief financial officer including
a balance sheet, statement of operations and cash flow statement within 30 days
of each quarter end and its complete audited annual financial statements,
certified by a reorganized firm of certified public accountants, within 120 days
of fiscal year end or at such time as Lessee's Board of Directors receives the
audit. If Lessee is a publicly held company, then Lessee agrees to provide
quarterly unaudited statements and annual audited statements, certified by a
recognized firm of certified public accountants, within 10 days after the
statements are provided to the Securities and Exchange Commission ("SEC") or
make such statements available on its website. All such statements are to be
prepared using generally accepted accounting principles ("GAAP") and, if Lessee
is a publicly held company, are to be in compliance with SEC requirements.

(c)  Lessor may inspect any Equipment during normal business hours after giving
Lessee reasonable prior notice.

(d)  Lessee will keep the Equipment at the Equipment Location (specified in the
applicable Schedule) and will give Lessor prior written notice of any relocation
of Equipment. If Lessor requests, Lessee will promptly notify Lessor in writing
of the location of any Equipment.

(e)  If any Equipment is lost or damaged (where the estimated repair costs would
exceed the greater of ten percent (10%) of the original Equipment cost or ten
thousand and 00/100 dollars ($10,000), or is otherwise involved in an accident
causing personal injury or property damage, Lessee will promptly and fully
report the event to Lessor in writing.

(f)  If Lessor requests, Lessee will furnish a certificate of an authorized
officer of Lessee stating that he has reviewed the activities of Lessees and
that, to the best of his knowledge, there

2

exists no default or event which with notice or lapse of time (or both) would
become such a default within thirty (30) days after any request by Lessor.

(g)  Lessee will promptly notify Lessor of any change in Lessee's state of
incorporation or organization.

5.   DELIVERY, USE AND OPERATION:

(a)  All Equipment shall be shipped directly from the Supplier to Lessee.

(b)  Lessee agrees that the Equipment will be used by Lessee solely in the
conduct of its business and in a manner complying with all applicable laws,
regulations and insurance policies.

(c)  Lessee will not move any equipment from its leased or owned locations
("LOCATION"), except for purposes of repair, refurbishment or maintenance, and
Lessee will not move any piece of Equipment with an original equipment value of
$25,000 or more from one Location to another Location without written
notification to Lessor.

(d)  Lessee will keep the Equipment free and clear of all liens and encumbrances
other than those which result from acts of Lessor.

(e)  Lessor shall not disturb Lessees quiet enjoyment of the Equipment during
the term of the Agreement unless a default has occurred and is continuing under
this Agreement.

6.   MAINTENANCE:

(a)  Lessee will, at its sole expense, maintain each unit of Equipment in good
operating order and repair, normal wear and tear excepted. The Lessee shall also
maintain the Equipment in accordance with manufacturers recommendations. Lessee
shall make all alterations or modifications required to comply with any
applicable law, rule or regulation during the term of this Agreement. If Lessor
requests, Lessee shall affix plates, tags or other identifying labels showing
ownership thereof by Lessee and Lessor's security interest therein. The tags or
labels shall be placed in a prominent position on each unit of Equipment.

(b)  Lessee will not attach or install anything on the Equipment that will
impair the originally intended function or use of such Equipment without the
prior written consent of Lessor, which consent may not be withheld, conditioned
or delayed unreasonably. All additions, parts, supplies, accessories, and
equipment ("ADDITIONS") furnished or attached to any Equipment that are not
readily removable shall become subject to the lien or Lessor. All Additions
shall be made only in compliance with applicable law. Lessee will not attach or
install any Equipment to or in any other personal or real property without the
prior written consent of Lessor, which consent may not be withheld, conditioned
or delayed unreasonably.

7.   STIPULATED LOSS VALUE: If for any reason any unit of Equipment becomes
lost, stolen, destroyed, irreparably damages or unusable ("CASUALTY
OCCURRENCES") Lessee shall promptly and fully notify Lessor in writing. Lessee
shall pay Lessor the sum of (i) the Stipulated Loss Value (see Schedule) of the
affected unit determined as of the rent payment date prior to the casualty
Occurrence; and (ii) all rent and other amounts which are then due under this

3

Agreement on the Payment Date (defined below) for the affected unit. The Payment
Date shall be the next rent payment after the Casualty Occurrence. Upon payment
of all sums due hereunder, the term of this lease as to such unit shall
terminate.

8.   INSURANCE:

(a)  Lessee shall bear the entire risk of any loss, theft, damage to, or
destruction of, any unit of Equipment from any cause whatsoever from the time
the Equipment is delivered to Lessee and installed (if applicable).

(b)  Lessee agrees, at its own expense, to keep all Equipment insured for such
amounts and against such hazards as Lessor may reasonably require. All such
policies shall be with companies, and on terms, reasonably satisfactory to
Lessor. The insurance shall include coverage for damage to or loss of Equipment,
liability for personal injuries, death or property damage. Lessor shall be named
as additional insured with a loss payable clause in favor of Lessor, as its
interest may appear, irrespective of any breach of warranty or other act or
omission of Lessee. The insurance shall provide for liability coverage in any
amount equal to at least ONE MILLION U.S. DOLLARS ($1,000,000.00) total
liability per occurrence, unless otherwise stated in any Schedule. The
casualty/property damage coverage shall be in an amount equal to the higher of
the Stipulated Loss Value or the full replacement cost of the Equipment. No
insurance shall be subject to any co-insurance clause. The insurance policies
shall provide that the insurance may not be altered or canceled by the insurer
until after thirty (30) days written notice to Lessor. Lessee agrees to deliver
to Lessor evidence of insurance reasonable satisfactory to Lessor.

(c)  Lessee hereby appoints to Lessor as Lessee's attorney-in-fact to make proof
of loss and claim for insurance, and to make adjustments with insurers and to
receive payment of an execute or endorse all documents, checks or drafts in
connection with insurance payments. Lessor shall not act a Lessees
attorney-in-fact unless Lessee is in default. Lessee shall pay any reasonable
expenses if Lessor in adjusting or collecting insurance. Lessee will not make
adjustments with insurers except with respect to claims for damage to any unit
of Equipment where the repair costs are less than the lesser of ten percent
(10%) of the original Equipment cost or ten thousand and 00/100 dollars
($10,000). Lessor may, at its option, apply proceeds of insurance, in whole or
in part, to (i) repair or replace Equipment or any portion thereof, or (ii)
satisfy any obligation of Lessee to Lessor under this Agreement.

9.   RETURN OF EQUIPMENT:

(a)  At the expiration or termination of this Agreement or any Schedule, Lessee
shall perform any testing and repairs required to place the units of Equipment
in the same condition and appearance as when received by Lessee (reasonable wear
and tear excepted) and in good working order for the original intended purpose
of the Equipment. If required the units of Equipment shall be deinstalled,
disassembled and crated by an authorized manufacturer's representative or such
other service person as is reasonably satisfactory to Lessor. Lessee shall
remove installed markings that are not necessary for the operation, maintenance
or repair of the Equipment. All Equipment will be cleaned, cosmetically
acceptable, and in such condition as to be immediately installed into use in a
similar environment for which the Equipment was

4

originally intended to be used. All waste material and fluid must be removed
from the Equipment and disposed of in accordance with then current waste
disposal laws. Lessee shall return the units of Equipment to a location within
the continental United States as Lessor shall direct. Lessee shall obtain and
pay for a policy of transit insurance for the redelivery period in an amount
equal to the replacement value of the Equipment. The transit insurance must name
Lessor as the loss payee. The Lessee shall pay for all costs to comply with this
section (a).

(b)  Until Lessee has fully complied with the requirements of Section 9(a)
above, Lessee's rent payment obligation and all other obligations under this
Agreement shall continue from month to month notwithstanding any expiration or
termination of the lease term. Lessor may not terminate the Lessee's right to
use Equipment, unless Lessee is in default.

(c)  Lessee shall provide to Lessor a detailed inventory of all components of
the Equipment including model and serial numbers. Lessee shall also provide an
up-to-date copy of all other documentation pertaining to the Equipment. All
service manuals, blueprints, process flow diagrams, operating manuals, inventory
and maintenance records shall be given to Lessor at least ninety (90) days and
not more than one hundred twenty (120) days prior to lease termination.

(d)  Lessee shall make the Equipment available for on-site operational
inspections by potential purchasers at least one hundred twenty (120) days prior
to and continuing up to lease termination. Lessor shall provide Lessee with
reasonable notice prior to any inspection. Lessee shall provide personnel, power
and other requirements necessary to demonstrate electrical, hydraulic and
mechanical systems for each item of Equipment.

10.  DEFAULT AND REMEDIES:

(a)  Lessor may in writing declare this Agreement in default if: (i) Lessee
breaches its obligation to pay rent or any other sum when due and fails to cure
the breach within ten (10) days; (ii) Lessee breaches any of its insurance
obligations under Section 9; (iii) Lessee breaches any of its other obligations
and fails to cure that breach within thirty (30) days after written notice from
Lessor; (iv) any representation or warranty made by Lessee in connection with
this Agreement shall be false or misleading in any material respect; (v) Lessee
or any guarantor or other obligor for the Lessee's obligations hereunder
("GUARANTOR") becomes insolvent or ceases to do business as a going concern;
(vi) any Equipment is illegally used; (vii) if Lessee or any Guarantor is a
natural person, any death or incompetency of Lessee or such Guarantor; (viii) a
petition is filed by or against Lessee or any Guarantor under any bankruptcy or
insolvency laws and in the event of an involuntary petition, the petition is not
dismissed, within forty-five (45) days of the filing date; (ix) Lessee default
under any other material obligation for (A) borrowed money, (B) the deferred
purchase price of property, or (C) payments due under the lease agreement; (x)
there is any dissolution, termination or existence, merger, consolidation or
change in controlling ownership or Lessee or any Guarantor, but not to include
an initial public offering, or any other stock offering, preferred to common, in
which the primary purpose is to raise cash equity; or (xi) there is a material
adverse change in the Lessee's financial condition. The default declaration
shall apply to all Schedules unless specifically excepted by Lessor.

(b)  After a default, at the request of Lessor, Lessee shall comply with the
provisions of Section 9(a) and the following provisions shall apply also. Lessee
hereby authorizes Lessor to

5

peacefully enter any premises where any Equipment may be and take possession of
the Equipment. Lessee shall immediately pay to Lessor without further demand as
liquidated damages for loss of a bargain and not as a penalty, the Stipulated
Loss Value of the Equipment (calculated as of the rent payment date prior to the
declaration of default), and all rents and other sums then due under this
Agreement and all Schedules. Lessor may terminate this Agreement as to any or
all of the Equipment. A termination shall occur only upon written notice by
Lessor to Lessee and only as to the units of Equipment specified in any such
notice. Lessor may, but shall not be required to, sell Equipment at private or
public sale, in bulk or in parcels, with or without notice, and without having
the Equipment present at the place of sale. Lessor may also, but shall not be
required to, lease, otherwise dispose of or keep idle all or part of the
Equipment. Lessor may use Lessee's premises for a reasonable period of time for
any or all of the purposes stated above without liability for rent, costs,
damages or otherwise. The proceeds of sale, lease or other disposition, if any,
shall be applied in the following order of priorities: (i) to pay all of
Lessor's costs, charges and expenses incurred in taking, removing, holding,
repairing and selling, leasing or otherwise disposing of Equipment; then (ii) to
the extent not previously paid by Lessee, to pay Lessor all sums due from Lessee
under this Agreement; then (iii) to reimburse to Lessee any sums previously paid
by Lessee as liquidated damages; and then (iv) to Lessee, if there exists any
surplus. Lessee shall immediately pay any deficiency in (i) and (ii) above.

(c)  The foregoing remedies are cumulative, and any or all thereof may be
exercised instead of or in addition to each other or any remedies at law, in
equity, or under statute. Lessee waives notice of sale or other disposition (and
the time and place thereof), and the manner and place of any advertising. Lessee
shall pay Lessor's actual attorney's fees incurred in connection with the
enforcement, assertion, defense or preservation of Lessor's rights and remedies
under this Agreement, or if prohibited by law, such lesser sum as may be
permitted. Waiver of any default shall not be a waiver of any other or
subsequent default.

(d)  Any default under the terms of this or any other agreement between Lessor
and Lessee may be declared by Lessor a default under this and any such other
agreement.

11.  ASSIGNMENT: LESSEE SHALL NOT SELL, TRANSFER, ASSIGN, ENCUMBER OR SUBLET ANY
EQUIPMENT OR THE INTEREST OF LESSEE IN THE EQUIPMENT WITHOUT THE PRIOR WRITTEN
CONSENT OF LESSOR. Lessor may, without the consent of Lessee, assign this
Agreement, any Schedule or the right to enter into a Schedule. Lessee agrees
that is Lessee receives written notice of an assignment from Lessor, Lessee will
pay all rent and all other amounts payable under any assigned Schedule to such
assignee or as instructed by Lessor. Lessee also agrees to confirm in writing
receipt of the notice of assignment as may be reasonably requested by assignee.
Lessee hereby waives and agrees not to assert against any such assignee any
defense, set-off, recoupment claim or counterclaim which Lessee has or may at
any time have against Lessor for any reason whatsoever.

12.  NET LEASE: Lessee is unconditionally obligated to pay all rent and other
amounts due for the entire lease term no matter what happens, even if the
Equipment is damaged or destroyed, if it is defective or if Lessee no longer can
use it. Lessee is not entitled to reduce or set-off against rent or other
amounts due to Lessor or to anyone to whom Lessor assigns this Agreement or any
Schedule whether Lessees claim arises out of this Agreement, any Schedule, any

6

statement by Lessor, Lessor's liability of any manufacturers liability, strict
liability, negligence or otherwise.

13.  INDEMNIFICATION:

(a)  Lessee hereby agrees to indemnify Lessor, its agents, employees, successors
and assigns (on an after tax basis) from and against any and all losses,
damages, penalties, injuries, claims, actions and suits, including legal
expenses, of whatsoever kind and nature arising out of or relating to the
Equipment or this Agreement, except to the extent the losses, damages,
penalties, injuries, claims, actions, suits or expenses result from Lessor's
gross negligence or willful misconduct ("CLAIMS"). This indemnity shall include,
but is not limited to, Lessor's strict liability in tort and Claims, arising out
of (i) the selection, manufacture, purchase, acceptance or rejection of
Equipment, the ownership of Equipment during the term of this Agreement, and the
delivery, lease, possession, maintenance, uses, condition, return or operation
of Equipment (including, without limitation, latent and other defects, whether
or not discoverable by Lessor or Lessee and any claim for patent, trademark or
copyright infringement or environmental damage) or (ii) the condition of
Equipment sold or disposed of after use by Lessee, any sublessee or employees of
Lessee. Lessee shall, upon request, defend any actions based on, or arising out
of, any of the foregoing.

(b)  All of Lessor's rights, privileges and indemnities contained in this
Section 13 shall survive the expiration or other termination of this Agreement.
The rights, privileges and indemnities contained herein are expressly made for
the benefit of, and shall be enforceable by Lessor, its successors and assigns.

14.  DISCLAIMER: LESSEE ACKNOWLEDGES THAT IT HAS SELECTED THE EQUIPMENT WITHOUT
ANY ASSISTANCE FROM LESSOR, ITS AGENTS OR EMPLOYEES. LESSOR DOES NOT MAKE, HAS
NOT MADE, NOR SHALL BE DEEMED TO MAKE OR HAVE MADE, ANY WARRANTY OR
REPRESENTATION, EITHER EXPRESS OR IMPLIED, WRITTEN OR ORAL, WITH RESPECT TO THE
EQUIPMENT LEASED UNDER THIS AGREEMENT OR ANY COMPONENT THEREOF, INCLUDING,
WITHOUT LIMITATION, ANY WARRANTY AS TO DESIGN, COMPLIANCE WITH SPECIFICATIONS,
QUALITY OF MATERIALS OR WORKMANSHIP, MERCHANTABILITY, FITNESS FOR ANY PURPOSE,
USE OR OPERATION, SAFETY, PATENT, TRADEMARK OR COPYRIGHT INFRINGEMENT, OR TITLE.
All such risks, as between Lessor and Lessee, are to be borne by Lessee. Without
limiting the foregoing, Lessor shall have no responsibility or liability to
Lessee or any other person with respect to any of the following: (i) any
liability, loss or damage caused or alleged to be caused directly or indirectly
by any Equipment, any inadequacy thereof, any deficiency or defect (latent or
otherwise) of the Equipment, or any other circumstance in connection with the
Equipment; (ii) the use, operation or performance of any Equipment or any risks
relating to it, (iii) any interruption of service, loss of business or
anticipated profits or consequential damages; or (iv) the delivery, operation,
servicing, maintenance, repair, improvement or replacement of any Equipment. If,
and so long as, no default exists under this Agreement, Lessee shall be, and
hereby is, authorized during the term of this Agreement to assert and enforce,
whatever claims and rights Lessor may have against any Supplier of the Equipment
at Lessee's sole cost and

7

expense, in the name of and for the account of Lessor and/or Lessee, as their
interests may appear.

15.  REPRESENTATIONS AND WARRANTIES OF LESSEE: Lessee makes each of the
following representations and warranties to Lessor on the date hereof and on the
date of execution of each Schedule:

(a)  Lessee has adequate power and capacity to enter into, and perform under,
this Agreement and all related documents (together, the "DOCUMENTS"). Lessee is
duly qualified to do business wherever necessary to carry on its present
business and operations, including the jurisdiction(s) where the Equipment is or
is to be located.

(b)  The Documents have been duly authorized, executed and delivered by Lessee
and constitute valid, legal and binding agreements, enforceable in accordance
with their terms, except to the extent that the enforcement of remedies may be
limited under applicable bankruptcy and insolvency laws.

(c)  No approval, consent or withholding of objections is required from any
governmental authority or entity with respect to the entry into or performance
by Lessee of the Documents except such as have already been obtained.

(d)  The entry into and performance by Lessee of the Documents will not: (i)
violate any judgment, order, law or regulation applicable to Lessee or any
provision of Lessee's Certificate of Incorporation or bylaws; or (ii) result in
any breach of, constitute a default under or result in the creation of any lien,
charge, security interest or other encumbrance upon any Equipment pursuant to
any indenture, mortgage, deed of trust, bank loan or credit agreement or other
instrument (other than this Agreement) to which Lessee is a party,

(e)  There are no suits or proceedings pending or threatened in court or before
any commission, board or other administrative agency against or affecting
Lessee, which if decided against Lessee will have a material adverse effect on
the ability of Lessee to fulfill its obligations under this Agreement.

(f)  The Equipment accepted under any Certificate of Acceptance is and will
remain tangible personal property.

(g)  Each financial statement delivered to Lessor has been prepared in
accordance with generally accepted accounting principles consistently applied.
Since the date of the most recent financial statement, there has been no
material adverse change.

(h)  Lessee's exact legal name is as set forth in the first sentence of this
Agreement and Lessee is and will be at all times validly existing and in good
standing under the laws of the State of its incorporation (specified in the
first sentence of this Agreement).

(i)  The Equipment will at all times be used for commercial or business
purposes.

(j)  Lessee is and will remain in full compliance with all laws and regulations
applicable to it including, without limitation,' (i) ensuring that no person who
owns a controlling interest in or

8

otherwise controls Lessee is or shall be (Y) listed on the Specially Designated
Nationals and Blocked Person List maintained by the Office of Foreign Assets
Control ("OFAC"), Department of the Treasury, and/or any other similar lists
maintained by OFAC pursuant to any authorizing statute, Executive Order or
regulation or (Z) a person designated under Section 1(b), (c) or (d) of
Executive Order No. 13224 (September 23, 2001), any related enabling legislation
or any other similar Executive Orders, and (ii) compliance with all applicable
Bank Secrecy Act ("BSA") laws, regulations and government guidance on BSA
compliance and on the prevention and detection of money laundering violations.

16.  OWNERSHIP FOR TAX PURPOSES, GRANT OF SECURITY INTEREST; USURY SAVINGS:

(a)  For income tax purposes, the parties hereto agree that it is their mutual
intention that Lessee shall be considered the owner of the Equipment.
Accordingly, Lessor agrees (i) to treat Lessee as the owner of the Equipment on
Its federal income tax return, (ii) not to take actions or positions
inconsistent with such treatment on or with respect to its federal income tax
return, and (iii) not to claim any tax benefits available to an owner of the
Equipment on or with respect to its federal income tax return. The foregoing
undertakings by Lessor shall not be violated by Lessor's taking a tax position
inconsistent with the foregoing sentence to the extent such a position is
required by law or is taken through inadvertence so long as such inadvertent tax
position is reversed by Lessor promptly upon its discovery, Lessor shall in no
event be liable to Lessee if Lessee fails to secure any of the tax benefits
available to the owner of the Equipment.

(b)  Lessee hereby grants to Lessor a first security interest in the Equipment,
together with all additions, attachments, accessions, accessories and accessions
thereto whether or not furnished by the Supplier of the Equipment and any and
all substitutions, replacements or exchanges therefor, and any and all insurance
and/or other proceeds of the property in and against which a security interest
is granted hereunder. This security interest is given to secure the payment and
performance of all debts, obligations and liabilities of any kind whatsoever of
Lessee to Lessor, now existing or arising in the future under this Agreement or
any Schedules attached hereto, and any renewals, extensions and modifications of
such debts, obligations and liabilities.

(c)  It is the intention of the parties hereto to comply with any applicable
usury laws to the extent that any Schedule is determined to be subject to such
laws; accordingly, it is agreed that, notwithstanding any provision to the
contrary in any Schedule or this Agreement, in no event shall any Schedule
require the payment or permit the collection of interest in excess of the
maximum amount permitted by applicable law. If any such excess interest is
contracted for, charged or received under any Schedule or this Agreement, or in
the event that all of the principal balance shall be prepaid, so that under any
of such circumstances the amount of interest contracted for, charged or received
under any Schedule or this Agreement shall exceed the maximum amount of interest
permitted by applicable law, then in such event (i) the provisions of this
paragraph shall govern and control, (ii) neither Lessee nor any other person or
entity now or hereafter liable for the payment hereof shall be obligated to pay
the amount of such interest to the extent that it is in excess of the maximum
amount of interest permitted by applicable law, (iii) any such excess which may
have been collected shall be either applied as a credit against the then unpaid
principal balance or refunded to Lessee, at the option of' the Lessor, and (iv)
the effective rate of interest shall be automatically reduced to the maximum
lawful contract rate

9

allowed under applicable law as now or hereafter construed by the courts having
jurisdiction thereof. It is further agreed that without limitation of the
foregoing, all calculations of the rate of interest contracted for, charged or
received under any Schedule or this Agreement which are made for the purpose of
determining whether such rate exceeds the maximum lawful contract rate, shall be
made, to the extent permitted by applicable law, by amortizing, prorating,
allocating and spreading in equal parts during the period of the full stated
term of the indebtedness evidenced hereby, all interest at any time contracted
for, charged or received from Lessee or otherwise by Lessor in connection with
such indebtedness; provided, however, that if any applicable state law is
amended or the law of the United States of America preempts any applicable state
law, so that it becomes lawful for Lessor to receive a greater interest per
annum rate than is presently allowed, the Lessee agrees that, on the effective
date of such amendment or preemption, as the case may be, the lawful maximum
hereunder shall be increased to the maximum interest per annum rate allowed by
the amended state law or the law of the United States of America.

17.  EARLY TERMINATION:

(a)  On or after the First Termination Date (specified in the applicable
Schedule), Lessee may, so long as no default exists hereunder, terminate this
Agreement as to all (but not less than alt) of the Equipment on such Schedule as
of a rent payment date ("TERMINATION DATE"). Lessee must give Lessor at least
ninety (90) days prior written notice of the termination.

(b)  Lessee shall, and Lessor may, solicit cash bids for the Equipment on an AS
IS, WHERE IS BASIS without recourse to or warranty from Lessor, express or
implied ("AS IS BASIS"). Prior to the Termination Date, Lessee shall (i) certify
to Lessor any bids received by Lessee and (ii) pay to Lessor (A) the Termination
Value (calculated as of the rent due on the Termination Date) for the Equipment,
and (8) all rent and other sums due and unpaid as of the Termination Date.

(c)  If all amounts due hereunder have been paid on the Termination Date, Lessor
shall (i) sell the Equipment on an AS IS BASIS for cash to the highest bidder
and (ii) refund the proceeds of such sale (net of any related expenses) to
Lessee up to the amount of the Termination Value. If such sale is not
consummated, no termination shall occur and Lessor shall refund the Termination
Value (less any expenses incurred by Lessor) to Lessee.

(d)  Notwithstanding the foregoing, Lessor may elect by written notice, at any
time prior to the Termination Date, not to sell the Equipment. In that event, on
the Termination Date Lessee shall (i) return the Equipment (in accordance with
Section 9) and (ii) pay to Lessor all amounts required under Section 17(b) less
the amount of the highest bid certified by Lessee to Lessor.

18.  EARLY PURCHASE OPTION:

(a)  Lessee may purchase on an AS IS BASIS all (but not less than all) of the
Equipment on any Schedule on any Rent Payment Date after the First Termination
Date specified in the applicable Schedule but prior to the last Rent Payment
Date of such Schedule (the "EARLY PURCHASE DATE"), for a price equal to (i) the
Termination Value (calculated as of the Early Purchase Date) for the Equipment,
and (ii) all rent and other sums due and unpaid as of the Early

10

Purchase Date (the "EARLY OPTION PRICE"), plus all applicable sales taxes.
Lessee must notify Lessor of its intent to purchase the Equipment in writing at
least thirty (30) days, but not more than two hundred seventy (270) days, prior
to the Early Purchase Date. If Lessee is in default or if the Schedule or this
Agreement has already been terminated, Lessee may not purchase the Equipment.
(The purchase option granted by this subsection shall be referred to herein as
the "EARLY PURCHASE OPTION").

(b)  If Lessee exercises its Early Purchase Option, then on the Early Purchase
Date, Lessee shall pay to Lessor any rent and other sums due and unpaid on the
Early Purchase Date and Lessee shall pay the Early Option Price, plus all
applicable sales taxes, to Lessor in cash.

19.  END OF LEASE PURCHASE OPTION: Lessee may, at lease expiration, purchase all
(but not less than all) of the Equipment on any Schedule on an AS IS BASIS for
cash equal to the amount indicated on such Schedule (the "OPTION PAYMENT"), plus
all applicable sales taxes. The Option Payment, plus all applicable sales taxes,
shall be due and payable in immediately available funds on the expiration date
of such Schedule. Lessee must notify Lessor of its intent to purchase the
Equipment in writing at least one hundred eighty (180) days prior to the
expiration date of the Schedule. If Lessee is in default, or if the Schedule or
this Agreement has already been terminated, Lessee may not purchase the
Equipment.

20.  MISCELLANEOUS:

(a)  LESSEE AND LESSOR UNCONDITIONALLY WAIVE THEIR RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF THE
RELATED DOCUMENTS, ANY DEALINGS BETWEEN LESSEE AND LESSOR RELATING TO THE
SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS, AND/OR THE
RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN LESSEE AND LESSOR. THE SCOPE OF
THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY
BE FILED IN ANY COURT. THIS WAIVER IS IRREVOCABLE. THIS WAIVER MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING. THE WAIVER ALSO SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT,
ANY RELATED DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS
TRANSACTION OR ANY RELATED TRANSACTION. THIS AGREEMENT MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.

(b)  Any cancellation or termination by Lessor of this Agreement, any Schedule,
supplement or amendment hereto, or the lease of any Equipment hereunder shall
not release Lessee from any then outstanding obligations to Lessor hereunder.
All Equipment shall at all times remain personal property even though it may be
attached to real property. The Equipment shall not become part of any other
property by reason of any installation in, or attachment to, other real or
personal property.

(c)  Time is of the essence of this Agreement. Lessor's failure at any time to
require strict performance by Lessee of any of the provisions hereof shall not
waive or diminish Lessor's right at any other time to demand strict compliance
with this Agreement Lessee agrees, upon Lessor's

11

request, to execute, or otherwise authenticate, any document, record or
instrument necessary or expedient for filing, recording or perfecting the
interest of Lessor or to carry out the intent of this Agreement. In addition,
Lessee hereby authorizes Lessor to file a financing statement and amendments
thereto describing the Equipment described in any and all Schedules now and
hereafter executed pursuant hereto and adding any other collateral described
therein and containing any other information required by the applicable Uniform
Commercial Code. Lessee irrevocably grants to Lessor the power to sign Lessee's
name and generally to act on behalf of Lessee to execute and file financing
statements and other documents pertaining to any or all of the Equipment. Lessee
hereby ratifies its prior authorization for Lessor to file financing statements
and amendments thereto describing the Equipment and containing any other
information required by any applicable law (including without limitation the
Uniform Commercial Code) if filed prior to the date hereof. All notices required
to be given hereunder shall be deemed adequately given if sent by registered or
certified mail to the addressee at its address stated herein, or at such other
place as such addressee may have specified in writing. This Agreement and any
Schedule and Annexes thereto constitute the entire agreement of the parties with
respect to the subject matter hereof. NO VARIATION OR MODIFICATION OF THIS
AGREEMENT OR ANY WAIVER OF ANY OF ITS PROVISIONS OR CONDITIONS, SHALL BE VALID
UNLESS IN WRITING AND SIGNED BY AN AUTHORIZED REPRESENTATIVE OF THE PARTIES
HERETO.

(d)  If Lessee does not comply with any provision of this Agreement, Lessor
shall have the right, but shall not be obligated, to effect such compliance, in
whole or in part. All reasonable amounts spent and obligations incurred or
assumed by Lessor in effecting such compliance shall constitute additional rent
due to Lessor. Lessee shall pay the additional rent within ten (10) days after
the date Lessor sends notice to Lessee requesting payment Lessor's effecting
such compliance shall not be a waiver of Lessee's default.

(e)  Any rent or other amount not paid to Lessor when due shall bear interest,
from the due date until paid, at the lesser of eighteen percent (18%) per annum
or the maximum rate allowed by law. Any provisions in this Agreement and any
Schedule that are in conflict with any statute, law or applicable rule shall be
deemed omitted, modified or altered to conform thereto. Notwithstanding anything
to the contrary contained in this Agreement or any Schedule, in no event shall
this Agreement or any Schedule require the payment or permit the collection of
amounts in excess of the maximum permitted by applicable law.

(f)  Lessee hereby irrevocably authorizes Lessor to adjust the Capitalized
Lessor's Cost up or down by no more than ten percent [10%] within each Schedule
to account for equipment change orders, equipment returns, invoicing errors, and
similar matters. Lessee acknowledges and agrees that the rent shall be adjusted
as a result of the change in the Capitalized Lessor's Cost. Lessor shall send
Lessee a written notice stating the final Capitalized Lessor's Cost, if it has
changed.

(g)  THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF CONNECTICUT (WITHOUT REGARD TO THE CONFLICT OF
LAWS PRINCIPLES OF SUCH STATE), INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY
AND PERFORMANCE, REGARDLESS OF THE LOCATION OF THE EQUIPMENT.

12

(h)  Any cancellation or termination by Lessor, pursuant to the provisions of
this Agreement, any Schedule, supplement or amendment hereto, of the lease of
any Equipment hereunder, shall not release Lessee from any then outstanding
obligations to Lessor hereunder.

(i)  To the extent that any Schedule would constitute chattel paper, as such
term is defined in the Uniform Commercial Code as in effect in any applicable
jurisdiction, no security interest therein may be created through the transfer
or possession of this Agreement in and of itself without the transfer or
possession of the original of a Schedule executed pursuant to this Agreement and
incorporating this Agreement by reference; and no security interest in this
Agreement and a Schedule may be created by the transfer or possession of any
counterpart of the Schedule other than the original thereof, which shall be
identified as the document marked Original and all other counterparts shall be
marked Duplicate.

(j)  Each party hereto agrees to keep confidential, the terms and provisions of
the Documents and the transactions contemplated hereby and thereby
(collectively, the "TRANSACTIONS"), except that each party may make disclosure
to the extent required by law and Lessee may make confidential disclosure to its
significant investors, potential business partners and/or potential investors.
Notwithstanding the foregoing, the obligations of confidentiality contained
herein, as they relate to the Transactions, shall not apply to the federal tax
structure or federal tax treatment of the Transactions, and each party hereto
(and any employee, representative, or agent of any party hereto) may disclose to
any and all persons, without limitation of any kind, the federal tax structure
and federal tax treatment of the Transactions. The preceding sentence is
intended to cause each Transaction to be treated as not having been offered
under conditions of confidentiality for purposes of Section I.6011-4(b)(3) (or
any successor provision) of the Treasury Regulations promulgated under Section
6011 of the Internal Revenue Code of 1986, as amended, and shall be construed in
a manner consistent with such purpose. In addition, each party hereto
acknowledges that it has no proprietary or exclusive rights to the federal tax
structure of the Transactions or any federal tax matter or federal tax idea
related to the Transactions.

IN WITNESS WHEREOF, Lessee and Lessor have caused this Agreement to be executed
by their duly authorized representatives as of the date first above written.

LESSOR:                                  LESSEE:

GENERAL ELECTRIC CAPITAL CORPORATION     SYNTA PHARMACEUTICALS CORP.

By:    /s/ JOHN EDEL                     By:    /s/ KEITH EHRLICH
-------------------------------          --------------------------------

Name:  John Edel                         Name:  Keith Ehrlich
-------------------------------          --------------------------------

Title: SVP                               Title: VP of Finance and Administration
-------------------------------          --------------------------------

13

EQUIPMENT CONCENTRATION RIDER

SYNTA PHARMACEUTICALS CORP. ("Customer"), on or before October 19, 2005, shall
cause the composition and mix of Equipment financed after November 10, 2004
under the Master Lease Agreement dated as of November 10, 2004 between Customer
and General Electric Capital Corporation to conform to and meet the following
concentration requirements (hereinafter "Concentration Requirements") for each
class of Equipment (hereinafter "Equipment Class") as identified and set forth
below. Customer herein represents and warrants that it shall maintain each such
Equipment Class and its respective Concentration Requirement from and after such
above referenced date and continuing thereafter to the end of the term:

EQUIPMENT CLASS                          CONCENTRATION REQUIREMENT
---------------                          -------------------------

Laboratory & scientific equipment:       Minimum of 60%

General Office equipment, Computers      Maximum of 15%
& similar:

Soft costs (leaseholds, software,        Maximum of 25%
& similar):

Accepted and Agreed:

SYNTA PHARMACEUTICALS CORP.

By:    /s/ KEITH EHRLICH
-----------------------------------

Title: VP of Finance and Administration
-----------------------------------

Date:  11/11/04
-----------------------------------

EQUIPMENT SCHEDULE
(QUASI LEASE - FIXED RATE)
SCHEDULE NO. 001
DATED THIS 11/23/04
TO MASTER LEASE AGREEMENT
DATED AS OF NOVEMBER 10, 2004

LESSOR & MAILING ADDRESS:                        LESSEE & MAILING ADDRESS:
GENERAL ELECTRIC CAPITAL CORPORATION             SYNTA PHARMACEUTICALS CORP.
83 WOOSTER HEIGHTS RD. 5TH FLOOR                 45 HARTWELL AVENUE
DANBURY, CT 06810                                LEXINGTON, MA 02421

This Schedule is executed pursuant to, and incorporates by reference the terms
and conditions of, and capitalized terms not defined herein shall have the
meanings assigned to them in, the Master Lease Agreement identified above
("Agreement", said Agreement and this Schedule being collectively referred to as
"Lease"). This Schedule, incorporating by reference the Agreement, constitutes a
separate instrument of lease.

A.   EQUIPMENT: Subject to the terms and conditions of the Lease. Lessor agrees
to lease to Lessee the Equipment described below (the "Equipment").

NUMBER          CAPITALIZED
LESSOR'S COST   MANUFACTURER   SERIAL NUMBERS   YEAR/MODEL AND TYNE OF EQUIPMENT
--------------------------------------------------------------------------------

SEE EXHIBIT A ATTACHED HERETO AND MADE A PART HEREOF.

B. FINANCIAL TERMS

1.   Advance Rent (if any): $32,496.60.
2.   Capitalized Lessor's Cost: $1,025,044.09.
3.   Basic Term (No. of Months): THIRTY SIX (36) Months.
4.   Basic Term Lease Rate Factor: 3.170264.
5.   Basic Term Commencement Date: 12/01/04
6.   Lessee Federal Tax ID No.: 04-3508648.
7.   Last Delivery Date: 11/23/04
8.   Daily Lease Rate Factor: .1057.
9.   Interest Rate: 9.32% per annum.
10.  Option Payment: $1.00

11.  First Termination Date: N/A (-) months after the Basic Term Commencement
Date.

12.  Interim Rent: For the period from and including the Lease Commencement Date
to the Basic Term Commencement Date ("INTERIM PERIOD"), Lessee shall pay as
rent (" INTERIM RENT") for each unit of Equipment, the product of the Daily
Lease Rate Factor times the Capitalized Lessor's Cost of such unit times
the number of days in the Interim Period. Interim Rent shall be due on
Basic Term Commencement Date.

13.  Basic Term Rent. Commencing on 12/01/04 and on the same day of each month
thereafter (each, a "RENT PAYMENT DATE") during the Basic Term, Lessee
shall pay as rent ("BASIC TERM RENT") the product of the Basic Term Lease
Rate Factor times the Capitalized Lessor's Cost of all Equipment on this
Schedule.

14.  Lessee agrees and acknowledges that the Capitalized Lessor's Cost of the
Equipment as stated on the Schedule is equal to the fair market value of
the Equipment on the date hereof.

C.   INTEREST RATE: Interest shall accrue from the Lease Commencement Date
through and including the date of termination of the Lease.

15

D.   PROPERTY TAX

PROPERTY TAX NOT APPLICABLE ON EQUIPMENT LOCATED IN MASSACHUSETTS.

Lessor may notify Lessee (and Lessee agrees to follow such notification)
regarding any changes in property tax reporting and payment responsibilities.

E.   ARTICLE 2A NOTICE

IN ACCORDANCE WITH THE REQUIREMENTS OF ARTICLE 2A OF THE UNIFORM COMMERCIAL CODE
AS ADOPTED IN THE APPLICABLE STATE, LESSOR HEREBY MAKES THE FOLLOWING
DISCLOSURES TO LESSEE PRIOR TO EXECUTION OF THE LEASE, (A) THE PERSON(S)
SUPPLYING THE EQUIPMENT IS VARIOUS (THE "SUPPLIER(S)"), (B) LESSEE IS ENTITLED
TO THE PROMISES AND WARRANTIES, INCLUDING THOSE OF ANY THIRD PARTY, PROVIDED TO
THE LESSOR BY SUPPLIER(S), WHICH IS SUPPLYING THE EQUIPMENT IN CONNECTION WITH
OR AS PART OF THE CONTRACT BY WHICH LESSOR ACQUIRED THE EQUIPMENT AND (C) WITH
RESPECT TO SUCH EQUIPMENT, LESSEE MAY COMMUNICATE WITH SUPPLIER(S) AND RECEIVE
AN ACCURATE AND COMPLETE STATEMENT OF SUCH PROMISES AND WARRANTIES, INCLUDING
ANY DISCLAIMERS AND LIMITATIONS OF THEM OR OF REMEDIES. TO THE EXTENT PERMITTED
BY APPLICABLE LAW, LESSEE HEREBY WAIVES ANY AND ALL RIGHT'S AND REMEDIES
CONFERRED UPON A LESSEE IN ARTICLE 2A AND ANY RIGHTS NOW OR HEREAFTER CONFERRED
BY STATUTE OR OTHERWISE WHICH MAY LIMIT OR MODIFY ANY OF LESSOR'S RIGHTS OR
REMEDIES UNDER THE DEFAULT AND REMEDIES SECTION OF THE AGREEMENT.

F.   STIPULATED LOSS AND TERMINATION VALUE TABLE*

Termination    Stipulated                    Termination     Stipulated
Rental       Value          Loss Value                    Value           Loss Value
Basic        Percentage     Percentage       Rental       Percentage      Percentage

1           99.830         103.748          19           53.306           55.803
2           97.412         101.251          20           50.526           52.945
3           94.975          98.735          21           47.725           50.064
4           92.519          96.200          22           44.902           47.163
5           90.044          93.646          23           42.057           44.239
6           87.549          91.073          24           39.190           41.293
7           85.036          88.481          25           36.301           38.325
8           82.503          85.868          26           33.390           35.334
9           79.950          83.237          27           30.455           32.321
10           77.377          80.585          28           27.498           29.285
11           74.785          77.914          29           24.518           26.226
12           72.172          75.222          30           21.515           23.144
13           69.539          72.510          31           18.489           20.039
14           66.885          69.778          32           15.439           16.910
15           64.211          67.024          33           12.365           13.757
16           61.516          64.251          34            9.268           10.581
17           58.801          61.456          35            6.146            7.380
18           56.064          58.640          36            3.000            4.155

16

*The Stipulated Loss Value or Termination Value for any unit of Equipment
shall be the Capitalized Lessor's Cost of such unit multiplied by the
appropriate percentage derived from the above table. In the event that the
Lease is for any reason extended, then the last percentage figure shown
above shall control throughout any such extended term.

G.   PAYMENT AUTHORIZATION

You are hereby irrevocably authorized and directed to deliver and apply the
proceeds due under this Schedule as follows:

COMPANY NAME                  ADDRESS                              AMOUNT
----------------------------------------------------------------------------------

Synta Pharmaceuticals Corp.   45 Hartwell Ave. Lexington. MA       $  1,002,924.52

GE (Advance Rental)           83 Wooster Heights Rd, Danbury, CT   $     22,119.57*

*$12,500 from your Good Faith Deposit will be applied as follows:
$2,122.97 (Interim Interest)
$10,377.03 (Balance of Advance Rental)

17

This authorization and direction is given pursuant to the same authority
authorizing the above-mentioned financing.

PURSUANT TO THE PROVISIONS OF THE LEASE, AS IT RELATES TO THIS SCHEDULE, LESSEE
HEREBY CERTIFIES AND WARRANTS THAT (i) ALL EQUIPMENT LISTED ABOVE IS IN GOOD
CONDITION AND APPEARANCE, HAS BEEN DELIVERED AND INSTALLED (IF APPLICABLE) AS OF
THE DATE STATED ABOVE AND IN WORKING ORDER, AND COPIES OF THE BILL(S) OF LADING
OR OTHER DOCUMENTATION ACCEPTABLE TO LESSOR WHICH SHOW THE DATE OF DELIVERY ARE
ATTACHED HERETO; (ii) LESSEE HAS INSPECTED THE EQUIPMENT, AND ALL SUCH TESTING
AS IT DEEMS NECESSARY HAS BEEN PERFORMED BY LESSEE, SUPPLIER OR THE
MANUFACTURER; AND (iii) LESSEE ACCEPTS THE EQUIPMENT FOR ALL PURPOSES OF THE
LEASE AND ALL ATTENDANT DOCUMENTS.

LESSEE DOES FURTHER CERTIFY THAT AS OF THE DATE HEREOF (i) LESSEE IS NOT IN
DEFAULT UNDER THE LEASE; AND (ii) THE REPRESENTATIONS AND WARRANTIES MADE BY
LESSEE PURSUANT TO OR UNDER THE LEASE ARE TRUE AND CORRECT ON THE DATE HEREOF.

Except as expressly modified hereby, all terms and provisions of the
Agreement shall remain in full force and effect. This Schedule is not binding or
effective with respect to the Agreement or Equipment until executed on behalf of
Lessor and Lessee by authorized representatives of Lessor and Lessee,
respectively.

IN WITNESS WHEREOF, Lessee and Lessor have caused this Schedule to be
executed by their duly authorized representatives as of the date first above
written.

LESSOR:                                 LESSEE:

GENERAL ELECTRIC CAPITAL CORPORATION    SYNTA PHARMACEUTICALS CORP.

By:    /s/ JOHN EDEL                    By:    /s/ KEITH EHRLICH
-----------------------------           ---------------------------------

Name:  John Edel                        Name:  Keith Ehrlich
-----------------------------           ---------------------------------

Title: SVP                              Title: VP of Finance and Administration
-----------------------------           ---------------------------------

18

EQUIPMENT SCHEDULE
(Quasi Lease - Fixed Rate)
SCHEDULE NO. 002
DATED THIS 11/23/04
TO MASTER LEASE AGREEMENT
DATED AS OF NOVEMBER 10, 2004

LESSOR & MAILING ADDRESS:                           LESSEE & MAILING ADDRESS:
GENERAL ELECTRIC CAPITAL CORPORATION                SYNTA PHARMACEUTICALS CORP.
83 WOOSTER HEIGHTS RD. 5TH FLOOR                    45 HARTWELL AVENUE
DANBURY, CT 06810                                   LEXINGTON, MA 02421

This Schedule is executed pursuant to, and incorporates by reference the terms
and conditions of, and capitalized terms not defined herein shall have the
meanings assigned to them in, the Master Lease Agreement identified above
("AGREEMENT", said Agreement and this Schedule being collectively referred to as
"LEASE"). This Schedule, incorporating by reference the Agreement, constitutes a
separate instrument of lease.

A.   EQUIPMENT: Subject to the terms and conditions of the Lease, Lessor agrees
to lease to Lessee the Equipment described below (the "EQUIPMENT").

NUMBER                 CAPITALIZED
OF UNITS               LESSOR'S COST            MANUFACTURER        SERIAL NUMBERS        YEAR/MODEL AND TYPE OF EQUIPMENT
--------------------------------------------------------------------------------------------------------------------------

SEE EXHIBIT A ATTACHED HERETO AND MADE A PART HEREOF.

B.   FINANCIAL TERMS
1.       Advance Rent (if any): $7,288.65.
2.       Capitalized Lessor's Cost: $292,307.59.
3.       Basic Term (No. of Months): FORTY EIGHT (48) Months.
4.       Basic Term Lease Rate Factor: 2.493487.
5.       Basic Term Commencement Date: 12/01/04.
6.       Lessee Federal Tax ID No: 04-3508648.
7.       Last Delivery Date: 11/23/04.
8.       Daily Lease Rate Factor: .0831.
9.       Interest Rate: 9.52% per annum.
10.       Option Payment: $1.00

11.  First Termination Date: N/A(-) months after the Basic Term Commencement
Date.

12.  Interim Rent: For the period from and including the Lease Commencement
Date to the Basic Term Commencement Date ("INTERIM PERIOD"), Lessee
shall pay as rent ("INTERIM RENT") for each unit of Equipment, the
product of the Daily Lease Rate Factor times the Capitalized Lessor's
Cost of such unit times the number of days in the Interim Period.
Interim Rent shall be due on Basic Term Commencement Date.

13.  Basic Term Rent. Commencing on 12/01/04 and on the same day of each
month thereafter (each, a "RENT PAYMENT DATE") during the Basic Term,
Lessee shall pay as rent ("BASIC TERM RENT") the product of the Basic
Term Lease Rate Factor times the Capitalized Lessor's Cost of all
Equipment on this Schedule.

14.  Lessee agrees and acknowledges that the Capitalized Lessor's Cost of the
Equipment as stated on the Schedule is equal to the fair market value of
the Equipment on the date hereof.

C.   INTEREST RATE: Interest shall accrue from the Lease Commencement Date
through and including the date of termination of the Lease.

D.   PROPERTY TAX

PROPERTY TAX NOT APPLICABLE ON EQUIPMENT LOCATED IN MASSACHUSETTS.

Lessor may notify Lessee (and Lessee agrees to follow such notification)
regarding any changes in property tax reporting and payment
responsibilities.

E.   ARTICLE 2A NOTICE

IN ACCORDANCE WITH THE REQUIREMENTS OF ARTICLE 2A OF THE UNIFORM COMMERCIAL
CODE AS ADOPTED IN THE APPLICABLE STATE, LESSOR HEREBY MAKES THE FOLLOWING
DISCLOSURES TO LESSEE PRIOR TO EXECUTION OF THE LEASE, (A) THE PERSON(S)
SUPPLYING THE EQUIPMENT IS VARIOUS (THE "SUPPLIER(S)"), (B) LESSEE IS
ENTITLED TO THE PROMISES AND WARRANTIES, INCLUDING THOSE OF ANY THIRD
PARTY, PROVIDED TO THE LESSOR BY SUPPLIER(S), WHICH IS SUPPLYING THE
EQUIPMENT IN CONNECTION WITH OR AS PART OF THE CONTRACT BY WHICH LESSOR
ACQUIRED THE EQUIPMENT AND (C) WITH RESPECT TO SUCH EQUIPMENT, LESSEE MAY
COMMUNICATE WITH SUPPLIER(S) AND RECEIVE AN ACCURATE AND COMPLETE STATEMENT
OF SUCH PROMISES AND WARRANTIES, INCLUDING ANY DISCLAIMERS AND LIMITATIONS
OF THEM OR 0F REMEDIES. TO THE EXTENT PERMITTED BY APPLICABLE LAW, LESSEE
HEREBY WAIVES ANY AND ALL RIGHTS AND REMEDIES CONFERRED UPON A LESSEE IN
ARTICLE 2A AND ANY RIGHTS NOW OR HEREAFTER CONFERRED BY STATUTE OR
OTHERWISE WHICH MAY LIMIT OR MODIFY ANY OF LESSOR'S RIGHTS OR REMEDIES
UNDER THE DEFAULT AND REMEDIES SECTION OF THE AGREEMENT.

F.   STIPULATED LOSS AND TERMINATION VALUE TABLE*

Termination    Stipulated                  Termination    Stipulated
Rental    Value          Loss Value                  Value          Loss Value
Basic     Percentage     Percentage        Rental    Percentage     Percentage

1        100.507        104.445           25         55.234         57.732
2         98.787        102.665           26         53.155         55.593
3         97.053        100.871           27         51.059         53.437
4         95.306         99.064           28         48.947         51.265
5         93.545         97.243           29         46.818         49.076
6         91.769         95.407           30         44.672         46.870
7         89.980         93.558           31         42.509         44.647
8         88.177         91.695           32         40.329         42.407
9         86.359         89.817           33         38.132         40.150
10         84.527         87.925           34         35.917         37.875
11         82.680         86.018           35         33.685         35.583
12         80.819         84.097           36         31.435         33.273
13         78.943         82.161           37         29.167         30.945
14         77.052         80.210           38         26.881         28.599
15         75.146         78.244           39         24.577         26.235
16         73.224         76.262           40         22.254         23.852
17         71.288         74.266           41         19.914         21.452
18         69.336         74.254           42         17.554         19.032
19         67.369         70.227           43         15.176         16.594
20         65.386         68.184           44         12.780         14.138
21         63.386         66.126           45         10.364         11.662
22         61.373         64.051           46          7.929          9.167
23         59.343         61.961           47          5.474          6.652
24         57.297         59.855           48          3.000          4.118

* The Stipulated Loss Value or Termination Value for any unit of Equipment
shall be the Capitalized Lessor's Cost of such unit multiplied by the
appropriate percentage derived from the above table. In the event that the
Lease is for any reason extended, then the last percentage figure shown
above shall control throughout any such extended term.

G.   PAYMENT AUTHORIZATION

You are hereby irrevocably authorized and directed to deliver and apply the
proceeds due under this Schedule as follows:

COMPANY NAME                         ADDRESS                                AMOUNT
-----------------------------------------------------------------------------------------

Synta Pharmaceuticals Corp.          45 Hartwell Ave. Lexington, MA         $  284,400.55
GE (Interim Interest)                83 Wooster Heights Rd, Danbury, CT     $      618.39
GE (Advance Rental)                  83 Wooster Heights Rd, Danbury, CT     $    7,288.65

This authorization and direction is given pursuant to the same
authority authorizing the above-mentioned financing.

PURSUANT TO THE PROVISIONS OF THE LEASE, AS IT RELATES TO THIS SCHEDULE, LESSEE
HEREBY CERTIFIES AND WARRANTS THAT (i) ALL EQUIPMENT LISTED ABOVE IS IN GOOD
CONDITION AND APPEARANCE, HAS BEEN DELIVERED AND INSTALLED (IF APPLICABLE) AS OF
THE DATE STATED ABOVE AND IN WORKING ORDER, AND COPIES OF THE BILL(S) OF LADING
OR OTHER DOCUMENTATION ACCEPTABLE TO LESSOR WHICH SHOW THE DATE OF DELIVERY ARE
ATTACHED HERETO; (ii) LESSEE HAS INSPECTED THE EQUIPMENT, AND ALL SUCH TESTING
AS IT DEEMS NECESSARY HAS BEEN PERFORMED BY LESSEE, SUPPLIER OR THE
MANUFACTURER; AND (iii) LESSEE ACCEPTS THE EQUIPMENT FOR ALL PURPOSES OF THE
LEASE AND ALL ATTENDANT DOCUMENTS.

LESSEE DOES FURTHER CERTIFY THAT AS OF THE DATE HEREOF(i) LESSEE IS NOT IN
DEFAULT UNDER THE LEASE; AND (ii) THE REPRESENTATIONS AND WARRANTIES MADE BY
LESSEE PURSUANT TO OR UNDER THE LEASE ARE TRUE AND CORRECT ON THE DATE HEREOF.

Except as expressly modified hereby, all terms and provisions of the
Agreement shall remain in full force and effect. This Schedule is not binding or
effective with respect to the Agreement or Equipment until executed on behalf of
Lessor and Lessee by authorized representatives of Lessor and Lessee,
respectively.

IN WITNESS WHEREOF, Lessee and Lessor have caused this Schedule to be
executed by their duly authorized representatives as of the date first above
written.

LESSOR                                 LESSEE:
GENERAL ELECTRIC CAPITAL CORPORATION   SYNTA PHARMACEUTICALS CORP.

By: /s/ John Edel                      By: /s/ Keith Ehrlich
----------------------------------     --------------------------------

Name: JOHN EDEL                        Name: KEITH EHRLICH
--------------------------------       ------------------------------

TITLE: SVP                             Title: V.P. Finance & Administration
-------------------------------        -----------------------------

EXHIBIT A, ACCOUNT # 4158939-001

COMPANY NAME:              SYNTA PHARMACEUTICALS CORP.
EQUIPMENT LOCATION:        A:- 45 Hartwell Ave, Lexington, MA 02421-3102.
B:- 6A, PRESTON COURT, BEDFORD, MA-07130
C:- 125 Hartwell Ave, Lexington, MA 02421-3102.

INV.
ITEM      SUPPLIER #        INVOICE   INV. DATE                DESCRIPTION          QTY          SERIAL #             [ILLEGIBLE]
-----------------------------------------------------------------------------------------------------------------------------------

PC CONNECTION       35892386   11/18/03       IBM Thinkpad Labtop and LCD
screen with attachments              1S2379D3UKPA1520
11/18/03       Freight
36245703   02/12/04       IBM Thinkpad laptop with
attachments                   1      1S2378DHU99D3135
02/12/04       Freight
36309791   03/01/04       IBM Thinkpad laptop with
attachments                   1      1S2885PWU99D8840
03/01/04       Freight
36387290   03/19/04       Catalyst 4000 w/port and
other attachments             1
03/19/04       Freight
36537182   04/22/04       IBM Thinkpad computer         1      1S237372U99M2B5
04/22/04       Freight
36537165   04/22/04       3 IBM Thinkpad computers
with attachments              1      1S237372UKP2G6TM/1S2885
04/22/04       Freight
36566609   04/30/04       IBM Thinkpad computer with
remote navigator              1      1S237372U994L2LO
04/30/04       Freight
36581784   05/05/04       2 IBM Thinkpad computers
with attachments              2      1S237372U994MOT7, 0W4
05/05/04       Freight
36872064   07/21/04       3 IBM Thinkpad computers
with attachments              3      1S23738DHU99BV848, BV62
07/21/04       Freight
36667358   05/28/04       2 IBM Thinkpad computers      2      1S23738DHU99BD703,705
05/28/04       Freight
36795030   06/30/04       IBM Thinkpad computer         1      1S2885PWU99D9434
06/30/04       Freight
36845874   07/14/04       Powerlite ANSI LUMENS -
V11H158020
07/14/04       Freight
36848861   07/14/04       2 IBM Thinkpad computers
with attachments              2      1S237BDHU99B1777,7BO
07/14/04       Freight
36902567   07/29/04       HP Laserjet and Epson
Inkjet printers               1
Freight
37004807   08/26/04       Proliant DL 360 server        1      M014LGP335
08/26/04       Freight
37055656   09/10/04       IBM Thinkpad computer with
attachments                          1S2378DGU99C6032
09/10/04       Freight
37097975   09/22/04       IBM Thinkpad computer with
attachments                          1S2379EU99RBNMG
09/22/04       Freight

CRC R\PRESS         16102-B1   11/25/03       Dictionary of natural
products (CD-ROM)

UNICOM              315494     12/09/03       Implementation of Internal
Network Security - 50%
commencement
75297      12/12/03       Proliant DL320 G2, memory
servers                              M02FKVJ61PSS
12/12/03       Tax
75327      12/15/03       server software
12/15/03       Tax
315680     12/30/03       Implementation of Internal
Network Security - 50%
completion
81598      06/28/04       [ILLEGIBLE] LaserJet 4650dn
printer                       1      PCAD00129
06/28/04       Tax
82326      07/21/04       LaserJet 4300DTN printer      1      CNGY205694
07/21/04       Freight
83743      08/30/04       Laserjet 4200N printer        1      USGNM500035
08/30/04       Tax
84399      09/20/04       Xeon 3.06 GHZ Processor       1
09/20/04       Tax
84439      09/21/04       Proliant DL36 with
attachments                   1
09/21/04       Tax
84473      09/22/04       40/80 GB HDD                  1
09/22/04       Tax
84475      09/22/04       40/80 GB HDD                  11
09/22/04       Tax
84507      09/23/04       Softwares and Software
license (Excel, Windows) etc  3
09/23/04       Tax
84571      09/27/04       BACKUP excel for windows      1
09/27/04       Tax
84573      09/27/04       1024 MB RAM                   1
09/27/04       Tax

INSIGHT DIRECT USA  A2361878   01/23/04       IBM Thinkpad laptop with
attachments                   1      1S2885PWU99D8382
93677733   02/09/04       IBM Thinkpad laptop -         1      1S2378DHU99D3627
02/09/04       Tax
93970572   03/31/04       3 IBM Thinkpad computers
with attachments              3      1S2378DHU998G052,080 an
94231367   05/14/04       IBM Thinkpad computer         1      1S2885PWU99D9445

INV.
ITEM      SUPPLIER #        INVOICE   INV. DATE                DESCRIPTION          AMT. FINANCED      VENDOR TOTAL    CK #
------------------------------------------------------------------------------------------------------------------------------

PC CONNECTION       35892386   11/18/03       IBM Thinkpad Labtop and LCD
screen with attachments      $        2,544.74                   55616
11/18/03       Freight                      $           35.83
36245703   02/12/04       IBM Thinkpad laptop with
attachments                  $        1,924.06                   58812
02/12/04       Freight                      $           18.41
36309791   03/01/04       IBM Thinkpad laptop with
attachments                  $        2,574.35                   58960
03/01/04       Freight                      $           49.32
36387290   03/19/04       Catalyst 4000 w/port and
other attachments            $        6,636.95                   57007
03/19/04       Freight                      $           69.09
36537182   04/22/04       IBM Thinkpad computer        $        1,951.15                   57749
04/22/04       Freight                      $           16.35
36537165   04/22/04       3 IBM Thinkpad computers
with attachments             $        6,742.93                   57749
04/22/04       Freight                      $           36.83
36566609   04/30/04       IBM Thinkpad computer with
remote navigator             $        1,854.90                   57749
04/30/04       Freight                      $           12.92
36581784   05/05/04       2 IBM Thinkpad computers
with attachments             $        5,335.72                   57643
05/05/04       Freight                      $          178.11
36872064   07/21/04       3 IBM Thinkpad computers
with attachments             $        5,673.80                   58833
07/21/04       Freight                      $           36.64
36667358   05/28/04       2 IBM Thinkpad computers     $        3,739.33                   58001
05/28/04       Freight                      $           63.27
36795030   06/30/04       IBM Thinkpad computer        $        3,751.24                   58400
06/30/04       Freight                      $           54.09
36845874   07/14/04       Powerlite ANSI LUMENS -
V11H158020                   $        3,033.50                   58833
07/14/04       Freight                      $           49.35
36848861   07/14/04       2 IBM Thinkpad computers
with attachments             $        3,666.25                   58833
07/14/04       Freight                      $           23.88
36902567   07/29/04       HP Laserjet and Epson
Inkjet printers              $        2,147.21                   59028
Freight                      $           69.00
37004807   08/26/04       Proliant DL 360 server       $        3,004.05                   59434
08/26/04       Freight                      $          143.29
37055656   09/10/04       IBM Thinkpad computer with
attachments                  $        4,627.30                   59746
09/10/04       Freight                      $           73.74
37097975   09/22/04       IBM Thinkpad computer with
attachments                  $        2,519.85                   59885
09/22/04       Freight                      $          119.92

CRC R\PRESS         16102-B1   11/25/03       Dictionary of natural
products (CD-ROM)            $        6,630.00                   55701

UNICOM              315494     12/09/03       Implementation of Internal
Network Security - 50%
commencement                 $        6,250.00                   56277
75297      12/12/03       Proliant DL320 G2, memory
servers                      $        1,744.00                   56277
12/12/03       Tax                          $           87.20
75327      12/15/03       server software              $          691.00                   56277
12/15/03       Tax                          $           34.55
315680     12/30/03       Implementation of Internal
Network Security - 50%
completion                   $        6,250.00                   56277
81598      06/28/04       [ILLEGIBLE] LaserJet 4650dn
printer                      $        2,234.65                   58419
06/28/04       Tax                          $          111.74
82326      07/21/04       LaserJet 4300DTN printer     $        2,412.97                   58938
07/21/04       Freight                      $          120.65
83743      08/30/04       Laserjet 4200N printer       $        1,450.88                   59467
08/30/04       Tax                          $           72.54
84399      09/20/04       Xeon 3.06 GHZ Processor      $          869.48                   59770
09/20/04       Tax                          $           43.47                   59920
84439      09/21/04       Proliant DL36 with
attachments                  $        4,901.18
09/21/04       Tax                          $          218.75
84473      09/22/04       40/80 GB HDD                 $           30.99
09/22/04       Tax                          $            1.55
84475      09/22/04       40/80 GB HDD                 $          340.88
09/22/04       Tax                          $           17.04
84507      09/23/04       Softwares and Software
license (Excel, Windows) etc $        1,579.48
09/23/04       Tax                          $           78.97
84571      09/27/04       BACKUP excel for windows     $        1,207.80
09/27/04       Tax                          $           60.39
84573      09/27/04       1024 MB RAM                  $          455.83
09/27/04       Tax                          $           22.79

INSIGHT DIRECT USA  A2361878   01/23/04       IBM Thinkpad laptop with
attachments                  $        2,532.60                   56235
93677733   02/09/04       IBM Thinkpad laptop -        $        1,890.09                   58797
02/09/04       Tax                          $           93.20
93970572   03/31/04       3 IBM Thinkpad computers
with attachments             $        6,250.62                   57212
94231367   05/14/04       IBM Thinkpad computer        $        2,311.00                   57732

INV.                                                                            PROOF OF                   EQUIP
ITEM      SUPPLIER #        INVOICE   INV. DATE          DESCRIPTION            PAYMENT       CK AMT.       CODE       LOCATION
-----------------------------------------------------------------------------------------------------------------------------------

PC CONNECTION       35892386   11/18/03  IBM Thinkpad Labtop and LCD
screen with attachments       Yes          $   2,580.57   COMP      45 Hartwell
11/18/03  Freight                                                   SOFT
36245703   02/12/04  IBM Thinkpad laptop with
attachments                   Yes          $   1,942.97   COMP      45 Hartwell
02/12/04  Freight                                                   SOFT
36309791   03/01/04  IBM Thinkpad laptop with
attachments                   Yes          $   2,623.67   COMP      125 Hartwell
03/01/04  Freight                                                   SOFT
36387290   03/19/04  Catalyst 4000 w/port and
other attachments             Yes          $   8,896.44   COMP      45 Hartwell
03/19/04  Freight                                                   SOFT
36537182   04/22/04  IBM Thinkpad computer         Yes          $  11,282.20   COMP      45 Hartwell
04/22/04  Freight                                                   SOFT
36537165   04/22/04  3 IBM Thinkpad computers
with attachments              Yes          $  11,282.20   COMP      125 Hartwell
04/22/04  Freight                                                   SOFT
36566609   04/30/04  IBM Thinkpad computer with
remote navigator              Yes          $  11,282.20   COMP      45 Hartwell
04/30/04  Freight                                                   SOFT
36581784   05/05/04  2 IBM Thinkpad computers
with attachments              Yes          $   5,539.14   COMP      45 Hartwell
05/05/04  Freight                                                   SOFT
36872064   07/21/04  3 IBM Thinkpad computers
with attachments              Yes          $  16,376.22   COMP      125 Hartwell
07/21/04  Freight                                                   SOFT
36667358   05/28/04  2 IBM Thinkpad computers      Yes          $   3,802.00   COMP      125 Hartwell
05/28/04  Freight                                                   SOFT
36795030   06/30/04  IBM Thinkpad computer         Yes          $   5,327.03   COMP      125 Hartwell
06/30/04  Freight                                                   SOFT
36845874   07/14/04  Powerlite ANSI LUMENS -
V11H158020                    Yes          $  16,376.22   OFC       45 Hartwell
07/14/04  Freight                                                   SOFT
36848861   07/14/04  2 IBM Thinkpad computers
with attachments              Yes          $  16,376.22   OFC       125 Hartwell
07/14/04  Freight                                                   SOFT
36902567   07/29/04  HP Laserjet and Epson
Inkjet printers               Yes          $   2,216.21   OFC       125 Hartwell
Freight                                                   SOFT
37004807   08/26/04  Proliant DL 360 server        Yes          $   5,187.59   COMP      125 Hartwell
08/26/04  Freight                                                   SOFT
37055656   09/10/04  IBM Thinkpad computer with
attachments                   Yes          $   4,837.85   COMP      125 Hartwell
09/10/04  Freight                                                   SOFT
37097975   09/22/04  IBM Thinkpad computer with
attachments                   Yes          $   4,366.75   COMP      125 Hartwell
09/22/04  Freight                                                   SOFT

CRC R\PRESS         16102-B1   11/25/03  Dictionary of natural
products (CD-ROM)             Yes          $   6,630.00   SOFT      45 Hartwell

UNICOM              315494     12/09/03  Implementation of Internal
Network Security - 50%
commencement                  Yes          $  15,056.75   SOFT      45 Hartwell
75297      12/12/03  Proliant DL320 G2, memory
servers                       Yes          $  15,056.75   COMP      45 Hartwell
12/12/03  Tax                                                       SOFT
75327      12/15/03  server software               Yes          $  15,056.75   SOFT      45 Hartwell
12/15/03  Tax                                                       SOFT
315680     12/30/03  Implementation of Internal
Network Security - 50%
completion                    Yes          $  15,056.75   SOFT      45 Hartwell
81598      06/28/04  [ILLEGIBLE] LaserJet 4650dn
printer                       Yes          $   2,346.59   COMP      45 Hartwell
06/28/04  Tax                                                       SOFT
82326      07/21/04  LaserJet 4300DTN printer      Yes          $   2,533.62   OFC       45 Hartwell
07/21/04  Freight                                                   SOFT
83743      08/30/04  Laserjet 4200N printer        Yes          $   1,523.42   OFC       125 Hartwell
08/30/04  Tax                                                       SOFT
84399      09/20/04  Xeon 3.06 GHZ Processor       Yes          $   2,799.95   COMP      6A Bedford
09/20/04  Tax                           Yes          $   9,040.66   SOFT
84439      09/21/04  Proliant DL36 with
attachments                                               COMP      6A Bedford
09/21/04  Tax                                                       SOFT
84473      09/22/04  40/80 GB HDD                                              COMP      6A Bedford
09/22/04  Tax                                                       SOFT
84475      09/22/04  40/80 GB HDD                                              COMP      6A Bedford
09/22/04  Tax                                                       SOFT
84507      09/23/04  Softwares and Software
license (Excel, Windows) etc
09/23/04  Tax                                                       SOFT      6A Bedford
84571      09/27/04  BACKUP excel for windows                                  SOFT
09/27/04  Tax                                                       SOFT      6A Bedford
84573      09/27/04  1024 MB RAM                                               SOFT
09/27/04  Tax                                                       COMP      6A Bedford
SOFT
INSIGHT DIRECT USA  A2361878   01/23/04  IBM Thinkpad laptop with
attachments
93677733   02/09/04  IBM Thinkpad laptop -         Yes          $   2,532.60   COMP      45 Hartwell
02/09/04  Tax                           Yes          $   1,983.29   COMP      45 Hartwell
93970572   03/31/04  3 IBM Thinkpad computers                                  SOFT
with attachments              Yes          $   6,250.62   COMP      45 Hartwell
94231367   05/14/04  IBM Thinkpad computer         Yes          $   2,450.72   COMP      45 Hartwell

INITIALS:-
-----------------

EXHIBIT A, ACCOUNT # 4158939-001

COMPANY NAME:         SYNTA PHARMACEUTICALS CORP.
EQUIPMENT LOCATION:   A:- 45 Hartwell Ave, Lexington, MA 02421-3102
B:- 6A, PRESTON COURT, BEDFORD, MA - 01730
C:- 125 Hartwell Ave, Lexington, MA 02421-3102

INV.
ITEM          SUPPLIER            INVOICE #    INV. DATE        DESCRIPTION          QTY   SERIAL #   [ILLEGIBLE]
-----------------------------------------------------------------------------------------------------------------

05/14/04  Tax
05/14/04  Freight
94292203       05/25/04  2 IBM Thinkpad computers    2    1S23734CU994H0G6, KO
05/25/04  Tax
05/25/04  Freight
94475527       06/29/04  2 IBM Thinkpad computers    2    1S2379D6U99C6297, C6418
06/29/04  Tax
06/29/04  Freight
94587327       07/21/04  HP color Laserjet 4650
printer                     1    SJPDAB04816
07/21/04  Tax
07/21/04  Freight
94731094       08/17/04  2 IBM Thinkpad computers
with attachments            2    1S2373KU4993LYMV, LYNH
08/17/04  Tax
08/17/04  Freight

AGILENT TECHNOLOGIES      100920463      11/04/03  HPLC system with
attachments                 1
11/04/03  HPLC software license
+ software revision
upgrade and module
license
101028762      02/17/04  HPLC system with
attachments                 1    DE4052579/JP13213479
101064581      03/22/04  Chemistation
installation
101242774      09/11/04  HPLC System with
attachments
101254428      09/22/04  Agilent Pump with
attachments

VWR INTERNATIONAL, INC.   16744077       11/17/03  microfuge 22R 120V          1
17145830       01/05/04  OPYS MR MCPLT RDR           1
17366381       01/27/04  Microplate Washer
19676184       08/26/04  Buchi vacuum pump V-500
18822256       06/08/04  vwr freezer gen upright
20.7cf with attachments     1

PERKIN ELMER              5300457708     11/27/03  automatic injector for
Victor 2 plate              1     299811374
11/27/03  Tax
5300484289     01/03/04  automatic injector for
Victor 2 plate              1     299811397
01/03/04  Tax

VENTANA                   2259452        12/02/03  NexES discovery staining
module                      1

IONOPTIX CORPORATION      23132          12/09/03  hyperswitch light source
and CCD camera              1
12/09/03  Ion Wizaed - data
display / analysis
software

ALA SCIENTIFIC
INSTRUMENTS               6459           12/19/03  EPC-10 system - Sutter
MP 285 robotic machine      1
12/19/03  Freight

MOLECULAR DEVICES CORP.   275429         12/22/03  Flexstation II 384
Instrument w/laptop         1    FXX01574
12/22/03  Freight
281525         04/14/04  Flexstation 384             1    FL3840131
04/14/04  Installation and training

KODAK EASTMAN COMPANY     106516070      12/30/03  Image Station               1    1549674
12/30/03  Freight and Tax

VARIAN                    1891234        02/06/04  NMR Probe M300              2    S010009
1891245        02/06/04  NMR Probe - installation
9008960        04/21/04  NMR probe                   1

PERSONAL CHEMISTRY        1696           03/01/04  Emrys Optimizer Exp         1

DUPLITRON                 117355         03/17/04  Panal Board                 1

INV.
ITEM          SUPPLIER            INVOICE #    INV. DATE        DESCRIPTION         AMT. FINANCED VENDOR TOTAL      CK #
--------------------------------------------------------------------------------------------------------------------------

05/14/04  Tax                        $     115.55
05/14/04  Freight                    $      24.17
94292203       05/25/04  2 IBM Thinkpad computers   $   3,199.98                   57883
05/25/04  Tax                        $     160.00
05/25/04  Freight                    $       8.68
94475527       06/29/04  2 IBM Thinkpad computers   $   2,837.66                   58582
06/29/04  Tax                        $     141.88
06/29/04  Freight                    $       9.80
94587327       07/21/04  HP color Laserjet 4650
printer                    $   2,361.30                   58764
07/21/04  Tax                        $     118.07
07/21/04  Freight                    $      97.19
94731094       08/17/04  2 IBM Thinkpad computers
with attachments           $   3,398.00                   59398
08/17/04  Tax                        $     169.90
08/17/04  Freight                    $      10.26

Agilent Technologies      100920463      11/04/03  HPLC system with
attachments                $  37,958.40                   55583
11/04/03  HPLC software license
+ software revision
upgrade and module
license                    $   4,524.30
101028762      02/17/04  HPLC system with
attachments                $  68,024.75                   56864
101064581      03/22/04  Chemistation
installation               $   2,737.90                   56966
101242774      09/11/04  HPLC System with
attachments                $  64,823.40                   59500
101254428      09/22/04  Agilent Pump with
attachments                $  12,098.70                   59790

VWR INTERNATIONAL, INC.   16744077       11/17/03  microfuge 22R 120V         $   4,505.00                   55623
17145830       01/05/04  OPYS MR MCPLT RDR          $   4,505.90                   56282
17366381       01/27/04  Microplate Washer          $   5,571.90                   56879
19676184       08/26/04  Buchi vacuum pump V-500    $   1,196.25                   59607
18822256       06/08/04  vwr freezer gen upright
20.7 cf with attachments   $   1,464.01                   58136

PERKIN ELMER              5300457708     11/27/03  automatic injector for
Victor 2 plate             $   6,200.00                   55702
11/27/03  Tax                        $     310.00
5300484289     01/03/04  automatic injector for
Victor 2 plate             $   6,200.00                   56814
01/03/04  Tax                        $     310.00

VENTANA                   2259452        12/02/03  NexES discovery staining
module                     $  95,000.00                   55704

IONOPTIX CORPORATION      23132          12/09/03  hyperswitch light source
and CCD camera             $  40,300.00                   56182
12/09/03  Ion Wizaed - data
display / analysis
software                   $   2,000.00

ALA SCIENTIFIC
INSTRUMENTS               6459           12/19/03  EPC-10 system - Sutter
MP 285 robotic machine     $  14,000.00                   56190
12/19/03  Freight                    $     125.00

MOLECULAR DEVICES CORP.   275429         12/22/03  Flexstation II 384
Instrument w/laptop        $  74,000.00                   56248
12/22/03  Freight                    $     125.00
281525         04/14/04  Flexstation 384            $ 180,000.00                   57828
04/14/04  Installation and training  $   5,500.00

KODAK EASTMAN COMPANY     106516070      12/30/03  Image Station              $  15,000.00                   56240
12/30/03  Freight and Tax            $     802.97

VARIAN                    1891234        02/06/04  NMR Probe M300             $  26,371.88                   56878
1891245        02/06/04  NMR Probe - installation   $   2,728.12                   56878
9008960        04/21/04  NMR probe                  $  13,090.00                   57458

PERSONAL CHEMISTRY        1696           03/01/04  Emrys Optimizer Exp        $  61,200.00                   56961

DUPLITRON                 117355         03/17/04  Panal Board                $   1,779.75                   56955

INV.                                                                                PROOF OF                   EQUIP
ITEM          SUPPLIER            INVOICE #    INV. DATE        DESCRIPTION         PAYMENT      CK AMT.       CODE    LOCATION
-----------------------------------------------------------------------------------------------------------------------------------

05/14/04  Tax                                                   SOFT
05/14/04  Freight                                               SOFT
94292203       05/25/04  2 IBM Thinkpad computers   Yes      $    5,284.35     COMP    125 Hartwell
05/25/04  Tax                                                   SOFT
05/25/04  Freight                                               SOFT
94475527       06/29/04  2 IBM Thinkpad computers   Yes      $    3,718.87     COMP    125 Hartwell
06/29/04  Tax                                                   SOFT
06/29/04  Freight                                               SOFT
94587327       07/21/04  HP color Laserjet 4650
printer                    Yes      $    2,576.56     OFC     45 Hartwell
07/21/04  Tax                                                   SOFT
07/21/04  Freight                                               SOFT
94731094       08/17/04  2 IBM Thinkpad computers
with attachments           Yes      $    3,621.12     COMP    125 Hartwell
08/17/04  Tax                                                   SOFT
08/17/04  Freight                                               SOFT

AGILENT TECHNOLOGIES      100920463      11/04/03  HPLC system with
attachments                Yes      $   42,482.70     LAB     45 Hartwell
11/04/03  HPLC software license
+ software revision
upgrade and module
licence                                               SOFT
101028762      02/17/04  HPLC system with
attachments                Yes      $   69,177.76     LAB     45 Hartwell
101064581      03/22/04  Chemistation
installation               Yes      $    7,317.68     SOFT    45 Hartwell
101242774      09/11/04  HPLC System with
attachments                Yes      $   67,644.00     LAB     45 Hartwell
101254428      09/22/04  Agilent Pump with
attachments                Yes      $   16,010.63     LAB     45 Hartwell

VWR INTERNATIONAL, INC.   16744077       11/17/03  microfuge 22R 120V         Yes      $    6,402.12     LAB     45 Hartwell
17145830       01/05/04  OPYS MR MCPLT RDR          Yes      $    9,714.47     LAB     45 Hartwell
17366381       01/27/04  Microplate Washer          Yes      $   15,875.47     LAB     45 Hartwell
19676184       08/26/04  Buchi vacuum pump V-500    Yes      $   69,368.00     LAB     45 Hartwell
18822256       06/08/04  vwr freezer gen upright
20.7 cf with attachments   Yes      $    9,288.50     LAB     45 Hartwell

PERKIN ELMER              5300457708     11/27/03  automatic injector for
Victor 2 plate             Yes      $    6,510.00     LAB     45 Hartwell
11/27/03  Tax                                                   SOFT
5300484289     01/03/04  automatic injector for
Victor 2 plate             Yes      $    6,510.00     LAB     45 Hartwell
01/03/04  Tax                                                   SOFT

VENTANA                   2259452        12/02/03  NexES discovery staining
module                     Yes      $   95,000.00     LAB     45 Hartwell

IONOPTIX CORPORATION      23132          12/09/03  hyperswitch light source
and CCD camera             Yes      $   42,300.00     LAB     45 Hartwell
12/09/03  Ion Wizaed - data
display / analysis
software                                              SOFT

ALA SCIENTIFIC
INSTRUMENTS               6459           12/19/03  EPC-10 system - Sutter
MP 285 robotic machine     Yes      $   14,125.00     LAB     45 Hartwell
12/19/03  Freight                                               SOFT

MOLECULAR DEVICES CORP.   275429         12/22/03  Flexstation II 384
Instrument w/laptop        Yes      $   74,388.50     LAB     45 Hartwell
12/22/03  Freight                                               SOFT
281525         04/14/04  Flexstation 384            Yes      $  185,500.00     LAB     6A Bedford
04/14/04  Installation and training                             SOFT    SOFT

KODAK EASTMAN COMPANY     106516070      12/30/03  Image Station              Yes      $   15,802.97     LAB     6A Bedford
12/30/03  Freight and Tax                                       SOFT

VARIAN                    1891234        02/06/04  NMR Probe M300             Yes      $   29,100.00     LAB     45 Hartwell
1891245        02/06/04  NMR Probe - installation   Yes      $   29,100.00     SOFT    45 Hartwell
9008960        04/21/04  NMR probe                  Yes      $   13,090.00     LAB     45 Hartwell

PERSONAL CHEMISTRY        1696           03/01/04  Emrys Optimizer Exp        Yes      $   61,200.00     LAB     45 Hartwell

DUPLITRON                 117355         03/17/04  Panal Board                Yes      $    1,799.75     LAB     45 Hartwell

INITIALS:-
--------------

EXHIBIT A, ACCOUNT # 4158939-001

COMPANY NAME:                  SYNTA PHARMACEUTICALS CORP.
EQUIPMENT LOCATION:            A:- 45 Hartwell Ave, Lexington, MA 02421-3102.
B:- 6A, PRESTON COURT, BEDFORD, MA - 01730
C:- 125 Hartwell Ave, Lexington, MA 02421-3102.

INV.
ITEM          SUPPLIER            INVOICE #    INV. DATE        DESCRIPTION            QTY    SERIAL #    [ILLEGIBLE] AMT. FINANCED
----  ------------------------  -------------  ---------  --------------------------   ---  ------------- ----------  -------------

MICRO VIDEO INSTRUMENT    00040763        03/29/04  CFI Plan Fluor 60x                                          $     2,018.75
Freight                                                     $        15.75
00041172        04/29/04  X-cite power supply lamp     1                              $     4,745.25
04/29/04  Freight                                                     $        25.63
00042403        08/18/04  Microscope Upgrade with                                     $    55,521.55
attachments
SOFTWARE                                                    $     2,300.00
Freight                                                     $        55.94
ISCO INC                  383957-00       03/31/04  Combiflash SQ 16X 16 Column 1                               $    45,039.00
383960-00       03/31/04  Lab equipment foxy 200 with  1                              $     8,377.00
attachments
AFFYMETRIX, INC           RI 83668        03/31/04  Training Kit GC & Scanner                                   $   140,000.00
upgrade GCS3000 with
attachments
FISHER SCIENTIFIC         5683007         04/26/04  World precision evom         1                              $     1,674.00
epithelial voltohmeter
EASTERN SCIENTIFIC        184             04/27/04  Leybold vacuum pump with     1                              $     3,010.00
attachments
04/27/04  Installation                                                $        75.00
INTELEC MARKETING         15958           04/30/04  Workstation ofc              MANY                           $     2,975.68
04/30/04  Freight                                                     $       337.00
REC SUPPLY                1035            05/05/04  SGI Octane2 2X600MHz                                        $    13,758.00
UNITED BUSINESS TEL       11362           07/09/04  125 Hartwell Phone System    125                            $     4,050.00
(Telephone Sets)
Tax                                                         $       202.50
11363           07/09/04  Hartwell Phone System /                                     $    13,000.00
Installation and Testing
11364           07/09/04  Hartwell Phone System /                                     $     2,000.00
Installation and Testing
(3rd cabinet at local site
and one digital line card)
fibre extended board
NEW ENGLAND LAB           3650-1          04/12/04  8' fume hood and casework -                                 $     1,310.00
10% deposit
3650-2          05/21/04  8' fume hood and casework -                                 $    11,790.00
90% balance upon completion
SHONS REFRIGERATION       52348           06/02/04  80 m Freeser 115V            1                              $     8,442.00
BIO-RAD                   3161309         06/14/04  icycler well mod m\demo;     1    LX10003276101             $     4,500.00
06/14/04  iq optical system                 LXYO331002                $    27,000.00
06/14/04  bio plex                          582BRO11178               $    43,000.00
LUNAIRE LIMITED           1053708         07/02/04  Stability Chamber -          1            31043             $    10,117.00
CE0917W-A-B #31043
07/02/04  Steel Surcharge and DPDT                                    $       563.00
CONTACTS
BIOMATIC                  2004-176        07/30/04  OQ/PV of aglient series 1100                                $     1,895.00
binary pump, Model G1312
07/30/04  Maintence                                                   $       995.00
BIOLOGICAL OPTICAL TECH   04-10935        08/03/04  Objective Heater Controller  3                              $     2,825.00
08/03/04  Freight                                                     $        14.00
LAB PRODUCTS              IP081704        08/17/04  Waste management system with 1            59020             $     8,878.25
attachments
Freight and Handling                                        $     1,151.78
NOVTEK                    1514            08/30/04  Air stream Incubator                                        $     1,980.00
08/30/04  Freight                                                     $        18.95
BIOPTECHS                 04-11047        09/03/04  Della dish controller with                                  $     3,725.00
attachments
NORTHEAST AUTOMATION      11837           09/13/04  Jun-Air compressor                                          $     7,020.48
09/13/04  Freight                                                     $       195.52
ZANDER MEDICAL SUPPLIES   942504          09/14/04  Incubator with attachments                                  $     3,511.70
Freight                                                     $        95.11
FUNDING TOTAL  $ 1,317,351.68
==============

INV.                                                                                                 PROOF OF                EQUIP
ITEM          SUPPLIER            INVOICE #    INV. DATE         DESCRIPTION           VENDOR TOTAL  PAYMENT     CK AMT.     CODE
----  ------------------------  -------------  --------- --------------------------    ------------  --------  -----------   -----

MICRO VIDEO INSTRUMENT    00040763       03/29/04  CFI Plan Fluor 60x            57229         Yes       $   2,402.35  LAB
Freight                                                             SOFT
00041172       04/29/04  X-cite power supply lamp      57746         Yes       $   4,770.88  LAB
04/29/04  Freight                                                             SOFT
00042403       08/18/04  Microscope Upgrade with       59348         Yes       $  57,877.49  LAB
attachments
SOFTWARE                                                            SOFT
Freight                                                             SOFT
ISCO INC                  383957-00      03/31/04  Combiflash SQ 16X 16 Column   57214         Yes       $  53,650.95  LAB
383960-00      03/31/04  Lab equipment foxy 200 with   57214         Yes       $  53,650.95  LAB
attachments
AFFYMETRIX, INC           RI 83668       03/31/04  Training Kit GC & Scanner     57160         Yes       $ 140,000.00  LAB
upgrade GCS3000 with
attachments
FISHER SCIENTIFIC         5683007        04/26/04  World precision evom          57725         Yes       $   2,911.62  LAB
epithelial voltohmeter
EASTERN SCIENTIFIC        184            04/27/04  Leybold vacuum pump with      57722         Yes       $   3,085.00  LAB
attachments
04/27/04  Installation                                                        SOFT
INTELEC MARKETING         15958          04/30/04  Workstation ofc               58546         Yes       $   3,312.68  OFC
04/30/04  Freight                                                             SOFT
REC SUPPLY                1035           05/05/04  SGI Octane2 2X600MHz          57906         Yes       $  13,896.00  COMP
UNITED BUSINESS TEL       11362          07/09/04  125 Hartwell Phone System     58610         Yes       $  19,252.50  OFC
(Telephone Sets)
Tax                                                                 SOFT
11363          07/09/04  Hartwell Phone System /       58610         Yes       $  19,252.50  SOFT
Installation and Testing
11364          07/09/04  Hartwell Phone System /       58610         Yes       $  19,252.50  OFC
Installation and Testing
(3rd cabinet at local site
and one digital line card)
fibre extended board
NEW ENGLAND LAB           3650-1         04/12/04  8' fume hood and casework -   57340         Yes       $   6,022.40  LAB
10% deposit
3650-2         05/21/04  8' fume hood and casework -   57899         Yes       $  11,790.00  LAB
90% balance upon completion
SHONS REFRIGERATION       52348          06/02/04  80 m Freeser 115V             57909         Yes       $   8,442.00  LAB
BIO-RAD                   3161309        06/14/04  icycler well mod m\demo;      58156         Yes       $  75,692.96  LAB
06/14/04  iq optical system                                                   LAB
06/14/04  bio plex                                                            LAB
LUNAIRE LIMITED           1053708        07/02/04  Stability Chamber -           58901         Yes       $  10,979.82  LAB
CE0917W-A-B#31043
07/02/04  Steel Surcharge and DPDT                                            SOFT
CONTACTS
BIOMATIC                  2004-176       07/30/04  OQ/PV of agilent series 1100  59176         Yes       $   2,890.00  LAB
binary pump, Model G1312
07/30/04  Maintence                                                           SOFT
BIOLOGICAL OPTICAL TECH   04-10935       08/03/04  Objective Heater Controller   59099         Yes       $   2,839.00  LAB
08/03/04  Freight                                                             SOFT
LAB PRODUCTS              IP081704       08/17/04  Waste management system with  59412         Yes       $  10,030.03  LAB
attachments
Freight and Handling                                                SOFT
NOVTEK                    1514           08/30/04  Air stream Incubator          59430         Yes       $   1,996.96  LAB
08/30/04  Freight                                                             SOFT
BIOPTECHS                 04-11047       09/03/04  Della dish controller with    59666         Yes       $  12,600.00  LAB
attachments
NORTHEAST AUTOMATION      11837          09/13/04  Jun-Air compressor            59570         Yes       $   7,216.00  LAB
09/13/04  Freight                                                             SOFT
ZANDER MEDICAL SUPPLIES   942504         09/14/04  Incubator with attachments    59613         Yes       $   3,606.61  LAB
Freight                                                               SOFT

INV.
ITEM          SUPPLIER            INVOICE #     INV. DATE        DESCRIPTION              LOCATION
----  ------------------------  -------------   --------- ----------------------------   ------------

MICRO VIDEO INSTRUMENT    00040763        03/29/04  CFI Plan Fluor 60x             6A Bedford
Freight
00041172        04/29/04  X-cite power supply lamp       6a Bedford
04/29/04  Freight
00042403        08/18/04  Microscope Upgrade with        45 Hartwell
attachments
SOFTWARE
Freight
ISCO INC                  383957-00       03/31/04  Combiflash SQ 16X 16 Column    45 Hartwell
383960-00       03/31/04  Lab equipment foxy 200 with    45 Hartwell
attachments
AFFYMETRIX, INC          RI 83668        03/31/04  Training Kit GC & Scanner      6A Bedford
upgrade GCS3000 with
attachments
FISHER SCIENTIFIC         5683007         04/26/04  World precision evom           45 Hartwell
epithelial voltohmeter
EASTERN SCIENTIFIC        184             04/27/04  Leybold vacuum pump with       45 Hartwell
attachments
04/27/04  Installation
INTELEC MARKETING         15958           04/30/04  Workstation ofc                45 Hartwell
04/30/04  Freight
REC SUPPLY                1035            05/05/04  SGI Octane2 2X600MHz           45 Hartwell
UNITED BUSINESS TEL       11362           07/09/04  125 Hartwell Phone System      125 Hartwell
(Telephone Sets)
Tax
11363           07/09/04  Hartwell Phone System /        125 Hartwell
Installation and Testing
11364           07/09/04  Hartwell Phone System /        125 Hartwell
Installation and Testing
(3rd cabinet at local site
and one digital line card)
fibre extended board
NEW ENGLAND LAB           3650-1          04/12/04  8' fume hood and casework -    45 Hartwell
10% deposit
3650-2          05/21/04  8' fume hood and casework -    45 Hartwell
90% balance upon completion
SHONS REFRIGERATION       52348           06/02/04  80 m Freeser 115V              45 Hartwell
BIO-RAD                   3161309         06/14/04  icycler well mod m\demo;       45 Hartwell
06/14/04  iq optical system
06/14/04  bio plex
LUNAIRE LIMITED           1053708         07/02/04  Stability Chamber -            45 Hartwell
CE0917W-A-B#31043
07/02/04  Steel Surcharge and DPDT
CONTACTS
BIOMATIC                  2004-176        07/30/04  OQ/PV of agilent series 1100   45 Hartwell
binary pump, Model G1312
07/30/04  Maintence
BIOLOGICAL OPTICAL TECH   04-10935        08/03/04  Objective Heater Controller    45 Hartwell
08/03/04  Freight
LAB PRODUCTS              IP081704        08/17/04  Waste management system with   45 Hartwell
attachments
Freight and Handling
NOVTEK                    1514            08/30/04  Air stream Incubator           45 Hartwell
08/30/04  Freight
BIOPTECHS                 04-11047        09/03/04  Della dish controller with     45 Hartwell
attachments
NORTHEAST AUTOMATION      11837           09/13/04  Jun-Air compressor             45 Hartwell
09/13/04  Freight
ZANDER MEDICAL SUPPLIES   942504          09/14/04  Incubator with attachments     45 Hartwell
Freight

EQUIPMENT CODE LIST

LAB   = Lab Equipment

COMP  = Computer Hardware

OFC   = Furniture, Telephone, Fax, Etc.

SOFT  = [ILLEGIBLE], TOOLING/MOLDS, TAX, Freight, Extended Warranties, Service
Contracts, Tenant Improvements, Etc.

Equip. Code            Total (Cat.)    % of Total

LAB                   $  1,129,669.92       85.75%
COMP                  $    103,301.79        7.84%
OFC                   $     20,431.54        1.55%
SOFT                  $     63,948.43        4.85%
Total                 $  1,317.351.68      100.00%

Synta Pharmaceuticals Corp.
By:  /s/ Keith Ehrlich
Name:  Keith Ehrlich
-------------------------------
Title:  V.P. Finance; Administration
------------------------------

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors
Synta Pharmaceuticals Corp.:

We consent to the use of our report dated February 4, 2005 with respect to
the consolidated balance sheets of Synta Pharmaceuticals Corp. as of December
31, 2004 and 2003, and the related consolidated statements of operations,
stockholders' equity (deficit) and comprehensive loss, and cash flows for each
of the years in the three-year period ended December 31, 2004 and the period
from inception (March 10, 2000) through December 31, 2004, included herein and
to the reference to our firm under the heading "Experts" in the prospectus.

/s/ KPMG LLP

Boston, Massachusetts
March 17, 2005

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors
Synta Pharmaceuticals Corp.:

We consent to the use of our report dated December 1, 2004, with respect to the
consolidated balance sheet of Principia Associates, Inc. as of September 20,
2002, and the related consolidated statements of operations, stockholders'
equity, and cash flows for the period from inception (June 17, 2002) through
September 20, 2002, included herein and to the reference to our firm under the
heading "Experts" in the prospectus.

/s/ KPMG LLP

Boston, Massachusetts
March 17, 2005

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors
Synta Pharmaceuticals Corp.:

We consent to the use of our report dated December 1, 2004, with respect to 
the balance sheet of SBR Pharmaceuticals Corp. as of July 31, 2002, and the 
related statements of operations, stockholders' equity, and cash flows for 
the seven months ended July 31, 2002, included herein and to the reference to 
our firm under the heading "Experts" in the prospectus.

/s/ KPMG LLP

Boston, Massachusetts
March 17, 2005