SECURITIES PURCHASE AGREEMENT



            SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of July

18, 2001, among Curis, Inc., a Delaware corporation (the "Company"), Elan

International Services, Ltd., a Bermuda exempted limited liability company

("EIS"), and Elan Pharma International Limited, an Irish private limited

liability company, an affiliate of EIS ("EPIL").



                                R E C I T A L S:



            A. The Company desires to issue and sell to EIS, and EIS desires to

purchase from the Company, on the date hereof, (i) 1,000 shares of a

newly-created series of the Company's convertible exchangeable preferred stock,

par value U.S.$0.01 per share, designated "Series A Convertible Exchangeable

Preferred Stock" (the "Series A Preferred Stock"), (ii) 546,448 shares of the

Company's common stock, par value U.S.$0.01 per share ("Common Stock"), and

(iii) a warrant to purchase up to 50,000 shares of Common Stock, as provided

therein, in the form attached hereto as Exhibit A (as amended at any time, the

"Warrant"). The Company further desires to issue and sell to EPIL, and EPIL

desires to purchase from the Company, a convertible promissory note of the

Company, in the form attached hereto as Exhibit B-1 (the "Note"), advances under

which shall be disbursed from time to time in a principal amount up to

U.S.$8,010,000 (excluding capitalized interest) in accordance with its terms and

subject to the conditions contained herein and therein. The Series A Preferred

Stock and the Common Stock are referred to, collectively, herein as the

"Shares." The Shares, the Warrant and the Note are referred to, collectively,

herein as the "Securities." The rights, preferences and privileges of the Series

A Preferred Stock are as set forth in the Company's Certificate of Designations,

Preferences and Rights, the form of which is attached hereto as Exhibit C (the

"Certificate of Designations").



            B. The Company and EIS have formed Curis Newco, Ltd., an exempted

limited liability company organized under the laws of Bermuda ("Newco"), and

pursuant to the terms of a Subscription, Joint Development and Operating

Agreement, dated as of the date hereof (as amended at any time, the "JDOA"),

simultaneously with the transactions contemplated by this Agreement to occur on

the Initial Closing Date: (i) the Company shall acquire 6,000 voting common

shares of Newco, par value U.S.$1.00 per share (the "Newco Common Shares"),

representing 100% of the issued and outstanding Newco Common Shares and, on a

fully-diluted basis, 50% of the aggregate outstanding Newco Shares, and 3,612

non-voting convertible preference shares of Newco, par value U.S.$1.00 per share

(the "Newco Preference Shares"; together with the Newco Common Shares, the

"Newco Shares"), representing 60.2% of the issued and outstanding Newco

Preference Shares and, on a fully-diluted basis, 30.1% of the aggregate

outstanding Newco Shares and (ii) EIS shall acquire 2,388 Newco Preference

Shares, representing 39.8% of the issued and outstanding Newco Preference Shares

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                                      -2-





and, on a fully-diluted basis, 19.9% of the aggregate outstanding Newco Shares.

Additionally, as of the date hereof, Newco has entered into license agreements

with (i) Neuralab Limited, a Bermuda private limited liability company and as

affiliate of EIS and EPIL ("Elan") (such agreement, as amended at any time, the

"Elan License Agreement"), and (ii) the Company (such agreement, as amended at

any time, the "Company License Agreement"; together with the Elan License

Agreement, the "License Agreements").



            C. The Company, EIS and EPIL are executing and delivering on the

date hereof a Registration Rights Agreement, in the form attached hereto as

Exhibit D (as amended at any time, the "Company Registration Rights Agreement"),

in respect of (i) Common Stock issued and purchased hereunder and Common Stock

issued or issuable upon conversion of the Series A Preferred Stock, exercise of

all or any portion of the Warrant and conversion of all or any portion of the

Note and (ii) any other Common Stock owned by EIS or any of its affiliates or

their respective permitted transferees. The Company, EIS and Newco are also

executing and delivering on the date hereof a Registration Rights Agreement, in

the form attached hereto as Exhibit E (as amended at any time, the "Newco

Registration Rights Agreement"). This Agreement, the Certificate of

Designations, the Note, the Warrant, the JDOA, the Company Registration Rights

Agreement, the Newco Registration Rights Agreement, the License Agreements and

each other document or instrument executed and delivered in connection with the

transactions contemplated hereby and by the JDOA are referred to, collectively,

herein as the "Transaction Documents." On June 29, 2001, the Company executed

and delivered a letter to and for the benefit of EIS (the "Letter").



                               A G R E E M E N T:



            In consideration of the foregoing premises and the mutual covenants

contained herein, the sufficiency of which is hereby acknowledged, the parties

hereby agree as follows:



            SECTION 1. Closing.



            (a) Time and Place. The closing of the Initial Purchase (as defined

below) (the "Initial Closing") shall occur on the date hereof (the "Initial

Closing Date"). The funding of each advance under the Note (each, a "Note

Closing") shall occur on such dates as set forth in Section 1(e) (each, a "Note

Closing Date"). The Initial Closing and each Note Closing individually are

referred to herein as a "Closing," and the Initial Closing Date and each Note

Closing Date individually are referred to herein as a "Closing Date." The

Initial Closing shall be held at the offices of Cahill Gordon & Reindel, 80 Pine

Street, New York, New York 10005 (by means of facsimile or overnight mail) and

each Note Closing shall be a paper closing by means of facsimile or as otherwise

agreed by the parties.

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                                      -3-





            (b) Sale and Purchase. At the Initial Closing, subject to the terms

and conditions hereof, the Company shall issue and sell to EIS, and EIS shall

purchase from the Company, (i) 1,000 shares of Series A Preferred Stock, (ii)

546,448 shares of Common Stock and (iii) the Warrant (the "Initial Purchase").

In addition, subject to the terms and conditions hereof and as set forth in the

Note, the Company shall issue to EPIL the Note as set forth in Section 1(e).



            (c) Purchase Price. The aggregate purchase price for the Initial

Purchase shall be U.S.$16,015,000 (the "Initial Purchase Price"),

U.S.$12,015,000 of which represents the purchase price for 1,000 shares of

Series A Preferred Stock, and U.S.$4,000,000 of which represents the purchase

price for 546,448 shares of Common Stock and the Warrant.



            (d) Initial Closing Delivery. On the Initial Closing Date, subject

to the terms and conditions hereof:



            (i) EIS shall pay the Initial Purchase Price by wire transfer of

      U.S.$16,015,000 to an account designated in writing by the Company;



            (ii) EIS, EPIL and/or Elan, as applicable, shall execute and deliver

      to the Company: (A) this Agreement, (B) the Company Registration Rights

      Agreement, (C) the Newco Registration Rights Agreement, (D) the JDOA and

      (E) the License Agreements;



            (iii) the Company shall execute and deliver to EIS or EPIL, as

      applicable: (A) certificates representing 1,000 shares of Series A

      Preferred Stock, (B) certificates representing 546,448 shares of Common

      Stock, (C) the Note, (D) the Warrant, (E) this Agreement, (F) the Company

      Registration Rights Agreement, (G) the Newco Registration Rights

      Agreement, (H) the JDOA, (I) the Certificate of Designations as filed with

      the Secretary of State of the State of Delaware, (J) the License

      Agreements, (K) Exchange Shares (as defined in Section 5(b) hereof),

      including the a stock power relating to the Exchange Shares for the

      benefit of EIS executed pursuant to Section 6 hereof, (L) a customary

      secretary's certificate from the secretary of the Company, including a

      certificate as to the incumbency of the officers of the Company executing

      any of the Transaction Documents, and (M) any other documents or

      instruments reasonably requested by EIS or EPIL; and



            (iv) the Company shall cause to be delivered to EIS and EPIL an

      opinion of counsel in the form attached hereto as Exhibit F.



            (e) Advances under the Note. It is estimated that Newco will require

additional funds to commence development of Newco's products. Within the period

commencing

{PAGE}



                                      -4-





on the Initial Closing Date and ending on the two year anniversary of the

Initial Closing Date (the "Development Period"), EIS and the Company may provide

to Newco up to an aggregate maximum amount of U.S.$10,000,000, such funding to

be provided by EIS and the Company on a pro rata basis based on their respective

equity interests, on a fully-diluted basis, in Newco (the "Development

Funding"). In order to ensure the Company has funds available for its share of

the Development Funding, EPIL has agreed to advance to the Company up to

U.S.$8,010,000 subject to the terms and conditions set forth below and as set

forth in the Note.



            (1) From time to time at the request of the Company, EPIL shall make

      advances under the Note to the Company (each, an "Advance") in an

      aggregate principal amount of up to U.S.$8,010,000 (excluding capitalized

      interest) (the "Total Commitment"); provided that the Total Commitment

      shall be reduced in an amount equal to amounts funded by the Company to

      Newco as Development Funding (each a "Development Funding Contribution")

      for which an Advance was not concurrently requested in respect of the

      Note. The aggregate amount of the Advances made to the Company shall not

      in any event exceed the amount of Development Funding funded by the

      Company to Newco (after giving effect to any concurrent Advance made under

      the Note and any corresponding Development Funding Contribution made by

      the Company) (the "Maximum Amount").



            (2) Each Advance shall be subject to the following terms and

      conditions:



                  (A) each Advance shall be made at such time that (x) each

      Participant (as defined in the JDOA) shall have determined, pursuant to

      Clauses 6.3 and 6.4 of the JDOA, that Development Funding shall be

      provided, (y) Newco shall have provided written notice thereof to EIS and

      to the Company and (z) the Company shall have delivered a written request

      to EPIL in the form attached hereto as Exhibit B-2 (the "Disbursement

      Notice") not less than 10 business days prior to the requested Note

      Closing Date;



                  (B) the minimum amount of each Advance shall be not less than

      U.S.$250,000 (or such lesser amount up to the Maximum Amount or the Total

      Commitment, as the case may be, if the amount that remains available is

      less than U.S.$250,000). The Company shall be entitled to receive up to

      four (4) Advances in any calendar year;



                  (C) each Advance under the Note shall (x) occur only during

      the Development Period, (y) together with all previous Advances, not

      exceed the Total Commitment and (z) together with all previous Advances,

      not exceed the Maximum Amount;

{PAGE}



                                      -5-





                  (D) at the time of each Advance, no material breach or default

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