COLLABORATION AGREEMENT

This Agreement is entered into as of April 19, 2002, by and between:

                                         SEATTLE GENETICS, INC., a Delaware corporation, having its principal place of business at 21823 30th Drive S.E., Bothell, Washington 98021

(hereinafter referred to as SGI)

and:

                                         GENENTECH INC., a Delaware corporation, having its principal place of business at 1 DNA Way, South San Francisco, California.

(hereinafter referred to as GNE).

WITNESSETH

WHEREAS, SGI owns or controls intellectual property rights relating to certain drug conjugation and linker technology;

WHEREAS, GNE is currently conducting research and development programs aimed at the discovery of antigens and the development of antibodies targeting those antigens;

WHEREAS, GNE wishes to acquire from SGI exclusive options to worldwide exclusive licenses under SGIs patent rights and know-how related to SGIs drug conjugation and linker technology;

WHEREAS, SGI wishes to grant to GNE such exclusive options to such exclusive licenses in order to allow GNE to evaluate SGIs drug conjugation and linker technology for use with certain of GNEs antigens and antibodies, and

WHEREAS, SGI wishes to grant to GNE such exclusive licenses, subject to the terms of and conditioned upon this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and obligations set forth herein, the Parties hereto, intending to be legally bound, agree as follows:

ARTICLE I - DEFINITIONS AND INTERPRETATION

1.1.          Definitions:  For the purposes of this Agreement the following words and phrases shall have the following meanings:

AAA has the meaning set forth in Section 20.3.4.

ADC or [***] means any [***] Antibody that incorporates or uses Drug Conjugation Technology.

ADC Access Fee has the meaning set forth in Section 7.1.1 hereof.

Additional ADC Access Fee has the meaning set forth in Section 7.1.2 hereof.

Additional Research Program Renewal Term has the meaning set forth in Section 3.3.

Affiliate of a Party, means any corporation or other business entity that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with a Party.  As used herein, the term control will mean the direct or indirect ownership of [***] or more of the stock having the right to vote for directors thereof or the ability to otherwise control the management thereof.

Agreement means this agreement, all amendments and supplements to this Agreement and all schedules to this Agreement, including the following:

Antibody or Antibodies means any antibody, [***], with a unique amino acid sequence that binds to a Research Antigen or Exclusive Antigen.

Antigen means any [***] binds.

[***] means any molecule, including without limitation, any [***], that [***].

[***] means the SGI Technology licensed to SGI under the [***] (as defined in the definition of SGI In-Licenses).

Breaching Party has the meaning set forth in Section 14.4.

Calendar Quarter means any of the three-month periods beginning January 1, April 1, July 1 and October 1 in any year.

Change in Control has the meaning set forth in Article 17.

Confidential Information has the meaning set forth in Section 9.1.

[***] or [***] means any [***] that does not [***] or [***].

Designation Renewal Fees has the meaning set forth in Section 7.1.2.

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Drug Conjugate Materials means research grade cytotoxic compounds, including [***], and linkers for attaching such cytotoxic compounds to [***].

Drug Conjugation Technology means drug conjugation chemistry owned or controlled by SGI, including [***] and derivatives thereof, [***] analogues developed by SGI, [***] and linker technology for attaching Drug Conjugate Materials to [***] that is the subject matter of the Licensed Patents and SGI Know-How.

Effective Date means the date of this Agreement.

Events of Force Majeure has the meaning set forth in Article 16.

Exclusive Antigen has the meaning set forth in Section 4.3.1.

Exclusive License has the meaning set forth in Section 4.3.1.

Existing Third Party Royalties has the meaning set forth in Section 7.4.1.

Field means [***]; provided that with respect to use of the [***], the [***]; and provided, further, that [***].

First Commercial Sale means, in each country of the Territory, the first commercial sale of a Licensed Product by GNE, its Affiliates or Sublicensees to a Third-Party following, if required by law, Regulatory Approval and, when Regulatory Approval is not required by law, the first commercial sale in that country, in each case for use or consumption of such Licensed Product in such country by the general public; for avoidance of doubt, First Commercial Sale of a given Licensed Product cannot occur more than once in any particular country of the Territory.

First Research Program Renewal Term has the meaning set forth in Section 3.3

GNE Patents has the meaning set forth in Section 10.3.2.

Improvements means all patentable or non-patentable inventions, discoveries, or other know-how developed solely or jointly by employees of, or others acting on behalf of, SGI or GNE (including any SGI FTEs funded by GNE pursuant to this Agreement) which (i) utilize, incorporate, derive from or are based on the Drug Conjugation Technology, (ii) add to the knowledge of the Drug Conjugation Technology and (iii) help mastering or enhancing processes for formulating or using the Drug Conjugation Technology in combination with [***].  By way of clarification, the Parties agree that discoveries, inventions, developments and know-how made or developed solely by GNE that are not specifically related to Drug Conjugation Technology shall not be deemed Improvements hereunder.

IND means an Investigational New Drug Application filed or to be filed with the United States Food and Drug Administration and any successor agency or authority thereto (FDA).

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Indemnitee has the meaning set forth in Section 15.2.

Indemnitor has the meaning set forth in Section 15.2

Initial Research Program Term has the meaning set forth in Section 3.3.

Initiation means, with respect to a human clinical trial, the dosing of the first patient with a Licensed Product pursuant to a clinical protocol of the specified clinical trial.

Joint Patents has the meaning set forth in Section 10.2.2.

Liabilities has the meaning set forth in Section 15.1.1.

Licensed Patents means:

(i)            any [***] patents and patent applications listed in Schedule B to this Agreement, which shall be amended from time to time to reflect any additions to the Licensed Patents;

(ii)           any patents and patent applications covering Improvements, and covering [***] to the extent [***];

(iii)          any [***] patents issued from any patent applications referred to above and any [***] patents issued from a patent application filed in any country in the Territory which corresponds to a patent or patent application identified above;

(iv)          any reissues, reexaminations, confirmations, renewals, registrations, substitutions, extensions, counterparts, divisions or continuations issued, assigned or licensed to SGI of or relating to the patents or patent applications identified above; and

(v)           [***].

Licensed Product means any and all products where the manufacture, use, sale, offer for sale or import of such products 1) would have infringed a Valid Patent Claim if not for the licenses granted in this Agreement and/or 2) otherwise relies on or incorporates Drug Conjugation Technology, SGI Know-How, Improvements or [***] provided to GNE by SGI hereunder.

Net Sales means, as to each calendar quarter, the gross invoiced sales prices charged for all Licensed Products sold by or for GNE, its Affiliates and sublicensees to independent Third Parties during such quarter, after deduction (if not already deducted in the amount invoiced) of the following items paid by GNE, its Affiliates and sublicensees during such calendar quarter with respect to sales of Licensed Products regardless of the calendar quarter in which such sales were made, provided and to the extent that such items are incurred or allowed and do not exceed reasonable and customary amounts in the market in which such sales occurred:

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(a)           trade, quantity and/or cash discounts, allowances or rebates actually taken and allowed, including without limitation promotional or similar discounts or rebates and discounts or rebates to governmental or managed care organizations;

(b)           credits or allowances given or made for rejection, defects, recall or return, rebates, retroactive price reductions of or uncollectable amounts on previously sold Licensed Products;

(c)           any tax, tariff, duty or government charge (including any tax such as a sales, value added, excise or similar tax or government charge other than an income tax) levied on the sale, transportation or delivery of a Licensed Product and borne by the seller thereof without reimbursement from any third party; and

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