<PAGE>


CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

                                                                  EXHIBIT 10.4

                            PURCHASE/SUPPLY AGREEMENT

                                    REGARDING

                                     IB-367

                                     BETWEEN

                          FERRING PEPTIDE PRODUCTION AB
                       P.O. BOX 30047, SOLDATTORPSVAGEN 5
                                  S-20061 MALMO
                                     SWEDEN

                                       AND

                          POLYPEPTIDE LABORATORIES A/S
                                 HERREDSVEJEN 2
                                  3400 HILLER0D
                                     DENMARK

                      JOINTLY REFERRED TO AS "POLYPEPTIDE"

                                       AND

                       INTRABIOTICS PHARMACEUTICALS, INC.
                                 816 KIFER ROAD
                                    SUNNYVALE
                                CALIFORNIA 94086

                                       USA


[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


                                       1.

<PAGE>

         This Agreement is entered into on the 3rd day of January, 1997,
between POLYPEPTIDE LABORATORIES A/S, a Danish company incorporated under the
laws of Denmark, with its registered offices at Herredsvejen 2,3400 Hillerod,
Denmark and FERRING PEPTIDE PRODUCTION AB, a Swedish company incorporated
under the laws of Sweden, with its registered office at Soldattorpsvagen 5,
S-20061 Malmo, Sweden (hereinafter jointly referred to as POLYPEPTIDE), and
INTRABIOTICS PHARMACEUTICALS, INC., a company incorporated in the state of
Delaware under the laws of the United States, with its registered offices at
816 Kifer Road, Sunnyvale, California 94086, USA (hereinafter referred to as
INTRABIOTICS).

         WHEREAS, the parties now wish to enter into a long-term business
relationship under which POLYPEPTIDE will supply to INTRABIOTICS the Drug
Substance IB-367 hereafter referred to as the "Product" for marketing
world-wide. Therefore the parties agree on the following:

         As used herein, each of the following defined terms shall have the
meaning specified:

         "Affiliate" of a Party shall mean an entity: (i) in which at least 50
per cent of the voting shares or other means of control of such entity are owned
or controlled by such Party, or (ii) which owns or controls at least 50 per cent
of the voting shares of such Party, or (iii) in which at least 50 per cent of
such ownership or control is owned or controlled by an entity owning or
controlling at least 50 per cent of the voting shares of such Party.

         "cGMP" shall mean the current good manufacturing practices regulations
now set forth in Part 211 of Title 21 of the U.S. Code of Federal Regulations,
as hereafter revised and amended.

         "Product" shall mean the compound as described in the Specification
manufactured according to the process developed under the Development Supply
Agreement entered into between INTRABIOTICS and POLYPEPTIDE on the date hereof.

         "Specification" shall mean the specifications set forth in Annex 1 to
this Agreement as may be modified from time to time as directed by IntraBiotics.

         "Party" shall mean INTRABIOTICS or POLYPEPTIDE and, when used in the
plural, shall mean INTRABIOTICS and POLYPEPTIDE.

         "Manufacturing Cost" shall mean, for each gram of Product
manufactured, the cost to POLYPEPTIDE for [ * ] relating to the manufacture
of Product, and other costs to manufacture Product under current generally
accepted accounting principles, all such costs and charges to be calculated
on the basis consistently applied to all other products manufactured by
POLYPEPTIDE at the facility or facilities used to manufacture Product.

1.       SUPPLY ARRANGEMENT

         This entire agreement is conditional upon:

         -     INTRABIOTICS deciding to use the Process developed under the
               Development Supply Agreement entered into between INTRABIOTICS
               and POLYPEPTIDE on the date hereof for producing the Product for
               commercial sale.


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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


                                       2.

<PAGE>

         -     INTRABIOTICS notifying POLYPEPTIDE on its decision to produce the
               Product for commercial sales with the lead times stated in clause
               3.1.

         Given that these conditions are fulfilled POLYPEPTIDE shall supply to
INTRABIOTICS and its sublicensees and distributors bulk quantities of the
Product made in accordance with the Specification. The supply of the Product is
made to INTRABIOTICS in accordance with Annex 2, Purchase/Supply Schedules,
which shall be provided by INTRABIOTICS to POLYPEPTIDE according to clause 3.2
and 3.3, and the individual purchase orders placed by INTRABIOTICS consistent
herewithwhereby the actual delivery dates are defined.

2.       PURCHASE/SUPPLY

         Under this Agreement and subject to POLYPEPTIDE's ability to supply,
INTRABIOTICS is obliged to purchase at least [ * ] per cent of its world-wide
needs of the Product on an annual basis from POLYPEPTIDE. If INTRABIOTICS
licenses the Product to a third party it shall in good faith attempt to obtain
for the benefit of POLYPEPTIDE a purchase/supply agreement between the licensee
and POLYPEPTIDE on substantially the same terms as this Agreement.

         If INTRABIOTICS licenses the Product to a third party and such third
party does not enter into a purchase/supply agreement with POLYPEPTIDE and as a
consequence the purchases made by INTRABIOTICS under this Agreement come to an
end or are significantly reduced (a significant reduction for this purpose being
a reduction of [ * ]% within any [ * ] period as compared to the preceding
[ * ]) then:

         (a)      In the case that the purchases are significantly reduced
INTRABIOTICS shall honour existing purchase orders on the scheduled dates and
shall within [ * ] of the occurrence of the significant reduction in
purchases, purchase a proportional part (corresponding to the percentage
reduction in purchases) of existing stocks of finished inventory of Product
produced on the basis of INTRABIOTICS Purchase/Supply Schedules in accordance
with clause 3 at the then established price according to clause 4. [ * ] sole
option, [ * ] shall within [ * ] of the occurrence of the significant
reduction in purchases, either purchase a proportional part (corresponding to
the percentage reduction in purchases) of the inventory of raw materials
purchased and intermediates produced on the basis of INTRABIOTICS
Purchase/Supply Schedules in accordance with clause 3 at a price equal to
[ * ], or request POLYPEPTIDE to complete the manufacture of such raw
materials and intermediates into finished inventory of Product which
INTRABIOTICS will purchase at the then established price according to clause
4.

         (b)      In the case that the purchases come to an end INTRABIOTICS
shall honour existing purchase orders on the scheduled dates and shall within
[ * ] of the last existing purchase order being delivered purchase all
existing stocks of finished inventory of Product produced on the basis of
INTRABIOTICS Purchase/Supply Schedules in accordance with clause 3 at the
then established price according to clause 4. At INTRABIOTICS sole option,
INTRABIOTICS shall within [ * ] of the last existing purchase order being
delivered either purchase all of the inventory of raw materials purchased and
intermediates produced on the basis of INTRABIOTICS Purchase/Supply Schedules
in accordance with Clause 3 at a price equal to

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


                                       3.

<PAGE>

[* ], or request POLYPEPTIDE to complete the manufacture of such raw materials
and intermediates into finished inventory of Product which INTRABIOTICS will
purchase at the then established price according to clause 4.

3.       PURCHASE/SUPPLY SCHEDULES

         Following the completion of Phase II clinical studies INTRABIOTICS
shall advise POLYPEPTIDE of its estimate of the market potential of the Product
to assist POLYPEPTIDE in its long term planning. Such estimates are indicative
only and shall be non-binding on the Parties.

         3.1      For quantities of Product to be delivered during the first
year of commercial supply of the Product the following shall apply:

                  (a)      For quantities up to [ * ] the purchase order from
INTRABIOTICS shall be given [ * ] in advance.

                  (b)      For quantities in excess of [ * ] and up to [ * ]
purchase orders shall be given at least [ * ] in advance.

                  (c)      For quantities between [ * ] purchase orders shall be
given at least [ * ] in advance.

                  (d)      For quantities above [ * ] purchase orders shall be
given at least [ * ] in advance.

         3.2      From the first anniversary of the first delivery of the
Product hereunder and onwards INTRABIOTICS shall by [ * ] of each calendar year
render to POLYPEPTIDE newly revised Purchase/Supply Schedules. Each
Purchase/Supply Schedule will be for the following [ * ] months.

         POLYPEPTIDE is obliged to supply the Product according to INTRABIOTICS'
purchase order provided that such purchase order is placed [ * ] prior to the
requested delivery date. If INTRABIOTICS places orders for quantities in any
calendar quarter exceeding [ * ] of the quantities purchased in the previous
calendar quarter then POLYPEPTIDE will use its best efforts to deliver the
additional quantities within a reasonable period of time.

         With respect to each Purchase/Supply Schedule in effect from time to
time INTRABIOTICS is obliged to purchase at least [ * ] of the volume of the
first [ * ] of such Purchase/Supply Schedule.

         3.3      The supply and forecasting procedure outlined above in clause
3.2 shall govern annual supplies of Product up to [ * ]. For annual supplies
above [ * ] the Parties shall negotiate in good faith a new supply and
forecasting procedure to replace 3.2.

         In the event that the Parties fail to agree a new procedure, clause 3.2
shall remain in force and govern the supply of up to [ * ] of Product per year.
INTRABIOTICS in addition may place additional binding purchase orders at least
[ * ] in advance of the requested delivery date for such


[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


                                       4.

<PAGE>

additional supplies of Product provided that such additional supplies are within
the volumes in the Purchase/Supply Schedules in effect from time to time and
provided that the purchase orders for any given calendar [ * ] period do not
exceed the preceding calendar [ * ] period by more than [ * ]. POLYPEPTIDE shall
accept such purchase orders.

         3.4      If at any time POLYPEPTIDE shall be unable to supply
Product to INTRABIOTICS (other than as excused hereunder by virtue of force
majeure) then this shall be considered a material breach of this Agreement.
In addition, if POLYPEPTIDE shall be unable to supply or POLYPEPTIDE
terminates this Agreement other than pursuant to clause 9.2, POLYPEPTIDE
shall grant to INTRABIOTICS the [ * ] right to manufacture the Product under
[ * ], and shall promptly disclose and transfer to INTRABIOTICS at [ * ],
such information as INTRABIOTICS shall reasonably require in order to make
such Product or have such Product made on its behalf. Upon request by
INTRABIOTICS, POLYPEPTIDE shall further provide to INTRABIOTICS at [ * ]
assistance from and access to appropriate POLYPEPTIDE personnel as reasonably
required to facilitate the establishment of a reliable source of supply of
materials to INTRABIOTICS with a minimum of "down-time".

4.       PRICES

         4.1      The price per delivery shall be based on the total quantity
to be purchased by INTRABIOTICS for the [ * ] according to the
Purchase/Supply Schedule. For the period from the signature of this agreement
until [ * ] the prices shall be calculated pursuant to the following scale:

<TABLE>
<CAPTION>

                              VOLUME BAND
                                 [ * ]                             PRICE USD PER [ * ]
<S>                         <C>                                    <C>
                                 [ * ]                                    [ * ]
                                 [ * ]                                    [ * ]
                                 [ * ]                                    [ * ]
                                 [ * ]                                    [ * ]
                                 [ * ]                                    [ * ]
                                 [ * ]                                    [ * ]
                                 [ * ]                                    [ * ]
</TABLE>

         4.2      The prices stated in clause 4.1 are based on the following two
basic assumptions: (i) that the cyclization of the linear peptide to form the
Product through the formation of the two disulfide bridges has a yield of at
least [ * ] as measured by [ * ] with [ * ] at [ * ], and (ii) the Specification
is as set out in Annex 1 upon signing this Agreement.

         When the commercial scale-up process is defined the parties shall
review any change in price in the light of the then calculated Manufacturing
Cost based on the then current Specification and process. Provided that the
cyclization yield is still at least [ * ] and there have been no changes to the
Specification affecting Manufacturing Cost, then the price formula as outlined
in clause 4.3 shall be applicable to the prices listed in clause 4.1. If either
of the two basic


[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


                                       5.

<PAGE>

assumptions have changed and it can be demonstrated that these changes have
increased or decreased the Manufacturing Cost of the Product then the parties
shall negotiate appropriate changes in the prices listed in clause 4.1. In the
event that the Parties are unable to reach agreement on a revised price within
[ * ] of starting negotiations then, upon notice from either Party, [ * ].

         4.3      Every [ * ] thereafter the prices shall be negotiated and
approved by the parties for the forthcoming [ * ] period. These negotiations
will end no later than 1 month before the beginning of the forthcoming [ * ]
period. The negotiations on the price shall take into consideration increases or
decreases in the costs of [ * ], and the interest of both parties to optimise
the overall profitability. The adjusted price applies to all deliveries in the
following [ * ] period. In the event that the exchange rate between the Danish
Kroner and US Dollar fluctuates more than [ * ] in the intervening period
between [ * ] price reviews, the Parties shall review, within [ * ] of such
fluctuation being identified by either Party, the effect of such currency
fluctuation on costs and revenues and prices in accordance with this clause.

         4.4      If the parties cannot agree an a new price and POLYPEPTIDE's
Manufacturing Cost within the same Volume Band above has increased, the former
agreed price shall be changed for the next [ * ] period by an amount
corresponding to the change of the lower of [ * ] for the preceding [ * ],
published by the US Department of Commerce, or the [ * ] over the preceding
[ * ].

         If the parties cannot agree on a new price and POLYPEPTIDE's
Manufacturing Cost within the same Volume Band above has decreased, the former
agreed price shall be decreased for the next [ * ] period by an amount
corresponding to [ * ] percent of [ * ].

         4.5      If at any time after the scale-up Process has been defined,
cf. clause 4.2, INTRABIOTICS shall modify the Specification and it can be
demonstrated that such modifications have increased or decreased the
Manufacturing Cost of the Product, then the Parties shall negotiate appropriate
changes in the then current prices. In the event that the Parties are unable to
reach agreement on a revised price within [ * ] of starting negotiations then,
upon notice from either Party, [ * ].

         4.6      If during a given [ * ] period INTRABIOTICS has obtained
supplies of the Product at prices based on a Purchase/Supply Schedule which
INTRABIOTICS has not been able to fulfil, or has purchased quantities in excess
of the quantities on which the prices have been based, INTRABIOTICS' [ * ] for
the [ * ] period in question shall be adjusted accordingly in the following
[ * ]. Any amount owed by INTRABIOTICS to POLYPEPTIDE due to such adjustment
shall be paid no later than [ * ] after the beginning of the next [ * ] period.
Any amount owed by POLYPEPTIDE to INTRABIOTICS shall be [ * ].

5.       PAYMENTS

         5.1      The Product shall be invoiced at shipment to INTRABIOTICS in
US dollars ("USD").


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COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


                                       6.

<PAGE>

         5.2      Payments shall be made by INTRABIOTICS to POLYPEPTIDE at the
latest [ * ] from date of invoice. Date of invoice shall not precede date of
shipment of the Product together with information necessary to verify acceptable
quality and conformance to all applicable specifications for each batch
manufactured by POLYPEPTIDE.

6.       DELIVERY AND ORDERING OF THE PRODUCT

         6.1      POLYPEPTIDE shall deliver to INTRABIOTICS all the Product in a
timely fashion, subject to the requirements of this Agreement and individual
purchase orders. Based on the Purchase/Supply Schedule INTRABIOTICS shall give
to POLYPEPTIDE confirmed purchase orders at least [ * ] prior to the requested
delivery date unless otherwise stated in this Agreement and POLYPEPTIDE shall
deliver the Product no later than the requested delivery date provided such
purchase orders are in keeping with the most recently revised Purchase/Supply
Schedule as outlined in clause 3.1, 3.2 and 3.3. All Product shall be shipped to
INTRABIOTICS by POLYPEPTIDE at least [ * ] before the Product's date of
reanalysis according to the Specification.

         6.2      The Product is to be shipped [ * ], as that term is generally
understood in accordance with "Incoterms". POLYPEPTIDE shall package materials
for shipment in accordance with the Specification and all applicable laws, as
supplemented (to the extent not inconsistent therewith) by POLYPEPTIDE's then
current standard operating practices. POLYPEPTIDE shall split shipments upon the
reasonable request of INTRABIOTICS.

         POLYPEPTIDE shall provide shipping documentation in accordance with
that requested in INTRABIOTICS' purchase order, as well as (in advance if
possible): (i) a certificate of analysis, (ii) batch record, and (iii) such
other documentation relating to the Product as INTRABIOTICS may reasonably
request in writing from time to time, for each production lot included in the
shipment.

         6.3      In the event of loss or damaged shipment hereunder subject to
clause 6.4 POLYPEPTIDE shall use its reasonable best efforts to replace said
shipment within [ * ] of notification of loss or damage by INTRABIOTICS.

         6.4      (a)      INTRABIOTICS shall be deemed to have accepted
delivery of Product supplied hereunder unless INTRABIOTICS shall have notified
POLYPEPTIDE of any non-conformity in respect of a shipment within [ * ]
following INTRABIOTICS' receipt of same.

                  (b)      Any claim of nonconformity hereunder shall be
accompanied by a report of analysis of the allegedly nonconforming material
prepared by or on behalf of INTRABIOTICS. If POLYPEPTIDE confirms INTRABIOTICS'
claim of nonconformity, POLYPEPTIDE shall replace the nonconforming goods with
conforming goods within [ * ] and refund the entire purchase price of the
nonconforming goods to INTRABIOTICS within [ * ]. INTRABIOTICS shall pay for the
replacement conforming goods within [ * ] of receipt. Pursuant to written
directions from POLYPEPTIDE, INTRABIOTICS shall either return the nonconforming
goods to POLYPEPTIDE, or destroy same, [ * ].


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COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


                                       7.

<PAGE>

                  (c)      In case of disagreement between the parties regarding
the conformity or nonconformity of a delivery of the Product, the parties shall
refer the matter for review and/or analysis and final settlement to an
independent expert laboratory to be agreed by both of them. The costs of such
expertise and analysis shall [ * ].

7.       POLYPEPTIDE MANUFACTURING FACILITIES

         7.1      POLYPEPTIDE represents and warrants that it will maintain
suitable manufacturing facilities and equipment for manufacturing of the Product
pursuant to this Agreement.

         7.2      POLYPEPTIDE will comply with the requirements set forth by
relevant governmental authorities for POLYPEPTIDE's facilities for manufacture
of the Product for use in human pharmaceuticals. Relevant governmental
authorities include but is not limited to the regulatory authorities of the
United States of America, the European Union, other European states, and [ * ].

         7.3      [ * ] shall maintain and regularly update the DMF as necessary
to comply with applicable laws and regulations and to accurately reflect its
then current manufacturing procedures. [ * ] shall have the [ * ] right to
reference and otherwise use or direct the use of the DMF; provided, however,
that INTRABIOTICS shall be free, in its sole discretion, to [ * ]. [ * ] shall
not abandon or otherwise fail to maintain the DMF without first offering to
assign the DMF to [ * ].

         7.4      Product supplied by POLYPEPTIDE to INTRABIOTICS shall be
manufactured, stored, and shipped by POLYPEPTIDE in compliance with all
applicable laws and regulations, including cGMP regulations, in accordance with
the master batch record maintained by POLYPEPTIDE, the DMF submitted by
POLYPEPTIDE, and the Specification. POLYPEPTIDE shall be free to change its
manufacturing specification or manufacturing directions with respect to the
Product only with the prior consent of INTRABIOTICS. Such consent shall not be
unreasonably withheld.

7.5 POLYPEPTIDE shall perform or cause to be performed all quality control tests
and assays on raw and packaging materials and intermediates used in preparing
and shipping Product hereunder, all in a manner consistent with the
Specification and with POLYPEPTIDE'S reasonable internal quality control
procedures. POLYPEPTIDE shall retain records pertaining to such testing and, to
the extent required by law or as reasonably required by INTRABIOTICS in order to
prepare for or defend against litigation brought by third parties, POLYPEPTIDE
shall provide INTRABIOTICS and its licensees with access to and copies of such
batch records and file samples.

         7.6      POLYPEPTIDE shall notify INTRABIOTICS promptly of any
correspondence to or from, or inspections by, relevant governmental authorities
relating to the Product or the manufacture thereof and shall promptly provide
copies of such correspondence or reports of such inspections. This includes any
FDA form 483 in the form that would be available under the


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                                       8.

<PAGE>

Freedom of Information Act or other equivalent forms from another relevant
regulatory authority.

         7.7      POLYPEPTIDE shall promptly inform INTRABIOTICS of any
complaint or inquiry of which it becomes aware which raise potentially serious
quality, health, safety or regulatory concerns regarding the Product.

         7.8      Should the relevant governmental authorities, for reasons for
which POLYPEPTIDE bears the responsibility, withdraw the approval of manufacture
of the Product for use in human pharmaceuticals and as a consequence thereof
demand that the Product delivered under this agreement may not be used by
INTRABIOTICS in its products. INTRABIOTICS shall have the right to terminate
this agreement in accordance with Clause 9 and shall have the rights described
in clause 3.4, and POLYPEPTIDE shall [ * ] within [ * ] of receipt of the stock.
Apart therefrom neither party shall incur any liability towards the other party.
INTRABIOTICS shall either return the Product still in stock at INTRABIOTICS to
POLYPEPTIDE or destroy same, each at [ * ].

         7.9      INTRABIOTICS has the right to authorise a representative to
inspect POLYPEPTIDE's premises used for the production of the Product. Before an
inspection takes place INTRABIOTICS shall reveal the full identity of its
authorised representative to POLYPEPTIDE, who shall accept the representative,
unless it has objectively valid reasons for not doing so. Inspections shall take
place at INTRABIOTICS' own costs and shall not limit POLYPEPTIDE's
responsibility for the manufacture of the Product. For this purpose,
INTRABIOTICS' authorised representative shall be granted, upon previous request,
access during business hours, to the part of POLYPEPTIDE's premises where the
Product is manufactured.

8.       OWNERSHIP OF INTELLECTUAL PROPERTY

         8.1      [ * ] shall own and will have [ * ] and will own [ * ]
relating to the [ * ] or its external advisors in [ * ]. All [ * ] will be
paid by [ * ] will direct all [ * ]. In order to [ * ] will ensure that the
[ * ] is [ * ] and execute such documents, including but not limited to [ * ],
as are necessary for [ * ]. [ * ] will supply to [ * ] copies of [ * ] when
relevant. [ * ] is entitled to [ * ].

         8.2 The DMF on the Product based on the facilities, technology, and
knowledge of POLYPEPTIDE is the property of [ * ], which is only permitted to
make use of the DMF for [ * ].

9.       TERM AND TERMINATION OF THIS AGREEMENT


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                                       9.

<PAGE>

         9.1      This Agreement shall have an initial term of [ * ] full
calendar years following the first supplies of the Product hereunder and shall
then automatically renew for [ * ] periods unless POLYPEPTIDE terminates with
[ * ] written notice, or INTRABIOTICS terminates with [ * ] written notice given
prior to the commencement of any such renewal period.

         9.2      Each contract party shall be entitled to terminate the
present contract without notice in the event of material breaches of contract
by the other party or if bankruptcy or composition proceedings are opened on
the estate of the other party. Notice of termination for a material breach of
contract shall only be admissible if the other party was requested to rectify
the contract impediment within [ * ] period of grace without any response
being forthcoming from the other party. Notice may only be served within one
month after the end of the aforesaid limit.

10.      LIABILITY

         10.1     INTRABIOTICS shall indemnify, defend and hold POLYPEPTIDE and
its agents, employees and directors (the "POLYPEPTIDE Indemnitees") harmless
from and against any and all liability, damage, loss, cost or expense (including
reasonable attorneys' fees) arising out of third party claims or suits resulting
from the use, sale or promotion of Product or a product containing Product by
INTRABIOTICS, its sublicensees, distributors or agents, except to the extent
that such claims or suits result from negligence or intentional misconduct of
POLYPEPTIDE or a POLYPEPTIDE Indemnitee in the manufacture of the Product. Upon
assertion of such claim or suit, the POLYPEPTIDE Indemnitees shall promptly
notify INTRABIOTICS thereof and INTRABIOTICS shall appoint counsel reasonably
acceptable to the POLYPEPTIDE Indemnitees to represent the POLYPEPTIDE
Indemnitees with respect to any claim or suit for which indemnification is
sought. The POLYPEPTIDE Indemnitees shall not settle any such claim or suit
without the prior written consent of INTRABIOTICS, unless they shall have first
waived their rights to indemnification hereunder.

         10.2     POLYPEPTIDE shall indemnify, defend and hold INTRABIOTICS
and its agents, employees and directors (the "INTRABIOTICS Indemnitees")
harmless from and against any and all liability, damage, loss, cost or
expense (including reasonable attorneys' fees) arising out of third party
claims or suits resulting from negligence or intentional misconduct in the
manufacture of Product by POLYPEPTIDE, except to the extent such claims or
suits result from the negligence or wilful misconduct of INTRABIOTICS or an
INTRABIOTICS Indemnitee. Upon assertion of such claim or suit, the
INTRABIOTICS Indemnitees shall promptly notify POLYPEPTIDE thereof and
POLYPEPTIDE shall appoint counsel reasonably acceptable to the INTRABIOTICS
Indemnitees to represent the INTRABIOTICS Indemnitees with respect to any
claim or suit for which indemnification is sought. The INTRABIOTICS
Indemnitees shall not settle any such claim or suit without the prior written
consent of POLYPEPTIDE, unless they shall have first waived their rights to
indemnification hereunder.

         10.3     In no event shall either Party be liable to the other for
incidental or consequential damages or for punitive damages us a result of any
breach of this Agreement.

11.      ASSIGNMENT/TRANSFER


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                                      10 .

<PAGE>

         This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. Neither
party shall assign its rights and obligations under this Agreement without first
obtaining the written consent of the other parties, which consent shall not be
unreasonably withheld. Each of the parties may assign its rights and obligations
to an Affiliate provided that the assigning party shall guarantee its
Affiliate's performance and obligations under this Agreement, or to any
successor by virtue of a merger or acquisition of substantially the entire
business to which this Agreement relates or in the case of INTRABIOTICS to a
licensee of the Product, without consent, but upon notice to the other party.

12.      FORCE MAJEURE

         Neither party is liable for failing to perform or having delayed the
performance of its obligation under this agreement, if the performance is
delayed or precluded by circumstances beyond its control, including but not
limited to fire, flood, war, strike, lock-out, failure or shortage of public
utilities due to governmental decrees, orders or legislation and court
injunctions.

         The party, whose performance is delayed or precluded, shall immediately
inform the other party of the circumstances preventing the performance.

         In the event that the circumstances preventing the performance continue
for more than [ * ], each party will have a right to cancel the Agreement and
neither of the parties will have a right to reimbursement or to any claim for
damages as a result of the cancellation of the Agreement.

         In the event that POLYPEPTIDE's ability to supply Product in whole or
in part to INTRABIOTICS is restricted by factors beyond its control and this
Agreement is not terminated, POLYPEPTIDE shall treat and supply INTRABIOTICS in
the same equitable manner as all of POLYPEPTIDES other major customers.

13.      OTHER PROVISIONS

         13.1     All amendments and changes to the present Agreement must be
made in writing and signed by both Parties in order to be valid.

         13.2     Except as expressly provided herein, nothing in this Agreement
is intended or shall be deemed to constitute a partnership, agency or
employer-employee relationship between the Parties. Neither Party shall have the
right to incur any debts or make any commitments for the other.

         13.3     If individual provisions of the present Agreement are wholly
or partially in breach of cogent law or if they are or become invalid for any
other reason, the validity of the other provisions shall not be affected
thereby. The present Agreement shall if necessary be amended by a valid
provision which comes as close as possible to the original intention of the
parties.

         13.4     Except as otherwise required by law, neither Party shall make
any public disclosure as to the terms or existence of this Agreement without the
prior written consent of the


[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.



                                       11.

<PAGE>

other. Notwithstanding this clause, INTRABIOTICS may publish that such an
agreement has been entered into between the parties subject to pre-approval
by POLYPEPTIDE of the wording.

         13.5     THE PARTIES EXPRESSLY DISCLAIM ALL WARRANTIES, EXPRESSED OR
IMPLIED, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY, FITNESS
FOR A PARTICULAR PURPOSE, OR NON-INFRINGEMENT OF THIRD PARTY PATENTS, UNLESS
OTHERWISE EXPRESSLY PROVIDED FOR IN THIS AGREEMENT.

         13.6     INTRABIOTICS and POLYPEPTIDE each represents and warrants to
the other that, as of the Effective Date: (i) it is free to enter this
Agreement; (ii) in so doing it will not violate any other agreement to which it
is a party; (iii) it is a corporation duly organised and validly existing under
the laws of the jurisdiction indicated above and, by virtue of such
jurisdiction's laws, is in good standing as a domestic corporation of such
jurisdiction; and (iv) it is qualified to do business in all jurisdictions in
which qualification is necessary in order to perform its obligations hereunder.

         13.7     All disputes between the parties relating to this Agreement,
including its interpretation that cannot be settled amicably by the parties,
shall be settled by binding arbitration in the state of the defending party in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association. The arbitration carried out hereunder shall apply to the exclusion
of regular legal means, provided that the rights of the Parties in urgent
situations in which time is of the essence to obtain proper remedies in courts
of law or equity shall remain unimpaired.

14.      APPLICABLE LAW AND JURISDICTION

         All matters arising under or related to the Agreement shall be governed
by and construed under and pursuant to the laws of the State of California
without regard to conflict of laws principles.

         IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their respective duly authorised officers as of the day and year
first above written, each copy of which shall for all purposes be deemed to be
original.

POLYPEPTIDE LABORATORIES A/S               INTRABIOTICS PHARMACEUTICALS, INC.

/s/ Erik Lorentsen                         /s/ Thomas Shepherd
---------------------------------          -------------------------------------
Erik Lorentsen                             Thomas Shepherd
General Manager                            Vice President Corporate Development

FERRING PEPTIDE PRODUCTION AB


[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


                                       12.

<PAGE>


/s/ Anders J. Andersen
---------------------------------
Anders J. Andersen
General Manager


[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


                                       13.

<PAGE>

                                     ANNEX 1
                                  SPECIFICATION

TABLE OF CONTENTS:

Pages 1 and 2     INTRABIOTICS QUALITY SPECIFICATION No.: [ * ]

Page 3            - Storage

                  - Shipment


[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


                                       14.

<PAGE>

                       INTRABIOTICS QUALITY SPECIFICATION

                                 QA ISSUED COPY

                            SPECIFICATION NO., [ * ]

<TABLE>
<CAPTION>

----------------------------------------------------------------------------------------------------------------------
MATERIAL:
IB-367-03                  FOR INFORMATION ONLY
----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                    <C>
DATE EFFECTIVE:                          SUPERCEDES:                            PAGE:
         Nov 26, 1996                             [ * ]                                  1 of 2
----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------
AUTHOR:                                  DEPT.:                                 DATE:
/s/  MISSING SIGNATURE                   Analytical Development                          11/26/96
----------------------------------------------------------------------------------------------------------------------
APPROVED:                                DEPT.:                                 DATE:
/s/ MISSING SIGNATURE                    Quality Assurance                               11/26/96
----------------------------------------------------------------------------------------------------------------------
APPROVED:                                DEPT.:                                 DATE:
/s/ MISSING SIGNATURE                    Pharmaceutical Development                      11/26/96
----------------------------------------------------------------------------------------------------------------------
</TABLE>

DESCRIPTION:
[ * ]

<TABLE>
<CAPTION>

----------------------------------------------------------------------------------------------------------------------
TEST                                   SPECIFICATION                                                METHOD
----------------------------------------------------------------------------------------------------------------------
<S>                                    <C>                                                          <C>
1. [ * ]                               [ * ]                                                        [ * ]
----------------------------------------------------------------------------------------------------------------------
2. [ * ]                               [ * ]                                                        [ * ]
----------------------------------------------------------------------------------------------------------------------
3. [ * ]                               [ * ]                                                        [ * ]
----------------------------------------------------------------------------------------------------------------------
4. [ * ]                               [ * ]                                                        [ * ]
----------------------------------------------------------------------------------------------------------------------
5. [ * ]                               [ * ]                                                        [ * ]
----------------------------------------------------------------------------------------------------------------------
</TABLE>

IntraBiotics Pharmaceuticals, Inc.
816 Kifer Road
Sunnyvale, CA 94086


[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


                                       15.

<PAGE>

                       INTRABIOTICS QUALITY SPECIFICATION

                                 QA ISSUED COPY

                            SPECIFICATION NO., [ * ]

<TABLE>
<CAPTION>

----------------------------------------------------------------------------------------------------------------------
MATERIAL:
IB-367-03                  FOR INFORMATION ONLY
----------------------------------------------------------------------------------------------------------------------
DATE EFFECTIVE:                          SUPERCEDES:                            PAGE:
<S>                                      <C>                                    <C>
         Nov 26, 1996                             [ * ]                                  2 of 2
----------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>

----------------------------------------------------------------------------------------------------------------------
TEST                                   SPECIFICATION                                                METHOD
----------------------------------------------------------------------------------------------------------------------
<S>                                    <C>                                                          <C>
6. [ * ]                               [ * ]                                                        [ * ]
----------------------------------------------------------------------------------------------------------------------
7. [ * ]                               [ * ]                                                        [ * ]
----------------------------------------------------------------------------------------------------------------------
8. [ * ]                               [ * ]                                                        [ * ]
----------------------------------------------------------------------------------------------------------------------
9.  [ * ]                              [ * ]                                                        [ * ]
----------------------------------------------------------------------------------------------------------------------
10. [ * ]                              [ * ]                                                        [ * ]
----------------------------------------------------------------------------------------------------------------------
11. [ * ]                              [ * ]                                                        [ * ]
----------------------------------------------------------------------------------------------------------------------
12. [ * ]                              [ * ]                                                        [ * ]
----------------------------------------------------------------------------------------------------------------------
13. [ * ]                              [ * ]                                                        [ * ]
----------------------------------------------------------------------------------------------------------------------
14. [ * ]                              [ * ]                                                        [ * ]
----------------------------------------------------------------------------------------------------------------------
</TABLE>

IntraBiotics Pharmaceuticals, Inc.
816 Kifer Road
Sunnyvale, CA 94086


[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


                                       16.

<PAGE>

                                     ANNEX 1

                                  SPECIFICATION

STORAGE: Store at recommended storage conditions.  [ * ].

SHIPMENT: the [ * ].

NB. The storage container and shipping conditions may be modified in the future
once the proper stability data are available.




[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

                                       17.