<PAGE>

                                                                    EXHIBIT 14.1

                                [CONNETICS LOGO]

                              CONNETICS CORPORATION

                   CODE OF PROFESSIONAL CONDUCT FOR EMPLOYEES

                                DATE: 12 FEB 2004

  THIS CODE DOES NOT ALTER THE TERMS AND CONDITIONS OF YOUR EMPLOYMENT. RATHER,
  IT HELPS EACH OF US TO KNOW WHAT IS EXPECTED OF US TO MAKE SURE WE ALWAYS ACT
    WITH INTEGRITY. THE MOST CURRENT VERSION OF THE CODE CAN BE FOUND ON THE
                                CONNETICS JUNGLE.

                                        1
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                               Inside Front Cover

                              REMEMBER THESE RULES

(1)      Know the legal and company standards that apply to your job.

(2)      Follow these standards - always.

(3)      Ask if you are ever unsure what's the right thing to do.

(4)      Keep asking until you get the answer.

                         INTEGRITY: DOING WHAT IS RIGHT

Ask Before Acting:

-        Is it legal?

-        Does it follow company policy?

-        Is it right?

-        How would it look to those outside the company? For example, how would
         it look to our customers, the people in the communities where we work,
         and the general public?

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                              [LETTER TO EMPLOYEES]

We are proud of our strong commitment to the highest ethical standards in the
conduct of our business. We are focused on complying with the law and acting
with integrity at all times.

To reinforce our commitment to compliance and integrity, we have prepared this
Code of Professional Conduct for Employees ("Code" or "Code of Conduct") to
create a consistent compliance and integrity framework. Our Code of Conduct
reaffirms but also strengthens the basic requirements for our business and the
behavior expected of each employee. We have developed our Code of Conduct to
ensure that we act with integrity and respect the trust placed in us by our
customers, fellow employees, stockholders, regulatory agencies, supply chain
partners, and the community where we live and work.

We ask that you read this Code carefully and understand the fundamental
principle of how we conduct business: Nothing is more important than our
commitment to integrity -- no financial objective, no marketing target, no
effort to outdo the competition. No desire to please the boss outweighs that
core commitment. Our commitment to integrity must always come first.

We believe Connetics has a reputation of operating its business with integrity.
To protect and enhance this reputation we have worked so hard to earn, we must
continue to work together on a daily basis in a manner that is consistent with
our values. The way we treat each other and how we conduct our business is a
responsibility we all share.

Sincerely,

/s/ Thomas G. Wiggans
-------------------------------------
Thomas G. Wiggans
President and Chief Executive Officer

/s/ G. Kirk Raab
----------------------------------
G. Kirk Raab
Chairman of the Board of Directors

                                       iii
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                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                   <C>
WHAT YOU SHOULD KNOW ABOUT THE CODE OF CONDUCT                                         1
----------------------------------------------------------------------------------------
         -        What is the Code For?

         -        Who Should Follow this Code?

         -        Your Personal Commitment to do the Right Thing

         -        What About Those Who Supervise Others?

         -        Does the Code Explain All the Standards I Need to Know?

         -        Is There Ever a Time Someone Doesn't Have to Follow the Code?

ASKING QUESTIONS AND RAISING CONCERNS                                                  2
----------------------------------------------------------------------------------------
         -        Your Duty to Speak Up

WHERE TO GO FOR HELP                                                                   3
----------------------------------------------------------------------------------------
         -        Whom Should I Contact for Help?

         -        Reporting Hotline

         -        What Happens when I call the Reporting Hotline?

         -        We Will Not Tolerate Retaliation

         -        Can I Call Anonymously?

         -        We Take Compliance Seriously

CONNETICS COMPLIANCE PROGRAM - WHAT DOES IT DO?                                        4
----------------------------------------------------------------------------------------
         -        Compliance Structure

WORK ENVIRONMENT                                                                       5
----------------------------------------------------------------------------------------
         -        Our Goal

         -        Equal Employment Opportunity and Diversity

         -        Harassment-Free Work Environment

         -        Health, Safety and Security of Employees

         -        Employee Confidentiality

         -        Drugs and Alcohol in the Workplace

         -        Solicitation

COMPANY INFORMATION, RESOURCES AND FINANCIAL DISCLOSURE                                8
----------------------------------------------------------------------------------------
         -        Our Goal

         -        Accurate Books and Records, and Financial Disclosure

         -        Company Time

         -        Company Property and Resources

         -        Proprietary Information

         -        Corporate Opportunities

         -        Computer Use and Network Security

         -        Company Funds

         -        Insider Trading

         -        Investor Relations

         -        Media

         -        Records Management

         -        Research Integrity

         -        Unsolicited Ideas

CONFLICTS OF INTEREST, GIFTS AND ENTERTAINMENT                                        15
----------------------------------------------------------------------------------------
         -        Our Goal

         -        Conflicts of Interest

         -        Receiving Gifts and Entertainment
</TABLE>

                                       iv
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<TABLE>
<S>                                                                                   <C>
         -        Offering Gifts and Entertainment

CONDUCTING BUSINESS                                                                   21
----------------------------------------------------------------------------------------
         -        Our Goal

         -        Auditing and Accounting Complaints

         -        Antitrust Laws

         -        Information about Competitors

         -        Trade Restrictions, Export Controls and Boycott Laws

         -        Customs

         -        The Government as Our Customer

         -        International Bribery and Corruption

         -        Confidential Information, Intellectual Property and Copyright

         -        Unfair Business Practices

DEALING WITH HEALTHCARE PROFESSIONALS                                                 28
----------------------------------------------------------------------------------------
         -        Our Goal

         -        Interactions with Healthcare Professionals

DEALING WITH CONSUMERS                                                                29
----------------------------------------------------------------------------------------
         -        Our Goal

         -        Product Quality

         -        Advertising and Promotion of Products

         -        Privacy of Customer and Consumer Information

OUR COMMUNITY AND SOCIETY                                                             30
----------------------------------------------------------------------------------------
         -        Our Goal

         -        Environmental Compliance

         -        Political Activity

         -        Government Inquiries or Investigations

         -        Disclosure of Sponsorship/Attribution

EMPLOYEE ACKNOWLEDGMENT                                                               32
----------------------------------------------------------------------------------------
CONNETICS CONTACT LIST
----------------------------------------------------------------------------------------
</TABLE>

                                        v
<PAGE>

                 WHAT YOU SHOULD KNOW ABOUT THE CODE OF CONDUCT

WHAT IS THE CODE FOR?

Connetics is firmly committed to conducting business according to the highest
levels of corporate and personal integrity. It hires people with the highest
levels of personal integrity and it strives to develop and maintain a culture
where high integrity is a key company value. Connetics is also committed to
conducting business in compliance with the letter and spirit of the law and
other accepted standards of business conduct reflected in corporate policies.

Laws and standards for business conduct are more demanding than ever. Failing to
meet these standards could expose Connetics to very serious harm. Moreover: it
is wrong.

Integrity means living up to the standards - our culture, our own company
policies, and laws - that we commit to. Nothing is more important at Connetics.

The Code of Conduct provides an introduction to important laws and policies that
everyone working for Connetics must follow. The Code is designed to help each of
us:

         -        Understand and follow the basic compliance rules that apply to
                  our job; and

         -        Know when and where to ask for advice.

The Code is not entirely new. It organizes, summarizes and updates, into one
convenient guide, policies that have been in place at Connetics for years.
Moreover, it is Connetics' expectation that the Code is an accurate description
of the everyday values and behavior of our employees, values and behavior that
should demonstrate the highest levels of integrity and ethics. As explained
below, it is a starting point - other corporate policies supplement the Code and
may apply to your job.

WHO SHOULD FOLLOW THIS CODE?

All employees and officers of Connetics must adhere to the standards contained
in this Code and should consult the Code for guidance when acting on behalf of
Connetics. Further, employees who work with our corporate partners, or who
engage vendors, consultants and temporaries must monitor their work for
Connetics, so that they act in a manner consistent with the principles in the
Code. Those dealing with corporate partners, vendors, consultants or temporaries
should contact their supervisor or the Legal Department for guidance.

YOUR PERSONAL COMMITMENT TO DO THE RIGHT THING

This Code represents a commitment to doing what is right. By working for
Connetics, you are agreeing to uphold this commitment. Understand the standards
of the Code and the policies that apply to your job - and always follow them.
Those who fail to follow these standards put themselves, their co-workers and
Connetics at risk. They are also subject to disciplinary action up to and
including termination. At the same time, attempts to use the Code to libel,
slander, or otherwise harm another individual through false accusations,
malicious rumors, or other irresponsible actions are prohibited.

WHAT ABOUT THOSE WHO SUPERVISE OTHERS?

Those who supervise others have additional responsibilities under the Code to:

         -        Set an example - show what it means to act with integrity.

         -        Ensure that those they supervise have adequate knowledge and
                  resources to follow the Code's standards.

         -        Monitor compliance of the people they supervise.

         -        Enforce the standards of this Code and all other related
                  company standards.

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         -        Support employees who in good faith raise questions or
                  concerns about compliance and integrity. This means there
                  should never be any form of retaliation against an employee
                  who raises such questions or concerns; and

         -        Report instances of noncompliance to the proper management
                  level.

DOES THE CODE EXPLAIN ALL THE STANDARDS I NEED TO KNOW?

The Code is the cornerstone of our commitment to integrity. But the Code is not
intended to describe every law or policy that may apply to you. Make sure you
know the rules that apply to you.

To learn more about the laws, policies and procedures that apply to you, see the
additional resources

identified throughout the Code with the [I LOGO] symbol, ask your manager, or
contact the Compliance Officer.

Our Code of Professional Conduct is supplemented by the following policies and
codes:

         -        Code of Professional Conduct for Chief Executive Officer and
                  Senior Finance Officers

         -        Employee Handbook

         -        Insider Trading Policy

         -        Health and Safety Manual

         -        Standard Operating Procedures

IS THERE EVER A TIME SOMEONE DOESN'T HAVE TO FOLLOW THE CODE?

While we may have occasion to amend this Code from time to time, it will be a
rare occurrence for Connetics to waive compliance by an employee. Only
Connetics' executive officers can waive compliance with the Code of Conduct by
an employee, and only Connetics' Board of Directors can waive compliance for
executive officers and senior financial officers. In particular, it takes the
vote of the Board or a designated Board committee to make any substantive
amendment of the Code or to waive any part of the Code affecting executive
officers and senior financial officers. The Board must determine in each
instance whether an amendment or waiver is appropriate and ensure that the
amendment or waiver is accompanied by appropriate controls to protect Connetics.
If a substantive amendment to the Code is made or a waiver is granted for
officers or directors, the waiver will be posted on Connetics' website. This
allows our stockholders to evaluate the merits of the waiver.

                      ASKING QUESTIONS AND RAISING CONCERNS

YOUR DUTY TO SPEAK UP

Our company cannot live up to its commitment to act with integrity if we, as
individuals, do not speak up when we should. That is why, in addition to knowing
the legal and ethical responsibilities that apply to your job, you should speak
up if:

         -        You are unsure about the proper course of action and need
                  advice.

         -        You believe that someone acting on behalf of Connetics is
                  doing - or may be about to do - something that violates the
                  law or our compliance and integrity standards.

         -        You believe that you may have been involved in misconduct.

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                              WHERE TO GO FOR HELP

WHOM SHOULD I CONTACT FOR HELP:

What should you do if you have a question or concern about compliance and
integrity standards? We work hard to foster an environment of open, honest
communication. So if you have a concern about a legal or business conduct issue,
you have options. THE MOST IMPORTANT THING IS THAT YOU ASK THE QUESTION OR RAISE
THE CONCERN.

Confidentiality will be maintained to the extent consistent with the best
interest of the employees involved, our company, and our company's obligations
under the law.

Your supervisor is usually a good place to start with a compliance or integrity
issue.

You may also get help or advice from:

         -        Your supervisor's supervisor.

         -        The head of your department.

         -        Your Legal or Human Resources Department.

         -        The Compliance Officer.

In addition, throughout this Code, resources are identified with the symbol [I
LOGO] where you can get help or guidance about that particular section of the
Code. At the end of this Code (p. 33), you will

find internal contact information for departments referenced by the [I LOGO]
symbol.

REPORTING HOTLINE

If after you have raised a concern with the contact suggested above and have not
been satisfied or are unsure about where to go, uncomfortable about using one of
the other resources identified, or wish to raise an issue anonymously, call the
Reporting Hotline number.

The Reporting Hotline is operated by an independent company that reports the
call to Connetics to enable it to respond to your concerns about compliance and
integrity. It operates 24 hours a day/seven days a week to report your concerns.

[I LOGO] Please refer to page 33 for dialing instructions and the Reporting
Hotline number.

WHAT HAPPENS WHEN I CALL THE REPORTING HOTLINE?

If you call our Reporting Hotline, a call specialist will listen and make a
detailed summary of your call. The information will then be forwarded to the
appropriate individual in Connetics (for example, the Legal Department, Human
Resources Department, or the Compliance Officer) or to an outside person, such
as the Chair of the Audit Committee or the Board of Directors, to look into the
matter.

Every effort will be made to give your call a quick response, especially when
circumstances make that important. If an investigation is undertaken, we will
look into the issue promptly and, whenever called for, see that corrective
action is taken.

WE WILL NOT TOLERATE RETALIATION

Any employee who, in good faith, lawfully and truthfully, seeks advice, raises a
concern or reports misconduct is following this Code - and doing the right
thing. Connetics will not allow retaliation

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against that person. Individuals engaging in retaliatory conduct will be subject
to disciplinary action, which may include termination. If you suspect that you
or someone you know has been retaliated against for raising a compliance or
integrity issue, immediately contact the Reporting Hotline, the Legal or Human
Resources Department, or the Compliance Officer.

We take claims of retaliation seriously. Allegations of retaliation will be
investigated and appropriate action taken.

CAN I CALL ANONYMOUSLY?

The Reporting Hotline allows you to raise concerns anonymously. It assigns
tracking numbers so that employees who do not want to give their name can still
check back to receive a response or provide more information. Of course, giving
your name can often help us look into the matter, and as explained above,
Connetics has a firm policy against retaliation for aiding a good faith concern
under this Code.

                                    Q: I think my supervisor is doing something
                                    that the Code says is wrong. I'm afraid to
                                    report her because she might make my job
                                    more difficult for me. What should I do?

                                    A: If you don't feel comfortable talking to
                                    your supervisor about it directly, you can
                                    try one of the other resources listed on
                                    page 33. This is also an ideal situation for
                                    calling the Reporting Hotline. Connetics
                                    will not tolerate retaliation against you in
                                    any form.

WE TAKE COMPLIANCE SERIOUSLY

Any violation of this Code, or of any laws or regulations affecting our
business, will result in disciplinary action. Such action may include an oral or
written warning, disciplinary probation, suspension, reduction in salary,
demotion, or dismissal from employment. These disciplinary actions may also
apply to an employee's supervisor who directs or approves the employee's
improper actions or is aware of those actions but does not act appropriately to
correct them or fails to exercise appropriate supervision. In addition to
imposing discipline directly, Connetics may also bring violations of law or
suspected violations of law to the attention of appropriate law enforcement
personnel.

                 CONNETICS COMPLIANCE PROGRAM - WHAT DOES IT DO?

COMPLIANCE STRUCTURE

This Code is more than just a description of our standards. It is the
centerpiece of a company-wide compliance program supported by our Board of
Directors, management, and employees. The compliance program is administered by
a Compliance Steering Committee and a Compliance Officer, all of whom are
Connetics employees. The Committee members and the Compliance Officer are
charged with reviewing Connetics' compliance policies and specific compliance
situations that may arise.

Together, the Compliance Officer and Connetics management monitor the compliance
program. This responsibility includes:

         -        Assigning roles and responsibilities for the program

         -        Overseeing compliance training and communications

         -        Overseeing compliance auditing and monitoring

         -        Overseeing internal investigation processes

         -        Reviewing disciplinary procedures for Code violations; and

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         -        Monitoring the resources available for raising issues and
                  reporting concerns.

The Board of Directors of Connetics has the exclusive responsibility for the
final interpretation of the Code of Conduct. The Board may revise, change or
amend the Code at any time.

                                WORK ENVIRONMENT

OUR GOAL

Connetics is committed to fostering a workplace that is safe and professional
and that promotes teamwork, diversity and trust. This includes the strongest
commitment to providing equal employment opportunities for all persons.

[I LOGO] In addition to the policies discussed in this Code, our employee
handbook also discusses employee conduct. If you have further questions please
review the Handbook or contact the Human Resources department.

EQUAL EMPLOYMENT OPPORTUNITY AND DIVERSITY

We strongly believe in the professionalism and integrity of all employees. The
individuals in our workforce are a diverse team of individuals creating a
positive and productive work environment. We recruit, hire, develop, promote,
discipline and provide other conditions of employment without regard to a
person's race, color, religion, gender, age, national origin, sexual
orientation, disability, citizenship status, veteran status, marital status, or
any other legally protected status. This includes providing reasonable
accommodation for employees' disabilities or religious beliefs and practices.
There may be additional protections provided to employees based on local laws or
regulations.

It is our policy to base all employment decisions on the principles of equal
employment opportunity and to take affirmative action in the employment of
women, minorities, individuals with disabilities, and veterans. In particular,
it is our policy:

         -        To recruit, hire, promote, reassign, and train qualified
                  persons without regard to race, color, religion, gender, age,
                  sexual orientation, or national origin;

         -        To undertake, through affirmative efforts, to improve
                  employment opportunities for minorities, women, people with
                  disabilities and veterans;

         -        To administer all personnel actions such as compensation,
                  benefits, transfers, layoffs, return from layoffs,
                  company-sponsored training, education, social and recreational
                  programs without regard to race, color, religion, gender,
                  sexual orientation, or national origin; and

         -        To provide reasonable accommodation where feasible, and
                  otherwise treat equally, qualified individuals with
                  disabilities.

Our company has an Affirmative Action Plan, of which this statement is a part.

[I LOGO] If you have further questions on equal employment opportunity, or would
like information on the Individuals with Disabilities and Veterans Programs,
contact the Human Resources department.

HARASSMENT-FREE WORK ENVIRONMENT

Connetics is committed to fostering a work environment in which all individuals
are treated with respect and dignity. Each individual should be permitted to
work in a business-like atmosphere that promotes equal employment opportunities
and prohibits discriminatory practices, including

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harassment. Therefore, we expect that all relationships among persons in the
workplace will be business-like and free of unlawful bias, prejudice and
harassment.

Harassment can be any behavior where the purpose or effect is to create an
offensive, hostile or intimidating environment. Harassment can be verbal
(epithets, derogatory comments, slurs), visual (derogatory posters, cartoons or
gestures), physical (assault, blocking, interference) threats and demands, or
retaliation for having reported the harassment. Other prohibited conduct
includes using voicemail, email or other electronic devices to transmit
derogatory or discriminatory information.

Sexual harassment is a form of prohibited harassment that requires special
mention. Examples of prohibited sexual harassment include unwelcome sexual
conduct such as verbal harassment (sexual requests, comments, jokes, slurs);
physical harassment (touching, kissing); and visual harassment (posters,
cartoons or drawings of a sexual nature). Sexual harassment is not limited to
conduct motivated by sexual attraction and may occur between members of the
opposite sex or members of the same sex.

Harassment by co-workers, supervisors, customers, vendors, contractors, etc.
will not be tolerated at Connetics. Supervisors who learn of possible harassment
of any employee, whether created by employees or non-employees, must immediately
notify the Human Resources Department. Failure to do so will subject the
supervisor to corrective action, including release from employment.

[I LOGO] If you observe or experience any form of harassment, you should report
it to your supervisor, department manager, the Human Resources department, or
call the Reporting Hotline. We strictly prohibit any form of retaliation against
anyone making such a good faith report.

                                    Q: I am a female employee. A male co-worker
                                    frequently makes personal comments about my
                                    appearance that make me uncomfortable. I've
                                    asked him to stop but he won't. What can I
                                    do about it?

                                    A: You can - and should - contact your
                                    supervisor, the Human Resources Department,
                                    or call the Reporting Hotline.

HEALTH, SAFETY AND SECURITY OF EMPLOYEES

We are committed to providing our employees with a safe and secure work
environment. Safety is especially important in manufacturing locations, which
are subject to significant workplace safety regulations. Our company complies
will all health and safety laws, as well as our own health and safety policies
that go beyond what the law requires. We also expect our contract manufacturers
to comply with all applicable health and safety laws and regulations.

Having safety rules is not enough, though. Our commitment to safety means each
of us needs to be alert to safety risks as we go about our jobs.

All of our employees, and the employees of other companies working on our
premises, must know the health and safety requirements associated with their
jobs.

A safe and secure work environment also means a workplace free from violence.
Threats (whether implicit or explicit), intimidation and violence have no place
at Connetics and will not be tolerated. NO WEAPONS OF ANY KIND ARE ALLOWED IN
THE WORKPLACE WITHOUT AUTHORIZATION.

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[I LOGO] You should be familiar with and follow company policies regarding
health, safety and security. Employees are urged to bring any unsafe practices -
including threats or intimidation - to the attention of their supervisor or
manager, the Human Resources Department, or to call the Reporting Hotline.

EMPLOYEE CONFIDENTIALITY

Connetics believes in respecting the confidentiality of our employees' personal
information. This means that access to personal records should be limited to
company personnel who have appropriate authorization and a clear business need
for that information. Employees who have access to personal information must
treat it appropriately and confidentially. All medical information will be
maintained in files separate from personnel records, and in accordance with the
requirements of H-I-P-A-A. Medical information will be available only to a
limited number of people in the Company.

Personal employee information is never provided to anyone outside of Connetics
without proper authorization.

Our companies' commitment to employee confidentiality is not a license to engage
in inappropriate personal activities at work. Company computers, for example,
are intended only for official use, not for outside business activities.
Connetics has the right to access and review all communications, records and
information created at work or with company resources. This may include such
things as intranet or Internet activity, email, voicemail and telephone
conversations.

[I LOGO] Employee confidentiality is subject to laws or regulations by a number
of governmental bodies. If you have questions, you should contact the Compliance
Officer or the Legal Department.

DRUGS AND ALCOHOL IN THE WORKPLACE

Work requires clear thinking and often the ability to react quickly - the safety
of fellow employees and consumers depends on it. Being under the influence of
alcohol or drugs, or improperly using medication, diminishes an employee's
ability to perform at his or her best. In addition, as a pharmaceutical company,
we are subject to strict regulations on the use and distribution of the products
we make.

This is why our rules strictly forbid abuse of drugs and alcohol, as well as the
unlawful manufacture, distribution, dispensation, possession or use of any
controlled substance in the workplace. Violations of these rules are taken very
seriously.

[I LOGO] If you observe any drug or alcohol abuse, you should report it to your
supervisor, the Human Resources Department, or call the Reporting Hotline.
Information regarding drug counseling, rehabilitation or other employee
assistance options is also available from the Human Resources Department.

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                                    Q: I have noticed that my supervisor's
                                    breath often smells of alcohol, even early
                                    in the morning, and he seems impaired. I am
                                    afraid that if I confront him or tell anyone
                                    it may cause a scene or he may try to get me
                                    fired. What should I do?

                                    A: There is enough evidence to believe a
                                    problem may exist so speak right away with
                                    another supervisor or a representative from
                                    Human Resources or call the Reporting
                                    Hotline. A safe, secure work environment is
                                    absolutely critical at Connetics. We will
                                    not tolerate retaliation against you and
                                    will take steps to protect you from any
                                    retaliation.

SOLICITATION

In order to avoid disruption of company operations, we have adopted the
following rules to soliciting, circulating petitions and distributing literature
on company property or during regular business hours:

         Outsiders: Persons who are not employed by the company may not solicit,
         distribute literature, or circulate petitions on company property at
         any time for any purpose.

         Connetics Employees: An employee who is seeking support for non-work
         causes, activities, organizations or fundraising, may do so by posting
         the request for support on the public company email or public notice
         boards. All such postings should first be discussed with the Human
         Resources Department. You should not directly solicit support from a
         fellow employee for any reason. It is our policy to make the
         information available on email, and give employees an opportunity to
         respond on their own volition.

             COMPANY INFORMATION, RESOURCES AND FINANCIAL DISCLOSURE

OUR GOAL

Our employees seek to create stockholder value by working hard to achieve
superior financial results. In pursuing this goal, Connetics and its employees
must produce honest and accurate reports and records, and must be forthright in
measuring and reporting financial performance, must protect company assets and
resources, and must never engage in insider trading. You are expected to act
with honesty and integrity in the performance of your duties. Simply put, fraud
of any kind with respect to business information or company resources will not
be tolerated.

ACCURATE BOOKS AND RECORDS, AND FINANCIAL DISCLOSURE

A company's credibility is judged in many ways - one very important way is the
integrity of its books, records and accounting. Connetics is committed to
providing stockholders with full, accurate, timely and understandable
information, in all material respects, about our financial condition and results
of operations. In meeting this commitment, Connetics is required by securities
laws to report in accordance with generally accepted accounting principles in
the U.S. and to maintain books and records that accurately and fairly reflect
all transactions. The goal of accurate accounting and financial reporting
requires compliance with rules from the U.S. Securities and Exchange Commission,
the Financial Accounting Standards Board and other regulatory organizations.

But this obligation includes more than financial information. Every employee
must help ensure that reporting of any business information of whatever kind
(financial or otherwise) and in whatever form

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(computerized, paper or otherwise) is accurate, complete and timely. This
requires, among other things, accurately recording costs, sales, shipments, time
sheets, vouchers, bills, payroll and benefits records, test data, regulatory
data and other essential company information.

ALL CONNETICS EMPLOYEES MUST:

         -        Follow all laws, external accounting requirement and company
                  procedures for reporting financial and other business
                  information.

         -        Never deliberately make a false or misleading entry in a
                  report or record.

         -        Never establish an unrecorded fund for any purpose.

         -        Never alter or destroy company records except as authorized by
                  established policies and procedures.

         -        Never sell, transfer or dispose of company assets without
                  proper documentation and authorization.

         -        Cooperate with and do not take any action that would mislead
                  our internal and external auditors.

         -        Contact the Finance Department with any questions about the
                  proper recording of financial transactions.

[I LOGO] The Board of Directors, CEO, and senior financial officers and other
managers responsible for accurate books and records, and accounting and
disclosure of financial information, have a special duty to ensure that these
standards are met. See the separate Code of Professional Conduct for the Board
of Directors, Chief Executive Officer and Senior Financial Officers. If you have
any questions about new or proposed accounting and financial reporting
standards, contact the Controller or the Finance Department.

COMPANY TIME

To be successful, every employee must make the best use of his or her time and
that of co-workers. All employees are expected to fulfill their job
responsibilities and devote the necessary time to their work, while pursuing
their individual work-life goals. Those required to report the hours they work
must do so truthfully and accurately.

COMPANY PROPERTY AND RESOURCES

All employees are responsible for using good judgment so that the company's
assets are not misused or wasted. Company assets are intended to help employees
achieve business goals. Careless, inefficient or illegal use of company property
hurts all of us. Remember that all records you create as part of your work for
Connetics are Connetics' property and are not part of your "personal records."

[I LOGO] For more information on our policies regarding the use of company
property, see your supervisor. For information on the use of company computers,
see "Computer Use and Network Security."

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PROPRIETARY INFORMATION

We regularly produce valuable, nonpublic ideas, strategies, and other kinds of
business information. This information is called "proprietary information" which
means that Connetics owns the information, just as it does other kinds of
property. Because it is the product of the company's own hard work, various laws
allow us to protect this information from use by outsiders. Some examples of
company proprietary information are:

         -        Sales, marketing and other corporate databases.

         -        Marketing strategies and plans.

         -        Personnel records.

         -        Research and technical data.

         -        Proposals.

         -        New product development.

         -        Formulas.

         -        Manufacturing practices and processes.

         -        Product sales (before they are made public).

         -        Information about the status of our "pipeline".

         -        Trade secrets of any sort.

In the course of your work, you may have access to proprietary information
regarding Connetics, its affiliates, suppliers, customers, and fellow employees.
All employees must protect the confidentiality of Connetics' proprietary
information so that we reap the benefits of our own hard work.

Use good judgment about the information you discuss openly when visitors are
present in the building. For example, close your door when discussing matters of
a confidential nature, be aware of how voices can carry during hallway and open
area discussions, and be aware that papers and presentations on whiteboards in
conference rooms may reveal information that could be confidential or open to
interpretation.

Sometimes an employee may need to share proprietary information with outside
persons - for example, so that a commercial business partner Connetics has
selected to work with can be an effective partner for us. However, even when
there may seem to be a legitimate reason to share proprietary information, NEVER
disclose such information without management's prior approval and a written
confidentiality agreement approved by the Legal Department.

The company's agreements (e.g., with employees, consultants, and collaborators)
are designed to maximize Connetics' intellectual property protection and
ownership to the maximum extent consistent with U.S., California and other
applicable laws. All employees are required to sign a Proprietary Information
and Invention Agreement as a condition of employment. This Agreement defines
your obligations in greater detail.

Trademarks and service marks -- words, slogans, symbols, logos or other devices
used to identify a particular source of goods or services -- are important
business tools and valuable assets which require care in their use and
treatment. No employee may negotiate or enter into any agreement respecting
Connetics' trademarks, service marks or logos without first consulting the Legal
Department.

[I LOGO] Connetics' intellectual property protection entails a series of
policies and procedures designed to provide education, maintain good records,
secure protection under patent, trademark and related laws, and generally to
protect against losses before they happen. Some of these policies and procedures
include publication clearance, maintenance of laboratory notebooks, invention
disclosures, confidentiality, materials transfer and other agreements, outside
idea submissions, and the like. If you have any questions about this, please
contact the General Counsel.

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CORPORATE OPPORTUNITIES

Connetics employees and officers are prohibited from using company property or
information, or their position with the company, for personal gain, such as
profiting from business opportunities that they learn about through their work.
Employees and officers are also prohibited from competing with Connetics.
Competing with Connetics could include:

         -        Engaging in the same line of business.

         -        Taking away from Connetics opportunities for sales or
                  purchases of products, services or other interests.

[I LOGO] If you have any question about whether a particular opportunity is
covered by this prohibition, or any question regarding policies on proprietary
information, contact the Legal Department.

COMPUTER USE AND NETWORK SECURITY

Computer technology - hardware, software, networks, and the information that
runs on them - is critical to business success. And everyone who uses a computer
plays a role so that these resources operate as they should. This means that all
employees must:

         -        Use these computers responsibly and primarily for legitimate
                  business purposes - any personal uses should be reasonable and
                  kept to a minimum.

         -        Protect the security of computer systems.

GOOD JUDGMENT SHOULD GUIDE YOUR USE OF COMPUTERS, BUT THESE RULES CAN HELP:

         NEVER:

                  -        Engage in electronic communications that might be
                           considered offensive, derogatory, defamatory,
                           harassing, obscene or otherwise vulgar.

                  -        Use company electronic communications systems to
                           improperly disseminate copyrighted or licensed
                           materials or proprietary information.

                  -        Use company electronic communications systems to
                           transmit chain letters, advertisements or
                           solicitations (unless authorized).

                  -        Visit inappropriate Internet sites.

                  -        Give your password unless required.

         ALWAYS:

                  -        Protect information used to access company networks,
                           including ID's and passwords, pass codes, and
                           building access key cards.

                  -        Change your password if you believe it may be known
                           to others.

Your electronic communications at work may not necessarily be private. All
communications and information transmitted by, received from, created or stored
in our computer system (whether through word processing programs, email, the
Internet or otherwise) are Company records and property of Connetics. Records of
your electronic communications may be made and used for a variety of reasons,
and may be monitored to verify that company policies are being followed. Keep
this in mind and exercise care when you use electronic mail.

For information on computer and network security, contact the MIS Department.

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COMPANY FUNDS

How each employee uses company funds impacts profitability, so follow a simple
rule: Protect company funds as you would your own, guarding against misuse, loss
or theft. This includes making sure that all claims, vouchers, bills and
invoices are accurate and proper.

Company funds include both cash and its equivalents, such as checks, postage,
charge cards, bills, vouchers, reimbursement claims and negotiable instruments.

INSIDER TRADING

In order to protect the investing public, securities laws make it illegal for
those with "inside information" to buy or sell securities (stocks, bonds,
options, etc.)

"Inside information" means information - whether POSITIVE OR NEGATIVE -- that:

         -        is not available to the public; and

         -        is material.

"Material information" means information that a reasonable investor would likely
consider important in deciding whether to purchase or sell a security. Chances
are, if you learn something nonpublic that leads you to want to buy or sell
stock, the information may be considered material. Material information is not
necessarily information that is certain; information that something is likely to
occur, or even that it "may happen," may be considered material.

Many of our employees may have inside information simply by virtue of their
positions.

Inside information might include, for example:

         -        Introduction of an innovative new product.

         -        Negative views about a new or existing product.

         -        Significant new contracts.

         -        Mergers, acquisitions and joint ventures.

         -        Litigation.

         -        Earnings statements and forecasts.

         -        Expected Governmental actions.

INFORMATION ABOUT ANOTHER COMPANY. Inside information can also be information
you obtained confidentially during the course of your work about another company
- for example, from a customer or supplier.

If you have knowledge of any of these kinds of information - and the information
is nonpublic - this is inside information, and no Connetics employee may buy or
sell securities using it.

NO "TIPS." This means you must never give someone else (your spouse, co-worker,
friend, broker, etc.) a "tip" regarding nonpublic inside information; this
includes discussions on Internet "chat rooms."

Securities law violations are taken very seriously and can be prosecuted even
when the amount involved was small or the "tipper" made no profit at all.
Government agencies regularly monitor trading activities through computerized
searches.

Employees (and outsiders with whom they are associated) who have inside
information can lawfully trade in the market once the information is made public
through established channels and enough time has passed for the information to
be absorbed by the public. Employees who have regular access to

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<PAGE>

inside information must generally limit their trading of company securities to
specified "window periods."

[I LOGO] Connetics has a written Insider Trading Policy which covers all
employees. You should familiarize yourself with the policy, as using inside
information or advising others to do so is subject to disciplinary action, up to
and including termination by Connetics, and criminal and civil penalties.

[I LOGO] Please refer to the complete Insider Trading Compliance Program: Policy
and Guidelines with Respect to Certain Transactions in Company Securities which
was provided to you at hire, or on the company intranet http://cnctjungle/Stock.

[I LOGO] If you have questions or concerns about your responsibilities under the
insider trading laws, contact the Legal Department.

                                    Q: A supplier sold Connetics a software
                                    system on a trial-run basis. I have heard
                                    the trial run was a success and we are going
                                    to buy the company's system. I bet other
                                    companies will follow our lead. My
                                    sister-in-law invests in tech stocks and
                                    knows a lot about them. Can I tell her about
                                    this, and let her decide whether she thinks
                                    this company is a good investment?

                                    A: Absolutely not. The information you have
                                    about our plans to use this company's
                                    product is confidential inside information.
                                    If you convey it to your sister-in-law, you
                                    are violating our policy not to divulge
                                    confidential proprietary information. If you
                                    or your sister-in-law use the information to
                                    invest, you may also be violating the
                                    securities laws.

INVESTOR RELATIONS

Stockholders, financial analysts, creditors and others count on us to provide
reliable information on Connetics' operations, performance and outlook.

TO PROTECT THE INTEGRITY OF THE INFORMATION:

Personnel who are authorized to speak to investors and analysts on behalf of
Connetics may not provide "special" or favored treatment to some. We must
provide all members of the public equal access to honest and accurate material
information. Only those employees specifically authorized to do so may respond
to inquiries from members of the investment community (e.g., stockholders,
brokers, investment analysts, etc.). All such inquiries must be forwarded
promptly to the Investor Relations Department.

MEDIA

Connetics is a publicly-traded company, and it is necessary to follow certain
procedures for communicating with our external audiences (the financial
community, media, and government officials) to lessen our exposure to legal
liabilities. Media or press calls require careful consideration. No employee
should talk about company matters with a reporter, either on or off the record,
without first contacting the Legal Department or the Investor Relations
Department.

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All incoming telephone calls from the financial community, media and government
officials (except the Food and Drug Administration) should be initially routed
to the Chief Financial Officer. Calls from the FDA should be routed to the Vice
President of Regulatory Affairs. If the affiliation of the caller is unknown,
and the caller is requesting general corporate information and/or information on
stock activity, the call should also be routed to the CFO. In the event the CFO
is unavailable, external calls and contacts should be forwarded to one of the
following senior officers:

                  Chief Executive Officer
                  Chief Operating Officer
                  General Counsel

[I LOGO] Please see the CFO if you have any questions about this procedure. In
the event of a crisis, Connetics' SOP on crisis management and business
continuity will also apply.

RECORDS MANAGEMENT

Managing records and recorded information is essential to the work of Connetics,
and care must be taken to ensure that this information is managed properly.

FOUR PRINCIPLES SHOULD GUIDE US:

         -        MAINTAIN RECORDS AS REQUIRED BY LAW. Some laws have specific
                  record-keeping requirements. Each department must faithfully
                  manage and maintain all records required by law.

         -        BE ALERT TO THE NEED FOR ACCURACY. Employees should always
                  maintain accurate records. Providing false or misleading
                  records or altering them, is wrong under any circumstances and
                  could constitute a serious violation of law. Intentionally
                  falsifying GxP data may place Connetics in a precarious
                  position with regulatory authorities and can result in
                  fraudulent regulatory filings. Falsification of records may
                  lead to immediate termination.

         -        RETAIN ANY RECORDS RELATED TO LITIGATION OR AN INVESTIGATION.
                  If an investigation or litigation is pending or anticipated,
                  certain records, including electronic records, may be subject
                  to "disposal suspension." This means they must be retained and
                  must not be altered, deleted, concealed or destroyed. Be sure
                  to obtain advice from the Compliance Officer, Records Manager
                  or the Legal Department.

         -        KNOW AND FOLLOW COMPANY RECORDS MANAGEMENT POLICIES. Every
                  business needs an orderly process for retaining records and
                  documents. Consult our record retention policy for further
                  guidance.

[I LOGO] For more information on records management policies, review our
Standard Operating Procedures on Records Retention. If you still have questions,
contact the Legal Department or the Compliance Officer.

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<PAGE>

                                    Q: Does "disposal suspension" mean the same
                                    thing as "records management"?

                                    A: No. Records management is a system of
                                    policies and procedures designed to ensure
                                    that company records are created, managed
                                    and disposed of in accordance with legal
                                    record-keeping requirements, or business
                                    needs. Disposal suspension is the manner in
                                    which the company satisfies its legal duty
                                    to preserve potentially relevant evidence
                                    that might be asked for in litigation or
                                    investigations. When company records are
                                    subject to disposal suspension, they may not
                                    be disposed of.

RESEARCH INTEGRITY

Research integrity is fundamental to the scientific process and to Connetics'
ability to bring products to market. All company research and development must
be conducted according to all applicable laws and regulations and to the
generally accepted ethical standards of the scientific community. Scientific
misconduct, such as fabrication, falsification or plagiarism in proposing,
conducting or reporting research is prohibited.

UNSOLICITED IDEAS

Connetics employees are sometimes approached by persons outside the company with
ideas or suggestions they think we should use. These ideas can involve products,
packaging, promotions, advertising, processes, business methods and other
topics.

Unfortunately, if these "unsolicited ideas" are not properly dealt with, our
company risks liability. For this reason, DO NOT ACCEPT, OR IN ANY WAY
ENCOURAGE, OFFERS OF UNSOLICITED IDEAS.

This important rule does not generally apply to certain suppliers, such as
advertising agencies, and some other consultants under contract with Connetics.
But if you are unsure whether an unsolicited idea falls into one of these
categories, always seek advice.

[I LOGO] If you are approached about an unsolicited idea, immediately notify the
Legal Department.

                 CONFLICTS OF INTEREST, GIFTS AND ENTERTAINMENT

OUR GOAL

As employees of Connetics, we work together to avoid any conflicts of interest,
whether actual or perceived.

CONFLICTS OF INTEREST

Our employees have many activities in their lives outside the company. A
"conflict of interest" arises when an employee's personal, social, financial or
political activities have the potential of interfering with his or her loyalty
and objectivity to the company. Actual conflicts must be avoided, but even the
APPEARANCE of a conflict of interest can be harmful.

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<PAGE>

YOU MAY NOT HAVE ANY OUTSIDE AFFILIATIONS WITH COMPETITORS, CUSTOMERS OR
SUPPLIERS UNLESS YOU: obtain the written approval of your supervisor and the
Human Resources Department, who will consult with the Compliance Officer.

COMMON WAYS THAT CONFLICTS OF INTEREST CAN ARISE

OUTSIDE EMPLOYMENT AND AFFILIATIONS. If you have a second job with, are
performing services for, or are serving as a director or consultant for an
organization that is a competitor, customer or supplier of goods or services,
this raises an actual or possible conflict of interest. This is true even if
your supervisor has approved your request to take other employment. (The same
point applies to working for an organization that is seeking to become a
competitor, customer or supplier.)

Some arrangements of this kind are NEVER permissible - for example, working for
or providing services to anyone you deal with as part of your job for Connetics.

JOBS AND AFFILIATIONS OF CLOSE RELATIVES. The work activities of close relatives
can also create conflicts of interest. If you learn that a "close relative"
(defined at page 17) works or performs services for any competitor, customer or
supplier, promptly notify your supervisor, the Human Resource and Legal
Departments. They will work with you and the Compliance Officer to determine if
any action is required to address the situation. In general, a relative should
not have any business dealings with you, with anyone working in your department
or with anyone who reports to you. Exceptions require the approval of management
and the Compliance Officer. In addition, in some circumstances it may be
necessary to get the Board of Directors to review related party transactions for
possible conflicts of interest.

You must also be careful not to disclose any confidential business information
to any relative.

                                    Q: We need to contract a firm to provide
                                    cleaning services and are spending a lot of
                                    time looking for the right one. Couldn't we
                                    save the company a lot of time and effort by
                                    hiring my brother's cleaning firm because I
                                    know that they can be trusted to do the job
                                    right?

                                    A: No. Simply hiring a firm because you
                                    trust your brother is not a sound business
                                    practice and it contravenes our procurement
                                    policies. Further, this creates a conflict
                                    of interest between your desire to help your
                                    brother and your objectivity in selecting
                                    the most competitive supplier. However, if
                                    you make a proper disclosure to the
                                    Compliance Officer and remove yourself from
                                    the selection process (and no one who
                                    reports to you is involved), your brother's
                                    company can compete for the work with other
                                    qualified vendors.

BOARDS OF DIRECTORS. Occasionally, an employee may be asked to serve on the
board of directors of another organization. This can, in come cases, raise a
conflict of interest or even a legal issue. Before accepting a position as a
board member (including nonprofit organizations), always get written approval
from the Human Resources Department, who will consult with the Legal Department
and the Compliance Officer.

INVESTMENTS. Employees and their close relatives need to be careful that their
investments do not create conflicts of interest, impairing the employee's
ability to make objective decisions on behalf of an operating company.

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<PAGE>

Conflicts can occur if investments are made in competitors, suppliers or
customers. Any "substantial interest" in a competitor, supplier or customer
requires the prior written approval of your supervisor, Human Resources and the
Legal Department, who will notify the Compliance Officer.

A "substantial interest" means any economic interest that might influence or
appear to influence your judgment. It does not usually include an investment
that is less than 1 percent of the value of the outstanding equity securities of
a public company or an interest worth less than $25,000 in a privately owned
company. Publicly-traded mutual funds, index funds and similar poolings of
securities, when the individual investor has no say in which investments are
included, do not present conflicts.

SOME INVESTMENTS ARE ALWAYS WRONG:

         -        Never invest in a supplier if you have any involvement in the
                  selection or assessment of, or negotiations with, the
                  supplier, or if you supervise anyone who has such
                  responsibility; and

         -        Never invest in a customer if you are responsible for dealings
                  with that customer or supervise anyone with such
                  responsibility.

         Usually, however, whether an investment creates a conflict of interest
         is a matter of good judgment. When deciding whether an investment might
         create a conflict, ask yourself these questions:

         -        Would the investment affect any decisions I will make for
                  Connetics?

         -        How would the investment seem to others inside Connetics such
                  as my co-workers - would they think it might affect how I do
                  my job for the company?

         -        How would it look to someone outside, such as a customer,
                  supplier, stockholder, or even the media?

OTHER CONSIDERATIONS ON CONFLICTS OF INTEREST

CLOSE RELATIVES. As the previous sections show, the activities of a close
relative can create a conflict of interest. This happens when an employee's
loyalty becomes divided - or may appear to be divided - between loyalty to the
close relative (who has one set of interests) and loyalty to Connetics (which
may have different interests). "Close relative" includes a spouse, parents,
stepparents, children, stepchildren, siblings, stepsiblings, nephews, nieces,
aunts, uncles, grandparents, grandchildren, in-laws and a same or opposite sex
domestic partner. On conflict questions you are not responsible for learning
about the activities of family members who do not reside with you. For family
members outside your home, you need only be concerned with those circumstances
that you know about.

POTENTIAL SUPPLIERS, CUSTOMERS AND COMPETITORS. For conflicts of interest, a
"supplier," "customer" or "competitor" also includes both actual and potential
suppliers, customers or competitors.

If you think you may have a conflict of interest, or that others could possibly
believe an activity or relationship you are engaged in is a conflict of
interest, you must promptly disclose the situation in writing to the Compliance
Officer.

RECEIVING GIFTS AND ENTERTAINMENT

Connetics has many suppliers, and suppliers are vital to our company's success.
That is why relationships with suppliers must be based entirely on sound
business decisions and fair dealing. We are particularly concerned that any
person who gives gifts to an employee does not seek or receive special favors
from Company employees. We recognize that business gifts and entertainment can
build goodwill, but they can also make it harder to be objective about the
person providing them, in short, gifts and entertainment can create their own
conflicts of interest. Accepting any gift of more than nominal value or
entertainment that is more than a routine social amenity can appear to be an
attempt to influence the recipient into favoring a particular customer, vendor,
consultant or the like. To avoid

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<PAGE>

the reality and the appearance of improper relations with current or prospective
customers, vendors and consultants, employees should observe the following
guidelines when deciding whether or not to accept gifts or entertainment:

"GIFTS AND ENTERTAINMENT" means anything of value, including discounts, loans,
cash, favorable terms on any product or service, services, prizes,
transportation, use of another company's vehicles or vacation facilities, stocks
or other securities, participation in stock offerings, home improvements,
tickets, and gift certificates. The potential list is endless - these are just
examples.

GIFTS AND ENTERTAINMENT OFFERED TO CONNETICS EMPLOYEES AND THEIR CLOSE RELATIVES
FALL INTO THREE CATEGORIES:

USUALLY OK

Some gifts and entertainment are small enough that they do not require approval.
Gifts or entertainment with a combined market value of $250 or less from any one
source in a calendar year are in this category (as long as they do not fall into
the "Always Wrong" category, below). This means that as long as the following do
not total more than $250 from a single source in a calendar year they do not
require approval.

         -        Occasional meals with a business associate.

         -        Ordinary sports, theater and other cultural events.

         -        Other reasonable and customary gifts and entertainment.

Similarly, accepting promotional items of nominal value, such as pens,
calendars, and coffee mugs which are given to customers in general, does not
require approval.

ALWAYS WRONG

Other types of gifts and entertainment are simply wrong, either in fact or in
appearance, so that they are never permissible, and no one can approve these.
Employees may never:

                  -        Accept any gift or entertainment that would be
                           illegal or result in any violation of law.

                  -        Accept any gift of cash or cash equivalent (such as
                           gift certificates, loans, stock, stock options).

                  -        Accept or request anything as a quid pro quo or as
                           part of an agreement to do anything in return for the
                           gift or entertainment.

                  -        Participate in any entertainment that is unsavory,
                           sexually oriented, or otherwise violates our
                           commitment to mutual respect.

                  -        Participate in any activity that you know would cause
                           the person giving the gift or entertainment to
                           violate his or her own employer's standards.

ALWAYS ASK

For anything that does not fit into the other categories, it may or may not be
permissible to proceed, but you will need to get written approval from your
supervisor and Human Resources and Finance Departments, or the Compliance
Officer. Examples in this category include the following when paid by a current
or potential supplier or customer:

                  -        Gifts and entertainment from a single source with an
                           annual fair market value over $250.

                  -        Special events - such as tickets to a World Cup match
                           or Super Bowl game (these usually have a value of
                           more than $250)

                  -        Travel or entertainment lasting more than a day.

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<PAGE>

         In determining whether to approve something in the "Always Ask"
         category, supervisors and the Compliance Officer will use reasonable
         judgment and consider such issues as:

                  -        Whether the gift or entertainment would be likely to
                           influence your objectivity.

                  -        Whether there is a business purpose (for example,
                           business will be discussed as part of the event in
                           question).

                  -        What kind of precedent it would set for other
                           employees.

                  -        How it would appear to other employees or people
                           outside the company.

OTHER CONSIDERATIONS ON GIFTS AND ENTERTAINMENT

NOTIFYING SUPPLIERS AND CUSTOMERS. You should inform all persons with whom you
are doing or seeking to do business of this policy.

WHAT TO DO IF YOU RECEIVE AN IMPERMISSIBLE GIFT. You must immediately return any
gift of cash or cash equivalent such as a bank check, money order, investment
securities or negotiable instrument. For other types of gifts over the "Usually
OK" amount, if management and the Compliance Officer determine that returning
the gift is impractical or undesirable, you should turn the gifts over to the
Compliance Officer for company use, sale or donation. Gifts such as a picture,
desk set or the like may be used in your office with the written permission of
your management and Compliance Officer but will remain company property. If
appropriate, a letter should be sent to the donor explaining your company's
policy with respect to gifts.

[I LOGO] If you have questions or concerns about gifts and entertainment
policies, contact your supervisor or Human Resources or the Legal Department.

                                    Q: A supplier's sales representative offers
                                    you a cleverly designed pen that his company
                                    uses in signing contracts, but there is one
                                    catch to the offer. He says you may have the
                                    pen only if you help him make his case to
                                    the rest of the procurement team. Since the
                                    pen is probably worth less than $250, can
                                    you accept it?

                                    A: No, because there is a quid pro quo, an
                                    expression meaning "something for
                                    something." He will only give you the pen if
                                    he gets something in return. Even though
                                    this may seem like a small matter, these
                                    quid pro quo arrangements are on the list of
                                    conflicts that are "Always Wrong."

OFFERING GIFTS AND ENTERTAINMENT

Just as we have strict rules for receiving gifts and entertainment, we must also
be careful how we offer them. Offering social amenities or business courtesies
of a nominal value such as modest gifts, meals and entertainment is common in
the commercial world and is meant to create goodwill and enhance business
relationships.

Using good judgment and moderation, occasionally exchanging entertainment or
gifts of nominal value with a non-Governmental individual or entity is
appropriate unless the recipient's employer forbids the practice. Any courtesy
should always comply with the policies of the recipient's organization.

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OFFERING GIFTS

You must always follow company policy on gift giving. In addition to the general
policies stated below, we have also adopted express guidelines on giving
anything of value to a healthcare professional. See "DEALING WITH HEALTHCARE
PROFESSIONALS," at page 28.

SOME CONDUCT IS ALWAYS OFF-LIMITS - NO EXCEPTIONS. NEVER OFFER OR PROVIDE A
GIFT, ENTERTAINMENT OR ANYTHING OF VALUE IF IT IS:

         -        Illegal.

         -        Known to be in violation of the rules of the recipient's
                  organization.

         -        Cash or other monetary instruments (such as bank checks,
                  traveler's checks, money orders, investment securities or
                  negotiable instruments).

         -        Unsavory, sexually oriented, or otherwise violates our
                  commitment to mutual respect.

         -        A quid pro quo (offered for something in return).

         -        A gift over $250 - unless presented in a public presentation
                  making it clear that the recipient is being given the gift,
                  for example, pursuant to a sales incentive program that is
                  known and acceptable to the recipient's employer.

         -        Not recorded properly on company books.

GIFTS AND ENTERTAINMENT TO A GOVERNMENT OFFICIAL RAISES SPECIAL RISKS. Never
offer, provide or approve such gifts, gratuities or entertainment without prior
written approval of the Legal Department, management and the Compliance Officer.

[I LOGO] For more information on the risks of offering gifts and entertainment
to Government officials, see the following sections in this Code: "Political
Activity" (on pp. 30-31), Corporate Political Activity and Personal Political
Activity.

[I LOGO] If you have questions or concerns about gifts and entertainment
policies with respect to healthcare professionals, review the separate policies
on that matter, or contact the Sales Department or the Legal Department.

                                    Q: I want to give one of our best vendors a
                                    special gift to say thanks. I have access to
                                    some tennis tournament tickets that I know
                                    she would appreciate but I think it is
                                    against her company's policy for her to
                                    accept them. If she doesn't care about the
                                    policy, can I give her the tickets?

                                    A: No. If you know that giving a gift will
                                    violate the policy of the recipient's
                                    company, you may not give the gift. Just as
                                    we want others to respect our standards, we
                                    will respect theirs.

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<PAGE>

                               CONDUCTING BUSINESS

OUR GOAL

In all our business dealings, we strive to be honest and fair. We will
vigorously compete, but do so fairly, complying with all laws protecting
competition and the integrity of the marketplace.

AUDITING AND ACCOUNTING COMPLAINTS

Good faith complaints by employees, shareholders and others regarding
accounting, internal controls and auditing matters are handled by the Audit
Committee of the Board of Directors. Complaints of that nature reported to the
Reporting Hotline are automatically forwarded to the Chair of the Audit
Committee, which has oversight over the complaint. Employees may submit their
complaints regarding questionable accounting, internal controls and auditing
matters on a confidential and anonymous basis. Confidentiality will be
maintained to the fullest extent possible, consistent with the need to conduct
an adequate investigation of the complaint.

ANTITRUST LAWS

Connetics strictly adheres to the U.S. antitrust laws and to what are called
"competition" laws in many other countries - laws that protect markets around
the world from anticompetitive behavior. These laws prohibit anticompetitive
agreements, such as price-fixing and predatory efforts to eliminate competitors.

FACTS ABOUT COMPETITION LAWS:

         -        COMPETITION LAWS VARY AROUND THE WORLD. The individual U.S.
                  states, the European Union, and many countries have laws
                  prohibiting anticompetitive behavior. The laws that apply to
                  you may vary depending on where you work or where a
                  transaction you are working on will take place.

         -        THEY CAN COVER CONDUCT OUTSIDE THE COUNTRY. U.S. antitrust
                  laws may apply even when the conduct occurs outside the
                  country's borders.

         -        PENALTIES ARE SEVERE. In the U.S., individuals convicted of
                  price-fixing often receive prison sentences, and some
                  companies have been fined hundreds of millions of dollars;
                  customers and competitors can sue for three times the harm
                  caused. In the E.U., fines for anticompetitive behavior can be
                  ten percent of worldwide turnover (i.e., sales).

         -        CARELESS CONDUCT CAN VIOLATE THE LAW. What might appear to be
                  ordinary business contacts, such as a lunch discussion with a
                  competitor's sales representative or a gripe session at an
                  industry trade association, can lead to antitrust law
                  violations.

BASIC RULES TO KNOW:

CERTAIN AGREEMENTS ALMOST ALWAYS VIOLATE COMPETITION LAWS. NEVER TALK WITH OR
EXCHANGE INFORMATION WITH COMPETITORS TO:

         -        set prices or any other economic terms of the sale, purchase
                  or license of goods or services

         -        use a common method of setting prices

         -        set any conditions of sale or purchase

         -        to allocate or limit customers, geographic territories,
                  products or services, or NOT TO solicit business from each
                  other in one or more ways

         -        not to do business with (to "boycott") one or more customers,
                  suppliers, licensors or licensees; and

         -        limit production volume or research and development, to
                  refrain from certain types of selling or marketing of goods or
                  services, or to limit or standardize the features of products
                  or services.

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<PAGE>

Because of the risk, do not discuss competitive matters with competitors - at
any time or any place - without authorization of the Legal Department.

OTHER ACTIVITIES ARE NOT ABSOLUTELY ILLEGAL, BUT WILL BE LEGAL IN SOME MARKET
SITUATIONS AND ILLEGAL IN OTHERS. ALWAYS CONSULT WITH THE LEGAL DEPARTMENT
BEFORE:

         -        "Predatory" pricing, or pricing below some level of cost, with
                  the effect of driving at least some competition from the
                  market;

         -        Exclusive dealing arrangements that require customers or
                  licensees not to deal in the goods or services of the
                  Company's competitor;

         -        Reciprocal purchase agreements that condition the purchase of
                  a product on the seller's agreement to buy products from the
                  other party;

         -        "Tying" arrangements, in which a seller conditions its
                  agreement to sell a product or service that the buyer wants on
                  the buyer's agreement to purchase a second product that the
                  buyer would prefer not to buy or to buy elsewhere on better
                  terms;

         -        "Bundling" or market share discounts in which the final price
                  depends on the customer's purchase of multiple products or on
                  allocating a specified percentage of its total purchases to
                  the Company's products;

         -        "Price discrimination," or selling to different purchasers of
                  the Company's products at different prices or on other
                  different economic terms of the purchase, or offering
                  different promotional allowances or services in connection
                  with the customer's resale of the products, without complying
                  with the specific exceptions permitted under the law; and

         -        Agreements with customers or licensees on the maximum resale
                  price or price levels of the Company's goods or services.

MONOPOLIZING, TRYING TO MONOPOLIZE MARKETS AND ABUSING A DOMINANT POSITION ARE
ILLEGAL.

Some competition laws make it illegal to monopolize or attempt to monopolize a
market, while others regulate the conduct of companies that hold a "dominant
position." A company with a dominant position, for example, must not try to
prevent others from entering the market or to eliminate competition. Usually,
competitors set prices to cover their costs - below-cost pricing may appear to
be "predatory." If there is a reason to price below cost, this should be
reviewed with the Legal Department to ensure that it is not predatory or in
violation of any law.

[I LOGO] This Code is not intended as a comprehensive review of the antitrust
laws, and is not a substitute for expert advice. If you have questions or
concerns about your responsibilities under the competition laws, consult the
Legal Department before taking action.

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<PAGE>

                                    Q: During a trade association meeting, I
                                    chatted with representatives of competing
                                    manufacturers. One representative said, "I
                                    don't know about the rest of you, but our
                                    gross margins aren't as good as they used to
                                    be." Another said "I wish we could do
                                    something about all those deep discounts." I
                                    nodded my head but never said anything. Over
                                    the next few weeks the companies whose
                                    representatives were present during the
                                    conversation raised their prices. Was the
                                    discussion a problem? What should I have
                                    done?

                                    A: Yes, this discussion definitely was a
                                    problem. A court might conclude that
                                    everyone present during the conversations,
                                    whether they said anything or not, had
                                    engaged in price-fixing, even though there
                                    was never an explicit agreement. Because of
                                    this risk, if you find yourself present
                                    during a discussion of prices with
                                    competitors, immediately break away from the
                                    discussion in a way that makes it clear you
                                    consider this improper, and promptly call
                                    the Legal Department.

INFORMATION ABOUT COMPETITORS

To compete in the marketplace, it is necessary and legal to gather competitive
information fairly. But some forms of information-gathering are wrong and can
violate the law - in the U.S., one such law is the Economic Espionage Act.

Connetics is committed to avoiding the appearance of improper
information-gathering, so it is important to know what you can and cannot do,
and what you must be careful about.

                                    Q: I have just been hired from another
                                    company. I have a box of materials from my
                                    former employer that would be very helpful
                                    in developing marketing plans for Connetics.
                                    May I bring this with me?

                                    A: No, you should not bring materials that
                                    may contain confidential information to
                                    Connetics from a prior job. Just as it would
                                    be wrong for someone to take our
                                    confidential information, we should not use
                                    the confidential information of others.

LEGITIMATE SOURCES OF COMPETITIVE INFORMATION INCLUDE:

         -        Newspapers and press accounts.

         -        Other public information, such as annual reports or published
                  sales materials.

         -        Talking with customers - but not to obtain confidential
                  information.

         -        Trade shows (but not information from competitors - see
                  "Antitrust Laws" on page 21).

         -        Information publicly available on the Internet.

         -        Industry surveys by reputable consultants.

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<PAGE>

NEVER USE THE FOLLOWING:

         -        A competitor's confidential or proprietary information or
                  something similar belonging to someone else - consult the
                  Legal Department if you have such information. Even if
                  confidential or proprietary information just shows up on your
                  desk, get legal advice.

         -        Confidential or proprietary information in any form possessed
                  by new hires from prior employers.

         -        Information on a competitor that someone offers to sell.

[I LOGO] If you have a question about whether it is appropriate to accept or
have certain competitive information, contact the Legal Department.

TRADE RESTRICTIONS, EXPORT CONTROLS AND BOYCOTT LAWS

TRADE RESTRICTIONS AND EXPORT CONTROLS. The United States government uses
economic sanctions and trade embargoes to further various foreign policy and
national security objectives. Employees must abide by all economic sanctions or
trade embargoes that the United States has adopted, whether they apply to
foreign countries, political organizations or particular foreign individuals and
entities.

The reach of these laws varies. They can restrict the activities of citizens or
residents (including companies), with regard to certain countries, or the
Governments, financial institutions, firms or individuals residence in or
identified with those countries.

These restrictions also impose licensing requirements for export of certain
products or technology. An "export" is not only the transfer of a physical
commodity - it can include the transfer of services or technology (such as
technical data or other information) to a national of another country by:

         -        Email;

         -        Face-to-face discussions, either in the U.S. or abroad;

         -        Visits to any company facility.

[I LOGO] In all international dealings, be sure you know and comply with all
export controls and trade restrictions. Inquires regarding whether a transaction
on behalf of the Company complies with applicable sanctions and trade embargo
programs should be referred to the Compliance Officer or the Legal Department.

U.S. ANTI-BOYCOTT ACT. Under U.S. law, Connetics is required to report to the
U.S. Government, and not to cooperate with, any request concerning boycotts or
related restrictive trade practices. Employees may not take any action, furnish
any information, or make any declaration that could be viewed as participation
in an illegal foreign boycott. These laws were originally designed to respond to
the boycott of Israel by certain Middle Eastern countries, but they apply to any
boycott of countries friendly to the U.S., such as, for example, the Pakistani
boycott of India. There are severe penalties for violation of these laws.

You should immediately notify the Legal Department if you receive
boycott-related requests for information, whether oral or written. This includes
requests that are part of an actual order, as well as those that do not concern
a specific transaction.

[I LOGO] If you need further information on trade restrictions and export
controls, contact the Legal Department.

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<PAGE>

CUSTOMS

As a general rule, importation of Connetics' products or any other goods is
subject to various customs and fiscal laws and regulations. In particular,
physical importation of products into a country must usually comply with either
(1) regulations that specify the import duties, value added tax, excise tax and
the like, that may be payable in relation to our products, or (2) tax bonding or
other similar regulations that govern "tax or duty free" shipments.

You must be sure that all imports comply with these requirements and that any
information provided to customs and tax officials is accurate and truthful.

[I LOGO] If you need further information, contact the Legal Department.

THE GOVERNMENT AS OUR CUSTOMER

Each year, Connetics does business with the U.S. Government. While integrity is
the foundation for all dealings with customers, special rules apply when the
Government is our customer - rules that are in some cases very different from
those that apply in dealing with a commercial customer. Violations can result in
criminal and civil penalties.

Those involved in providing service under a Government contract need to know
these rules.

Basic rules include:

         -        Never offer or provide gifts, gratuities or entertainment
                  without prior written approval of the Compliance Officer and
                  the Legal Department.

         -        Know and follow anti-kickback rules, including restrictions on
                  gifts by those seeking business from the Government and from
                  Government contractors.

         -        Understand "most favored customer" pricing and verify
                  compliance.

         -        Conform strictly to the contract's quality, quantity and
                  testing requirements.

         -        Billings must always be accurate, complete, and in full
                  compliance with all rules and regulations, including time and
                  cost allocations.

         -        Be truthful, accurate, and complete in all representations and
                  certifications.

         -        Know your customer's rules and regulations.

         -        Don't initiate any employment discussions with any current or
                  former Government employee until first consulting with the
                  Legal Department.

[I LOGO] If you have questions about proper business relationships with the
Government, contact the Legal Department.

INTERNATIONAL BRIBERY AND CORRUPTION

The laws of the U.S., as well as important extra-territorial laws, such as the
U.S. Foreign Corrupt Practices Act, prohibit bribes to foreign Governments and
other officials (such as political candidates, political parties and their
officials, employees of Government-owned businesses, United Nations officials,
etc.) A violation is a serious criminal offense for both companies and
individuals, which can result in fines, loss of export privileges and
imprisonment for individuals.

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<PAGE>

BRIBERY AND CORRUPTION LAWS:

Forbid

         -        Offering or giving anything of value to a foreign official for
                  the purpose of obtaining or retaining business, or for any
                  improper purpose. This includes payments to reduce taxes or
                  customers duties.

         -        Making improper payments through third parties - so companies
                  must be diligent in selecting agents and partners. Additional
                  care is needed if the prospective agent is - or is in
                  association with - a Government official.

Require that companies keep accurate books and records so that payments are
honestly described and not used for unlawful purposes.

Connetics requires more of employees - bribes are prohibited to anyone, anywhere
in the world, for any reason. Remember that it is your responsibility to avoid
these prohibited actions.

Never:

         -        Make an unauthorized payment, or authorize an improper payment
                  or gift (cash or otherwise) - directly or through an agent -
                  to a government official.

         -        Induce a foreign official to do something illegal.

         -        Ignore or fail to report any indication of improper payments,
                  gifts or entertainment.

         -        Establish an unrecorded fund for any purpose.

         -        Make a false or misleading entry in company books.

         -        Do anything to induce someone else to violate these rules, or
                  look the other way when there might be a violation.

FACILITATING PAYMENTS: U.S. law permits certain "facilitating payments" to
foreign Government employees. We discourage these payments, and a payment may be
made only in these limited circumstances:

         -        You obtain approval from the Legal Department.

         -        It is legal in the country in question.

         -        It is necessary to obtain or expedite the performance of
                  routine, non-discretionary, legitimate, customary duties, such
                  as mail delivery, scheduling inspections or customs clearance.

         -        It is requested by the Government employee.

         -        The payment is small (below $250 on an annual basis) and is
                  fully and accurately recorded on the company books.

         -        It does not involve a decision to award business to, or to
                  continue doing business with the company.

In some countries, all such payments are considered illegal and therefore should
never be made. PAYMENTS MAY NEVER BE MADE TO ANY U.S. GOVERNMENT EMPLOYEE.

CONFIDENTIAL INFORMATION, INTELLECTUAL PROPERTY AND COPYRIGHT

Just as we protect our own confidential information (see "Proprietary
Information" on pp. 9-10), we respect the proprietary and confidential
information of others. This includes written materials, software, music and
other "intellectual property."

Any proposed name of a new product, financial instrument or service intended to
be sold or rendered to customers must be submitted to the Legal Department for
clearance prior to its adoption and use. Similarly, using the trademark or
service mark of another company, even one with whom our Company

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<PAGE>

has a business relationship, always requires clearance or approval by our Legal
Department, to ensure that the use of that other company's mark is proper.

Employees must avoid the unauthorized use of copyrighted materials of others and
should confer with the Legal Department if they have any questions regarding the
permissibility of photocopying, excerpting, electronically copying or otherwise
using copyrighted materials. In addition, simply because material is available
for copying, such as matter downloaded from the Internet, does not mean that it
is automatically permissible to copy or re-circulate (by, for example, email or
posting to an intranet facility). All copies of work that is authorized to be
made available for ultimate distribution to the public, including all machine
readable works such as computer software, must bear the prescribed form of
copyright notice.

Basic rules to follow:

         -        Do not bring to Connetics or use, any confidential
                  information, including computer records, from prior employers.

         -        Do not load any unlicensed software on any Connetics computer.

         -        Do not accept or use anyone else's confidential information
                  except under an agreement approved by the Legal Department.

         -        Do not use or copy documents and materials that are
                  copyrighted (including computer software, portions of audio,
                  video and off-the-Internet or off-the-air recordings) without
                  specific permission from the copyright owner. Consult the
                  Legal Department on whether "fair use" rules or existing
                  licenses may allow it.

[I LOGO] If you have questions about intellectual property or copyright rules,
contact the Legal Department.

UNFAIR BUSINESS PRACTICES

Connetics competes vigorously for business, but some conduct in the name of
competition is not consistent with the law or our commitment to integrity.

NEVER COMPETE BY ENGAGING IN UNFAIR PRACTICES SUCH AS:

         -        Disparaging or making false statements about competitors or
                  their services

         -        Stealing or misusing competitors' trade secrets.

         -        Cutting off a competitor's sources of supply.

         -        Inducing customers to break contracts with competitors.

         -        Requiring someone to buy from your company before we will buy
                  from them.

         -        Paying bribes to help Connetics' business or to hurt a
                  competitor.

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<PAGE>

                                    Q: I just received my primary competitor's
                                    business plans for the coming year in an
                                    unmarked envelope, but with a postmark that
                                    indicates that it was mailed from the
                                    competitor's headquarters city. Although
                                    this is obviously a confidential internal
                                    document, I didn't do anything to get it, so
                                    can I keep it?

                                    A: No. This document contains trade secrets
                                    that were sent to us by someone with access
                                    who violated his or her obligation of
                                    confidentiality. At worst, sending it is a
                                    violation of law, and at best it creates a
                                    situation where we cannot explain how we
                                    obtained it. Do not use or make copies of
                                    such documents. Consult with the Legal
                                    Department on the proper way to dispose of
                                    this document.

                     DEALING WITH HEALTHCARE PROFESSIONALS

OUR GOAL

Connetics must consistently strive to treat its customers with integrity, which
includes compliance with all laws designed to ensure that healthcare
professionals are not unduly influenced to prescribe our products.

INTERACTIONS WITH HEALTHCARE PROFESSIONALS

U.S. law imposes additional restrictions on pharmaceutical companies in dealing
with their customers, healthcare professionals (doctors, nurses, physicians'
assistants, etc.). The intent of the laws is threefold:

         -        To make it unlawful for a pharmaceutical manufacturer to
                  provide financial inducements through direct or indirect means
                  that result in changes to prescribing behavior resulting in
                  federal reimbursement.

         -        To ensure that pharmaceutical manufacturers provide ethical,
                  clinically accurate and balanced information to healthcare
                  providers.

         -        To ensure that interactions between pharmaceutical
                  manufacturers and healthcare providers avoid inappropriate
                  prescribing that would be injurious to patients.

Connetics endorses and supports the appropriate use of entertainment with our
customers within company guidelines and legal obligations. We expect that our
employees will ensure that appropriate value is obtained from the customer in
the course of business meetings. When interacting with our customers, employees
should convey product information or other information relevant to the
customer's medical practice, and when interacting with our advisors, employees
should obtain relevant information useful to the company's business activities.
In summary, promotional and entertainment expenditures are encouraged when they
are consistent with company guidelines, appropriate to the information conveyed
or obtained, or relevant and useful to the customer's practice.

WE HAVE ADOPTED SPECIFIC CUSTOMER RELATIONS POLICIES FOR OUR SALES FORCE. ANY
EMPLOYEE WHO HAS DIRECT CONTACT WITH A HEALTHCARE PROFESSIONAL ON BEHALF OF
CONNETICS SHOULD BE FAMILIAR WITH THOSE POLICIES AND ABIDE BY THEM AT ALL TIMES.

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<PAGE>

[I LOGO] If you have any questions about our policies relating to interactions
with doctors or other healthcare professionals, please contact the Chief
Commercial Officer or the Legal Department for guidance.

                             DEALING WITH CONSUMERS

OUR GOAL

To be successful, Connetics must consistently strive to treat consumers fairly
and honestly. Product quality, responsible marketing practices, understanding
our customer's needs, and paying attention to issues relating to consumer
privacy are critical parts of what Connetics is expected to do.

PRODUCT QUALITY

Maintaining the high quality of products is critical to Connetics' success -
because it is what customers and consumers expect from us. So that we
consistently meet their expectations, and meet or exceed all Government safety
and company quality standards for products produced, our employees must act in
accordance with these company quality and safety commitments.

Connetics Will Consistently Work To:

         -        Follow all Government requirements and all company standards
                  on product quality.

         -        Strictly adhere to company production and quality control
                  procedures.

         -        Strictly follow all procedures for the storing, handling and
                  shipping of products.

         -        Ensure that any new product has satisfied all applicable
                  standards for quality before being offered to the public.

         -        Ensure that data integrity is maintained and that all
                  regulatory agency filings contain only truthful and accurate
                  information and data.

         -        Ensure that monitoring systems are in place to detect
                  potential product defects and violations of laws and company
                  policies.

[I LOGO] Every day, Connetics' reputation for quality is in the hands of
employees. If you learn of a product quality issue or problem, report it
immediately to your supervisor, the management of your department, the Quality
Assurance Department, or the Reporting Hotline.

                                    Q: My supervisor has told us to skip a
                                    quality control procedure. I think this
                                    violates company policy, but he is the
                                    supervisor. Should I just follow others and
                                    ignore this?

                                    A: No. If you think that the supervisor is
                                    breaking the rules and you do not feel
                                    comfortable talking with your supervisor
                                    directly, contact your supervisor's
                                    supervisor, the Quality Assurance
                                    Department, or call the Reporting Hotline.

ADVERTISING AND PROMOTION OF PRODUCTS

The reputation of Connetics is a critically important asset. To maintain the
ongoing trust of consumers, marketing, advertising and sales activities must
describe products fairly, honestly and legally. Before we make a claim about a
product, we must be able to substantiate it.

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<PAGE>

We have procedures in place to comply with applicable advertising standards. All
advertising and promotions must be approved by management and are subject to
monitoring by them for compliance.

[I LOGO] Employees involved in advertising or marketing must know and follow the
applicable policies. Make sure you check with the Legal Department if you need
guidance on advertising policies.

PRIVACY OF CUSTOMER OR CONSUMER INFORMATION

Connetics has a responsibility to protect the privacy of information that
customers or consumers entrust to us. Employees who do not have a business
reason to access this information should never seek to do so, and those who do
have legitimate access should take steps to protect against the unauthorized
release or use of private customer information. Outside parties who are given
access to this information are also responsible for protecting it, and they
should be monitored for their compliance.

Customer and consumer privacy is an important area where rules are still
developing. Connetics is committed to monitoring evolving privacy standards and
may, from time to time, develop additional policies in light of them.

                            OUR COMMUNITY AND SOCIETY

OUR GOAL

Connetics strives to respect society's values and honor our commitment to
address society's expectations of us as a global citizen.

ENVIRONMENTAL COMPLIANCE

Connetics expects full and complete compliance with all applicable environmental
laws and regulations wherever we do business. Accordingly, every Connetics
employee is required to:

         -        Conduct business in accordance with all applicable
                  environmental laws, regulations, requirements, and corporate
                  commitments.

         -        Follow specified procedures, notify management of potential
                  environmental concerns, and share ideas for continuous
                  performance improvement.

[I LOGO] If you have questions or concerns relating to our environmental
compliance requirements or activities, contact the Legal Department.

POLITICAL ACTIVITY

U.S. law sets strict limits on contributions by corporations to political
parties and candidates, and violators are subject to very serious penalties,
including imprisonment.

         CORPORATE POLITICAL ACTIVITY. Employees may not make any direct or
         indirect political contribution or expenditure ON BEHALF OF CONNETICS
         unless authorized by management and Connetics' Legal Department in
         writing. This includes contributions to candidates, officeholders and
         parties. Lobbying activities and contributions can include such things
         as:

         -        Buying tickets for a political fund-raising event.

         -        Providing meals, goods, services, travel, accommodations or
                  tickets for sporting and entertainment events.

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<PAGE>

         -        Lending personnel during working hours for fund-raiding
                  activities.

         -        Paying for advertisements and other campaign expenses.

         PERSONAL POLITICAL ACTIVITY. Connetics encourages political activity by
         employees in support of candidates or parties of their choice. Should
         you engage in the political process, you must do so on your own time
         with your own resources. Do not use company time, property or equipment
         for personal political activities without authorization from the
         Compliance Officer or the Legal Department.

GOVERNMENT INQUIRIES OR INVESTIGATIONS

Connetics' business activities are regulated and this means that from time to
time our personnel may come into contact with Government officials responsible
for enforcing the law. DEALING HONESTLY WITH GOVERNMENT OFFICIALS IS REQUIRED.

If circumstances arise involving contact with Government officials with respect
to your duties, any information provided must be completely honest and truthful.

At the same time, care must be taken in dealing with any representatives of
Government agencies so that all appropriate steps are taken. Accordingly, you
should always contact the Legal Department immediately upon receiving a request
for information from a Government agency (or the Regulatory Department, if the
request is from the Food and Drug Administration). Also, be sure that records
relevant to the Government inquiry are preserved.

DISCLOSURE OF SPONSORSHIP/ATTRIBUTION

When individuals or organizations publish (or otherwise make public) the results
of work that has been funded, directly or indirectly, by us relating to the
health implications of our products, there should be disclosure of the company's
financial support. This company-wide policy of disclosure also applies when
third parties act on our behalf and at our expense in presenting data or views
in order to influence other policy issues of immediate interest to Connetics.
The precise manner or format of attribution will often depend on the specific
context (e.g., an article, a seminar, a conference, etc.). However, when such
activity is undertaken by an industry trade association or other group,
Connetics may not require specific attribution if the activity is appropriately
attributed to the trade association and the company's membership in the
organization is publicly disclosed.

[I LOGO] If you have any questions, please contact the Legal Department.

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<PAGE>

                            EMPLOYEE ACKNOWLEDGEMENT

As this Code of Conduct makes clear, adherence to the law and highest standards
of integrity is critical for Connetics - our very success depends on it.

Compliance does not just happen, however. It requires a commitment by every one
of us. That is why Connetics will periodically ask those who receive this Code
to take a training course based on the Code.

We also ask you to confirm your INDIVIDUAL COMMITMENT to act responsibly on
behalf of Connetics by:

         -        Adhering to the standards of conduct contained in the Code.

         -        Participating in additional training courses on compliance and
                  integrity topics relevant to your job.

         -        Seeking guidance if you are ever in doubt as to the proper
                  course of conduct.

         -        Using one of the options that has been made available to
                  report any action that appears inconsistent with these
                  standards.

                                      * * *

Please indicate that you have received, read and will abide by this Code of
Conduct by signing your name and dating the attached acknowledgment and
returning it promptly to the Compliance Officer.

       I CERTIFY THAT I HAVE RECEIVED, THAT I WILL ABIDE BY THE CONNETICS
                          CORPORATION CODE OF CONDUCT.

                         ______________________________
                                   (SIGNATURE)

                         ______________________________
                                (PRINT YOUR NAME)

                        DATE: ___________________________

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<PAGE>

COMPLIANCE COMMITTEE

The Corporate Compliance Committee establishes corporate policy and practices in
the area of business ethics. The committee consists of the following officers of
the company or their designees:

Dave Dimmick, VP Quality (Chair)
Katrina Church, EVP Legal (Compliance Officer)
Matt Foehr, SVP Tech Ops
Nandan Oza, VP Manufacturing
Mike Miller, SVP Marketing & Sales
Ken Ikeda, Dir. Sales Ops
Rebecca Sunshine, SVP Human Resources
Chuck Democko, VP Regulatory
Michael Nazak, Controller

CONTACT NUMBERS

Please refer to the following list of contact resources listed throughout this
Code.

<TABLE>
<CAPTION>
         RESOURCE                    CONTACT NAME             CONTACT NUMBER
--------------------------          ---------------           --------------
<S>                                 <C>                       <C>
Compliance Officer                  Katrina Church              650-843-2843
Reporting Hotline                                             1-877-841-3303
Human Resources Department          Vickie Crawford             650-739-2929
Finance Department                  Mike Nazak                  650-843-2877
Legal Department                    Katrina Church              650-843-2843
Regulatory Department               Chuck Democko               650-739-2930
Quality Affairs Department          David Dimmick               650-843-2865
MIS Department                      Sam Zhou                    650-843-2833
</TABLE>

REPORTING HOTLINE

You may report anonymously using the internet, telephone, or regular mail.

         Internet:
                  http://www.connetics.com/hotline

         Telephone: 1-877-841-3303

         Mail:
               CONNETICS CORPORATION
               C/O MESSAGEPEOPLE-1006
               PO BOX 1164
               NEWARK, CA 94560

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