<PAGE>   1

                                                                  EXHIBIT 10.56

                                    Note: Certain confidential portions of this
                                    document have been omitted and filed
                                    separated with the Securities and Exchange
                                    Commission.


                                    AGREEMENT


        This AGREEMENT ("Agreement") is made by and between Connetics
Corporation ("CNCT"), a corporation of the State of Delaware, having an address
at 3400 West Bayshore Road, Palo Alto, California, U.S.A., and the Howard Florey
Institute of Experimental Physiology and Medicine ("HFI"), a statutory
corporation incorporated by an Act of the Parliament of the State of Victoria
(being Act No. 8108 of 1971 as amended by Act No. 9728 of 1982) of Royal Parade,
Parkville, Melbourne in the State of Victoria, Australia.

                                    RECITALS

        WHEREAS, HFI has granted to Genentech, Inc. ("GNE") an exclusive,
worldwide license to certain patents and know-how owned by HFI pertaining to the
hormone(s) known as Relaxin pursuant to the License Agreement made on December
31, 1982 and re-executed as amended and varied as of June 30, 1987 (the "HFI/GNE
Agreement");

        WHEREAS, GNE has granted to CNCT an exclusive sublicense under its
license from HFI pursuant to the License Agreement, effective September 27,
1993, as amended July 14, 1994 (the "GNE/CNCT Agreement"), and the Consent to
Sublicense signed by HFI on November 18, 1993;

        WHEREAS, pursuant to the GNE/CNCT Agreement, in partial satisfaction of
its obligations to GNE, CNCT has agreed to pay directly to HFI the royalties due
HFI pursuant to the HFI/GNE Agreement or such other payment as may be agreed to
between HFI and CNCT, acknowledging that HFI and CNCT may desire to restructure
such payments; and

        WHEREAS, HFI and CNCT, desiring to cooperate towards maximizing the
value of Relaxin, wish to restructure such payment terms and obligations of CNCT
to HFI as set forth below, which during the term of this Agreement will be in
full satisfaction of CNCT's (and, to that extent GNE's) obligations to HFI,
respectively pursuant to Section 4.1.1 (as amended by Paragraph 26) of the
GNE/CNCT Agreement and Clauses 5.1 and 5.2 of the HFI/GNE Agreement.

        NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, the parties hereto agree as follows:

1.0     DEFINITIONS.

        The following defined terms, and other capitalized terms defined herein,
shall govern the interpretation of this Agreement. Except as otherwise provided
herein, capitalized defined terms

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HFI / CNCT Agreement
Page 2


shall be interpreted consistent with their definition in the HFI/GNE Agreement
and the GNE/CNCT Agreement, or in the case of conflict therebetween shall be
interpreted consistent with the HFI/GNE Agreement.

        1.1 "Net Revenue" shall mean the gross payments received by CNCT or an
Affiliate of CNCT from a Partner on account of a Licensed Product, less: (a) any
tax impost or other governmental charge assessed against such payments; and (b)
in the case of milestone payments received by CNCT or an Affiliate of CNCT from
a Partner, the extent to which such payment constitutes reimbursement of genuine
research and development costs reasonably incurred by CNCT or an Affiliate of
CNCT (including but not limited to expenses for reagents, materials, equipment,
salaries, testing, clinical trials, insurance and any overhead reasonably
attributable to such research and development).

        1.2 "Net Sales Price" shall mean the gross invoiced price from the sale
of a Licensed Product to an unaffiliated third party purchaser less: (a) actual
cost of packaging which has been included in the gross invoiced price; (b) the
actual cost of freight and insurance which has been included in the gross
invoiced price; (c) trade, prompt payment and quantity discounts actually given
by CNCT in relation to the Licensed Product at the normal commercial rates usual
in the pharmaceutical industry; (d) any tax imposed or other governmental charge
(other than an income or value added tax) charged or levied on the sale,
transportation, or delivery of a Licensed Product and borne by CNCT; (e) credits
or allowances actually given by CNCT arising from returned Licensed Product or
retrospective price adjustments to Licensed Products, and (f) rebates and
adjustments actually given or made, including charge backs.

        1.3 "Partner" shall mean a third party who has entered into an agreement
with CNCT for the manufacture, use or sale of a Licensed Product.

        1.4 "Valid Claim" shall mean a claim of an issued, unexpired patent
included in the Licensed Patents, which has not been abandoned for any reason,
and which, but for the license to CNCT would be infringed by CNCT's or a
Partner's manufacture, use or sale of a product, which claim has not been held
invalid or unenforceable by a decision of an administrative agency or a court of
competent jurisdiction, unappealable or unappealed within the time allowed for
appeal, and which has not been admitted to be invalid through reissue,
reexamination or disclaimer.

        1.5 "Up-front Payment(s)" shall mean Net Revenue (whether in money or
money's worth) received by CNCT or an Affiliate of CNCT from a Partner in the
nature of a one-time license fee, option fee or like payment on account of the
grant by CNCT or such Affiliate of a license or an option to obtain a license to
manufacture, use or sell Relaxin (excluding key milestone and genuine research
and development payments).




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HFI / CNCT Agreement
Page 3


2.0     COMMITTED RESEARCH FUNDING

        CNCT will pay to HFI the following amounts (in U.S. Dollars) to fund
research by HFI each year after the execution of this Agreement ("Committed
Research Funding"):

        (a)    1998:  $115,000.00,
        (b)    1999:  $120,750.00,
        (c)    2000:  $126,787.50,
        (d)    2001:  $133,126.87, and
        (e)    2002:  $139,783.21.

Such payments shall be rendered to HFI by CNCT in U.S. Dollars in two (2)
installments each year, each installment to be paid within ten (10) business
days of the beginning to each calendar half, the first payment due January 20,
1998. HFI shall, in good faith, employ reasonable efforts to use the Committed
Research Funding provided by CNCT herein for the purpose of funding research on
Relaxin.

3.0     EQUITY PARTICIPATION

        3.1 CNCT shall provide equity in the form of common stock (the
"Securities") at a value (in U.S. Dollars) of 1.5 times the average trading
price of CNCT common stock over the twenty (20) days prior to a particular
issuance in accordance with the following schedule ("Equity Participation"):

        (a)    $10,000.00 on the Effective Date,
        (b)    $10,500.00 on the 1999 anniversary of the Effective Date,
        (c)    $11,025.00 on the 2000 anniversary of the Effective Date,
        (d)    $11,576.25 on the 2001 anniversary of the Effective Date, and
        (e)    $12,155.06 on the 2002 anniversary of the Effective Date.

Such equity shall be evidenced by certificate therefor, to be delivered to HFI
within one (1) month of the date due.

        3.2 With regard to the "Securities", HFI hereby represents and warrants
that:

               (a) Purchase Entirely for Own Account. The Securities will be
        acquired for investment for HFI's own account, and not with a view to
        the resale or distribution of any part thereof unless such resale or
        distribution is in compliance with the United States Securities Act of
        1933, as amended (the "Act"), and any rules or regulations promulgated
        thereunder, and, except as provide above, that HFI has no present
        intention of selling, granting any participation in, or otherwise
        distributing the same. By executing this Agreement, HFI further
        represents that it does not have any contract, undertaking, agreement or
        arrangement with any person to sell, transfer or grant participation to
        such person or to any third person, with respect to any of the
        Securities.


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HFI / CNCT Agreement
Page 4


               (b) Disclosure of Information. HFI believes it has received all
        the information it considers necessary or appropriate for deciding
        whether to acquire the Securities. HFI further represents that it has
        had an opportunity to ask questions and receive answers from CNCT
        regarding the terms and conditions of the Securities.

               (c) Restricted Securities. HFI understands that the Securities
        are characterized as "restricted securities" under the United States
        federal securities laws inasmuch as they are being acquired from CNCT in
        a transaction not involving a public offering and that, under such laws
        and applicable regulations, such Securities may be resold without
        registration under the Act only in certain limited circumstances.

               (d) Regulation S Representations and Warranties. HFI represents
        and warrants that is not a "U.S. Person" as that term is defined in
        Regulation S promulgated under the Act and is not acquiring the
        Securities for the account or benefit of a U.S. Person. Under Regulation
        S, with certain exceptions, "U.S. Person" means: (i) any natural person
        resident in the U.S.; (ii) any partnership or corporation organized or
        incorporated under the laws of the U.S.; (iii) any estate of which any
        executor or administrator is a U.S. Person; (iv) any trust of which any
        trustee is a U.S. Person; (v) any agency or branch of a foreign entity
        located in the U.S.; (vi) any non-discretionary account or similar
        account (other than an estate or trust) held by a dealer or other
        fiduciary for the benefit or account of a U.S. Person; (vii) any
        discretionary account or similar account (other than an estate or trust)
        held by a dealer or other fiduciary organized, incorporated, or (if an
        individual) resident in the U.S.; and (viii) any partnership or
        corporation if: (A) organized or incorporated under the laws of any
        foreign jurisdiction; and (B) formed by a U.S. Person principally for
        the purpose of investing in securities not registered under the Act,
        unless it is organized or incorporated and owned by accredited investors
        (as defined in Rule 501(a) under the Act) who are not natural persons,
        estates or trusts.

               (e) Further Limitations on Disposition. Without in anyway
        limiting the representations set forth above, HFI further agrees that it
        will not make any disposition of all or any portion of the Securities
        unless and until the transferee and any subsequent transferee has agreed
        in writing for the benefit of CNCT to be bound by the terms of this
        Section 3.2, and;

                             (i) There is then in effect a Registration
        Statement under the Act covering such proposed disposition and such
        disposition is made in accordance with such Registration Statement;

                             (ii) Such disposition is in accordance with
        Regulation S promulgated under the Act; or

                             (iii) HFI shall have notified the Company of the
        proposed disposition and shall have furnished CNCT with a detailed
        statement of the circumstances

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HFI / CNCT Agreement
Page 5


        surrounding the proposed disposition, and shall have furnished CNCT
        with an opinion of counsel, reasonably satisfactory to CNCT, that such
        disposition will not require registration of such securities under the
        Act.

               (f) Legends. It is understood that the certificates evidencing
        the Securities may bear the following legend:

               "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
               ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED, SOLD
               OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE
               OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO SUCH
               SECURITIES, OR DELIVERY OF AN OPINION OF COUNSEL IN FORM AND
               SUBSTANCE SATISFACTORY TO THE COMPANY THAT SUCH OFFER, SALE OR
               TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE WITH THE ACT
               OR UNLESS SOLD IN FULL COMPLIANCE WITH THE RULES PROMULGATED
               UNDER THE ACT."

        3.3 With regard to the "Securities", CNCT hereby represents and warrants
that:

               (a)    the Securities will be validly issued by CNCT to HFI;

               (b) the Securities will be fully paid and will not oblige HFI to
        pay any amount whatsoever to CNCT in respect of the Securities;

               (c) the Securities will be issued to HFI without any encumbrance
        whatsoever being attached to them (except as set forth in Section 3.2);
        and

               (d) the representations and warranties of Section 3.2 are
        required for compliance with U.S. law.


4.0     TERMINATION OF COMMITTED RESEARCH FUNDING AND EQUITY PARTICIPATION

        CNCT's obligation to pay to HFI Committed Research Funding and Equity
Participation pursuant to Articles 2.0 and 3.0 respectively shall cease
immediately on the date of the first arms' length sale of a Licensed Product by
CNCT or a Partner to a third party forming part of a continuous program or
campaign designed to market the Licensed Product (after all required regulatory
approvals have been granted therefor). For the purpose of this Article 4.0, the
date of first commercial sale shall be the date when a Licensed Product is
transferred from the manufacturing facilities for such Licensed Product to a
common carrier bound for delivery to a customer. Any payment of Committed
Research Funding and Equity Participation by CNCT prior to the date of first
commercial sale of a Licensed Product shall not be creditable against future
royalties due to HFI under Article 5.0.


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HFI / CNCT Agreement
Page 6


5.0     UP-FRONT PAYMENTS AND ROYALTIES

        5.1 Sale of Licensed Product by CNCT. CNCT shall pay HFI a royalty of
[1] percent [1] of the Net Sales Price for the sale by CNCT of any Licensed
Product in each country where such Licensed Product is within the scope of a
Valid Claim of one or more Licensed Patents in such country.

        5.2    Revenue Received from Partners.

               (a) CNCT shall pay HFI [1] percent [1] of Up-front Payments, or
        in the case of a payment received for multiple purposes of the
        proportion that constitutes an Up-front Payment, if any.

               (b) CNCT shall pay HFI [1] percent [1] of the Net Revenues, if
        any: (i) from payments received by CNCT from a Partner for the
        achievement of key development milestones (e.g., initiation of Phase III
        studies, BLA filing and approval) for Licensed Products; and/or (ii)
        from royalties received by CNCT from a Partner on account of the sale by
        the Partner of any Licensed Product in each country where such Licensed
        Product is within the scope of a Valid Claim of one or more Licensed
        Patents in such country.

               (c) No payment shall be owed to HFI by CNCT based upon any other
        revenues received by CNCT from a Partner, including but not limited to,
        reimbursements and ongoing payments or support for research and
        development, technology transfer, research material transfer and
        manufacturing scale-up.

        5.3 Payment. CNCT shall within one hundred twenty (120) days after the
last day of each calendar quarter provide HFI with a statement, in writing,
setting forth:

               (a) by country: (i) the quantities of Licensed Product sold by
        CNCT, (ii) the gross sales price and the corresponding Net Sales Price
        of all such Licensed Product, and (iii) a calculation of the royalties
        payable to HFI pursuant to Section 5.1; and

               (b) by Partner (i) the Up-front Payments, gross revenue and
        corresponding Net Revenue received by CNCT pursuant to Section 5.2, and
        (ii) a calculation of the royalties payable to HFI pursuant to Section
        5.2.

CNCT's statement shall be accompanied by evidence of the deposit in U.S. Dollars
of the amounts due HFI for such calendar quarter to the account of HFI at such
bank in the U.S. as designated by HFI. The Net Sales Price and Net Revenue shall
first be calculated in the currency

---------

(1) Confidential treatment has been requested for the language which has been
    omitted. All such omitted material has been filed separately with the SEC.
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HFI / CNCT Agreement
Page 7


in which the sales were made or the revenues were received and then directly
converted into U.S. Dollars at the exchange rate reported in the U.S. Edition of
the Wall Street Journal (or other publication chosen by the parties by mutual
consent from time to time) for the last business day of the quarterly period for
which such payment is due.

        5.4 Audit. CNCT shall keep complete and accurate records (in conformity
with good accounting practice) relating to the calculation of the amounts due
HFI pursuant to Sections 5.2 and 5.3 for a period of three (3) years following
the closing date of the period to which they refer. Upon reasonable notice to
CNCT, HFI shall have the right to have an independent certified public
accountant, selected by HFI and reasonably acceptable to CNCT, audit CNCT's
records, during normal business hours, to verify the amounts payable by CNCT to
HFI; provided, however, that such audit shall not take place more frequently
than once a year and shall not cover such records for more than the preceding
three (3) years. The accountant shall only report to HFI as to the accuracy of:
(a) the payments made by CNCT to HFI; and (b) in the event of any inaccuracy,
the correct amounts thereof. CNCT shall promptly pay to HFI the amount of any
underpayment determined in such audit. Such audit shall be at HFI's expense
unless the audit identifies greater than five percent (5%) error in the total
amounts due to HFI for the audited period, in which case such audit shall be at
CNCT's expense. The provisions of this Section 5.4 shall apply, mutatis
mutandis, to the extent applicable in any agreement providing for a royalty- or
payment-generating transaction hereunder between CNCT and a Partner; upon
request, CNCT shall provide HFI a copy of such agreement, except that CNCT may
redact such copy to the extent necessary for compliance with its confidentiality
or related obligations thereunder.

        5.5 The provisions of Clause 5.4 of the HFI/GNE Agreement shall govern
disposals of Licensed Product by other than bona fide arms length transactions.
Notwithstanding anything herein to the contrary, no royalty or payment shall be
payable to HFI by CNCT with respect to any Licensed Products which are used or
provided, free of charge: (a) to scientific institutions for use solely in
scientific research; (b) to governmental authorities for use in testing or
evaluation; (c) for use in bona fide pre-clinical and clinical trials; (d) to
HFI; (e) in reasonable and customary amounts for post approval evaluations by
physicians; and (f) in reasonable and customary amounts to third parties, in the
course of bona fide promotional activities for Licensed Products and as free
"trade goods," including for indigent patient programs. No royalty or payment
shall be made with respect to any sale or transfer of a Licensed Product between
and among CNCT, its Affiliates, its sub-licensees and their distributors where
such sale or transfer is made in the course of a subsequent royalty- or
payment-generating transaction hereunder. No royalty or payment shall be made
with respect to any transaction between CNCT or an Affiliate of CNCT and a
Partner that does not entail a Licensed Product. No multiple royalties shall be
payable on account of the sale of any Licensed Product, regardless of whether or
not more than one patent, or patent and other intellectual property rights,
exist(s) covering such Licensed Product in any country.




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HFI / CNCT Agreement
Page 8


6.0     MISCELLANEOUS.

        6.1 Term. The term of this Agreement shall commence upon the date of
execution of the last of the parties to sign ("Effective Date") and continue in
full force and effect until the termination or expiration of: (a) the HFI/GNE
Agreement; or (b) the GNE/CNCT Agreement, whichever event is earlier. Upon
termination or expiration of this Agreement, all rights and obligations of the
parties herein shall cease.

        6.2 Effect. The parties hereby agree that the payment terms set forth
herein shall, during the term of this Agreement, be in lieu of and in full
satisfaction of any and all payment obligations arising during the term of this
Agreement and due HFI under Clauses 5.1 and 5.2 of the HFI/GNE Agreement
resulting from the sublicense to CNCT of the Licensed Patents and Licensed
Know-How pursuant to the GNE/CNCT Agreement. The parties acknowledge that CNCT
shall not be liable to HFI for any other payment obligations (under Clauses
3.3.6(c), 5 or any other provision in the HFI/GNE Agreement) incurred by GNE or
any third party. Other than as expressly provided herein, the respective rights,
duties and obligations of HFI, GNE and CNCT pursuant to the HFI/GNE and GNE/CNCT
Agreements are not altered, amended, changed or affected by this Agreement.

        6.3 Governing Law. This Agreement is executed and delivered in, and
shall be construed and enforced in accordance with the domestic laws of the
State of California, U.S.A., and shall be binding upon and shall inure to the
benefit of the respective successors and assigns of the parties to this
Agreement.

        6.4 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.

        6.5 Integration. The parties have, in this Agreement and the HFI/GNE and
GNE/CNCT Agreements, incorporated all representations, warranties, covenants,
commitments and understandings on which they have relied in entering into this
Agreement and, except as provided herein, the parties make no covenants or other
commitments to the other concerning their future actions. Accordingly, this
Agreement (and to the extent applicable, the HFI/GNE and GNE/CNCT Agreements):

               (a) constitutes the entire agreement and understanding between
        the parties, and there are no promises, representations, conditions,
        provisions or terms relating to it other than as set forth in this
        Agreement, and

               (b) supersedes all previous understandings, agreements and
        representations between the parties, written or oral,
        relating to the subject matter of this Agreement.



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HFI / CNCT Agreement
Page 9


        6.6 Assignment. This Agreement shall be binding on the parties hereto
and their successors and assigns; provided, however, that neither party shall
assign or transfer, in whole or part, this Agreement or any of its rights or
obligations arising hereunder without the prior written consent of the other
party, which shall not be unreasonably withheld. Any purported assignment
without such consent shall be null and void.

        6.7 Waivers and Amendments. No failure or delay by either party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial waiver thereof include any other right,
power or privilege. This Agreement may not be amended, changed, discharged or
terminated except by a written document signed by duly authorized officers of
the parties.

        6.8 Severability. In the event that any provision of this Agreement
shall be unenforceable or invalid under any applicable law or be so held by
applicable court decision, such unenforceability or invalidity shall only apply
to such provision and shall not render this Agreement unenforceable or invalid
as a whole; and, in such event, such provision shall be modified or interpreted
so as to best accomplish the objective of such unenforceable or invalid
provision within the limits of applicable law or applicable court decision and
the manifest intent of the parties hereto.

        6.9 Headings. The headings used in this Agreement are for convenience
only and shall not be used to construe or interpret this Agreement.

        6.10 Notification to GNE. CNCT shall, upon receipt of a fully executed
original of this Agreement, provide notice thereof to GNE by delivering a true
and correct copy to GNE in accordance with the notice provisions of the GNE/CNCT
Agreement.

                            [Signature Page Follows]



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HFI / CNCT Agreement
Page 10


        IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives.

THE COMMON SEAL OF THE
HOWARD FLOREY INSTITUTE OF
EXPERIMENTAL PHYSIOLOGY
AND MEDICINE WAS HEREUNTO AFFIXED
BY AUTHORITY OF THE BOARD



 /s/  C.B. Goode          Board Member
-------------------------

Print Name  C.B. Goode
          ----------------------------

Date      January 19, 1998
    ----------------------------------


 /s/ F.A.O. Mendelsohn    Board Member
-------------------------

Print Name  F.A.O. Mendelsohn
          ----------------------------

Date      January 19, 1998
    ----------------------------------



CONNETICS CORPORATION


By     /s/ Thomas G. Wiggans
  ------------------------------------
        Thomas G. Wiggans
        President & CEO

Date:  January 19, 1998
     ---------------------------------