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                                                                     Exhibit 4.3

                              CONNETICS CORPORATION

                        1995 DIRECTORS' STOCK OPTION PLAN


      1.    Purposes of the Plan. The purposes of this Directors' Stock Option
Plan are to attract and retain the best available personnel for service as
Directors of the Company, to provide additional incentive to the Outside
Directors of the Company to serve as Directors, and to encourage their continued
service on the Board. All options granted hereunder shall be "nonstatutory stock
options".

      2.    Definitions. As used herein, the following definitions shall apply:

            (a)   "Board" shall mean the Board of Directors of the Company.

            (b)   "Code" shall mean the Internal Revenue Code of 1986, as
amended.

            (c)   "Common Stock" shall mean the Common Stock of the Company.

            (d)   "Company" shall mean Connetics Corporation, a Delaware
corporation.

            (e)   "Continuous Status as a Director" shall mean the absence of
any interruption or termination of service as a Director.

            (f)   "Director" shall mean a member of the Board.

            (g)   "Employee" shall mean any person, including officers and
directors, employed by the Company or any Parent or Subsidiary of the Company.
The payment of a director's fee by the Company shall not be sufficient in and of
itself to constitute "employment" by the Company.

            (h)   "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.

            (i)   "Option" shall mean a stock option granted pursuant to the
Plan. All options shall be nonstatutory stock options (i.e., options that are
not intended to qualify as incentive stock options under Section 422 of the
Code).

            (j)   "Optioned Stock" shall mean the Common Stock subject to an
Option.

            (k)   "Optionee" shall mean an Outside Director who receives an
Option.

            (l)   "Outside Director" shall mean a Director who is not an
Employee.

            (m)   "Parent" shall mean a "parent corporation", whether now or
hereafter existing, as defined in Section 424(e) of the Code.

            (n)   "Plan" shall mean this 1995 Directors' Stock Option Plan.


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            (o)   "Share" shall mean a share of the Common Stock, as adjusted in
accordance with SECTION 11 of the Plan.

            (p)   "Subsidiary" shall mean a "subsidiary corporation", whether
now or hereafter existing, as defined in Section 424(f) of the Code.

      3.    Stock Subject to the Plan. Subject to the provisions of SECTION 11
of the Plan, the maximum aggregate number of Shares which may be optioned and
sold under the Plan is 600,000 Shares (the "Pool") of Common Stock. The Shares
may be authorized, but unissued, or reacquired Common Stock. If an Option should
expire or become unexercisable for any reason without having been exercised in
full, the unpurchased Shares which were subject thereto shall, unless the Plan
shall have been terminated, become available for future grant under the Plan. If
Shares which were acquired upon exercise of an Option are subsequently
repurchased by the Company, such Shares shall not in any event be returned to
the Plan and shall not become available for future grant under the Plan.

      4.    Administration of and Grants of Options under the Plan.

            (a)   Administrator. Except as otherwise required herein, the Plan
shall be administered by the Board.

            (b)   Procedure for Grants. All grants of Options hereunder shall be
automatic and nondiscretionary and shall be made strictly in accordance with the
following provisions:

                  (i)   No person shall have any discretion to select which
      Outside Directors shall be granted Options or to determine the number of
      Shares to be covered by Options granted to Outside Directors.

                  (ii)  Each Outside Director who first becomes an Outside
      Director after the effective date of this Plan shall be automatically
      granted an Option (the "First Option") to purchase 30,000 Shares on the
      date on which such person first becomes an Outside Director, whether
      through election by the shareholders of the Company or appointment by the
      Board of Directors to fill a vacancy.

                  (iii) Each Outside Director (including Outside Directors who
      were not eligible for a First Option) shall thereafter be automatically
      granted an Option to purchase 15,000 Shares (a "Subsequent Option") on the
      date of each Annual Meeting of the Company's shareholders at which such
      Outside Director is elected, provided that, on such date, he or she shall
      have served on the Board for at least six (6) months prior to the date of
      such Annual Meeting.

                  (iv)  Notwithstanding the provisions of SUBSECTIONS (ii) and
      (iii) hereof, in the event that a grant would cause the number of Shares
      subject to outstanding Options plus the number of Shares previously
      purchased upon exercise of Options to exceed the Pool, then each such
      automatic grant shall be for that number of Shares determined by dividing
      the total number of Shares remaining available for grant by the number of
      Outside Directors receiving an Option on such date on the automatic grant
      date. Any further grants shall then be deferred until such time, if any,
      as additional Shares become available for grant


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      under the Plan through action of the shareholders to increase the number
      of Shares which may be issued under the Plan or through cancellation or
      expiration of Options previously granted hereunder.

                  (v)   Notwithstanding the provisions of SUBSECTIONS (ii) and
      (iii) hereof, any grant of an Option made before the Company has obtained
      shareholder approval of the Plan in accordance with SECTION 17 hereof
      shall be conditioned upon obtaining such shareholder approval of the Plan
      in accordance with SECTION 17 hereof.

                  (vi)  The terms of each First Option granted hereunder shall
      be as follows:

                        (A)   the First Option shall be exercisable only while
            the Outside Director remains a Director of the Company, except as
            set forth in SECTION 9 hereof.

                        (B)   the exercise price per Share shall be 100% of the
            fair market value per Share on the date of grant of the First
            Option, determined in accordance with SECTION 8 hereof.

                        (C)   the First Option shall become exercisable in
            installments cumulatively as to 25% of the Shares subject to the
            First Option on each of the first, second, third and fourth
            anniversaries of the date of grant of the Option.

                  (vii) The terms of each Subsequent Option granted hereunder
      shall be as follows:

                        (A)   the Subsequent Option shall be exercisable only
            while the Outside Director remains a Director of the Company, except
            as set forth in SECTION 9 hereof.

                        (B)   the exercise price per Share shall be 100% of the
            fair market value per Share on the date of grant of the Subsequent
            Option, determined in accordance with SECTION 8 hereof.

                        (C)   the Subsequent Option shall become exercisable as
            to one hundred percent (100%) of the Shares subject to the
            Subsequent Option on the first anniversary of the date of grant of
            the Subsequent Option.

            (c)   Powers of the Board. Subject to the provisions and
restrictions of the Plan, the Board shall have the authority, in its discretion:

                  (i)   to determine, upon review of relevant information and in
      accordance with SECTION 8(b) of the Plan, the fair market value of the
      Common Stock;


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                  (ii)  to determine the exercise price per share of Options to
      be granted, which exercise price shall be determined in accordance with
      SECTION 8(a) of the Plan;

                  (iii) to interpret the Plan;

                  (iv)  to prescribe, amend and rescind rules and regulations
      relating to the Plan;

                  (v)   to authorize any person to execute on behalf of the
      Company any instrument required to effectuate the grant of an Option
      previously granted hereunder; and

                  (vi)  to make all other determinations deemed necessary or
      advisable for the administration of the Plan.

            (d)   Effect of Board's Decision. All decisions, determinations and
interpretations of the Board shall be final and binding on all Optionees and any
other holders of any Options granted under the Plan.

            (e)   Suspension or Termination of Option. If the President or his
or her designee reasonably believes that an Optionee has committed an act of
misconduct, the President may suspend the Optionee's right to exercise any
option pending a determination by the Board of Directors (excluding the Outside
Director accused of such misconduct). If the Board of Directors (excluding the
Outside Director accused of such misconduct) determines an Optionee has
committed an act of embezzlement, fraud, dishonesty, nonpayment of an obligation
owed to the Company, breach of fiduciary duty or deliberate disregard of the
Company rules resulting in loss, damage or injury to the Company, or if an
Optionee makes an unauthorized disclosure of any Company trade secret or
confidential information, engages in any conduct constituting unfair
competition, induces any Company customer to breach a contract with the Company
or induces any principal for whom the Company acts as agent to terminate such
agency relationship, neither the Optionee nor his or her estate shall be
entitled to exercise any option whatsoever. In making such determination, the
Board of Directors (excluding the Outside Director accused of such misconduct)
shall act fairly and shall give the Optionee an opportunity to appear and
present evidence on Optionee's behalf at a hearing before the Board or a
committee of the Board.

      5.    Eligibility. Options may be granted only to Outside Directors. All
Options shall be automatically granted in accordance with the terms set forth in
SECTION 4(b) hereof. An Outside Director who has been granted an Option may, if
he or she is otherwise eligible, be granted an additional Option or Options in
accordance with such provisions. The Plan shall not confer upon any Optionee any
right with respect to continuation of service as a Director or nomination to
serve as a Director, nor shall it interfere in any way with any rights which the
Director or the Company may have to terminate his or her directorship at any
time.

      6.    Term of Plan; Effective Date. The Plan shall become effective on the
earlier to occur of its adoption by the Board of Directors or its approval by
the shareholders of the Company. It shall continue in effect for a term of ten
(10) years unless sooner terminated under SECTION 13 of the Plan.


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      7.    Term of Options. The term of each Option shall be ten (10) years
from the date of grant thereof.

      8.    Exercise Price and Consideration.

            (a)   Exercise Price. The per Share exercise price for the Shares to
be issued pursuant to exercise of an Option shall be 100% of the fair market
value per Share on the date of grant of the Option.

            (b)   Fair Market Value. The fair market value shall be determined
by the Board; provided, however, that where there is a public market for the
Common Stock, the fair market value per Share shall be the mean of the bid and
asked prices of the Common Stock in the over-the-counter market on the date of
grant, as reported in The Wall Street Journal (or, if not so reported, as
otherwise reported by the National Association of Securities Dealers Automated
Quotation ("Nasdaq") System) or, in the event the Common Stock is traded on the
Nasdaq National Market or listed on a stock exchange, the fair market value per
Share shall be the closing price on such system or exchange on the date of grant
of the Option, as reported in The Wall Street Journal. With respect to any
Options granted hereunder concurrently with the initial effectiveness of the
Plan, the fair market value shall be the Price to Public as set forth in the
final prospectus relating to such initial public offering.

            (c)   Form of Consideration. The consideration to be paid for the
Shares to be issued upon exercise of an Option shall consist entirely of cash,
check, other Shares of Common Stock having a fair market value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised (which, if acquired from the Company, shall have been
held for at least six months), or any combination of such methods of payment
and/or any other consideration or method of payment as shall be permitted under
applicable corporate law.

      9.    Exercise of Option.

            (a)   Procedure for Exercise; Rights as a Shareholder.

                  (i)   Any Option granted hereunder shall be exercisable at
      such times as are set forth in SECTION 4(b) hereof; provided, however,
      that no Options shall be exercisable prior to shareholder approval of the
      Plan in accordance with SECTION 17 hereof has been obtained.

                  (ii)  An Option may not be exercised for a fraction of a
      Share.

                  (iii) An Option shall be deemed to be exercised when written
      notice of such exercise has been given to the Company in accordance with
      the terms of the Option by the person entitled to exercise the Option and
      full payment for the Shares with respect to which the Option is exercised
      has been received by the Company. Full payment may consist of any
      consideration and method of payment allowable under SECTION 8(c) of the
      Plan. Until the issuance (as evidenced by the appropriate entry on the
      books of the Company or of a duly authorized transfer agent of the
      Company) of the stock certificate evidencing such Shares, no right to vote
      or receive dividends or any other rights as a shareholder shall exist with


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      respect to the Optioned Stock, notwithstanding the exercise of the Option.
      A share certificate for the number of Shares so acquired shall be issued
      to the Optionee as soon as practicable after exercise of the Option. No
      adjustment will be made for a dividend or other right for which the record
      date is prior to the date the stock certificate is issued, except as
      provided in SECTION 11 of the Plan.

                  (iv)  Exercise of an Option in any manner shall result in a
      decrease in the number of Shares which thereafter may be available, both
      for purposes of the Plan and for sale under the Option, by the number of
      Shares as to which the Option is exercised.

            (b)   Termination of Status as a Director. If an Outside Director
ceases to serve as a Director, he or she may, but only within ninety (90) days
after the date he or she ceases to be a Director of the Company, exercise his or
her Option to the extent that he or she was entitled to exercise it at the date
of such termination. Notwithstanding the foregoing, in no event may the Option
be exercised after its term set forth in SECTION 7 has expired. To the extent
that such Outside Director was not entitled to exercise an Option at the date of
such termination, or does not exercise such Option (which he or she was entitled
to exercise) within the time specified herein, the Option shall terminate.

            (c)   Disability of Optionee. Notwithstanding SECTION 9(b) above, in
the event a Director is unable to continue his or her service as a Director with
the Company as a result of his or her total and permanent disability (as defined
in Section 22(e)(3) of the Internal Revenue Code), he or she may, but only
within six (6) months (or such other period of time not exceeding twelve (12)
months as is determined by the Board) from the date of such termination,
exercise his or her Option to the extent he or she was entitled to exercise it
at the date of such termination. Notwithstanding the foregoing, in no event may
the Option be exercised after its term set forth in SECTION 7 has expired. To
the extent that he or she was not entitled to exercise the Option at the date of
termination, or if he or she does not exercise such Option (which he or she was
entitled to exercise) within the time specified herein, the Option shall
terminate.

            (d)   Death of Optionee. In the event of the death of an Optionee:

                  (i)   During the term of the Option who is, at the time of his
      or her death, a Director of the Company and who shall have been in
      Continuous Status as a Director since the date of grant of the Option, the
      Option may be exercised, at any time within six (6) months following the
      date of death, by the Optionee's estate or by a person who acquired the
      right to exercise the Option by bequest or inheritance, but only to the
      extent of the right to exercise that would have accrued had the Optionee
      continued living and remained in Continuous Status as Director for six (6)
      months (or such lesser period of time as is determined by the Board) after
      the date of death. Notwithstanding the foregoing, in no event may the
      Option be exercised after its term set forth in SECTION 7 has expired.

                  (ii)  Within three (3) months after the termination of
      Continuous Status as a Director, the Option may be exercised, at any time
      within six (6) months following the date of death, by the Optionee's
      estate or by a person who acquired the right to exercise the Option by
      bequest or


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      inheritance, but only to the extent of the right to exercise that had
      accrued at the date of termination. Notwithstanding the foregoing, in no
      event may the option be exercised after its term set forth in SECTION 7
      has expired.

      10.   Nontransferability of Options. The Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution or pursuant to a qualified
domestic relations order (as defined by the Code or the rules thereunder). The
designation of a beneficiary by an Optionee does not constitute a transfer. An
Option may be exercised during the lifetime of an Optionee only by the Optionee
or a transferee permitted by this Section.

      11.   Adjustments Upon Changes in Capitalization; Corporate Transactions.

            (a)   Adjustment. Subject to any required action by the shareholders
of the Company, the number of shares of Common Stock covered by each outstanding
Option, and the number of shares of Common Stock which have been authorized for
issuance under the Plan but as to which no Options have yet been granted or
which have been returned to the Plan upon cancellation or expiration of an
Option, as well as the price per share of Common Stock covered by each such
outstanding Option, shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification of
the Common Stock, or any other increase or decrease in the number of issued
shares of Common Stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the Company
shall not be deemed to have been "effected without receipt of consideration."
Such adjustment shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
of Common Stock subject to an Option.

            (b)   Corporate Transactions. In the event of (i) a dissolution or
liquidation of the Company, (ii) a sale of all or substantially all of the
Company's assets, (iii) a merger or consolidation in which the Company is not
the surviving corporation, or (iv) any other capital reorganization in which
more than fifty percent (50%) of the shares of the Company entitled to vote are
exchanged, the Company shall give to the Eligible Director, at the time of
adoption of the plan for liquidation, dissolution, sale, merger, consolidation
or reorganization, either a reasonable time thereafter within which to exercise
the Option, including Shares as to which the Option would not be otherwise
exercisable, prior to the effectiveness of such liquidation, dissolution, sale,
merger, consolidation or reorganization, at the end of which time the Option
shall terminate, or the right to exercise the Option, including Shares as to
which the Option would not be otherwise exercisable (or receive a substitute
option with comparable terms), as to an equivalent number of shares of stock of
the corporation succeeding the Company or acquiring its business by reason of
such liquidation, dissolution, sale, merger, consolidation or reorganization.


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      12.   Time of Granting Options. The date of grant of an Option shall, for
all purposes, be the date determined in accordance with SECTION 4(B) hereof.
Notice of the determination shall be given to each Outside Director to whom an
Option is so granted within a reasonable time after the date of such grant.

      13.   Amendment and Termination of the Plan.

            (a)   Amendment and Termination. The Board may amend or terminate
the Plan from time to time in such respects as the Board may deem advisable;
provided that, to the extent necessary and desirable to comply with Rule 16b-3
under the Exchange Act (or any other applicable law or regulation), the Company
shall obtain approval of the shareholders of the Company to Plan amendments to
the extent and in the manner required by such law or regulation. Notwithstanding
the foregoing, the provisions set forth in SECTION 4 of this Plan (and any other
Sections of this Plan that affect the formula award terms required to be
specified in this Plan by Rule 16b-3) shall not be amended more than once every
six months, other than to comport with changes in the Code, the Employee
Retirement Income Security Act of 1974, as amended, or the rules thereunder.

            (b)   Effect of Amendment or Termination. Any such amendment or
termination of the Plan that would impair the rights of any Optionee shall not
affect Options already granted to such Optionee and such Options shall remain in
full force and effect as if this Plan had not been amended or terminated, unless
mutually agreed otherwise between the Optionee and the Board, which agreement
must be in writing and signed by the Optionee and the Company.

      14.   Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, state securities laws, and the requirements of any stock exchange
upon which the Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance. As a
condition to the exercise of an Option, the Company may require the person
exercising such Option to represent and warrant at the time of any such exercise
that the Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares, if, in the opinion of counsel for
the Company, such a representation is required by any of the aforementioned
relevant provisions of law.

      15.   Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan. Inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.

      16.   Option Agreement. Options shall be evidenced by written option
agreements in such form as the Board shall approve.

      17.   Shareholder Approval. Continuance of the Plan shall be subject to
approval by the shareholders of the Company at or prior to the first annual
meeting of shareholders held


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subsequent to the granting of an Option hereunder. If such shareholder approval
is obtained at a duly held shareholders' meeting, it may be obtained by the
affirmative vote of the holders of a majority of the outstanding shares of the
Company present or represented and entitled to vote thereon. If such shareholder
approval is obtained by written consent, it may be obtained by the written
consent of the holders of a majority of the outstanding shares of the Company.
Options may be granted, but not exercised, before such shareholder approval.


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