ASSIGNMENT AND ASSUMPTION AND
                                ROYALTY AGREEMENT


     THIS AGREEMENT effective as of May 8, 1998, (the "Effective Date") between
Intercardia, Inc., a corporation organized and existing under the laws of
Delaware and having its principal office at 3200 East Highway 54, Cape Fear
Building, Suite 300, Research Triangle Park, North Carolina 27709
("Intercardia") and Interneuron Pharmaceuticals, Inc., a corporation organized
and existing under the laws of Delaware and having its principal office at 99
Hayden Avenue, Lexington MA 02173 ("Interneuron").


                              W I T N E S S E T H:


     WHEREAS, in connection with an Agreement and Plan of Merger entered into on
the Effective Date (the "Merger Agreement"), Intercardia has agreed to acquire
from Interneuron all of the capital stock (the "Stock") of Transcell
Technologies, Inc. ("Transcell") owned by Interneuron under the terms and
conditions contained therein; and

     WHEREAS, Interneuron has agreed to assign (the "Assignment") to Intercardia
Interneuron's rights, benefits and interests under the agreements set forth on
Appendix A hereto (the "Assigned Agreements") and to continue to guaranty
certain lease obligations of Transcell under certain conditions (the "Guaranty
Agreement") effective upon the closing of the merger (the "Merger") contemplated
by the Merger Agreement; and

     WHEREAS, as consideration for the Assignment and the Guaranty Agreement,
Intercardia has agreed to pay to Interneuron royalties on Net Sales of Products
(each as defined herein), upon the terms and conditions set forth herein;

     NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained, the parties hereby agree as follows:


                                    ARTICLE I

                                   DEFINITIONS

     Unless specifically set forth to the contrary herein, the following terms,
where used in the singular or plural, shall have the respective meanings set
forth below:

I.1   "Closing Date" shall mean the closing date of the Merger.

I.2   "Common Stock" shall mean the common stock, $.001 par value, of
      Intercardia.



<PAGE>


I.3   Defined Terms Appearing in Merck Agreement. The following terms shall have
      the respective meanings set forth in the Merck Agreement:

      (a)   Affiliate;

      (b)   Calendar Quarter;

      (c)   Calendar Year;

      (d)   First Commercial Sale;

      (e)   Net Sales.

I.4   "Earned Payment" shall mean the $3,000,000 payment made by Intercardia in
      Common Stock to Interneuron on the Closing Date.

I.5   "Fair Market Value" shall mean, on any applicable payment date, (a) the
      average of the high and low sales price of the Common Stock on the five
      (5) most recent trading days, ending two (2) business days immediately
      prior to the applicable payment date, in which the trading volume of the
      Common Stock was at least 1500 shares, or, if no such sales take place on
      any such date, the average of the closing bid and asked prices of the
      Common Stock on such date, in each case as officially reported on the
      Nasdaq National Market or any other national securities exchange on which
      the Common Stock is then listed, or (b) if the Common Stock is not then
      listed or admitted to trading on the Nasdaq National Market or any other
      national securities exchange, the average of the reported closing bid and
      asked prices of the Common Stock on the five (5) trading days ending on
      such date as shown by Nasdaq or (c) if the Common Stock is not then listed
      on any exchange or shown by Nasdaq, the higher of (x) the book value
      thereof as determined by any firm of independent public accountants of
      recognized standing selected by the Board of Directors of Intercardia as
      at the last day of any month ending within 60 days preceding the date as
      of which the determination is to be made or (y) the fair value thereof
      determined in good faith by an independent valuation firm jointly selected
      by the parties as of a date which is within 15 days of the date as of
      which the determination is to be made.

I.6   "Merck" shall mean Merck & Co., Inc.

I.7   "Merck Agreement" shall mean the Research Collaboration and License
      Agreement by and among Merck & Co., Inc., Transcell and Interneuron
      effective as of June 30, 1997, a copy of which is attached hereto as
      Appendix 1.2.

I.8   "Party" shall mean Intercardia or Interneuron.


                                      -2-
<PAGE>


I.9   "Princeton License Agreement" shall mean the License Agreement between the
      Trustees of Princeton University ("Princeton") and Interneuron entered
      into on April 15, 1998, effective as of June 30, 1997.

I.10  "Princeton Sponsored Research Agreements" shall mean the Research
      Agreements between Princeton and Interneuron dated April 29, 1997 relating
      to Research Proposals titled "Construction of a Vancomycin Library" and
      "Towards a Map of the Active Site of MurG."

I.11  "Product" shall mean a product defined in the Merck Agreement as a
      Licensed Product.

I.12  "Securities Act" shall mean the Securities Act of 1933, as amended, and
      all rules and regulations promulgated thereunder.

I.13  "Side Agreement" shall mean the Side Agreement effective as of June 30,
      1997 by and among Merck, Princeton, Interneuron and Transcell.


                                   ARTICLE II

                  ASSIGNMENT AND ASSUMPTION; GUARANTY AGREEMENT

II.1  Assignment and Assumption. Interneuron hereby assigns to Intercardia all
      of its rights, benefits and interests under each of the Assigned
      Agreements. Intercardia hereby assumes and agrees to pay, perform,
      discharge and carry out all of the obligations and liabilities of
      Interneuron under each of the Assigned Agreements.

II.2  Guaranty Agreement. Interneuron hereby agrees to continue its respective
      guaranties set forth on Appendix 2.2 hereof (the "Guaranties") until such
      time as the respective guaranty can be terminated or transferred to
      Intercardia. Intercardia hereby agrees to (i) use its best efforts to
      terminate or remove Interneuron from each of the Guaranties and (ii) pay,
      perform, discharge and carry out all the obligations and liabilities under
      the leases subject to the Guaranties; provided, however, that promptly
      after the Closing Date, Intercardia shall submit a written request to
      terminate or remove Interneuron from such Guaranties and shall negotiate
      in good faith to do so; further provided that, in the event that
      Intercardia shall be unsuccessful in terminating or removing Interneuron
      from such Guaranties at such time, Intercardia hereby covenants to submit
      a similar request on an annual basis, or promptly following the closing of
      any capital raising transaction of Intercardia, whichever is sooner, until
      such Guaranties are terminated. Interneuron may participate in or initiate
      any discussions relating to the termination of, or removal of Interneuron
      from, such Guaranties.



                                      -3-
<PAGE>


II.3  Consents or Approvals. To the extent that any consent or approval is
      required to permit the assignment to Intercardia of any Assigned Agreement
      or any agreement, commitment or other contractual right thereof,
      contemplated hereunder to be assigned to Intercardia and such consent or
      approval is not obtained, this Agreement shall not constitute an
      assignment thereof. However, Interneuron and Intercardia shall cooperate
      in any reasonable arrangements designed to provide for Intercardia all of
      the benefits (and to assure that Interneuron will be effectively relieved
      from related liabilities) under such agreement or commitment; provided,
      however, that neither Interneuron nor Intercardia shall be required to
      enter into any arrangement which, in the reasonable opinion of its
      counsel, violates the provisions of any contract, law or regulation to
      which such Party is a party or by which such Party is bound. Intercardia
      agrees that, so long as it is a party to any such agreement or commitment
      Intercardia will fully perform all of Interneuron `s obligations
      thereunder which arise following the Effective Date.


                                   ARTICLE III

                      EARNED PAYMENT; ROYALTIES AND REPORTS

III.1   Earned Payment and Royalties. In consideration for Interneuron's
        agreements hereunder, Intercardia shall make the following payments to
        Interneuron:

        III.1.1 Earned Payment. Intercardia shall pay the Earned Payment to
                Interneuron on the Closing Date. The Earned Payment shall be
                non-refundable and shall be paid in shares of Intercardia Common
                Stock calculated by dividing $3,000,000 by the Per Share Price.
                The Per Share Price shall equal the Fair Market Value of
                Intercardia Common Stock determined as of the Closing Date;
                provided, however, that if the Fair Market Value of Intercardia
                Common Stock determined as of the Closing Date is (i) less than
                $15.00 then the Per Share Price shall equal $15.00 and (ii) more
                than $29.00, the Per Share Price shall equal $29.00.

        III.1.2 Royalties

                (a)     Subject to the terms and conditions of this Agreement,
                        Intercardia shall pay to Interneuron royalties based on
                        cumulative annual Net Sales of Products by Merck,
                        Intercardia, their Affiliates or sublicensees in the
                        percentages set forth below:

                        Cumulative Annual Net Sales                 Royalty
                        ---------------------------                 -------
                        Less than or equal to $500,000,000              1%
                        Greater than $500,000,000                     1.5%



                                      -4-
<PAGE>


                (b)     Royalties at the rates set forth above shall be
                        effective as of the date of First Commercial Sale of a
                        Product and shall continue until Merck, or its successor
                        in interest to the Merck Agreement, no longer has an
                        obligation to pay royalties pursuant to the Merck
                        Agreement, on any Product; provided, however, that
                        payment of royalties shall not be due until cumulative
                        net sales of Products equal $300,000,000 (the "Initial
                        Payment Event").

III.2   Reports; Payment of Royalty; Adjustments.

        (a)     Following the First Commercial Sale of a Product and during the
                term of the Agreement, Intercardia shall furnish to Interneuron
                a copy of the written report received by Intercardia under
                Section 5.5 of the Merck Agreement for each Calendar Quarter of
                a Calendar Year showing the sales of all Products subject to
                royalties sold by Merck, Intercardia, their Affiliates and
                sublicensees during the reporting period (and a reconciliation
                to Net Sales) together with a report showing the royalties
                accrued under this Agreement (collectively, the "Accrual
                Reports"). Accrual Reports shall be due on the thirty-fifth
                (35th) day following the close of each Calendar Quarter.
                Royalties shown to have accrued as of the Initial Payment Event
                shall be due and payable on the thirty-fifth (35th) day
                following the Initial Payment Event. After the Initial Payment
                Event, royalties shown to have accrued by each Accrual Report
                shall be due and payable within ten (10) days after the date
                that the Accrual Report for such Calendar Quarter is due.

                Intercardia shall keep complete and accurate records, including
                copies of any reports forwarded by Merck to Intercardia pursuant
                to the Merck Agreement, in sufficient detail to enable the
                royalties hereunder to be determined. Such Accrual Reports will
                include information in the local currency and as converted into
                United States dollars based on the average exchange rate on the
                first and last day of each month (determined in accordance with
                the Merck Agreement).

        (b)     Royalties shall be paid through the issuance by Intercardia to
                Interneuron of shares (the "Royalty Shares") of Common Stock,
                unless Interneuron and Intercardia agree that royalties may be
                paid in cash. The number of Royalty Shares to be issued shall be
                equal to the amount of royalties due hereunder divided by the
                Fair Market Value determined as of each Accrual Report date.
                Interneuron shall have the registration rights with respect to
                the resale of the Royalty Shares as set forth in a Registration
                Rights Agreement to be entered into as of the Closing Date.



                                      -5-
<PAGE>


III.3   Audits.

        (a)     Upon the request of Interneuron, Intercardia shall permit an
                independent certified public accounting firm of nationally
                recognized standing selected by Interneuron, to have access
                during normal business hours to such of the records of
                Intercardia as may be reasonably necessary to verify the
                accuracy of the Accrual Reports hereunder for any year ending
                not more than thirty-six (36) months prior to the date of such
                request.

        (b)     If such accounting firm correctly concludes that additional
                royalties were owed during such period, Intercardia shall pay
                the additional royalties within thirty (30) days of the date
                Interneuron delivers to Intercardia such accounting firm's
                written report so concluding. The fees and expenses charged by
                such accounting firm shall be paid by Interneuron; provided,
                however, that if an error in favor of Interneuron in the payment
                of royalties of more than 10% of the royalties due hereunder for
                the period being reviewed is discovered, then the fees and
                expenses of such accounting firm shall be borne by Intercardia.

        (c)     Upon the expiration of thirty-six (36) months following the end
                of any year the calculation of royalties payable with respect to
                such year shall be binding and conclusive upon Interneuron, and
                Intercardia shall be released from any liability or
                accountability with respect to royalties for such year.

III.4   Payment Exchange Rate. All calculations of royalties payable to
        Interneuron under this Agreement shall be made in United States dollars.
        In the case of sales outside the United States, the rate of exchange to
        be used in computing the amount of currency equivalent in United States
        dollars shall be calculated in accordance with Section 5.7 of the Merck
        Agreement.

III.5   Tax Withholding. If laws, rules or regulations require withholding of
        income taxes or other taxes imposed upon payments set forth in this
        Article III, Intercardia shall make such withholding payments as
        required and subtract such withholding payments from the calculation of
        royalties and number of Royalty Shares issuable pursuant to this Article
        III. Intercardia shall submit appropriate proof of payment of the
        withholding taxes to Interneuron within a reasonable period of time.
        Intercardia will use efforts consistent with its usual business
        practices to ensure that any withholding taxes imposed are reduced as
        far as possible under the provisions of the current or any future double
        taxation treaties or agreements between foreign countries, and the
        Parties shall cooperate with each other with respect thereto, with the
        appropriate Party under the circumstance providing the documentation
        required under such treaty or agreement to claim benefits thereunder.

III.6   Representations and Warranties of Interneuron. Interneuron represents
        and warrants to Intercardia that:


                                      -6-
<PAGE>


        (a)     the Royalty Shares payable to Interneuron pursuant to the terms
                hereof will be acquired for investment for its own account,
                without any view to the unregistered public distribution or
                resale thereof, all without prejudice, however, to the right of
                Interneuron at any time lawfully to sell or otherwise to dispose
                of all or any part of the Royalty Shares pursuant to
                registration or any exemption therefrom under the Securities Act
                and applicable state securities laws;

        (b)     Interneuron understands that the Royalty Shares to be received
                by it pursuant to the terms hereof are characterized as
                "restricted securities" under the federal securities laws
                inasmuch as they will be acquired from Intercardia 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 Securities Act only in certain
                limited circumstances;

        (c)     Interneuron is an "accredited investor" within the meaning of
                Rule 501 of Regulation D under the Securities Act. Interneuron
                has the capacity to evaluate the merits and high risks of an
                investment in the Royalty Shares and is able to bear the
                economic risk of this investment. Interneuron understands that
                an investment in Royalty Shares is highly speculative and
                involves a high degree of risk. Interneuron has been provided
                access to all information requested by it in order to evaluate
                the merits and risks of an investment in the Royalty Shares;

        (d)     Interneuron acknowledges that the certificates evidencing the
                Royalty Shares shall bear a legend substantially as follows:

        "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
        1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
        HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH
        RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN EXEMPTION FROM
        REGISTRATION UNDER SUCH ACT."

                The foregoing legend shall be removed by Intercardia from any
                certificate at such time as the holder of the Royalty Shares
                represented by the certificate delivers an opinion of counsel
                reasonably satisfactory to Intercardia to the effect that such
                legend is not required in order to establish compliance with any
                provisions of the Securities Act, or at such time as the holder
                of such Royalty Shares satisfies the requirements of Rule 144(k)
                under the Securities Act (provided that Rule 144(k) as then in
                effect does not differ substantially from Rule 144(k) as in
                effect as of the date of this Agreement), and provided further
                that Intercardia has received from the holder a written
                representation that such holder satisfies the requirements of
                Rule 144(k) as then in effect with respect to such Royalty
                Shares;


                                      -7-
<PAGE>


        (e)     Interneuron is a duly organized and validly existing corporation
                under the laws of the State of Delaware, and has taken all
                required corporate action to authorize the execution, delivery
                and performance of this Agreement; it has the full corporate
                right, power and authority to enter into this Agreement and to
                perform all of its obligations hereunder; the execution and
                delivery of this Agreement and the consummation of the
                transactions contemplated herein do not violate, conflict with,
                or constitute a default under its certificate of incorporation,
                by-laws or the terms or provisions of any material agreement to
                which it is a party or by which it is bound, or any order,
                award, judgment or decree to which it is a party, except in each
                case, for such violations, conflicts or defaults which would not
                have a material adverse effect (a "Material Adverse Effect") on
                the assets, results of operations, business or financial
                condition of Interneuron and its subsidiaries, taken as a whole;
                and (assuming this Agreement constitutes the valid and binding
                obligation of Intercardia), upon execution and delivery, this
                Agreement will constitute the legal, valid and binding
                obligation of Interneuron;

        (f)     The Assigned Agreements were, as of their respective effective
                dates and, to Interneuron's knowledge, the Assigned Agreements
                are, in each case, with respect to Interneuron, in full force
                and effect and enforceable against Interneuron in accordance
                with their respective terms, except (a) as limited by applicable
                bankruptcy, insolvency, reorganization, moratorium or other laws
                of general application affecting enforcement of creditors'
                rights, (b) as limited by laws relating to the availability of
                specific performance, injunctive relief or other equitable
                remedies, and (c) to the extent the enforceability of any
                indemnification provisions contained in the Assigned Agreements
                may be limited by applicable laws;

        (g)     Interneuron has not previously assigned, transferred, conveyed
                or otherwise encumbered its right, title and interest in the
                Assigned Agreements, except pursuant to the Merck Agreement;

        (h)     to Interneuron's knowledge, there are no claims, judgments or
                settlements against or owed by Interneuron or pending or
                threatened claims or litigation to which Interneuron is a party,
                in each case relating to the Assigned Agreements; and

        (i)     Interneuron has obtained consents, if any, required in order to
                assign the Assigned Agreements to Intercardia.

III.7   Representations and Warranties of Intercardia. Intercardia represents
        and warrants to Interneuron that:

        (a)     Intercardia is a duly organized and validly existing corporation
                under the laws of the State of Delaware, and has taken all
                required corporate action to authorize the 


                                      -8-
<PAGE>


                execution, delivery and performance of this Agreement; it has
                the full corporate right, power and authority to enter into this
                Agreement and to perform all of its obligations hereunder; the
                execution and delivery of this Agreement and the consummation of
                the transactions contemplated herein do not violate, conflict
                with, or constitute a default under its certificate of
                incorporation, by-laws or the terms or provisions of any
                material agreement to which it is a party or by which it is
                bound, or any order, award, judgment or decree to which it is a
                party, except in each case, for such violations, conflicts or
                defaults which would not have a Material Adverse Effect on the
                assets, results of operations, business or financial condition
                of Intercardia and its subsidiaries, taken as a whole; and
                (assuming this Agreement constitutes the valid and binding
                obligation of Interneuron) upon execution and delivery, this
                Agreement will constitute the legal, valid and binding
                obligation of Intercardia;

        (b)     the Royalty Shares issuable pursuant to this Agreement have been
                duly authorized and, when issued and delivered pursuant to the
                terms of this Agreement will be duly and validly issued, fully
                paid and non-assessable and free of any preemptive rights and of
                restrictions on transfer except under applicable federal and
                state securities laws; Intercardia will use its best efforts
                during the term of this Agreement to maintain, authorize and
                reserve for issuance a sufficient number of shares of authorized
                Common Stock for the issuance of Royalty Shares pursuant to this
                Agreement, including, if necessary, amending its Certificate of
                Incorporation.


                                   ARTICLE IV

                              TERM AND TERMINATION

IV.1    Term and Expiration. This Agreement shall be effective as of the
        Effective Date and shall continue in effect until expiration of all
        royalty obligations hereunder.

IV.2    Effect of Expiration or Termination. Expiration or termination of this
        Agreement shall not relieve the Parties of any obligation accruing prior
        to such expiration or termination. Any expiration or early termination
        of this Agreement shall be without prejudice to the rights of any Party
        against the other accrued or accruing under this Agreement prior to
        termination, including the obligation to make royalty payments for
        Product(s) sold prior to such termination.


                                       -9-
<PAGE>


                                    ARTICLE V

                                  MISCELLANEOUS

V.1  Assignment. This Agreement shall be binding upon and inure to the benefit
     of the Parties and their respective successors and permitted assigns.
     Nothing in this Agreement shall create or be deemed to create any third
     party beneficiary rights in any person who is not a Party. No assignment of
     this Agreement or of any rights or obligations hereunder may be made by
     Intercardia (by operation of law or otherwise) without Interneuron's
     written consent. Interneuron may assign all or a portion of its benefits
     pursuant to this Agreement.

V.2  Severability. In the event that any of the provisions contained in this
     Agreement are held invalid, illegal or unenforceable in any respect, the
     validity, legality and enforceability of the remaining provisions contained
     herein shall not in any way be affected or impaired thereby, unless the
     absence of the invalidated provision(s) adversely affect the substantive
     rights of the parties. The Parties shall replace the invalid, illegal or
     unenforceable provision(s) with valid, legal and enforceable provision(s)
     which, insofar as practical, implement the purposes of this Agreement.

V.3  Notices. All notices or other communications which are required or
     permitted hereunder shall be in writing and sufficient if delivered
     personally, sent by facsimile (and promptly confirmed by personal delivery,
     registered or certified mail or overnight courier), sent by
     nationally-recognized overnight courier or sent by registered or certified
     mail, postage prepaid, return receipt requested, addressed as follows:

          if to Interneuron to:     Interneuron Pharmaceuticals, Inc.
                                    99 Hayden Avenue
                                    Lexington, MA 02173
                                    Attention: President
                                    Fax No.: 781-862-3859

          with a copy to:           Bachner, Tally, Polevoy  Misher LLP
                                    380 Madison Avenue
                                    18th Floor
                                    New York, NY 10017
                                    Attention:  Jill M.  Cohen, Esq.
                                    Fax No.:  212-682-5729


                                -10-
<PAGE>




          if to Intercardia to:     Intercardia, Inc.
                                    P.O. Box 14287
                                    3200 East Highway 54
                                    Cape Fear Building, Suite 300
                                    Research Triangle Park, NC  27709
                                    Attention: President
                                    Fax No.: 919-544-1245

          with a copy to:           Wyrick Robbins Yates & Ponton LLP
                                    4101 Lake Boone Trail
                                    Suite 300
                                    Raleigh, NC  27607
                                    Attention: Larry Robbins, Esq.
                                    Fax No.: 919-781-4865

     or to such other address as the Party to whom notice is to be given may
     have furnished to the other Parties in writing in accordance herewith. Any
     such communication shall be deemed to have been given when delivered if
     personally delivered or sent by facsimile on a business day, on the
     business day after patch if sent by nationally-recognized overnight courier
     and on the third business day following the date of mailing if sent by
     mail.

V.4  Applicable Law. The Agreement shall be governed by and construed in
     accordance with the laws of the State of Delaware and the United States
     without reference to any rules of conflict of laws.

V.5  Dispute Resolution. The Parties agree to attempt initially to solve all
     claims, disputes, or controversies arising under, out of, or in connection
     with this Agreement by conducting good faith negotiations. If the Parties
     are unable to settle the matter between themselves, the matter shall
     thereafter be resolved by alternative dispute resolution, starting with
     mediation and including, if necessary, a final and binding arbitration.
     Whenever a Party shall decide to institute arbitration proceedings, it
     shall give written notice to that effect to the other Party. The Party
     giving such notice shall refrain from instituting the arbitration
     proceedings for a period of sixty (60) days following such notice. During
     such period, the Parties shall make good faith efforts to amicably resolve
     the dispute without arbitration. Any arbitration hereunder shall be
     conducted under the rules of the American Arbitration Association. Each
     such arbitration shall be conducted by a panel of three arbitrators: one
     arbitrator shall be appointed by each of Interneuron and Intercardia and
     the third shall be appointed by the American Arbitration Association. Any
     such arbitration shall be held in Wilmington, Delaware. The arbitrators
     shall have the authority to grant specific performance. Judgment upon the
     award so rendered may be entered in any court having jurisdiction or
     application may be made to such court for judicial acceptance of any award
     and an order of enforcement, as the case may be. In no event shall a demand
     for arbitration be made after the date when institution of a legal or
     equitable proceeding based


                                      -11-
<PAGE>


     on such claim, dispute or other matter in question would be barred by the
     applicable statute of limitations.

V.6  Entire Agreement. This Agreement, together with the Merger Agreement and
     the exhibits thereto, contains the entire understanding of the Parties with
     respect to the subject matter hereof. All express or implied agreements and
     understandings, either oral or written, relating to the subject matter
     hereof, heretofore made are expressly merged in and made a part of this
     Agreement. This Agreement may be amended, or any term hereof modified, only
     by a written instrument duly executed by all Parties hereto. To the extent
     this Agreement refers to or incorporates sections of the Merck Agreement,
     the consent of Interneuron shall be required in connection with the
     amendment or modification of any of such sections of the Merck Agreement.

V.7  No Authority. Except as specifically set forth herein, no Party shall have
     the authority to make any statements, representations or commitments of any
     kind, or to take any action, which shall be binding on any other Party,
     without the prior consent of such other Party.

V.8  Waiver. The waiver by a Party hereto of any right hereunder or the failure
     to perform or of a breach by another Party shall not be deemed a waiver of
     any other right hereunder or of any other breach or failure by said other
     Party whether of a similar nature or otherwise.

V.9  Counterparts. The Agreement may be executed in two or more counterparts,
     each of which shall be deemed an original, but all of which together shall
     constitute one and the same instrument.

     IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first set forth above.

                              INTERCARDIA, INC.


                              By: /s/ Clayton Duncan                      
                                  ----------------------------------------------
                                  Name:    Clayton Duncan
                                  Title:   President and Chief Executive Officer

                              INTERNEURON PHARMACEUTICALS, INC.


                              By: /s/ Glenn L. Cooper, M.D.                
                                  ----------------------------------------------
                                  Name:    Glenn L. Cooper, M.D.
                                  Title:   President and Chief Executive Officer




                                      -12-
<PAGE>



                                   APPENDIX A
                                   ----------


                               ASSIGNED AGREEMENTS


Merck Agreement
Princeton License Agreement
Princeton Sponsored Research Agreements
Side Agreement


<PAGE>




                                  APPENDIX 1.2
                                  ------------


                                 MERCK AGREEMENT







<PAGE>


                                  APPENDIX 2.2
                                  ------------


                                   GUARANTIES


Guaranty to Lease between Transcell and Cedar Brook Corporate Center, L.P.,
dated September 19, 1996.

Guaranty to Master Equipment Lease between Transcell and Phoenix Leasing
Incorporated.