<PAGE>   1
   

                                                                    EXHIBIT 10.7
    



                         INTERMUNE PHARMACEUTICALS, INC.

                          ----------------------------

                             COLLABORATION AGREEMENT

                          ----------------------------

                                 APRIL 27, 1999

<PAGE>   2
                         INTERMUNE PHARMACEUTICALS, INC.

                             COLLABORATION AGREEMENT

        THIS COLLABORATION AGREEMENT is made effective as of the 27th day of
April, 1999 (the "Effective Date") by and between INTERMUNE PHARMACEUTICALS,
INC., a California corporation (the "Company"), and CONNETICS CORPORATION, a
Delaware corporation ("Connetics"). Each of the Company and Connetics may be
referred to herein as a "Party" or together as the "Parties."

                                    RECITALS

        WHEREAS, as of even date herewith, the Company and Connetics have
amended and restated that certain Exclusive Sublicense Agreement, dated August
21, 1998, pursuant to which, among other things, InterMune shall make certain
milestone and royalty payments to Connetics; and

        WHEREAS, as of even date herewith, the Company and Connetics have
entered into a Transition Agreement pursuant to which, among other things,
Connetics shall book net revenues, expenses, and net profits of Actimmune Units
for the treatment of Chronic Granulomatous Disease from January 15, 1999 through
December 31, 2001; and

        WHEREAS, as of April 7, 1999 herewith, the Company and Connetics have
amended and restated that certain Service Agreement, dated October 12, 1998 (the
"Service Agreement"), pursuant to which, among other things, Connetics provides
to the Company certain information services, payroll, facilities, human
resources, accounting, employee benefits administration, and R&D related
services; and

        WHEREAS, pursuant to the terms of that certain term sheet between the
Company and certain of the Series A-1 and A-2 Preferred Stock investors, the
Board of Directors of the Company intends to declare and pay a dividend (the
"Dividend") of four million seven hundred twenty one thousand eight hundred
seventy six dollars and seventy two cents ($4,721,876.72) to Connetics as the
sole holder of shares of Series A Preferred Stock, following the closing of the
Series A-1 and A-2 Preferred Stock financing; and

        WHEREAS, Connetics has delivered concurrently herewith a notice of
conversion, pursuant to which, in accordance with the Company's Amended and
Restated Articles of Incorporation, all of Connetics' 11,200,000 shares of
Series A Preferred shall be converted into 960,000 shares of Series A-1
Preferred Stock once the Dividend has been paid to Connetics.

        NOW, THEREFORE, in consideration of the foregoing recitals and mutual
promises hereinafter set forth, the parties hereby agree as follows:


                                       1.
<PAGE>   3
1.      CASH PAYMENTS.

        1.1 COLLABORATION AGREEMENT CASH PAYMENT. On the Effective Date, the
Company shall pay to Connetics five hundred thousand dollars ($500,000) by wire
transfer.

        1.2 TRANSITION AGREEMENT CASH PAYMENT. On the Effective Date, the
Company shall pay to Connetics one hundred fifty three thousand six hundred
fifty five dollars ($153,655) by wire transfer as payment representing the
Actimmune Gross Margin for the period from January 15, 1999 to the Effective
Date, pursuant to Section 2.3(c) of the Transition Agreement.

        1.3 AMENDED AND RESTATED SERVICE AGREEMENT CASH PAYMENT. On the
Effective Date, the Company shall pay to Connetics two hundred two thousand nine
hundred eighty nine dollars ($202,989) by wire transfer as payment for services
provided from January 1, 1999, through March 31, 1999 under the Service
Agreement.

        1.4 REIMBURSEMENT FOR PREPAID EXPENSES. On the Effective Date, the
Company shall pay to Connetics fifty one thousand eight hundred thirty dollars
($51,830) by wire transfer as payment for the prepaid expenses provided from
January 1, 1999, through March 31, 1999.

2.      CONVERSION OF SERIES A PREFERRED INTO SERIES A-1 PREFERRED.

        2.1 CONVERSION NOTICE. Connetics shall deliver, concurrent with the
execution of this Agreement, a notice of conversion of all of Connetics'
11,200,000 shares of Series A Preferred Stock into an aggregate of 960,000
shares of Series A-1 Preferred Stock. Such notice shall be in the form attached
hereto as EXHIBIT A (the "Conversion Notice").

        2.2 CONVERSION. Promptly following payment of the dividend declared by
the Board of Directors of the Company to Connetics, Connetics shall deliver to
the Company its Series A Preferred Stock certificate. The Company shall then
convert the Series A Preferred Stock into Series A-1 Preferred Stock in
accordance with Article III.E.1 of the Company's Amended and Restated Articles
of Incorporation.

3.      COMMITMENT TO PAY CASH OR ISSUE PROMISSORY NOTE.

        3.1 COMMITMENT. On March 31, 2001, the Company shall, in its sole
discretion, either pay to Connetics (i) five hundred thousand dollars
($500,000.00) by check or by wire transfer or (ii) two hundred thousand dollars
($200,000) by check or by wire transfer and deliver a promissory note in the
form attached hereto as EXHIBIT B (the "Note").

        3.2 PROMISSORY NOTE. The Note will be due and payable in two principal
payments of $150,000 each with the first payment on or before June 30, 2001, and
the second payment on or before September 30, 2001.


                                       2.
<PAGE>   4
        3.3 MILESTONE PAYMENT. The Company shall pay to Connetics a milestone
payment of one million five hundred thousand dollars ($1,500,000) in the form
and at the times set forth in Section 5.2 of the Amended and Restated Exclusive
Sublicense Agreement.

4.      ISSUANCE OF SERIES B PREFERRED.

        4.1 SERIES B PREFERRED. Effective upon the closing of the Company's
Series B Preferred Stock Financing (the "Series B Financing"), the Company shall
issue to Connetics shares of Series B Preferred Stock (the "Series B Preferred")
in an amount equal to the quotient of five hundred thousand dollars ($500,000)
divided by the price per share of Series B Preferred paid by the purchasers of
the Series B Preferred. The Company shall use its best efforts to assure that
the terms, conditions, rights, preferences and privileges of the Series B
Preferred issued to Connetics by the Company in the Series B Financing shall be
the same as those of the Series B Preferred issued to the other purchasers,
provided however, that such efforts shall not require the Company to accept a
lower price per share or make other material concessions to the other purchasers
of the Series B Preferred. Notwithstanding the foregoing, in the event of either
a Company Sale (as defined below) or a firm underwritten public offering of the
Company's Common Stock either of which occurs prior to a Series B Financing, the
Company shall, in its sole discretion, either (i) deliver to Connetics five
hundred thousand dollars ($500,000) by check or wire transfer or (ii) issue to
Connetics four hundred thousand (400,000) shares of Series A-2 Preferred Stock
concurrently with the closing of such Company Sale or public offering.

        4.2 COMPANY SALE. For the purposes of this Agreement, a "Company Sale"
shall mean (a) any capital reorganization or reclassification of the capital
stock of the Company, or consolidation or merger of the Company with another
corporation after which fifty percent (50%) or more of the voting securities of
the surviving corporation is held by persons who were not stockholders of the
Company immediately prior to such reorganization, reclassification,
consolidation, or (b) the sale of all or substantially all of the Company's
assets or of any successor corporation's property and assets to any other
corporation or corporations, including, without limitation, a sale, assignment,
transfer or termination in any manner in whole or in part of the License
Agreement(s) between the Company and Connetics, Genentech and U.C. Davis and/or
patent rights described in the License Agreement.

5.      ISSUANCE OF SERIES C PREFERRED

        5.1 SERIES C PREFERRED. In addition to and not in lieu of Section 4.1,
effective upon the closing of the Company's Series C Preferred Stock Financing
(the "Series C Financing"), the Company shall issue shares to Connetics of
Series C Preferred Stock (the "Series C Preferred") in an amount equal to the
quotient of one million dollars ($1,000,000) divided by the price per share of
Series C Preferred paid by the purchasers of the Series C Preferred. The Company
shall use its best efforts to assure that the terms, conditions, rights,
preferences and privileges of the Series C Preferred issued to Connetics by the
Company in the Series C Financing shall be same as those of the Series C
Preferred issued to the other purchasers, provided however, that such efforts
shall not require the Company to accept a lower price per share or make other
material concessions to the other purchasers of the Series C Preferred.
Notwithstanding the foregoing, in


                                       3.
<PAGE>   5
the event of either a Company Sale or a firm underwritten public offering of the
Company's Common Stock either of which occurs prior to the Series B Financing or
Series C Financing (if the Series B Financing has occurred), the Company shall,
in its sole discretion, either (i) deliver to Connetics one million dollars
($1,000,000) or (ii) issue to Connetics either eight hundred thousand (800,000)
shares of Series A-2 Preferred Stock (if the Series B Financing has not
occurred) or that number of shares of Series B Preferred in an amount equal to
one million dollars ($1,000,000) divided by the price paid per share for the
Series B Preferred in the Series B Financing, concurrently with the closing of
such Company Sale or public offering .

6.      REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY

        The Company hereby represents and warrants to Connetics as follows:

        6.1 CORPORATE POWER. The Company has all requisite corporate power to
execute and deliver this Agreement and to carry out and perform its obligations
under the terms of this Agreement.

        6.2 AUTHORIZATION. All corporate action on the part of the Company and
its Board of Directors necessary for the authorization, execution, delivery and
performance of this Agreement by the Company and the performance of the
Company's obligations hereunder has been taken, except for the authorization and
reservation of the Series B Preferred and Series C Preferred. This Agreement and
the Note, when executed and delivered by the Company, shall constitute valid and
binding obligations of the Company enforceable in accordance with their terms,
subject to laws of general application relating to bankruptcy, insolvency, the
relief of debtors and, with respect to rights to indemnity, subject to federal
and state securities laws. The Series B Preferred and Series C Preferred of the
Company, when issued in compliance with the provisions of this Agreement, will
be validly issued, fully paid and nonassessable and free of any liens or
encumbrances, other than restrictions on transfer under the applicable state and
federal securities laws.

        6.3 OFFERING. Assuming the accuracy of the representations and
warranties of Connetics contained in Section 5 hereof, the issuance of the Note
will be exempt from the registration and prospectus delivery requirements of the
Securities Act of 1933, as amended (the "1933 Act"), and has been registered or
qualified (or are exempt from registration and qualification) under the
registration, permit, or qualification requirements of all applicable state
securities laws.

7.      REPRESENTATIONS AND WARRANTIES OF CONNETICS

        7.1 PURCHASE FOR OWN ACCOUNT. Connetics represents that it shall be
acquiring the Note, the Series B Preferred and Series C Preferred solely for its
own account and beneficial interest for investment and not for sale or with a
view to distribution of the Note, Series B Preferred and Series C Preferred or
any part thereof, has no present intention of selling (in connection with a
distribution or otherwise), granting any participation in, or otherwise
distributing the same, and does not presently have reason to anticipate a change
in such intention.


                                       4.
<PAGE>   6
        7.2 INFORMATION AND SOPHISTICATION. Connetics acknowledges that it has
received all the information it has requested from the Company and it considers
necessary or appropriate for deciding whether to acquire the Note, the Series B
Preferred, and Series C Preferred. Connetics represents that it has had an
opportunity to ask questions and receive answers from the Company regarding the
terms and conditions of the offering of the Note, the Series B Preferred, and
the Series C Preferred, and to obtain any additional information necessary to
verify the accuracy of the information given Connetics. Connetics further
represents that it has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risk of this investment.

        7.3 ABILITY TO BEAR ECONOMIC RISK. Connetics acknowledges that
investment in the Note, the Series B Preferred and Series C Preferred involves a
high degree of risk, and represents that it is able, without materially
impairing its financial condition, to hold the Note, the Series B Preferred and
the Series C Preferred for an indefinite period of time and to suffer a complete
loss of its investment.

        7.4 FURTHER LIMITATIONS ON DISPOSITION. Without in any way limiting the
representations set forth above, Connetics further agrees not to make any
disposition of all or any portion of the Note, the Series B Preferred and the
Series C Preferred unless and until:

               (a) There is then in effect a registration statement under the
1933 Act covering such proposed disposition and such disposition is made in
accordance with such registration statement; or

               (b) Connetics shall have notified the Company of the proposed
disposition and shall have furnished the Company with a detailed statement of
the circumstances surrounding the proposed disposition, and if reasonably
requested by the Company, Connetics shall have furnished the Company with an
opinion of counsel, reasonably satisfactory to the Company, that such
disposition will not require registration under the 1933 Act or any applicable
state securities laws.

               (c) Notwithstanding the provisions of paragraphs (a) and (b)
above, no such registration statement or opinion of counsel shall be necessary
for a transfer by Connetics to a shareholder or partner (or retired partner) of
such Connetics, or transfers by gift, will or intestate succession to any spouse
or lineal descendants or ancestors, if all transferees agree in writing to be
subject to the terms hereof to the same extent as if they were Connetics
hereunder.

        7.5 EXPERIENCE. Connetics is an "accredited" investor as such term is
defined in Rule 501 under the Securities Act.

        7.6 FURTHER ASSURANCES. Connetics agrees and covenants that at any time
and from time to time it will promptly execute and deliver to the Company such
further instruments and documents and take such further action as the Company
may reasonably require in order to carry out the full intent and purpose of this
Agreement.


                                       5.
<PAGE>   7
        7.7 INSURANCE. Connetics agrees and covenants that the Company shall be
covered as an insured party under Connetics' general liability and products
liability policy until May 31, 1999.

8.      CONFIDENTIALITY.

        8.1 CONFIDENTIAL INFORMATION OBLIGATIONS. As used herein, "Confidential
Information" means all information that a Party discloses to the other Party
under this Agreement, provided that "Confidential Information" shall not include
such information excluded under Section 8.2. Except to the extent expressly
authorized by this Agreement or otherwise agreed in writing by the Parties, each
Party agrees that, during the term of this Agreement and for five (5) years
after the expiration or termination of this Agreement, it shall keep
confidential and shall not publish or otherwise disclose and shall not use for
any purpose other than as provided for in this Agreement any Confidential
Information furnished to it by the other Party pursuant to this Agreement.

        8.2 EXCEPTIONS. The obligations set forth in Section 8.1 shall not apply
to any Information that the receiving Party can demonstrate by competent
evidence:

               (a) was already known to the receiving Party, other than under an
obligation of confidentiality, at the time of disclosure by the other Party;

               (b) was generally available to the public or otherwise part of
the public domain at the time of its disclosure to the receiving Party by the
other Party;

               (c) became generally available to the public or otherwise part of
the public domain after its disclosure and other than through any act or
omission of the receiving Party in breach of this Agreement;

               (d) was disclosed to the receiving Party, other than under an
obligation of confidentiality to a third Party, by a third Party who had no
obligation to the disclosing Party not to disclose such information to others;
or

               (e) is independently developed by the receiving Party without
using any of the other Party's Confidential Information.

        8.3 PERMITTED DISCLOSURE. Notwithstanding the limitations in this
Section 8, each Party may disclose Confidential Information belonging to the
other Party (or otherwise subject to this Section 8), to the extent such
disclosure is reasonably necessary in the following instances, but solely for
the limited purpose of such necessity:

               (a) regulatory and tax filings;

               (b) prosecuting or defending litigation;


                                       6.
<PAGE>   8
               (c) complying with applicable governmental laws or regulations or
valid court orders; or

               (d) disclosure to affiliates, employees, consultants or agents
who agree to be bound by similar terms of confidentiality and non-use at least
equivalent in scope to those set forth in this Section 8.

        Notwithstanding the foregoing, in the event a Party is required to make
a disclosure of the other Party's Confidential Information pursuant to Section
8.3, it will give reasonable advance notice to the other Party of such
disclosure and endeavor in good faith to secure confidential treatment of such
information. In any event, the Parties agree to take all reasonable action to
avoid disclosure of Confidential Information hereunder. Further, the Parties
agree to consult with one another on the provisions of this Agreement to be
redacted in any filings made by a Party with the United States Securities and
Exchange Commission or as otherwise required by law.

9.      MISCELLANEOUS

        9.1 BINDING AGREEMENT. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective successors and
assigns of the parties. Nothing in this Agreement, express or implied, is
intended to confer upon any third party any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.

        9.2 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of California, as such laws are applied to
agreements among California residents, made and to be performed entirely within
the State of California.

        9.3 COUNTERPARTS. This 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.

        9.4 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.

        9.5 NOTICES. Any notice required or permitted under this Agreement shall
be given in writing and shall be deemed effectively given upon personal delivery
or upon two (2) days after deposit with the United States Post Office, postage
prepaid, addressed to the Company, or to Connetics at its address at 3400 West
Bayshore Road, Palo Alto, CA 94303, or at such other address as such Party may
designate by ten (10) days advance written notice to the other Party.

        9.6 MODIFICATION; WAIVER. No modification or waiver of any provision of
this Agreement or consent to departure therefrom shall be effective unless in
writing and approved by the Company and Connetics.


                                       7.
<PAGE>   9
        9.7 INDEPENDENT COUNSEL. Connetics acknowledges that this Agreement has
been prepared on behalf of the Company by Cooley Godward LLP, counsel to the
Company, and that Cooley Godward LLP does not represent, and is not acting on
behalf of, Connetics. Connetics has been provided with an opportunity to consult
with its own counsel with respect to this Agreement.

        9.8 ENTIRE AGREEMENT. This Agreement and the Exhibits hereto, the
Transition Agreement, the Amended and Restated Exclusive Sublicense Agreement,
and the Amended and Restated Service Agreement (collectively, the "Intercompany
Agreements") constitute the full and entire understanding and agreement between
the parties with regard to the subjects of the Intercompany Agreements and no
Party shall be liable or bound to any other in any manner by any
representations, warranties, covenants and agreements except as specifically set
forth in the Intercompany Agreements.


                                       8.
<PAGE>   10

        IN WITNESS WHEREOF, the parties have executed this COLLABORATION
AGREEMENT as of the date first written above.

                                         INTERMUNE PHARMACEUTICALS, INC.

                                         By:    /s/ Scott Harkonen
                                                --------------------------------
                                         Print Name: Scott Harkonen
                                                     ---------------------------
                                         Title: Chief Executive Officer
                                                --------------------------------


                                         CONNETICS CORPORATION

                                         By:    /s/ T. G. Wiggans
                                                --------------------------------
                                         Print Name:   Thomas G. Wiggans

                                         Title: President and Chief 
                                                Executive Officer
                                                --------------------------------



                            COLLABORATION AGREEMENT
                                 SIGNATURE PAGE
<PAGE>   11
                                    EXHIBIT A

                            FORM OF CONVERSION NOTICE


<PAGE>   12
                            FORM OF CONVERSION NOTICE


        April ___, 1999

        InterMune Pharmaceuticals, Inc.
        3294 West Bayshore Road
        Palo Alto, CA 94303

        RE: CONVERSION OF SERIES A PREFERRED STOCK INTO SERIES A-1 PREFERRED
            STOCK

        In accordance with Article III.E.1 of the Amended and Restated Articles
of Incorporation of InterMune Pharmaceuticals, Inc. (the "Company"), Connetics
Corporation hereby gives irrevocable notice of its election to convert its
shares of Series A Preferred Stock into shares of Series A-1 Preferred Stock.

        Enclosed please find a copy of the Series A Preferred Stock certificate
PA-1 evidencing ownership by Connetics Corporation of 11,200,000 shares of
Series A Preferred Stock of the Company (the "Stock Certificate"), which Stock
Certificate shall be delivered to the Company upon payment of the dividend
referenced in the recitals of the Collaboration Agreement. Upon the closing of
the Series A-1 and A-2 Preferred Stock financing and receipt of the original
Stock Certificate, please deliver the certificate for 960,000 shares of Series
A-1 Preferred Stock to Connetics Corporation at the address shown on the
Company's record books.

                                         Sincerely,

                                         Connetics Corporation

                                         By:
                                               ---------------------------------
                                         Name:
                                               ---------------------------------
                                         Title:
                                               ---------------------------------

<PAGE>   13
                                    EXHIBIT B

                             FORM OF PROMISSORY NOTE

<PAGE>   14
                                 PROMISSORY NOTE


$300,000.00                                                       March 31, 2001
                                                           Palo Alto, California


        For value received INTERMUNE PHARMACEUTICALS, INC., a California
corporation ("Payor") promises to pay to Connetics Corporation or its assigns
("HOLDER") the principal sum of $300,000.00 with interest on the outstanding
principal amount at the prime rate plus two percent (2%) per annum. Interest
shall commence with the date hereof and shall continue on the outstanding
principal until paid in full.

        1. This note (the "Note") is issued to the Holder pursuant to the terms
of that certain Agreement dated as of April ___, 1999 between the Company and
the Holders.

        2. All payments of interest and principal shall be in lawful money of
the United States of America. All payments shall be applied first to accrued
interest, and thereafter to principal.

        3. $150,000 of the outstanding principal balance and all unpaid accrued
interest shall become fully due and payable on June 30, 2001, and $150,000 of
the outstanding principal balance and all unpaid accrued interest shall become
due and payable on September 30, 2001.

        4. In the event of any default hereunder, Payor shall pay all reasonable
attorneys' fees and court costs incurred by Holder in enforcing and collecting
this Note.

        5. Payor hereby waives demand, notice, presentment, protest and notice
of dishonor.

        6. The terms of this Note shall be construed in accordance with the laws
of the State of California, as applied to contracts entered into by California
residents within the State of California, which contracts are to be performed
entirely within the State of California.

        7. Any term of this Note may be amended or waived with the written
consent of Payor and the Holder.

                                   INTERMUNE PHARMACEUTICALS, INC.

                                   By:
                                               ---------------------------------
                                   Print Name:
                                               ---------------------------------
                                   Title:
                                               ---------------------------------