<PAGE>   1

                                                                   EXHIBIT 10.2



                              CONNETICS CORPORATION
                         COMMON STOCK PURCHASE AGREEMENT


       This Common Stock Purchase Agreement (the "AGREEMENT") is entered into as
of this 7th day of July, 1999, among Connetics Corporation, a Delaware
corporation ("CONNETICS") and Paladin Labs Inc. ("PALADIN"). Connetics and
Paladin are entering into a License Agreement simultaneously with this Agreement
(the "LICENSE AGREEMENT"). All terms not otherwise defined in this Agreement
shall have the meanings ascribed to them in the License Agreement. The "CLOSING
DATE" shall be the second business day following receipt of approval by the
Vancouver Stock Exchange as contemplated in Section 9.1 of the License
Agreement.

                                    SECTION 1
                              SALE OF COMMON STOCK

       1.1 Sale of Common Stock. Subject to the terms and conditions of this
Agreement, on the Closing Date, Connetics will issue and sell to Paladin, and
Paladin will purchase from Connetics, for $400,000 (the "PURCHASE PRICE")
Forty-Three Thousand Three Hundred Fifteen (43,315) shares of Connetics' Common
Stock, par value $0.001 per share (the "COMMON STOCK"). The purchase price per
share shall equal 150% of the Fair Market Value. For purposes of this Agreement,
the term "FAIR MARKET VALUE" is defined as the average of the last reported sale
price of Connetics' Common Stock on the Nasdaq National Market over the ten (10)
trading days ending on the trading day preceding the Closing Date.

       1.2 Closing Dates. The closing of the purchase and sale of the Common
Stock (the "CLOSING") shall be held at the offices of Connetics, 3400 West
Bayshore Road, Palo Alto, California at 10:00 a.m. Pacific Standard Time on the
Closing Date, or at such other time and location as Connetics and Paladin may
agree. The shares of Common Stock to be purchased, the purchase price to be
paid, and the timing of the Closing shall be as set forth in this Agreement.

       1.3 Delivery. At the Closing, Connetics shall deliver to Paladin a
certificate or certificates representing the shares of Common Stock purchased by
Paladin, against payment of the Purchase Price by wire transfer.

       1.4 Legend. The certificate or certificates for the Common Stock shall be
subject to a legend restricting transfer under the Securities Act of 1933, as
amended (the "SECURITIES ACT") and referring to restrictions on transfer of such
certificates, which legend shall be substantially as follows:

       "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND HAVE
BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE
SALE, OFFERING OR DISTRIBUTION THEREOF. NO SUCH SALE, OFFERING OR DISPOSITION
MAY BE EFFECTED WITHOUT (A) AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO,
OR (B) AN OPINION OF COUNSEL FOR CONNETICS THAT


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SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT, OR (C) FULL
COMPLIANCE WITH THE PROVISIONS OF RULE 144 UNDER THE SECURITIES ACT, OR (D) FULL
COMPLIANCE WITH THE PROVISIONS OF REGULATION S UNDER THE SECURITIES ACT. HEDGING
TRANSACTIONS INVOLVING THOSE SECURITIES MAY NOT BE CONDUCTED UNLESS IN
COMPLIANCE WITH THE SECURITIES ACT."

       1.5 Removal of Legends. Any legend endorsed on a certificate pursuant to
SECTION 1.4 hereof shall be removed (a) if such shares may be transferred in
compliance with Rule 144(k) promulgated under the Securities Act, or (b) if the
holder of such shares shall have provided Connetics with an opinion of counsel,
in form and substance acceptable to Connetics, stating that a public sale,
transfer or assignment of such shares may be made without registration.

                                    SECTION 2
                   REPRESENTATIONS AND WARRANTIES OF CONNETICS

       Connetics hereby represents and warrants to Paladin that:

       2.1 Organization. Connetics is a corporation duly organized and validly
existing under the laws of the State of Delaware and is in good standing under
such laws. Connetics has requisite corporate power and authority to own, lease
and operate its properties and assets, and to carry on its business as presently
conducted and as proposed to be conducted. Connetics is qualified to do business
as a foreign corporation in each jurisdiction in which the ownership of its
property or the nature of its business requires such qualification, except where
failure to so qualify would not have a materially adverse effect on Connetics.

       2.2 Authorization. Connetics has all corporate right, power and authority
to enter into this Agreement and to consummate the transactions contemplated by
this Agreement. All corporate action on the part of Connetics, its directors and
stockholders necessary for the authorization, execution, delivery and
performance of this Agreement by Connetics, and the authorization, sale,
issuance and delivery of the Common Stock and the performance of Connetics'
obligations under this Agreement has been taken. This Agreement has been duly
executed and delivered by Connetics and constitutes a legal, valid and binding
obligation of Connetics enforceable in accordance with its terms, subject to
laws of general application relating to bankruptcy, insolvency and the relief of
debtors and rules of law governing specific performance, injunctive relief or
other equitable remedies

       2.3 Validity of Securities. The Common Stock, when issued, sold and
delivered by Connetics in accordance with the terms of this Agreement, will be
duly and validly issued, fully-paid and nonassessable and free and clear of any
liens and encumbrances. There are no statutory, contractual or other preemptive
rights or rights of first refusal with respect to the issuance and sale of the
Common Stock. Based in part upon the representations of Paladin in this
Agreement, the offer, sale and issuance of the Common Stock constitute
transactions exempt from the registration and prospectus delivery requirements
of the Securities Act, and have been registered or qualified (or are exempt from
registration and qualification) under the registration, permit or qualification
requirements of all applicable state securities laws.


                                     PAGE 2
<PAGE>   3

       2.4 Capitalization. The authorized capital stock of Connetics as of March
31, 1999 consists of 50,000,000 shares of Common Stock, $0.001 par value, of
which 21,229,877 shares were issued and outstanding and 10,394 were held as
Treasury shares, and 5,000,000 shares of Preferred Stock, $0.001 par value, of
which zero shares were issued and outstanding. Connetics' Board of Directors has
authorized the creation of 90,000 shares of Series B Preferred Stock for
potential issuance under Connetics' stockholder rights plan. Since March 31,
1999, no shares of Connetics' Common or Preferred Stock have been issued, except
pursuant to the exercise of options or warrants outstanding as of that date, and
in accordance with Connetics' Employee Stock Purchase Plan. All such issued and
outstanding shares have been duly authorized and validly issued and are fully
paid and nonassessable. In addition to the foregoing, Connetics has reserved and
outstanding the following warrants, rights, options and convertible securities:

        (i)    warrants for the purchase of 22,728 shares of Common Stock at an
               exercise price of $11.00 per share, which warrants expire in
               December 2000;

        (ii)   warrants for the purchase of 905,000 shares of Common Stock at an
               exercise price of $9.08 per share, which warrants expire in May,
               2001;

        (iii)  warrants for the purchase of 20,000 shares of Common Stock at an
               exercise price of $7.43 per share, which warrants expire in
               December, 2001;

        (iv)   warrants for the purchase of 250,000 shares of Common Stock at an
               exercise price of $8.25 per share, which warrants expire in
               January 2002;

        (v)    warrants for the purchase of 18,395 shares of Common Stock at an
               exercise price of $4.89 per share, which warrants expire in July
               2002;

        (vi)   warrants for the purchase of 73,071 shares of Common Stock at an
               exercise price of $5.78, which warrants expire in December 2002;

        (vii)  warrants for the purchase of 6,000 shares of Common Stock at an
               exercise price of $6.00 per share, which warrants expire in
               January, 2003;

        (viii) 2,600,000 shares reserved for issuance pursuant to Connetics'
               1994 Stock Plan, of which, at March 31, 1999, options (net of
               repurchases) to purchase 519,590 shares had been exercised,
               options to purchase 2,047,455 shares were outstanding and 32,955
               shares remained available for future grant;

        (ix)   500,000 shares reserved for issuance pursuant to Connetics' 1995
               Employee Stock Purchase Plan, of which, at March 31, 1999,
               210,462 shares had been issued;

        (x)    250,000 shares reserved for issuance under Connetics' 1995
               Directors' Stock Option Plan, of which, at March 31, 1999,
               165,000 options had been granted;

        (xi)   38,863 shares reserved for issuance for option grants to various
               consultants; and

        (xii)  500,000 shares reserved for issuance under Connetics' 1998
               Supplemental Stock Plan, of which, at March 31, 1999, 234,250
               options had been granted.


Connetics also has an equity line agreement with Kepler Capital LLC ("KEPLER")
that allows Connetics to access up to $25 million through sales of its Common
Stock. The Equity Line,


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originally to be made available on or before December 1, 1997, became available
on June 26, 1998 and will remain open until June 2001. During any 90-day period
within the three year term, if the Company's stock meets certain volume
restrictions and trades above $10.00, then up to $500,000 would be drawn against
the Equity Line in exchange for the sale of stock at an approximate minimum
price of $10.00. The purchase price will be subject to a maximum discount of
15%. To date, the Company has not drawn down any amount against the Equity Line.
In addition, Connetics may be obligated to issue additional shares to Genentech,
Inc. before December 15, 1999, as part of the consideration paid for Connetics'
acquisition of rights to gamma interferon in 1998.

Except as described in this SECTION 2.4, there are no other options, warrants,
conversion privileges or other contractual rights presently outstanding to
purchase or otherwise acquire any authorized but unissued shares of Connetics'
capital stock or other securities. All of the issued and outstanding securities
of Connetics have been issued in compliance with all applicable federal and
state securities laws.

       2.5 No Conflict. The execution and delivery of this Agreement does not,
and the consummation of the transactions contemplated hereby will not, conflict
with, or result in any violation of, or default (with or without notice or lapse
of time, or both), or give rise to a right of termination, cancellation or
acceleration of any obligation or to a loss of a material benefit under any
provision of the Certificate of Incorporation or Bylaws of Connetics or any
mortgage, indenture, lease or other agreement or instrument, permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Connetics, its properties or assets, which conflict,
violation, default or right would have a material adverse effect on the
business, properties, prospects or financial condition of Connetics.

       2.6 Accuracy of Reports; Financial Statements. All reports required to be
filed with the Securities and Exchange Commission (the "SEC") by Connetics from
February 1, 1996 (the date of Connetics' initial public offering) through the
date of this Agreement under the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT"), have been duly and timely filed, were in substantial
compliance with the requirements of their respective forms when filed, were
complete and correct in all material respects as of the dates at which the
information was furnished, and contained (as of such dates) no untrue statement
of a material fact nor omitted to state a material fact necessary in order to
make the statements made therein in light of the circumstances in which made not
misleading. All such reports are collectively referred to as the "SEC
DOCUMENTS." Connetics' financial statements included in the SEC Documents (the
"FINANCIAL STATEMENTS") comply as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto. The Financial Statements have been prepared in
accordance with generally accepted accounting principles consistently applied
and fairly present the consolidated financial position of Connetics and any
subsidiaries at the dates thereof and the consolidated results of operations and
consolidated cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal, recurring adjustments).

       2.7 Changes. Since May 13, 1999 (the date on which Connetics' Quarterly
Report on Form 10-Q for the fiscal quarter ended March 31, 1999 was filed with
the SEC), Connetics has


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not (a) incurred any material liability, absolute or contingent, or (b)
experienced any event or condition of any nature that has materially and
adversely affected or might materially and adversely affect Connetics' business,
properties, prospects or financial condition (as such business is presently
conducted and as it is proposed to be conducted). There is no material liability
or contingency of Connetics that is not disclosed in the SEC Documents.

       2.8 Governmental Consents, Etc. No consent, approval or authorization of
or designation, declaration or filing with any governmental authority on the
part of Connetics is required in connection with the valid execution and
delivery of this Agreement, or the consummation of any other transaction
contemplated hereby, except such filings as may be required to be made with the
SEC, the National Association of Securities Dealers, Inc. ("NASD") and with
governmental authorities for purposes of effecting compliance with the
securities and Blue Sky laws in the states in which Common Stock is offered
and/or sold, which compliance will be effected in accordance with such laws.
Connetics has all franchises, permits, licenses and any similar authority
necessary for the conduct of its business as now being conducted by it, the lack
of which could materially and adversely affect the business, properties,
prospects or financial condition of Connetics; provided further, Connetics
believes it can obtain, without undue burden or expense, any similar authority
for the conduct of business which it plans to conduct.

       2.9 Litigation. There is no pending or, to the best of Connetics'
knowledge, threatened lawsuit, administrative proceeding, arbitration, labor
dispute or governmental investigation ("LITIGATION") to which Connetics is a
party or by which any material portion of its assets, taken as a whole, may be
bound, nor is Connetics aware of any basis therefor, which Litigation, if
adversely determined, would have a material adverse effect on the business,
properties, prospects or financial condition of Connetics. Connetics is not a
party or subject to the provisions of any order, writ, injunction, judgement, or
decree of any court or governmental agency or instrumentality. There is no
action, suit, proceeding, or investigation by Connetics currently pending or
that Connetics intends to initiate.

       2.10 Intellectual Property. To its knowledge, and except as disclosed in
the SEC Documents, Connetics owns or possesses sufficient legal rights to all
patents, trademarks, service marks, tradenames, copyrights, trade secrets,
licenses, information and proprietary rights and processes necessary for its
business as now conducted and as proposed to be conducted, without infringement
of any rights of a third party. Connetics has not received any communications
alleging that Connetics has violated or, by conducting its business as proposed,
would violate any of the patents, trademarks, service marks, tradenames,
copyrights, trade secrets or other proprietary rights or processes of any other
person or entity, which violation would have a material adverse effect on the
business, properties, prospects or financial condition of Connetics. Except as
disclosed in the SEC Documents and as contemplated in the License Agreement,
Connetics has not granted (nor has Connetics licensed from a third party) any
material rights to or licenses to its patents, trademarks, service marks,
tradenames, copyrights, trade secrets or other proprietary rights or processes.

       2.12 No Material Default. Connetics is not in violation of or default
under any provision of (a) its Certificate of Incorporation or Bylaws or (b) any
mortgage, indenture, lease or other



                                     PAGE 5
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agreement or instrument, permit, concession, franchise or license to which it is
a party or by which it is bound or (c) any federal or state judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Connetics,
except with respect to clauses (b) and (c) above, such violations or defaults as
would not have a material adverse effect on the business, properties, prospects
or financial condition of Connetics.

       2.13 Disclosure. No representation or warranty of Connetics contained in
this Agreement or the exhibits attached to this Agreement (when read together
and taken as a whole), contains any untrue statement of a material fact or omits
to state a material fact necessary in order to make the statements contained in
this Agreement or its exhibits not misleading in light of the circumstances
under which they were made.

       2.14 Solvency; No Default. As of this date Connetics has sufficient funds
and cash flow to pay its debts and other liabilities as they become due, and
Connetics is not in default with respect to any material debt or liability.

       2.15 Rights of Common Stock. The Common Stock shall have the rights,
preferences, privileges and restrictions provided in Connetics' Amended and
Restated Certificate of Incorporation. Connetics has furnished Paladin with
copies of its Amended and Restated Certificate of Incorporation and Bylaws. Said
copies are true, correct and complete and contain all amendments through the
Closing Date.

       2.16 Real Property Holding Corporation. Connetics is not a real property
holding corporation within the meaning of Section 897(c)(2) of the Internal
Revenue Code and any regulations promulgated thereunder.

        2.17 Investment Company Act. Connetics is not an "investment company,"
or a company "controlled" by an "investment," within the meaning of the
Investment Company Act of 1940, as amended.

                                    SECTION 3
                    REPRESENTATIONS AND WARRANTIES OF PALADIN

       Paladin hereby represents and warrants to Connetics as follows:

       3.1 Accredited Investor. Paladin is an "accredited investor" as defined
by Rule 501(a) under the Securities Act. Paladin has received all the
information it has requested regarding Connetics. Paladin has such business and
financial experience as is required to give it the capacity to protect its own
interests in connection with the purchase of the Common Stock.

       3.2 Investment. Paladin is acquiring the Common Stock for investment for
its own account, not as a nominee or agent and not with a view to or for resale
in connection with any distribution thereof. Paladin understands that its
purchase of Common Stock from Connetics pursuant to this Agreement has not been
registered under the Securities Act by reason of a specific exemption from the
registration provisions of the Securities Act which depends upon,



                                     PAGE 6
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among other things, the bona fide nature of Paladin's investment intent and the
accuracy of Paladin's representations as expressed in this Agreement.

       3.3 Authority. Paladin has duly executed and delivered this Agreement,
which constitutes a legal, valid and binding obligation of Paladin, enforceable
in accordance with its terms, subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors and rules of law governing
specific performance, injunctive relief or other equitable remedies. The
execution and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby will not, conflict with or result in any
violation of any obligation under any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Paladin.

       3.4 Government Consents, Etc. No consent, approval or authorization of or
designation, declaration or filing with any governmental authority on the part
of Paladin is required in connection with the valid execution and delivery of
this Agreement, or the offer, sale or issuance of the Common Stock, or the
consummation of any other transaction contemplated by this Agreement.

        3.5 Regulation S. For purposes of this Section 3.5, unless otherwise
defined in this Section, capitalized terms used and not otherwise defined in
this Section shall have the meanings given to them in Regulation S ("REGULATION
S") under the Securities Act.

               (a) Paladin is not a U.S. Person as defined in Rule 902(k) of
Regulation S under the Securities Act and is not acquiring the Common Stock for
the account or benefit of any U.S. Person. That rule defines a "U.S. Person" to
mean

               (i)    any natural person resident in the United States;

               (ii)   any partnership or corporation organized or incorporated
                      under the laws of the United States;

               (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
                      United States;

               (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 United States; 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 Securities Act, unless it is organized or



                                     PAGE 7
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                      incorporated, and owned, by accredited investor (as
                      defined in Rule 501(a) under the Securities Act) who are
                      not natural persons, estates or trusts;


               (b) At the time the buy order for the Common Stock was
originated, Paladin was located outside the United States;

               (c) Neither Paladin nor any of its affiliates nor anyone acting
on its or their behalf has engaged or will engage in any Directed Selling
Efforts with respect to the Common Stock, and all such persons understand and
have complied and will otherwise comply with the requirements of Regulation S;

               (d) Paladin will not, through its own actions or any of its
affiliates or any person acting on its or their behalf, during the Distribution
Compliance Period applicable to the Common Stock, offer or sell any of the
Common Stock (or create or maintain any derivative position equivalent thereto)
in the United States, to or for the account or benefit of Paladin other than in
accordance with Regulation S, or engage in hedging transactions with regard to
any of the Common Stock in the United States, to or for the account or benefit
of Paladin other than in compliance with the Securities Act; and

               (e) Paladin will, after the expiration of the applicable
Distribution Compliance Period, offer, sell, pledge or otherwise transfer the
Common Stock (or create or maintain any derivative position thereto) only
pursuant to registration under the Securities Act or an available exemption
therefrom, or engage in hedging transactions with regard to the Common Stock
only in compliance with the Securities Act and, in any case, in accordance with
applicable state securities laws.

                                    SECTION 4
                      CONDITIONS TO OBLIGATIONS OF PALADIN

       Paladin's obligations to Connetics under this Agreement are subject to
the fulfillment, on or before the Closing, of each of the following conditions,
unless otherwise waived:

       4.1 Representations and Warranties Correct. The representations and
warranties made by Connetics in SECTION 2 of this Agreement and in the License
Agreement shall be true and correct in all material respects on the Closing Date
with the same effect as though such representations and warranties had been made
on and as of the Closing Date; provided, however, that representations and
warranties which are made as of a particular date shall be true and correct only
as of the date such representations and warranties were made.

       4.2 Performance. All covenants, agreements and conditions contained in
this Agreement or in the License Agreement to be performed by Connetics on or
prior to such Closing Date shall have been performed or complied with in all
material respects.

       4.3 License Agreement. Paladin shall have received a License Agreement
validly executed and delivered by Connetics.



                                     PAGE 8
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       4.4 No Order Pending. There shall not then be in effect any order
enjoining or restraining the transactions contemplated by this Agreement.

       4.5 No Law Prohibiting or Restricting Sale. There shall not be in effect
any law, rule or regulation prohibiting or restricting such sale, or requiring
any consent or approval of any person which shall not have been obtained to
issue the Common Stock (except as otherwise referenced in this Agreement).

       4.6 Compliance Certificate. Connetics shall have delivered to Paladin a
certificate substantially in the form attached as EXHIBIT A to this Agreement,
executed by a duly authorized officer, dated the Closing Date, and certifying to
the fulfillment of the conditions specified in SECTIONS 4.1 and 4.2.

                                    SECTION 5
                     CONDITIONS TO OBLIGATIONS OF CONNETICS

       The obligations of Connetics under this Agreement are subject to the
fulfillment on or prior to the Closing of each of the following conditions,
unless otherwise waived:

       5.1 Representations and Warranties Correct. The representations and
warranties made by Paladin in SECTION 3 of this Agreement shall be true and
correct in all material respects on and as of the Closing Date with the same
effect as though such representations and warranties had been made on and as of
the Closing Date.

       5.2 Performance. All covenants, agreements and conditions contained in
this Agreement to be performed by Paladin on or prior to the Closing Date shall
have been performed or complied with in all material respects.

       5.3 License Agreement. Connetics shall have received a License Agreement
validly executed and delivered by Paladin.

       5.4 No Order Pending. There shall not then be in effect any order
enjoining or restraining the transactions contemplated by this Agreement.

       5.5 No Law Prohibiting or Restricting Such Sale. There shall not be in
effect any law, rule or regulation prohibiting or restricting such sale, or
requiring any consent or approval of any person which shall not have been
obtained to issue the Common Stock (except as otherwise provided in this
Agreement).

                                    SECTION 6
                                  MISCELLANEOUS

       6.1 Governing Law. This Agreement and all acts and transactions pursuant
to this Agreement and the rights and obligations of the parties to this
Agreement shall be governed,



                                     PAGE 9
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controlled, interpreted and defined by and under the laws of the State of
Delaware and the United States without regard to that body of law known as
conflicts of law.

       6.2 Survival. Unless otherwise set forth in this Agreement, the
warranties, representations and covenants of Connetics and Paladin contained in
or made pursuant to this Agreement shall survive the execution and delivery of
this Agreement and the Closing.

       6.3 Registration Rights. Paladin shall have the registration rights set
forth in EXHIBIT B attached to this Agreement.

       6.4 Successors and Assigns. Each Party agrees that its rights and
obligations under this Agreement may not be transferred or assigned directly or
indirectly without the prior written consent of the other Party, which consent
shall not be unreasonably withheld, except in connection with the sale of all or
substantially all of the assigning Party's related business. Subject to the
foregoing sentence, this Agreement shall be binding upon and inure to, the
benefit of the Parties, their successors and assigns; provided that Paladin may
assign all or part of the Common Stock to any Affiliate of Paladin. For purposes
of this Agreement, "Affiliate" means any entity that controls, is controlled by
or is under common control with Paladin.

       6.5 Entire Agreement; Amendment. This Agreement and the other documents
delivered pursuant to this Agreement which are incorporated in this Agreement by
reference, together with the License Agreement, constitutes the entire agreement
of the Parties with respect to the subject matter, and supersedes all prior or
contemporaneous understandings or agreements, whether written or oral, between
Connetics and Paladin with respect to such subject matter, including
specifically the Binding Letter of Intent entered into on November 19, 1998. No
amendment or modification of this Agreement or any term of this Agreement shall
be valid or binding upon the Parties unless made in writing and signed by the
duly authorized representatives of both Parties.

       6.6 Notices and Dates. Unless otherwise provided in this Agreement, any
notice required or permitted by this Agreement shall be in writing and shall be
deemed sufficient upon delivery, when delivered personally or by overnight
courier and addressed to the party to be notified at such party's address as set
forth on the signature page to this Agreement or as subsequently modified by
written notice. If any date provided for in this Agreement falls on a Saturday,
Sunday or legal holiday, such date shall be deemed extended to the next business
day.

       6.7 Partial Invalidity. If any term, provision, covenant or restriction
of this Agreement is held to be invalid, void or unenforceable by a court of
competent jurisdiction, then the remaining provisions shall remain in full force
and effect and shall in no way be affected, impaired or invalidated. The Parties
agree to renegotiate in good faith any term held invalid and to be bound by the
mutually agreed substitute provision in order to give the most approximate
effect intended by the Parties.

                                    PAGE 10
<PAGE>   11

       6.8 No Third Party Rights. Nothing in this Agreement shall create or be
deemed to create any rights in any person or entity not a party to this
Agreement.

       6.9 No Waiver. No waiver of any term or condition of this Agreement shall
be valid or binding on either Party unless agreed in writing by the Party to be
charged. The failure of either Party to enforce at any time any of the
provisions of this Agreement, or the failure to require at any time performance
by the other Party of any of the provisions of this Agreement, shall in no way
be construed to be a present or future waiver of such provisions, nor in any way
affect the validity of either Party to enforce each and every such provision
thereafter.

       6.10 Captions and Headings. The section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. The captions and headings used
herein are for convenience and ease of reference only and are not intended to be
a part of or to affect the meaning or interpretation of this Agreement.

       6.11 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.


       IN WITNESS WHEREOF, the parties to this Agreement have executed or caused
their respective authorized officers to execute this Agreement as of the first
date written above.


<TABLE>
<S>                                              <C>
Connetics Corporation                             Paladin Labs Inc.


By:  /s/ T. Wiggans                               By:    /s/ Jonathan Goodman
    -------------------------------------               -------------------------------
    Thomas G. Wiggans                                  Jonathan Goodman
    President and Chief Executive Officer              President

Connetics Corporation                             Paladin Labs, Inc.
3400 West Bayshore Road                           6111 Royalmount, Suite 102
Palo Alto, California  94303                      Montreal, Quebec  H4P 2T4
Fax No. 650-843-2838                              Fax No.

</TABLE>



                                    PAGE 11
<PAGE>   12

                  EXHIBIT A TO COMMON STOCK PURCHASE AGREEMENT

                              CONNETICS CORPORATION
                             COMPLIANCE CERTIFICATE


       The undersigned, Thomas G. Wiggans, hereby certifies as follows:

       1. He is the duly elected President and Chief Executive Officer of
Connetics Corporation, a Delaware corporation ("Connetics").

       2. Connetics' representations and warranties set forth in Section 2 of
the Common Stock Purchase Agreement (the "Agreement") dated July 7, 1999
are true and correct in all material respects as though made on and as of the
date of this Certificate.

       3. Connetics has performed and complied with all covenants, agreements,
obligations and conditions contained in the Agreement to be performed by
Connetics on or prior to the Closing Date.

        The undersigned has executed this Certificate this 7th day of July,
1999.


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

<PAGE>   13


                  EXHIBIT B TO COMMON STOCK PURCHASE AGREEMENT
                          REGISTRATION RIGHTS AGREEMENT
                               [DOCUMENT C990051]