<PAGE>


CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.


                                                                   EXHIBIT 10.18


                                                        ALZA Contract # 20001780


                          INTERIM DEVELOPMENT AGREEMENT

     This INTERIM DEVELOPMENT AGREEMENT ("Agreement") is entered into as of this
8th day of November, 2000 between ALZA CORPORATION ("ALZA") and BIOMEDICINES,
INC. ("BioMedicines").

                                    RECITALS

     A.   ALZA and BioMedicines have entered into discussions with respect to
the development of a product utilizing proprietary technology of ALZA for the
controlled delivery of BioMedicines' proprietary Interferon Omega recombinant
protein and have signed a Confidentiality Agreement dated May 10, 2000 (the
"Confidentiality Agreement") in that regard.

     B.   The parties wish to commence the development of such product while
negotiating the definitive agreement covering the development, manufacture and
marketing of such product.

     NOW THEREFORE, in consideration of the mutual covenants and agreements
provided herein, the parties hereby agree as follows:

     1.   DEFINITIONS. For the purposes of this Agreement, the following terms
shall have the respective meanings set forth below:

          1.1  "CONFIDENTIAL INFORMATION" shall mean (i) in the case of
BioMedicines, information disclosed by BioMedicines to ALZA on or after the
Effective Date hereof concerning Drug (as defined herein) as such, or the use or
manufacture thereof, owned by or licensed to BioMedicines prior to the date of
the Confidentiality Agreement or developed by BioMedicines after the date of the
Confidentiality Agreement outside the Program (as defined herein) and without
reference to or use of any Program Information (as defined herein) or ALZA
Confidential Information, and (ii) in the case of ALZA, information disclosed by
ALZA to BioMedicines on or after the Effective Date hereof concerning the
System, or the use or manufacture thereof, or otherwise useful to the Program,
owned by or licensed to ALZA prior to the date of the Confidentiality Agreement
or developed by ALZA after the date of the Confidentiality Agreement outside the
Program and without reference to or use of any Program Information or
BioMedicines Confidential Information. Confidential Information will not include
any information which is (i) now in the public domain or subsequently enters the
public domain without fault on the part of the receiving party; (ii) known by
the receiving party from its own sources, as evidenced by the receiving party's
written records made prior to the date of the Confidentiality Agreement; or
(iii) received from any third party not under any obligation to keep such
information confidential.


                                        1


<PAGE>


          1.2  "DEVELOPMENT COSTS" shall mean the costs of the Program incurred
by ALZA pursuant to this Agreement and determined in accordance with Exhibit A
hereto.

          1.3  "DRUG" shall mean BioMedicines' proprietary Interferon Omega
recombinant protein in its pure form or in the formulation originally provided
to ALZA by BioMedicines hereunder.

          1.4  "EFFECTIVE DATE" shall mean November 8, 2000.

          1.5  "PRODUCT" shall mean the product developed under the Program
which combines Drug with System or another product combining Drug with System
that is substantially identical to the Product.

          1.6  "PROGRAM" shall mean all activities undertaken on or after the
Effective Date by either or both parties in accordance with the terms hereof for
the development of a Product, including regulatory and clinical activities.

          1.7  "PROGRAM INFORMATION" shall mean any Technical Information and
Regulatory Data developed or acquired by either party under or as a result of
the Program.

          1.8  "REGULATORY DATA" shall mean regulatory filings (but not any
Program Information owned by ALZA or any of ALZA's Confidential Information
contained therein, which shall remain the property of ALZA) resulting from the
Program and clinical study results resulting from activities under the Program.

          1.9  "SYSTEM" shall mean an implantable osmotic system which is
intended to function by releasing the active agent or agents on a controlled
basis. The term "System" will include anything incorporated in or used in
connection with, or which is an attribute of, the Product, or the development
thereof, including anything which affects or may affect the pharmacodynamics,
pharmacokinetics, stability or absorption of a therapeutic agent or the
formulation, stabilization or use of a therapeutic agent in the System (in each
case other than the Drug itself, any formulation of the Drug itself provided to
ALZA by BioMedicines created by BioMedicines not under or as a result of the
Program or any other therapeutic agent not physically incorporated into or onto
the System).

          1.10 "TECHNICAL INFORMATION" shall mean know-how, ideas, trade
secrets, inventions (including patents covering such inventions), data,
technology and information, including improvements and modifications to any
thereof, processes and analytical methodology used in development, testing,
analysis and manufacture, and medical, clinical, toxicological and other
scientific data developed or acquired by either party under or as a result of
the Program. Notwithstanding the foregoing, Technical Information will not
include trademarks or Regulatory Data.

     2.   PRODUCT DEVELOPMENT PROGRAM.

          2.1  Promptly after execution of this Agreement and receipt from
BioMedicines of Drug and the materials described in Section 2.3, the parties
will commence the



[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.


                                       2.


<PAGE>


Program. In connection with the Program, the parties will make available
appropriate scientific, engineering and other personnel to perform tasks under
the Program. The parties will use diligent efforts to carry out the Program,
will participate in periodic conferences to review its status and will cooperate
in the prompt preparation and review of, and discussion concerning, work plans
and cost estimates and revisions thereto as further described in Section 2.2.

          2.2  The initial work plan for, and the initial cost estimate for
ALZA's activities under the Program is attached hereto as Exhibit B. The parties
understand and agree that it is difficult to accurately predict the activities
that will be necessary to develop the Product, or the cost thereof, and
significant uncertainties exist in any product development effort. As a result,
any such work plan and cost estimate will be diligently reviewed and revised
from time to time in order that it remain a faithful best-estimate of work to be
done by the parties under the Program and, with regard to ALZA's activities, the
Development Costs thereof.

          2.3  In connection with the Program, BioMedicines will provide to
ALZA, at no charge to ALZA, such quantities of Drug which ALZA may reasonably
require to carry out its duties hereunder. BioMedicines will provide ALZA with a
Material Safety Data Sheet for the Drug and will complete and return ALZA's
Safety and Environmental Evaluation Questionnaire prior to commencement of the
Program. BioMedicines will also provide ALZA with all relevant information
available and known to BioMedicines concerning the safety, handling, use,
disposal and environmental effects of the Drug or as may be necessary to conduct
the Program. ALZA will provide BioMedicines with all relevant information
available and known to ALZA concerning the safety, handling, use, disposal and
environmental effects on the System or as may be necessary to conduct the
Program.

     BioMedicines will indemnify, defend and hold ALZA harmless from and against
all liabilities, claims, demands, damages, losses, costs, expenses or money
judgments (including reasonable attorneys' fees) incurred by or rendered against
ALZA and resulting from the use, storage or handling of the Drug under the
Program, except to the extent that ALZA has not complied with written materials
provided in advance by BioMedicines as described above. Notwithstanding the
foregoing, BioMedicines shall not be required to indemnify ALZA for actions by
ALZA that represent willful misconduct, gross negligence or a material violation
of the law.

          2.4  BioMedicines will pay to ALZA, on a monthly basis, all
Development Costs incurred by ALZA in connection with the activities carried out
under the Program. ALZA will invoice BioMedicines on or before the fifteenth day
of each month for the preceding month's Development Costs. All payments will be
made within 30 days after the date of the invoice. Notwithstanding the
foregoing, BioMedicines will not be obligated to pay Development Costs in excess
of those provided for in approved work plans and cost estimates, and ALZA will
not be obligated to perform any work which would result in Development Costs
exceeding such approved cost estimates.

          2.5  Each party will, for the term of this Agreement and for [ * ]
after its expiration or termination for any reason, keep confidential and not
disclose to others, and use only as permitted hereunder in connection with the
Program, (a) all clinical study results resulting from activities under the
Program (unless such results fall within the exceptions set



[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.


                                       3.


<PAGE>


forth in subsections (i), (ii) and (iii) in the last sentence of Section 1.1
above), (b) all of the other party's Confidential Information and (c) all
Program Information (other than such clinical study results) owned by the other
party. Notwithstanding the foregoing, such information may be (i) disclosed to
government and regulatory agencies where such information may be required to be
included in patent applications or regulatory filings permitted under the terms
of this Agreement; (ii) provided to third parties under agreements including
appropriate confidentiality provisions for consulting, market research,
manufacturing, development, and clinical testing with respect to the Product and
similar activities under the Program; (iii) published if and to the extent such
publication has been approved in writing by each of the parties (provided,
however, results of clinical studies of the Product may be published without the
prior written approval of both parties if and to the extent any such publication
has been reviewed to ensure that no Confidential Information or Program
Information (other than the results of clinical studies of the Product) has been
disclosed and each party has been given at least 60 days to file a patent
application to protect any patentable invention owned by it which would
otherwise be disclosed in such publication); or (iv) disclosed to the extent
required by applicable laws or regulations or as ordered by a court or other
regulatory body having competent jurisdiction. In each of the foregoing cases,
the other party will use diligent efforts to limit the disclosure and maintain
confidentiality to the extent reasonably possible.

          2.6  As part of the Program, BioMedicines may conduct clinical studies
of the Product, at its sole cost and expense. In such instances:

               (a)  ALZA will have the right to review and comment upon all
proposed protocols, forms of informed consent forms, investigator brochures and
all forms of investigator agreements and contract research organization
agreements (other than with respect to the financial arrangements under such
agreements) for any clinical studies to be conducted by or on behalf of
BioMedicines with respect to the Product. ALZA agrees to provide its comments to
BioMedicines in writing as soon as reasonably practicable but in any event
within 30 days of receipt of such documents. BioMedicines will make such changes
in any such documents as may be reasonably requested by ALZA in writing with
respect to the use of the System or any reference to or description of ALZA or
to otherwise protect the rights or intellectual property interests of ALZA as
described herein.

               (b)  Clinical supplies shall be supplied by ALZA on a Development
Cost basis and shall be manufactured in accordance with current Good
Manufacturing Practices as defined from time to time by the Act (as defined in
Section 2.8) or any successor laws or regulations governing the manufacture of
clinical supplies of Product in the United States ("GMPs").

               (c)  In order to assist in obtaining patent protection for the
Product outside the United States, unless otherwise agreed in writing by ALZA,
prior to conducting any clinical study, BioMedicines will obtain from each
participating subject or patient, a confidentiality agreement in the form
attached hereto as Exhibit C and will deliver an executed copy thereof to ALZA.
If ALZA requires BioMedicines to obtain such an agreement, ALZA shall pay the
cost of any translation thereof as required by applicable law or regulations.



[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.

                                       4.


<PAGE>


               (d)  Within a reasonable time after completion or termination of
each clinical study, BioMedicines will deliver a final report concerning the
study to ALZA. Publication of any data or information derived from the study, or
any reports thereof, will be subject to the mutual agreement of the parties,
(provided, however, results of clinical studies of the Product may be published
without the prior written approval of both parties if and to the extent any such
publication has been reviewed to ensure that no Confidential Information or
Program Information (other than the results of clinical studies of the Product)
has been disclosed and each party has been given at least 60 days to file a
patent application to protect any patentable invention owned by it which would
otherwise be disclosed in such publication).

               (e)  If and to the extent that any clinical studies are
undertaken pursuant to this Agreement, BioMedicines will indemnify, defend and
hold ALZA harmless from and against any and all liabilities, claims, demands,
damages, losses, costs, expenses or money judgments (including reasonable
attorneys' fees) incurred by or rendered against ALZA, and which arise out of or
result from the clinical studies or the use, design or labeling of the Product
in connection therewith, except as may arise from the gross negligence or
willful misconduct of ALZA. ALZA will give BioMedicines prompt notice in
writing, in the manner set forth in Section 5.3 below, of any claim or demand
made against ALZA for which ALZA may be entitled to indemnity under this Section
2.6.

               (f)  If and to the extent that any clinical studies are
undertaken pursuant to this Agreement, ALZA will indemnify, defend and hold
BioMedicines harmless from and against any and all liabilities, claims, demands,
damages, losses, costs, expenses or money judgments (including reasonable
attorneys' fees) incurred by or rendered against BioMedicines, which arise out
of or result from the gross negligence or willful misconduct of ALZA or the
failure by ALZA to deliver clinical supplies manufactured in accordance with
GMPs as described in Section 2.6(b). BioMedicines will give ALZA prompt notice
in writing, in the manner set forth in Section 5.3 below, of any claim or demand
made against BioMedicines for which BioMedicines may be entitled to indemnity
under this Section 2.6.

          2.7  As part of the Program, ALZA will have the right, but not the
obligation, to review and comment upon all regulatory filings proposed to be
made by BioMedicines with respect to the Product, and BioMedicines will include
any changes reasonably requested by ALZA with respect to the use of the System
or any reference to or description of ALZA or to otherwise protect the rights or
intellectual property interests of ALZA as described herein. Such changes must
be provided within 10 business days after ALZA's receipt of the proposed filing
from BioMedicines. ALZA will have the right, but not the obligation, to
participate in any meetings to be held with regulatory authorities with respect
to the Product, and BioMedicines will promptly provide ALZA with copies of all
correspondence from or to regulatory authorities concerning the Product. If ALZA
does elect to participate in any meeting, then ALZA shall promptly inform
BioMedicines of its decision and agrees to coordinate its activities with
BioMedicines in preparation for said meeting(s). Notwithstanding the foregoing,
unless otherwise agreed subsequently, BioMedicines shall be responsible for the
conduct of all meetings with regulatory authorities regarding the Product.

          2.8  Each party will promptly notify the other party of any
information that it obtains or develops regarding the efficacy or safety of the
Product or the System but only insofar



[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.


                                       5.

<PAGE>


as such System-related information bears on the safety or efficacy of the
Product. ALZA and BioMedicines also agree to exchange adverse drug reaction
reports in a manner and time frame that will allow compliance with regulatory
reporting requirements, including any requirements of the U.S. Food, Drug and
Cosmetic Act, 21 U.S.C. 312 et seq., and regulations promulgated thereunder (the
"Act") (and, if applicable, the ICH guidelines) and ongoing safety review of the
Product. After execution of this Agreement but prior to the initiation of any
clinical trial of the Product, the parties will agree in writing upon standard
operating procedures for reporting adverse events to regulatory authorities and
to each other. BioMedicines agrees and acknowledges that ALZA may provide
information it obtains under this Section 2.8 to ALZA's other clients developing
and/or marketing other products incorporating the System or similar delivery
systems.

          2.9  Prior to [ * ], BioMedicines will not conduct (by itself or with
a third party) any material development or commercialization activities with
respect to any product (other than the Product) which incorporates any [ * ]
into any drug delivery system for the controlled or sustained release of such [
* ] and intended for commercialization in any subterritory in which BioMedicines
retains exclusive commercialization rights to the Product (as described in
Exhibit D attached hereto). Prior to [ * ], ALZA will not conduct (by itself or
with any third party) any material development or commercialization activities
with respect to any product (other than the Product) which incorporates any [ *
]) into any [ * ] drug delivery system and intended for commercialization in any
subterritory in which BioMedicines retains exclusive commercialization rights to
the Product (as described in Exhibit D attached hereto) so long as BioMedicines
is using diligent efforts to carry out the Program and is not otherwise in
material breach of this Agreement. Thereafter, neither party will conduct (by
itself or with a third party) any material development or commercialization
activities with respect to any product (other than the Product) incorporating [
* ] drug delivery system and intended for commercialization in any subterritory
in which BioMedicines retains exclusive commercialization rights to the Product
(as described in Exhibit D attached hereto).

          3.   OWNERSHIP.

               3.1  Technical Information will be (a) the property of
BioMedicines if and to the extent (i) [*] or (ii) [*], and (b) the property
of ALZA [*]. [*] will be the property of BioMedicines, subject to the
confidentiality obligations set forth in Section 2.5.

               3.2  Each party has the right, with respect to Program
Information owned by the other party under Section 3.1, to use such information
to carry out the Program during the term of this Agreement. Each party has the
right, with respect to Program Information owned by it under Section 3.1, to
disclose and to license such Program Information to third parties; provided,
however, that during the term of this Agreement, no such use will be
inconsistent with the terms of this Agreement.



[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.

                                       6.


<PAGE>


               3.3  In addition, if BioMedicines terminates this Agreement or
determines not to proceed with the Program for any reasons other than (i) an
uncured material breach of this Agreement by ALZA or (ii) the failure of the
parties to enter into a definitive development and commercialization agreement
on the terms in Exhibit D attached hereto (unless such failure is based on
BioMedicines' failure to negotiate such an agreement in good faith),
BioMedicines hereby grants ALZA a worldwide, royalty-free, nonexclusive license
in perpetuity to use all Regulatory Data (including the right to cross-reference
the Regulatory Data contained in the regulatory filings made in connection with
the Program).

               3.4  Nothing in this Agreement shall provide or imply under any
circumstance (i) the right of BioMedicines to use or license the System from
ALZA; (ii) the right of ALZA to use or license [ * ] from BioMedicines; or (iii)
the right of either party to otherwise use or license any intellectual property
owned by the other party except as specifically provided in this Agreement
concerning Program Information.

               3.5  Each party agrees to enter promptly into good faith
negotiations with the other party for a definitive development and
commercialization agreement, consistent with the terms set forth on Exhibit D
attached hereto, and such additional terms and conditions as the parties will
agree, covering the development and manufacture by ALZA and marketing by
BioMedicines of the Product.

          4.   TERM AND TERMINATION.

               4.1  This Agreement will remain in effect until such time as work
is no longer being carried out under the Program in accordance with mutually
approved work plans and cost estimates.

               4.2  BioMedicines may terminate this Agreement at any time upon
not less than sixty (60) days' written notice to ALZA. ALZA may terminate this
Agreement upon not less than thirty (30) days' written notice to BioMedicines
but only if BioMedicines fails to pay any amounts due to ALZA under this
Agreement within thirty (30) days after the date of invoice or if BioMedicines
is not proceeding diligently with the Program in accordance with Section 2.1
hereof.

               4.3  Termination of this Agreement will be without prejudice to
ALZA's right to receive from BioMedicines (i) payment of all Development Costs
incurred prior to the effective date of the termination and (ii) all Program
Information owned by it. Termination of this Agreement by BioMedicines will be
without prejudice to BioMedicines' right to receive from ALZA all Program
Information owned by it. After termination of this Agreement by BioMedicines or
termination by ALZA due to a breach of this Agreement by BioMedicines,
BioMedicines will reimburse ALZA, within thirty (30) days after invoice, for any
uncancellable obligations and expenses incurred by ALZA prior to such
termination in connection with the Program and all costs incurred by ALZA in
terminating the Program.

               4.4  Upon termination of this Agreement, ALZA will return all
unused Drug to BioMedicines, if requested by BioMedicines in writing within
thirty (30) days after termination, or otherwise will dispose of it at
BioMedicines' expense.


[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.


                                       7.

<PAGE>


          5.   MISCELLANEOUS.

               5.1  This Agreement will be governed by and construed in
accordance with the laws of the State of California, excluding any choice of law
rules which may direct the application of the laws of another jurisdiction.

               5.2  This Agreement will not be amended or modified except in a
writing signed by each of the parties hereto.

               5.3  All notices, requests and other communications required or
permitted to be given hereunder or with respect hereto will be in writing, and
may be given by (i) personal delivery, (ii) registered first-class United States
mail, postage prepaid by the sender, return receipt requested, (iii) overnight
delivery service, charges prepaid by the sender, or (iv) via facsimile and, in
each case, addressed to the other party at the address for such party as set
forth below, and will be effective upon receipt in the case of (i) (iii) or (iv)
above, and five days after mailing in the case of (ii) above.

         If to ALZA:             ALZA Corporation
                                 1900 Charleston Road
                                 Mountain View, CA 94043
                                 Fax #: 650-564-7848
                                 Attention: General Counsel

         If to BioMedicines:     BioMedicines, Inc.
                                 1301 Marina Village Parkway
                                 Suite 200
                                 Alameda, CA 94501
                                 Fax #: 510-814-0170
                                 Attention: Vice President, Chemical Development

Any party may change its address at which notice is to be received by written
notice provided pursuant to this Section 5.3.

               5.4  Each party will be responsible for assuring that all
applicable rules, laws and regulations are met in the performance of its
respective duties hereunder.

               5.5  This Agreement, together with the exhibits hereto, sets
forth the entire agreement and understanding between the parties with respect to
the subject matter hereof, and supersedes all prior agreements and
understandings between the parties with respect to the subject matter hereof,
whether oral or in writing; provided, however, that the provisions of the
Confidentiality Agreement (other than with respect to the term of
confidentiality which is hereby amended to extend to the term of this Agreement
and for [ * ] after its expiration or termination for any reason) will remain in
full force and effect with respect to Confidential Information (as such term is
defined therein) disclosed prior to the date hereof.

               5.6  Neither party will originate any publicity, news release or
public announcement, written or oral, whether to the public, the press,
stockholders or otherwise,



[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.


                                       8.


<PAGE>


referring to the existence or terms of this Agreement, including its existence,
the subject matter to which it relates, the performance under it or any of its
specific terms and conditions, except such announcements, as in the opinion of
the counsel for the party making such announcement, are required by law,
including United States securities laws, rules or regulations, without the prior
written consent of the other party, such consent not to be unreasonably
withheld. If a party decides to make an announcement it believes to be required
by law with respect to this Agreement, it will give the other party such notice
as is reasonably practicable and an opportunity to comment upon the
announcement. In addition, neither party will disclose the existence of this
Agreement, any of the subject matter hereof, or any of the terms hereof to any
third party without the prior written consent of the other party, except as
otherwise provided in Section 2.5.

               5.7  The provisions of Sections 1, the last sentence of 2.3, 2.5,
2.6(d), (e) and (f), the first sentence of 2.8, 3.1, the second sentence of
Section 3.2, 3.3, 3.4, 4.3, 4.4, 5.1, 5.3, 5.4, 5.5, 5.6, 5.8, 5.9, 5.10, 5.11
and 5.12 and this Section 5.7 will survive the termination for any reason of
this Agreement. Except as specifically provided in this Agreement, neither party
will be liable to the other due to the termination of this Agreement as provided
herein, whether in loss of good will, anticipated profits or otherwise.

               5.8  In the event that any provision of this Agreement (other
than any provision regarding confidentiality of the ownership of intellectual
property) shall be invalid or unenforceable under any controlling body of the
law, the validity or enforceability of the remaining provisions shall remain
unaffected.

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

               5.10 The failure of either ALZA or BioMedicines to assert a right
hereunder or to insist upon compliance with any term or condition of this
Agreement shall not constitute a waiver of that right or excuse a subsequent
failure to perform any term or condition by BioMedicines or ALZA, respectively.

               5.11 The titles or headings of various numbered or un-numbered
Sections in this Agreement are for reference only and do not limit or modify the
substance of the Agreement in any way.

               5.12 Neither party shall be held liable or responsible to the
other party nor be deemed to have defaulted under or breached this Agreement for
failure or delay in fulfilling nor performing any term of this Agreement, other
than an obligation to make a payment, when such failure or delay is caused by or
results from fire, floods, embargoes, government regulations, prohibitions or
interventions, war, insurrections, riots, civil commotions, lockouts, acts of
God or any other cause beyond the reasonable control of such party.

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


[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.

                                       9.


<PAGE>



ALZA CORPORATION                          BIOMEDICINES, INC.


By: /s/ Robert M. Myers                   By: /s/ Mark Moran
    -------------------------------           ---------------------------------
    Robert M. Myers
    Title: Senior Vice President,             Title: CHIEF EXECUTIVE OFFICER
    Commercial Development                           --------------------------













[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.


                                      10.


<PAGE>


                                    EXHIBIT A

                                DEVELOPMENT COSTS

Development Costs are equal to the sum of (i) research expenses, (ii) general
and administrative expenses and (iii) capital asset expenditures.

     (i)   Research expenses include both direct expenses and indirect expenses.

           (a)  Direct expenses include direct [ * ] in connection with the
                Program.

           (b)  Indirect expenses include [ * ].

           Examples of items included in direct and indirect expenses are listed
           on Exhibit A-1

     (ii)  General and administrative expenses are allocated among the [ * ]
           organizations. The portion allocated to the research and product
           development organization is then allocated to all [ * ]

           Examples of items included in general and administrative expenses are
           listed on Exhibit A-1.

     (iii) Capital asset expenditures are the actual costs of new capital assets
           acquired specifically for the project.

----------

     * This fixed billing rate will not be changed prior to [ * ] and, if
changed on or after [ * ], such changes will be limited to not more than [ * ]
change per calendar year and shall be a maximum of [ * ] of the rate in effect
at the time of the increase.





[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.


<PAGE>


                                   EXHIBIT A-1

                                   EXAMPLES OF
                                RESEARCH EXPENSES


DIRECT EXPENSES

[*]

INDIRECT EXPENSES

[*]

                                   EXAMPLES OF
                       GENERAL AND ADMINISTRATIVE EXPENSE


[*]

[*]








[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.


<PAGE>


                                    EXHIBIT B

                          WORK PLAN AND COST ESTIMATES















[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.


<PAGE>


                                    EXHIBIT C

          FORM OF (PATIENT) (SUBJECT) LETTER OF CONFIDENTIALITY

Dear Volunteer:

I would like to discuss with you the possibility of you participating in a
clinical study to evaluate the safety and efficacy of a new product. This study
is being sponsored by the company that is developing the new product, and I will
be participating in this study as an investigator. I believe, based on your
medical records, that you would qualify as a participant in this study although
a final determination of your qualification cannot be made until a screening
evaluation is done.

At this time, information about this new product and the study is being kept
confidential by the company sponsoring the study in order to protect the
sponsor's early work in the development of this product. I therefore ask that
you confirm by signing this letter that you will respect the sponsor's desire to
keep any information relating to the new product and the clinical study
confidential until the sponsor releases the information to the public.

The sponsor recognizes that your health and well-being are of primary importance
and does not want to prevent you from discussing information about the study,
the product and its effect on you with your health care providers and other
persons involved in the study. Instead, what you are agreeing to do is not to
disclose any information about the product or this study to anyone else.

Signing this letter does not mean that you are required to participate in the
study, or that you must stay in the study if you begin to participate in the
study. It merely means that you will keep information relating to the product or
this study confidential, whether or not you participate in the study.

If you are willing to agree to maintain the confidentiality of this information,
please return this letter fully signed (including the date and your full name)
to me. I will then be free to discuss this matter in greater detail with you.


Very truly yours,

--------------------------------------
(Investigator)

I agree with the confidential treatment of information as discussed above:

--------------------------------------
Signature

--------------------------------------
(Type in Patient/Subject Name)

Date:
     ---------------------------------



[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.


<PAGE>


                                  EXHIBIT C-1A

                 (ALTERNATIVE FORM FOR MINOR PATIENT/SUBJECTS)

             FORM OF (PATIENT) (SUBJECT) LETTER OF CONFIDENTIALITY

Dear Volunteer:

I would like to discuss with you the possibility of you testing a new type of
medicine. The sponsor of this test has not made any public announcement about
this new medicine so I am asking you and your parent or guardian to agree not to
discuss with other people the information I may give you about the new medicine.

If you would like me to tell you about this new medicine, you should talk with
your parents or guardian. If you and your parents or guardian agree that you
would like to be a part of this test, please sign this letter for me.

Very truly yours,

--------------------------------------
(Investigator)

I agree with the confidential treatment of information as discussed above:

--------------------------------------
Signature

--------------------------------------
(Type in Patient/Subject Name)


Date:
     ---------------------------------





[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
<PAGE>


                                  EXHIBIT C-1B

              FORM OF PARENT OR GUARDIAN LETTER OF CONFIDENTIALITY


Dear Parent or Guardian:

I would like to discuss with you the possibility of your minor child/ward
participating as a volunteer in a clinical study to evaluate the safety and
efficacy of a new product. This study is being sponsored by the company that is
developing the new product, and I will be participating in this study as an
investigator. I believe, based on the child's medical records, that (s)he would
qualify as a participant in this study although a final determination of
qualification cannot be made until a screening evaluation is done.

At this time, information about this new product and the study is being kept
confidential by the company sponsoring the study in order to protect the
sponsor's early work in the development of this product. I therefore ask that
you confirm by signing this letter that you will respect the sponsor's desire to
keep any information relating to the new product and the clinical study
confidential until the sponsor releases the information to the public.

The sponsor recognizes that the health and well-being of the child are of
primary importance and does not want to prevent the discussion of information
about the study, the product and its effect on the child with his/her health
care providers and other persons involved in the study. Instead, what you are
agreeing to do is not to disclose any information about the product or this
study to anyone else.

Signing this letter does not mean that the child is required to participate in
the study, or that (s)he must stay in the study if (s)he begins to participate
in the study. It merely means that you will keep information relating to the
product or this study confidential as described above, whether or not the child
participates in the study.

If you are willing to agree to maintain the confidentiality of this information,
please return this letter fully signed (including date and your full name) to
me. The child has been asked to sign a separate letter. When you sign this
letter and the child signs his/her letter, I will be free to discuss this matter
in greater detail with you and the child.

Very truly yours,

--------------------------------------
(Investigator)

I agree with the confidential treatment of information as discussed above:

--------------------------------------
Signature (Parent or Guardian)

--------------------------------------
(Type in Name of Parent or Guardian)



[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.


<PAGE>


                                    EXHIBIT D

                                   TERM SHEET

















[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.


<PAGE>


                                  KEY TERMS FOR
               PRODUCT DEVELOPMENT AND COMMERCIALIZATION AGREEMENT
                   DUROS-Registered Trademark- Interferon-omega

================================================================================
<TABLE>
<CAPTION>

<S>                     <C>
PARTIES:                ALZA Corporation (together with its affiliates, "ALZA")
                        and BioMedicines, Inc.("BioMedicines").

PRODUCT:                A product (the "Product") combining BioMedicines'
                        proprietary Interferon-omega (the "Drug") and ALZA's
                        proprietary DUROS-Registered Trademark- drug delivery
                        system (the "System").

TERRITORY:              Worldwide, divided into four Subterritories:

                                  Subterritory A:  [*]
                                  Subterritory B:  [*]
                                  Subterritory C:  [*]
                                  Subterritory D:  [*]

AGREEMENT:              Product Development and Commercialization Agreement.

PRODUCT DEVELOPMENT
PROGRAM:                ALZA will undertake the development of the Product in
                        accordance with work plans and cost estimates approved
                        by BioMedicines. BioMedicines will have the right to
                        pre-approve all work plans and cost estimates and will
                        reimburse ALZA on a monthly basis for its Development
                        Costs. The development program will proceed with
                        diligence through product development and regulatory
                        approval of the Product in Major Market Countries* in
                        accordance with a reasonable regulatory strategy
                        communicated by Biomedicines to ALZA.

COMMERCIALIZATION
RIGHTS AND TERM:        Upon receipt of regulatory approvals, BioMedicines will
                        proceed with diligence to commence and continue diligent
                        commercialization of the Product during the term of the
                        Agreement as follows:

                        BASIC TERM: BioMedicines will be granted the exclusive
                        right to market the Product until (i) in each of
                        Subterritories A, B, and C, [ * ] after the first
                        commercial sale of the Product in the first Major Market
                        Country of such Subterritory, and (ii) in Subterritory
                        D, [ * ] after the first commercial sale of the Product
                        in the first Major Market Country anywhere in the
                        Territory. BioMedicines shall have the right to assign
                        or transfer such right to a third party, subject to
                        ALZA's approval, such approval not to be unreasonably
                        withheld (it being understood that reasonable bases for
                        withholding such approval shall include, without
                        limitation, a transfer to a competitor of ALZA in the
                        drug delivery business, a transfer to a company with
                        whom ALZA is engaged in significant litigation, or any
                        other legitimate business reason).
</TABLE>
----------------
*France, Germany, Italy, Japan, United Kingdom and United States.


[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.


                                       2.


<PAGE>

<TABLE>
<CAPTION>

<S>                     <C>

                        EXTENDED TERM: At its election, BioMedicines may
                        continue its commercialization rights on an exclusive
                        basis, or convert to nonexclusive commercialization
                        rights, after the Basic Term, on a
                        Subterritory-by-Subterritory basis. Such election will
                        be made on an annual basis, at least 90 days before the
                        end of each calendar year (beginning with the last year
                        of the Basic Term). Once BioMedicines has elected to
                        convert to nonexclusive rights for any Subterritory,
                        BioMedicines may not reconvert to exclusive rights for
                        such Subterritory.

UPFRONT PAYMENTS:       None.

MILESTONE PAYMENTS:     [*], due upon initiation of the first [*].

                        [*], due upon submission of first application for
                        regulatory approval to market the Product in the [*].

                        [*], due upon first regulatory approval to market the
                        Product in the [*].

                        [*], due upon the first commercial sale of the Product
                        in a Major Market Country.

                        [*], due when cumulative worldwide Net Sales** in four
                        consecutive calendar quarters first exceed [*].

                        [*], due when cumulative worldwide Net Sales in four
                        consecutive calendar quarters first exceed [*];
                        provided, however, that if such milestone is reached
                        within 12 months of the prior milestone being reached,
                        such milestone shall not be due until 12 months after
                        the prior milestone payment of [*] became due.
</TABLE>
----------------------
**    "Net Sales" will mean the total amount billed or invoiced in United States
  dollars (or converted thereto in accordance with the Definitive Agreement)
  on sales of the Product by BioMedicines or any of its affiliates,
  assignees, transferees, distributors or marketing partners (or their
  affiliates) to independent, unrelated third parties such as wholesalers,
  hospitals, and others, in bona fide arm's length transactions, less the
  following deductions, in each case related specifically to the Product and
  actually allowed and taken by such third parties and not otherwise
  recovered by or reimbursed to BioMedicines or any of its affiliates,
  assignees, transferees, distributors or marketing partners (or their
  affiliates): (i) trade, cash and quantity discounts; (ii) taxes on sales
  (such as sales or use taxes) to the extent added to the sale price and set
  forth separately as such in the total amount invoiced; (iii) freight,
  insurance and other transportation charges to the extent added to the sale
  price and set forth separately as such in



[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.

                                       3.

<PAGE>


  the total amount invoiced; and (iv) amounts repaid or credited by reason of
  rejections, defects, recalls or returns or because of retroactive price
  reductions or wholesaler chargebacks. Net Sales will also include the fair
  market value of all other consideration received by BioMedicines in respect
  of the Product or by any of its affiliates, assignees, transferees,
  distributors or marketing partners (or their affiliates) with respect to
  the Product, in each case whether such consideration is in cash, payment in
  kind, exchange or other form.

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.

                                       4.


<PAGE>

<TABLE>
<CAPTION>

<S>                     <C>
                        [*], due when cumulative worldwide Net Sales in four
                        consecutive calendar quarters first exceed [*];
                        provided, however, that if such milestone is reached
                        within 12 months of the prior milestone being reached,
                        such milestone shall not be due until 12 months after
                        the prior milestone payment of [*] became due.

EXCLUSIVITY:            Prior to [*], BioMedicines will not conduct (by itself
                        or with a third party) any material development or
                        commercialization activities with respect to any product
                        (other than the Product) which incorporates any [*] into
                        any [*] for the controlled or sustained release of such
                        [*] and intended for commercialization in any
                        Subterritory in which BioMedicines retains exclusive
                        commercialization rights to the Product.

                        Prior to [*], ALZA will not conduct (by itself or with a
                        third party) any material development or
                        commercialization activities with respect to any product
                        (other than the Product) which incorporates any [*] into
                        any [*] and intended for commercialization in any
                        Subterritory in which BioMedicines retains exclusive
                        commercialization rights to the Product so long as
                        BioMedicines is not in material breach of this
                        Agreement. In negotiations for the Agreement, the
                        parties will discuss, without obligation on either side,
                        incentives for ALZA to extend the foregoing exclusivity
                        period.

                        Thereafter, neither party will [*] with respect to any
                        product (other than the Product) incorporating [*] and
                        intended for commercialization in any Subterritory in
                        which BioMedicines retains exclusive commercialization
                        rights to the Product.

PRODUCT PAYMENTS:       DURING THE BASIC TERM: In addition to the supply price
                        for the Product described below, BioMedicines will make
                        quarterly payments ("Product Payments") to ALZA in each
                        calendar year based on Net Sales of the Product, at a
                        percentage rate, determined as provided below, of the
                        aggregate worldwide Net Sales of the Product for the
                        immediately preceding calendar year:

                             If Worldwide Net Sales              The Payment Rate
                               of the Product in                For Year X + 1 will
                          Year X are ($U.S. million):    be the following % of Net Sales:
                          ---------------------------    --------------------------------

                                Less than [*]                        [*]
                                     [*]                             [*]
                                     [*]                             [*]
                                     [*]                             [*]
                                 [*] or more                         [*]

                        For clarification, for the calendar year in which the
                        Product is first sold commercially, the payment rate
                        will be [ * ] of Net Sales.

                        DURING THE EXTENDED TERM: For any Subterritory for which
                        BioMedicines elects to maintain exclusive
                        commercialization rights after
</TABLE>

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.

                                       5.


<PAGE>

<TABLE>
<CAPTION>

<S>                    <C>
                        the Basic Term, Product Payments will continue to be
                        determined in the same manner as during the Basic Term.
                        For any Subterritory for which BioMedicines elects to
                        convert to nonexclusive commercialization rights after
                        the Basic Term, Product Payments will be reduced by [*]
                        of the rates for the Basic Term. For example, assuming
                        worldwide Net Sales in Year X were less than [*], the
                        payment rate would be [*] of Net Sales in Year X + 1
                        for any Subterritory as to which BioMedicines elects
                        nonexclusive rights.

MINIMUM PAYMENTS:       On a Subterritory by Subterritory basis, BioMedicines
                        will make quarterly Minimum Payments to ALZA equal to
                        [*] of projected quarterly Net Sales of Product in each
                        of Subterritories A, B, and C (such projected Net Sales
                        to be based on reasonably anticipated timing of
                        regulatory approvals and sales projections). Such
                        quarterly Minimum Payments will be established no later
                        than the date of submission of the first application for
                        regulatory approval to market the Product, and will be
                        fully creditable against quarterly Product Payments due
                        for the quarter in which the Minimum Payments are made.
                        No minimum payments will be due for Subterritory D.

MANUFACTURE AND SUPPLY: ALZA will manufacture BioMedicines' requirements of the
                        Product. The parties will begin to negotiate in good
                        faith fixed supply prices (which may include annual
                        price increases in accordance with the U.S. Producers'
                        Price Index) promptly after the manufacture and
                        acceptance by BioMedicines of three batches of the
                        Product which meet the then-current guidelines of the
                        International Committee on Harmonization ("ICH"), or
                        successor organization, or regulatory requirements of
                        the U.S. Food and Drug Administration, whichever are
                        more stringent. Until the parties agree upon a supply
                        price, the supply price will be [*] of ALZA's standard
                        manufacturing cost. BioMedicines will supply Drug to
                        ALZA at [*].

PROPRIETARY
RIGHTS:                 The provisions regarding ownership of Program
                        Information will be identical to those in Article 3 of
                        the Interim Development Agreement between the parties,
                        including a license to Regulatory Data for ALZA under
                        the terms set forth in Section 3.3 of the Interim
                        Development Agreement in each Subterritory in which
                        BioMedicines no longer retains exclusive
                        commercialization rights to the Product.

INDEMNIFICATION:        BioMedicines will indemnify ALZA for claims arising from
                        the use or sale of the Product, except to the extent due
                        to ALZA's gross negligence or intentional misconduct,
                        illegal act or failure to manufacture Product in
                        accordance with cGMP. ALZA will warrant that, at the
                        time of shipment, Product manufactured by ALZA will meet
                        the NDA or BLA specifications, will be manufactured in
                        accordance with cGMP, and will not be adulterated or
                        misbranded due to any action, or failure to act, of
                        ALZA. ALZA will indemnify BioMedicines for breach of
                        this warranty, subject to certain limitations to be
                        negotiated in good faith and included in the Agreement.
                        BioMedicines will make parallel warranties with
</TABLE>



[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.

                                       6.


<PAGE>

<TABLE>
<CAPTION>

<S>                    <C>
                        respect to Drug and will indemnify ALZA for breach of
                        these warranties, subject to certain limitations to be
                        negotiated in good faith and included in the Agreement.

TERMINATION:            BioMedicines may terminate the Agreement at any time
                        upon [*] written notice to ALZA.
</TABLE>


THIS DOCUMENT OUTLINES THE GENERAL BUSINESS TERMS FOR THE AGREEMENT. OTHER TERMS
AND CONDITIONS WILL APPLY.





[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.

                                       7.