<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 ACT OF 1933, AS AMENDED.

                                                                 EXHIBIT 10.18

                                 LICENSE AGREEMENT

     Effective this Twenty-Fifth day of March, 1999, the MCW RESEARCH
FOUNDATION, INC. ("MCWRF"), a body having corporate powers under the laws of the
State of Wisconsin and the wholly owned subsidiary of the MEDICAL COLLEGE OF
WISCONSIN, INC. ("MCW"), and INTERMUNE PHARMACEUTICALS, INC. ("INTERMUNE") a
corporation, having a place of business at 2483 East Bayshore Road, Suite 103,
Palo Alto, CA, U.S.A., agree as follows:

1.   DEFINITIONS:

     (a)  "PSEUDOMONAS V ANTIGEN" means [ * ] developed by [ * ] (the
"Inventors").

     (b)  "LICENSED RIGHTS" means any subject matter claimed in or covered by
U.S. Provisional Patent Serial No. [ * ], filed on behalf of the Inventors and
the Regents of the University of California ("THE REGENTS") by MCWRF on [ * ];
and any divisions, continuations, or continuations-in-part (but only to the
extent that such continuations-in-part have inventors from both institutions)
thereof; any corresponding foreign applications thereof, and any U.S. or joint
foreign patents issued thereon or reissues or extensions thereof assigned by
each inventor to his/her respective institution.

     (c)  "LICENSED PRODUCT(S)" means [ * ] manufacture, use or sale.  For all
other fields of use, including but not limited to the field of [ * ].

2.   BACKGROUND:

     (a)  MCWRF represents that it is the owner and sole administrator by
assignment, and by interinstitutional agreement with the Regents of the Licensed
Rights.  MCWRF desires to grant a license for making the Licensed Product(s)
commercially available for public use and benefit.

     (b)  INTERMUNE wishes to acquire an exclusive LICENSE as herein specified.

3.   LICENSE GRANT:

     (a)  MCWRF hereby grants and INTERMUNE hereby accepts an exclusive
world-wide license under the Licensed Rights to make, have made, use, and
sell Licensed Product(s).

     (b)  The license grant of Paragraph 3.a. shall include the right to grant
sublicenses to others during the term of this Agreement.

     (c)  The development of this invention was sponsored in part by the
National Institutes of Health, Department of Health and Human Services, and as a
consequence this license is subject to overriding obligations to the Federal
Government under 35 U.S.C. 200-212 and 37 C.F.R. 401.

                             1.

<PAGE>

     (d)  MCWRF and THE REGENTS reserve the Licensed Rights for educational and
research purposes.

4.   FEES AND ROYALTIES:

     (a)  In consideration of the License granted herein, INTERMUNE shall pay to
MCWRF:

          (i)   a licensed issue fee in the sum of Fifty Thousand Dollars
($50,000.00) payable upon execution of this agreement;

          (ii)  the sum of One Hundred Thousand Dollars ($100,000.00)
                payable upon filing an IND for each Licensed Product;

          (iii) the sum of Two Hundred Fifty Thousand Dollars ($250,000.00)
                payable upon initiation of a Phase III clinical trial for each
                Licensed Product.

          (iv)  the sum of Six Hundred Fifty Thousand Dollars ($650,000.00)
                payable upon submission of an NDA for each Licensed Product;

          (v)   the sum of One Million Dollars ($1,000,000.00) payable upon
                receiving approval of an NDA for each licensed product;

     (b)  These sums are not advances against earned royalties provided for in
Paragraph 4.c.

     (c)  In consideration of the license granted herein, INTERMUNE shall pay
to MCWRF two and one-half (2.5) percent of net sales for each and every
Licensed Product(s) which is sold, irrespective of selling price, given as a
promotional item or gift, included with the sale of other equipment, or
transferred or caused to be transferred, to any other party by INTERMUNE.
Net sales shall mean gross sales lease:

          (i)   trade and/or quantity discounts as are customary in the trade;

          (ii)  taxes or other governmental charges on the production, sales,
transportation, delivery or use of licensed products;

          (iii) transportation charges;

          (iv)  sales commissions paid to non-affiliated parties; and

          (v)   amounts repaid or credited by reasons of recall or return.

     (d)  Royalties pursuant to Paragraph 4.c. shall not be due by INTERMUNE to
MCWRF on Licensed Product(s) delivered to any third party solely for evaluation,
demonstration, or the like.

     (e)  All royalties due hereunder by INTERMUNE to MCWRF shall be paid to
MCWRF in United States Dollars.  When Licensed Products are sold for monies
other than United States Dollars, INTERMUNE shall first determine the earned
royalty in the currency of the country in which the Licensed Products were sold
and then convert the amount into equivalent United States Dollars, using the
exchange rate quoted in the Wall Street Journal on the last business day of the
reporting period, as provided for in Article 5.

     (f)  INTERMUNE shall be responsible for all bank transfer charges.

[ * ] = 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 ACT OF 1933, AS
AMENDED.
                                 2.

<PAGE>

5.   REPORTS, PAYMENTS AND ACCOUNTING:

     (a)  INTERMUNE agrees to make written progress reports to MCWRF within
sixty (60) days of each June 30 and each December 31 during the life of this
Agreement covering activities related to the development and testing of all
Licensed Products and the status of government approvals necessary for
marketing.  Progress reports are required for each Licensed Product until the
first commercial sale of that Licensed Product occurs in the United States.
Progress reports submitted under Paragraph 5.a. shall include, but are not
limited to, the following topics:

          (i)   summary of work completed;

          (ii)  key scientific discoveries;

          (iii) summary of work in progress;

          (iv)  schedule of anticipated events or milestones;

          (v)   marketing plans for introducing Licensed Products; and

          (vi)  summary of resources (dollar value) expended during the
reporting period.

     (b)  INTERMUNE agrees to make written reports to MCWRF within sixty (60)
days of each June 30 and each December 31 during the life of this Agreement
stating in each such report the number of Licensed Product(s) used, sold, given,
included in sales of other products or equipment, transferred or leased by
INTERMUNE, upon which royalties are payable pursuant to Article 4. hereof for
the prior six (6) month period.

     (c)  INTERMUNE also agrees to make a similar written report to MCWRF within
ninety (90) days after the date of the termination of this Agreement on Licensed
Product(s) sold, given, included in sales of other products or equipment,
transferred or leased by INTERMUNE and upon which royalties are payable
hereunder but which were not previously reported.

     (d)  Concurrently with the making of each report required under this
Article 5.b. and 5.c., INTERMUNE shall pay to MCWRF all royalties due hereunder
in connection with the transactions so reported.

     (e)  During the term of this Agreement, and for a period of seven (7) years
after the termination of this Agreement, INTERMUNE agrees to keep records
showing the manufacture, sales, use, leases, gifts, inclusions and transfers of
Licensed Product(s) in sufficient detail to enable the royalties due and payable
hereunder by INTERMUNE to be determined, and further agrees to permit its books
and records to be examined from time to time to the extent necessary, but not
more than once a year, to verify reports provided for in Paragraphs 5.b. and
5.c. hereof.  Such examination is to be made by an independent certified
accountant appointed by MCWRF, with the fees and expenses to be borne by MCWRF.

6.   PATENTS:


[ * ] = 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 ACT OF 1933, AS
AMENDED.
                                   3.

<PAGE>

     (a)  MCWRF agrees to pursue and maintain patent protection of the
Pseudomonas V Antigen technology commencing on the date of this License
Agreement, using counsel to be mutually agreed upon, with the costs of
preparing, filing, prosecuting and maintaining such protection to be paid by
INTERMUNE.  The initial License fee ($50,000) shall be creditable against patent
expenses incurred prior to the date of this agreement.  INTERMUNE will be billed
for additional patent expenses by MCWRF as the costs are incurred.

     (b)  INTERMUNE may request MCWRF to obtain patent protection in foreign
countries.  INTERMUNE shall notify MCWRF of this request not less than ninety
(90) days prior to the deadline for any filing, action, or payment to be made in
connection therewith.  The notice of request must be in writing, must identify
the countries desired, and must reaffirm INTERMUNE's obligation to underwrite
the costs thereof.  The absence of such a notice from INTERMUNE will be
considered an election not to obtain or maintain foreign rights.  MCWRF may
prosecute and maintain such rights at its sole discretion and expense in any
country in which INTERMUNE has not elected to file, prosecute, or maintain
patents in accordance with this Article, but INTERMUNE will have no rights or
licenses thereunder.

     (c)  INTERMUNE's obligation to underwrite and pay patent costs will
continue for so long as this Agreement is in effect.  However, INTERMUNE may
terminate its obligations with respect to any given patent application or patent
upon ninety (90) days written notice to MCWRF. MCWRF may prosecute and maintain
such rights at its sole discretion and expense, but INTERMUNE will have no
further rights or licenses thereunder.

7.   WARRANTIES AND INDEMNITIES:

     (a)  Nothing in this Agreement shall be construed as:

          (i)   A warranty or representation that anything made, used, sold,
rented or leased, under any license granted by this Agreement is or will be free
from infringement of patents of third parties;

          (ii)  Granting by implication, estoppel, or otherwise any licenses or
right under patents of MCWRF or THE REGENTS regardless of whether such patents
dominate or are subordinate to any Licensed Rights.  The foregoing
notwithstanding, MCWRF hereby informs INTERMUNE that they know of no patents
which dominate the Licensed Rights and under which MCWRF has the right to grant
licenses.

     (b)  MCWRF AND THE REGENTS MAKE NO REPRESENTATIONS, EXTENDS NO WARRANTIES
OF ANY KIND, EITHER EXPRESSED OR IMPLIED. THERE ARE NO EXPRESSED OR IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR THAT THE
USE OF THE LICENSED PRODUCT(S) WILL NOT INFRINGE ANY PATENT, COPYRIGHT,
TRADEMARK, OR OTHER RIGHTS.

     (c)  INTERMUNE shall indemnify, hold harmless, and defend MCWRF and MCW,
THE REGENTS, their officers, employees, and agents, and the inventors against
any and all claims, suits, losses, liabilities, damages, costs, fees, and
expenses resulting from or arising out of exercise of this license. This
indemnification includes, but is not limited to, any product liability.


[ * ] = 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 ACT OF 1933, AS
AMENDED.                            4.

<PAGE>

8.   INFRINGEMENT BY OTHERS:

     INTERMUNE shall promptly inform MCWRF of any suspected infringement of any
Licensed Rights by a third party, and MCWRF and INTERMUNE shall consult in good
faith to agree on a mutually beneficial course of action.

9.   TERM AND TERMINATION:

     (a)  The word "termination" and cognate words, such as "term" and
"terminate" as used in this Agreement, are to be read, except where the contrary
is specifically indicated, as omitting from their effect the following rights
and obligations, all of which survive any termination to the degree necessary to
permit their complete fulfillment or discharge:

          (i)   INTERMUNE's obligation to supply a terminal report as specified
in Paragraph 5.c.  hereof;

          (ii)  MCWRF's rights to receive or recover and INTERMUNE's obligation
to pay fees and royalties, pursuant to Article 4. hereof, and pay patent
expenses incurred, pursuant to Article 6.  hereof, due or accruable for payment
at the time of any termination;

          (iii) INTERMUNE's obligation to maintain records and MCWRF's right to
conduct audits as provided in Paragraph 5.e.  hereof;

          (iv)  Releases running in favor of customers of INTERMUNE with respect
to Licensed Product(s) sold or transferred prior to any termination and on which
royalties have been paid or are payable by INTERMUNE to MCWRF as provided in
Article 4. hereof;

          (v)   Any cause of action or claim of either party hereto, accrued or
to accrue, because of any breach or default by the other party; and

          (vi)  The provisions of Article 7.

10.  DUE DILIGENCE:

     (a)  INTERMUNE, on execution of this Agreement shall diligently proceed
with the development, manufacture and sale of Licensed Products and shall
earnestly and diligently endeavor to market same within a reasonable time after
execution of this Agreement and in quantities sufficient to meet market demands.

     (b)  INTERMUNE shall endeavor to obtain all necessary government approvals
for the manufacture, use and sale of Licensed Products.

     (c)  INTERMUNE SHALL:

          (i)   file an IND and begin Phase I Clinical Trials within [ * ] years
of executing 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 ACT OF 1933, AS
AMENDED.

                                      5.
<PAGE>

          (ii)  initiate Phase II and Phase III Clinical Trials within [ * ]
years of beginning Phase I Clinical Trials;

          (iii) file an NDA within [ * ] years of beginning Phase III Clinical
Trials;

          (iv)  market a Licensed product within [ * ] years of filing an NDA.

     (d)  If INTERMUNE is unable to meet any of the above due diligence
provisions, MCWRF reserves the right to terminate this Agreement upon written
notice to INTERMUNE, which termination shall become effective sixty (60) days
after MCWRF's sending written notice of such termination unless such provision
has been met prior to the expiration of the sixty day period.

     (e)  From time to time, INTERMUNE may suggest modifications to the
diligence provisions above based on new information.  Such modifications shall
be effective only as mutually agreed upon, in writing, by the Parties.  MCWRF
shall consider such requested modifications in good faith and shall agree to
modifications that are reasonably necessary to achieve the overall objectives of
the development of the Licensed Product.

     (f)  In the event that INTERMUNE determines that it will be unable to meet
any of the diligence provisions, INTERMUNE shall notify MCWRF of such inability,
identifying the nature of the inability with reasonable specificity and may ask
MCWRF for a reasonable extension of time in which to complete such provision.
At MCWRF's sole discretion, MCWRF may grant InterMune such an extension to
complete the provision.

     (g)  If INTERMUNE shall at any time default in the payment of any earned
royalty or the making of any report hereunder, or shall commit any material
breach of any covenant herein contained, or shall make any materially false
report and shall fail to remedy any such default, breach, or report within
ninety (90) days after written notice thereof by MCWRF, MCWRF may, at its
option, terminate this Agreement and the licenses herein granted by notice in
writing to such effect.

     (h)  INTERMUNE shall have the right to terminate this Agreement in respect
to any or all Licensed Patent(s), upon giving at least ninety (90) days written
notice to MCWRF of its intention and desire to terminate.

11.  USE OF NAMES AND TRADEMARKS:

     Nothing contained in this Agreement confers any right to use in
advertising, publicity, or other promotional activities, any name, trade name,
trademark, or other designation of any party hereto or THE REGENTS.

12.  ASSIGNMENT:

     This Agreement may not be assigned.

13.  APPLICABLE LAW:


[ * ] = 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 ACT OF 1933, AS
AMENDED.

                                      6.
<PAGE>

     This Agreement shall be construed, interpreted, and applied in accordance
with the laws of the State of Wisconsin.

14.  ARBITRATION:

     (a)  Any controversy arising under or related to this Agreement, and any
disputed claim by either party against the other under this Agreement,
including, without limitation, disputes relating to patent validity or
infringement, shall be settled by arbitration, upon the request of either party,
in accordance with the then-prevailing Patent Arbitration rules of the American
Arbitration Association (AAA).  In the event of such controversy, the matter
shall be submitted to one arbitrator knowledgeable in the field, who has been
selected by mutual agreement of the parties hereto or by the AAA if the parties
cannot agree.

     (b)  Any arbitration under Paragraph 14.a. hereof shall be held at
Milwaukee, Wisconsin, or such other place as may be mutually agreed upon in
writing between the parties, and judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof.

15.  NOTICES:

     All notices, demands, or other writings in this Agreement provided to be
given, made, or sent, or which may be given, made, or sent by either party
hereto to the other, shall be deemed to have been fully given, made, or sent
when done in writing and deposited in the United States mail, first class,
postage prepaid, and addressed as follows:

     To MCWRF:      MCW Research Foundation
                    8701 Watertown Plank Road
                    Milwaukee, WI 53226
                    Attn:  William R. Hendee, Ph.D.
                    Executive Vice President

     To INTERMUNE:  Intermune Pharmaceuticals, Inc.
                    3294 West Bayshore Road
                    Palo Alto, CA 94303
                    Attn:  Woodruff Emlen, M.D.
                    Vice President, Exploratory Medicine

     The address to which any notice, demand, or other writing may be given or
made or sent to any party may be changed upon written notice given by such party
as above provided.

16.  WAIVER:

     The parties covenant and agree that, if either party hereunder fails or
neglects for any reason to take advantage of any of the terms hereof provided
for the termination of this Agreement, or if a party, having the right to
declare this Agreement terminated, shall fail to do so, any such failure or
neglect by such party shall not be or be deemed or be construed to be a waiver
of any of the terms, covenants, or conditions of this Agreement or of the
performance thereof.  None of the terms, covenants, and conditions of this
Agreement can be waived except by the written consent of the party waiving
compliance.


[ * ] = 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 ACT OF 1933, AS
AMENDED.

                                      7.
<PAGE>

17.  SCOPE OF AGREEMENT:

     (a)  The article headings herein are for convenience only and in no manner
affect the rights and obligations of the parties, nor shall they be used to
interpret the provisions hereof.

     (b)  This Agreement constitutes the entire agreement between the parties
pertaining to the Licensed Rights.  No representative of MCWRF or INTERMUNE has
been authorized to make any representation, warranty, or promise not contained
herein.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
their officers or representatives duly authorized as of the date first herein
above written. Execution of this agreement by INTERMUNE is subject to approval
by the INTERMUNE Board of Directors, within 30 days of the date first herein
above written.


MCW RESEARCH FOUNDATION, INC.                INTERMUNE PHARMACEUTICALS, INC.

By: /s/  Joseph O. Hill                      By:  /s/ W. Scott Harkonen
   ----------------------------------------       -----------------------------


Title: Joseph O. Hill, Ph.D. Vice President  Title:  President & CEO
      -------------------------------------        ----------------------------
Date:  3/25/99                               Date:  3/25/99
     --------------------------------------       -----------------------------




[ * ] = 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 ACT OF 1933, AS
AMENDED.

                                      8.