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                                                                   EXHIBIT 10.19
September 1, 2004

VIA HAND DELIVERY

Paul F. Truex
Peninsula Pharmaceuticals, Inc.
1751 Harbor Bay Parkway
Alameda, CA 94502

Dear Paul:

As we discussed, this letter sets forth the terms of the separation and
transition employment agreement (the "Agreement") that Peninsula
Pharmaceuticals, Inc. (the "Company") is offering to you to aid in your
employment transition.

      1. RESIGNATION AND SEPARATION DATES.

            (a) RESIGNATION. Your resignation as the Company's Chief Executive
Officer ("CEO") will be effective on September 3, 2004 (the "Resignation Date"),
the start date of the Company's new CEO. Between now and the Resignation Date,
you will continue to discharge your duties as the full-time CEO of the Company,
report to the Board of Directors, serve at its pleasure, and follow the
Company's policies and procedures.

            (b) TRANSITION SERVICES AND SEPARATION. During the period (the
"Transition Period") from and after the Resignation Date, until the date that
either you or the Company elects (for any or no reason) to terminate your
employment by the Company (the "Separation Date"), you will remain an employee
of the Company and will provide the Company such transition and related
services, in any area of your expertise or work experience, as requested by the
Company (the "Services"), up to forty (40) hours per week. You agree to exercise
the highest degree of professionalism and utilize your expertise and creative
talents in performing the Services. It is understood that the parties expect the
Separation Date shall occur no later than four (4) months from the resignation
date. In order to receive the Severance Benefits provided in Section 5 herein,
within ten (10) days following the Separation Date, you must execute and return
to the Company the Separation Date Release attached hereto as EXHIBIT B. The
Company will reimburse you for all reasonable business expenses you incur in
providing the Services, provided that the Company approves such expenses in
advance and you provide supporting documentation (including receipts) for such
expenses.

            (c) OTHER BUSINESS ACTIVITIES DURING THE TRANSITION PERIOD. During
the Transition Period, you may engage in consulting or other work relationships,
provided that: you do not perform such work using the Company's facilities,
equipment or materials; such activities

                                      -1-
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are not for a Competitive Business (as defined in Paragraph 5(h)); and such
activities do not otherwise conflict or interfere with your obligations to the
Company.

      2. BOARD SERVICE. By signing this Agreement, you hereby resign as a member
of the Company's Board of Directors effective as of the Resignation Date. As
part of this Agreement, you will provide the Company with a signed copy of the
resignation letter attached hereto as EXHIBIT A.

      3. ACCRUED SALARY AND VACATION PAY. During the Transition Period, the
Company will continue to pay you at your current salary (less standard payroll
deductions and withholdings) and provide you all current benefits. On the
Separation Date, the Company will pay you (to the extent not paid previously)
all accrued salary, and all accrued and unused vacation, earned through the
Separation Date, less standard payroll deductions and withholdings. You are
entitled to these payments by law.

      4. HEALTH INSURANCE. To the extent provided by the federal COBRA law or,
if applicable, state insurance laws, and by the Company's current group health
insurance policies, you will be eligible to continue your group health and
dental insurance benefits after the Separation Date. Later, you may be able to
convert to an individual policy through the provider of the Company's health and
dental insurance, if you wish. You will be separately provided a written notice
of your rights and obligations under COBRA.

      5. SEVERANCE BENEFITS AND COVENANTS. In consideration of the Services and
other good consideration, the Company agrees to provide you the following
benefits (the "Severance Benefits"), under the following terms and conditions.
The Company's obligation to provide the Severance Benefits is conditioned upon
your compliance with the terms of this Agreement.

            (a)   INITIAL LUMP SUM AND SALARY CONTINUATION. Within one (1)
business day of the Separation Date, the Company will pay you one lump sum
amount (the "Initial Lump Sum") equivalent to one half of the base salary (at
the rate in effect as of your Separation Date) you would have earned if you had
been employed during the period between the Separation Date and the date that is
twelve (12) months after the Resignation Date (the "Severance Period"). During
the Severance Period, the Company will also pay you severance payments in
installments at the rate of one half of your base salary (at the rate in effect
as of the Separation Date) for the period between the Separation Date and the
end of the Severance Period (the "Salary Continuation Payments"), paid on the
Company's normal payroll dates, beginning with the first payroll following the
Separation Date. Taken together, the Initial Lump Sum and the Salary
Continuation Payments are collectively referred to herein as the "Severance
Payments". The Severance Payments will be subject to standard payroll deductions
and withholdings.

            (b)   BONUSES. Within one (1) business day of the Separation Date,
you will receive an additional lump sum payment of $110,000 (equivalent to your
target bonus for 2004 as established at the December 11, 2003 meeting of the
Board of Directors), subject to standard payroll deductions and withholding. At
the end of the Severance Period, you will receive a lump sum payment of $73,333
(equivalent to your 2004 target bonus prorated for the 8 months of the Severance
Period in 2005), subject to standard payroll deductions and withholding.

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            (c)   HEALTH INSURANCE. If you timely elect continued coverage under
COBRA, the Company will reimburse your COBRA premiums, in an amount sufficient
to continue your (and your dependents') health and dental insurance coverage at
the level in effect as of August 1, 2004 (and to the extent permitted by the
Company's current group health policies), from the Separation Date through the
earlier of the following: (i) the date that you become eligible for group health
insurance benefits through a new employer; or (ii) the termination of the
Severance Period. You agree to promptly notify the Company in writing if you
become eligible for group health and dental insurance coverage through a new
employer prior to the end of the Severance Period.

            (d)   STOCK. Pursuant to the terms of your stock option or
restricted stock grant notices and agreements, and the Company's applicable
stock option plan(s) (collectively, the "Stock Documents"):

                  (i)   TRANSITION PERIOD VESTING. During the period after the
Resignation Date through the Separation Date, your stock options and restricted
stock grants will continue to vest according to the terms of the Stock
Documents.

                  (ii)  ACCELERATED VESTING. Upon the Company's receipt of the
Separation Date Release after the Separation Date, the vesting of your stock
option grant dated December 11, 2003 for 333,333 option shares shall be
accelerated so that, as of the Separation Date, such grant shall vest according
to the terms of the Stock Documents as if you had provided an additional full
twelve (12) months of continuous service to the Company after the Separation
Date, representing an acceleration of 83,333 shares. In addition, the remaining
unvested portion of your stock option grant dated February 14, 2003 for 3,333
option shares shall become fully vested, representing an acceleration of 2,083
shares.

                  (iii) EXERCISE. You will be entitled to exercise your stock
options with respect to your vested stock option shares through the date upon
which the options expire.

            (e)   LIMITATIONS ON AUTHORITY. Prior to the Separation Date, you
will have only such responsibilities and authority as an employee of the Company
as established by any agreement with the Company (including any proprietary
information or confidentiality agreement) and as expressly authorized by the
CEO. After the Separation Date, you will have no authority to bind the Company,
and you agree not to represent or purport to represent the Company in any manner
whatsoever to any third party or enter into any contract or commitment on behalf
of the Company.

            (f)   PROPRIETARY INFORMATION. You hereby acknowledge and reaffirm
your continuing obligation to comply with your Proprietary Information and
Inventions Agreement (the "PIIA") attached hereto as EXHIBIT C; provided,
however, that the PIAA shall be construed as follows, solely for the purposes of
this Agreement with you: (a) the prohibitions of Section 1.1 of the PIIA shall
be construed to apply only to the Company's Proprietary Information (as defined
therein); (b) Proprietary Information (as defined in Section 1.2 of the PIIA)
shall not include any information generally known to and used by persons with
training and experience comparable to yours, or any information of the Company
that is public or has become public through no wrongful act of yours; and (c) if
disclosure, under the terms of Section 2.5 of the

                                      -3-
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PIIA, of any invention or patent application authored, conceived, or reduced to
practice by you following the Separation Date, would cause you to violate any
confidentiality agreement entered into with third parties, or to disclose the
confidential, proprietary and trade secret information of such third parties,
then you are required only to disclose a cursory name for each invention or
patent application, a listing of party(ies) to whom the invention belongs or on
whose behalf the patent application has been made, and the fact that full
disclosure has not been made because of the existence of a contrary agreement or
to avoid violation of the owner's legal rights.

            (g)   NONSOLICITATION. You agree that until the termination of the
Severance Period, you will not, either directly or indirectly, solicit or
attempt to solicit any employee, independent contractor, or consultant of the
Company to terminate his, her or its relationship with the Company in order to
become an employee, consultant, or independent contractor to or for any other
person or entity. This provision is not intended to prevent you, or any business
entity by which you are employed or to which you provide services, from
responding to requests for consideration for employment or for a consulting or
independent contractor relationship, where such requests are initiated by any
employee, independent contractor, or consultant of the Company.

            (h)   OTHER WORK ACTIVITIES. During the Severance Period, you may
engage in employment, consulting, or other work relationships, so long as such
activities are not for a Competitive Business or do not otherwise conflict with
your obligations to the Company. For purposes of this Agreement, "Competitive
Business" means a business engaged in research development, manufacture,
marketing, or sale of intravenously administered antibacterials and antifungals
for use in a hospital setting.

      6. REIMBURSEMENT OF ATTORNEYS' FEES. Within thirty (30) days following the
Effective Date, the Company will pay reasonable attorneys' fees and costs
incurred by you in connection with the negotiation and preparation of this
Agreement, up to a maximum of $6,000.

      7. NO OTHER COMPENSATION OR BENEFITS. You acknowledge that, except as
expressly provided in this Agreement, you will not receive any additional
compensation, severance, equity, or benefits after the Separation Date, with the
exception of any vested right you may have under the terms of a written
ERISA-qualified benefit plan (e.g., 401(k) account). By way of example, but not
limitation, you acknowledge that you have not earned and are not owed any bonus
or incentive compensation except as provided in Paragraph 5(b) herein.

      8. EXPENSE REIMBURSEMENTS. You agree that, within thirty (30) days after
the Separation Date, you will submit your final documented expense reimbursement
statement reflecting all business expenses you incurred through the Separation
Date, if any, for which you seek reimbursement. The Company will reimburse you
for these expenses pursuant to its regular business practices.

      9. AT-WILL AND RENEGOTIATION. Both parties acknowledge and agree that your
employment by the Company after the Resignation Date is at will, and that either
you or the Company may terminate such employment at any time for any reason or
no reason (the date of such termination being the Separation Date). However, the
parties also agree that, in the event you and the Company determine that
continued employment of you by the Company is desired

                                      -4-
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after the date four (4) months after the Resignation Date, then you and the
Company agree to negotiate in good faith appropriate modifications to this
Agreement to reflect such continued employment.

      10. RETURN OF COMPANY PROPERTY. You agree that, on or before the
Separation Date, you will return to the Company all Company documents (and all
copies thereof) and other Company property that you have in your possession or
control, including, but not limited to, any files, correspondence, memoranda,
reports, lists, proposals, notes, notebooks, drawings, records, studies,
compilations of data, plans, forecasts, agreements, proposals, purchase orders,
customer information and contact lists, sales and marketing information,
promotional literature, financial and operational information, research and
development information, product specifications, personnel information,
computer-recorded information, other tangible property and equipment, credit
cards, entry cards, identification badges and keys; and, any materials of any
kind that contain or embody any proprietary or confidential information of the
Company or its officers, directors, and employees (and all reproductions thereof
in whole or in part). You agree that you will make a diligent search to locate
any such documents, property and information on or before the Separation Date.
In addition, if you have used any personal computer, server, or e-mail system to
receive, store, review, prepare or transmit any Company confidential or
proprietary data, materials or information, you agree to provide the Company
with a computer-useable copy of such information and then permanently delete and
expunge such Company confidential or proprietary information from those systems;
and you agree to provide the Company access to your system as requested to
verify that the necessary copying and/or deletion is done (collectively, the
"Copying, Deletion, and Verification Process"). Notwithstanding the preceding
sentences in this Section 10, the Company agrees that, as a severance benefit
following the Separation Date, you may keep the Company laptop computer and
cellular phone currently in your possession, provided, however, that these items
will be subject to the Copying, Deleting, and Verification Process. Your return
of all Company property (except as expressly provided in this Section 10),
within a reasonable time after receiving notice of the Separation Date, is a
precondition to your receipt of the Severance Benefits provided under this
Agreement.

      11. CONFIDENTIALITY. The provisions of this Agreement will be held in
strictest confidence by you and the Company and will not be publicized or
disclosed in any manner whatsoever; provided, however, that: (a) you may
disclose this Agreement in confidence to your immediate family; (b) the parties
may disclose this Agreement in confidence to their respective attorneys,
accountants, auditors, tax preparers, and financial advisors; (c) the Company
may disclose this Agreement to its investors or potential investors and as
necessary to fulfill standard or legally required corporate reporting or
disclosure requirements; and (d) the parties may disclose this Agreement insofar
as such disclosure may be necessary to enforce its terms or as otherwise
required by law or applicable regulation. In particular, and without limitation,
you agree not to disclose the terms of this Agreement to any current or former
employee or independent contractor of the Company.

      12. NONDISPARAGEMENT. You agree not to disparage the Company or its
officers, directors, employees, shareholders and agents, in any manner likely to
be harmful to them or their business, business reputation or personal
reputation, and the Company (through its officers, directors, and corporate
Board observers) agrees not to disparage you in any manner likely to be harmful
to you or your business, business reputation or personal reputation; provided
that both

                                      -5-
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you and the Company may respond accurately and fully to any question, inquiry or
request for information when required by legal process.

      13. COOPERATION. You agree to reasonably cooperate with the Company in
connection with its actual or contemplated defense, prosecution, or
investigation of any claims or demands by or against third parties, or other
matters, arising from events, acts, or failures to act that occurred during the
time period in which you were employed by the Company. Such cooperation
includes, without limitation, making yourself available upon reasonable notice,
without subpoena, to provide truthful and accurate information in interviews
with Company personnel and deposition and trial testimony. The Company will
reimburse you for all reasonable out-of-pocket expenses you incur in connection
with any such cooperation (excluding forgone wages, salary, or other
compensation), and will reasonably accommodate your scheduling needs. Following
the Severance Period, the Company will pay you $200 per hour for time that you
are requested to devote to cooperation with the Company pursuant to this
Paragraph 13. You agree to execute all documents (if any) necessary to carry out
the terms of this Agreement.

      14. NO VOLUNTARY ADVERSE ACTION. You agree that you will not voluntarily
assist any third party (except your legal counsel) in bringing or pursuing any
claim or action of any kind against the Company, its parents, subsidiaries,
affiliates, officers, directors, employees or agents, unless pursuant to
subpoena or other compulsion of law. By way of illustration, this provision
shall not prohibit you from initiating or joining a shareholder action that is
not a released claim under Section 16 (Your Release of Claims) hereof, although
you may not breach the provisions of this Section 14 in the process of doing so,
and it shall not breach the provisions of this Section 14 if you were to
voluntarily exchange information with or assist third parties in prosecuting
such a shareholder action once you have become a party to it.

      15. NO ADMISSIONS. You understand and agree that the promises and payments
in consideration of this Agreement shall not be construed to be an admission of
any liability or obligation by the Company to you or to any other person, and
the Company makes no such admission.

      16. YOUR RELEASE OF CLAIMS. Except as otherwise set forth in this
Agreement, in exchange for the consideration under this Agreement to which you
would not otherwise be entitled, you hereby generally and completely release the
Company and its parents, subsidiaries, successors, predecessors and affiliates,
and its and their directors, officers, employees, agents, attorneys, insurers,
affiliates and assigns, from any and all claims, liabilities and obligations,
both known and unknown, that arise out of or are in any way related to events,
acts, conduct, or omissions occurring at any time prior to and including the
date you sign this Agreement. This general release includes, but is not limited
to: (a) all claims arising out of or in any way related to your employment with
the Company or the termination of that employment; (b) all claims related to
your compensation or benefits, including salary, bonuses, commissions, vacation
pay, expense reimbursements, severance pay, fringe benefits, stock, stock
options, or any other equity interests in the Company; (c) all claims for breach
of contract, wrongful termination, and breach of the implied covenant of good
faith and fair dealing; (d) all tort claims, including claims for fraud,
defamation, emotional distress, and discharge in violation of public policy; and
(e) all federal, state, and local statutory claims, including claims for
discrimination, harassment, retaliation,

                                      -6-
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attorneys' fees, or other claims arising under the federal Civil Rights Act of
1964 (as amended), the federal Americans with Disabilities Act of 1990 (as
amended), the California Labor Code, and the California Fair Employment and
Housing Act (as amended). Notwithstanding the foregoing, you shall not release
the Company hereby from any obligation to indemnify you pursuant to the articles
and bylaws of the Company or applicable law. You represent that you have no
lawsuits, claims or actions pending in your name, or on behalf of any other
person or entity, against the Company or any other person or entity subject to
the release granted in this paragraph.

      Notwithstanding the generality of the foregoing, you do not release the
following claims:

            (a)   Claims for indemnity from the Company, or for the provision of
a defense by the Company, pursuant to contract, the Company's by-laws, or
California law;

            (b)   Claims for unemployment compensation or any state disability
insurance benefits pursuant to the terms of applicable state law;

            (c)   Claims for workers' compensation insurance benefits under the
terms of any worker's compensation insurance policy or fund of the Company;

            (d)   Claims to continued participation in certain of the Company's
group benefit plans pursuant to the terms and conditions of the federal law
known as COBRA; and

            (e)   Claims to any benefit entitlements vested as the Termination
Date or the Separation Date, pursuant to the written terms of any Company
employee benefit plan.

      17. COMPANY'S RELEASE OF CLAIMS. The Company voluntarily releases and
discharges you and your heirs, successors, administrators, representatives and
assigns from all claims, liabilities, demands and causes of action, fixed or
contingent, which it may have or claim to have against you as the result of your
employment or the discontinuance of your employment and that are based upon
facts known, or which in the exercise of reasonable diligence should have been
known, to the Company's Board of Directors. The Company further covenants and
agrees that it will not directly or indirectly bring any action, legal or
otherwise, against you for any claims released herein. Notwithstanding the
foregoing, nothing herein shall release or discharge any claim by the Company
against you, or the right of the Company to bring any action, legal or
otherwise, against you as a result of any failure by you to perform your
obligations under this Agreement, or as a result of any acts of intentional
misconduct or recklessness (including but not limited to fraud, embezzlement,
misappropriation, or other malfeasance).

      18. SECTION 1542 WAIVER. In giving the releases set forth in this
Agreement, which include claims which may be unknown at present, the Company and
you acknowledge that it and you have read and understand Section 1542 of the
California Civil Code which reads as follows: "A GENERAL RELEASE DOES NOT EXTEND
TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT
THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR." The Company and you hereby expressly
waive and relinquish all rights and benefits under that section and any law or
legal principle of

                                      -7-
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similar effect in any jurisdiction with respect to your release of claims
herein, including but not limited to the release of unknown and unsuspected
claims.

      19. DISPUTE RESOLUTION. With the sole exception of any claims arising
under your Proprietary Information and Inventions Agreement, to ensure rapid and
economical resolution of any disputes which may arise under this Agreement, you
and the Company agree that any and all claims, disputes or controversies of any
nature whatsoever arising from or regarding the interpretation, performance,
negotiation, execution, enforcement or breach of this Agreement shall be
resolved by confidential, final and binding arbitration conducted before a
single arbitrator with Judicial Arbitration and Mediation Services, Inc.
("JAMS") in San Francisco, California, under the then-applicable JAMS rules. THE
PARTIES ACKNOWLEDGE THAT BY AGREEING TO THIS ARBITRATION PROCEDURE, THEY WAIVE
THE RIGHT TO RESOLVE ANY SUCH DISPUTE THROUGH A TRIAL BY JURY, JUDGE OR
ADMINISTRATIVE PROCEEDING. The arbitrator shall: (a) have the authority to
compel adequate discovery for the resolution of the dispute and to award such
relief as would otherwise be permitted by law; and (b) issue a written
arbitration decision including the arbitrator's essential findings and
conclusions and a statement of the award. The Company shall bear JAMS'
arbitration fees and administrative costs; however, the arbitrator, in his or
her sole discretion, shall be authorized to determine whether and to what extent
a party is the prevailing party, and if so, to award to that prevailing party
reimbursement for its reasonable attorneys' fees and costs arising from the
arbitration. The arbitrator, and not a court, shall also be authorized to
determine whether the provisions of this paragraph apply to a dispute,
controversy or claim sought to be resolved in accordance with these arbitration
procedures. Any awards or orders in such arbitrations may be entered and
enforced as judgments in the federal and the state courts of any competent
jurisdiction. Nothing in this Agreement is intended to prevent either you or the
Company from obtaining injunctive relief in court to prevent irreparable harm
pending the conclusion of any such arbitration.

      20. ESCROW IN EVENT OF ALLEGED BREACH. In the event of a good faith
dispute between you and the Company over a material breach of this Agreement,
until such time as it has been finally adjudicated in an arbitration conducted
pursuant to Paragraph 19 (Dispute Resolution) that you have violated this
Agreement, the Company shall pay into an interest bearing escrow account the
amount of any and all payments that it may cease to make to you as a result of
such alleged breach, so that such payments (plus any accrued interest) may be
held in such escrow account and distributed to you, in the event of an
arbitration award in your favor (in whole or in part), to the extent provided in
such award; or returned to the Company (plus any accrued interest) in the event
of an arbitration award in favor of the Company (in whole or in part), to the
extent provided in such award.

      21. MISCELLANEOUS. This Agreement, including all exhibits, constitutes the
complete, final and exclusive embodiment of the entire agreement between you and
the Company with regard to its subject matter. It is entered into without
reliance on any promise or representation, written or oral, other than those
expressly contained herein, and it supersedes any other such promises,
warranties or representations. This Agreement may not be modified or amended
except in a writing signed by both you and a duly authorized officer of the
Company. This Agreement will bind the heirs, personal representatives,
successors and assigns of both you and the Company, and inure to the benefit of
both you and the Company, their heirs, successors and assigns. If any provision
of this Agreement is determined to be invalid or unenforceable, in

                                      -8-
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whole or in part, this determination will not affect any other provision of this
Agreement and the provision in question shall be modified so as to be rendered
enforceable in a manner consistent with the intent of the parties insofar as
possible under applicable law. This Agreement will be deemed to have been
entered into and will be construed and enforced in accordance with the laws of
the State of California without regard to conflict of laws principles. Any
ambiguity in this Agreement shall not be construed against either party as the
drafter. Any waiver of a breach of this Agreement shall be in writing and shall
not be deemed to be a waiver of any successive breach. This Agreement may be
executed in counterparts and facsimile signatures will suffice as original
signatures.

If this Agreement is acceptable to you, please sign below and return the
original to me. The offer contained in this Agreement will automatically expire
if we do not receive the executed Agreement from you by September 2, 2004.

                                      -9-
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I wish you the best in your future endeavors.

Sincerely,

PENINSULA PHARMACEUTICALS, INC.

By: /s/ Eckard Weber
    -------------------------------
    Eckard Weber, M.D.
    Chairman, Board of Directors

Exhibit A - Resignation Letter
Exhibit B - Separation Date Release
Exhibit C - Proprietary Information and Inventions Agreement

UNDERSTOOD AND AGREED:

/s/ Paul F. Truex
----------------------------------
Paul F. Truex

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

                                     -10-
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                                    EXHIBIT A

                               RESIGNATION LETTER

<PAGE>

Eckard Weber, M.D.
Chairman of the Board of Directors
Peninsula Pharmaceuticals, Inc.
1751 Harbor Bay Parkway
Alameda, CA 94502

Dear Eckard:

      I hereby resign as a Director on the Board of Directors of Peninsula
Pharmaceuticals, Inc. effective as of September 3, 2004. I will execute any
further documents necessary to effectuate my resignation from the Board.

Signed:   /s/ Paul F. Truex
        -----------------------------------
              Paul F. Truex

Date: September 3, 2004


<PAGE>

                                    EXHIBIT B

                             SEPARATION DATE RELEASE

         (TO BE SIGNED ON OR WITHIN 10 DAYS AFTER THE SEPARATION DATE.)

      In consideration for the consideration provided to me by Peninsula
Pharmaceuticals, Inc. (the "Company"), and as required by the Agreement between
the Company and me dated September 1, 2004, I hereby give the following
Separation Date Release (the "Release").

      I hereby generally and completely release the Company and its directors,
officers, employees, shareholders, partners, agents, attorneys, predecessors,
successors, parent and subsidiary entities, insurers, affiliates, and assigns
from any and all claims, liabilities and obligations, both known and unknown,
that arise out of or are in any way related to events, acts, conduct, or
omissions occurring at any time prior to and including the date I sign this
Release. This general release includes, but is not limited to: (1) all claims
arising out of or in any way related to my employment with the Company or the
termination of that employment; (2) all claims related to my compensation or
benefits from the Company, including salary, bonuses, commissions, vacation pay,
expense reimbursements, severance pay, fringe benefits, stock, stock options, or
any other ownership or equity interests in the Company; (3) all claims for
breach of contract, wrongful termination, and breach of the implied covenant of
good faith and fair dealing; (4) all tort claims, including claims for fraud,
defamation, emotional distress, and discharge in violation of public policy; and
(5) all federal, state, and local statutory claims, including claims for
discrimination, harassment, retaliation, attorneys' fees, or other claims
arising under the federal Civil Rights Act of 1964 (as amended), the federal
Americans with Disabilities Act of 1990, and the California Fair Employment and
Housing Act (as amended). I represent that I have no lawsuits, claims or actions
pending in my name, or on behalf of any other person or entity, against the
Company or any other person or entity subject to the release granted in this
paragraph.

      Notwithstanding the generality of the foregoing, I do not release the
following claims:

            (a)   Claims for the payments and benefits promised to me by the
Company in the Agreement between the Company and me dated September 1, 2004;

            (b)   Claims for indemnity from the Company, or for the provision of
a defense by the Company, pursuant to contract, the Company's by-laws, or
California law;

            (c)   Claims for unemployment compensation or any state disability
insurance benefits pursuant to the terms of applicable state law;

            (d)   Claims for workers' compensation insurance benefits under the
terms of any worker's compensation insurance policy or fund of the Company;

            (e)   Claims to continued participation in certain of the Company's
group benefit plans pursuant to the terms and conditions of the federal law
known as COBRA; and

<PAGE>

            (f)   Claims to any benefit entitlements vested as the Termination
Date or the Separation Date, as defined in the Agreement between the Company and
me dated September 1, 2004, pursuant to the written terms of any Company
employee benefit plan.

      The Company hereby voluntarily releases and discharges you and your heirs,
successors, administrators, representatives and assigns from all claims,
liabilities, demands and causes of action, fixed or contingent, which it may
have or claim to have against you as the result of your employment or the
discontinuance of your employment and that are based upon facts known, or which
in the exercise of reasonable diligence should have been known, to the Company's
Board of Directors. The Company further covenants and agrees that it will not
directly or indirectly bring any action, legal or otherwise, against you for any
claims released herein. Notwithstanding the foregoing, nothing herein shall
release or discharge any claim by the Company against you, or the right of the
Company to bring any action, legal or otherwise, against you as a result of any
failure by you to perform your obligations under this Agreement, or as a result
of any acts of intentional misconduct or recklessness (including but not limited
to embezzlement, misappropriation, or other malfeasance).

      THE COMPANY AND I UNDERSTAND THAT THIS AGREEMENT INCLUDES A RELEASE OF ALL
KNOWN AND UNKNOWN CLAIMS. The Company and I acknowledge that it and I have read
and understand Section 1542 of the California Civil Code which reads as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR." The
Company and I hereby expressly waive and relinquish all rights and benefits
under that section and any law or legal principle of similar effect in any
jurisdiction with respect to my release of claims herein, including but not
limited to the release of unknown and unsuspected claims.

By: _____________________________
         PAUL F. TRUEX

Date: ___________________________

PENINSULA PHARMACEUTICALS, INC.

By: _____________________________
         Eckard Weber, M.D.
         Chairman, Board of Directors

Date: ___________________________

<PAGE>

                                    EXHIBIT C

                PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
<PAGE>

                        PENINSULA PHARMACEUTICALS, INC.

                        EMPLOYEE PROPRIETARY INFORMATION
                            AND INVENTIONS AGREEMENT

      In consideration of my employment or continued employment by PENINSULA
PHARMACEUTICALS, INC. (the "COMPANY"), and the compensation now and hereafter
paid to me, I hereby agree as follows:

1.    NONDISCLOSURE.

      1.1 RECOGNITION OF COMPANY'S RIGHTS; NONDISCLOSURE. At all times during my
employment and thereafter, I will hold in strictest confidence and will not
disclose, use, lecture upon or publish any of the Company's Proprietary
Information (defined below), except as such disclosure, use or publication may
be required in connection with my work for the Company, or unless an officer of
the Company expressly authorizes such in writing. I will obtain Company's
written approval before publishing or submitting for publication any material
(written, verbal, or otherwise) that relates to my work at Company and/or
incorporates any Proprietary Information. I hereby assign to the Company any
rights I may have or acquire in such Proprietary Information and recognize that
all Proprietary Information shall be the sole property of the Company and its
assigns.

      1.2 PROPRIETARY INFORMATION. The term "PROPRIETARY INFORMATION" shall mean
any and all confidential and/or proprietary knowledge, data or information of
the Company. By way of illustration but not limitation, the term "PROPRIETARY
INFORMATION" includes (a) data, results, ideas, processes, techniques, formulae,
know-how, improvements, discoveries, developments and designs (hereinafter
collectively referred to as "INVENTIONS"), (b) tangible and intangible
information relating to biological materials such as cell lines, antibodies,
tissue samples, proteins, nucleic acids and the like, assays and assay
components and media, procedures and formulations for producing any such assays
or assay components, and pre-clinical and clinical data, results, developments
or experiments, and (c) plans for research, development and new products,
marketing and selling information, business plans, budgets and unpublished
financial statements, licenses, prices and costs, suppliers and customers, and
information regarding the skills and compensation of other employees of the
Company.

      1.3 THIRD PARTY INFORMATION. I understand, in addition, that the Company
has received and in the future will receive from third parties confidential or
proprietary information ("THIRD PARTY INFORMATION") subject to a duty on the
Company's part to maintain the confidentiality of such information and to use it
only for certain limited purposes. During the term of my employment and
thereafter, I will hold Third Party Information in the strictest confidence and
will not disclose to anyone (other than Company personnel who need to know such
information in connection with their work for the Company) or use, except in
connection with my work for the Company, Third Party Information unless
expressly authorized by an officer of the Company in writing.

      1.4 NO IMPROPER USE OF INFORMATION OF PRIOR EMPLOYERS AND OTHERS. During
my employment by the Company I will not improperly use or disclose any
confidential information or trade secrets, if any, of any former employer or any
other person to whom I have an obligation of confidentiality, and I will not
bring onto the premises of the Company any unpublished documents or any
property belonging to any former employer or any other person to whom I have an
obligation of confidentiality unless consented to in writing by that former
employer or person. I will use in the performance of my duties only information
which is generally known and used by persons with training and experience
comparable to my own, which is common knowledge in the industry or otherwise
legally in the public domain, or which is otherwise provided or developed by the
Company.

2.    ASSIGNMENT OF INVENTIONS.

      2.1 PROPRIETARY RIGHTS. The term "PROPRIETARY RIGHTS" shall mean all trade
secret, patent, copyright, mask work and other intellectual property rights
throughout the world.

      2.2 PRIOR INVENTIONS. Inventions, if any, patented or unpatented, which I
made prior to the commencement of my employment with the Company are excluded
from the scope of this Agreement. To preclude any possible uncertainty, I have
set forth on Exhibit B (Previous Inventions) attached hereto a complete list of
all Inventions that I have, alone or jointly with others, conceived, developed
or reduced to practice or caused to be conceived, developed or reduced to
practice prior to the commencement of my employment with the Company, that I
consider to be my property or the property of third parties and that I wish to
have excluded from the scope of this Agreement (collectively referred to as
"PRIOR

                                       1.
<PAGE>

INVENTIONS") If disclosure of any such Prior Invention would cause me to
violate any prior confidentiality agreement, I understand that I am not to list
such Prior Inventions in Exhibit B but am only to disclose a cursory name for
each such invention, a listing of the party(ies) to whom it belongs and the fact
that full disclosure as to such inventions has not been made for that reason. A
space is provided on Exhibit B for such purpose. If no such disclosure is
attached, I represent that there are no Prior Inventions. If, in the course of
my employment with the Company, I incorporate a Prior Invention into a Company
product, process or machine, the Company is hereby granted and shall have a
nonexclusive, royalty-free, irrevocable, perpetual, worldwide license (with
rights to sublicense through multiple tiers of sublicensees) to make, have made,
modify, use and sell such Prior Invention. Notwithstanding the foregoing, I
agree that I will not incorporate, or permit to be incorporated, Prior
Inventions in any Company Inventions without the Company's prior written
consent.

      2.3 ASSIGNMENT OF INVENTIONS. Subject to Sections 2.4, and 2.6, I hereby
assign and agree to assign in the future (when any such Inventions or
Proprietary Rights are first reduced to practice or first fixed in a tangible
medium, as applicable) to the Company all my right, title and interest in and to
any and all Inventions (and all Proprietary Rights with respect thereto) whether
or not patentable or registrable under copyright or similar statutes, made or
conceived or reduced to practice or learned by me, either alone or jointly with
others, during the period of my employment with the Company. Inventions assigned
to the Company, or to a third party as directed by the Company pursuant to this
Section 2, are hereinafter referred to as "COMPANY INVENTIONS."

      2.4 NONASSIGNABLE INVENTIONS. This Agreement does not apply to an
Invention which qualifies fully as a nonassignable Invention under Section 2870
of the California Labor Code (hereinafter "SECTION 2870"). I have reviewed the
notification on Exhibit A (Limited Exclusion Notification) and agree that my
signature acknowledges receipt of the notification.

      2.5 OBLIGATION TO KEEP COMPANY INFORMED. During the period of my
employment and for six (6) months after termination of my employment with the
Company, I will promptly disclose to the Company fully and in writing all
Inventions authored, conceived or reduced to practice by me, either alone or
jointly with others. In addition, I will promptly disclose to the Company all
patent applications filed by me or on my behalf within a year after termination
of employment. At the time of each such disclosure, I will advise the Company in
writing of any Inventions that I believe fully qualify for protection under
Section 2870; and I will at that time provide to the Company in writing all
evidence necessary to substantiate that belief. The Company will keep in
confidence and will not use for any purpose or disclose to third parties without
my consent any confidential information disclosed in writing to the Company
pursuant to this Agreement relating to Inventions that qualify fully for
protection under the provisions of Section 2870. I will preserve the
confidentiality of any Invention that does not fully qualify for protection
under Section 2870.

      2.6 GOVERNMENT OR THIRD PARTY. I also agree to assign all my right, title
and interest in and to any particular Company Invention to a third party,
including without limitation the United States, as directed by the Company.

      2.7 WORKS FOR HIRE. I acknowledge that all original works of authorship
which are made by me (solely or jointly with others) within the scope of my
employment and which are protectable by copyright are "works made for hire,"
pursuant to United States Copyright Act (17 U.S.C., Section 101).

      2.8 ENFORCEMENT OF PROPRIETARY RIGHTS. I will assist the Company in every
proper way to obtain, and from time to time enforce, United States and foreign
Proprietary Rights relating to Company Inventions in any and all countries. To
that end I will execute, verify and deliver such documents and perform such
other acts (including appearances as a witness) as the Company may reasonably
request for use in applying for, obtaining, perfecting, evidencing, sustaining
and enforcing such Proprietary Rights and the assignment thereof. In addition, I
will execute, verify and deliver assignments of such Proprietary Rights to the
Company or its designee. My obligation to assist the Company with respect to
Proprietary Rights relating to such Company Inventions in any and all countries
shall continue beyond the termination of my employment, but the Company shall
compensate me at a reasonable rate after my termination for the time actually
spent by me at the Company's request on such assistance.

In the event the Company is unable for any reason, after reasonable effort, to
secure my signature on any document needed in connection with the actions
specified in the preceding paragraph, I hereby irrevocably designate and appoint
the Company and its duly authorized officers and agents as my agent and attorney
in fact, which appointment is coupled with an interest, to act for and in my
behalf to execute, verify and file any such documents and to do all other
lawfully permitted acts to further the purposes of the preceding paragraph with
the same legal force and effect as if executed by me. I hereby waive and
quitclaim to the Company any and all claims, of any nature whatsoever,

                                       2.
<PAGE>

which I now or may hereafter have for infringement of any Proprietary Rights
assigned hereunder to the Company.

3.    RECORDS. I agree to keep and maintain adequate and current records (in the
form of notes, sketches, drawings and in any other form that may be required by
the Company) of all Proprietary Information developed by me and all Inventions
made by me during the period of my employment at the Company, which records
shall be available to and remain the sole property of the Company at all times.

4.    ADDITIONAL ACTIVITIES. I agree that during the period of my employment by
the Company I will not, without the Company's express written consent, engage in
any employment or business activity which is competitive with, or would
otherwise conflict with, my employment by the Company. I agree further that for
the period of my employment by the Company and for one (1) year after the date
of termination of my employment by the Company I will not, either directly or
through others, solicit or attempt to solicit any employee, independent
contractor or consultant of the company to terminate his or her relationship
with the Company in order to become an employee, consultant or independent
contractor to or for any other person or entity.

5.    No CONFLICTING OBLIGATION. I represent that my performance of all the
terms of this Agreement and as an employee of the Company does not and will not
breach any agreement to keep in confidence information acquired by me in
confidence or in trust prior to my employment by the Company. I have not entered
into, and I agree I will not enter into, any agreement either written or oral in
conflict herewith.

6.    RETURN OF COMPANY DOCUMENTS. When I leave the employ of the Company and at
the Company's earlier requests, I will deliver to the Company any and all
drawings, notes, memoranda, specifications, devices, formulas, and documents,
together with all copies thereof, and any other material containing or
disclosing any Company Inventions, Third Party Information or Proprietary
Information of the Company. I further agree that any property situated on the
Company's premises and owned by the Company, including disks and other storage
media, filing cabinets or other work areas, is subject to inspection by Company
personnel at any time with or without notice. Prior to leaving, I will cooperate
with the Company in completing and signing the Company's termination statement.

7.    LEGAL AND EQUITABLE REMEDIES. Because my services are personal and unique
and because I may have access to and become acquainted with the Proprietary
Information of the Company, the Company shall have the right to enforce this
Agreement and any of its provisions by injunction, specific performance or other
equitable relief, without bond and without prejudice to any other rights and
remedies that the Company may have for a breach of this Agreement.

8.    NOTICES. Any notices required or permitted hereunder shall be given to the
appropriate party at the address specified below or at such other address as the
party shall specify in writing. Such notice shall be deemed given upon personal
delivery to the appropriate address or if sent by certified or registered mail,
three (3) days after the date of mailing.

9.    NOTIFICATION OF NEW EMPLOYER. In the event that I leave the employ of the
Company, I hereby consent to the notification of my new employer of my rights
and obligations under this Agreement.

10.   GENERAL PROVISIONS.

      10.1 GOVERNING LAW; CONSENT TO PERSONAL JURISDICTION. This Agreement will
be governed by and construed according to the laws of the State of California,
as such laws are applied to agreements entered into and to be performed entirely
within California between California residents. I hereby expressly consent to
the personal jurisdiction of the state and federal courts located in Alameda
County, California for any lawsuit filed there against me by Company arising
from or related to this Agreement.

      10.2 SEVERABILITY. In case any one or more of the provisions contained in
this Agreement shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect the other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein. If moreover, any one or more of the provisions
contained in this Agreement shall for any reason be held to be excessively broad
as to duration, geographical scope, activity or subject, it shall be construed
by limiting and reducing it, so as to be enforceable to the extent compatible
with the applicable law as it shall then appear.

      10.3 SUCCESSORS AND ASSIGNS. This Agreement will be binding upon my heirs,
executors, administrators and other legal representatives and will be for the
benefit of the Company, its successors, and its assigns.

      10.4 SURVIVAL. The provisions of this Agreement shall survive the
termination of my employment and the assignment of this Agreement by the Company
to any successor in interest or other assignee.

                                       3.
<PAGE>

      10.5 AT-WILL EMPLOYMENT. I agree and understand that nothing in this
Agreement shall confer any right with respect to continuation of employment by
the Company, nor shall it interfere in any way with my right or the Company's
right to terminate my employment at any time, with or without cause or advance
notice.

      10.6 WAIVER. No waiver by the Company of any breach of this Agreement
shall be a waiver of any preceding or succeeding breach. No waiver by the
Company of any right under this Agreement shall be construed as a waiver of any
other right. The Company shall not be required to give notice to enforce strict
adherence to all terms of this Agreement.

      10.7 ENTIRE AGREEMENT. The obligations pursuant to Sections 1 and 2 of
this Agreement (with the exception of Section 2.7) shall apply to any time
during which I was previously employed, or am in the future employed, by the
Company as a consultant if no other agreement governs nondisclosure and
assignment of inventions during such period. This Agreement is the final,
complete and exclusive agreement of the parties with respect to the subject
matter hereof and supersedes and merges all prior discussions between us. No
modification of or amendment to this Agreement, nor any waiver of any rights
under this Agreement, will be effective unless in writing and signed by the
party to be charged. Any subsequent change or changes in my duties, salary or
compensation will not affect the validity or scope of this Agreement.

      This Agreement shall be effective as of the first day of my employment
with the Company, namely: OCTOBER 1st, 2001.

      I HAVE READ THIS AGREEMENT CAREFULLY AND UNDERSTAND ITS TERMS. I HAVE
COMPLETELY FILLED OUT EXHIBIT B TO THIS AGREEMENT.

Dated: 4/1/03

/s/ PAUL TRUEX
-------------------
(SIGNATURE)

 PAUL TRUEX
-------------------
(PRINTED NAME)

ACCEPTED AND AGREED TO:

PENINSULA PHARMACEUTICALS, INC.

By: /s/ PAUL TRUEX
    --------------------

Title: PRESIDENT & DIRECTOR

4128 PLEASANTON AVE
-----------------------
(Address)

PLEASANTON, CA 94566

Dated: 4/1/03

                                       4.
<PAGE>

                                    EXHIBIT A

                         LIMITED EXCLUSION NOTIFICATION

      THIS IS TO NOTIFY you in accordance with Section 2872 of the California
Labor Code that the foregoing Agreement between you and the Company does not
require you to assign or offer to assign to the Company any invention that you
developed entirely on your own time without using the Company's equipment,
supplies, facilities or trade secret information except for those inventions
that either:

      1. Relate at the time of conception or reduction to practice of the
invention to the Company's business, or actual or demonstrably anticipated
research or development of the Company; or

      2. Result from any work performed by you for the Company.

      To the extent a provision in the foregoing Agreement purports to require
you to assign an invention otherwise excluded from the preceding paragraph, the
provision is against the public policy of this state and is unenforceable.

      This limited exclusion does not apply to any patent or invention covered
by a contract between the Company and the United States or any of its agencies
requiring full title to such patent or invention to be in the United States.

      I ACKNOWLEDGE RECEIPT of a copy of this notification.

                                        By: PAUL F. TRUEX
                                            ------------------------------------
                                                (PRINTED NAME OF EMPLOYEE)

                                        Date: 4/1/2003

WITNESSED BY:

KELLY CLONAN
-----------------------------------
(PRINTED NAME OF REPRESENTATIVE)

                                      A-1.
<PAGE>

                                   EXHIBIT B

TO:      PENINSULA PHARMACEUTICALS, INC.

FROM:    PAUL TRUEX

DATE:    4/1/03

SUBJECT: PREVIOUS INVENTIONS

1. Except as listed in Section 2 below, the following is a complete list of all
inventions or improvements relevant to the subject matter of my employment by
Peninsula Pharmaceuticals, Inc. (the "COMPANY") that have been made or conceived
or first reduced to practice by me alone or jointly with others prior to my
engagement by the Company:

      [X] No inventions or improvements.

      [ ] See below:

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

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

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

[ ]   Additional sheets attached.

2. Due to a prior confidentiality agreement, I cannot complete the disclosure
under Section 1 above with respect to inventions or improvements generally
listed below, the proprietary rights and duty of confidentiality with respect to
which I owe to the following party(ies):

      INVENTION OR IMPROVEMENT       PARTY(IES)         RELATIONSHIP

1.    --------------------------     ---------------    -----------------------

2.    --------------------------     ---------------    -----------------------

3.    --------------------------     ---------------    -----------------------

[ ]   Additional sheets attached.

                                      B-1.