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                                                                  EXHIBIT 10.3

                       INTRABIOTICS PHARMACEUTICALS, INC.

                           2000 EQUITY INCENTIVE PLAN

                        EFFECTIVE DATE: JANUARY 25, 2000
                APPROVED BY STOCKHOLDERS _______________, ______
                       TERMINATION DATE: JANUARY 24, 2010

1.       PURPOSES.

         (a) ELIGIBLE STOCK AWARD RECIPIENTS. The persons eligible to receive
Stock Awards are the Employees, Directors and Consultants of the Company and its
Affiliates.

         (b) AVAILABLE STOCK AWARDS. The purpose of the Plan is to provide a
means by which eligible recipients of Stock Awards may be given an opportunity
to benefit from increases in value of the Common Stock through the granting of
the following Stock Awards: (i) Incentive Stock Options, (ii) Nonstatutory Stock
Options, (iii) stock bonuses and (iv) rights to acquire restricted stock.

         (c) GENERAL PURPOSE. The Company, by means of the Plan, seeks to retain
the services of the group of persons eligible to receive Stock Awards, to secure
and retain the services of new members of this group and to provide incentives
for such persons to exert maximum efforts for the success of the Company and its
Affiliates.

2.       DEFINITIONS.

         (a) "AFFILIATE" means any parent corporation or subsidiary corporation
of the Company, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f), respectively, of the Code.

         (b) "BOARD" means the Board of Directors of the Company.

         (c) "CODE" means the Internal Revenue Code of 1986, as amended.

         (d) "COMMITTEE" means a committee of one or more members of the Board
appointed by the Board in accordance with subsection 3(c).

         (e) "COMMON STOCK" means the common stock of the Company.

         (f) "COMPANY" means IntraBiotics Pharmaceuticals, Inc., a Delaware
corporation.

         (g) "CONSULTANT" means any person, including an advisor, (i) engaged by
the Company or an Affiliate to render consulting or advisory services and who is
compensated for such services or (ii) who is a member of the Board of Directors
of an Affiliate. However, the term "Consultant" shall not include either
Directors who are not compensated by the Company

                                       1.

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for their services as Directors or Directors who are merely paid a director's
fee by the Company for their services as Directors.

         (h) "CONTINUOUS SERVICE" means that the Participant's service with the
Company or an Affiliate, whether as an Employee, Director or Consultant, is not
interrupted or terminated. The Participant's Continuous Service shall not be
deemed to have terminated merely because of a change in the capacity in which
the Participant renders service to the Company or an Affiliate as an Employee,
Consultant or Director or a change in the entity for which the Participant
renders such service, provided that there is no interruption or termination of
the Participant's service. For example, a change in status without interruption
from an Employee of the Company to a Consultant of an Affiliate or a Director
will not constitute an interruption of Continuous Service. The Board or the
chief executive officer of the Company, in that party's sole discretion, may
determine whether Continuous Service shall be considered interrupted in the case
of any leave of absence approved by that party, including sick leave, military
leave or any other personal leave.

         (i) "COVERED EMPLOYEE" means the chief executive officer and the four
(4) other highest compensated officers of the Company for whom total
compensation is required to be reported to stockholders under the Exchange Act,
as determined for purposes of Section 162(m) of the Code.

         (j) "DIRECTOR" means a member of the Board of Directors of the Company.

         (k) "DISABILITY" means the permanent and total disability of a person
within the meaning of Section 22(e)(3) of the Code.

         (l) "EMPLOYEE" means any person employed by the Company or an
Affiliate. Mere service as a Director or payment of a director's fee by the
Company or an Affiliate shall not be sufficient to constitute "employment" by
the Company or an Affiliate.

         (m) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

         (n) "FAIR MARKET VALUE" means, as of any date, the value of the Common
Stock determined as follows:

                  (i) If the Common Stock is listed on any established stock
exchange or traded on the Nasdaq National Market or the Nasdaq SmallCap Market,
the Fair Market Value of a share of Common Stock shall be the closing sales
price for such stock (or the closing bid, if no sales were reported) as quoted
on such exchange or market (or the exchange or market with the greatest volume
of trading in the Common Stock) on the last market trading day prior to the day
of determination, as reported in THE WALL STREET JOURNAL or such other source as
the Board deems reliable.

                  (ii) In the absence of such markets for the Common Stock, the
Fair Market Value shall be determined in good faith by the Board.

                                       2.

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         (o) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.

         (p) "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not a
current Employee or Officer of the Company or its parent or a subsidiary, does
not receive compensation (directly or indirectly) from the Company or its parent
or a subsidiary for services rendered as a consultant or in any capacity other
than as a Director (except for an amount as to which disclosure would not be
required under Item 404(a) of Regulation S-K promulgated pursuant to the
Securities Act ("Regulation S-K")), does not possess an interest in any other
transaction as to which disclosure would be required under Item 404(a) of
Regulation S-K and is not engaged in a business relationship as to which
disclosure would be required under Item 404(b) of Regulation S-K; or (ii) is
otherwise considered a "non-employee director" for purposes of Rule 16b-3.

         (q) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify
as an Incentive Stock Option.

         (r) "OFFICER" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

         (s) "OPTION" means an Incentive Stock Option or a Nonstatutory Stock
Option granted pursuant to the Plan.

         (t) "OPTION AGREEMENT" means a written agreement between the Company
and an Optionholder evidencing the terms and conditions of an individual Option
grant. Each Option Agreement shall be subject to the terms and conditions of the
Plan.

         (u) "OPTIONHOLDER" means a person to whom an Option is granted pursuant
to the Plan or, if applicable, such other person who holds an outstanding
Option.

         (v) "OUTSIDE DIRECTOR" means a Director who either (i) is not a current
employee of the Company or an "affiliated corporation" (within the meaning of
Treasury Regulations promulgated under Section 162(m) of the Code), is not a
former employee of the Company or an "affiliated corporation" receiving
compensation for prior services (other than benefits under a tax qualified
pension plan), was not an officer of the Company or an "affiliated corporation"
at any time and is not currently receiving direct or indirect remuneration from
the Company or an "affiliated corporation" for services in any capacity other
than as a Director or (ii) is otherwise considered an "outside director" for
purposes of Section 162(m) of the Code.

         (w) "PARTICIPANT" means a person to whom a Stock Award is granted
pursuant to the Plan or, if applicable, such other person who holds an
outstanding Stock Award.

         (x) "PLAN" means this IntraBiotics Pharmaceuticals, Inc. 2000 Equity
Incentive Plan.

         (y) "RULE 16b-3" means Rule 16b-3 promulgated under the Exchange Act or
any successor to Rule 16b-3, as in effect from time to time.

                                       3.

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         (z) "SECURITIES ACT" means the Securities Act of 1933, as amended.

         (aa) "STOCK AWARD" means any right granted under the Plan, including an
Option, a stock bonus and a right to acquire restricted stock.

         (bb) "STOCK AWARD AGREEMENT" means a written agreement between the
Company and a holder of a Stock Award evidencing the terms and conditions of an
individual Stock Award grant. Each Stock Award Agreement shall be subject to the
terms and conditions of the Plan.

         (cc) "TEN PERCENT STOCKHOLDER" means a person who owns (or is deemed to
own pursuant to Section 424(d) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or of any of its Affiliates.

3.       ADMINISTRATION.

         (a) ADMINISTRATION BY BOARD. The Board shall administer the Plan unless
and until the Board delegates administration to a Committee, as provided in
subsection 3(c).

         (b) POWERS OF BOARD. The Board shall have the power, subject to, and
within the limitations of, the express provisions of the Plan:

                  (i) To determine from time to time which of the persons
eligible under the Plan shall be granted Stock Awards; when and how each Stock
Award shall be granted; what type or combination of types of Stock Award shall
be granted; the provisions of each Stock Award granted (which need not be
identical), including the time or times when a person shall be permitted to
receive Common Stock pursuant to a Stock Award; and the number of shares of
Common Stock with respect to which a Stock Award shall be granted to each such
person.

                  (ii) To construe and interpret the Plan and Stock Awards
granted under it, and to establish, amend and revoke rules and regulations for
its administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Stock Award Agreement,
in a manner and to the extent it shall deem necessary or expedient to make the
Plan fully effective.

                  (iii) To amend the Plan or a Stock Award as provided in
Section 12.

                  (iv) To terminate or suspend the Plan as provided in Section
13.

                  (v) Generally, to exercise such powers and to perform such
acts as the Board deems necessary or expedient to promote the best interests of
the Company which are not in conflict with the provisions of the Plan.

         (c)      DELEGATION TO COMMITTEE.

                  (i) GENERAL. The Board may delegate administration of the Plan
to a Committee or Committees of one (1) or more members of the Board, and the
term "Committee" shall apply to any person or persons to whom such authority has
been delegated. If

                                       4.

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administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, including the power to delegate to a subcommittee any of the
administrative powers the Committee is authorized to exercise (and references in
this Plan to the Board shall thereafter be to the Committee or subcommittee),
subject, however, to such resolutions, not inconsistent with the provisions of
the Plan, as may be adopted from time to time by the Board. The Board may
abolish the Committee at any time and revest in the Board the administration of
the Plan.

                  (ii) COMMITTEE COMPOSITION WHEN COMMON STOCK IS PUBLICLY
TRADED. At such time as the Common Stock is publicly traded, in the discretion
of the Board, a Committee may consist solely of two or more Outside Directors,
in accordance with Section 162(m) of the Code, and/or solely of two or more
Non-Employee Directors, in accordance with Rule 16b-3. Within the scope of such
authority, the Board or the Committee may (1) delegate to a committee of one or
more members of the Board who are not Outside Directors the authority to grant
Stock Awards to eligible persons who are either (a) not then Covered Employees
and are not expected to be Covered Employees at the time of recognition of
income resulting from such Stock Award or (b) not persons with respect to whom
the Company wishes to comply with Section 162(m) of the Code and/or) (2)
delegate to a committee of one or more members of the Board who are not
Non-Employee Directors the authority to grant Stock Awards to eligible persons
who are not then subject to Section 16 of the Exchange Act.

         (d) EFFECT OF BOARD'S DECISION. All determinations, interpretations and
constructions made by the Board in good faith shall not be subject to review by
any person and shall be final, binding and conclusive on all persons.

4. SHARES SUBJECT TO THE PLAN.

         (a) SHARE RESERVE. Subject to the provisions of Section 11 relating
to adjustments upon changes in Common Stock and subject to the increases in
the number of reserved shares described below, the Common Stock that may be
issued pursuant to Stock Awards shall not exceed in the aggregate five
million (5,000,000) shares of Common Stock (the "Reserved Shares"). On
December 31 of each year starting with December 31, 2000, and continuing
through and including December 31, 2008, the number of Reserved Shares
automatically will be increased by the least of (i) five percent (5%) of the
number of shares of the Common Stock outstanding on a fully diluted basis on
the anniversary date, (ii) two million (2,000,000) shares or (iii) a number
of shares determined by the Board prior to the anniversary date, which number
shall be less than (i) and (ii).

         (b) REVERSION OF SHARES TO THE SHARE RESERVE. If any Stock Award shall
for any reason expire or otherwise terminate, in whole or in part, without
having been exercised in full, the shares of Common Stock not acquired under
such Stock Award shall revert to and again become available for issuance under
the Plan.

         (c) SOURCE OF SHARES. The shares of Common Stock subject to the Plan
may be unissued shares or reacquired shares, bought on the market or otherwise.

                                       5.

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5.       ELIGIBILITY.

         (a) ELIGIBILITY FOR SPECIFIC STOCK AWARDS. Incentive Stock Options may
be granted only to Employees. Stock Awards other than Incentive Stock Options
may be granted to Employees, Directors and Consultants.

         (b) TEN PERCENT STOCKHOLDERS. A Ten Percent Stockholder shall not be
granted an Incentive Stock Option unless the exercise price of such Option is at
least one hundred ten percent (110%) of the Fair Market Value of the Common
Stock at the date of grant and the Option is not exercisable after the
expiration of five (5) years from the date of grant.

         (c) SECTION 162(m) LIMITATION. Subject to the provisions of Section 11
relating to adjustments upon changes in the shares of Common Stock, no Employee
shall be eligible to be granted Options covering more than one million five
hundred thousand (1,500,000) shares of Common Stock during any calendar year.

         (d) CONSULTANTS.

                  (i) A Consultant shall not be eligible for the grant of a
Stock Award if, at the time of grant, a Form S-8 Registration Statement under
the Securities Act ("Form S-8") is not available to register either the offer or
the sale of the Company's securities to such Consultant because of the nature of
the services that the Consultant is providing to the Company, or because the
Consultant is not a natural person, or as otherwise provided by the rules
governing the use of Form S-8, unless the Company determines both (i) that such
grant (A) shall be registered in another manner under the Securities Act (E.G.,
on a Form S-3 Registration Statement) or (B) does not require registration under
the Securities Act in order to comply with the requirements of the Securities
Act, if applicable, and (ii) that such grant complies with the securities laws
of all other relevant jurisdictions.

                  (ii) Form S-8 generally is available to consultants and
advisors only if (i) they are natural persons; (ii) they provide bona fide
services to the issuer, its parents, its majority-owned subsidiaries or
majority-owned subsidiaries of the issuer's parent; and (iii) the services are
not in connection with the offer or sale of securities in a capital-raising
transaction, and do not directly or indirectly promote or maintain a market for
the issuer's securities.

6.       OPTION PROVISIONS.

         Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. All Options shall be separately
designated Incentive Stock Options or Nonstatutory Stock Options at the time of
grant, and, if certificates are issued, a separate certificate or certificates
will be issued for shares of Common Stock purchased on exercise of each type of
Option. The provisions of separate Options need not be identical, but each
Option shall include (through incorporation of provisions hereof by reference in
the Option or otherwise) the substance of each of the following provisions:

                                       6.

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         (a) TERM. Subject to the provisions of subsection 5(b) regarding Ten
Percent Stockholders, no Incentive Stock Option shall be exercisable after the
expiration of ten (10) years from the date it was granted.

         (b) EXERCISE PRICE OF AN INCENTIVE STOCK OPTION. Subject to the
provisions of subsection 5(b) regarding Ten Percent Stockholders, the exercise
price of each Incentive Stock Option shall be not less than one hundred percent
(100%) of the Fair Market Value of the Common Stock subject to the Option on the
date the Option is granted. Notwithstanding the foregoing, an Incentive Stock
Option may be granted with an exercise price lower than that set forth in the
preceding sentence if such Option is granted pursuant to an assumption or
substitution for another option in a manner satisfying the provisions of Section
424(a) of the Code.

         (c) EXERCISE PRICE OF A NONSTATUTORY STOCK OPTION. The exercise price
of each Nonstatutory Stock Option shall be not less than eighty-five percent
(85%) of the Fair Market Value of the Common Stock subject to the Option on the
date the Option is granted. Notwithstanding the foregoing, a Nonstatutory Stock
Option may be granted with an exercise price lower than that set forth in the
preceding sentence if such Option is granted pursuant to an assumption or
substitution for another option in a manner satisfying the provisions of Section
424(a) of the Code.

         (d) CONSIDERATION. The purchase price of Common Stock acquired pursuant
to an Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised or (ii) at
the discretion of the Board (1) by delivery to the Company of other Common
Stock, (2) according to a deferred payment or other similar arrangement with the
Optionholder or (3) in any other form of legal consideration that may be
acceptable to the Board. Unless otherwise specifically provided in the Option,
the purchase price of Common Stock acquired pursuant to an Option that is paid
by delivery to the Company of other Common Stock acquired, directly or
indirectly from the Company, shall be paid only by shares of the Common Stock of
the Company that have been held for more than six (6) months (or such longer or
shorter period of time required to avoid a charge to the Company's earnings for
financial accounting purposes). At any time that the Company is incorporated in
Delaware, payment of the Common Stock's "par value," as defined in the Delaware
General Corporation Law, shall not be made by deferred payment.

         In the case of any deferred payment arrangement, interest shall be
compounded at least annually and shall be charged at the minimum rate of
interest necessary to avoid the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be interest
under the deferred payment arrangement.

         (e) TRANSFERABILITY OF AN INCENTIVE STOCK OPTION. An Incentive Stock
Option shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the Optionholder
only by the Optionholder. Notwithstanding the foregoing, the Optionholder may,
by delivering written notice to the Company, in a form satisfactory to the
Company, designate a third party who, in the event of the death of the
Optionholder, shall thereafter be entitled to exercise the Option.

                                       7.

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         (f) TRANSFERABILITY OF A NONSTATUTORY STOCK OPTION. A Nonstatutory
Stock Option shall be transferable to the extent provided in the Option
Agreement. If the Nonstatutory Stock Option does not provide for
transferability, then the Nonstatutory Stock Option shall not be transferable
except by will or by the laws of descent and distribution and shall be
exercisable during the lifetime of the Optionholder only by the Optionholder.
Notwithstanding the foregoing, the Optionholder may, by delivering written
notice to the Company, in a form satisfactory to the Company, designate a third
party who, in the event of the death of the Optionholder, shall thereafter be
entitled to exercise the Option.

         (g) VESTING GENERALLY. The total number of shares of Common Stock
subject to an Option may, but need not, vest and therefore become exercisable in
periodic installments that may, but need not, be equal. The Option may be
subject to such other terms and conditions on the time or times when it may be
exercised (which may be based on performance or other criteria) as the Board may
deem appropriate. The vesting provisions of individual Options may vary. The
provisions of this subsection 6(g) are subject to any Option provisions
governing the minimum number of shares of Common Stock as to which an Option may
be exercised.

         (h) TERMINATION OF CONTINUOUS SERVICE. In the event an Optionholder's
Continuous Service terminates (other than upon the Optionholder's death or
Disability), the Optionholder may exercise his or her Option (to the extent that
the Optionholder was entitled to exercise such Option as of the date of
termination) but only within such period of time ending on the earlier of (i)
the date three (3) months following the termination of the Optionholder's
Continuous Service (or such longer or shorter period specified in the Option
Agreement), or (ii) the expiration of the term of the Option as set forth in the
Option Agreement. If, after termination, the Optionholder does not exercise his
or her Option within the time specified in the Option Agreement, the Option
shall terminate.

         (i) EXTENSION OF TERMINATION DATE. An Optionholder's Option Agreement
may also provide that if the exercise of the Option following the termination of
the Optionholder's Continuous Service (other than upon the Optionholder's death
or Disability) would be prohibited at any time solely because the issuance of
shares of Common Stock would violate the registration requirements under the
Securities Act, then the Option shall terminate on the earlier of (i) the
expiration of the term of the Option set forth in the Option Agreement or (ii)
the expiration of a period of three (3) months after the termination of the
Optionholder's Continuous Service during which the exercise of the Option would
not be in violation of such registration requirements.

         (j) DISABILITY OF OPTIONHOLDER. In the event that an Optionholder's
Continuous Service terminates as a result of the Optionholder's Disability, the
Optionholder may exercise his or her Option (to the extent that the Optionholder
was entitled to exercise such Option as of the date of termination), but only
within such period of time ending on the earlier of (i) the date twelve (12)
months following such termination (or such longer or shorter period specified in
the Option Agreement) or (ii) the expiration of the term of the Option as set
forth in the Option Agreement. If, after termination, the Optionholder does not
exercise his or her Option within the time specified herein, the Option shall
terminate.

                                       8.

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         (k) DEATH OF OPTIONHOLDER. In the event (i) an Optionholder's
Continuous Service terminates as a result of the Optionholder's death or (ii)
the Optionholder dies within the period (if any) specified in the Option
Agreement after the termination of the Optionholder's Continuous Service for a
reason other than death, then the Option may be exercised (to the extent the
Optionholder was entitled to exercise such Option as of the date of death) by
the Optionholder's estate, by a person who acquired the right to exercise the
Option by bequest or inheritance or by a person designated to exercise the
Option upon the Optionholder's death pursuant to subsection 6(e) or 6(f), but
only within the period ending on the earlier of (1) the date twelve (12)
months following the date of death (or such longer or shorter period specified
in the Option Agreement) or (2) the expiration of the term of such Option as set
forth in the Option Agreement. If, after death, the Option is not exercised
within the time specified herein, the Option shall terminate.

         (l) EARLY EXERCISE. The Option may, but need not, include a provision
whereby the Optionholder may elect at any time before the Optionholder's
Continuous Service terminates to exercise the Option as to any part or all of
the shares of Common Stock subject to the Option prior to the full vesting of
the Option. Any unvested shares of Common Stock so purchased may be subject to a
repurchase option in favor of the Company or to any other restriction the Board
determines to be appropriate. The Company will not exercise its repurchase
option until at least six (6) months (or such longer or shorter period of time
required to avoid a charge to earnings for financial accounting purposes) have
elapsed following exercise of the Option unless the Board otherwise specifically
provides in the Option.

         (m) RE-LOAD OPTIONS.

                  (i) Without in any way limiting the authority of the Board to
make or not to make grants of Options hereunder, the Board shall have the
authority (but not an obligation) to include as part of any Option Agreement a
provision entitling the Optionholder to a further Option (a "Re-Load Option") in
the event the Optionholder exercises the Option evidenced by the Option
Agreement, in whole or in part, by surrendering other shares of Common Stock in
accordance with this Plan and the terms and conditions of the Option Agreement.
Unless otherwise specifically provided in the Option, the Optionholder shall not
surrender shares of Common Stock acquired, directly or indirectly from the
Company, unless such shares have been held for more than six (6) months (or such
longer or shorter period of time required to avoid a charge to earnings for
financial accounting purposes).

                  (ii) Any such Re-Load Option shall (1) provide for a number of
shares of Common Stock equal to the number of shares of Common Stock surrendered
as part or all of the exercise price of such Option; (2) have an expiration date
which is the same as the expiration date of the Option the exercise of which
gave rise to such Re-Load Option; and (3) have an exercise price which is equal
to one hundred percent (100%) of the Fair Market Value of the Common Stock
subject to the Re-Load Option on the date of exercise of the original Option.
Notwithstanding the foregoing, a Re-Load Option shall be subject to the same
exercise price and term provisions heretofore described for Options under the
Plan.

                                       9.

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                  (iii) Any such Re-Load Option may be an Incentive Stock Option
or a Nonstatutory Stock Option, as the Board may designate at the time of the
grant of the original Option; PROVIDED, HOWEVER, that the designation of any
Re-Load Option as an Incentive Stock Option shall be subject to the one hundred
thousand dollar ($100,000) annual limitation on the exercisability of Incentive
Stock Options described in subsection 10(d) and in Section 422(d) of the Code.
There shall be no Re-Load Options on a Re-Load Option. Any such Re-Load Option
shall be subject to the availability of sufficient shares of Common Stock under
subsection 4(a) and the "Section 162(m) Limitation" on the grants of Options
under subsection 5(c) and shall be subject to such other terms and conditions as
the Board may determine which are not inconsistent with the express provisions
of the Plan regarding the terms of Options.

7.       PROVISIONS OF STOCK AWARDS OTHER THAN OPTIONS.

         (a) STOCK BONUS AWARDS. Each stock bonus agreement shall be in such
form and shall contain such terms and conditions as the Board shall deem
appropriate. The terms and conditions of stock bonus agreements may change from
time to time, and the terms and conditions of separate stock bonus agreements
need not be identical, but each stock bonus agreement shall include (through
incorporation of provisions hereof by reference in the agreement or otherwise)
the substance of each of the following provisions:

                  (i) CONSIDERATION. A stock bonus may be awarded in
consideration for past services actually rendered to the Company or an Affiliate
for its benefit.
                  (ii) VESTING. Shares of Common Stock awarded under the stock
bonus agreement may, but need not, be subject to a share repurchase option in
favor of the Company in accordance with a vesting schedule to be determined by
the Board.

                  (iii) TERMINATION OF PARTICIPANT'S CONTINUOUS SERVICE. In the
event a Participant's Continuous Service terminates, the Company may reacquire
any or all of the shares of Common Stock held by the Participant which have not
vested as of the date of termination under the terms of the stock bonus
agreement.

                  (iv) TRANSFERABILITY. Rights to acquire shares of Common Stock
under the stock bonus agreement shall be transferable by the Participant only
upon such terms and conditions as are set forth in the stock bonus agreement, as
the Board shall determine in its discretion, so long as Common Stock awarded
under the stock bonus agreement remains subject to the terms of the stock bonus
agreement.

         (b) RESTRICTED STOCK AWARDS. Each restricted stock purchase agreement
shall be in such form and shall contain such terms and conditions as the Board
shall deem appropriate. The terms and conditions of the restricted stock
purchase agreements may change from time to time, and the terms and conditions
of separate restricted stock purchase agreements need not be identical, but each
restricted stock purchase agreement shall include (through incorporation of
provisions hereof by reference in the agreement or otherwise) the substance of
each of the following provisions:

                                      10.

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                  (i) PURCHASE PRICE. The purchase price under each restricted
stock purchase agreement shall be such amount as the Board shall determine and
designate in such restricted stock purchase agreement. The purchase price shall
not be less than eighty-five percent (85%) of the Common Stock's Fair Market
Value on the date such award is made or at the time the purchase is consummated.

                  (ii) CONSIDERATION. The purchase price of Common Stock
acquired pursuant to the restricted stock purchase agreement shall be paid
either: (i) in cash at the time of purchase; (ii) at the discretion of the
Board, according to a deferred payment or other similar arrangement with the
Participant; or (iii) in any other form of legal consideration that may be
acceptable to the Board in its discretion; PROVIDED, HOWEVER, that at any time
that the Company is incorporated in Delaware, then payment of the Common Stock's
"par value," as defined in the Delaware General Corporation Law, shall not be
made by deferred payment.

                  (iii) VESTING. Shares of Common Stock acquired under the
restricted stock purchase agreement may, but need not, be subject to a share
repurchase option in favor of the Company in accordance with a vesting schedule
to be determined by the Board.

                  (iv) TERMINATION OF PARTICIPANT'S CONTINUOUS SERVICE. In the
event a Participant's Continuous Service terminates, the Company may repurchase
or otherwise reacquire any or all of the shares of Common Stock held by the
Participant which have not vested as of the date of termination under the terms
of the restricted stock purchase agreement.

                  (v) TRANSFERABILITY. Rights to acquire shares of Common Stock
under the restricted stock purchase agreement shall be transferable by the
Participant only upon such terms and conditions as are set forth in the
restricted stock purchase agreement, as the Board shall determine in its
discretion, so long as Common Stock awarded under the restricted stock purchase
agreement remains subject to the terms of the restricted stock purchase
agreement.

8.       COVENANTS OF THE COMPANY.

         (a) AVAILABILITY OF SHARES. During the terms of the Stock Awards, the
Company shall keep available at all times the number of shares of Common Stock
required to satisfy such Stock Awards.

         (b) SECURITIES LAW COMPLIANCE. The Company shall seek to obtain from
each regulatory commission or agency having jurisdiction over the Plan such
authority as may be required to grant Stock Awards and to issue and sell shares
of Common Stock upon exercise of the Stock Awards; PROVIDED, HOWEVER, that this
undertaking shall not require the Company to register under the Securities Act
the Plan, any Stock Award or any Common Stock issued or issuable pursuant to any
such Stock Award. If, after reasonable efforts, the Company is unable to obtain
from any such regulatory commission or agency the authority which counsel for
the Company deems necessary for the lawful issuance and sale of Common Stock
under the Plan, the Company shall be relieved from any liability for failure to
issue and sell Common Stock upon exercise of such Stock Awards unless and until
such authority is obtained.

                                      11.

<PAGE>

9.       USE OF PROCEEDS FROM STOCK.

         Proceeds from the sale of Common Stock pursuant to Stock Awards shall
constitute general funds of the Company.

10.      MISCELLANEOUS.

         (a) ACCELERATION OF EXERCISABILITY AND VESTING. The Board shall have
the power to accelerate the time at which a Stock Award may first be exercised
or the time during which a Stock Award or any part thereof will vest in
accordance with the Plan, notwithstanding the provisions in the Stock Award
stating the time at which it may first be exercised or the time during which it
will vest.

         (b) STOCKHOLDER RIGHTS. No Participant shall be deemed to be the holder
of, or to have any of the rights of a holder with respect to, any shares of
Common Stock subject to such Stock Award unless and until such Participant has
satisfied all requirements for exercise of the Stock Award pursuant to its
terms.

         (c) NO EMPLOYMENT OR OTHER SERVICE RIGHTS. Nothing in the Plan or any
instrument executed or Stock Award granted pursuant thereto shall confer upon
any Participant any right to continue to serve the Company or an Affiliate in
the capacity in effect at the time the Stock Award was granted or shall affect
the right of the Company or an Affiliate to terminate (i) the employment of an
Employee with or without notice and with or without cause, (ii) the service of a
Consultant pursuant to the terms of such Consultant's agreement with the Company
or an Affiliate or (iii) the service of a Director pursuant to the Bylaws of the
Company or an Affiliate, and any applicable provisions of the corporate law of
the state in which the Company or the Affiliate is incorporated, as the case may
be.

         (d) INCENTIVE STOCK OPTION $100,000 LIMITATION. To the extent that the
aggregate Fair Market Value (determined at the time of grant) of Common Stock
with respect to which Incentive Stock Options are exercisable for the first time
by any Optionholder during any calendar year (under all plans of the Company and
its Affiliates) exceeds one hundred thousand dollars ($100,000), the Options or
portions thereof which exceed such limit (according to the order in which they
were granted) shall be treated as Nonstatutory Stock Options.

         (e) INVESTMENT ASSURANCES. The Company may require a Participant, as a
condition of exercising or acquiring Common Stock under any Stock Award, (i) to
give written assurances satisfactory to the Company as to the Participant's
knowledge and experience in financial and business matters and/or to employ a
purchaser representative reasonably satisfactory to the Company who is
knowledgeable and experienced in financial and business matters and that he or
she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Stock Award; and (ii) to
give written assurances satisfactory to the Company stating that the Participant
is acquiring Common Stock subject to the Stock Award for the Participant's own
account and not with any present intention of selling or otherwise distributing
the Common Stock. The foregoing requirements, and any assurances given pursuant
to such requirements, shall be inoperative if (1) the issuance of the shares of
Common Stock

                                      12.

<PAGE>

upon the exercise or acquisition of Common Stock under the Stock Award has
been registered under a then currently effective registration statement under
the Securities Act or (2) as to any particular requirement, a determination
is made by counsel for the Company that such requirement need not be met in
the circumstances under the then applicable securities laws. The Company may,
upon advice of counsel to the Company, place legends on stock certificates
issued under the Plan as such counsel deems necessary or appropriate in order
to comply with applicable securities laws, including, but not limited to,
legends restricting the transfer of the Common Stock.

         (f) WITHHOLDING OBLIGATIONS. To the extent provided by the terms of a
Stock Award Agreement, the Participant may satisfy any federal, state or local
tax withholding obligation relating to the exercise or acquisition of Common
Stock under a Stock Award by any of the following means (in addition to the
Company's right to withhold from any compensation paid to the Participant by the
Company) or by a combination of such means: (i) tendering a cash payment; (ii)
authorizing the Company to withhold shares of Common Stock from the shares of
Common Stock otherwise issuable to the Participant as a result of the exercise
or acquisition of Common Stock under the Stock Award; PROVIDED, HOWEVER, that no
shares of Common Stock are withheld with a value exceeding the minimum amount of
tax required to be withheld by law; or (iii) delivering to the Company owned and
unencumbered shares of Common Stock of the Company that have been held for more
than six (6) months (or such longer or shorter period of time required to avoid
a charge to the Company's earnings for financial accounting purposes).

11.      ADJUSTMENTS UPON CHANGES IN STOCK.

         (a) CAPITALIZATION ADJUSTMENTS. If any change is made in the Common
Stock subject to the Plan, or subject to any Stock Award, without the receipt of
consideration by the Company (through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Plan will be appropriately
adjusted in the class(es) and maximum number of securities subject to the Plan
pursuant to subsection 4(a) and the maximum number of securities subject to
award to any person pursuant to subsection 5(c), and the outstanding Stock
Awards will be appropriately adjusted in the class(es) and number of securities
and price per share of Common Stock subject to such outstanding Stock Awards.
The Board shall make such adjustments, and its determination shall be final,
binding and conclusive. (The conversion of any convertible securities of the
Company shall not be treated as a transaction "without receipt of consideration"
by the Company.)

         (b) DISSOLUTION OR LIQUIDATION. In the event of a dissolution or
liquidation of the Company, then all outstanding Stock Awards shall terminate
immediately prior to such event.

         (c) CHANGE IN CONTROL. In the event of (i) a sale, lease or other
disposition of all or substantially all of the securities or assets of the
Company, (ii) a merger or consolidation in which the Company is not the
surviving corporation or (iii) a reverse merger in which the Company is the
surviving corporation but the shares of Common Stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the

                                      13.

<PAGE>

form of securities, cash or otherwise, then any surviving corporation or
acquiring corporation may assume any Stock Awards outstanding under the Plan or
may substitute similar stock awards (including an award to acquire the same
consideration paid to the stockholders in the transaction described in this
subsection 11(c)) for those outstanding under the Plan.

         Notwithstanding the vesting schedules set forth in Stock Awards
outstanding under the Plan, in the event of a change in control of the Company
described above, (i) Stock Awards held by persons who are then Employees but not
Officers of the Company shall become vested and immediately exercisable as to
one-half (1/2) of the then unvested shares subject to such Stock Awards as of
the effective date of the change in control; and (ii) Stock Awards held by
persons who are then Officers of the Company shall become fully vested in the
event that such Officers' service with the Company is involuntarily terminated
without Cause (as defined below) or voluntarily terminated for Good Reason (as
defined below), in either case within thirteen months following the change in
control.

         For purposes of this Section 11, "Cause" means that, in the reasonable
determination of the Company, the Officer:

                  (i) has been indicted or convicted of any felony or any crime
involving dishonesty that is likely to inflict or has inflicted demonstrable and
material injury on the business of the Company;

                  (ii) has participated in any fraud against the Company; or

                  (iii) has intentionally damaged any property of the Company
thereby causing demonstrable and material injury to the business of the Company;

PROVIDED THAT Cause shall not exist based on conduct described in clause (ii) or
clause (iii) unless the conduct described in such clause has not been cured
within fifteen (15) days following the Officer's receipt of written notice from
the Company specifying the particulars of the conduct constituting Cause.

         For purposes of this Section 11, "Good Reason" means that any of the
following is undertaken without the Officer's express written consent:

                  (i) the assignment to the Officer of any duties or
responsibilities that results in a significant diminution in the Officer's
function as in effect immediately prior to the effective date of the change in
control; provided, however, that a mere change in the Officer's title or
reporting relationships shall not constitute Good Reason;

                  (ii) a material reduction by the Company in the Officer's
annual base salary, as in effect on the effective date of the change in control
or as increased thereafter;

                  (iii) any failure by the Company to continue in effect any
benefit plan or program, including fringe benefits, incentive plans and plans
with respect to the receipt of securities of the Company, in which the Officer
is participating immediately prior to the effective

                                      14.

<PAGE>

date of the change in control (hereinafter referred to as "Benefit Plans"); or
the taking of any action by the Company that would adversely affect the
Officer's participation in or reduce the Officer's benefits under the Benefit
Plans; provided, however, that "Good Reason" shall not exist under this
paragraph following a change in control if the Company offers a range of benefit
plans and programs that, taken as a whole, are comparable to the Benefit Plans;
or

                  (iv) a relocation of the Officer's business office to a
location more than fifty (50) miles from the location at which the Officer
performs duties as of the effective date of the change in control, except for
required travel by the Officer on the Company's business to an extent
substantially consistent with the Officer's business travel obligations prior to
the change in control.

12.      AMENDMENT OF THE PLAN AND STOCK AWARDS.

         (a) AMENDMENT OF PLAN. The Board at any time, and from time to time,
may amend the Plan. However, except as provided in Section 11 relating to
adjustments upon changes in Common Stock, no amendment shall be effective unless
approved by the stockholders of the Company to the extent stockholder approval
is necessary to satisfy the requirements of Section 422 of the Code, Rule 16b-3
or any Nasdaq or securities exchange listing requirements.

         (b) STOCKHOLDER APPROVAL. The Board may, in its sole discretion, submit
any other amendment to the Plan for stockholder approval, including, but not
limited to, amendments to the Plan intended to satisfy the requirements of
Section 162(m) of the Code and the regulations thereunder regarding the
exclusion of performance-based compensation from the limit on corporate
deductibility of compensation paid to certain executive officers.

         (c) CONTEMPLATED AMENDMENTS. It is expressly contemplated that the
Board may amend the Plan in any respect the Board deems necessary or advisable
to provide eligible Employees with the maximum benefits provided or to be
provided under the provisions of the Code and the regulations promulgated
thereunder relating to Incentive Stock Options and/or to bring the Plan and/or
Incentive Stock Options granted under it into compliance therewith.

         (d) NO IMPAIRMENT OF RIGHTS. Rights under any Stock Award granted
before amendment of the Plan shall not be impaired by any amendment of the Plan
unless (i) the Company requests the consent of the Participant and (ii) the
Participant consents in writing.

         (e) AMENDMENT OF STOCK AWARDS. The Board at any time, and from time to
time, may amend the terms of any one or more Stock Awards; PROVIDED, HOWEVER,
that the rights under any Stock Award shall not be impaired by any such
amendment unless (i) the Company requests the consent of the Participant and
(ii) the Participant consents in writing.

13.      TERMINATION OR SUSPENSION OF THE PLAN.

         (a) PLAN TERM. The Board may suspend or terminate the Plan at any time.
Unless sooner terminated, the Plan shall terminate on the day before the tenth
(10th) anniversary of the Effective Date the Plan described in Section 14 or the
date on which the Plan is approved by the

                                      15.

<PAGE>

stockholders of the Company, whichever is earlier. No Stock Awards may be
granted under the Plan while the Plan is suspended or after it is terminated.

         (b) NO IMPAIRMENT OF RIGHTS. Suspension or termination of the Plan
shall not impair rights and obligations under any Stock Award granted while the
Plan is in effect except with the written consent of the Participant.

14.      EFFECTIVE DATE OF PLAN.

         The Plan shall become effective simultaneously with the effectiveness
of the Company's registration statement under the Securities Act with respect to
the initial public offering of shares of the Company's Common Stock by the
Board, but no Stock Award shall be exercised (or, in the case of a stock bonus,
shall be granted) unless and until the Plan has been approved by the
stockholders of the Company, which approval shall be within twelve (12) months
before or after the date the Plan is adopted by the Board.

15.      CHOICE OF LAW.

         The law of the State of Delaware shall govern all questions concerning
the construction, validity and interpretation of this Plan, without regard to
such state's conflict of laws rules.

                                      16.

<PAGE>

                       INTRABIOTICS PHARMACEUTICALS, INC.
                           2000 EQUITY INCENTIVE PLAN

                             STOCK OPTION AGREEMENT
                   (INCENTIVE AND NONSTATUTORY STOCK OPTIONS)

         Pursuant to your Stock Option Grant Notice ("Grant Notice") and this
Stock Option Agreement, IntraBiotics Pharmaceuticals, Inc. (the "Company") has
granted you an option under its 2000 Equity Incentive Plan (the "Plan") to
purchase the number of shares of the Company's Common Stock indicated in your
Grant Notice at the exercise price indicated in your Grant Notice. Defined terms
not explicitly defined in this Stock Option Agreement but defined in the Plan
shall have the same definitions as in the Plan.

         The details of your option are as follows:

         1. VESTING. Subject to the limitations contained herein, your option
will vest as provided in your Grant Notice, provided that vesting will cease
upon the termination of your Continuous Service.

         2. NUMBER OF SHARES AND EXERCISE PRICE. The number of shares of Common
Stock subject to your option and your exercise price per share referenced in
your Grant Notice may be adjusted from time to time for Capitalization
Adjustments, as provided in the Plan.

         3. EXERCISE PRIOR TO VESTING ("EARLY EXERCISE"). If permitted in your
Grant Notice (i.e., the "Exercise Schedule" indicates that "Early Exercise" of
your option is permitted) and subject to the provisions of your option, you may
elect at any time that is both (i) during the period of your Continuous Service
and (ii) during the term of your option, to exercise all or part of your option,
including the nonvested portion of your option; provided, however, that:

                  (a) a partial exercise of your option shall be deemed to cover
first vested shares of Common Stock and then the earliest vesting installment of
unvested shares of Common Stock;

                  (b) any shares of Common Stock so purchased from installments
that have not vested as of the date of exercise shall be subject to the purchase
option in favor of the Company as described in the Company's form of Early
Exercise Stock Purchase Agreement;

                  (c) you shall enter into the Company's form of Early Exercise
Stock Purchase Agreement with a vesting schedule that will result in the same
vesting as if no early exercise had occurred; and

                  (d) if your option is an incentive stock option, then, as
provided in the Plan, to the extent that the aggregate Fair Market Value
(determined at the time of grant) of the shares of Common Stock with respect to
which your option plus all other incentive stock options you hold are
exercisable for the first time by you during any calendar year (under all plans
of the

                                       1.

<PAGE>

Company and its Affiliates) exceeds one hundred thousand dollars ($100,000),
your option(s) or portions thereof that exceed such limit (according to the
order in which they were granted) shall be treated as nonstatutory stock
options.

         4. METHOD OF PAYMENT. Payment of the exercise price is due in full upon
exercise of all or any part of your option. You may elect to make payment of the
exercise price in cash or by check or in any other manner PERMITTED BY YOUR
GRANT NOTICE, which may include one or more of the following:

                  (a) In the Company's sole discretion at the time your option
is exercised and provided that at the time of exercise the Common Stock is
publicly traded and quoted regularly in THE WALL STREET JOURNAL, pursuant to a
program developed under Regulation T as promulgated by the Federal Reserve Board
that, prior to the issuance of Common Stock, results in either the receipt of
cash (or check) by the Company or the receipt of irrevocable instructions to pay
the aggregate exercise price to the Company from the sales proceeds.

                  (b) Provided that at the time of exercise the Common Stock is
publicly traded and quoted regularly in THE WALL STREET JOURNAL, by delivery of
already-owned shares of Common Stock either that you have held for the period
required to avoid a charge to the Company's reported earnings (generally six
months) or that you did not acquire, directly or indirectly from the Company,
that are owned free and clear of any liens, claims, encumbrances or security
interests, and that are valued at Fair Market Value on the date of exercise.
"Delivery" for these purposes, in the sole discretion of the Company at the time
you exercise your option, shall include delivery to the Company of your
attestation of ownership of such shares of Common Stock in a form approved by
the Company. Notwithstanding the foregoing, you may not exercise your option by
tender to the Company of Common Stock to the extent such tender would violate
the provisions of any law, regulation or agreement restricting the redemption of
the Company's stock.

         5. WHOLE SHARES. You may exercise your option only for whole shares of
Common Stock.

         6. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the contrary
contained herein, you may not exercise your option unless the shares of Common
Stock issuable upon such exercise are then registered under the Securities Act
or, if such shares of Common Stock are not then so registered, the Company has
determined that such exercise and issuance would be exempt from the registration
requirements of the Securities Act. The exercise of your option must also comply
with other applicable laws and regulations governing your option, and you may
not exercise your option if the Company determines that such exercise would not
be in material compliance with such laws and regulations.

         7. TERM. You may not exercise your option before the commencement of
its term or after its term expires. The term of your option commences on the
Date of Grant and expires upon the EARLIEST of the following:

                  (a) immediately upon the termination of your Continuous
Service for Cause;

                                       2.

<PAGE>

                  (b) three (3) months after the termination of your
Continuous Service for any reason other than Cause, Disability or death,
provided that if during any part of such three (3) month period you may not
exercise your option solely because of the condition set forth in the preceding
paragraph relating to "Securities Law Compliance," your option shall not expire
until the earlier of the Expiration Date or until it shall have been exercisable
for an aggregate period of three (3) months after the termination of your
Continuous Service;

                  (c) six (6) months after the termination of your
Continuous Service due to your Disability;

                  (d) twelve (12) months after your death if you die either
during your Continuous Service or within three (3) months after your
Continuous Service terminates for reason other than Cause;

                  (e) the Expiration Date indicated in your Grant Notice; or

                  (f) the day before the tenth (10th) anniversary of the Date of
Grant.

         For purposes of your option, "Cause" means your misconduct, including
but not limited to: (i) your conviction of any felony or any crime involving
moral turpitude or dishonesty, (ii) your participation in a fraud or act of
dishonesty against the Company, (iii) your conduct that, based upon a good faith
and reasonable factual investigation and determination by the Board,
demonstrates your gross unfitness to serve, or (iv) your intentional, material
violation of any contract between the Company and you or any statutory duty of
yours to the Company that you do not correct within fifteen (15) days after
written notice to you thereof. Your physical or mental disability shall not
constitute "Cause."

         If your option is an incentive stock option, note that, to obtain the
federal income tax advantages associated with an "incentive stock option," the
Code requires that at all times beginning on the date of grant of your option
and ending on the day three (3) months before the date of your option's
exercise, you must be an employee of the Company or an Affiliate, except in the
event of your death or Disability. The Company has provided for extended
exercisability of your option under certain circumstances for your benefit but
cannot guarantee that your option will necessarily be treated as an "incentive
stock option" if you continue to provide services to the Company or an Affiliate
as a Consultant or Director after your employment terminates or if you otherwise
exercise your option more than three (3) months after the date your employment
terminates.

         8.       EXERCISE.

                  (a) You may exercise the vested portion of your option (and
the unvested portion of your option if your Grant Notice so permits) during its
term by delivering a Notice of Exercise (in a form designated by the Company)
together with the exercise price to the Secretary of the Company, or to such
other person as the Company may designate, during regular business hours,
together with such additional documents as the Company may then require.

                                       3.

<PAGE>

                  (b) By exercising your option you agree that, as a condition
to any exercise of your option, the Company may require you to enter into an
arrangement providing for the payment by you to the Company of any tax
withholding obligation of the Company arising by reason of (1) the exercise of
your option, (2) the lapse of any substantial risk of forfeiture to which the
shares of Common Stock are subject at the time of exercise, or (3) the
disposition of shares of Common Stock acquired upon such exercise.

                  (c) If your option is an incentive stock option, by exercising
your option you agree that you will notify the Company in writing within fifteen
(15) days after the date of any disposition of any of the shares of the Common
Stock issued upon exercise of your option that occurs within two (2) years after
the date of your option grant or within one (1) year after such shares of Common
Stock are transferred upon exercise of your option.

         9. TRANSFERABILITY. Your option is not transferable, except by will or
by the laws of descent and distribution, and is exercisable during your life
only by you. Notwithstanding the foregoing, by delivering written notice to the
Company, in a form satisfactory to the Company, you may designate a third party
who, in the event of your death, shall thereafter be entitled to exercise your
option.

         10. OPTION NOT A SERVICE CONTRACT. Your option is not an employment or
service contract, and nothing in your option shall be deemed to create in any
way whatsoever any obligation on your part to continue in the employ of the
Company or an Affiliate, or of the Company or an Affiliate to continue your
employment. In addition, nothing in your option shall obligate the Company or an
Affiliate, their respective shareholders, Boards of Directors, Officers or
Employees to continue any relationship that you might have as a Director or
Consultant for the Company or an Affiliate.

         11. WITHHOLDING OBLIGATIONS.

                  (a) At the time you exercise your option, in whole or in part,
or at any time thereafter as requested by the Company, you hereby authorize
withholding from payroll and any other amounts payable to you, and otherwise
agree to make adequate provision for (including by means of a "cashless
exercise" pursuant to a program developed under Regulation T as promulgated by
the Federal Reserve Board to the extent permitted by the Company), any sums
required to satisfy the federal, state, local and foreign tax withholding
obligations of the Company or an Affiliate, if any, which arise in connection
with your option.

                  (b) Upon your request and subject to approval by the Company,
in its sole discretion, and compliance with any applicable conditions or
restrictions of law, the Company may withhold from fully vested shares of Common
Stock otherwise issuable to you upon the exercise of your option a number of
whole shares of Common Stock having a Fair Market Value, determined by the
Company as of the date of exercise, not in excess of the minimum amount of tax
required to be withheld by law. If the date of determination of any tax
withholding obligation is deferred to a date later than the date of exercise of
your option, share withholding pursuant to the preceding sentence shall not be
permitted unless you make a proper and timely election under Section 83(b) of
the Code, covering the aggregate number of shares of Common

                                       4.

<PAGE>

Stock acquired upon such exercise with respect to which such determination is
otherwise deferred, to accelerate the determination of such tax withholding
obligation to the date of exercise of your option. Notwithstanding the filing of
such election, shares of Common Stock shall be withheld solely from fully vested
shares of Common Stock determined as of the date of exercise of your option that
are otherwise issuable to you upon such exercise. Any adverse consequences to
you arising in connection with such share withholding procedure shall be your
sole responsibility.

                  (c) You may not exercise your option unless the tax
withholding obligations of the Company and/or any Affiliate are satisfied.
Accordingly, you may not be able to exercise your option when desired even
though your option is vested, and the Company shall have no obligation to issue
a certificate for such shares of Common Stock or release such shares of Common
Stock from any escrow provided for herein.

         12. NOTICES. Any notices provided for in your option or the Plan shall
be given in writing and shall be deemed effectively given upon receipt or, in
the case of notices delivered by mail by the Company to you, five (5) days after
deposit in the United States mail, postage prepaid, addressed to you at the last
address you provided to the Company.

         13. GOVERNING PLAN DOCUMENT. Your option is subject to all the
provisions of the Plan, the provisions of which are hereby made a part of your
option, and is further subject to all interpretations, amendments, rules and
regulations which may from time to time be promulgated and adopted pursuant to
the Plan. In the event of any conflict between the provisions of your option and
those of the Plan, the provisions of the Plan shall control.

                                       5.<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 10.4

                            PURCHASE/SUPPLY AGREEMENT

                                    REGARDING

                                     IB-367

                                     BETWEEN

                          FERRING PEPTIDE PRODUCTION AB
                       P.O. BOX 30047, SOLDATTORPSVAGEN 5
                                  S-20061 MALMO
                                     SWEDEN

                                       AND

                          POLYPEPTIDE LABORATORIES A/S
                                 HERREDSVEJEN 2
                                  3400 HILLER0D
                                     DENMARK

                      JOINTLY REFERRED TO AS "POLYPEPTIDE"

                                       AND

                       INTRABIOTICS PHARMACEUTICALS, INC.
                                 816 KIFER ROAD
                                    SUNNYVALE
                                CALIFORNIA 94086

                                       USA

[ * ] = 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.

                                       1.

<PAGE>

         This Agreement is entered into on the 3rd day of January, 1997,
between POLYPEPTIDE LABORATORIES A/S, a Danish company incorporated under the
laws of Denmark, with its registered offices at Herredsvejen 2,3400 Hillerod,
Denmark and FERRING PEPTIDE PRODUCTION AB, a Swedish company incorporated
under the laws of Sweden, with its registered office at Soldattorpsvagen 5,
S-20061 Malmo, Sweden (hereinafter jointly referred to as POLYPEPTIDE), and
INTRABIOTICS PHARMACEUTICALS, INC., a company incorporated in the state of
Delaware under the laws of the United States, with its registered offices at
816 Kifer Road, Sunnyvale, California 94086, USA (hereinafter referred to as
INTRABIOTICS).

         WHEREAS, the parties now wish to enter into a long-term business
relationship under which POLYPEPTIDE will supply to INTRABIOTICS the Drug
Substance IB-367 hereafter referred to as the "Product" for marketing
world-wide. Therefore the parties agree on the following:

         As used herein, each of the following defined terms shall have the
meaning specified:

         "Affiliate" of a Party shall mean an entity: (i) in which at least 50
per cent of the voting shares or other means of control of such entity are owned
or controlled by such Party, or (ii) which owns or controls at least 50 per cent
of the voting shares of such Party, or (iii) in which at least 50 per cent of
such ownership or control is owned or controlled by an entity owning or
controlling at least 50 per cent of the voting shares of such Party.

         "cGMP" shall mean the current good manufacturing practices regulations
now set forth in Part 211 of Title 21 of the U.S. Code of Federal Regulations,
as hereafter revised and amended.

         "Product" shall mean the compound as described in the Specification
manufactured according to the process developed under the Development Supply
Agreement entered into between INTRABIOTICS and POLYPEPTIDE on the date hereof.

         "Specification" shall mean the specifications set forth in Annex 1 to
this Agreement as may be modified from time to time as directed by IntraBiotics.

         "Party" shall mean INTRABIOTICS or POLYPEPTIDE and, when used in the
plural, shall mean INTRABIOTICS and POLYPEPTIDE.

         "Manufacturing Cost" shall mean, for each gram of Product
manufactured, the cost to POLYPEPTIDE for [ * ] relating to the manufacture
of Product, and other costs to manufacture Product under current generally
accepted accounting principles, all such costs and charges to be calculated
on the basis consistently applied to all other products manufactured by
POLYPEPTIDE at the facility or facilities used to manufacture Product.

1.       SUPPLY ARRANGEMENT

         This entire agreement is conditional upon:

         -     INTRABIOTICS deciding to use the Process developed under the
               Development Supply Agreement entered into between INTRABIOTICS
               and POLYPEPTIDE on the date hereof for producing the Product for
               commercial sale.

[ * ] = 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>

         -     INTRABIOTICS notifying POLYPEPTIDE on its decision to produce the
               Product for commercial sales with the lead times stated in clause
               3.1.

         Given that these conditions are fulfilled POLYPEPTIDE shall supply to
INTRABIOTICS and its sublicensees and distributors bulk quantities of the
Product made in accordance with the Specification. The supply of the Product is
made to INTRABIOTICS in accordance with Annex 2, Purchase/Supply Schedules,
which shall be provided by INTRABIOTICS to POLYPEPTIDE according to clause 3.2
and 3.3, and the individual purchase orders placed by INTRABIOTICS consistent
herewithwhereby the actual delivery dates are defined.

2.       PURCHASE/SUPPLY

         Under this Agreement and subject to POLYPEPTIDE's ability to supply,
INTRABIOTICS is obliged to purchase at least [ * ] per cent of its world-wide
needs of the Product on an annual basis from POLYPEPTIDE. If INTRABIOTICS
licenses the Product to a third party it shall in good faith attempt to obtain
for the benefit of POLYPEPTIDE a purchase/supply agreement between the licensee
and POLYPEPTIDE on substantially the same terms as this Agreement.

         If INTRABIOTICS licenses the Product to a third party and such third
party does not enter into a purchase/supply agreement with POLYPEPTIDE and as a
consequence the purchases made by INTRABIOTICS under this Agreement come to an
end or are significantly reduced (a significant reduction for this purpose being
a reduction of [ * ]% within any [ * ] period as compared to the preceding
[ * ]) then:

         (a)      In the case that the purchases are significantly reduced
INTRABIOTICS shall honour existing purchase orders on the scheduled dates and
shall within [ * ] of the occurrence of the significant reduction in
purchases, purchase a proportional part (corresponding to the percentage
reduction in purchases) of existing stocks of finished inventory of Product
produced on the basis of INTRABIOTICS Purchase/Supply Schedules in accordance
with clause 3 at the then established price according to clause 4. [ * ] sole
option, [ * ] shall within [ * ] of the occurrence of the significant
reduction in purchases, either purchase a proportional part (corresponding to
the percentage reduction in purchases) of the inventory of raw materials
purchased and intermediates produced on the basis of INTRABIOTICS
Purchase/Supply Schedules in accordance with clause 3 at a price equal to
[ * ], or request POLYPEPTIDE to complete the manufacture of such raw
materials and intermediates into finished inventory of Product which
INTRABIOTICS will purchase at the then established price according to clause
4.

         (b)      In the case that the purchases come to an end INTRABIOTICS
shall honour existing purchase orders on the scheduled dates and shall within
[ * ] of the last existing purchase order being delivered purchase all
existing stocks of finished inventory of Product produced on the basis of
INTRABIOTICS Purchase/Supply Schedules in accordance with clause 3 at the
then established price according to clause 4. At INTRABIOTICS sole option,
INTRABIOTICS shall within [ * ] of the last existing purchase order being
delivered either purchase all of the inventory of raw materials purchased and
intermediates produced on the basis of INTRABIOTICS Purchase/Supply Schedules
in accordance with Clause 3 at a price equal to

[ * ] = 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>

[* ], or request POLYPEPTIDE to complete the manufacture of such raw materials
and intermediates into finished inventory of Product which INTRABIOTICS will
purchase at the then established price according to clause 4.

3.       PURCHASE/SUPPLY SCHEDULES

         Following the completion of Phase II clinical studies INTRABIOTICS
shall advise POLYPEPTIDE of its estimate of the market potential of the Product
to assist POLYPEPTIDE in its long term planning. Such estimates are indicative
only and shall be non-binding on the Parties.

         3.1      For quantities of Product to be delivered during the first
year of commercial supply of the Product the following shall apply:

                  (a)      For quantities up to [ * ] the purchase order from
INTRABIOTICS shall be given [ * ] in advance.

                  (b)      For quantities in excess of [ * ] and up to [ * ]
purchase orders shall be given at least [ * ] in advance.

                  (c)      For quantities between [ * ] purchase orders shall be
given at least [ * ] in advance.

                  (d)      For quantities above [ * ] purchase orders shall be
given at least [ * ] in advance.

         3.2      From the first anniversary of the first delivery of the
Product hereunder and onwards INTRABIOTICS shall by [ * ] of each calendar year
render to POLYPEPTIDE newly revised Purchase/Supply Schedules. Each
Purchase/Supply Schedule will be for the following [ * ] months.

         POLYPEPTIDE is obliged to supply the Product according to INTRABIOTICS'
purchase order provided that such purchase order is placed [ * ] prior to the
requested delivery date. If INTRABIOTICS places orders for quantities in any
calendar quarter exceeding [ * ] of the quantities purchased in the previous
calendar quarter then POLYPEPTIDE will use its best efforts to deliver the
additional quantities within a reasonable period of time.

         With respect to each Purchase/Supply Schedule in effect from time to
time INTRABIOTICS is obliged to purchase at least [ * ] of the volume of the
first [ * ] of such Purchase/Supply Schedule.

         3.3      The supply and forecasting procedure outlined above in clause
3.2 shall govern annual supplies of Product up to [ * ]. For annual supplies
above [ * ] the Parties shall negotiate in good faith a new supply and
forecasting procedure to replace 3.2.

         In the event that the Parties fail to agree a new procedure, clause 3.2
shall remain in force and govern the supply of up to [ * ] of Product per year.
INTRABIOTICS in addition may place additional binding purchase orders at least
[ * ] in advance of the requested delivery date for such

[ * ] = 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>

additional supplies of Product provided that such additional supplies are within
the volumes in the Purchase/Supply Schedules in effect from time to time and
provided that the purchase orders for any given calendar [ * ] period do not
exceed the preceding calendar [ * ] period by more than [ * ]. POLYPEPTIDE shall
accept such purchase orders.

         3.4      If at any time POLYPEPTIDE shall be unable to supply
Product to INTRABIOTICS (other than as excused hereunder by virtue of force
majeure) then this shall be considered a material breach of this Agreement.
In addition, if POLYPEPTIDE shall be unable to supply or POLYPEPTIDE
terminates this Agreement other than pursuant to clause 9.2, POLYPEPTIDE
shall grant to INTRABIOTICS the [ * ] right to manufacture the Product under
[ * ], and shall promptly disclose and transfer to INTRABIOTICS at [ * ],
such information as INTRABIOTICS shall reasonably require in order to make
such Product or have such Product made on its behalf. Upon request by
INTRABIOTICS, POLYPEPTIDE shall further provide to INTRABIOTICS at [ * ]
assistance from and access to appropriate POLYPEPTIDE personnel as reasonably
required to facilitate the establishment of a reliable source of supply of
materials to INTRABIOTICS with a minimum of "down-time".

4.       PRICES

         4.1      The price per delivery shall be based on the total quantity
to be purchased by INTRABIOTICS for the [ * ] according to the
Purchase/Supply Schedule. For the period from the signature of this agreement
until [ * ] the prices shall be calculated pursuant to the following scale:

<TABLE>
<CAPTION>

                              VOLUME BAND
                                 [ * ]                             PRICE USD PER [ * ]
<S>                         <C>                                    <C>
                                 [ * ]                                    [ * ]
                                 [ * ]                                    [ * ]
                                 [ * ]                                    [ * ]
                                 [ * ]                                    [ * ]
                                 [ * ]                                    [ * ]
                                 [ * ]                                    [ * ]
                                 [ * ]                                    [ * ]
</TABLE>

         4.2      The prices stated in clause 4.1 are based on the following two
basic assumptions: (i) that the cyclization of the linear peptide to form the
Product through the formation of the two disulfide bridges has a yield of at
least [ * ] as measured by [ * ] with [ * ] at [ * ], and (ii) the Specification
is as set out in Annex 1 upon signing this Agreement.

         When the commercial scale-up process is defined the parties shall
review any change in price in the light of the then calculated Manufacturing
Cost based on the then current Specification and process. Provided that the
cyclization yield is still at least [ * ] and there have been no changes to the
Specification affecting Manufacturing Cost, then the price formula as outlined
in clause 4.3 shall be applicable to the prices listed in clause 4.1. If either
of the two basic

[ * ] = 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>

assumptions have changed and it can be demonstrated that these changes have
increased or decreased the Manufacturing Cost of the Product then the parties
shall negotiate appropriate changes in the prices listed in clause 4.1. In the
event that the Parties are unable to reach agreement on a revised price within
[ * ] of starting negotiations then, upon notice from either Party, [ * ].

         4.3      Every [ * ] thereafter the prices shall be negotiated and
approved by the parties for the forthcoming [ * ] period. These negotiations
will end no later than 1 month before the beginning of the forthcoming [ * ]
period. The negotiations on the price shall take into consideration increases or
decreases in the costs of [ * ], and the interest of both parties to optimise
the overall profitability. The adjusted price applies to all deliveries in the
following [ * ] period. In the event that the exchange rate between the Danish
Kroner and US Dollar fluctuates more than [ * ] in the intervening period
between [ * ] price reviews, the Parties shall review, within [ * ] of such
fluctuation being identified by either Party, the effect of such currency
fluctuation on costs and revenues and prices in accordance with this clause.

         4.4      If the parties cannot agree an a new price and POLYPEPTIDE's
Manufacturing Cost within the same Volume Band above has increased, the former
agreed price shall be changed for the next [ * ] period by an amount
corresponding to the change of the lower of [ * ] for the preceding [ * ],
published by the US Department of Commerce, or the [ * ] over the preceding
[ * ].

         If the parties cannot agree on a new price and POLYPEPTIDE's
Manufacturing Cost within the same Volume Band above has decreased, the former
agreed price shall be decreased for the next [ * ] period by an amount
corresponding to [ * ] percent of [ * ].

         4.5      If at any time after the scale-up Process has been defined,
cf. clause 4.2, INTRABIOTICS shall modify the Specification and it can be
demonstrated that such modifications have increased or decreased the
Manufacturing Cost of the Product, then the Parties shall negotiate appropriate
changes in the then current prices. In the event that the Parties are unable to
reach agreement on a revised price within [ * ] of starting negotiations then,
upon notice from either Party, [ * ].

         4.6      If during a given [ * ] period INTRABIOTICS has obtained
supplies of the Product at prices based on a Purchase/Supply Schedule which
INTRABIOTICS has not been able to fulfil, or has purchased quantities in excess
of the quantities on which the prices have been based, INTRABIOTICS' [ * ] for
the [ * ] period in question shall be adjusted accordingly in the following
[ * ]. Any amount owed by INTRABIOTICS to POLYPEPTIDE due to such adjustment
shall be paid no later than [ * ] after the beginning of the next [ * ] period.
Any amount owed by POLYPEPTIDE to INTRABIOTICS shall be [ * ].

5.       PAYMENTS

         5.1      The Product shall be invoiced at shipment to INTRABIOTICS in
US dollars ("USD").

[ * ] = 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>

         5.2      Payments shall be made by INTRABIOTICS to POLYPEPTIDE at the
latest [ * ] from date of invoice. Date of invoice shall not precede date of
shipment of the Product together with information necessary to verify acceptable
quality and conformance to all applicable specifications for each batch
manufactured by POLYPEPTIDE.

6.       DELIVERY AND ORDERING OF THE PRODUCT

         6.1      POLYPEPTIDE shall deliver to INTRABIOTICS all the Product in a
timely fashion, subject to the requirements of this Agreement and individual
purchase orders. Based on the Purchase/Supply Schedule INTRABIOTICS shall give
to POLYPEPTIDE confirmed purchase orders at least [ * ] prior to the requested
delivery date unless otherwise stated in this Agreement and POLYPEPTIDE shall
deliver the Product no later than the requested delivery date provided such
purchase orders are in keeping with the most recently revised Purchase/Supply
Schedule as outlined in clause 3.1, 3.2 and 3.3. All Product shall be shipped to
INTRABIOTICS by POLYPEPTIDE at least [ * ] before the Product's date of
reanalysis according to the Specification.

         6.2      The Product is to be shipped [ * ], as that term is generally
understood in accordance with "Incoterms". POLYPEPTIDE shall package materials
for shipment in accordance with the Specification and all applicable laws, as
supplemented (to the extent not inconsistent therewith) by POLYPEPTIDE's then
current standard operating practices. POLYPEPTIDE shall split shipments upon the
reasonable request of INTRABIOTICS.

         POLYPEPTIDE shall provide shipping documentation in accordance with
that requested in INTRABIOTICS' purchase order, as well as (in advance if
possible): (i) a certificate of analysis, (ii) batch record, and (iii) such
other documentation relating to the Product as INTRABIOTICS may reasonably
request in writing from time to time, for each production lot included in the
shipment.

         6.3      In the event of loss or damaged shipment hereunder subject to
clause 6.4 POLYPEPTIDE shall use its reasonable best efforts to replace said
shipment within [ * ] of notification of loss or damage by INTRABIOTICS.

         6.4      (a)      INTRABIOTICS shall be deemed to have accepted
delivery of Product supplied hereunder unless INTRABIOTICS shall have notified
POLYPEPTIDE of any non-conformity in respect of a shipment within [ * ]
following INTRABIOTICS' receipt of same.

                  (b)      Any claim of nonconformity hereunder shall be
accompanied by a report of analysis of the allegedly nonconforming material
prepared by or on behalf of INTRABIOTICS. If POLYPEPTIDE confirms INTRABIOTICS'
claim of nonconformity, POLYPEPTIDE shall replace the nonconforming goods with
conforming goods within [ * ] and refund the entire purchase price of the
nonconforming goods to INTRABIOTICS within [ * ]. INTRABIOTICS shall pay for the
replacement conforming goods within [ * ] of receipt. Pursuant to written
directions from POLYPEPTIDE, INTRABIOTICS shall either return the nonconforming
goods to POLYPEPTIDE, or destroy same, [ * ].

[ * ] = 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>

                  (c)      In case of disagreement between the parties regarding
the conformity or nonconformity of a delivery of the Product, the parties shall
refer the matter for review and/or analysis and final settlement to an
independent expert laboratory to be agreed by both of them. The costs of such
expertise and analysis shall [ * ].

7.       POLYPEPTIDE MANUFACTURING FACILITIES

         7.1      POLYPEPTIDE represents and warrants that it will maintain
suitable manufacturing facilities and equipment for manufacturing of the Product
pursuant to this Agreement.

         7.2      POLYPEPTIDE will comply with the requirements set forth by
relevant governmental authorities for POLYPEPTIDE's facilities for manufacture
of the Product for use in human pharmaceuticals. Relevant governmental
authorities include but is not limited to the regulatory authorities of the
United States of America, the European Union, other European states, and [ * ].

         7.3      [ * ] shall maintain and regularly update the DMF as necessary
to comply with applicable laws and regulations and to accurately reflect its
then current manufacturing procedures. [ * ] shall have the [ * ] right to
reference and otherwise use or direct the use of the DMF; provided, however,
that INTRABIOTICS shall be free, in its sole discretion, to [ * ]. [ * ] shall
not abandon or otherwise fail to maintain the DMF without first offering to
assign the DMF to [ * ].

         7.4      Product supplied by POLYPEPTIDE to INTRABIOTICS shall be
manufactured, stored, and shipped by POLYPEPTIDE in compliance with all
applicable laws and regulations, including cGMP regulations, in accordance with
the master batch record maintained by POLYPEPTIDE, the DMF submitted by
POLYPEPTIDE, and the Specification. POLYPEPTIDE shall be free to change its
manufacturing specification or manufacturing directions with respect to the
Product only with the prior consent of INTRABIOTICS. Such consent shall not be
unreasonably withheld.

7.5 POLYPEPTIDE shall perform or cause to be performed all quality control tests
and assays on raw and packaging materials and intermediates used in preparing
and shipping Product hereunder, all in a manner consistent with the
Specification and with POLYPEPTIDE'S reasonable internal quality control
procedures. POLYPEPTIDE shall retain records pertaining to such testing and, to
the extent required by law or as reasonably required by INTRABIOTICS in order to
prepare for or defend against litigation brought by third parties, POLYPEPTIDE
shall provide INTRABIOTICS and its licensees with access to and copies of such
batch records and file samples.

         7.6      POLYPEPTIDE shall notify INTRABIOTICS promptly of any
correspondence to or from, or inspections by, relevant governmental authorities
relating to the Product or the manufacture thereof and shall promptly provide
copies of such correspondence or reports of such inspections. This includes any
FDA form 483 in the form that would be available under 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 ACT OF 1933, AS AMENDED.

                                       8.

<PAGE>

Freedom of Information Act or other equivalent forms from another relevant
regulatory authority.

         7.7      POLYPEPTIDE shall promptly inform INTRABIOTICS of any
complaint or inquiry of which it becomes aware which raise potentially serious
quality, health, safety or regulatory concerns regarding the Product.

         7.8      Should the relevant governmental authorities, for reasons for
which POLYPEPTIDE bears the responsibility, withdraw the approval of manufacture
of the Product for use in human pharmaceuticals and as a consequence thereof
demand that the Product delivered under this agreement may not be used by
INTRABIOTICS in its products. INTRABIOTICS shall have the right to terminate
this agreement in accordance with Clause 9 and shall have the rights described
in clause 3.4, and POLYPEPTIDE shall [ * ] within [ * ] of receipt of the stock.
Apart therefrom neither party shall incur any liability towards the other party.
INTRABIOTICS shall either return the Product still in stock at INTRABIOTICS to
POLYPEPTIDE or destroy same, each at [ * ].

         7.9      INTRABIOTICS has the right to authorise a representative to
inspect POLYPEPTIDE's premises used for the production of the Product. Before an
inspection takes place INTRABIOTICS shall reveal the full identity of its
authorised representative to POLYPEPTIDE, who shall accept the representative,
unless it has objectively valid reasons for not doing so. Inspections shall take
place at INTRABIOTICS' own costs and shall not limit POLYPEPTIDE's
responsibility for the manufacture of the Product. For this purpose,
INTRABIOTICS' authorised representative shall be granted, upon previous request,
access during business hours, to the part of POLYPEPTIDE's premises where the
Product is manufactured.

8.       OWNERSHIP OF INTELLECTUAL PROPERTY

         8.1      [ * ] shall own and will have [ * ] and will own [ * ]
relating to the [ * ] or its external advisors in [ * ]. All [ * ] will be
paid by [ * ] will direct all [ * ]. In order to [ * ] will ensure that the
[ * ] is [ * ] and execute such documents, including but not limited to [ * ],
as are necessary for [ * ]. [ * ] will supply to [ * ] copies of [ * ] when
relevant. [ * ] is entitled to [ * ].

         8.2 The DMF on the Product based on the facilities, technology, and
knowledge of POLYPEPTIDE is the property of [ * ], which is only permitted to
make use of the DMF for [ * ].

9.       TERM AND TERMINATION 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 ACT OF 1933, AS AMENDED.

                                       9.

<PAGE>

         9.1      This Agreement shall have an initial term of [ * ] full
calendar years following the first supplies of the Product hereunder and shall
then automatically renew for [ * ] periods unless POLYPEPTIDE terminates with
[ * ] written notice, or INTRABIOTICS terminates with [ * ] written notice given
prior to the commencement of any such renewal period.

         9.2      Each contract party shall be entitled to terminate the
present contract without notice in the event of material breaches of contract
by the other party or if bankruptcy or composition proceedings are opened on
the estate of the other party. Notice of termination for a material breach of
contract shall only be admissible if the other party was requested to rectify
the contract impediment within [ * ] period of grace without any response
being forthcoming from the other party. Notice may only be served within one
month after the end of the aforesaid limit.

10.      LIABILITY

         10.1     INTRABIOTICS shall indemnify, defend and hold POLYPEPTIDE and
its agents, employees and directors (the "POLYPEPTIDE Indemnitees") harmless
from and against any and all liability, damage, loss, cost or expense (including
reasonable attorneys' fees) arising out of third party claims or suits resulting
from the use, sale or promotion of Product or a product containing Product by
INTRABIOTICS, its sublicensees, distributors or agents, except to the extent
that such claims or suits result from negligence or intentional misconduct of
POLYPEPTIDE or a POLYPEPTIDE Indemnitee in the manufacture of the Product. Upon
assertion of such claim or suit, the POLYPEPTIDE Indemnitees shall promptly
notify INTRABIOTICS thereof and INTRABIOTICS shall appoint counsel reasonably
acceptable to the POLYPEPTIDE Indemnitees to represent the POLYPEPTIDE
Indemnitees with respect to any claim or suit for which indemnification is
sought. The POLYPEPTIDE Indemnitees shall not settle any such claim or suit
without the prior written consent of INTRABIOTICS, unless they shall have first
waived their rights to indemnification hereunder.

         10.2     POLYPEPTIDE shall indemnify, defend and hold INTRABIOTICS
and its agents, employees and directors (the "INTRABIOTICS Indemnitees")
harmless from and against any and all liability, damage, loss, cost or
expense (including reasonable attorneys' fees) arising out of third party
claims or suits resulting from negligence or intentional misconduct in the
manufacture of Product by POLYPEPTIDE, except to the extent such claims or
suits result from the negligence or wilful misconduct of INTRABIOTICS or an
INTRABIOTICS Indemnitee. Upon assertion of such claim or suit, the
INTRABIOTICS Indemnitees shall promptly notify POLYPEPTIDE thereof and
POLYPEPTIDE shall appoint counsel reasonably acceptable to the INTRABIOTICS
Indemnitees to represent the INTRABIOTICS Indemnitees with respect to any
claim or suit for which indemnification is sought. The INTRABIOTICS
Indemnitees shall not settle any such claim or suit without the prior written
consent of POLYPEPTIDE, unless they shall have first waived their rights to
indemnification hereunder.

         10.3     In no event shall either Party be liable to the other for
incidental or consequential damages or for punitive damages us a result of any
breach of this Agreement.

11.      ASSIGNMENT/TRANSFER

[ * ] = 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.

                                      10 .

<PAGE>

         This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. Neither
party shall assign its rights and obligations under this Agreement without first
obtaining the written consent of the other parties, which consent shall not be
unreasonably withheld. Each of the parties may assign its rights and obligations
to an Affiliate provided that the assigning party shall guarantee its
Affiliate's performance and obligations under this Agreement, or to any
successor by virtue of a merger or acquisition of substantially the entire
business to which this Agreement relates or in the case of INTRABIOTICS to a
licensee of the Product, without consent, but upon notice to the other party.

12.      FORCE MAJEURE

         Neither party is liable for failing to perform or having delayed the
performance of its obligation under this agreement, if the performance is
delayed or precluded by circumstances beyond its control, including but not
limited to fire, flood, war, strike, lock-out, failure or shortage of public
utilities due to governmental decrees, orders or legislation and court
injunctions.

         The party, whose performance is delayed or precluded, shall immediately
inform the other party of the circumstances preventing the performance.

         In the event that the circumstances preventing the performance continue
for more than [ * ], each party will have a right to cancel the Agreement and
neither of the parties will have a right to reimbursement or to any claim for
damages as a result of the cancellation of the Agreement.

         In the event that POLYPEPTIDE's ability to supply Product in whole or
in part to INTRABIOTICS is restricted by factors beyond its control and this
Agreement is not terminated, POLYPEPTIDE shall treat and supply INTRABIOTICS in
the same equitable manner as all of POLYPEPTIDES other major customers.

13.      OTHER PROVISIONS

         13.1     All amendments and changes to the present Agreement must be
made in writing and signed by both Parties in order to be valid.

         13.2     Except as expressly provided herein, nothing in this Agreement
is intended or shall be deemed to constitute a partnership, agency or
employer-employee relationship between the Parties. Neither Party shall have the
right to incur any debts or make any commitments for the other.

         13.3     If individual provisions of the present Agreement are wholly
or partially in breach of cogent law or if they are or become invalid for any
other reason, the validity of the other provisions shall not be affected
thereby. The present Agreement shall if necessary be amended by a valid
provision which comes as close as possible to the original intention of the
parties.

         13.4     Except as otherwise required by law, neither Party shall make
any public disclosure as to the terms or existence of this Agreement without the
prior written consent of 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 ACT OF 1933, AS AMENDED.

                                       11.

<PAGE>

other. Notwithstanding this clause, INTRABIOTICS may publish that such an
agreement has been entered into between the parties subject to pre-approval
by POLYPEPTIDE of the wording.

         13.5     THE PARTIES EXPRESSLY DISCLAIM ALL WARRANTIES, EXPRESSED OR
IMPLIED, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY, FITNESS
FOR A PARTICULAR PURPOSE, OR NON-INFRINGEMENT OF THIRD PARTY PATENTS, UNLESS
OTHERWISE EXPRESSLY PROVIDED FOR IN THIS AGREEMENT.

         13.6     INTRABIOTICS and POLYPEPTIDE each represents and warrants to
the other that, as of the Effective Date: (i) it is free to enter this
Agreement; (ii) in so doing it will not violate any other agreement to which it
is a party; (iii) it is a corporation duly organised and validly existing under
the laws of the jurisdiction indicated above and, by virtue of such
jurisdiction's laws, is in good standing as a domestic corporation of such
jurisdiction; and (iv) it is qualified to do business in all jurisdictions in
which qualification is necessary in order to perform its obligations hereunder.

         13.7     All disputes between the parties relating to this Agreement,
including its interpretation that cannot be settled amicably by the parties,
shall be settled by binding arbitration in the state of the defending party in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association. The arbitration carried out hereunder shall apply to the exclusion
of regular legal means, provided that the rights of the Parties in urgent
situations in which time is of the essence to obtain proper remedies in courts
of law or equity shall remain unimpaired.

14.      APPLICABLE LAW AND JURISDICTION

         All matters arising under or related to the Agreement shall be governed
by and construed under and pursuant to the laws of the State of California
without regard to conflict of laws principles.

         IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their respective duly authorised officers as of the day and year
first above written, each copy of which shall for all purposes be deemed to be
original.

POLYPEPTIDE LABORATORIES A/S               INTRABIOTICS PHARMACEUTICALS, INC.

/s/ Erik Lorentsen                         /s/ Thomas Shepherd
---------------------------------          -------------------------------------
Erik Lorentsen                             Thomas Shepherd
General Manager                            Vice President Corporate Development

FERRING PEPTIDE PRODUCTION AB

[ * ] = 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.

                                       12.

<PAGE>

/s/ Anders J. Andersen
---------------------------------
Anders J. Andersen
General Manager

[ * ] = 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.

                                       13.

<PAGE>

                                     ANNEX 1
                                  SPECIFICATION

TABLE OF CONTENTS:

Pages 1 and 2     INTRABIOTICS QUALITY SPECIFICATION No.: [ * ]

Page 3            - Storage

                  - Shipment

[ * ] = 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.

                                       14.

<PAGE>

                       INTRABIOTICS QUALITY SPECIFICATION

                                 QA ISSUED COPY

                            SPECIFICATION NO., [ * ]

<TABLE>
<CAPTION>

----------------------------------------------------------------------------------------------------------------------
MATERIAL:
IB-367-03                  FOR INFORMATION ONLY
----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                    <C>
DATE EFFECTIVE:                          SUPERCEDES:                            PAGE:
         Nov 26, 1996                             [ * ]                                  1 of 2
----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------
AUTHOR:                                  DEPT.:                                 DATE:
/s/  MISSING SIGNATURE                   Analytical Development                          11/26/96
----------------------------------------------------------------------------------------------------------------------
APPROVED:                                DEPT.:                                 DATE:
/s/ MISSING SIGNATURE                    Quality Assurance                               11/26/96
----------------------------------------------------------------------------------------------------------------------
APPROVED:                                DEPT.:                                 DATE:
/s/ MISSING SIGNATURE                    Pharmaceutical Development                      11/26/96
----------------------------------------------------------------------------------------------------------------------
</TABLE>

DESCRIPTION:
[ * ]

<TABLE>
<CAPTION>

----------------------------------------------------------------------------------------------------------------------
TEST                                   SPECIFICATION                                                METHOD
----------------------------------------------------------------------------------------------------------------------
<S>                                    <C>                                                          <C>
1. [ * ]                               [ * ]                                                        [ * ]
----------------------------------------------------------------------------------------------------------------------
2. [ * ]                               [ * ]                                                        [ * ]
----------------------------------------------------------------------------------------------------------------------
3. [ * ]                               [ * ]                                                        [ * ]
----------------------------------------------------------------------------------------------------------------------
4. [ * ]                               [ * ]                                                        [ * ]
----------------------------------------------------------------------------------------------------------------------
5. [ * ]                               [ * ]                                                        [ * ]
----------------------------------------------------------------------------------------------------------------------
</TABLE>

IntraBiotics Pharmaceuticals, Inc.
816 Kifer Road
Sunnyvale, CA 94086

[ * ] = 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.

                                       15.

<PAGE>

                       INTRABIOTICS QUALITY SPECIFICATION

                                 QA ISSUED COPY

                            SPECIFICATION NO., [ * ]

<TABLE>
<CAPTION>

----------------------------------------------------------------------------------------------------------------------
MATERIAL:
IB-367-03                  FOR INFORMATION ONLY
----------------------------------------------------------------------------------------------------------------------
DATE EFFECTIVE:                          SUPERCEDES:                            PAGE:
<S>                                      <C>                                    <C>
         Nov 26, 1996                             [ * ]                                  2 of 2
----------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>

----------------------------------------------------------------------------------------------------------------------
TEST                                   SPECIFICATION                                                METHOD
----------------------------------------------------------------------------------------------------------------------
<S>                                    <C>                                                          <C>
6. [ * ]                               [ * ]                                                        [ * ]
----------------------------------------------------------------------------------------------------------------------
7. [ * ]                               [ * ]                                                        [ * ]
----------------------------------------------------------------------------------------------------------------------
8. [ * ]                               [ * ]                                                        [ * ]
----------------------------------------------------------------------------------------------------------------------
9.  [ * ]                              [ * ]                                                        [ * ]
----------------------------------------------------------------------------------------------------------------------
10. [ * ]                              [ * ]                                                        [ * ]
----------------------------------------------------------------------------------------------------------------------
11. [ * ]                              [ * ]                                                        [ * ]
----------------------------------------------------------------------------------------------------------------------
12. [ * ]                              [ * ]                                                        [ * ]
----------------------------------------------------------------------------------------------------------------------
13. [ * ]                              [ * ]                                                        [ * ]
----------------------------------------------------------------------------------------------------------------------
14. [ * ]                              [ * ]                                                        [ * ]
----------------------------------------------------------------------------------------------------------------------
</TABLE>

IntraBiotics Pharmaceuticals, Inc.
816 Kifer Road
Sunnyvale, CA 94086

[ * ] = 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.

                                       16.

<PAGE>

                                     ANNEX 1

                                  SPECIFICATION

STORAGE: Store at recommended storage conditions.  [ * ].

SHIPMENT: the [ * ].

NB. The storage container and shipping conditions may be modified in the future
once the proper stability data are available.

[ * ] = 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.

                                       17.

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