Document:

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                                                                 CONFIDENTIAL

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
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AMENDED.

                                                             EXHIBIT 10.17

                  SPONSORED RESEARCH AND LICENSE AGREEMENT

     THIS SPONSORED RESEARCH AND LICENSE AGREEMENT (the "Agreement") is
entered into and made effective as of January 1, 2000, between INTERMUNE
PHARMACEUTICALS, INC., a California corporation located at 3924 West
Bayshore, Palo Alto, CA 94303 ("InterMune"), and PANORAMA RESEARCH, INC., a
California corporation having its principal place of business at 2462
Wyandotte St., Mountain View, CA  94043 ("PRI").  InterMune and PRI may be
referred to herein each individually as a "Party" and jointly as the
"Parties."

                                  RECITALS

     WHEREAS, InterMune is involved in the research, development and
commercialization of products potentially useful in the prevention,
mitigation and treatment of infectious and other diseases;

     WHEREAS,  PRI has research facilities and expertise related to
infectious diseases caused by STAPHYLOCOCCUS AUREUS;

     WHEREAS, InterMune and PRI are parties to that certain research
agreement dated September 1, 1998, pursuant to which InterMune sponsored and
PRI performed certain research related to S. AUREUS (the "Prior Research
Agreement");

     WHEREAS, InterMune and PRI now desire to undertake further research
based on certain discoveries made by PRI pursuant to the Prior Research
Agreement (the "Research Programs," as further described below) in accordance
with the terms and conditions set forth herein; and

     WHEREAS, InterMune desires to obtain from PRI, and PRI desires to grant
to InterMune, an exclusive world-wide license to develop and commercialize
products from the technology arising under the Prior Research Agreement and
the Research Programs conducted hereunder;

     NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants and agreements contained herein, the Parties hereby agree as
follows:

1.   DEFINITIONS

     1.1   "AFFILIATE" means any company or entity controlled by, controlling
or under common control with a Party.  As used in this Section 1.1, "control"
means (a) that an entity or company owns, directly or indirectly, more than
fifty percent (50%) of the voting stock of another entity, or (b) that an
entity, person or group has the actual ability to control and direct the
management of the entity, whether by contract or otherwise.

     1.2   "BUDGET" means the annual aggregate budget for the Research
Programs, which shall equal [ * ], as may be adjusted pursuant to Section
5.1(a).

                                      1.
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     1.3   "INFORMATION" means information, results and data of any type
whatsoever, in any tangible or intangible form, including without limitation
inventions, practices, methods, techniques, specifications, formulations,
formulae, knowledge, know-how, skill, experience, trade secrets, test data
(including pharmacological, biological, chemical, biochemical, toxicological
and clinical test data), analytical and quality control data, stability data,
studies and procedures, and patent and other legal information or
descriptions, and all intellectual property rights therein.

     1.4   "LEAD COMPOUND" means a compound that utilizes or incorporates the
Research Technology and that InterMune publicly announces to its investors
and potential investors as having significant potential as a therapeutic,
prophylactic or diagnostic product, subject to Section 4.2(a)(ii).

     1.5   "LICENSED PRODUCT" means a product that utilizes or incorporates
the Research Technology.

     1.6   "NDA" means a New Drug Application filed with the United States
Food and Drug Administration, or any other equivalent regulatory filing in a
major country.

     1.7   "NET SALES" means, with respect to any Licensed Product, the gross
invoiced sales of such Licensed Product by InterMune, its Affiliates and its
sublicensees to Third Party purchasers, less the following deductions:

          (a)     discounts, credits, rebates, allowances, adjustments,
rejections and recalls for which the customer has been credited the original
sales price and returns;

          (b)     trade, quantity, or cash discounts or rebates customary to
the industry and actually allowed, given or accrued (including, but not
limited to, cash, governmental and managed care rebates, and hospitals or
other buying group chargebacks);

          (c)     sales, excise, turnover, inventory, value-added, and
similar taxes assessed on the sale of such Licensed Product;

          (d)     an  allowance equal to two percent (2.0%) of gross invoiced
sales for transportation, importation, insurance and other handling expenses;

          (e)     the portion of any management fees paid during the relevant
time period to group purchasing organizations that relate specifically to the
sale of such Licensed Product to such organizations.

     A sale of a Licensed Product shall be deemed to occur upon the receipt
of payment by InterMune for such Licensed Product from a Third Party
purchaser.

     In the event that a Licensed Product includes one or more active
ingredients that do not utilize or incorporate any Research Technology (a
"Combination Product"), Net Sales shall be calculated on the basis of the
invoice price of such Licensed Product sold without such other active
ingredients.  If such Licensed Product is not sold separately from such other
active ingredients, then Net Sales shall be calculated on the basis of the
invoice price of the

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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.

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Combination Product multiplied by a fraction, the numerator of which shall be
the inventory cost of such Licensed Product and the denominator of which
shall be the inventory cost of all of the active ingredients in the
Combination Product.  Inventory cost shall be determined in good faith by
InterMune in accordance with InterMune's regular accounting methods.

     1.8   "PRINCIPAL INVESTIGATOR" means Dr. James Larrick.

     1.9   "PRIOR RESEARCH TECHNOLOGY" means all Information conceived of or
reduced to practice by PRI in the course of any work conducted pursuant to
the Prior Research Agreement.

     1.10  [ * ].

     1.11  "[ * ] RESEARCH PLAN" means the research plan covering the [ * ]
Research Program to be determined by the Research Committee pursuant to
Section 2.5 hereof.

     1.12  "[ * ] RESEARCH PROGRAM" means the research program related to
[ * ] to be performed by PRI hereunder.

     1.13  "RESEARCH COMMITTEE" means the committee described in Section 2.3.

     1.14  "RESEARCH PATENT" means any Patent that claims or otherwise covers
an invention in the Research Technology.

     1.15  "RESEARCH PLANS" means the [ * ] Research Plan and the [ * ]
Research Plan, each of which may be referred to individually as a "Research
Plan."

     1.16  "RESEARCH PROGRAMS" means the [ * ] Research Program and the [ * ]
Research Program, each of which may be referred to individually as a
"Research Program."

     1.17  "RESEARCH TECHNOLOGY" means (a) all Information conceived of or
reduced to practice by PRI in the course of any work conducted pursuant to
this Agreement, and (b) all Prior Research Technology.

     1.18  "RESEARCH TERM" means the period commencing on the Effective Date
and terminating on the earlier of (a) the third anniversary of the Effective
Date, or (b) the termination of both Research Programs pursuant to Section
2.10.

     1.19  "PATENT" means (a) all patent applications heretofore or hereafter
filed or having legal force in any country including without limitation
divisionals, continuations, continuation-in-part and provisional
applications; (b) all issued, unexpired patents in any country, including
utility, model and design patents and certificates of invention; and (c) all
substitutions, extensions, reissues, renewals and supplementary protection
certificates with respect to any such issued patent.

     1.20  "THIRD PARTY" means any party other than InterMune and PRI and
their respective Affiliates.

[ * ] = 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.

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     1.21  "VALID CLAIM" means a claim in an issued Research Patent that has
not expired or been canceled, been declared invalid by an unreversed and
unappealable decision of a court or other appropriate body of competent
jurisdiction, been admitted to be invalid or unenforceable through reissue,
disclaimer or otherwise, and/or been abandoned.

     1.22  [ * ].

     1.23  [ * ] RESEARCH PLAN" means the research plan covering the [ * ]
Research Program to be determined by the Research Committee pursuant to
Section 2.5 hereof.

     1.24  "[ * ] RESEARCH PROGRAM" means the research program related to
[ * ] to be performed by PRI hereunder pursuant to the [ * ] Research Plan.

2.   CONDUCT OF RESEARCH PROGRAMS

     2.1   RESEARCH PROGRAMS.  PRI agrees to conduct each of the Research
Programs during the Research Term in accordance with the applicable Research
Plan, as such Research Plan may be amended from time to time by the Research
Committee.  PRI shall use its best efforts in carrying out the Research
Programs and will furnish the research staff, technical know-how, equipment,
instruments, supplies and facilities necessary to carry out the Research
Programs at its own expense. InterMune shall provide funding to support PRI's
conduct of the Research Programs, as described in Section 5.1.  Title in any
equipment purchased or manufactured in the performance of the Research
Programs shall vest in PRI.

     2.2   PRINCIPAL INVESTIGATOR.  All the work performed in conducting the
Research Programs shall be under the direct supervision of the Principal
Investigator.  If for any reason the Principal Investigator is unable or
ceases to continue to directly supervise the conduct of the Research
Programs, then InterMune may terminate the Agreement on thirty (30) days
written notice.  In such event, PRI automatically shall be deemed to have
granted to InterMune an exclusive, world-wide, fully paid-up, royalty-free,
perpetual, irrevocable, sublicenseable license under the Research Technology
for all internal research purposes and to develop, use, make, have made,
import, offer for sale and sell Licensed Products.

     2.3   RESEARCH COMMITTEE.

          (a)     Promptly after the Effective Date, the Parties shall form
the Research Committee, which shall be comprised of a total of four (4)
members, two (2) appointed by each Party.  Each member of the Research
Committee shall have the appropriate level of skill, experience and
familiarity with the Research Programs.  The Principal Investigator shall
serve as one of PRI's Research Committee members.  Each Party shall have the
right to substitute different representatives as members on the Research
Committee as needed from time to time, and each Party may bring additional
representatives to attend meetings of the Research Committee in a non-voting,
AD HOC capacity.  One of InterMune's members shall serve as the chairperson
of the Research Committee.

          (b)     The Research Committee shall meet at least once every other
month at such times and at such meeting places as shall be mutually agreed
upon by the Parties.  The

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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.

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Research Committee meetings may be held by telephone or videoconference, if
agreed by the Research Committee members.  Each Party will designate an
individual to serve as the liaison between the Parties to undertake and
coordinate any day-to-day communications as may be required between the
Parties relating to the Research Programs. The Research Committee shall
operate by majority decision of its members, and the Research Committee
members shall use good faith efforts to reach agreement on all matters to be
decided.  In the event the Research Committee is unable to reach agreement on
any matter before it within thirty (30) days of undertaking consideration of
such matter, then InterMune shall have the deciding vote on such matter.

          (c)     Minutes of the Research Committee meetings shall be
prepared by the chairperson.  Such minutes shall be promptly reviewed and
shall be deemed approved when mutually accepted in writing by both Parties
through their respective Research Committee representatives; provided,
however, that if the Research Committee representatives of a Party fail to
comment on, or otherwise indicate disagreement with, the minutes provided by
the other Party in writing within fifteen (15) days of receipt, then the
receiving Party shall be deemed to have approved such minutes.

     2.4   DUTIES AND AUTHORITY OF THE RESEARCH COMMITTEE.

          (a)     The Research Committee shall have the following duties and
responsibilities during the Research Term: (i) to prepare the Research Plans;
(ii) to coordinate and monitor the progress of PRI's efforts in conducting
the Research Programs; (iii) to review the results of the Research Programs;
(iv) to allocate the Budget between the Research Programs; and (v) to amend
or modify the Research Plans as appropriate or necessary.

          (b)     The powers of the Research Committee are limited to those
expressly set forth in this Agreement.  Without limiting the generality of
the foregoing, the Research Committee shall not have the right to amend this
Agreement.  The actions of the Research Committee shall not substitute for
either Party's ability to exercise any right set forth herein, nor excuse the
performance of any obligation set forth herein.

     2.5   RESEARCH PLANS. As soon as possible following the Effective Date,
the Research Committee shall define the specific tasks of each Party under
each of the [ * ] Research Program and the [ * ] Research Program, which
tasks shall be set forth in the "[ * ] Research Plan" and the "[ * ] Research
Program" respectively, and attached and incorporated herein as Schedule 2.5
hereto.  Each Research Plan may be amended or modified by the Research
Committee as necessary.

     2.6   RECORDS; INSPECTION.

          (a)     PRI shall maintain records of all work conducted under the
Research Programs and all results (including without limitation any
inventions, discoveries and developments) made pursuant to its efforts under
the Research Programs, in laboratory notebooks (or similar records) separate
from all other work conducted by PRI.  Such records shall be complete and
accurate and shall fully and properly reflect all work done and results
achieved in the performance of the Research Program in sufficient detail and
in good scientific

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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.

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manner appropriate for patent and for regulatory purposes. InterMune shall
have the right, during normal business hours and upon reasonable notice to
inspect and copy such records.

          (b)     InterMune shall have the right to arrange for a reasonable
number of its employees, agents and outside consultants to visit PRI at its
offices and laboratories during normal business hours and upon reasonable
notice, and to discuss the Research Programs and its results in detail with
the technical personnel and consultants of PRI.

          (c)     All inspections, copying and visits hereunder shall be
conducted in a manner so as not to disrupt PRI's business nor cause any
disclosure of any other PRI confidential information.

     2.7   DISCLOSURE OF INVENTIONS AND RESEARCH RESULTS.  PRI shall provide
to InterMune a complete written disclosure for each and every invention or
other discovery, whether or not patentable, first conceived or reduced to
practice in the performance of the Research Programs (an "Invention"),
promptly after each such Invention is made.  All such inventions and
discoveries, and any other Information disclosed under this Section 2.7,
shall be deemed "Confidential Information," and shall be subject to the
provisions of Article 7.  PRI shall regularly inform InterMune of the results
of the Research Programs, and shall provide InterMune copies of the results
and raw data from the Research Programs as requested by InterMune.  As used
herein, "raw data" means all Information generated by the Principal
Investigator and the persons working at his direction on the Research,
whether in written, graphic or electronic form, and including without
limitation all materials such as films, printouts, and photographs that
record such Information, all to the extent concerning work conducted pursuant
to the Research Programs.  Panorama shall also provide quarterly written
summaries of the Research Programs as set forth in Section 2.8.  InterMune
shall be free to use all such Information for any and all purposes.

     2.8   QUARTERLY REPORTS.  PRI shall provide InterMune and the Research
Committee with a written progress report biannually during the Research Term.
Each such report shall summarize the work performed by PRI in relation to the
goals of the Research Programs during such period, and shall provide any
other information required by the Research Plans or reasonably requested by
InterMune or the Research Committee.

     2.9   PRI COVENANTS.

          (a)     INVENTION ASSIGNMENT AGREEMENTS. PRI hereby covenants that
each of its employees, consultants and agents performing any work under the
[ * ] Research Program and/or the [ * ] Research Program will have entered
into a written invention assignment agreement requiring that each such
individual assign to PRI all right, title and interest in any Information
conceived of or reduced to practice by such individual pursuant to such
Research Program.

          (b)     NO MISAPPROPRIATION.  PRI hereby covenants that it shall
not knowingly misappropriate or otherwise misuse, nor shall it knowingly
permit any of its employees, consultants or agents to misappropriate or
otherwise misuse, any intellectual property of any Third Party in its conduct
of the Research Programs hereunder.

[ * ] = 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.

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     2.10  TERMINATION OF RESEARCH PROGRAMS.

          (a)     InterMune may terminate either or both of the Research
Programs, without cause, at any time during the Research Term upon six (6)
months written notice; provided that InterMune shall remain liable for all
payments due within the Budget and in accordance with the Research Plan for
such Research Program through the date of termination of such Research
Program.

          (b)     In the event that InterMune terminates only one of the
Research Programs, InterMune shall provide PRI written notice of any
adjustment InterMune desires to make to the Budget with respect to the
remaining Research Program, if any; provided that the Budget shall not be
reduced by more than fifty percent (50%) without the written consent of both
Parties.  The Research Committee shall amend the Research Plan for such
remaining Research Program appropriately to reflect the resources to be
dedicated to such remaining Research Program in light of such adjusted Budget.

3.   ASSIGNMENT OF RIGHTS; LICENSE GRANT

     3.1   ASSIGNMENT TO PRI.  InterMune hereby assigns to PRI all of its
right, title and interest in and to the Prior Research Technology.  InterMune
shall take all actions reasonably requested by PRI to effect such assignment.

     3.2   GRANT TO INTERMUNE.  PRI hereby grants to InterMune an exclusive,
world-wide, royalty-bearing, sublicenseable license under the Research
Technology for all internal research purposes and to develop, use, make, have
made, import, offer for sale and sell Licensed Products.

     3.3   EXCLUSIVITY.  PRI and the Principal Investigator each hereby
covenant that it shall not perform any work for any Third Party relating to
[ * ] during the Research Term without InterMune's prior written consent.

     3.4   GOVERNMENT FUNDING.  PRI and the Principal Investigator each
hereby covenant that no government funding will be used to conduct any of the
work under either Research Program without InterMune's prior written consent.
In the event the PRI receives government funding as permitted in the
preceding sentence: (a) InterMune's payment obligation under Section 4.1(a)
shall continue at its then-current level, and (b) PRI shall not use such
funding other than for the conduct of the Research Programs without
InterMune's prior written consent.

4.   DILIGENCE

     4.1   GENERALLY.  Following the Research Term and during the term of
this Agreement, InterMune shall use commercially reasonable efforts
consistent with its usual practice in developing and commercializing
pharmaceutical products of similar market potential, at its own expense, to
develop and commercialize Licensed Products in such countries throughout the
world where in InterMune's opinion it is commercially viable to do so.

     4.2   FUNDING REQUIREMENTS.

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EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

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          (a)     InterMune shall be deemed to have met its diligence
obligations under this Article 4 provided that the total aggregate annualized
development costs incurred by InterMune, its Affiliates and its sublicensees
in connection with the Licensed Products equals or exceeds the amount
indicated below (the "Diligence Amount") for the corresponding period
indicated below (the "Diligence Period"), until such time as the first NDA is
approved for the first Licensed Product.

<TABLE>
<CAPTION>

 DILIGENCE PERIOD                           DILIGENCE AMOUNT

 <S>                                        <C>
 From the end of the Research Term               [ * ]
 until designation of a Lead Compound

 From the designation of a Lead                  [ * ]
 Compound, and for so long as InterMune
 is conducting preclinical development
 on a Lead Compound, until initiation
 by InterMune of Phase I trials for a
 Lead Compound

 From the initiation by InterMune of             [ * ]
 Phase I trials for a Lead Compound,
 and for so long as InterMune is
 conducting Phase I trials, until
 initiation by InterMune of Phase II
 trials for a Lead Compound

 From the initiation by InterMune of             [ * ]
 Phase II trials for a Lead Compound,
 and for so long as InterMune is
 conducting Phase II or Phase III
 trials, until receipt of NDA approval
 for a Licensed Product
</TABLE>

               (i)       Only one Diligence Amount shall apply at any given
time.  In the event that there are multiple Lead Compounds being
preclinically and/or clinically developed by InterMune at any given time, the
Diligence Amount corresponding to the most advanced level of preclinical or
clinical development of such Lead Compounds then being conducted by InterMune
shall apply.

               (ii)      In the event that InterMune ceases preclinical or
clinical development of a Lead Compound, InterMune shall provide PRI written
notice thereof and such compound thereafter shall no longer be deemed a Lead
Compound.  For all periods following the Research Term and prior to receipt
of the first NDA approval for the first Licensed Product for which there are
no then-existing Lead Compounds, the Diligence Amount shall be deemed to be
[ * ] per year.

          (b)     In the event that InterMune fails during any Diligence
Period to expend the corresponding Diligence Amount, and such failure is not
excused as described in Section 4.3

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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.

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below, InterMune shall not be deemed to have breached its diligence
obligations under this Article 4 if within thirty (30) days of its receipt
from PRI of written notice of such failure, InterMune pays to PRI an amount
equal to the differential between such Diligence Amount and InterMune's and
its Affiliates' and sublicensees' actual development costs for Licensed
Products during such Diligence Period.

     4.3   LIMITATION.  Notwithstanding anything in this Article 4 to the
contrary, InterMune shall not be deemed to have breached its obligations
under this Article 4 if (a) the Parties agree in writing on a different
standard of diligence, or (b) any clinical trial, IND, NDA or other aspect of
the development or commercialization of any Licensed Product is suspended or
delayed due to problems or issues with the safety or efficacy of such
Licensed Product.

5.   CONSIDERATION

     5.1   RESEARCH SUPPORT PAYMENTS.

          (a)     InterMune shall reimburse PRI for costs incurred in
connection with performing the Research Programs in accordance with the
Budget.  While it is estimated that the amounts in the Budget will be
sufficient to conduct the Research Programs, Panorama may submit to InterMune
a revised budget requesting additional funds to conduct the Research
Programs.  However, InterMune is not liable for any cost in excess of the
Budget unless InterMune agrees in writing to such increase the Budget.

          (b)     InterMune shall make payments to PRI for the amounts owed
under the Budget for each calendar year during the Research Term in four (4)
equal quarterly installments, each of which shall be due within thirty (30)
days of the first day of the relevant calendar quarter.

     5.2   EQUITY.

          (a)     InterMune shall grant non-statutory stock options to
purchase shares of InterMune Common Stock to the below-designated PRI
employees during the Research Term in consideration for their work on the
Research Programs, which options shall vest as follows up to the total amount
indicated:

<TABLE>
<CAPTION>

                 OPTIONS VESTING   OPTIONS VESTING ON THE FIRST OF EACH
                ON THE EFFECTIVE      MONTH DURING THE RESEARCH TERM      TOTAL
   EMPLOYEE           DATE             FOLLOWING THE EFFECTIVE DATE
 <S>            <C>                <C>                                    <C>
 James Larrick        [ * ]                        [ * ]                  [ * ]

 Susan Wright         [ * ]                        [ * ]                  [ * ]

 Yuguiang Wang        [ * ]                        [ * ]                  [ * ]

</TABLE>

     Each such grant of options shall be pursuant to InterMune's equity
incentive plan, and shall have an exercise price per share equal to the fair
market value of InterMune's Common

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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.

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Stock on the date of such grant as determined by InterMune's Board of
Directors at the Board meeting of November 17, 1999.

          (b)     In the event that any employee of PRI described in
subsection (a) above is no longer conducting work on any Research Program,
then such employee's right to be granted options under subsection (a) shall
terminate.

     5.3   MILESTONE PAYMENT.  Within thirty (30) days of its receipt of the
first approval of an NDA for the first Licensed Product, InterMune shall pay
to PRI [ * ].

     5.4   ROYALTIES.

          (a)     InterMune shall pay PRI a royalty of [ * ] on all Net Sales
of Licensed Products; provided that if the manufacture, use or sale of a
Licensed Product is not covered by a Valid Claim in the country of sale at
the time of sale, then the foregoing royalty rate shall be reduced by fifty
percent (50%) with respect to such sale of such Licensed Product.

          (b)     InterMune's obligation to pay royalties under subsection
(a) above shall commence, on a country-by-country and Licensed
Product-by-Licensed Product basis, with the first commercial sale of such
Licensed Product in such country (the "First Sale"), and shall expire upon
the later of (i) expiration of the last issued Research Patent containing a
Valid Claim covering the manufacture, use or sale of such Licensed Product in
such country, or (ii) ten (10) years from the First Sale.  Upon such
expiration of InterMune's royalty obligation under this Section 5.4, PRI
automatically shall be deemed to have granted to InterMune an exclusive,
fully paid-up, royalty-free, perpetual, irrevocable, sublicenseable license
under the Research Technology to use, make, have made, import, offer for sale
and sell such Licensed Product in such country.

     5.5   PAYMENT OF ROYALTIES.  Following the First Sale of a Licensed
Product and during the term of the Agreement, InterMune shall furnish to PRI
a quarterly written report for each calendar quarter showing the sales of all
Licensed Products subject to royalty payments hereunder during the reporting
period and the royalties payable under this Agreement.  Reports shall be due
within sixty (60) days following the close of each calendar quarter.
Royalties that have accrued in a particular calendar quarter shall be due and
payable on the date such royalty report is due. InterMune shall keep complete
and accurate records in sufficient detail to enable the royalties payable
hereunder to be determined. All payments to be made by InterMune to PRI under
this Agreement shall be made in United States dollars and may be paid by
check made to the order of PRI or bank wire transfer to such bank account in
the United States designated in writing by PRI from time to time.

     5.6   PAYMENT EXCHANGE RATE. The rate of exchange to be used in
computing Net Sales and the amount of currency equivalent in United States
dollars due PRI shall be made at the rate of exchange quoted on the last
business day of the applicable royalty period  in the Wall Street Journal.

     5.7   INCOME TAX WITHHOLDING.  If laws, rules or regulations require
withholding of income taxes or other taxes imposed upon payments set forth in
this Article 5, InterMune shall

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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.

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make such withholding payments as required and subtract such withholding
payments from the payments set forth in this Article 5.  InterMune shall
submit appropriate proof of payment of the withholding taxes to PRI within a
reasonable period of time.

     5.8   AUDITS.

          (a)     Upon the written request of PRI and not more than once in
each calendar year, InterMune shall permit an independent certified public
accounting firm of nationally recognized standing selected by PRI and
reasonably acceptable to InterMune, at PRI's expense, to have access during
normal business hours to such records of InterMune as may be reasonably
necessary to verify the accuracy of the royalty reports hereunder for any
calendar year ending not more than twenty-four (24) months prior to the date
of such request.  The accounting firm shall disclose to PRI only whether the
royalty reports are correct or incorrect and the specific details concerning
any discrepancies.  No other information shall be provided to PRI.

          (b)     If such accounting firm correctly concludes that additional
royalties were owed during such period, InterMune shall pay the additional
royalties within thirty (30) days of the date PRI delivers to InterMune such
accounting firm's written report so correctly concluding.

          (c)     PRI shall treat all information subject to review under
this Section 5.6 as Confidential Information in accordance with the
confidentiality provisions of Article 7 of this Agreement, and shall cause
its accounting firm to enter into an acceptable confidentiality agreement
with InterMune obligating such firm to retain all such financial information
in confidence pursuant to such confidentiality agreement.

6.   INTELLECTUAL PROPERTY MATTERS; PATENTS

     6.1   OWNERSHIP.  Each Party shall solely own any Information solely
invented or developed by such Party pursuant to this Agreement and all
intellectual property rights therein, including without limitation any
Patents claiming such Information.  The Parties shall each own an undivided
one-half interest in any Information jointly invented or developed by the
Parties pursuant to this Agreement and all intellectual property rights
therein, including, without limitation, any Patents claiming such Information
("Joint Patents").  Inventorship shall be determined in accordance with the
U.S. laws.

     6.2   PATENT FILING, PROSECUTION AND MAINTENANCE.

          (a)     InterMune shall have the first right, but not the
obligation, to file applications for the Research Patents and to prosecute
and maintain such Research Patents in such countries as selected by
InterMune, at its expense. InterMune shall reasonably consider any
recommendations provided by PRI regarding the filing and/or prosecution of
such Research Patents, but the final decision as to the filing and/or
prosecution matters shall rest with InterMune.

          (b)     In the event that PRI desires that InterMune file and
prosecute a patent application claiming a particular invention in the
Research Technology, and InterMune does not file such a patent application
within one hundred twenty (120) days of such request, or decides 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.

                                     11
<PAGE>
                                                                 CONFIDENTIAL

abandon prosecution of such a filed application, then PRI may thereafter
file, prosecute and/or maintain the Patent(s) claiming such particular
inventions, at PRI's expense. In such event, InterMune shall cooperate
reasonably with PRI in such efforts, and such Patent shall thereafter be
excluded from the Research Technology.

     6.3   COOPERATION.  Each Party agrees to cooperate with the other and
take all reasonable additional actions as may be reasonably required to
achieve the intent of this Article 6, including, without limitation, the
execution of necessary and appropriate instruments and documents.

     6.4   INFRINGEMENT OF THIRD PARTY PATENTS.  In the event that a Third
Party files an action against a Party alleging that such Party's activities
under this Agreement infringe such Third Party's patent rights, such Party
shall give written notice to the other Party, and the Parties will consult
and cooperate on the best course of action.  The Party that was sued shall
have the right to defend itself against such action, and the other Party
shall provide all reasonable assistance in such defense.

     6.5   INFRINGEMENT OF RESEARCH PATENTS.  If either Party becomes aware
that a Third Party is infringing any rights in the Research Patents, such
Party shall give written notice to the other Party describing in detail the
nature of such infringement.  InterMune shall have the initial right to
enforce the Research Patents against such Third Party infringer.  PRI agrees
to provide InterMune all reasonable assistance, at InterMune' expense, in
such enforcement, including without limitation being joined as a party to the
suit where appropriate.  In the event that InterMune fails to institute an
infringement suit or take other reasonable action in response to such
infringement within one hundred twenty (120) days after its receipt of notice
of such infringement, PRI shall have the right, but not the obligation, to
institute such suit or take other appropriate action in its own name to
enforce the Research Patents.  Regardless of which Party brings an
enforcement action under this Section 6.5, the Party not bringing the action
shall have the right to participate in such action at its own expense with
its own counsel. Any damages or other recovery, whether by settlement or
otherwise, from an action hereunder to enforce the Research Patents shall
first be applied pro rata to each Party to pay the costs and expenses of
participating in such action, and any remaining amount shall be paid to the
Party conducting the action.

7.   CONFIDENTIALITY

     7.1   CONFIDENTIAL INFORMATION.  As used herein, "Confidential
Information" means all Information that InterMune discloses to PRI under this
Agreement, all Research Technology and all other Information deemed
"Confidential Information" under this Agreement, provided that Confidential
Information shall not include any Information excluded under Section 7.2.
Except to the extent expressly authorized by this Agreement or otherwise
agreed in writing by the Parties, PRI agrees that it shall keep confidential
and shall not publish or otherwise disclose any Confidential Information, and
shall not use such Information for any purpose other than as provided for in
this Article 7.

     7.2   EXCEPTIONS.  Notwithstanding Section 7.1 above, "Confidential
Information" shall not include any Information that PRI can demonstrate by
competent written evidence:

[ * ] = 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>
                                                                 CONFIDENTIAL

          (a)     was already known to PRI, other than under an obligation of
confidentiality, at the time of disclosure by InterMune or, in the case of
Research Technology, prior to its creation or discovery hereunder;

          (b)     was generally available to the public or otherwise part of
the public domain at the time of its disclosure to PRI by InterMune;

          (c)     became generally available to the public or otherwise part
of the public domain after its disclosure and other than through any act or
omission of PRI in breach of this Agreement;

          (d)     was disclosed to PRI, other than under an obligation of
confidentiality to a Third Party, by a Third Party who had no obligation to
InterMune not to disclose such information to others; or

          (e)     is independently developed by PRI without using any
Confidential Information.

     7.3   PERMITTED DISCLOSURE.  Notwithstanding the limitations in this
Article 7, PRI may disclose Confidential Information, to the extent such
disclosure is reasonably necessary in the following instances, but solely for
the limited purpose of such necessity:

          (a)     prosecuting or defending litigation;

          (b)     complying with applicable governmental laws or regulations
or valid court orders; and

          (c)     disclosure to employees, consultants or agents, solely in
furtherance of this Agreement, and provided that such individuals agree in
writing to be bound by similar terms of confidentiality and non-use at least
equivalent in scope to those set forth in this Article 7.

           Notwithstanding the foregoing, in the event that PRI is required
to make a disclosure of the Confidential Information pursuant to subsections
(a) and (b) above, it will give reasonable advance notice to InterMune of
such disclosure and shall use its best efforts to assist InterMune in
securing confidential treatment of such information.  In any event, PRI
agrees to use its best efforts to avoid disclosure of Confidential
Information hereunder.

     7.4   PUBLICITY.  Neither Party shall use the name of the other Party in
connection with any product, promotional literature, or advertising material
without the prior written permission of the other party, which permission
shall not be unreasonably withheld.  This restriction shall not apply to
materials used by InterMune solely for financing or corporate partnering
purposes or to documents available to the public that identify the existence
of the Agreement.

     7.5   TERMS OF THE AGREEMENT. The material terms of this Agreement are
deemed to be Confidential Information, subject to Section 7.2 above.

8.   REPRESENTATIONS AND WARRANTIES

[ * ] = 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>

                                                                 CONFIDENTIAL

     8.1   MUTUAL REPRESENTATIONS AND WARRANTIES.  Each Party hereby
represents and warrants to the other Party that:

          (a)     it has full corporate power and authority under the laws of
the state or country of its incorporation to enter into this Agreement and to
carry out the provisions hereunder;

          (b)     this Agreement is a legal and valid obligation binding upon
it and is enforceable in accordance with its terms; and

          (c)     the execution, delivery and performance of this Agreement
by it does not materially conflict with any agreement, oral or written, to
which it is a party or by which it may be bound, nor violate any law or
regulation of any court, governmental body or administrative or other agency
having authority over it.

     8.2   PRI REPRESENTATIONS AND WARRANTIES.  PRI hereby represents and
warrants to InterMune that:

          (a)     None of the Prior Research Technology has been
misappropriated from any Third Party nor is the result of any misuse of any
Third Party's intellectual property;

          (b)     All inventors of the Prior Research Technology existing as
of the Effective Date have irrevocably assigned all right, title and interest
in the Prior Research Technology to PRI;

          (c)     To PRI's knowledge as of the Effective Date, InterMune's
practice of the Research Technology as contemplated hereunder will not
infringe the rights of any Third Party; and

          (d)     To PRI's knowledge as of the Effective Date, no claim,
whether or not embodied in an action past or present, of any infringement, of
any conflict with, or of any violation of any patent, trade secret or other
intellectual property right or similar right of any Third Party, has been
made or is pending or threatened with respect to the Research Technology.

9.   INDEMNIFICATION

     9.1   BY INTERMUNE.  Subject to PRI's compliance with Section 9.3,
InterMune hereby agrees to indemnify, defend and hold harmless PRI and its
officers, directors, agents and employees from and against any and all
liabilities, damages, judgments, awards or costs of defense (including
without limitation reasonable attorneys' fees, expenses to defend and amounts
paid in settlement of any action) (collectively, "Losses") arising from any
Third Party claim resulting directly or indirectly from InterMune's breach of
any of its covenants or representations and warranties hereunder, or
InterMune's negligence or wrongdoing, but only to the extent that such Losses
do not result from PRI's breach of any of its covenants or representations
and warranties hereunder or PRI's negligence or wrongdoing.

     9.2   BY PRI.  Subject to InterMune's compliance with Section 9.3, PRI
hereby agrees to indemnify, defend and hold harmless InterMune and its
officers, directors, agents and

[ * ] = 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>

                                                                 CONFIDENTIAL

employees from and against any and all Losses from any Third Party claim
resulting directly or indirectly from PRI's breach of any of its covenants or
representations and warranties hereunder, or PRI's negligence or wrongdoing,
but only to the extent that such Losses do not result from InterMune's breach
of any of its covenants or representations and warranties hereunder or
InterMune's negligence or wrongdoing.

     9.3   NOTICE AND PROCEDURES.  In all cases where one Party seeks
indemnification by the other under this Article 9, the Party seeking
indemnification shall promptly notify the indemnifying Party of receipt of
any claim or lawsuit covered by such indemnification obligation and shall
cooperate fully with the indemnifying Party in connection with the
investigation and defense of such claim or lawsuit.  The indemnifying Party
shall have the right to control the defense, with counsel of its choice,
provided that the non-indemnifying Party shall have the right to be
represented by advisory counsel at its own expense.  The indemnifying Party
shall not settle or dispose of the matter in any manner which could
negatively and materially affect the rights or liability of the
non-indemnifying Party without the non-indemnifying Party's prior written
consent, which shall not be unreasonably withheld or delayed.

10.  TERM AND TERMINATION

     10.1  TERM. The term of this Agreement shall commence upon the Effective
Date and shall expire, unless earlier terminated as provided under Sections
10.2 and 10.3, upon the expiration date of the last to expire royalty or
other payment obligation under this Agreement.

     10.2  TERMINATION BY INTERMUNE.  Following termination of the Research
Term, InterMune may terminate this Agreement upon thirty (30) days written
notice to PRI.

     10.3  TERMINATION FOR MATERIAL BREACH.  If a Party materially breaches
this Agreement, and within sixty (60) days of written notice of breach from
the non-breaching Party the breaching Party has not (i) cured the breach, or
(ii) initiated good faith efforts to cure such breach to the reasonable
satisfaction of the non-breaching Party, then the non-breaching Party may
terminate this Agreement in writing promptly after expiration of such sixty
(60) day period.

     10.4  EFFECT OF TERMINATION.

          (a)     In the event that InterMune terminates this Agreement
pursuant to Section 10.2,or PRI terminates this Agreement pursuant to Section
10.3:

                  (i)    all licenses granted to InterMune pursuant to
Section 3.2 shall immediately terminate;

                  (ii)   InterMune shall provide PRI with an accounting of
the total amount expended by InterMune in the development and
commercialization of the Research Technology, [ * ]; and

                  (iii)  PRI shall have the right to grant one or more Third
Parties the right to develop and commercialize Licensed Products, or to
develop and commercialize Licensed Products itself; provided that PRI shall
pay InterMune a royalty on all net sales of Licensed

[ * ] = 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>

                                                                 CONFIDENTIAL

Products by PRI, its Affiliates and its sublicensees on terms and conditions
equivalent to those set forth in Article 5 of this Agreement.  Such royalty
obligation shall continue until [ * ].

          (b)     In the event that InterMune terminates this Agreement
pursuant to Section 10.3, (i) PRI automatically shall be deemed to have
granted to InterMune an exclusive, world-wide, fully paid-up, royalty-free,
perpetual, irrevocable, sublicenseable license under the Research Technology
for all internal research purposes and to develop, use, make, have made,
import, offer for sale and sell Licensed Products, and (ii) Article 6 shall
survive such termination.

     10.5  BANKRUPTCY RIGHTS.  In the event that this Agreement is terminated
or rejected by a Party or its receiver or trustee under applicable bankruptcy
laws due to such Party's bankruptcy, then all rights and licenses granted
under or pursuant to this Agreement by such Party to the other Party are, and
shall otherwise be deemed to be, for purposes of Section 365(n) of the
Bankruptcy Code and any similar law or regulation in any other country,
licenses of rights to "intellectual property" as defined under Section
101(52) of the Bankruptcy Code. The Parties agree that all intellectual
property rights licensed hereunder, including without limitation any patents
or patent applications of a Party in any country covered by the license
grants under this Agreement, are part of the "intellectual property" as
defined under Section 101(52) of the Bankruptcy Code subject to the
protections afforded the non-terminating Party under Section 365(n) of the
Bankruptcy Code, and any similar law or regulation in any other country.

     10.6  SURVIVAL.  The following provisions shall survive termination or
expiration of this Agreement:  Sections 2.2, 5.4(b), 5.8, 6.1, 10.4 and 10.6
and Articles 7, 9 and 11.  Termination or expiration of this Agreement shall
not relieve either Party of any liability which accrued hereunder prior to
the effective date of such termination, nor preclude either Party from
pursuing all rights and remedies it may have hereunder or at law or in equity
with respect to any breach of this Agreement, nor prejudice either Party's
right to obtain performance of any obligation.  The remedies provided under
this Agreement are cumulative, and are not exclusive of other remedies
available to a Party in law or equity.

11.  MISCELLANEOUS

     11.1  ENTIRE AGREEMENT; AMENDMENT.  This Agreement sets forth the
complete, final and exclusive agreement between the Parties with respect to
the subject matter hereof, and all of the covenants, promises, agreements,
warranties, representations, conditions and understandings between the
Parties hereto with respect to such subject matter, and supersedes and
terminates all prior agreements and understandings between the Parties with
respect to such subject matter.  There are no covenants, promises,
agreements, warranties, representations, conditions or understandings, either
oral or written, between the Parties with respect to such subject matter
other than as are set forth herein and therein.  No subsequent alteration,
amendment, change or addition to this Agreement shall be binding upon the
Parties unless reduced to writing and signed by an authorized officer of each
Party.

     11.2  DISPUTE RESOLUTION. In the event of any controversy or claim
arising out of, relating to or in connection with any provision of this
Agreement, or the rights or obligations of the Parties hereunder, the Parties
shall try to settle their differences amicably between themselves by
referring the disputed matter to the Chief Executive Officer of InterMune and
the President

[ * ] = 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.

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<PAGE>

                                                                 CONFIDENTIAL

for PRI for discussion and resolution.  Either Party may initiate such
informal dispute resolution by sending written notice of the dispute to the
other Party, and within ten (10) days of such notice the Chief Executive
Officer of InterMune and the President of PRI shall meet for attempted
resolution by good faith negotiations.  If such personnel are unable to
resolve such dispute within thirty (30) days of initiating such negotiations,
each Party may thereafter pursue any and all rights and remedies it may have
at law or equity.  If mutually agreeable, the Parties may explore alternative
forms of dispute resolution, such as mediation and/or arbitration.
Notwithstanding any other provision of this Section 11.2, either Party may
seek a temporary restraining order or injunction against the other Party in
the event of a breach of any confidentiality obligation hereunder, or to
prevent a Party's wrongful use of any intellectual property hereunder.

     11.3  FORCE MAJEURE.  Both Parties shall be excused from the performance
of their obligations under this Agreement to the extent that such performance
is prevented by force majeure and the non-performing Party promptly provides
notice of the prevention to the other Party.  Such excuse shall be continued
so long as the condition constituting force majeure continues and the
non-performing Party takes reasonable efforts to remove the condition.  For
purposes of this Agreement, "force majeure" shall include conditions beyond
the control of the Parties, including without limitation, an act of God,
voluntary or involuntary compliance with any regulation, law or order of any
government, war, civil commotion, labor strike or lock-out, epidemic, failure
or default of public utilities or common carriers, destruction of production
facilities or materials by fire, earthquake, storm or like catastrophe.

     11.4  NOTICES.  Any notice required or permitted to be given under this
Agreement shall be in writing, shall specifically refer to this Agreement and
shall be deemed to have been sufficiently given for all purposes if mailed by
first class certified or registered mail, postage prepaid, express delivery
service or personally delivered, or if sent by facsimile and confirmed
through one of the foregoing methods.  Unless otherwise specified in writing,
the mailing addresses of the Parties shall be as described below.

    For InterMune:       InterMune Pharmaceuticals, Inc.
                         3924 West Bayshore
                         Palo Alto, CA 94303
                         Fax: (650) 858-2937
                         Attention: Senior Vice President of Scientific Affairs

    For PRI:             Panorama Research, Inc.
                         2462 Wyandotte St.
                         Mountain View, CA 94043
                         Fax: (650) 694-7717
                         Attention: President

     11.5  LIMITATION OF LIABILITY.  IN NO EVENT WILL EITHER PARTY BE LIABLE
TO THE OTHER PARTY FOR ANY INDIRECT, COLLATERAL, CONSEQUENTIAL, SPECIAL OR
PUNITIVE DAMAGES ARISING IN CONNECTION WITH 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.

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     11.6  CONSENTS NOT UNREASONABLY WITHHELD OR DELAYED.  Whenever provision
is made in this Agreement for either Party to secure the consent or approval
of the other, that consent or approval shall not unreasonably be withheld or
delayed, and whenever in this Agreement provisions are made for one Party to
object to or disapprove a matter, such objection or disapproval shall not
unreasonably be exercised, unless expressly stated that such consent is to be
given in such Party's sole discretion.

     11.7  INDEPENDENT CONTRACTORS.  The status of the Parties under this
Agreement shall be that of independent contractors.  Neither Party shall have
the right to enter into any agreements on behalf of the other Party, nor
shall it represent to any person that it has any such right or authority.
Nothing in this Agreement shall be construed as establishing a partnership or
joint venture relationship between the Parties.

     11.8  MAINTENANCE OF RECORDS.  Each Party shall keep and maintain all
records required by law or regulation with respect to the Product and shall
make copies of such records available to the other Party upon request.

     11.9  UNITED STATES DOLLARS.  References in this Agreement to "Dollars"
or "$" shall mean the legal tender of the United States of America.

     11.10 NO STRICT CONSTRUCTION.  This Agreement has been prepared jointly
and shall not be strictly construed against either Party.

     11.11 ASSIGNMENT.  Neither Party may assign or transfer this Agreement
or any rights or obligations hereunder without the prior written consent of
the other, except a Party may make such an assignment without the other
Party's consent to a successor-in-interest to substantially all of the
business assets of such Party to which this Agreement relates, whether in a
merger, sale of stock, sale of assets or other transaction.  Any permitted
successor or assignee of rights and/or obligations hereunder shall, in a
writing to the other Party, expressly assume performance of such rights
and/or obligations. This Agreement shall be binding upon and shall inure to
the benefit of each Party's successors-in-interest and permitted assigns.
Any assignment or attempted assignment by either Party in violation of the
terms of this Section 11.11 shall be null and void and of no legal effect.

     11.12 COUNTERPARTS.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

     11.13 FURTHER ACTIONS.  Each Party agrees to execute, acknowledge and
deliver such further instruments, and to do all such other acts, as may be
necessary or appropriate in order to carry out the purposes and intent of
this Agreement.

     11.14 SEVERABILITY.  If any one or more of the provisions of this
Agreement is held to be invalid or unenforceable, the provision shall be
considered severed from this Agreement and shall not serve to invalidate any
remaining provisions hereof.  The Parties shall make a good faith effort to
replace any invalid or unenforceable provision with a valid and enforceable
one

[ * ] = 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.

                                     18

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                                                                 CONFIDENTIAL

such that the objectives contemplated by the Parties when entering this
Agreement may be realized.

     11.15 AMBIGUITIES.  Ambiguities, if any, in this Agreement shall not be
construed against any Party, irrespective of which Party may be deemed to
have authored the ambiguous provision.

     11.16 HEADINGS.  The headings for each article and section in this
Agreement have been inserted for convenience of reference only and are not
intended to limit or expand on the meaning of the language contained in the
particular article or section.

     11.17 NO WAIVER.  Any delay in enforcing a Party's rights under this
Agreement or any waiver as to a particular default or other matter shall not
constitute a waiver of such Party's rights to the future enforcement of its
rights under this Agreement, excepting only as to an express written and
signed waiver as to a particular matter for a particular period of time.

[ * ] = 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.

                                     19

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                                                                 CONFIDENTIAL

     IN WITNESS WHEREOF, the Parties have executed this Agreement in by their
proper officers as of the date and year first above written.

INTERMUNE PHARMACEUTICALS, INC.        PANORAMA RESEARCH, INC.

By:  /s/   W. Scott Harkonen           By:  /s/  J. W. Larrick
    -------------------------------        ----------------------------------

Name:  W. Scott Harkonen               Name:  James W. Larrick
      -----------------------------          --------------------------------

Title:  President / CEO                Title:  President
       ----------------------------           -------------------------------

PRINCIPAL INVESTIGATOR:

I hereby acknowledge and agree to be bound by the terms and conditions of
this Agreement.

     /s/  J. W. Larrick
-----------------------------------
James Larrick, Ph.D.

Date:   Dec. 30, 1999
      -----------------------------

[ * ] = 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.

                                     20

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                                                                 CONFIDENTIAL

                                SCHEDULE 2.5

                               RESEARCH PLANS

[ * ] = 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.

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<TABLE>
<S>                                                                          <C>
1.   DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

     1.1       "Affiliate" . . . . . . . . . . . . . . . . . . . . . . . . . .1

     1.2       "Budget". . . . . . . . . . . . . . . . . . . . . . . . . . . .1

     1.3       "Information" . . . . . . . . . . . . . . . . . . . . . . . . .1

     1.4       "Lead Compound" . . . . . . . . . . . . . . . . . . . . . . . .2

     1.5       "Licensed Product". . . . . . . . . . . . . . . . . . . . . . .2

     1.6       "NDA" . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

     1.7       "Net Sales" . . . . . . . . . . . . . . . . . . . . . . . . . .2

     1.8       "Principal Investigator". . . . . . . . . . . . . . . . . . . .3

     1.9       "Prior Research Technology" . . . . . . . . . . . . . . . . . .3

     1.10      [ * ] . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

     1.11      [ * ] Research Plan". . . . . . . . . . . . . . . . . . . . . .3

     1.12      [ * ] Research Program" . . . . . . . . . . . . . . . . . . . .3

     1.13      "Research Committee". . . . . . . . . . . . . . . . . . . . . .3

     1.14      "Research Patent" . . . . . . . . . . . . . . . . . . . . . . .3

     1.15      "Research Plans". . . . . . . . . . . . . . . . . . . . . . . .3

     1.16      "Research Programs" . . . . . . . . . . . . . . . . . . . . . .3

     1.17      "Research Technology" . . . . . . . . . . . . . . . . . . . . .3

     1.18      "Research Term" . . . . . . . . . . . . . . . . . . . . . . . .3

     1.19      "Patent". . . . . . . . . . . . . . . . . . . . . . . . . . . .3

     1.20      "Third Party" . . . . . . . . . . . . . . . . . . . . . . . . .3

     1.21      "Valid Claim" . . . . . . . . . . . . . . . . . . . . . . . . .3

     1.22      [ * ] . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

     1.23      [ * ] Research Plan". . . . . . . . . . . . . . . . . . . . . .4

     1.24      [ * ] Research Program" . . . . . . . . . . . . . . . . . . . .4

2.   CONDUCT OF RESEARCH PROGRAMS. . . . . . . . . . . . . . . . . . . . . . .4

     2.1       Research Programs . . . . . . . . . . . . . . . . . . . . . . .4

     2.2       Principal Investigator. . . . . . . . . . . . . . . . . . . . .4

     2.3       Research Committee. . . . . . . . . . . . . . . . . . . . . . .4

     2.4       Duties and Authority of the Research Committee. . . . . . . . .5

     2.5       Research Plans. . . . . . . . . . . . . . . . . . . . . . . . .5

     2.6       Records; Inspection . . . . . . . . . . . . . . . . . . . . . .5
</TABLE>

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

                                      1

<PAGE>

                                                                 CONFIDENTIAL

<TABLE>
<S>                                                                          <C>
     2.7       Disclosure of Inventions and Research Results . . . . . . . . .6

     2.8       Quarterly Reports . . . . . . . . . . . . . . . . . . . . . . .6

     2.9       PRI Covenants . . . . . . . . . . . . . . . . . . . . . . . . .6

     2.10      Termination of Research Programs. . . . . . . . . . . . . . . .7

3.   ASSIGNMENT OF RIGHTS; LICENSE GRANT . . . . . . . . . . . . . . . . . . .7

     3.1       Assignment to PRI . . . . . . . . . . . . . . . . . . . . . . .7

     3.2       Grant to InterMune. . . . . . . . . . . . . . . . . . . . . . .7

     3.3       Exclusivity . . . . . . . . . . . . . . . . . . . . . . . . . .7

     3.4       Government Funding. . . . . . . . . . . . . . . . . . . . . . .7

4.   DILIGENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

     4.1       Generally . . . . . . . . . . . . . . . . . . . . . . . . . . .7

     4.2       Funding Requirements. . . . . . . . . . . . . . . . . . . . . .8

     4.3       Limitation. . . . . . . . . . . . . . . . . . . . . . . . . . .9

     5.1       Research Support Payments . . . . . . . . . . . . . . . . . . .9

     5.2       Equity. . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

     5.3       Milestone Payment . . . . . . . . . . . . . . . . . . . . . . 10

     5.4       Royalties . . . . . . . . . . . . . . . . . . . . . . . . . . 10

     5.5       Payment of Royalties. . . . . . . . . . . . . . . . . . . . . 10

     5.6       Payment Exchange Rate . . . . . . . . . . . . . . . . . . . . 10

     5.7       Income Tax Withholding. . . . . . . . . . . . . . . . . . . . 11

     5.8       Audits. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

     6.1       Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . 11

     6.2       Patent Filing, Prosecution and Maintenance. . . . . . . . . . 11

     6.3       Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . 12

     6.4       Infringement of Third Party Patents . . . . . . . . . . . . . 12

     6.5       Infringement of Research Patents. . . . . . . . . . . . . . . 12

7.   CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

     7.1       Confidential Information. . . . . . . . . . . . . . . . . . . 12

     7.2       Exceptions. . . . . . . . . . . . . . . . . . . . . . . . . . 13

     7.3       Permitted Disclosure. . . . . . . . . . . . . . . . . . . . . 13

     7.4       Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . 13

     7.5       Terms of the Agreement. . . . . . . . . . . . . . . . . . . . 13
</TABLE>

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

                                      2

<PAGE>

                                                                 CONFIDENTIAL

<TABLE>
<S>                                                                          <C>
     8.1       Mutual Representations and Warranties . . . . . . . . . . . . 14

     8.2       PRI Representations and Warranties. . . . . . . . . . . . . . 14

9.   INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

     9.1       By InterMune. . . . . . . . . . . . . . . . . . . . . . . . . 14

     9.2       By PRI. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

     9.3       Notice and Procedures . . . . . . . . . . . . . . . . . . . . 15

10.  TERM AND TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . 15

     10.1      Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

     10.2      Termination by InterMune. . . . . . . . . . . . . . . . . . . 15

     10.3      Termination for Material Breach . . . . . . . . . . . . . . . 15

     10.4      Effect of Termination . . . . . . . . . . . . . . . . . . . . 15

     10.5      Bankruptcy Rights . . . . . . . . . . . . . . . . . . . . . . 16

     10.6      Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . 16

11.  MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

     11.1      Entire Agreement; Amendment . . . . . . . . . . . . . . . . . 16

     11.2      Dispute Resolution. . . . . . . . . . . . . . . . . . . . . . 16

     11.3      Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . 17

     11.4      Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

     11.5      Limitation of Liability . . . . . . . . . . . . . . . . . . . 17

     11.6      Consents Not Unreasonably Withheld or Delayed . . . . . . . . 18

     11.7      Independent Contractors . . . . . . . . . . . . . . . . . . . 18

     11.8      Maintenance of Records. . . . . . . . . . . . . . . . . . . . 18

     11.9      United States Dollars . . . . . . . . . . . . . . . . . . . . 18

     11.10     No Strict Construction. . . . . . . . . . . . . . . . . . . . 18

     11.11     Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . 18

     11.12     Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . 18

     11.13     Further Actions . . . . . . . . . . . . . . . . . . . . . . . 18

     11.14     Severability. . . . . . . . . . . . . . . . . . . . . . . . . 18

     11.15     Ambiguities . . . . . . . . . . . . . . . . . . . . . . . . . 19

     11.16     Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . 19

     11.17     No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . 19

SCHEDULE 2.5  RESEARCH PLANS . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>

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

                                      3

<PAGE>

                                                                 CONFIDENTIAL

[ * ] = 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>

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

                                                                 EXHIBIT 10.18

                                 LICENSE AGREEMENT

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

1.   DEFINITIONS:

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

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

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

2.   BACKGROUND:

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

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

3.   LICENSE GRANT:

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

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

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

                             1.

<PAGE>

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

4.   FEES AND ROYALTIES:

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

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

          (ii)  the sum of [ * ] payable upon [ * ] Licensed Product;

          (iii) the sum of [ * ] payable upon [ * ] Licensed Product.

          (iv)  the sum of [ * ] payable upon [ * ] Licensed Product;

          (v)   the sum of [ * ] payable upon [ * ] licensed product;

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

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

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

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

          (iii) transportation charges;

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

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

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

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

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

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
                                 2.

<PAGE>

5.   REPORTS, PAYMENTS AND ACCOUNTING:

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

          (i)   summary of work completed;

          (ii)  key scientific discoveries;

          (iii) summary of work in progress;

          (iv)  schedule of anticipated events or milestones;

          (v)   marketing plans for introducing Licensed Products; and

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

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

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

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

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

6.   PATENTS:

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
                                   3.

<PAGE>

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

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

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

7.   WARRANTIES AND INDEMNITIES:

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

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

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

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

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

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.                            4.

<PAGE>

8.   INFRINGEMENT BY OTHERS:

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

9.   TERM AND TERMINATION:

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

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

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

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

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

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

          (vi)  The provisions of Article 7.

10.  DUE DILIGENCE:

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

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

     (c)  INTERMUNE SHALL:

          (i)   file an IND and begin Phase I Clinical Trials within [ * ] years
of executing this Agreement;

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

                                      5.
<PAGE>

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

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

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

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

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

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

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

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

11.  USE OF NAMES AND TRADEMARKS:

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

12.  ASSIGNMENT:

     This Agreement may not be assigned.

13.  APPLICABLE LAW:

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

                                      6.
<PAGE>

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

14.  ARBITRATION:

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

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

15.  NOTICES:

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

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

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

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

16.  WAIVER:

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

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

                                      7.
<PAGE>

17.  SCOPE OF AGREEMENT:

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

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

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

MCW RESEARCH FOUNDATION, INC.                INTERMUNE PHARMACEUTICALS, INC.

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

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

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

                                      8.

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