Document:

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                                                                    EXHIBIT 10.1

[CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS AGREEMENT HAVE
BEEN REDACTED AND HAVE BEEN SEPARATELY FILED WITH THE COMMISSION]

                              ASSIGNMENT AGREEMENT

      THIS ASSIGNMENT AGREEMENT (this "Agreement") dated as of December 8, 1999
(the "Effective Date"), is entered into between The Immune Response Corporation,
a Delaware corporation ("IRC"), having a place of business located at 5935
Darwin Court, Carlsbad, California 92008, and Connetics Corporation, a Delaware
corporation ("Connetics"), having a place of business located at 3400 West
Bayshore Road, Palo Alto, California 94303.

                            W I T N E S S E T H :

      WHEREAS, Connetics owns or has rights under certain patent applications
and issued patents claiming T-cell receptor technology (the "TCR Technology").

      WHEREAS, Connetics is willing to sell, assign and transfer (or cause to be
sold, assigned and transferred) to IRC all worldwide patent applications, issued
patents and know-how regarding the TCR Technology which Connetics owns or
controls, subject to the terms and conditions of the Acquisition Agreement (as
defined below) and the Collaboration Agreement (as defined below), all on the
terms and conditions of this Agreement.

      WHEREAS, IRC is willing to assume Connetics' obligations in connection
with the TCR Technology which Connetics owns or controls, subject to the terms
and conditions of the Acquisition Agreement and the Collaboration Agreement all
on the terms and conditions of this Agreement.

      NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein, the parties agree as follows:

1.    DEFINITIONS.

      For purposes of this Agreement, the terms defined in this Article 1 shall
have the respective meanings set forth below:

      1.1   "AFFILIATE" shall mean, with respect to any Person, any other Person
which directly or indirectly controls, is controlled by, or is under common
control with, such Person. A Person shall be regarded as in control of another
Person if it owns, or directly or indirectly controls, greater than fifty
percent (50%) of the voting stock or other ownership interest of the other
Person, or if it directly or indirectly possesses the power to direct or cause
the direction of the management and policies of the other Person by any means
whatsoever.

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      1.2   "ASSIGNED AGREEMENTS" shall mean (a) that certain Technology
Acquisition Agreement dated as of June 3, 1994, between XOMA (US) LLC ("XOMA")
and Connetics (as amended effective as of December 8, 1999, the "Acquisition
Agreement"), and (b) that certain Research and Collaboration Agreement effective
February 27, 1990, between XOMA and Dr. Arthur A. Vandenbark ("Vandenbark") (as
amended effective as of December 8, 1999, the "Collaboration Agreement").

      1.3   "ASSIGNED TECHNOLOGY" shall mean the Patent Rights and the Know-How.

      1.4   "COMMISSION" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.

      1.5   "CONFIDENTIAL INFORMATION" shall mean all business, financial or
technical information of any kind whatsoever (including without limitation,
compilations, data, formulae, models, patent disclosures, procedures, processes,
projections, protocols, results of experimentation and testing, specifications,
strategies, techniques, and techniques), and all tangible and intangible
embodiments thereof of any kind whatsoever (including without limitation,
apparatus, compositions, documents, drawings, machinery, patent applications,
records, reports), (a) which is disclosed by either party (the "Disclosing
Party") to the other party (the "Recipient") and is marked, identified as or
otherwise acknowledged to be confidential at the time of disclosure, or (b)
which is within the Know-How.

      Notwithstanding the foregoing, Confidential Information shall not include
information which the Recipient can establish by written documentation (i) to
have been publicly known prior to disclosure of such information by the
Disclosing Party, (ii) to have become publicly known, without fault on the part
of the Recipient, subsequent to disclosure of such information by the Disclosing
Party to the Recipient, (iii) to have been received by the Recipient at any time
from a source, other than the Disclosing Party, rightfully having possession of
and the right to disclose such information, or (iv) to have been otherwise known
by the Recipient prior to disclosure of such information by the Disclosing Party
to the Recipient.

      1.6   "FDA" shall mean the United States Food and Drug Administration, or
any successor agency in the United States, and any foreign equivalent thereto.

      1.7   "FIRST COMMERCIAL SALE" shall mean, with respect to any Product, the
first sale for use or consumption by the general public of such Product in a
country after required marketing and, if applicable, pricing approval has been
granted by the applicable regulatory authority(ies).

      1.8   "KNOW-HOW" shall mean all information and data regarding the TCR
Technology or Products which is not generally known to the public, including
without limitation, information or data either pertaining to or comprising
materials and chemicals, inventions, designs, concepts, algorithms, formulae,
software in any stage of development, supplies, techniques, practices, machinery
and equipment, reagents, processes, methods, knowledge, know-how, skill,
experience and expertise, data (including preclinical, clinical, technical,
analytical, and quality control data), technical information, patent application
data or descriptions, and marketing, sales and manufacturing data, in each case
that Connetics owns or controls.

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      1.9   "NET SALES" shall mean, with respect to any Product, the invoiced
sales price of such Product billed by IRC or its Affiliates (or, where
applicable, by licensees of IRC) to customers who are not Affiliates, less (to
the extent incurred and absorbed by IRC, its Affiliates or any such licensee)
(a) credits, allowances, discounts and rebates to, and chargebacks from the
account of, such customers for spoiled, damaged, out-dated, rejected or returned
Product; (b) transportation and insurance costs incurred in transporting such
Product to such customers; (c) actual cash, quantity and trade discounts,
rebates and other price adjustments or reduction programs; (d) sales, use,
value-added and other direct taxes, or any other governmental charge imposed
upon the production, importation, use or sale of the Product; (e) customs,
duties, surcharges and other governmental charges incurred in the exportation or
importation of such Product; and (f) bad debts accrual.

      1.10  "PATENT RIGHTS" shall mean (a) all United States and foreign
(including regional authorities such as the European Patent Office) regular or
provisional patent applications and issued patents listed on Schedule A; (b) all
United States and foreign patents that have issued or issue from such patent
applications, including utility, model and design patents and certificates of
invention; (c) all divisionals, continuations, continuations-in-part, reissues,
reexaminations, renewals, extensions or additions to any such patents and patent
applications described in clauses (a) or (b) above.

      1.11  "PERSON" shall mean an individual, corporation, partnership, limited
liability company, trust, business trust, association, joint stock company,
joint venture, pool, syndicate, sole proprietorship, unincorporated
organization, governmental authority or any other form of entity not
specifically listed herein.

      1.12  "PRODUCT" shall mean a composition or a product the manufacture,
use, offer for sale, sale or import of which is within the scope of a Valid
Claim.

      1.13  "PRODUCT REGISTRATIONS" shall mean all registrations, applications,
permits, licenses, authorizations, approvals, presentations and notifications of
any health and regulatory agencies with respect to a Product, which (a) are
owned, controlled, possessed or made by or on behalf of Connetics or its
Affiliates prior to the Effective Date, and (b) are or may be required by the
governing health authority of any country to test, manufacture, use, sell or
import in such country such Product.

      1.14  The terms "REGISTER," "REGISTERED" and "REGISTRATION" shall mean a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.

      1.15  "REGISTRATION EXPENSES" shall mean all expenses incurred in
effecting the registration of the Shares pursuant to this Agreement, including,
without limitation, all registration, qualification, and filing fees, printing
expenses, escrow fees, fees and disbursements of counsel for IRC, blue sky fees
and expenses, and expenses of any regular or special audits incident to or
required by any such registration, but shall not include Selling Expenses.

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      1.16  "ROYALTY TERM" means, in the case of *** and as to ***, the period
of time commencing on the First Commercial Sale in such country and ending upon
*** after the date of such First Commercial Sale in such country.

      1.17  "SECURITIES ACT" shall mean the Securities Act of 1933, as amended,
or any similar successor federal statute and the rules and regulations
thereunder, all as the same shall be in effect from time to time.

      1.18  "SELLING EXPENSES" shall mean all underwriting discounts and selling
commissions applicable to the sale of the Shares and fees and disbursements of
counsel for Connetics.

      1.19  "SHARES" shall mean those Shares of IRC Common Stock issued to
Connetics pursuant to Section 4.1.2 of this Agreement.

      1.20  "THIRD PARTY" shall mean any Person other than IRC, Connetics and
their respective Affiliates.

      1.21  "VALID CLAIM" shall mean an (a) issued claim under an issued patent
within the Patent Rights, which has not (i) expired or been canceled, (ii) been
declared invalid by an unreversed and unappealable decision of a court or other
appropriate body of competent jurisdiction, (iii) been admitted to be invalid or
unenforceable through reissue, disclaimer or otherwise, or (iv) been abandoned,
and (b) a claim of a patent application included within the Patent Rights as of
the Effective Date.

2.    REPRESENTATIONS AND WARRANTIES.

      2.1   MUTUAL REPRESENTATIONS. Each party represents and warrants to the
other party as follows:

            2.1.1 CORPORATE EXISTENCE. Such party is a corporation duly
organized, validly existing and in good standing under the laws of the state in
which it is incorporated.

            2.1.2 AUTHORIZATION AND ENFORCEMENT OF OBLIGATIONS. Such party (a)
has the corporate power and authority and the legal right to enter into this
Agreement and to perform its obligations hereunder, and (b) has taken all
necessary corporate action on its part to authorize the execution and delivery
of this Agreement and the performance of its obligations hereunder. This
Agreement has been duly executed and delivered on behalf of such party, and
constitutes a legal, valid, binding obligation, enforceable against such party
in accordance with its terms.

            2.1.3 NO CONSENTS. All necessary consents, approvals and
authorizations of all governmental authorities and other Persons required to be
obtained by such party in connection with this Agreement have been obtained.

____________________
*** Confidential material redacted and separately filed.

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            2.1.4 NO CONFLICT. The execution and delivery of this Agreement and
the performance of such party's obligations hereunder (a) do not conflict with
or violate any requirement of applicable laws or regulations, and (b) do not
conflict with, or constitute a default under, any contractual obligation of it.

      2.2   CONNETICS REPRESENTATIONS. Connetics represents and warrants to IRC
            as follows:

            2.2.1 ACCREDITED INVESTOR. Connetics is an "accredited investor" as
defined in Rule 501(a) of Regulation D promulgated under the Securities Act.

            2.2.2 INVESTMENT INTENT. Connetics is acquiring the Shares pursuant
to Section 4.1.2(a) below for investment for its own account only and not with a
view to the resale or "distribution" thereof in violation of the Securities Act.
Connetics understands that such Shares have not been registered under the
Securities Act or registered or qualified under any state securities law in
reliance on specific exemptions therefrom, which exemptions may depend upon,
among other things, the bona fide nature of Connetics' investment intent as
expressed herein.

            2.2.3 INVESTMENT EXPERIENCE. Connetics has been furnished with all
requested materials relating to IRC's business affairs and financial condition
and has been afforded the opportunity to ask questions of IRC and received
satisfactory answers to any such inquiries. Connetics has such business and
financial experience as is required to give it the capacity to evaluate the
merits and risks of the acquisition of such Shares.

            2.2.4 COMPLIANCE WITH SECURITIES LAWS AND REGULATIONS. All
subsequent offers and sales of such Shares shall be made pursuant to
registration under the Securities Act and qualification under the applicable
state securities laws or pursuant to exemptions from registration and
qualification.

            2.2.5 PATENT RIGHTS. Schedule A sets forth a complete and accurate
list of all patents and patent applications owned or controlled by Connetics and
related to the TCR Technology, including the country of filing, filing number,
date of issue, expiration date and title. The Patent Rights represent all the
patent applications and patents in any country which claim or disclose TCR
Technology and in which Connetics and/or its Affiliates has an ownership or
other transferable interest as of the date of this Agreement.

            2.2.6 ASSIGNED TECHNOLOGY. Connetics has all right, title and
interest in and to the Assigned Technology and is in full compliance with all
agreements (including without limitation the Assigned Agreements) pursuant to
which it acquired any of the Assigned Technology. After giving effect to the
sale, assignment and transfer of the Assigned Technology to IRC herein, IRC
shall be the sole owner of the Assigned Technology, free of all obligations to
pay royalties or other amounts to any Person (other than amounts owing by IRC to
Connetics pursuant to Section 4.1 below, and to XOMA and Vandenbark pursuant to
the Assigned Agreements) and all other adverse claims.

            2.2.7 ASSIGNED AGREEMENTS. To the best knowledge of Connetics, the
Assigned Agreements are binding upon the other parties thereto in accordance
with their respective terms

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and have not been amended or modified in any respect. Connetics has not
received written notice of any default (or alleged default) under any
Assigned Agreement. To the best knowledge of Connetics, there exists no
condition that with notice or the lapse of time or both would constitute a
default of a material obligation (or give rise to a termination right) under
any Assigned Agreement. Connetics has not received notice of cancellation or
termination of any Assigned Agreement.

      2.3   IRC REPRESENTATIONS. IRC represents and warrants to Connetics as
follows:

            2.3.1 VALID ISSUANCE OF SHARES. The Shares which are being issued to
Connetics hereunder, when issued, sold and delivered in accordance with the
terms hereof, for the consideration expressed herein, will be duly and validly
issued, fully paid and nonassessable, free and clear of all security interests,
liens or other encumbrances, voting or other restrictions and preemptive or
similar rights and, based in part upon the representations of Connetics in this
Agreement, will be issued in compliance with all applicable federal and state
securities laws. The Common Stock of IRC is qualified for trading on the Nasdaq
Stock Market, and IRC and such Common Stock meet the criteria for continuing
qualification for such trading.

            2.3.2 GOVERNMENTAL CONSENTS. The execution, delivery and performance
by IRC of this Agreement require no action by or in respect of, or filing with,
any governmental body, agency, or official other than (a) post-sale filings
pursuant to applicable state and federal securities laws, which IRC undertakes
to file within the applicable time periods and (b) any such action or filing as
to which the failure to make or obtain would not, individually or in the
aggregate, have a material adverse effect.

            2.3.3 SEC FILINGS; FINANCIAL STATEMENTS.

            (a)   IRC has delivered to Connetics (i) its annual report on Form
10-K for its fiscal year ended December 31, 1998, (ii) its proxy or information
statement relating to the annual meeting of the stockholders of the Company held
on May 25, 1999, and (iii) all of its other reports, statements, schedules and
registration statements filed with the Commission since December 31, 1998. IRC
has filed on a timely basis all such reports, statements, schedules and
registration statements required to be filed with the Commission.

            (b)   As of its filing date, each such report or statement filed
pursuant to the 1934 Act did not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading.

            (c)   The audited consolidated financial statements and unaudited
consolidated interim financial statements of IRC included in the annual and
other reports referred to in Section 2.3.3(a) fairly present, in conformity with
generally accepted accounting principles applied on a consistent basis, the
consolidated financial position of IRC and its consolidated subsidiaries as of
the dates thereof and their consolidated results of operations and changes in
financial position for the periods then ended.

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3.    SALE, ASSIGNMENT AND TRANSFER.

      3.1   ASSIGNED TECHNOLOGY. Connetics hereby irrevocably sells, assigns and
transfers (or shall cause to be sold, assigned and transferred) to IRC, and IRC
purchases and acquires from Connetics, all right, title and interest in and to
the Assigned Technology and all of Connetics' rights and obligations under the
Assigned Agreements, such assignment and purchase to be effective as of the
Effective Date. IRC hereby assumes and agrees to perform all of the obligations
of Connetics under the Assigned Agreements and agrees that the Assigned
Technology is subject to the terms and conditions of the Assigned Agreements.

      3.2   PRODUCT REGISTRATIONS. Connetics hereby irrevocably sells, assigns
and transfers (or shall cause to be sold, assigned and transferred) to IRC, all
right, title and interest in and to the Product Registrations. Within ten (10)
days after the Effective Date, Connetics shall deliver (or cause to be
delivered) to IRC copies of all Product Registrations and all data and
information required to be maintained by the owner of such Product
Registrations.

      3.3   FURTHER ACTIONS. Connetics shall, and shall cause its Affiliates to,
without charge and promptly upon request by IRC, take any and all actions and
execute and deliver (or cause to be executed and delivered) any and all
documents requested by IRC in order to (i) effect the assignment in Sections 3.2
and 3.3, and (ii) obtain, enforce or defend IRC's rights in the Assigned
Technology. In the event Connetics fails to promptly execute any such document
as IRC may so reasonably request, Connetics hereby appoints IRC as its
attorney-in-fact for the purpose of executing such document, which appointment
shall be a power coupled with an interest and shall be irrevocable.

      3.4   DELIVERY. Within ten (10) days of the Effective Date, Connetics
shall deliver to IRC the technical information, materials, and embodiments of
the Assigned Technology not previously delivered to IRC.

4.    CONSIDERATION.

      4.1   PAYMENTS BY IRC.

            4.1.1 TECHNOLOGY ACCESS FEES.

            (a)   Upon the Effective Date, IRC shall pay to Connetics ***.

            (b)   On or before ***, IRC shall pay to Connetics ***. In addition,
on or before October 31, 2000, IRC shall pay to Connetics ***.

            (c)   If prior to October 31, 2000, IRC (a) sells or assigns to a
Third Party the Assigned Technology or grants to a Third Party a license under
the Assigned Technology, and (b) receives cash consideration for such sale,
assignment or license, then within ten (10) business days after the receipt by
IRC of such cash consideration, IRC shall pay to Connetics an amount ***. All
amounts paid to Connetics under this Section 4.1.1(c) shall be credited against
the

____________________
*** Confidential material redacted and separately filed.

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payments owing under Section 4.1.1(b) above in the inverse order in which they
are due.

            4.1.2 THE SHARES.

            (a)   On the Effective Date, IRC shall issue to Connetics the number
of shares of Common Stock of IRC which when added to the number of shares of IRC
Common Stock issued to XOMA pursuant to the Agreement effective as of the date
hereof (the "IRC/XOMA Agreement"), between XOMA and IRC, equals two hundred and
fifty thousand (250,000) Shares.

            (b)   On or before June 30, 2000 (the "Adjustment Date"), IRC shall
issue to Connetics the number of shares of Common Stock of IRC (rounded to the
nearest whole number) which when added to the number of shares of IRC Common
Stock issued pursuant to Section 4.1.2(a) and the number of shares of IRC Common
Stock issued to XOMA pursuant to the IRC/XOMA Agreement, shall have an aggregate
value of ***, at a price per share equal to the average daily closing price of
the Common Stock of IRC as quoted on the Nasdaq Stock Market on each of the
twenty (20) trading days ending three (3) trading days prior to the Adjustment
Date. If the Registration Statement filed pursuant to Section 6 of this
Agreement does not include the Shares (if any) to be issued on the Adjustment
Date, then within five (5) business days after the Adjustment Date, IRC shall
file a registration statement for the resale of such Shares on Form S-3 pursuant
to the Securities Act and as would permit or facilitate the sale and
distribution of such Shares. IRC shall use its commercially reasonable efforts
to effect such registration as soon as practicable thereafter. Such Shares
otherwise shall be subject to all of the terms and conditions set forth in
Section 6 of this Agreement.

            (c)   The certificate or certificates for the Shares shall be
subject to a legend restricting transfer under the Securities Act of 1993 and
referring to restrictions on transfer of such certificate(s), which legend shall
be substantially as follows:

            THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
      ACT"), AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN
      CONNECTION WITH, THE SALE, OFFERING OR DISTRIBUTION THEREOF. NO SUCH SALE,
      OFFERING OR DISPOSITION MAY BE EFFECTED WITHOUT (A) AN EFFECTIVE
      REGISTRATION STATEMENT RELATED THERETO, OR (B) AN OPINION OF COUNSEL FOR
      CONNETICS THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT,
      OR (C) FULL COMPLIANCE WITH THE PROVISIONS OF RULE 144 UNDER THE
      SECURITIES ACT.

Any legend endorsed on a certificate pursuant to this section shall be removed
(i) if such shares may be transferred in compliance with Rule 144(k) promulgated
under the Securities Act, (ii) if such shares may be transferred in compliance
with subsection 4.1.2(d) below, and (iii) following registration of the Shares,
upon Connetics' request.

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*** Confidential material redacted and separately filed.

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            (d)   Connetics shall not directly or indirectly sell, assign,
transfer or otherwise dispose of the Shares or any interest therein (or enter
into any agreement to do any of the foregoing) until such time as (i) the Shares
have been registered and qualified under applicable federal and state securities
laws, or (ii) Connetics may sell, assign, transfer or otherwise dispose of the
Shares pursuant to an exemption from applicable federal and state securities
laws. Thereafter, Connetics shall not directly or indirectly sell, assign,
transfer or otherwise dispose of in the aggregate more than one-third (1/3) of
the aggregate number of the Shares issued to Connetics under Section 4.1.2(a) or
(b) above (or enter into any agreement to do any of the foregoing) in any period
of thirty (30) consecutive days.

            (e)   Notwithstanding anything to the contrary herein, in no event
shall the total number of shares of IRC Common Stock issued to Connetics
pursuant to this Agreement and to XOMA pursuant to the IRC/XOMA Agreement exceed
six hundred thousand (600,000) Shares.

            4.1.3 DEFERRED PAYMENTS.

            (a)   During the Royalty Term, IRC shall pay to Connetics an amount
equal to the remainder of (i) *** of Products sold by IRC, its Affiliates and
licensees, less (ii) all amounts payable thereon to XOMA pursuant to Section 5.1
of the Acquisition Agreement, less (iii) all amounts payable thereon to
Vandenbark pursuant to Section 5.1 of the Collaboration Agreement.

            (b)   During the Royalty Term, IRC shall pay Connetics an amount
equal to *** of any license fees and milestone fees received by IRC from a Third
Party licensee of the Patent Rights in consideration for the grant of a license
under the Patent Rights to develop or commercialize Products for use in the
prevention or treatment of multiple sclerosis in humans. In the event that IRC
grants licenses to a broad range of indications which includes multiple
sclerosis, IRC shall pay Connetics an amount equal to *** of the proportionate
amount of any license fees and milestone fees received by IRC from a Third Party
licensee of the Patent Rights in such transaction as they relate to the
development or commercialization of Products for use in the prevention or
treatment of multiple sclerosis. IRC and Connetics shall, in good faith,
determine the proportional value of the multiple sclerosis indication to the
license. Notwithstanding the foregoing, such license fees and milestone payments
shall exclude any amounts received by IRC calculated based upon sales of
Products, equity investments (to the extent of *** of the fair market value of
the securities sold), debt financing, patent costs and research and development
funding.

            4.2   VALID CLAIMS. For purposes of IRC's royalty obligations
pursuant to Section 4.1.3, in the event that IRC materially narrows the scope of
or abandons a claim within the Patent Rights, then the narrowed claim in the
form existing as of the Effective Date or the abandoned claim in the form
existing as of the Effective Date, as applicable, shall be considered a Valid
Claim with respect to such Product for purposes of this Agreement for a period
of *** years after the First Commercial Sale of such product. Notwithstanding
the foregoing, IRC shall not abandon claims within the Patent Rights prior to
***.

____________________
      *** Confidential material redacted and separately filed.

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      4.3   PAYMENT OBLIGATIONS UNDER ASSIGNED AGREEMENTS. IRC shall pay
directly to XOMA and Vandenbark, respectively, any amounts owing pursuant to the
Assigned Agreements; PROVIDED, HOWEVER, that all such amounts paid shall be
fully creditable against the amounts due Connetics pursuant to Section 4.1.3(a).

      4.4   ROYALTY TERMS. IRC shall pay to Connetics all amounts shown to have
accrued by each report provided by IRC under Article 5 below on the date such
report is due. Payment of such amounts in whole or in part may be made in
advance of such due date.

      4.5   EXCHANGE CONTROL. If at any time legal restrictions prevent the
prompt remittance by IRC of part or all amounts with respect to any country
where a Product is sold, the parties shall use their reasonable commercial
efforts, in cooperation with the applicable authorities in such country or
otherwise, to facilitate payment of all royalties affected thereby. If,
notwithstanding the good faith efforts of the parties, such remittance is
prevented, IRC shall have the right, in its sole discretion, to make such
payments by depositing the amount thereof in local currency to Connetics'
account in a bank or other depository institution in such country.

      4.6   WITHHOLDING TAXES. IRC shall be entitled to deduct the amount of any
withholding taxes, value-added taxes or other taxes, levies or charges with
respect to such amounts, other than United States taxes, payable by IRC or any
taxes required to be withheld by IRC, to the extent IRC pays to the appropriate
governmental authority on behalf of Connetics such taxes, levies or charges. IRC
shall use reasonable efforts to minimize any such taxes, levies or charges
required to be withheld on behalf of Connetics by IRC. IRC promptly shall
deliver to Connetics proof of payment of all such taxes, levies and other
charges, together with copies of all communications from or with such
governmental authority with respect thereto.

      4.7   LATE PAYMENTS. Any payments or portions thereof due hereunder which
are not paid on the date such payments are due under this Agreement shall bear
interest at a rate equal to the lesser of the prime rate as published in the
United States Western Edition of THE WALL STREET JOURNAL (or its successor in
interest) under the heading "Money Rates" plus two percent (2%), or the maximum
rate permitted by law, calculated on the number of days such payment is
delinquent.

5.    REPORTS AND ACCOUNTING.

      5.1   REPORTS. During the term of this Agreement following the First
Commercial Sale of a Product by IRC or its Affiliates, or the grant of a
sublicense hereunder by IRC or its Affiliates, IRC shall furnish to Connetics a
quarterly written report showing in reasonably specific detail the calculation
of amounts payable, if any, which shall have accrued hereunder during the
reporting period. With respect to sales of Products invoiced or revenues
received in United States dollars, all amounts shall be expressed in United
States dollars. With respect to sales of Products invoiced or revenues received
in a currency other than United States dollars, all amounts shall be expressed
in the domestic currency of the party making the sale together with the United
States dollar equivalent of the amounts payable, calculated using the average
closing buying rate for such currency published in the United States Western
Edition of THE WALL STREET

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JOURNAL under the heading "Currency Trading - Exchange Rates" on the last
business day of each month in the quarter prior to the date of payment.
Reports shall be due on the thirtieth (30th) day following the close of each
calendar quarter. IRC shall keep complete and accurate records in sufficient
detail to properly permit the calculation of amounts payable hereunder to be
determined.

      5.2   RECORDS. IRC shall keep for four (4) years from the date of each
payment of amounts due pursuant to Section 4.1 complete and accurate records of
sales and all other information necessary to calculate Net Sales of each Product
in sufficient detail to allow the accrued royalties to be determined accurately.
Connetics shall have the right to cause an independent, certified public
accounting firm of nationally recognized standing (who may be Connetics'
regularly retained independent accountants and who has executed a
confidentiality agreement with IRC reasonably acceptable to IRC) to audit such
records at the place or places of business where such records are customarily
kept in order to verify the accuracy of the reports of Net Sales and payments
for the preceding four years. Such audits may be exercised during normal
business hours once a year upon 30 days' advance written notice to IRC. The
accounting firm shall disclose to Connetics only whether the reports are correct
or not and the specific details concerning any discrepancies. No other
information shall be shared. Connetics shall bear the full cost of such audit
unless such audit discloses a variance of more than 5% from the amount of the
payments due under Section 4.1 of this Agreement, in which event, IRC shall bear
the full cost of such audit and shall pay to Connetics the amount payable.
Connetics shall not disclose confidential information concerning payments and
reports, and all information learned in the course of any audit or inspection
unless such information is or becomes publicly known or available (unless such
information becomes publicly known or available through breach of this
Agreement), except to the extent necessary for Connetics to reveal such
information in order to enforce its rights under this Agreement or if disclosure
is required by law.

6.    REGISTRATION OF THE SHARES.

      6.1   REGISTRATION. Within thirty (30) days after the Effective Date, IRC
shall file a registration statement for the resale of the Shares on Form S-3
pursuant to the Securities Act and as would permit or facilitate the sale and
distribution of the Shares. IRC shall use its commercially reasonable efforts to
effect such registration as soon as practicable thereafter. Additionally, IRC
shall file appropriate post-effective amendments to such registration statement
and appropriate qualifications under applicable blue sky or other state
securities laws. IRC shall furnish Connetics with copies of all correspondence
to and from the Commission from the date of filing, in connection with such
registration, such copies to be forwarded no later than five (5) business days
after receipt by IRC or mailing by IRC or its agents, as the case may be.

            6.1.1 IRC shall not be obligated to effect, or to take any action to
effect, any such registration pursuant to this Section 6.1 in any particular
jurisdiction in which IRC would be required to execute a general consent to
service of process in effecting such registration, qualification, or compliance,
unless IRC is already subject to service in such jurisdiction and except as may
be required by the Securities Act.

            6.1.2 The registration statement filed pursuant to this Section 6.1
shall not include other securities of IRC with respect to which registration
rights have been granted

                                       -11-
<PAGE>

(except those issued to XOMA pursuant to the IRC/XOMA Agreement), nor
securities of IRC being sold for the account of IRC, unless Connetics consents
to such inclusion, which consent shall not be unreasonably withheld or delayed.

      6.2   EXPENSES. All Registration Expenses incurred in connection with any
registration, qualification or compliance pursuant to Section 6.1 above shall be
borne by IRC. All Selling Expenses shall be borne by Connetics.

      6.3   REGISTRATION PROCEDURES. IRC will provide Connetics with a draft of
the registration statement and give due consideration to their comments three
(3) days prior to the filing. IRC will keep Connetics advised in writing as to
the initiation of the registration of the Shares and as to the completion
thereof. At its expense, IRC will use its commercially reasonable efforts to:

            6.3.1 Keep such registration effective for a period of one (1) year
from the Effective Date or until Connetics has completed the distribution
described in the registration statement relating thereto, whichever first
occurs;

            6.3.2 Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement;

            6.3.3 Furnish such number of prospectuses and other documents
incident thereto, including any amendment of or supplement to the prospectus, as
Connetics from time to time may reasonably request;

            6.3.4 Notify Connetics of the happening of any event as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading or incomplete in the light of the circumstances then existing,
and at the request of Connetics, prepare and furnish to Connetics a reasonable
number of copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of Shares, such
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or incomplete in the light of the
circumstances then existing; and

            6.3.5 Cause the Shares to be listed or qualified on each securities
exchange or inter-dealer quotation system on which similar securities issued by
IRC are then listed and thereafter maintain such listing or quotation.

      6.4   INDEMNIFICATION.

            6.4.1 IRC shall indemnify Connetics, its directors, officers,
employees, legal counsel and accountants and each Person controlling Connetics
within the meaning of Section 15 of the Securities Act, against all losses,
liabilities, damages and expenses incurred as a result of

                                       -12-
<PAGE>

any claim, demand, action or proceeding by any Third Party arising out of or
based on any untrue statement (or alleged untrue statement) made by or on
behalf of IRC of a material fact contained in any prospectus, offering
circular, or other document (including any related registration statement,
notification, or the like), or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, or any violation by IRC of the
Securities Act or any rule or regulation thereunder applicable to IRC and
will reimburse each such Connetics, its officers, directors, employees, legal
counsel and accountants and each Person controlling Connetics within the
meaning of Section 15 of the Securities Act, for any legal or any other
expenses reasonably incurred in connection with investigating or defending or
settling any such claim, demand, action or other proceeding; provided,
however, that IRC will not be liable in any such case to the extent that any
such loss, liability, damage or expense arises out of or is based on any
untrue statement or omission based upon written information furnished to IRC
by Connetics and stated to be specifically for use therein; provided,
further, that the obligations of IRC hereunder shall not apply to amounts
paid in settlement of any such claims, demands, actions or other proceedings
if such settlement is effected without the consent of IRC (which consent
shall not be unreasonably withheld or delayed).

            6.4.2 Connetics shall indemnify IRC, its directors, officers,
employees, legal counsel and accountants and each Person controlling IRC within
the meaning of Section 15 of the Securities Act, against all losses,
liabilities, damages and expenses incurred as a result of any claim, demand,
action or proceeding by any Third Party arising out of or based on any untrue
statement (or alleged untrue statement) made by or on behalf of Connetics of a
material fact contained in any prospectus, offering circular, or other document
(including any related registration statement, notification, or the like)
incident to any such registration, qualification, or compliance, or based on any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
any violation by Connetics of the Securities Act or any rule or regulation
thereunder applicable to Connetics, and will reimburse IRC, its directors,
officers, employees, legal counsel and accountants and each Person controlling
IRC within the meaning of Section 15 of the Securities Act, for any legal or any
other expenses reasonably incurred in connection with investigating or defending
or settling any such claim, demand, action or other proceeding, in each case to
the extent, but only to the extent, that such untrue statement (or alleged
untrue statement) or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular, or other document in reliance upon and
in conformity with written information furnished to IRC by Connetics and stated
to be specifically for use therein; provided, however, that the obligations of
Connetics hereunder shall not apply to amounts paid in settlement of any such
claims, demands, actions or other proceedings if such settlement is effected
without the consent of Connetics (which consent shall not be unreasonably
withheld or delayed).

            6.4.3 Any claim of indemnification under this Section 6.4 shall be
made in accordance with the procedure set forth in Section 9.2.

      6.5   INFORMATION BY CONNETICS. Connetics shall furnish to IRC such
information regarding Connetics and the distribution of the Shares as IRC may
reasonably request in writing

                                       -13-
<PAGE>

and as shall be reasonably required in connection with any registration,
qualification, or compliance referred to in this Article 6.

7.    CONFIDENTIALITY.

      7.1   CONFIDENTIAL INFORMATION. During the term of this Agreement, and for
a period of five (5) years following the expiration or earlier termination
hereof, the Recipient shall maintain in confidence all Confidential Information
of the Disclosing Party, and shall not use, disclose or grant the use of such
Confidential Information except on a need-to-know basis to those directors,
officers, employees, sublicensees, permitted assignees and agents, consultants,
clinical investigators or contractors, to the extent such disclosure is
reasonably necessary in connection with the Recipient's activities as expressly
authorized by this Agreement. To the extent that disclosure by the Recipient is
authorized by this Agreement, prior to disclosure, the Recipient shall obtain
agreement of any such Person to hold in confidence and not make use of the
Disclosing Party's Confidential Information for any purpose other than those
permitted by this Agreement.

      7.2   TERMS OF THIS AGREEMENT. IRC and Connetics shall not disclose any
terms or conditions of this Agreement to any Third Party without the prior
consent of the other party; PROVIDED, HOWEVER, that either party may disclose
the terms of this Agreement to XOMA and/or Vandenbark on a need-to-know basis.
Notwithstanding the foregoing, prior to execution of this Agreement, Connetics
and IRC shall agree upon the substance of information that can be used to
describe the terms of this transaction, and each party may disclose such
information, as modified by mutual agreement from time to time, without the
other party's consent.

      7.3   PERMITTED DISCLOSURES. The confidentiality obligations contained in
this Article 7 shall not apply to the extent that a party is required to
disclose information by law, regulation or order of a governmental agency or a
court of competent jurisdiction, provided in each case that such party shall
provide written notice thereof to the other party and sufficient opportunity to
object to any such disclosure or to request confidential treatment thereof.

8.    TERMINATION.

      8.1   EXPIRATION. This Agreement shall expire on the expiration of IRC's
obligation to make payments under Article 4 above.

      8.2   TERMINATION OF PAYMENT OBLIGATION BY IRC.

            8.2.1 During the term of this Agreement, neither Connetics nor any
of its Affiliates shall take any action or initiate any proceeding to prevent
the issuance of, invalidate, revoke or otherwise render unenforceable any of the
Patent Rights. Within ninety (90) days after the Effective Date of this
Agreement, Connetics and its Affiliates shall terminate, dismiss and withdraw
all such actions and proceedings which were taken or initiated by it or any of
its Affiliates on or before the date of this Agreement

            8.2.2 Without limiting the rights and remedies of IRC at law, in
equity or otherwise, if Connetics or any of its Affiliates (a) takes during the
term of this Agreement any

                                       -14-
<PAGE>

action or initiates any proceeding to prevent the issuance of, invalidate,
revoke or otherwise render unenforceable any of the Patent Rights, or (b)
fails within ninety (90) days after the Effective Date of this Agreement to
terminate, dismiss and withdraw any such action or proceeding which was taken
or initiated by it or any of its Affiliates on or before the date of this
Agreement, then, if IRC is not itself in material breach of this Agreement or
the Assigned Agreements, within ten (10) days after written notice from IRC,
(x) Connetics shall refund to IRC all amounts paid by IRC to Connetics under
this Agreement; (y) Connetics shall sell, assign and transfer to IRC (at no
cost to IRC) the number of shares of Common Stock of IRC issued to Connetics
under Section 4.1.2(a) or (b) above (or if Connetics no longer owns the IRC
shares, Connetics shall pay to IRC an amount equal to the full amount of
consideration received for the sale of such shares); and (z) IRC shall have
no further obligation to pay any amounts or issue any further shares to
Connetics under this Agreement.

            8.2.3 Without limiting the rights and remedies of IRC at law, in
equity or otherwise, if XOMA, Vandenbark or any of their respective Affiliates
(a) takes during the term of this Agreement any action or initiates any
proceeding to prevent the issuance of, invalidate, revoke or otherwise render
unenforceable any of the Patent Rights, or (b) fails within ninety (90) days
after the Effective Date of this Agreement to terminate, dismiss and withdraw
any such action or proceeding which was taken or initiated by it or any of its
Affiliates on or before the date of this Agreement, then, if IRC is not itself
in material breach of this Agreement or the Assigned Agreements, IRC shall have
no further obligation to pay any amounts to Connetics under Section 4.1.1 of
this Agreement.

      8.3   EFFECT OF EXPIRATION OR TERMINATION. Expiration or termination of
this Agreement shall not relieve the parties of any obligation accruing prior to
such expiration or termination, and the provisions of Sections 3.4 and 6.4 and
Articles 7 and 9 shall survive the expiration or termination of this Agreement.

9.    INDEMNIFICATION.

      9.1   INDEMNIFICATION.

            9.1.1 IRC shall defend, indemnify and hold Connetics harmless from
all losses, liabilities, damages and expenses (including reasonable attorneys'
fees and costs) incurred by Connetics as a result of any claim, demand, action
or proceeding by any Third Party arising from or relating to the research,
development, manufacture and sale on or after the Effective Date of Products by
IRC, its Affiliates or licensees, other than any losses, liabilities, damages
and expenses arising from or relating to (a) any claim of ownership by any one
or more Third Parties of any right, title or interest in or to the Patent
Rights, (b) any agreement between Connetics or its Affiliates and any one or
more Third Parties regarding the Patent Rights entered into prior to the date of
this Agreement, or (c) any breach by Connetics of any representation, warranty
or covenant under this Agreement.

            9.1.2 Connetics shall defend, indemnify and hold IRC harmless from
all losses, liabilities, damages and expenses (including reasonable attorneys'
fees and costs) incurred by IRC as a result of any claim, demand, action or
proceeding by any Third Party arising from or relating to (a) the research,
development, manufacture and sale prior to the Effective Date of

                                       -15-
<PAGE>

Products by Connetics, its Affiliates or licensees, (b) any claim of
ownership by any one or more Third Parties of any right, title or interest in
or to the Patent Rights,(c) any agreement between Connetics or its Affiliates
and any one or more Third Parties regarding the Patent Rights entered into
prior to the date of this Agreement (other than the Assigned Agreements), or
(d) any breach by Connetics of any representation, warranty or covenant under
this Agreement.

      9.2   PROCEDURE. The indemnified party shall promptly notify the other
party hereto of any claim, demand, action or proceeding for which it intends to
claim such indemnification, and the indemnifying party shall have the right to
participate in, and, to the extent it so desires, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with counsel
selected by the indemnifying party; PROVIDED, HOWEVER, that the indemnified
party shall have the right to retain its own counsel if representation of the
indemnified party by the counsel retained by the indemnifying party would be
inappropriate due to actual or potential differing interests between the
indemnified party and any other party represented by such counsel in such
proceedings, the reasonable costs of such independent counsel to be borne by the
indemnifying party. The indemnity agreement in this Article 9 shall not apply to
amounts paid in settlement of any claim, demand, action or proceeding if such
settlement is effected without the consent of the indemnifying party, which
consent shall not be unreasonably withheld or delayed. The failure to deliver
notice to the indemnifying party within a reasonable time after notice of any
such claim or demand, or commencement of any such action or proceeding, if
prejudicial to its ability to defend, shall relieve the indemnifying party of
any liability to the indemnified party under this Article 9, but the omission so
to deliver notice to the indemnifying party will not relieve it of any liability
that it may have to the indemnified party otherwise than under this Article 9.
The indemnified party under this Article 9 and its agents, shall cooperate fully
with the indemnifying party and its legal representatives in the investigation
and defense of any claim, demand, action or proceeding covered by this
indemnification.

      9.3   INSURANCE. IRC shall maintain insurance with respect to the
research, development, manufacture and sales of Products hereunder in such
amount as it customarily maintains with respect to the research, development,
manufacture and sales of its similar products. IRC shall maintain such insurance
for so long as it continues to research, develop, manufacture or sell any
Products, and thereafter for so long as it customarily maintains insurance the
research, development, manufacture or sales of its similar products.

10.   MISCELLANEOUS.

      10.1  NOTICES. Any consent, notice or report required or permitted to be
given or made under this Agreement by one of the parties hereto to the other
party shall be in writing, addressed to such other party at its address
indicated below, or to such other address as the addressee shall have last
furnished in writing to the addressor and (except as otherwise provided in this
Agreement) shall be effective upon receipt by the addressee.

      If to IRC:         The Immune Response Corporation
                         5935 Darwin Court
                         Carlsbad, California 92008
                         Attention: President
                         Fax: (760) 431-8636

                                       -16-
<PAGE>

      If to Connetics:   Connetics Corporation
                         3400 West Bayshore Road
                         Palo Alto, California 94303
                         Attention: Chief Executive Officer
                         Fax: (650) 843-2899

      10.2  GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without regard to
principles of conflicts of law.

      10.3  ATTORNEYS' FEES. In the event that the parties incur attorneys' fees
as a result of an action arising from IRC's failure to pay the amounts due
hereunder, the prevailing party shall be entitled to attorneys' fees.

      10.4  ASSIGNMENT. Neither IRC nor Connetics shall assign its rights or
obligations under this Agreement without the prior written consent of the other
party hereto; PROVIDED, HOWEVER, that party may, without such consent, assign
this Agreement and its rights and obligations hereunder (a) to its Affiliates,
or (b) in connection with the transfer or sale of all or substantially all of
its business, or in the event of its merger or consolidation or change in
control or similar transaction. Any permitted assignee shall assume all
obligations of its assignor under this Agreement.

      10.5  AMENDMENTS. No change, modification, extension, or termination of
this Agreement, or any of the provisions herein contained, shall be valid unless
made in writing and signed by duly authorized representatives of the parties
hereto.

      10.6  ENTIRE AGREEMENT. This Agreement embodies the entire understanding
between the parties and supersedes any prior representations, understanding and
agreements between them regarding the subject matter hereof. There are no
representations, agreements or understandings, oral or written, between the
parties regarding the subject matter of this Agreement which are not fully
expressed herein.

      10.7  WAIVER. The waiver by either party hereto of any right hereunder or
the failure to perform or of a breach by the other party shall not be deemed a
waiver of any other right hereunder or of any other breach or failure by said
other party whether of a similar nature or otherwise.

      10.8  HEADINGS. The headings and captions used in this Agreement are for
convenience of reference only, and shall not in any way affect the
interpretation of the provisions of this Agreement.

      10.9  COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be an original and all of which together shall constitute one and
the same instrument.

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

                                       -17-
<PAGE>

                                      THE IMMUNE RESPONSE CORPORATION

                                      By
                                         ---------------------------------------
                                          Dennis J Carlo, Ph.D.
                                          President and Chief Executive Officer

                                      CONNETICS CORPORATION

                                      By
                                         ---------------------------------------
                                          Thomas G. Wiggans
                                          President and Chief Executive Officer

                                       -18-

<PAGE>

                                   SCHEDULE A

                                  PATENT RIGHTS

***

____________________
*** Confidential material redacted and separately filed.

                                       -19-<PAGE>

                                                                    EXHIBIT 10.2

[CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS AGREEMENT HAVE
BEEN REDACTED AND HAVE BEEN SEPARATELY FILED WITH THE COMMISSION]

                                    AGREEMENT

      THIS AGREEMENT (this "Agreement") dated as of December 8, 1999 (the
"Effective Date"), is entered into between The Immune Response Corporation, a
Delaware corporation ("IRC"), having a place of business located at 5935 Darwin
Court, Carlsbad, California 92008, and XOMA (US) LLC, a Delaware limited
liability company ("XOMA"), having a place of business at 2910 Seventh Street,
Berkeley, California 94710, with reference to the following facts:

      A.    In connection with an acquisition of technology by IRC, an
assignment agreement known as the Technology Acquisition Agreement between
Connetics Corporation ("Connetics") and XOMA and effective as of June 3, 1994
(the "Original Agreement") must be amended.

      B.    In consideration for XOMA's willingness to amend the Original
Agreement, which amendment shall be effective as of December 8, 1999, IRC will
transfer to XOMA shares of IRC stock and will pay to XOMA the amounts set forth
herein, all on the terms and conditions herein.

      NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein, the parties agree as follows:

1.    DEFINITIONS.

      For purposes of this Agreement, the terms defined in this Article 1 shall
have the respective meanings set forth below:

      1.1   "AFFILIATE" shall mean, with respect to any Person, any other Person
which directly or indirectly controls, is controlled by, or is under common
control with, such Person. A Person shall be regarded as in control of another
Person if it owns, or directly or indirectly controls, greater than fifty
percent (50%) of the voting stock or other ownership interest of the other
Person, or if it directly or indirectly possesses the power to direct or cause
the direction of the management and policies of the other Person by any means
whatsoever.

      1.2   "COMMISSION" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.

<PAGE>

      1.3   "PERSON" shall mean an individual, corporation, partnership, limited
liability company, trust, business trust, association, joint stock company,
joint venture, pool, syndicate, sole proprietorship, unincorporated
organization, governmental authority or any other form of entity not
specifically listed herein.

      1.4   The terms "REGISTER," "REGISTERED" and "REGISTRATION" shall mean a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.

      1.5   "REGISTRATION EXPENSES" shall mean all expenses incurred in
effecting the registration of the Shares pursuant to this Agreement, including,
without limitation, all registration, qualification, and filing fees, printing
expenses, escrow fees, fees and disbursements of counsel for IRC, blue sky fees
and expenses, and expenses of any regular or special audits incident to or
required by any such registration, but shall not include Selling Expenses.

      1.6   "SECURITIES ACT" shall mean the Securities Act of 1933, as amended,
or any similar successor federal statute and the rules and regulations
thereunder, all as the same shall be in effect from time to time.

      1.7   "SELLING EXPENSES" shall mean all underwriting discounts and selling
commissions applicable to the sale of the Shares and fees and disbursements of
counsel for XOMA.

      1.8   "SHARES" shall mean those Shares of IRC Common Stock issued to XOMA
pursuant to Section 3.1.2 of this Agreement.

      1.9   "THIRD PARTY" shall mean any Person other than IRC, XOMA and their
respective Affiliates.

      1.10  "VANDENBARK" shall mean Dr. Arthur A. Vandenbark.

2.    REPRESENTATIONS AND WARRANTIES.

      2.1   MUTUAL REPRESENTATIONS. Each party represents and warrants to the
other party as follows:

            2.1.1 LEGAL EXISTENCE. Such party is a corporation or limited
liability company, as the case may be, duly organized, validly existing and in
good standing under the laws of the state in which it is incorporated or formed,
as the case may be.

            2.1.2 AUTHORIZATION AND ENFORCEMENT OF OBLIGATIONS. Such party (a)
has the power and authority and the legal right to enter into this Agreement and
to perform its obligations hereunder, and (b) has taken all necessary action on
its part to authorize the execution and delivery of this Agreement and the
performance of its obligations hereunder. This Agreement has been duly executed
and delivered on behalf of such party, and constitutes a legal, valid, binding
obligation, enforceable against such party in accordance with its terms.

                                       -2-
<PAGE>

            2.1.3 NO CONSENTS. All necessary consents, approvals and
authorizations of all governmental authorities and other Persons required to be
obtained by such party in connection with this Agreement have been obtained.

            2.1.4 NO CONFLICT. The execution and delivery of this Agreement and
the performance of such party's obligations hereunder (a) do not conflict with
or violate any requirement of applicable laws or regulations, and (b) do not
conflict with, or constitute a default under, any contractual obligation of it.

      2.2   XOMA REPRESENTATIONS. XOMA represents and warrants to IRC as
follows:

            2.2.1 ACCREDITED INVESTOR. XOMA is an "accredited investor" as
defined in Rule 501(a) of Regulation D promulgated under the Securities Act.

            2.2.2 INVESTMENT INTENT. XOMA is acquiring the Shares pursuant to
Section 3.1.2(a) below for investment for its own account only and not with a
view to the resale or "distribution" thereof in violation of the Securities Act.
XOMA understands that such Shares have not been registered under the Securities
Act or registered or qualified under any state securities law in reliance on
specific exemptions therefrom, which exemptions may depend upon, among other
things, the bona fide nature of XOMA's investment intent as expressed herein.

            2.2.3 INVESTMENT EXPERIENCE. XOMA has been furnished with all
requested materials relating to IRC's business affairs and financial condition
and has been afforded the opportunity to ask questions of IRC and received
satisfactory answers to any such inquiries. XOMA has such business and financial
experience as is required to give it the capacity to evaluate the merits and
risks of the acquisition of such Shares.

            2.2.4 COMPLIANCE WITH SECURITIES LAWS AND REGULATIONS. All
subsequent offers and sales of such Shares shall be made pursuant to
registration under the Securities Act and qualification under the applicable
state securities laws or pursuant to exemptions from registration and
qualification.

      2.3   IRC REPRESENTATIONS. IRC represents and warrants to XOMA as follows:

            2.3.1 VALID ISSUANCE OF SHARES. The Shares which are being issued to
XOMA hereunder, when issued, sold and delivered in accordance with the terms
hereof, for the consideration expressed herein, will be duly and validly issued,
fully paid and nonassessable, free and clear of all security interests, liens or
other encumbrances, voting or other restrictions and preemptive or similar
rights and, based in part upon the representations of XOMA in this Agreement,
will be issued in compliance with all applicable federal and state securities
laws. The Common Stock of IRC is qualified for trading on the Nasdaq Stock
Market, and IRC and such Common Stock meet the criteria for continuing
qualification for such trading.

            2.3.2 GOVERNMENTAL CONSENTS. The execution, delivery and performance
by IRC of this Agreement require no action by or in respect of, or filing with,
any governmental body, agency, or official other than (a) post-sale filings
pursuant to applicable state and federal securities laws, which IRC undertakes
to file within the applicable time periods and (b) any such

                                       -3-
<PAGE>

action or filing as to which the failure to make or obtain would not,
individually or in the aggregate, have a material adverse effect.

            2.3.3 SEC FILINGS; FINANCIAL STATEMENTS.

            (a)   IRC has delivered to XOMA (i) its annual report on Form 10-K
for its fiscal year ended December 31, 1998, (ii) its proxy or information
statement relating to the annual meeting of the stockholders of the Company held
on May 25, 1999, and (iii) all of its other reports, statements, schedules and
registration statements filed with the Commission since December 31, 1998. IRC
has filed on a timely basis all such reports, statements, schedules and
registration statements required to be filed with the Commission.

            (b)   As of its filing date, each such report or statement filed
pursuant to the 1934 Act did not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading.

            (c)   The audited consolidated financial statements and unaudited
consolidated interim financial statements of IRC included in the annual and
other reports referred to in Section 2.3.3(a) fairly present, in conformity with
generally accepted accounting principles applied on a consistent basis, the
consolidated financial position of IRC and its consolidated subsidiaries as of
the dates thereof and their consolidated results of operations and changes in
financial position for the periods then ended.

3.    CONSIDERATION.

      3.1   PAYMENTS BY IRC.

            3.1.1 TECHNOLOGY ACCESS.

            (a)   Upon the Effective Date, IRC shall pay to XOMA ***in cash.

            (b)   On or before *** in cash.

            (c)   If prior to July 31, 2000, IRC (i) sells or assigns to a Third
Party the Assigned Technology or grants to a Third Party a license under the
Assigned Technology, and (ii) receives cash consideration for such sale,
assignment or license, then within ten (10) business days after the receipt by
IRC of such cash consideration, IRC shall pay to XOMA an amount ***. All amounts
paid to XOMA under this Section 3.1.1(c) shall be credited against the payments
owing under Section 3.1.1(b) above in the inverse order in which they are due.

____________________
      *** Confidential material redacted and separately filed.

                                       -4-
<PAGE>

            3.1.2 THE SHARES.

            (a)   On the Effective Date, IRC shall issue to XOMA the number of
shares of Common Stock of IRC (rounded to the nearest whole number) which shall
have an aggregate value of ***, at a price per share equal to the average daily
closing price of the Common Stock of IRC as quoted on the Nasdaq Stock Market on
each of the twenty (20) trading days ending three (3) trading days prior to the
Effective Date.

            (b)   The certificate or certificates for the Shares shall be
subject to a legend restricting transfer under the Securities Act of 1993 and
referring to restrictions on transfer of such certificate(s), which legend shall
be substantially as follows:

            THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
      ACT"), AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN
      CONNECTION WITH, THE SALE, OFFERING OR DISTRIBUTION THEREOF. NO SUCH SALE,
      OFFERING OR DISPOSITION MAY BE EFFECTED WITHOUT (A) AN EFFECTIVE
      REGISTRATION STATEMENT RELATED THERETO, OR (B) AN OPINION OF COUNSEL FOR
      XOMA THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT, OR
      (C) FULL COMPLIANCE WITH THE PROVISIONS OF RULE 144 UNDER THE SECURITIES
      ACT.

Any legend endorsed on a certificate pursuant to this section shall be removed
(i) if such shares may be transferred in compliance with Rule 144(k) promulgated
under the Securities Act, (ii) if such shares may be transferred in compliance
with subsection 3.1.2(c) below, and (iii) following registration of the Shares,
upon XOMA's request.

            (c)   XOMA shall not directly or indirectly sell, assign, transfer
or otherwise dispose of the Shares or any interest therein (or enter into any
agreement to do any of the foregoing) until such time as (i) the Shares have
been registered and qualified under applicable federal and state securities
laws, or (ii) XOMA may sell, assign, transfer or otherwise dispose of the Shares
pursuant to an exemption from applicable federal and state securities laws.
Thereafter, XOMA shall not directly or indirectly sell, assign, transfer or
otherwise dispose of in the aggregate more than one-third (1/3) of the aggregate
number of the Shares issued to XOMA under Section 3.1.2(a) above (or enter into
any agreement to do any of the foregoing) in any period of thirty (30)
consecutive days.

            (d)   LATE PAYMENTS. Any payments or portions thereof due hereunder
which are not paid on the date such payments are due under this Agreement shall
bear interest at a rate equal to the lesser of the prime rate as published in
the United States Western Edition of THE WALL STREET JOURNAL (or its successor
in interest) under the heading "Money Rates" plus two percent (2%), or the
maximum rate permitted by law, calculated on the number of days such payment is
delinquent.

____________________
      *** Confidential material redacted and separately filed.

                                       -5-
<PAGE>

4.    ACCOUNTING.

      4.1   RECORDS. IRC shall keep for four (4) years from the date of each
payment of amounts due pursuant to Section 4.1 of the Assignment Agreement
between IRC and Connetics, complete and accurate records of sales and all other
information necessary to calculate Net Sales of each Product (as such terms are
defined in the Assignment Agreement) in sufficient detail to allow the accrued
royalties to be determined accurately. XOMA shall have the right to cause an
independent, certified public accounting firm of nationally recognized standing
(who may be XOMA's regularly retained independent accountants and who have
executed a confidentiality agreement with IRC reasonably acceptable to IRC) to
audit such records at the place or places of business where such records are
customarily kept in order to verify the accuracy of the reports of Net Sales and
payments for the preceding four years. Such audits may be exercised during
normal business hours once a year upon 30 days' advance written notice to IRC.
The accounting firm shall disclose to XOMA only whether the reports are correct
or not and the specific details concerning any discrepancies. No other
information shall be shared. XOMA shall bear the full cost of such audit unless
such audit discloses a variance of more than 5% from the amount of the payments
due under Section 4.1 of the Assignment Agreement, in which event, IRC shall
bear the full cost of such audit and shall pay to XOMA the amount payable. XOMA
shall not disclose confidential information concerning payments and reports, and
all information learned in the course of any audit or inspection unless such
information is or becomes publicly known or available other than through breach
of this Agreement, except to the extent necessary for XOMA to reveal such
information in order to enforce its rights under this Agreement or if disclosure
is required by law.

5.    REGISTRATION OF THE SHARES.

      5.1   REGISTRATION. Within thirty (30) days after the Effective Date, IRC
shall file a registration statement for the resale of the Shares on Form S-3
pursuant to the Securities Act and as would permit or facilitate the sale and
distribution of the Shares. IRC shall use its commercially reasonable efforts to
effect such registration as soon as practicable thereafter. Additionally, IRC
shall file appropriate post-effective amendments to such registration statement
and appropriate qualifications under applicable blue sky or other state
securities laws. IRC shall furnish XOMA with copies of all correspondence to and
from the Commission from the date of filing, in connection with such
registration, such copies to be forwarded no later than five (5) business days
after receipt by IRC or mailing by IRC or its agents, as the case may be.

            5.1.1 IRC shall not be obligated to effect, or to take any action to
effect, any such registration pursuant to this Section 5.1 in any particular
jurisdiction in which IRC would be required to execute a general consent to
service of process in effecting such registration, qualification, or compliance,
unless IRC is already subject to service in such jurisdiction and except as may
be required by the Securities Act.

            5.1.2 The registration statement filed pursuant to this Section 5.1
shall not include other securities of IRC with respect to which registration
rights have been granted

                                       -6-
<PAGE>

(except those issued to Connetics pursuant to the Assignment Agreement dated
as of the date hereof, between IRC and Connetics),nor securities of IRC being
sold for the account of IRC, unless XOMA consents to such inclusion, which
consent shall not be unreasonably withheld or delayed.

      5.2   EXPENSES. All Registration Expenses incurred in connection with any
registration, qualification or compliance pursuant to Section 5.1 above shall be
borne by IRC. All Selling Expenses shall be borne by XOMA.

      5.3   REGISTRATION PROCEDURES. IRC will provide XOMA with a draft of the
registration statement and give due consideration to their comments three (3)
days prior to the filing. IRC will keep XOMA advised in writing as to the
initiation of the registration of the Shares and as to the completion thereof.
At its expense, IRC will use its commercially reasonable efforts to:

            5.3.1 Keep such registration effective for a period of one (1) year
from the Effective Date or until XOMA has completed the distribution described
in the registration statement relating thereto, whichever first occurs;

            5.3.2 Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement;

            5.3.3 Furnish such number of prospectuses and other documents
incident thereto, including any amendment of or supplement to the prospectus, as
XOMA from time to time may reasonably request;

            5.3.4 Notify XOMA of the happening of any event as a result of which
the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading or incomplete in the light of the circumstances then existing,
and at the request of XOMA, prepare and furnish to XOMA a reasonable number of
copies of a supplement to or an amendment of such prospectus as may be necessary
so that, as thereafter delivered to the purchasers of Shares, such prospectus
shall not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading or incomplete in the light of the circumstances then
existing; and

            5.3.5 Cause the Shares to be listed or qualified on each securities
exchange or inter-dealer quotation system on which similar securities issued by
IRC are then listed and thereafter maintain such listing or quotation.

      5.4   INDEMNIFICATION.

            5.4.1 IRC shall indemnify XOMA, its directors, officers, employees,
legal counsel and accountants and each Person controlling XOMA within the
meaning of Section 15 of the Securities Act, against all losses, liabilities,
damages and expenses incurred as a result of

                                       -7-
<PAGE>

any claim, demand, action or proceeding by any Third Party arising out of or
based on any untrue statement (or alleged untrue statement) made by or on
behalf of IRC of a material fact contained in any prospectus, offering
circular, or other document (including any related registration statement,
notification, or the like), or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, or any violation by IRC of the
Securities Act or any rule or regulation thereunder applicable to IRC and
will reimburse each such XOMA, its officers, directors, employees, legal
counsel and accountants and each Person controlling XOMA within the meaning
of Section 15 of the Securities Act, for any legal or any other expenses
reasonably incurred in connection with investigating or defending or settling
any such claim, demand, action or other proceeding; provided, however, that
IRC will not be liable in any such case to the extent that any such loss,
liability, damage or expense arises out of or is based on any untrue
statement or omission based upon written information furnished to IRC by XOMA
and stated to be specifically for use therein; provided, further, that the
obligations of IRC hereunder shall not apply to amounts paid in settlement of
any such claims, demands, actions or other proceedings if such settlement is
effected without the consent of IRC (which consent shall not be unreasonably
withheld or delayed).

            5.4.2 XOMA shall indemnify IRC, its directors, officers, employees,
legal counsel and accountants and each Person controlling IRC within the meaning
of Section 15 of the Securities Act, against all losses, liabilities, damages
and expenses incurred as a result of any claim, demand, action or proceeding by
any Third Party arising out of or based on any untrue statement (or alleged
untrue statement) made by or on behalf of XOMA of a material fact contained in
any prospectus, offering circular, or other document (including any related
registration statement, notification, or the like) incident to any such
registration, qualification, or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation by
XOMA of the Securities Act or any rule or regulation thereunder applicable to
XOMA, and will reimburse IRC, its directors, officers, employees, legal counsel
and accountants and each Person controlling IRC within the meaning of Section 15
of the Securities Act, for any legal or any other expenses reasonably incurred
in connection with investigating or defending or settling any such claim,
demand, action or other proceeding, in each case to the extent, but only to the
extent, that such untrue statement (or alleged untrue statement) or omission (or
alleged omission) is made in such registration statement, prospectus, offering
circular, or other document in reliance upon and in conformity with written
information furnished to IRC by XOMA and stated to be specifically for use
therein; provided, however, that the obligations of XOMA hereunder shall not
apply to amounts paid in settlement of any such claims, demands, actions or
other proceedings if such settlement is effected without the consent of XOMA
(which consent shall not be unreasonably withheld or delayed).

            5.4.3 The indemnified party shall promptly notify the other party
hereto of any claim, demand, action or proceeding for which it intends to claim
such indemnification, and the indemnifying party shall have the right to
participate in, and, to the extent it so desires, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with counsel
selected by the indemnifying party; PROVIDED, HOWEVER, that the indemnified
party shall have the right to retain its own counsel if representation of the
indemnified party by the counsel retained

                                       -8-
<PAGE>

by the indemnifying party would be inappropriate due to actual or potential
differing interests between the indemnified party and any other party
represented by such counsel in such proceedings, the reasonable costs of such
independent counsel to be borne by the indemnifying party. The failure to
deliver notice to the indemnifying party within a reasonable time after
notice of any such claim or demand, or commencement of any such action or
proceeding, if materially prejudicial to its ability to defend, shall relieve
the indemnifying party of any liability to the indemnified party under this
Article 5, but the omission so to deliver notice to the indemnifying party
will not relieve it of any liability that it may have to the indemnified
party otherwise than under this Article 5. The indemnified party under this
Article 5 and its agents, shall cooperate fully with the indemnifying party
and its legal representatives in the investigation and defense of any claim,
demand, action or proceeding covered by this indemnification.

      5.5   INFORMATION BY XOMA. XOMA shall furnish to IRC such information
regarding XOMA and the distribution of the Shares as IRC may reasonably request
in writing and as shall be reasonably required in connection with any
registration, qualification, or compliance referred to in this Article 5.

6.    MISCELLANEOUS.

      6.1   TERMINATION OF PAYMENT OBLIGATIONS.

            6.1.1 During the term of this Agreement, neither XOMA nor any of its
Affiliates shall take any action or initiate any proceeding to prevent the
issuance of, invalidate, revoke or otherwise render unenforceable any of the
Patent Rights (as defined in the Assignment Agreement dated as of December 8,
1999, between IRC and Connetics). Within ninety (90) days after the date hereof,
XOMA and its Affiliates shall terminate, dismiss and withdraw all such actions
and proceedings which were taken or initiated by it or any of its Affiliates on
or before the date hereof.

            6.1.2 Without limiting the rights and remedies of IRC at law, in
equity or otherwise, if XOMA or any of its Affiliates (a) takes during the term
of this Agreement any action or initiates any proceeding to prevent the issuance
of, invalidate, revoke or otherwise render unenforceable any of the Patent
Rights (as defined in the Assignment Agreement dated as of December 8, 1999,
between IRC and Connetics), or (b) fails within ninety (90) days after the date
hereof to terminate, dismiss and withdraw any such action or proceeding which
was taken or initiated by it or any of its Affiliates on or before the date
hereof, then, if IRC is not itself in material breach of the Original Agreement
or this Agreement, within ten (10) days after written notice from IRC, (x) XOMA
shall refund to IRC all amounts paid by IRC to XOMA under this Agreement; (y)
XOMA shall sell, assign and transfer to IRC (at no cost to IRC) the number of
shares of Common Stock of IRC issued to XOMA under Section 3.1.2 of this
Agreement (or if XOMA no longer owns the IRC shares, XOMA shall pay to IRC an
amount equal to the full amount of consideration received for the sale of such
shares); and (z) IRC shall have no further obligation to pay any amounts to XOMA
under the Original Agreement or this Agreement.

            6.1.3 Without limiting the rights and remedies of IRC at law, in
equity or otherwise, if Connetics, Vandenbark or any of their respective
Affiliates (a) takes during the term

                                       -9-
<PAGE>

of this Agreement any action or initiates any proceeding to prevent the
issuance of, invalidate, revoke or otherwise render unenforceable any of the
Patent Rights (as defined in the Assignment Agreement dated as of December 8,
1999, between IRC and Connetics), or (b) fails within ninety (90) days after
the date hereof to terminate, dismiss and withdraw any such action or
proceeding which was taken or initiated by it or any of its Affiliates on or
before the date hereof, then, if IRC is not itself in material breach of the
Original Agreement or this Agreement, IRC shall have no further obligation to
pay any amounts to XOMA under Section 3.1.1 of this Agreement.

      6.2   NOTICES. Any consent, notice or report required or permitted to be
given or made under this Agreement by one of the parties hereto to the other
party shall be in writing, addressed to such other party at its address
indicated below, or to such other address as the addressee shall have last
furnished in writing to the addressor and (except as otherwise provided in
this Agreement) shall be effective upon receipt by the addressee.

      If to IRC:           The Immune Response Corporation
                           5935 Darwin Court
                           Carlsbad, California 92008
                           Attention: President
                           Fax: (760) 431-8636

      If to XOMA:          XOMA (US) LLC
                           2910 Seventh Street
                           Berkeley, California 94710
                           Attention: Legal Department

      6.3   GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without regard to
principles of conflicts of law.

      6.4   ATTORNEYS' FEES. In the event that the parties incur attorneys' fees
as a result of an action arising from IRC's failure to pay the amounts due
hereunder, the prevailing party shall be entitled to attorneys' fees.

      6.5   ASSIGNMENT. Neither IRC nor XOMA shall assign its rights or
obligations under this Agreement without the prior written consent of the other
party hereto; PROVIDED, HOWEVER, that party may, without such consent, assign
this Agreement and its rights and obligations hereunder (a) to its Affiliates,
or (b) in connection with the transfer or sale of all or substantially all of
its business, or in the event of its merger or consolidation or change in
control or similar transaction. Any permitted assignee shall assume all
obligations of its assignor under this Agreement.

      6.6   AMENDMENTS. No change, modification, extension or termination of
this Agreement, or any of the provisions herein contained, shall be valid unless
made in writing and signed by duly authorized representatives of the parties
hereto.

                                       -10-
<PAGE>

      6.7   ENTIRE AGREEMENT. This Agreement embodies the entire understanding
between the parties and supersedes any prior representations, understanding and
agreements between them regarding the subject matter hereof. There are no
representations, agreements or understandings, oral or written, between the
parties regarding the subject matter of this Agreement which are not fully
expressed herein.

      6.8   WAIVER. The waiver by either party hereto of any right hereunder or
the failure to perform or of a breach by the other party shall not be deemed a
waiver of any other right hereunder or of any other breach or failure by said
other party whether of a similar nature or otherwise.

      6.9   HEADINGS. The headings and captions used in this Agreement are for
convenience of reference only, and shall not in any way affect the
interpretation of the provisions of this Agreement.

      6.10  COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be an original and all of which together shall constitute one and
the same instrument.

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

                                       -11-

<PAGE>

                                      THE IMMUNE RESPONSE CORPORATION

                                      By
                                         ---------------------------------------
                                           Dennis J Carlo, Ph.D.
                                           President and Chief Executive Officer

                                      XOMA (US) LLC

                                      By
                                         ---------------------------------------

                                      Title
                                            ------------------------------------

                                       -12-

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