Document:

<PAGE>

                                                                   EXHIBIT 10.3

                TECHNOLOGY TRANSFER AND CUSTOM SERVICES AGREEMENT

THIS AGREEMENT made as of the 23 day of March, 2001.

BETWEEN:          MOLICHEM MEDICINES, INC., a corporation incorporated
                  under the laws of the North Carolina, USA and having a place
                  of business at:

                  207 South Elliott Road
                  PMB#231
                  Chapel Hill, NC
                  USA 27514

                  (hereinafter referred to as "MMI"

OF THE FIRST PART

                                    - and -

                  APOTEX FERMENTATION INC., a corporation incorporated
                  under the laws of Manitoba, Canada and having a place of
                  business at:

                  50 Scurfield Boulevard
                  Winnipeg, Manitoba
                  Canada R3Y 1G4

                  (hereinafter referred to as "AFI")

OF THE SECOND PART

WHEREAS AFI is engaged in the business of development and production of active
pharmaceutical raw materials and intermediates and possesses the necessary
know-how in research, development, scale up and manufacturing to provide
Services in respect of the Product to MMI (as described in Schedule "A" hereto);

AND WHEREAS MMI is the owner of or represents to have the appropriate license
and/or authority for the transfer of the necessary engineering, design, process
and operating information, technical data and other scientific and technical
information required to produce the Product;

                                      E-27
<PAGE>

AND WHEREAS MMI wishes to engage AFI and AFI wishes to accept such engagement to
provide the Services in respect of the Product at AFI's manufacturing facility
at 40 Scurfield Boulevard, Winnipeg, Manitoba (the '"Manufacturing Premises").

AND THEREFORE THIS INDENTURE WITNESSETH that in consideration of the payment
of two dollars ($2.00) by each of the parties hereto to the other party hereto,
the execution of this Agreement by the parties hereto, the mutual covenants and
conditions herein contained and other good and valuable consideration (the
receipt and sufficiency of which is hereby acknowledged by the parties), the
parties hereto do hereby covenant and agree as follows:

1.0      Upon the terms and conditions herein set forth, MMI hereby engages AFI
         (and AFI hereby accepts such engagement) to provide the Services in
         respect of the Product at the Manufacturing Premises in accordance with
         the Proposal attached as Schedule "A". MMI confirms that AFI is to
         proceed in accordance with Option #2 of the milestone payments program
         (Annex D of the Proposal). MMI shall have the exclusive right to
         acquire all the Product from AFI in accordance with the terms and
         conditions set out in Schedule "A".

2.0      Subject to paragraph 13 herein, the term of this Agreement shall be
         effective as of the date hereof and shall continue for the period until
         the Services in respect of the Product are fully delivered.

3.0      In consideration of the aforesaid services in Respect of the Product,
         MMI shall pay to AFI, the amounts set forth in Schedule "A" hereto upon
         the terms and conditions set out therein.

4.0      MMI shall provide to AFI all technical information and specifications
         on the Product required for manufacturing purposes as set out in
         Schedule "A" hereto at no cost to AFI. Nothing on this agreement shall
         be construed as a license to AFI for Moli1901 or the Product for any
         purpose other than as specifically set forth in this Agreement.

4.1      AFI shall supply raw materials for the manufacture of the Product as
         set out in Schedule "A" hereto.

5.0      AFI shall provide the Services in respect of the Product in compliance
         with MMI's Specifications and Methods as described in Schedule "A"
         hereto. Any changes to these Specifications and Methods must be
         notified to and approved by MMI in writing, prior to implementation.

5.1      AFI shall provide the Services in respect of the Product in accordance
         with the Good Laboratory Practice and Good Manufacturing Practices as
         commonly known and referred to in the industry.

6.0      In respect of delivery of the Product to MMI's premises (or to such
         other mutually agreed location) and by transportation mode mutually
         agreed between the parties, shipments will be made at the sole risk if
         AFI. Upon delivery by AFI of all or any part of the ordered Product to
         MMI's premises, the risk of loss or damage will pass from AFI to MMI.
         In the event of loss or damage to the Product during shipment, making
         the Product unusable for the intended

                                      E-28
<PAGE>

         purpose, AFI is responsible on a timely basis for the replacement of
         the Product only and not for any financial or other damages which may
         be suffered by MMI. MMI may at its option, arrange for its own
         insurance protection against loss or damage during shipment in which
         case MMI is to advise AFI of such an intention and AFI is to provide
         the necessary shipment information to allow the MMI insurance
         protection to be put in place.

7.0      MMI represents, warrants and covenants to AFI as follows and hereby
         acknowledges and agrees with AFI that AFI is relying on such
         representations, warranties and covenants in connection with the
         entering into by AFI of this Agreement:

         (a)      MMI is a subsisting corporation duly and validly incorporated
                  under the laws of the State of North Carolina, USA;

         (b)      the execution and delivery of this Agreement by MMI has been
                  duly authorized by all necessary corporate action and MMI has
                  all requisite corporate power and authority to enter into this
                  Agreement and to carry out the terms herein;

         (c)      this Agreement has been duly and validly executed and
                  delivered by MMI and constitutes a valid and legally binding
                  Agreement, enforceable against MMI;

         (d)      to the best of MMI's knowledge, the Services provided in
                  respect of the Product by AFI will not infringe upon the
                  intellectual property rights (i.e. patents and trademarks) of
                  any other parties.

         (e)      MMI is the legal and beneficial owner of the technical
                  specifications documented in Schedule "A" hereto, free and
                  clear of any claims of any nature or kind whatsoever of third
                  parties and has the absolute right, power and authority to
                  enter into this Agreement and to engage AFI for the Services
                  in respect of the Product as is contemplated herein;

         (f)      to do all things and cause all things to be done to ensure
                  that all of the representations, warranties and covenants of
                  MMI contained in this Agreement remain true and correct
                  throughout the term as if such representations and warranties
                  and covenants were continuously made throughout the term.

8.0      AFI represents, warrants and covenants as follows to MMI and hereby
         acknowledges and agrees that MMI is relying upon such representations,
         warranties and covenants in connection with the entering into by MMI of
         this Agreement;

         (a)      AFI is a subsisting corporation duly and validly incorporated
                  under the laws of the Province of Manitoba, Canada;

         (b)      the execution and delivery of this Agreement by AFI has been
                  duly authorized by all necessary corporate action and AFI has
                  all requisite corporate power and authority to enter this
                  Agreement and to carry out the terms herein;

                                      E-29
<PAGE>

         (c)      this Agreement has been duly and validly executed and
                  delivered by AFI and constitutes a valid and legally binding
                  agreement enforceable against AFI;

         (d)      the Product will be manufactured in compliance with and
                  meeting MMI's specifications as provided in Schedule "A"
                  hereto;

         (e)      AFI has the capability and capacity to provide the Services in
                  respect of the Product in accordance with MMI's specifications
                  as provided in Schedule "A" hereto;

         (g)      to do all things and cause all things to be done to ensure
                  that all of the representations, warranties and covenants of
                  AFI contained in this Agreement shall remain true and correct
                  throughout the terms as if such representations, warranties
                  and covenants were continuously made throughout the term.

9.0      AFI recognizes and acknowledges MMI's ownership and title to MMI's
         proprietary information and specifications and agrees to co-operate
         fully and in good faith with MMI and to execute such documents as MMI
         may reasonably request for the purposes of securing and preserving the
         rights of MMI in and to MMI's proprietary information as disclosed
         pursuant to this Agreement including, without limitation, MMI's
         specifications.

10.0     All copyrights, patents, trade secrets, or other intellectual property
         rights associated with any ideas, concepts, techniques, inventions,
         processes, or works of authorship developed or created by AFI during
         the course of performing the Services and related to Moli1901
         (collectively, the "Work Product") shall belong exclusively to MMI and
         shall, to the extent possible, be considered "works made for hire" for
         MMI. To the extent such work is determined not to constitute "works
         made for hire" as a matter of law, AFI hereby irrevocably assigns and
         transfers to MMI, as of the time of creation of the Work Product, any
         and all right, title, or interest it may have in such Work Product.

         Upon request of MMI and at MMI's expense, AFI shall take such further
         actions, including execution and delivery of instruments of conveyance
         necessary to obtain legal protection in the United States and foreign
         countries for such Work Product and for the purpose of vesting title
         thereto in MMI, or its nominee, as may be appropriate to give full and
         proper effect to such assignment and to vest in MMI complete title and
         ownership to such Work Product.

         Notwithstanding anything to the contrary herein, AFI shall be free to
         use and employ its general skills, know-how, and expertise, and to use,
         disclose, and employ any generalized ideas, concepts, know-how,
         methods, techniques or skills gained or learned during the course of
         this Agreement, so long as it acquires and applies such information
         without disclosure of any Confidential Information of MMI and without
         any unauthorized use of disclosure of Work Product.

11.0     All confidential records, material and information and copies thereof,
         and all trade secrets (and without restricting the generality of the
         foregoing any inventions, discoveries and methods of processing and
         production) concerning the business or affairs of obtained by MMI or of
         MMI obtained by AFI including, without limitation, MMI specifications
         and the

                                      E-30
<PAGE>

         terms and conditions of this Agreement, as a result of the entering
         into of this Agreement shall remain the exclusive property of the
         respective owner thereof. In order to preserve and protect the
         proprietary rights and any confidential information belonging to each
         of the parties thereto ("Confidential Information"), MMI and AFI agree
         that they will:

                  i.       treat and maintain the Confidential Information as
                           confidential both during the term, any renewal term
                           and thereafter;

                  ii.      use the Confidential Information only to fulfill its
                           obligations under this Agreement;

                  iii.     disclose the Confidential Information only as
                           necessary to its employees or agents who have a
                           demonstrable and valid "need to know" the
                           Confidential Information and not to anyone else;

                  iv.      disclose only so much of the Confidential Information
                           as is required to enable those employees or agents to
                           carry our their assigned duties; and

                  v.       advise its employees, agents or independent
                           contractors of the confidential nature of such
                           information and the requirements of non-disclosure.

         except if compelled to do so under Court Order of a competent authority
         (in such circumstance the party receiving the order will inform the
         other party prior to responding to the order).

11.1     For the purposes hereof, the Confidential Information includes
         information known or used by MMI or AFI in connection with their
         respective business, including, but not limited to any formula, design,
         prototype, compilation of information, data, program, code, method,
         technique or process, information relating to the Product or any other
         products, device, equipment or machine, information about or relating
         to MMI's or AFI's customers and MMI's or AFI's potential business
         ventures, financial information of all kinds relating to MMI or AFI and
         their respective activities, all inventions, ideas and related
         material, but does not include any of the foregoing which was known to
         MMI or AFI, as the case may be, prior to the entering into of this
         Agreement or which is or becomes a matter of public knowledge.

12.0     This Agreement is strictly personal to MMI and AFI. Neither this
         Agreement nor any of the rights granted hereunder including, without
         limitation, the right to use MMI'S specifications and the right to
         manufacture the Product shall be assignable or sub-licensed by MMI or
         AFI, by operation of law or otherwise.

13.0     If any one or more of the following events shall occur, AFI shall have
         the right to terminate this Agreement forthwith:

         (a)      MMI shall fail to pay any amounts payable hereunder within
                  thirty (30) days after the payment due date;

                                      E-31
<PAGE>

         (b)      MMI shall file a petition of bankruptcy, or shall be adjudged
                  a bankrupt, or a petition in bankruptcy shall be filed against
                  MMI and shall not be dismissed within thirty (30) days, or if
                  MMI shall become insolvent or shall discontinue its business;

         (c)      MMI shall disclose any information in respect to the
                  confidential information of AFI to any other party or shall
                  use any confidential information of AFI for any purpose other
                  than in relation to the provision of Services related to the
                  Product at the Premises; and

         (d)      MMI shall violate or fail to perform any of its other
                  undertakings, agreements, obligations, representations or
                  warranties under the terms of this Agreement and shall fail to
                  remedy any such breach within ten (10) days after AFI's notice
                  thereof.

13.1     If any one or more of the following events shall occur, MMI shall have
         the right to terminate this Agreement forthwith:

         (a)      AFI shall fail to pay any amounts payable hereunder within
                  thirty (30) days after the payment due date;

         (b)      AFI shall file a petition of bankruptcy, or shall be adjudged
                  a bankrupt, or a petition in bankruptcy shall be filed against
                  AFI and shall not be dismissed within thirty (30) days, or if
                  AFI shall become insolvent or shall discontinue its business;

         (c)      AFI shall disclose any information in respect to the
                  confidential information of MMI to any other party or shall
                  use any confidential information of MMI for any purpose other
                  than for the provision of Services related to the Product at
                  the Manufacturing Premises; and

         (d)      AFI shall violate or fail to perform any of its other
                  undertakings, agreements, obligations, representations or
                  warranties under the terms of this Agreement and shall fail to
                  remedy any such breach within ten (10) days after MMI's notice
                  thereof.

         (e)      MMI shall have the right to terminate the contract at the
                  completion of any milestone defined in Annex C (Schedule) of
                  the Proposal for the Production of Clinical Batches of
                  Moli1901. AFI shall not proceed to perform any work on the
                  milestone listed in Annex C without written authorization from
                  MMI and MMI shall have no financial obligation beyond approved
                  current milestones. In the event that MMI chooses to terminate
                  the contract at any time, AFI shall complete the work assigned
                  to the current milestone and shall be paid in full for the
                  milestone upon its completion. Termination of the contact or
                  authority to proceed shall be provided in writing within
                  fifteen (15) days of notification in writing by AFI of the
                  completion of a milestone.

13.2     Upon termination of this Agreement for cause, (a) AFI agrees to
         transfer and deliver to MMI immediately following the termination of
         this Agreement all documents, notebooks, charts, files and records
         containing or referencing MMI's Confidential Information (all
         confidential information) including copies, summaries, and notes in its
         possession or control and MMI

                                      E-32
<PAGE>

         Product and (b) MMI agrees to transfer and deliver to AFI immediately
         following the termination of this Agreement all documentation belonging
         to AFI in its possession.

13.3     The termination or expiration of this Agreement shall not relieve MMI
         or AFI from, or discharge, any obligations which accrued prior to such
         termination or expiration and shall not destroy or diminish the binding
         force and effect of any of the terms and conditions of this Agreement
         that expressly or by implication come into or continue in effect on or
         after termination or expiration.

13.4     Each of MMI and AFI acknowledge that the release or use of any of the
         Confidential Information other than as set out herein would be highly
         detrimental to the best interests of MMI or AFI, as the case may be,
         and that the right to maintain the confidentiality and ownership of the
         Confidential Information constitutes a proprietary right which MMI and
         AFI is entitled to protect. Any use of or any disclosure of the
         Confidential Information by MMI or AFI other than set out herein shall
         be deemed for all purposes to have caused the damaged party irreparable
         harm for which damages alone will not be adequate remedy and for which
         the damaged party shall be entitled to injunctive relief in addition to
         any other available remedies and MMI or AFI, as the case may be, hereby
         consents to the granting of an injunction to enforce the provisions of
         this Agreement and hereby waives any defenses AFI or MMI, as the case
         may be, may have in respect thereto.

14.0     Miscellaneous.

14.1     This Agreement (including the attached Schedule(s)) constitutes the
         entire Agreement between the parties with representations, warranties,
         covenants, agreements, or understanding relative thereto which are not
         set forth herein. No provision of this Agreement shall be effectively
         amended or waived except in writing signed by the party against whom
         the amendment or waiver is sought to be enforced.

14.2     Any notice or other communication required or permitted under this
         Agreement shall be in writing and may be given by personal delivery to
         the party for whom it is intended or by facsimile, or prepaid
         registered mail addressed:-

         in the case of MMI:

         MOLICHEM MEDICINES INC.
         207 South Elliot Road
         PMB#231
         Chapel Hill, NC
         USA 27514

         Attn:  Dr. Luis Molina, President and CEO

         Fax No:  919-929-3447

                                      E-33
<PAGE>

and in the case of AFI:

         APOTEX FERMENTATION INC.
         50 Scurfield Boulevard
         Winnipeg, Manitoba
         Canada R3Y 1G4

         Attn:  Gary Payne, General Manager and CEO

         Fax No:  204-989-9160

         In the event of a mail strike or other interruption of postal
         deliveries, all notices, directions or other instruments required or
         permitted to be given to the parties hereto shall be delivered or shall
         be sent by facsimile (receipt confirmed) to such parties.

         Any such notice or other communication given by delivery or facsimile
         shall be deemed to have been given on the day of delivery or facsimile
         or by prepaid mail twenty (20) days after mailing in Canada or the USA.
         Each party may at any time change its address for the purposes hereof
         by giving notice of such change to the others in accordance with the
         foregoing provisions.

14.3     Matters in dispute under this Agreement may, as agreed by the parties
         hereto, be referred to the arbitration.

14.4     Each of the parties hereto may extend the time for performance and
         waive non-performance by any of the other party hereto of its
         respective obligations and Agreements under this Agreement, but no act
         and/or failure to act by any of the parties shall be deemed to be an
         extension or waiver of timely and strict performance by the other
         parties to this Agreement of such obligations and Agreements, except to
         the extent notice is given to such of the other parties.

14.5     This agreement shall be governed by the laws of the state in the United
         States or the province of Canada of the defending party. Any provision
         herein which, in any way contravenes the laws of any jurisdiction or
         which is void, shall be deemed not to be part of this Agreement and
         shall be severable therefrom, and the remainder of the Agreement shall
         remain in full force and effect.

14.6     Article and Section headings contained in this Agreement are included
         solely for convenience, are not intended to be full or accurate
         descriptions of content thereof and shall not be considered part of
         this Agreement.

14.7     This Agreement shall extend to bind and enure to the benefit of the
         heirs, executors, administrators, successors and permitted assigns of
         the parties.

14.8     Nothing in this Agreement shall be deemed in any way or for any purpose
         to constitute any party a partner of the other party to the Agreement
         in the conduct of any business or

                                      E-34
<PAGE>

         otherwise or a member of a joint venture or joint enterprise with the
         other party to the Agreement.

14.9     AFI and MMI shall in a timely manner and as required from time to time
         take all such actions as may be necessary to give full effect to the
         provisions of this Agreement and abstain from taking any actions which
         would contravene the intent of the provisions of this Agreement and
         shall take all such actions, as may be necessary or appropriate to
         implement the transaction contemplated by this Agreement, including
         executing any appropriate documents or agreements.

14.10    AFI shall be excused for failure to perform any part of this Agreement
         due to events beyond its control. These events shall include but not be
         limited to fire, storm, flood, earthquake, explosions, embargoes, act
         of God and enactments of any acts or regulations or any priorities of
         any governmental authority.

14.11    This Agreement may be executed in counterpart.

14.12    Time shall be of the essence of this Agreement and every part hereof.

IN WITNESS WHEREOF the corporate parties hereto have set their hands and affixed
their corporate seals under the hands of their proper officers as of the date
first above written.

SIGNED, SEALED AND DELIVERED

In the presence of:       MOLICHEM MEDICINES INC.

                          Per: _______________________
                          Name:  Dr. Luis Molina
                          Title: President and EO

                          APOTEX FERMENTATION INC.

                          Per: __________________________
                          Name:  Gary Payne
                          Title: General Manager and CEO

                                      E-35
<PAGE>

** designates confidential information omitted and filed separately with the
SEC.

                                   SCHEDULE A
            to the Technology Transfer and Custom Services Agreement

                           Proposal
                           Production of Clinical
                           Batches
                           MOLI1901

                           Prepared for:

                           Molichem Medicines Inc.
                           207 South Elliot Road
                           PMB #231
                           Chapel Hill, NC 27514

                           Prepared by:

                           Apotex Fermentation Inc.
                           50 Scurfleld Boulevard
                           Winnipeg, Manitoba
                           Canada, R3Y 1G4

                           Revision 1

                           21 March 2001

This proposal or quotation includes data that shall not be disclosed to a third
party and shall not be duplicated; used or disclosed - in whole or in part - for
any purpose other than to evaluate this proposal or quotation. If, however, a
contract is awarded to this offerer or quoter as a result of - or in connection
with - the submission of this data, the purchaser shall have the right to
duplicate, use or disclose the data to the extent provided in the resulting
contract. This restriction does not limit the purchaser's right to use
information contained in this data if it is obtained from another source without
restriction.

                                      E-36
<PAGE>

<TABLE>
<CAPTION>
                                TABLE OF CONTENTS

SECTION                    TITLE                                                                                 PAGE
<S>                  <C>                                                                                       <C>
1.                   INTRODUCTION                                                                                  1

1.1                  Scope                                                                                         1

1.2                  Abbreviations and Acronyms                                                                    1

2.                   SPECIFICATIONS AND STANDARDS                                                                  2

2.1                  Molichem Medicines Inc. Documents                                                             2

3.                   TECHNICAL APPROACH                                                                            3

3.1                  PHASE I - Process Verification                                                                3

3.1.1                Microbiology                                                                                  3

3.1.1.1              Receipt of Organism                                                                           3

3.1.1.2              Culture Verification / Purity                                                                 3

3.1.1.3              Culture Viability / Productivity                                                              3

3.1.1.4              Seed Bank Preparation                                                                         3

3.1.1.5              Media Verification                                                                            3

3.1.1.6              Growth Conditions Verification                                                                3

3.1.1.7              Transfer of Seed Bank to Process                                                              4

3.1.1.8              Microbiology Report                                                                           4

3.1.2                Analytics                                                                                     4

3.1.2.1              Method Verification                                                                           4

3.1.2.2              Standards Preparation                                                                         4

3.1.2.3              Sample Preparation and Verification                                                           4

3.1.2.4              Raw Materials                                                                                 4

3.1.2.5              Analytics Report                                                                              4

3.1.3                Chemistry                                                                                     4

3.1.3.1              Broth Filtration/Extraction                                                                   5

3.1.3.2              Isolation                                                                                     5

3.1.3.3              Purification                                                                                  5

3.1.3.4              Characterization                                                                              5

3.1.3.5              Chemistry Report                                                                              5

3.1.4                Option to Proceed                                                                             5
</TABLE>

     Use or disclosure of the data contained on this sheet is subject to the
                 restriction on the title page of this proposal.

                                      E-37
<PAGE>

<TABLE>
<CAPTION>
SECTION                    TITLE                                                                                PAGE

<S>                   <C>                                                                                   <C>
3.2                   PHASE 11 - Process Trials                                                                   5

3.2.1                 Fermentation                                                                                5

3.2.1.1               Growth Curve                                                                                6

3.2.1.2               Fermentation Conditions                                                                     6

3.2.1.3               Productivity Verification                                                                   6

3.2.1.4               Fermentation Report and Data                                                                6

3.2.2                 Downstream                                                                                  6

3.2.2.1               Filtration                                                                                  6

3.2.2.2               Extraction                                                                                  6

3.2.2.3               Isolation                                                                                   6

3.2.2.4               Purification                                                                                6

3.2.2.5               Downstream Report                                                                           6

3.2.3                 Documentation                                                                               7

3.2.4                 Toxicology Study Material                                                                   7

3.2.5                 Option to Proceed                                                                           7

3.3                   PHASE III - Production                                                                      7

3.3.1                 Raw Materials                                                                               8

3.3.2                 Microbiology                                                                                8

3.3.3                 Fermentation                                                                                8

3.3.4                 Filtration/Concentration                                                                    8

3.3.5                 Extraction/Isolation                                                                        8

3.3.6                 Purification                                                                                8

3.3.7                 Packaging                                                                                   8

4.                    TESTING AND QUALITY CONTROL                                                                 9

4.1                   Methodology                                                                                 9

4.2                   Sampling                                                                                    9

4.3                   Standards                                                                                   9

4.4                   Validation                                                                                  9
</TABLE>

     Use or disclosure of the data contained on this sheet is subject to the
                 restriction on the title page of this proposal.

                                      E-38
<PAGE>

<TABLE>
<CAPTION>
SECTION                    TITLE                                                                                PAGE
<S>                   <C>                                                                                    <C>
5.                    QUALITY ASSURANCE AND REGULATORY AFFAIRS                                                   10

5.1                   Specifications                                                                             10

5.1.1                 Changing Specifications                                                                    10

5.2                   Data                                                                                       10

5.3                   Good Manufacturing Practices                                                               10

5.4                   United States Food and Drug Administration                                                 10

5.5                   Certificate of Analysis                                                                    10

5.6                   Stability (OPTION)                                                                         10

5.7                   Third Party Audits                                                                         11

6.                    PROJECT MANAGEMENT                                                                         13

6.1                   Contractor Status Report                                                                   13

6.2                   Correspondence                                                                             13

6.2.1                 Molichem Medicines Inc.                                                                    13

6.2.2                 Apotex Fermentation Inc.                                                                   13

6.3                   Contract Data Requirements List (CDRL)                                                     13

6.4                   Data Item Descriptions (DID)                                                               13

6.5                   Schedule                                                                                   13

6.6                   Milestone Payments                                                                         14

6.7                   Nomenclature and Description                                                               14

6.8                   Method of manufacture                                                                      14

6.9                   Preparation of Reference Standards                                                         14

6.10                  Certificate of Analysis and Analytical Characterization                                    14

6.11                  Production Flow Diagram                                                                    14

6.12                  Technology Transfer and Custom Manufacturing                                               14
                      Agreement

6.13                  Liability                                                                                  14

6.14                  Intellectual Property                                                                      14

6.15                  Customer Furnished Equipment, Data and Materials                                           14

6.16                  Facility Access                                                                            15

6.17                  Continuing Business Relationship                                                           15

6.18                  Product Improvement Recommendations (OPTION)                                               15
</TABLE>

     Use or disclosure of the data contained on this sheet is subject to the
                 restriction on the title page of this proposal.

                                      E-39
<PAGE>

                                     ANNEXES

        ANNEX        TITLE

         A           Contract Data Requirements List
         B           Data Item Descriptions
         C           Schedule
         D           Milestone Payments
         E           Nomenclature and Description
         F           Method of Manufacture
         G           Preparation of Reference Standards
         H           Certificate of Analysis and Analytical Characterization
         I           Production Flow Diagram
         J           Technology Transfer and Custom Manufacturing Agreement

     Use or disclosure of the data contained on this sheet is subject to the
                 restriction on the title page of this proposal.

                                      E-40
<PAGE>

                  PROPOSAL FOR THE PRODUCTION OF MOLICHEM 1901

1. INTRODUCTION

Apotex Fermentation Inc. (AFI) is pleased to provide this proposal to Molichem
for the manufacture of clinical batches of Molichem 1901 under contract to
Molichem. MoIi1901 is classed as an antibiotic. It is in phase one clinical
trials and an IND has been filed. Molichem requires material to support Phase II
and Phase III trials. Projections are that approximately 50g of material may be
required in 2001. Additional materials will be required for 2002 and 2003.

1.1 Scope

Apotex will provide the necessary technical support and equipment for the
manufacture of the initial Phase II product requirements as defined in this
proposal. This will include the efforts required to establish the capability for
reproducible limited rate production in accordance with Good Manufacturing
Practices. The work described in this proposal constitutes the scope limitations
being proposed by Apotex. Where options for additional work are indicated, the
rational for performing the work and the separate pricing has been provided.

1.2 Abbreviations and Acronyms

The following is a list of the abbreviations and acronyms used throughout this
proposal.

           ACS                         American Chemical Society
           AF1                         Apotex Fermentation Inc.
           AOAC                        Association of Analytical Chemists
           ARO                         After Receipt of Order
           BR                          Batch Record
           CDRL                        Contract Data Requirements List
           GMP                         Good Manufacturing Pradfices
           C of A                      Certificate of Analysis
           DID                         Data Item Description
           FDA                         Food and Drug Administration
           Molichem                    Molichem Medicines Inc.
           USP                         United States Pharmacopoeia

     Use or disclosure of the data contained on this sheet is subject to the
                 restriction on the title page of this proposal.

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2. SPECIFICATIONS AND STANDARDS

The following is a list of documents, specifications or standards that will
apply to the work performed within the scope of this proposal or any contract
arising from this proposal. Any deviation from these documents, specifications
or standards shall be stated in this proposal and shall form part of any
contract arising from this proposal.

2.1 Molichem Medicines Inc. Documents

       Burroughs Wellcome Co. TCPW95/0007           Nomenclature and Description
       July 13, 1995

       Burroughs Wellcome Co. TCPW95/0005           Method of Manufacture
       July 13, 1995

       Burroughs Wellcome Co. TCPW95/0006           Preparation of Reference
       July 13, 1995                                Standards

       Magellan Laboratories - TTP-MMR-M001 9       Certificate of Analysis -
       November 06, 2000                            Analytical Characterization
                                                    of Moli1901
                                                    (Duramycin)

     Use or disclosure of the data contained on this sheet is subject to the
                 restriction on the title page of this proposal.

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3. TECHNICAL APPROACH

3.1 PHASE I - Process Verification

Phase I will consist of verifying that the process provided by Molichem can be
transferred successfully to AFI and establishing processing parameters at the
laboratory scale to be used in the scale up of the process. The Moli 1901
process, as defined by the documentation listed in section 2.0 of this proposal,
will be transferred to AFI. Any changes or adjustments made to the process in
order to fit the process into the AFI facility will be identified at the end of
Phase II. This will include all of the microbiology, analytics and chemistry
aspects of the process.

3.1.1 Microbiology

The microbiology lab will verify the conditions for growth and the establishment
of a viable seed bank to be used in the production of the product. This effort
may be in part or wholly combined with Phase II - Fermentation.

3.1.1.1 Receipt of Organism

The producing organism, Streptoverticullium cinnamoneus, shall be provided by
Molichem Medicines. The organism is to be received according to Apotex
Fermentation Inc. policy.

3.1.1.2 Culture Verification Purity

The received culture, Streptoverticullium cinnamoneus, will be checked for
strain purity (axenic). Molichem will provide the organism morphology and growth
characteristics.

3.1.1.3 Culture Viability / Productivity

The received culture will be checked for viability (growth) and the ability of
the organism, Streptoverticullium cinnamoneus, to produce the targeted product.

3.1.1.4 Seed Bank Preparation

A master seed bank of Streptoverticullium cinnamoneus will be prepared for use
by Apotex Fermentation Inc.

3.1.1.5 Media Verification

Testing will be conducted to verify the growth of Streptoverticullium
cinnamoneus with the media recipe provide by Molichem Medicines. Equivalent
media components may be substituted by AFI.

3.1.1.6 Growth Conditions Verification

Testing will be conducted to verify the growth of Streptoverticullium
cinnamoneus with the growth conditions by Molichem Medicines and that the
productivity of the organism is consistent with Molichem Medicine's previous
experiences.

     Use or disclosure of the data contained on this sheet is subject to the
                 restriction on the title page of this proposal.

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3.1.1.7 Transfer of Seed Bank to Process

A working seed bank will be prepared from the master seed bank and transferred
to Process Scale Up.

3.1.1.8 Microbiology Report

Upon completion of the microbiology effort associated with Phase I, AFI will
produce a Microbiology Report in accordance with CDRL 001.

3.1.2 Analytics

The analytics lab will verify the standard test methodologies used in the
process and ensure that the test methods are transferred to the AFI labs.

3.1.2.1 Method Verification

The analytical testing methods provided by Molichem Medicines will be conducted
in the Analytical Laboratory to verify the successful transfer of the
technology.

3.1.2.2 Standards Preparation

Moli1901, provided by Molichem Medicines, will be examined, reserved and
designated as a working standard. In the event that it is necessary to purchase
standards, the cost of these standards will be the responsibility of Molichem.
The purchase of standards is not within the scope of this proposal.

Molichern may request AFI to retain and qualify a portion of the initial
production material as a primary standard. This effort is not within the scope
of this proposal.

3.1.2.3 Sample Preparation and Verification

Process sample preparations will be compared against the procedures provided by
Molichem Medicines to verify the transfer of the procedures.

3.1.2.4 Raw Materials

Testing methodologies required for raw materials, which are defined by USP, AOAC
or ACS, will be verified. The development of new test methods is not within the
scope of this proposal.

3.1.2.5 Analytics Report

Upon completion of the Analytics effort associated with Phase I, AFI will
produce an Analytics Report in accordance with CDRL 002.

3.1.3 Chemistry

The chemistry lab will verify that the extraction, isolation and purification
processes provided by Molichem are reproducible at AFI. This effort may be in
part or wholly combined with Phase II - Downstream Processing.

     Use or disclosure of the data contained on this sheet is subject to the
                 restriction on the title page of this proposal.

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3.1.3.1 Broth Filtration/Extraction

Using fermentation broth, containing Moli1901, generated at Apotex Fermentation
Inc., the fermentation / extraction process supplied by Molichem Medicines will
be verified in the chemistry lab.

3.1.3.2 Isolation

The isolation process supplied by Molichem Medicines will be verified in the
chemistry lab using extract generated at Apotex Fermentation Inc.

3.1.3.3 Purification

With isolated crude Moli1901, generated at Apotex Fermentation Inc., the
purification process supplied by Molichem Medicines will be verified in the
chemistry lab.

3.1.3.4 Characterization

Recovered Moli1901 from the chemistry trials will be characterized to verify the
successful isolation of the product.

3.1.3.5 Chemistry Report

Upon completion of the Chemistry effort associated with Phase I, AFI will
produce a Chemistry Report in accordance with CDRL 003.

3.1.4 Option to Proceed

At any time during Phase I, if it is determined that the product can not be
manufactured in the AFI facility due to exposure or safety concerns, or if it is
determined that the product can not be manufactured in accordance with the
Method of Manufacture (Annex F) provided by Molichem, AFI reserves the right to
terminate to contract. Should the contract be terminated, under this clause
during Phase I, only Milestone Payment 1 will be paid to AFI by Molichem.

3.2 PHASE II - Process Trials

Phase II will consist of verifying that the process provided by Molichem can be
manufactured at a production scale. Upon completion of Phase II, a review will
be held at AFI at which time AFI will present the findings generated during
Phase I and II. A presentation package shall be prepared for this review in
accordance with CDRL 019. An agenda and minutes of the meeting will be produced,
in accordance with CDRLs 020 and 021.

3.2.1 Fermentation

Process Scale Up will verify that the fermentation conditions, growth and
productivity of the organism, of Streptoverticullium cinnamoneus provided by
Molichem are reproducible at AFI. This effort may be in part or wholly combined
with Phase I Microbiology.

     Use or disclosure of the data contained on this sheet is subject to the
                 restriction on the title page of this proposal.

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<PAGE>

3.2.1.1 Growth Curve

Process Scale Up will verify that the growth profile for the organism is
reproducible at AFI and that it is consistent with the profile provided by
Molichem.

3.2.1.2 Fermentation Conditions

Process Scale Up will verify that the fermentation conditions, as provided by
Molichem, grow the culture in a fermentor.

3.2.1.3 Productivity Verification

Process Scale Up will verify that, using the growth profile and fermentation
conditions as provided by Molichem, the culture produces Moli1901 and that it is
reproducible at AFI

3.2.1.4 Fermentation Report and Data

Upon completion of the Fermentation effort associated with Phase II, AFI will
produce a Fermentation Report in accordance with CDRL 004.

3.2.2 Downstream

Process Scale Up will verify that the downstream conditions for the filtration,
extraction, isolation and purification, as provided by Molichem, are
reproducible at AFI

3.2.2.1 Filtration

Process Scale Up will verify that the filtration process is reproducible at
scale and consistent with the process provided by Molichem.

3.2.2.2 Extraction

Process Scale Up will verify that the extraction process is reproducible at
scale and consistent with the process provided by Molichem.

3.2.2.3 Isolation

Process Scale Up will verify that the isolation process is reproducible at scale
and consistent with the process provided by Moiichem.

3.2.2.4 Purification

Process Scale Up will verify that the purification process is reproducible at
scale and consistent with the process provided by Molichem.

3.2.2.5 Downstream Report

Upon completion of the Downstream effort associated with Phase II, AFI will
produce a Downstream Report in accordance with CDRL 005.

     Use or disclosure of the data contained on this sheet is subject to the
                 restriction on the title page of this proposal.

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3.2.3 Documentation

As part of this phase AFI will produce the following documents:

          a.      Master Batch Record - Seed Bank CDRL 006,
          b       Master Batch Record - Inoculum CDRL 007,
          C.      Master Batch Record - Fermentation CDRL 008,
          d.      Master Batch Record - Filtration CDRL 009,
          e.      Master Batch Record - Extraction/Isolation CDRL 010,
          f.      Master Batch Record - Purification CDRL 011,
          9.      Master Batch Record - Packaging CDRL 012,
          h       Raw Material Specifications - CDRL 013,
          i.      In Process Specifications - CDRL 014,
          j.      Finished Intermediate Specifications - CDRL 015,
          k.      Final Product Specification - CDRL 016,
          l.      Container/Closure Specification - CDRL 017, and
          M.      Labeling Specification - CDRL 018.

3.2.4 Toxicology Study Material

At the completion of Phase II, AFI will produce a quantity of Moli1901, using
protocol controls, for delivery to Molichem Medicines to be used in toxicology
studies. The protocols will be of sufficient detail to support toxicology
studies and shall be used in the development of the production batch records as
identified in this proposal. The quantity of material generated from this trial
production can not be accarately determined, but based on the information
provided by Molichem as identified in section 2.0 of this proposal, the process
should result in approximately 15g to 18g of material.

3.2.5 Option to Proceed

At any time during Phase II, if it is determined that the product can not be
manufactured in the AFI facility due to exposure or safety concerns, or if it is
determined that the product can not be manufactured in accordance with the
Method of Manufacture (Annex F) provided by Molichem, AFI reserves the right to
terminate to contract. Should the contract be terminated, under this clause
during Phase 2, only Milestone Payments 1 and 2 will be paid to AFI by Molichem.

3.3 PHASE III - Production

Production shall commence only after all work and documentation described in
Phases I and 11 are completed. Completion includes receipt in writing of final
approval by Molichem for documents indicated as requiring approval in the CDRL.

     Use or disclosure of the data contained on this sheet is subject to the
                 restriction on the title page of this proposal.

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Upon completion of Phase III, a Phase Ill Completion review will be held at AFI.
A presentation package will be prepared for this review in accordance with CDRL
023. An agenda and minutes of the meeting will be produced in accordance with
CDRLs 024 and 025.

AFI will manufacture three production batches. Based of the data provided by
Molichem and contained in section 2.0 of this proposal, the three batches are
expected to produce approximately 50g of Moli1901 material. AF1 can not
guarantee the quantity of material, which will be produced from the three
batches, as this is dependent on the strain and stability of the process. At the
end of Phase II, AF1 will be able to provide a reasonable prediction as to the
output of each clinical batch. Should Molichem wish to change the number of
batches to be made, an adjustment in the contract could be made prior to the
production of the clinical batches.

3.3.1 Raw Materials

Raw Materials for the production of Moli1901 will be ordered, received and
processed through AFI warehousing. The materials will be received through a
quarantine and release process in order to ensure they meet the predefined
requirements before being made available for use in the manufacture of Moli1901.
Only the materials required for the three production batches, as described in
paragraph 3.3 of this proposal, will be ordered prior to the completion of Phase
II.

3.3.2 Microbiology

A working seed bank and inoculum culture will be prepared in accordance to
pre-approved master batch records.

3.3.3 Fermentation

The preparation, charge-in, sterilization inoculation, cultivation and
subsequent harvest of the Moli1901 producing culture will be conducted in
accordance with the pre-approved master batch records.

3.3.4 Filtration/Concentration

The harvested fermentation broth will be filtered, the supernatant concentrated
in accordance with the pre-approved master batch record.

3.3.5 Extraction/Isolation

The product, Moli1901 will be recovered from the concentrated supernatant by
means of an extraction, concentration, isolation, washing and drying process
that is described in the pre-approved master batch record.

3.3.6 Purification

The purification of Moli1901 will be conducted by use of HPLC, followed by
treatment with ion exchange resin, decolourization, concentration and
freeze-drying in accordance with the pre-approved master batch record.

3.3.7 Packaging

The dry product, Moli1901, is to be packaged in accordance with the pre-approved
master batch record.

     Use or disclosure of the data contained on this sheet is subject to the
                 restriction on the title page of this proposal.

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4. TESTING AND QUALITY CONTROL

4.1 Methodology

All USP, AOAC or ACS methods of analysis used in the manufacturing process of
Moli1901 will be verified as adequate by AFI for their intended purpose. The
development of new test methods is considered beyond the scope of this proposal.

4.2 Sampling

All sampling will be conducted to an established sampling plan or by means to
provide a representative sampling of the material. All sample preparations will
be conducted and documented by AFI.

4.3 Standards

A primary standard of the final product, Moli1901, will be established with
material provided to AFI by Molichem. The preparation of standards from Moli1901
produced at AFI is not within the scope of this proposal.

4.4 Validation

Methods used in the analysis of Moli1901 material produced for Phase II clinical
trials do not require validation to meet regulatory requirements. These methods
must be validated prior to the production of material to be used in Phase Ill
clinical trials. The effort to validate these methods is not within the scope of
this proposal.

     Use or disclosure of the data contained on this sheet is subject to the
                 restriction on the title page of this proposal.

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5. QUALITY ASSURANCE AND REGULATORY AFFAIRS

5.1 Specifications

Moli1901 will be produced to meet the product specification as provided in Annex
F of this proposal. In house specifications will be developed as part of the
production process in order to manufacture this product.

5.1.1 Changing Specifications

Neither AFI nor Molichem shall have the right to change the Product
Specifications unilaterally, as stated in the Certificate of Analysis (Annex H),
except by mutual consent and in a time frame acceptable to both parties. Changes
that are acceptable to both parties shall be documented in writing and signed by
both parties prior to proceeding with the change in scope.

5.2 Data

In accordance with the requirements for the manufacture of active pharmaceutical
ingredients all master copies of data generated as part of the scale up and
production of MoIi1901 will be retained at AFI and will remain controlled by the
non-disclosure agreement signed between Molichem Medicines Inc. and AFI.

5.3 Good Manufacturing Practices

AFI will perform the work described in this proposal using good manufacturing
practices as set down by the applicable regulatory agencies for the manufacture
of Phase II clinical trial materials.

6.4 United States Food and Drug Administration

AFI understands that the manufacture of Phase II clinical materials may include
an audit by a US FDA team. If an audit is required, AFI is prepared to provide
the necessary support, in accordance with the FDA regulatory guidelines, to
allow for an FDA audit of the manufacturing process for Moli1901. However, the
support of an FDA audit is not within the scope of this proposal.

5.5 Certificate of Analysis

A Certificate of Analysis shall be provided for each batch of Moli1901 in
accordance with CDRL 022.

5.6 Stability (OPTION)

Molichem has not requested that a stability study be performed on the Moli1901
material which will be manufactured under the scope of this proposal. As an
option, AFI is prepared to perform a stability study based on three batches of
Moli1901 manufactured for Phase II clinical trials. Within the scope of this
option, a stability protocol would be provided in accordance with CDRL 027. AFI
would perform the stability study and provide stability testing and reports, in
accordance with CDRL 028, at six, twelve, eighteen and twenty-four months. The
study would include the accelerated stability

     Use or disclosure of the data contained on this sheet is subject to the
                 restriction on the title page of this proposal.

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testing with monthly testing during the first six months. Continuation of the
stability study beyond twenty-four months is considered beyond the scope of this
proposal option. Should Molichem wish to continue the stability program to
include stability testing and reports at, thirty-six, forty-eight and sixty
months, this effort can be contracted for at a later date.

This proposal currently allows for the production of an estimated 50g of
Moli1901 from three production runs. Based on the information available to AFI
at the time of this proposal, each production lot is estimated to generate in
the range of 15g to 18g of Moli1901. In order to perform stability testing,
samples must be taken from each production lot. AFI has estimated that the
sample size required for stability testing from each production lot to be a
minimum of 7g for a total minimum requirement of 21g of Moli1901. In order to
provide sufficient material for delivery to Molichem (50g) and to allow for
stability testing (21g), it will be necessary to perform five production runs or
one additional run beyond the three that are currently proposed.

Should Molichem wish to proceed with the stability testing, these additional two
runs would be done consecutive with the planned three production lots. The cost
of these two additional runs can be minimized if they are performed
consecutively by eliminating the non-recurring setup costs. The effort
associated with preparing and performing stability testing independent of the
first three production lots would be considerably more costly than performing
them together.

Although this stability study has been proposed under the optional scope area of
this proposal, AFI recommends that Molichem proceed with this proposed work as
it will provide baseline stability data for a comparison to the Phase III
production product. This is important in order to demonstrate that there are no
adverse affects on the product as a result of any process changes that are made
in order to optimize the manufacturing process for Phase III and full
production. Additionally this would ensure that the performance of stability
testing would not cause any delay in the efforts of Molichem to complete the
clinical trials of Moli1901. The cost of including this additional scope has
been itemized separately in Annex D.

5.7 Third Party Audit

AFI will support an audit conducted by Molichem Medicines Inc. or third parties
contracted by Molichem Medicines to perform an audit of the Moli1901 process.
Any such audit must be coordinated through the AFI Quality Systems department
and will be prearranged. AFI reserves the right to postpone or reschedule a
planned audit and to refuse access to AFI to individuals who may represent
competitors. AFI will provide access to documentation directly related to the
production of Moli1901. Access to the AFI facility during an audit will be
limited to those areas specifically designated for the production of MoH1901.

It is understood that a single third party audit will be covered by the scope of
this proposal. This audit will:

a.       last no more than three working days,

b.       that it will be conducted at AFI,

     Use or disclosure of the data contained on this sheet is subject to the
                 restriction on the title page of this proposal.

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         that AFI will provide Quality Assurance and Regulatory Affairs support
         to conduct and direct the audit,

d.       that no documentation will be prepared or delivered to the auditor
         prior to the audit,

e.       that only documentation pertaining to the production of Moli1901 will
         be provided for review during the audit,

f.       that no documentation will be released from AFI after the audit,

9.       that the findings of the audit shall be provided to AFI and Molichem at
         the end of the audit during a final briefing on the last day of the
         audit,

h.       that the findings are for information purposes only and do not bind AFI
         to make any changes in either the process or facility, and

i.       that the findings of the audit will not change any contractual
         agreement which may result from this proposal.

     Use or disclosure of the data contained on this sheet is subject to the
                 restriction on the title page of this proposal.

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6. PROJECT MANAGEMENT

6.1 Contractor Status Report

AFI will provide Contractor Status Reports indicating work performed, status of
tasks, problem areas and recommended solutions. The status report will be
provided monthly and will be prepared in accordance with CDRL 026.

6.2 Correspondence

6.2.1 Molichem Medicines Inc.

All correspondence and data deliverables will be forwarded to:

         Molichem Medicines Inc.
         207 South Elliot Road
         PMB #231
         Chapel Hill, NC 27514
         Attention: Dr. Luis Molina, President & Chief Executive Officer

6.2.2 Apotex Fermentation Inc.

All correspondence and data deliverables comments and approvals will be
forwarded to:

         Apotex Fermentation Inc.
         50 Scurfield Boulevard
         Winnipeg, Manitoba, Canada R3Y 1G4
         Attention: Mr. Jeffery Hartry, Project Manager

6.3 Contract Data Requirements List (CDRL)

Annex A provides a Contract Data Requirements List which identifies each on the
data items which will be delivered to Molichem as part of the production of
clinical batches of Moli1901. The CDRL also indicates which Data Item
Description will govern the preparation of the data item, the frequency of
delivery of the data item, when the data will be delivered and whether or not
Molichem will be required to approve the data item before further work can
proceed.

6.4 Data Item Descriptions (DID)

Annex B provides Data Item Descriptions describing the format and content of
each data item that will be delivered to Molichem as part of the production of
clinical batches of Moli1901.

6.5 Schedule

Annex C provides a schedule for the completion of the work outlined in this
proposal. As the manufacture of fermentation based active pharmaceutical
ingredients can be affected by many variables this schedule is an estimate and
not an absolute contractual commitment. AFI assumes no liability of any kind for
failure to meet this estimated schedule.

     Use or disclosure of the data contained on this sheet is subject to the
                 restriction on the title page of this proposal.

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6.6 Milestone Payments

Annex D provides a summary of the milestone payments and a description of the
work which will be performed to complete each milestone.

6.7 Nomenclature and Description

Annex E contains a copy of the Nomenclature and Description as provided by
Molichern Medicines Inc. which has been used in the preparation of this
proposal.

6.8 Method of Manufacture

Annex F contains a copy of the Method of Manufacture as provided by Molichern
Medicines Inc. which has been used in the preparation of this proposal.

6.9 Preparation of Reference Standards

Annex G contains a copy of the Preparation of Reference Standards as provided by
Molichem Medicines Inc. which have been used in the preparation of this
proposal.

6.10 Certificate of Analysis and Analytical Characterization

Annex H contains a copy of the Certificate of Analysis and Analytical
Characterization as provided by Molichem Medicines Inc. which has been used in
the preparation of this proposal.

6.11 Production Flow Diagram

Annex I contains a copy of the Production Flow Diagram as developed by AFI which
has been used in the preparation of this proposal.

6.12 Technology Transfer and Custom Manufacturing Agreement

Annex J contains a copy of Technology Transfer and Custom Manufacturing
Agreement which would form the basis of any contract which may result from this
proposal.

6.13 Liability

AFI agrees to provide the Moli1901 material and a CofA only and does not assume
any responsibility for consequences or collateral damage which may result from
Molichern using this material in any way.

Molichern shall warrant that they have the free and unencumbered right to use
the technology they are providing and they shall provide to AFI with a recent
written legal opinion that there will be no patent infringement pertaining to
the work they are contracting.

6.14     Not Allocated

     Use or disclosure of the data contained on this sheet is subject to the
                 restriction on the title page of this proposal.

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6.15 Customer Furnished Equipment, Data and Materials

Any equipment, data or materials provided by Molichem to AFI shall be returned
to Molichern upon completion of the work defined in this proposal. These items
will be tracked in the Monthly Status Report.

6.16 Facility Access

AFI will provide Molichem personnel or their contracted agents, access to the
facilities where Moli1901 is being manufactured. Access must be arranged for in
advance through the Project Manager and AFI reserves the right to reschedule
times and refuse access to individuals who may represent competitors.

6.17 Continuing Business Relationship

Upon completion of the Project as described in Schedule "A", MMI and AFI agree
to work together on a best efforts basis and operating in good faith, in an
effort to continue in a business relatiionship with AFI as the supplier of
Moli1901 in the future, recognizing that MMI retains the discretion to choose
the supplier of Moli1901 of its choice.

6.18 Product-Improvement Recommendations (OPTION)

As an option, AFI is prepared to review the manufacturing process as provided by
Molichem and as used to manufacture the Phase II clinical batches of Moli1901.
AFI would identify where operations could potentially be optimized through
further development in order to enhance product recovery, reduce cycle times or
improved on production costs. The current state of the technology employed in
the production of Moli1901 would be described and potential areas for
improvement would be discussed with respect. to the scope of any improvement
effort and the benefits and risks associated with any development effort. The
resulting Product Improvement Recommendation Report would be provided in
accordance with CDRL 029 and would form the basis for discussion of process
improvement efforts which Molichem may wish to perform prior to the commencement
of Phase III trials and production. The cost of including this additional scope
has been itemized separately in Annex D.

     Use or disclosure of the data contained on this sheet is subject to the
                 restriction on the title page of this proposal.

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                                     ANNEX A

                         CONTRACT DATA REQUIREMENTS LIST

                                       **

     Use or disclosure of the data contained on this sheet is subject to the
                 restriction on the title page of this proposal.

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                                     ANNEX B

                             DATA ITEM DESCRIPTIONS

                                       **

     Use or disclosure of the data contained on this sheet is subject to the
                 restriction on the title page of this proposal.

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                                     ANNEX C

                                    SCHEDULE

                                       **

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                 restriction on the title page of this proposal.

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                                     ANNEX D

                               MILESTONES PAYMENTS

                                       **

     Use or disclosure of the data contained on this sheet is subject to the
                 restriction on the title page of this proposal.

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                                     ANNEX E

                          NOMENCALTURE AND DESCRIPTION

                                       **

     Use or disclosure of the data contained on this sheet is subject to the
                 restriction on the title page of this proposal.

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                                     ANNEX F

                              METHOD OF MANUFACTURE

                                       **

     Use or disclosure of the data contained on this sheet is subject to the
                 restriction on the title page of this proposal.

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                                     ANNEX G

                       PREPARATION OF REFERENCE STANDARDS

                                       **

     Use or disclosure of the data contained on this sheet is subject to the
                 restriction on the title page of this proposal.

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                                     ANNEX H

                             CERTIFICATE OF ANALYSIS

                                       AND

                           ANALYTICAL CHARACTERIZATION

                                       **

     Use or disclosure of the data contained on this sheet is subject to the
                 restriction on the title page of this proposal.

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                                     ANNEX I

                             PRODUCTION FLOW DIAGRAM

                                       **

     Use or disclosure of the data contained on this sheet is subject to the
                 restriction on the title page of this proposal.

                                      E-64<PAGE>

                                                                   EXHIBIT 10.4

** designates information omitted that has been filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment under 17 CFR 200.80.

              EXCLUSIVE DEVELOPMENT AND COMMERCIALIZATION AGREEMENT

         THIS EXCLUSIVE DEVELOPMENT AND COMMERCIALIZATION AGREEMENT (the
"Agreement") is entered into and made effective as of May 11, 2001 (the
"Effective Date"), among INTERMUNE, INC., a Delaware corporation, having its
principal place of business at 1710 Gilbreth Road, Suite 301, Burlingame, CA
94010 ("InterMune"); MOLICHEM R&D, INC., a North Carolina corporation, having
its principal place of business at 267 Sweet Bay Place, Carrboro, North Carolina
27510 and MOLICHEM MEDICINES, INC., a Delaware corporation having its principal
place of business at 267 Sweet Bay Place, Carrboro, North Carolina 27510
(collectively "MoliChem"). InterMune and MoliChem may be referred to herein each
individually as a "Party" and jointly as the "Parties."

                                    RECITALS

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

         WHEREAS, MoliChem has rights to the peptide designated as Moli1901,
which may be effective in the treatment of certain pulmonary diseases;

         WHEREAS, MoliChem has development capabilities and expertise related to
Moli1901; and

         WHEREAS, InterMune and MoliChem now desire to undertake jointly the
development and commercialization of Moli1901 in accordance with the terms and
conditions set forth herein.

         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 with respect to any Party, any other Person which
controls, is controlled by, or is under common control with, such 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 "Applicable Laws" shall mean all applicable federal, state,
provincial and local laws, ordinances, rules and regulations applicable to this
Agreement or the activities contemplated hereunder, including without
limitation, the Federal Food, Drug and Cosmetic Act, 21 U.S.C. ss. 321 et seq.,
as amended, and the regulations promulgated thereunder from time to time, the
Prescription Drug Marketing Act of 1987, as amended, and any final regulations
or guidances promulgated

                                      E-65
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thereunder from time-to-time, the Medicare/Medicaid Anti-kickback Statute set
forth at 42 U.S.C. ss.1320a-7b(b) and any final regulations promulgated
thereunder from time to time, and equivalent state laws and regulations and any
requirements under any license agreement applicable to the Product worldwide,
whether such laws, ordinances, rules and regulations are now or hereafter in
effect.

         1.3 "Budget" means the collective annual Development Budget and
Commercialization Budget for a Product.

         1.4 "Commercialization Budget" means the annual budget for the
Commercialization Program for a Product.

         1.5 "Commercialization Committee" means the committee described in
Section 4.1.

         1.6 "Commercialization Expenses" means expenses incurred by a Party or
for its account pursuant to an approved Commercialization Budget.

         1.7 "Commercialization Plan" means the commercialization plan for the
pre-launch, launch, and post-launch of each Product with respect to the
marketing, promotion, detailing and sales of Product in accordance with the
Commercialization Program for a Product to be determined by the
Commercialization Committee in accordance with Section 4.

         1.8 "Commercialization Program" means the commercialization program for
commercializing each Product as described in Section 4.

         1.9 "Consideration" shall mean any cash or non-cash consideration of
any kind whatsoever, whether tangible or intangible, direct or indirect.

         1.10 "Development Budget" means the annual budget for the Development
Program for a Product.

         1.11 "Development Committee" means the committee described in Section
3.2.

         1.12 "Development Patent" means and includes any Patent that claims or
otherwise covers an invention in the Development Technology; provided however,
rights to inventions drawn to claims not related to Moli1901 shall not be
included in the Development Patent.

         1.13 "Development Plan" means the development plan in connection with
the Development Program for each Product to be determined by the Development
Committee pursuant to Section 3.

         1.14 "Development Program" means the development program for developing
each Product as described in Section 3.

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         1.15 "Development Technology" means

                  (a)      all Information relating to Moli1901 conceived of or
reduced to practice by either Party in the course of any work conducted pursuant
to this Agreement; and/or

                  (b)      Moli1901, its formulations and methods of
administration; and/or

                  (c)      Prior Development Technology; and

                  (d)      Joint Intellectual Property and Development Patents.

         1.16 "Development Term" means the period commencing on the Effective
Date and terminating on the earlier of (a) the termination of the Development
Program for each Product pursuant any termination pursuant to Section 11.

         1.17 "Drug Master File" means a submission to the FDA or other
regulatory authority that may be used to provide confidential detailed
information about facilities, processes, or articles used in the manufacturing,
processing, packaging and storing of Product.

         1.18 "Field" means all fields of use claimed by any of the Development
Patents.

         1.19 "Future Product Profit Share" means **

         1.20 "Glaxo/UNC Agreements" means collectively that certain: Assignment
Agreement between The Wellcome Foundation Ltd., Glaxo Wellcome, Inc., and
MoliChem, dated as of December 1, 1995; Assignment Agreement between Glaxo and
MoliChem, dated as of December 1, 1995; License Agreement between The University
of North Carolina and MoliChem, dated as of June 4, 1997, as amended on August
3, 1998; and April 17, 2001.

         1.21 "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.

         1.22 "Initial Product Profit Share" means **

         1.23 "InterMoli" means the financial construct to account for the
Parties' development and commercialization costs and profits from sales of any
Product, as specifically set forth in Exhibit A, which is incorporated herein by
reference. InterMoli is not intended to be and is not a legal entity and has
been defined for accounting identification purposes only.

         1.24 "Joint Intellectual Property" means (i) any Information specific
to the development and/or commercialization of Moli1901 solely invented or
developed by either Party or jointly developed by the Parties pursuant to this
Agreement and all intellectual property rights therein,

                                      E-67
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including without limitation any Patents claiming such Information, and (ii) any
Information jointly developed by the Parties pursuant to this Agreement and all
intellectual property rights therein, including without limitation any Patents
claiming such Information.

         1.25 "Moli1901" means the lantibiotic compound commonly known as
duramycin and previously designated by MoliChem as 2622U90; provided however,
that Moli1901 shall specifically not include any analogs, derivatives or
modifications of Moli1901.

         1.26 "NDA" means a New Drug Application filed with the U.S. Food and
Drug Administration (the "FDA") or any equivalent successor application.

         1.27 "Net Sales" means, with respect to any Product, the gross invoiced
sales of such 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
(other than income tax) assessed on the sale of such Product and borne by
InterMune;

         (d) transportation, importation and insurance charges;

         A sale of a Product shall be deemed to occur upon the earlier of (i)
receipt of Consideration for such Product from a Third Party purchaser; or (ii)
90 days after shipment of Product to a Third Party.

         1.28 "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.

         1.29 "Person" shall mean an individual, corporation, partnership,
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.

         1.30 "Prior Development Technology" means (a) all Information related
to Moli1901 acquired and/or conceived of and/or reduced to practice by MoliChem
in the course of any research and/or any development work (including without
limitation any clinical trials) conducted prior to this Agreement and/or (b) all
right(s), title(s) and interest(s) in Information related to Moli1901 that
MoliChem has licensed, received by assignment and/or acquired in, from and/or
pursuant to the

                                      E-68
<PAGE>

Glaxo/UNC Agreements or any other agreements, including without limitation any
Patents thereunder.

         1.31 "Product" means any product, use, application, administration,
method of administration or treatment that utilizes and/or incorporates the
Development Technology in the Field. For the purposes of this Agreement, any
product, use, application, administration, method of administration or treatment
that is developed for the same indication (e.g., Cystic Fibrosis) shall be
deemed to constitute the same Product.

         1.32 "Third Party" means any Person other than InterMune, MoliChem and
their respective Affiliates.

         1.33 "Valid Claim" means a claim in an issued Development 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.

2.       GRANT OF RIGHTS

         2.1 Grant to InterMune. Subject at all times to the terms and
conditions of this Agreement, MoliChem hereby grants to InterMune a co-exclusive
worldwide license, alongside MoliChem, to its rights in the Development
Technology, to use, manufacture, have manufactured, import, develop, market,
promote, detail, book sales, sell and have sold any Product in the Field,
including the right to grant sublicenses.

         2.2 Grant to MoliChem. Subject at all time to the terms and conditions
of this Agreement, InterMune hereby grants to MoliChem a co-exclusive worldwide
license, alongside InterMune, to any rights it may have or acquire in the
Development Technology, to use, manufacture, have manufactured, import, develop,
market, promote, detail, book sales, sell and have sold any Product in the
Field, including the right to grant sublicenses.

         2.3 Scope of License. The grant of rights set forth in Sections 2.1 and
2.2 of this Agreement shall be subject, at all times, to the authorization of
the Development Committee and/or the Commercialization Committee, unless the
Development Committee and/or Commercialization Committee for the Product subject
to the license grant have been terminated in accordance with Section 11. Any
sublicense granted pursuant to Section 2.1 or Section 2.2 must be authorized and
approved by the Development Committee and/or the Commercialization Committee,
unless the Development Committee and/or the Commercialization Committee for the
Product subject to the sublicense grant have been terminated in accordance with
Section 11. In the event either Party enters into a sublicense to the
Development Technology, the sublicensor will, within ten (10) days of execution
of such sublicense agreement, deliver a copy of such agreement to the other
Party.

         2.4 Exclusivity. Each Party hereby covenants that it shall not perform
any work for any Third Party relating to Moli1901 in the Field during the
Development Term without the prior written consent of the other Party, such
consent not to be unreasonably withheld or delayed.

                                      E-69
<PAGE>

3.       DEVELOPMENT PROGRAM

         3.1 Development Program. The Development Program for each Product shall
include all development work for such Product, including without limitation, all
clinical trials, toxicology studies, all regulatory matters and filings and
post-marketing studies. The Parties agree to conduct the Development Program,
for each Product during the Development Term in accordance with the applicable
Development Plan, as such Development Plan may be amended from time to time by
the Development Committee. Each Party shall use its reasonable best efforts in
carrying out the Development Program and each Party shall furnish the
development staff, technical know-how, equipment, instruments, supplies and
facilities necessary to carry out the Development Program. The Parties shall
provide funding to support the Development Program as described in Section 6.2.

         3.2 Development Committee.

         (a) All the work performed in conducting the Development Program shall
be under the supervision of the Development Committee through its directives to
the investigators who shall directly supervise the Development Program. Promptly
after the Effective Date, the Parties shall form the Development Committee,
which shall be comprised of an equal number of members, with half of the members
appointed by each Party. Each member of the Development Committee shall have the
appropriate level of skill, experience and familiarity with the Development
Program. An officer of MoliChem shall serve as chairman of the Development
Committee. Each Party shall have the right to substitute different
representatives as members on the Development Committee as may be necessary from
time to time, and each Party may bring additional representatives to attend
meetings of the Development Committee in a non-voting, ad hoc capacity. The
Parties hereby agree that the Development Committee shall be bound by all
obligations and commitments of contracts and agreements approved by the
Development Committee and entered into by one Party or the other and all those
contracts and agreements previously entered into by MoliChem related to Moli1901
and set forth in Exhibit B hereto; provided however, neither InterMune nor the
Development Committee shall be bound by the financial obligations set forth in
the letters awarding grant support to MoliChem from Cystic Fibrosis Foundation,
listed in Exhibit B.

         (b) The Development 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. Each Party shall be responsible for its own expenses and costs
related to attendance at such meetings of the Development Committee. The
Development Committee meetings may be held by telephone or videoconference, if
agreed by the Development 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 Development Program. The Development Committee shall operate by
majority decision of its members, and the Development Committee members shall
use good faith efforts to reach agreement on all matters to be decided. In the
event the Development Committee is unable to reach agreement on any matter
before it within thirty (30) days of undertaking consideration of such matter,
then the matter shall be resolved pursuant to Section 12.2. Notwithstanding the
foregoing, in the event there is a split decision by the Development Committee
as to whether or not to proceed with the initiation of the development of a
Product, the decision shall be tabled for further discussion at subsequent
meetings of the Development Committee for a period of twelve (12) months. If, at
the conclusion of the 12-month

                                      E-70
<PAGE>

period, the decision remains a split decision all rights to such Product shall
be subject to the terms of Section 11.7 of this Agreement.

         (c) The Development Committee shall decide who shall prepare the
minutes of the Development Committee's meetings. Such minutes shall be promptly
reviewed and shall be deemed approved when mutually accepted in writing by both
Parties through their respective Development Committee representatives; provided
however, that if the Development 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.

         (d) Upon commencement of Phase III trials for the initial Product or
upon termination of the Development Program for such initial Product, the
Development Committee shall evaluate the feasibility of initiating development
of the next indication of the Product in the Field. Notwithstanding the
foregoing, nothing in this provision shall prevent the Development Committee
from undertaking discussion related to future product development prior to the
commencement of Phase III trials.

         3.3 Development Plan and Budget. Within 90 days of the Effective Date,
the Development Committee shall approve the first annual Development Budget for
the Development Program and define the specific tasks of each Party under the
Development Program, which tasks shall be set forth in the "Development Plan."
This first Development Budget shall set forth a budget through the end of the
initial calendar year and through the end of the first twelve (12) month period
of the Agreement. Thereafter, the Development Budget shall run on a calendar
year basis. ** The Development Plan may be amended or modified by the
Development Committee as necessary. MoliChem shall manage and control the
production, purification and formulation of Moli1901 under the direction of the
Development Committee. The Development Committee will agree upon the good
manufacturing practices process and specifications of the final commercial
product. The Development Committee shall manage and conduct all pre-clinical
trials, trials supporting IND requirement and clinical trials, including
adequate and well controlled Phase III clinical trials for Moli1901 for each of
the countries where such studies are required for regulatory approval in such
country. Other than as provided for in Section 3.5 of this Agreement, the
Development Committee shall also manage all regulatory negotiations with all
regulatory authorities in all countries worldwide.

         3.4 Duties and Authority of the Development Committee.

         (a) The Development Committee shall have the following duties and
responsibilities during the Development Term: (i) to prepare the Development
Plan for each Product; (ii) to coordinate and monitor the progress of the
Parties' efforts in conducting the Development Program; (iii) to review the
results of the Development Program; (iv) to prepare and allocate an annual
Development Budget; and (v) to amend or modify the Development Plan or
Development Budget with respect to each Product as appropriate or necessary.

                                      E-71
<PAGE>

         (b) The powers of the Development Committee are limited to those
expressly set forth in this Agreement. Without limiting the generality of the
foregoing, the Development Committee shall not have the right to amend this
Agreement.

         3.5 Product Registration. Under the direction of the Development
Committee, MoliChem shall be responsible for managing all applications, requests
for authorization, submissions of information and data and for all interactions
with the United States and foreign regulatory authorities for the purpose of
attempting to obtain registration of the Products. MoliChem shall hold all
Product registrations in its name and shall retain control and ownership of the
Drug Master File related to Moli1901. However, qualified personnel of InterMune
shall participate and collaborate in the process of product registration
according to the plan set forth by the Development Committee. Such participation
shall include, but shall not be limited to (i) review of filings prior to
submission to the U.S. or foreign regulatory authorities, (ii) participation in
meetings with regulatory authorities, and (iii) interaction with MoliChem
personnel on a regular basis regarding the status of regulatory filings. In the
event MoliChem is unwilling or unable to continue directing the regulatory
filings, it may request that InterMune take responsibility for such filing, and
in such event InterMune will have the same obligations and responsibilities as
set forth above for MoliChem. In the event MoliChem has taken any action with
respect to the regulatory filings that materially jeopardizes the development of
any Product and InterMune can produce evidence that such MoliChem actions have
materially jeopardized the development of any Product and within thirty (30)
days of written notice by InterMune of such materially jeopardizing action or
omission MoliChem has not (i) reversed the action or cured the omission, then
all rights to control the regulatory filing with respect to such Product shall
thereafter be directed by InterMune; provided however, the regulatory filings
shall continue to be filed in the name of MoliChem and MoliChem shall have the
same rights of participation as set forth above for InterMune.

         3.6 Records; Inspection.

         (a) Each Party shall maintain records of all work conducted under the
Development Program and all results (including without limitation any
Inventions, discoveries and developments) made pursuant to its efforts under the
Development Program, in laboratory notebooks (or similar records) separate from
all other work conducted by such Party. Such records shall be complete and
accurate and shall fully and properly reflect all work done and results achieved
in the performance of the Development Program in sufficient detail and in good
scientific manner appropriate for patent and for regulatory purposes. The other
Party shall have the right, during normal business hours and upon reasonable
notice to inspect and copy such records.

         (b) Each Party and its appropriate employees, agents and outside
consultants may visit the other Party at its offices and laboratories during
normal business hours and upon reasonable notice, and may discuss the
Development Program and its results in detail with the technical personnel and
consultants of the other Party.

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

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<PAGE>

         3.7 Disclosure of Inventions and Development Results. Each Party shall
provide to the other Party 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 Development Program or
Commercialization Program (an "Invention"), promptly after each such Invention
is made. Each Party shall regularly inform the other Party of the results of the
Development Program, and shall provide copies of the results and raw data from
the Development Program as requested. As used herein, "raw data" means all
Information generated by persons working on the Development Program, whether in
written, graphic or electronic form, and including without limitation all
materials such as films, printouts, and photographs that record such
Information, concerning work conducted pursuant to the Development Program. Each
Party shall also provide monthly written summaries of the Development Program as
set forth in Section 3.9. The other Party shall be free to use all such
Information for any and all purposes.

         3.8 Reporting; Audits. The reporting requirements and audit rights for
the Development Program are set forth in Section 3 and Section 5, respectively,
of Exhibit A.

         3.9 Monthly Reports. Each Party shall provide the Development Committee
with a written progress report monthly during the Development Term. Each such
report shall summarize the work performed by such Party in relation to the goals
of the Development Program during such period, and shall provide any other
information reasonably requested by the other Party or the Development
Committee.

         3.10 MoliChem and InterMune Covenants.

         (a) Invention Assignment Agreements. Each Party hereby covenants that
each of its employees, consultants and agents performing any work under the
Development Program shall have entered into a written invention assignment
agreement requiring that each such individual assign to such Party all right,
title and interest in and to any Information conceived of and/or reduced to
practice by such individual in connection with any activities under the
Development Program.

         (b) No Misappropriation. Each Party 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 Information of any Third Party in its conduct of the Development Program
hereunder

         (c) Restrictions. Each Party agrees to abide by all restrictions set
forth in the Glaxo/UNC Agreements.

4.       COMMERCIALIZATION PROGRAM

         4.1 Commercialization Committee.

         (a) After successful completion of the final U.S. Phase II clinical
trial for any Product and approval by the FDA of the Phase III clinical trial
protocol, the Parties shall form the Commercialization Committee for such
Product, which shall be comprised of an equal number of members with half
appointed by each Party. Each member of the Commercialization Committee

                                      E-73
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shall have the appropriate level of skill, experience and familiarity with the
Commercialization Program. InterMune's Vice President of Sales and Marketing
shall serve as one of InterMune's Commercialization Committee members and shall
be the Chairman of the Commercialization Committee. Each Party shall have the
right to substitute different representatives as members on the
Commercialization Committee as needed from time to time, and each Party may
bring additional representatives to attend meetings of the Commercialization
Committee in a non-voting, ad hoc capacity.

         (b) The Commercialization Committee shall meet as often as the
Committee deems necessary and at such meeting places as shall be mutually agreed
upon by the Parties. The Commercialization Committee meetings may be held by
telephone or videoconference, if agreed by the Commercialization Committee
members. Each Party will designate an individual to serve as the liaison between
the Parties to undertake and coordinate any communications as may be required
between the Parties relating to the Commercialization Program. The
Commercialization Committee shall operate by majority decision of its members
and shall use good faith efforts to reach agreement on all matters to be
decided. In the event the Commercialization Committee is unable to reach
agreement on any matter before it within thirty (30) days of undertaking
consideration of such matter, then the matter shall be resolved pursuant to
Section 12.2.

         4.2 Duties and Authority of the Commercialization Committee.

         (a) The Commercialization Committee shall have the following duties and
responsibilities during the term of this Agreement: (i) to prepare the
Commercialization Plan for each product; (ii) to coordinate and monitor the
progress of the Parties' efforts in conducting the Commercialization Program;
(iii) to prepare the Commercialization Budget within ninety (90) days of the
formation of the Commercialization Committee for each Product and to prepare and
allocate the annual Commercialization Budget for each Product; (iv) to assist in
the progress of InterMune's efforts in conducting the Commercialization Program;
(v) to review the results of the Commercialization Program; and (iv) to amend or
modify the Commercialization Plan or Commercialization Budget as appropriate or
necessary. The Parties hereby agree that the Commercialization Committee shall
be bound by all obligations and commitments of contracts and agreements approved
by the Development Committee or the Commercialization Committee and entered into
by one Party or the other and all contracts and agreements previously entered
into by MoliChem related to Moli1901 and set forth in Exhibit B hereto.

         (b) The powers of the Commercialization Committee are limited to those
expressly set forth in this Agreement. Without limiting the generality of the
foregoing, the Commercialization Committee shall not have the right to amend
this Agreement.

         (c) The Commercialization Committee shall also manage selection and
prosecution of all Product trademarks. All such trademarks shall be jointly
owned by the Parties and may only be used by the Parties in association with the
Product and may not be used with any other product, treatment, application, etc.
of either of the Parties.

         (d) The Commercialization Committee shall decide who shall prepare the
minutes of the Commercialization Committee's meetings. Such minutes shall be
promptly reviewed and

                                      E-74
<PAGE>

shall be deemed approved when mutually accepted in writing by both Parties
through their respective Commercialization Committee representatives; provided
however, that if the Commercialization 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.

         4.3 Commercialization Program. Each of the Parties shall use
commercially reasonable efforts in carrying out its obligations under the
Commercialization Program as determined by the Commercialization Committee. In
order to establish and maintain the largest market possible for each Product,
under the direction of the Commercialization Committee, InterMune shall direct,
all the marketing, sales, promotion, operational and technical personnel,
know-how, equipment, supplies and facilities necessary to carry out the
Commercialization Program, including without limitation appropriate staffing
levels on an experienced, well-trained sales force dedicated exclusively to the
Commercialization Program. InterMune shall be responsible for and shall
commercially launch each of the Products at the direction of the
Commercialization Committee. ** In addition, the Commercialization Committee
shall set reasonable minimum annual sales performance obligations prior to the
launch of each Product in each of the countries within the territory.

         4.4 Reporting; Audits. The reporting requirements and audit rights for
the Commercialization Program are set forth in Section 3 and Section 5,
respectively, of Exhibit A.

         4.5 Notwithstanding any other provision of this Agreement to the
contrary, in the event InterMune has taken any action with respect to
commercialization of any Product that materially jeopardizes the
commercialization of such Product and MoliChem can produce evidence that such
InterMune actions have materially jeopardized the commercialization of any
Product, and InterMune has failed to cure such action within ninety (90) days
after receiving notice from MoliChem that such actions have materially
jeopardized the commercialization of the Product, then all rights to control the
commercialization with respect to such Product shall thereafter be directed by
MoliChem.

5.       Supply and Manufacturing.

         5.1 At the direction of the Development Committee, MoliChem shall
manage the planning, agreements and operations concerning the supply and
manufacture of the Products for the Development Program; provided however, all
manufacturing specifications shall be established by the Development Committee.

         5.2 At the direction of the Development Committee, MoliChem shall also
manage all matters concerning the supply and manufacture of any Product for the
Commercialization Program, in accordance with the specifications established by
the Development Committee.

         5.3 Although MoliChem shall manage the manufacture of the Products,
qualified personnel of InterMune shall participate and collaborate in the supply
and manufacture of the Products according to the plan set forth by the
Development Committee and for so long as MoliChem continues to manage the
manufacture of the Products, InterMune shall have a right to

                                      E-75
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audit the manufacture of Moli1901 in accordance with generally accepted audit
procedures for similar manufacturing processes.

         5.4 In the event MoliChem is unwilling or unable to manufacture any
Product, it may request that the Development Committee take responsibility for
the manufacture of such Product. All costs of manufacturing shall be borne by
InterMoli.

         5.5 Notwithstanding any other provision of this Agreement to the
contrary, in the event MoliChem has taken any action with respect to
manufacturing any Product that materially jeopardizes the commercialization of
such Product and InterMune can produce evidence that such MoliChem actions have
materially jeopardized the commercialization of any Product, and MoliChem has
failed to cure such action within ninety (90) days after receiving notice from
InterMune that such actions have materially jeopardized the commercialization of
the Product, then all rights to control the manufacturing with respect to such
Product shall thereafter be directed by InterMune.

6.       PAYMENTS

         6.1 Initial Payment. Upon the Effective Date and in partial
consideration for the rights granted to InterMune herein, InterMune shall make a
nonrefundable payment to MoliChem in the amount of One Million Four Hundred
Fifty Thousand Dollars ($1,450,000).

         6.2 Funding for Development and Commercialization. All reasonable and
direct costs of the Development Program and the Commercialization Program as set
forth in each approved Budget(s) shall be shared equally (i.e., 50%/50%) by the
Parties, no matter which Party incurs such costs. All Profit and Loss
calculations for the initial Product shall be in accordance with the terms of
Exhibit A. For the purposes of this Agreement, payment of Profits shall be
considered a payment obligation.

         6.3 Milestone Payments. InterMune shall make the following Milestone
Payments to MoliChem:

         **

         6.4 Profit Payments. InterMune shall be obligated to timely make all
Profit payments and detailed statements to MoliChem in accordance with the terms
of Exhibit A.

         6.5 Income Tax Withholding. If laws, rules or regulations require
withholding of income taxes or other taxes imposed upon payments set forth in
this Section 6, InterMune shall make such withholding payments as required and
subtract such withholding payments from the payments set forth in this Section
6. InterMune shall submit appropriate proof of payment of the withholding taxes
to MoliChem within a reasonable period of time.

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7.       INTELLECTUAL PROPERTY MATTERS; PATENTS

         7.1 Ownership. All Joint Intellectual Property shall be jointly owned
by the Parties with each Party owning an undivided one-half interest. For all
other intellectual property developed pursuant to this Agreement, inventorship
shall be determined in accordance with the U.S. patent or other applicable laws.
MoliChem shall own all inventions not related to Moli1901 that have been
conceived or reduced to practice under this Agreement solely by MoliChem's
employees, consultants or others with an obligation to assign their rights to
MoliChem. Intermune shall own all inventions not related to Moli1901 that have
been conceived or reduced to practice under this Agreement solely by InterMune's
employees, consultants or others with an obligation to assign their rights to
InterMune. InterMune shall grant MoliChem a perpetual irrevocable, royalty free,
non- exclusive license to any and all intellectual property rights that are not
Joint Intellectual Property and arise from the Development Program or
Commercialization Program that relate to Moli1901 or any other lantibiotic
technology of MoliChem (including but not limited to manufacturing, formulation
and packaging technology), and shall execute at the request of MoliChem such
reasonable documents in furtherance of the foregoing license.

         7.2 Patent Filing, Prosecution and Maintenance.

         (a) MoliChem shall have the first right, but not the obligation, to
file applications for the Development Patents and to prosecute and maintain such
Development Patents in such countries as selected by the Development Committee
or the Commercialization Committee, as the case may be, at InterMoli's expense.
MoliChem shall reasonably consider any recommendations provided by InterMune
regarding the filing and/or prosecution of such Development Patents, but the
final decision as to the filing and/or prosecution matters shall rest with
MoliChem.

         (b) In the event that InterMune desires that MoliChem file and
prosecute a patent application claiming a particular invention in the
Development Technology, and MoliChem does not file such a patent application
within one hundred twenty (120) days of such request, or decides to abandon
prosecution of such a filed application, then InterMune may thereafter file,
prosecute and/or maintain the Patent(s) claiming such particular inventions, at
InterMune's expense. In such event, MoliChem shall cooperate reasonably with
InterMune in such efforts.

         (c) In the event that pursuant to the terms of Section 11, MoliChem's
rights in any of the Development Patents are subject to an exclusive license to
InterMune, even as to MoliChem, MoliChem's rights to control the prosecution of
such Development Patents shall be as set forth in Sections 7.2(a) and 7.2(b) of
this Agreement; provided however, all expenses related to such prosecution shall
be solely the responsibility of InterMune, and InterMune will promptly reimburse
MoliChem for any such expenses. InterMune shall have the right to review and
comment on all aspects of such prosecution and to direct the prosecution of such
Development Patents in the event MoliChem is no longer or able or willing to
continue with the prosecution of any of the Development Patents. Notwithstanding
the foregoing, in the event MoliChem has taken any action with respect to the
prosecution of the Development Patents subject to an exclusive license in
accordance with the terms of this Section, or MoliChem has taken any action with
respect to the prosecution of the Development Patents, subject to such exclusive
license that materially jeopardizes the commercialization of such exclusively
licensed Product, and InterMune can produce evidence

                                      E-77
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that such MoliChem actions have materially jeopardized the commercialization of
such exclusively licensed Product, and MoliChem has failed to cure such action
within ninety (90) days after receiving notice from InterMune that such actions
have materially jeopardized the commercialization of the Product, and all of the
claims pending in such Patent or Patent application relate solely to the
exclusively licensed Product, then all rights to control the prosecution of the
Development Patents subject to such exclusive license shall thereafter be
directed by InterMune; provided however, this provision shall not invoke any
transfer of ownership of such Development Patents.

         7.3 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 Section 7, including, without limitation, the execution of
necessary and appropriate instruments and documents.

         7.4 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.

         7.5 Infringement of Development Patents. If either Party becomes aware
that a Third Party is infringing any rights in the Development Patents, such
Party shall give written notice to the other Party describing in detail the
nature of such infringement. MoliChem shall have the initial right to enforce
the Development Patents against such Third Party infringer. InterMune agrees to
provide MoliChem all reasonable assistance, at InterMoli's expense, in such
enforcement, including without limitation being joined as a party to the suit
where appropriate. In the event that MoliChem 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,
InterMune shall have the right, but not the obligation, to institute such suit
or take other appropriate action in its own name to enforce the Development
Patents. Regardless of which Party brings an enforcement action under this
Section 7.5, 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 Development 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.

         7.6 No Other Technology Rights. Except as otherwise provided in this
Agreement, under no circumstances shall a Party, as a result of this Agreement,
obtain any ownership interest or other right in any technology, know-how,
Patents, products, compounds, materials, vaccines, antibodies, cell lines or
cultures, or animals of the other Party, including items owned, controlled or
developed by the other, or transferred by the other to such Party at any time
pursuant to this Agreement. It is understood and agreed by the Parties that this
Agreement does not grant to either Party any license or other right in basic
technology of the other Party except to the extent necessary to enable the
Parties to carry out their obligations under this Agreement for the development
and commercialization of Products.

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8.       CONFIDENTIALITY

         8.1 Confidential Information. As used herein, "Confidential
Information" means all Information relating to the Development Program for each
Product, all Information that the Parties have disclosed to each other since
September 12, 2000 and/or during the term of this Agreement and all Information
deemed "Confidential Information" under this Agreement, provided that
Confidential Information (other than Information relating to the Development
Program for each Product) has been marked "Confidential" or "Proprietary" or, if
orally presented, is indicated before disclosure to be confidential or
proprietary. Except to the extent expressly authorized by this Agreement or
otherwise agreed in writing by the Parties, each Party shall keep confidential
and shall not publish or otherwise disclose any Confidential Information and
shall not use such Confidential Information for any purpose not authorized by
this Agreement.

         8.2 Exceptions. Notwithstanding Section 8.1 above, "Confidential
Information" shall not include any Information that a Party can demonstrate by
competent written evidence:

         (a) was already known to such Party, other than under an obligation of
confidentiality, at the time of disclosure by the other Party or, 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 such Party;

         (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
such Party;

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

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

         8.3 Permitted Disclosure. Notwithstanding the limitations in this
Section 8, each Party 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,
including without limitation, Nasdaq or SEC disclosure requirements or valid
court orders;

         (c) disclosure to employees, consultants or agents, solely in
furtherance of this Agreement, provided that such individuals have agreed in
writing to be bound by similar terms of confidentiality and non-use at least
equivalent in scope to those set forth in this Section 8; or

                                      E-79
<PAGE>

         (d) general information of a non-material nature regarding the general
status of a Development Program or a Commercialization Program.

         Notwithstanding the foregoing, in the event that a Party is required to
make a disclosure of the Confidential Information pursuant to subsections (a) or
(b) above, it will give prompt advance notice to the other Party of such
disclosure and shall use its best efforts to assist the other Party in securing
confidential treatment of such information.

         8.4 Publicity. The Parties shall agree upon the text of a press release
that will be distributed by InterMune and MoliChem in connection with the
effectiveness of this Agreement. Any press releases involving Moli1901 shall be
jointly approved by both MoliChem and InterMune before issuance; provided
however, if the Parties have previously approved a press release, the approved
disclosure may be included or referenced in a subsequent release of a similar
nature without prior approval of both Parties.

         8.5 Terms of the Agreement. The terms of this Agreement are deemed to
be Confidential Information, subject to Section 8.3 above; provided however,
Each Party shall be free to disclose the terms of the Agreement to potential
investors, financial institutions, granting entities, and its licensors and
assignors of Moli1901, provided such disclosures are subject to no less
restrictive terms of confidentiality than as are set forth in this Agreement.

         8.6 Survival. The provisions of this Section 8 shall survive for five
(5) years after the termination or expiration of this Agreement.

9.       REPRESENTATIONS AND WARRANTIES

         9.1 InterMune's Representations and Warranties. InterMune hereby
represents and warrants to MoliChem as of the Effective Date that:

         (a) It is a corporation duly organized, existing and in good standing
under the laws of the State of Delaware, with full right, power and authority to
enter into and perform this Agreement and to license and assign all of the
rights, property and authorizations herein granted;

         (b) This Agreement has been duly executed and delivered by InterMune
and is a legal, valid and binding obligation enforceable against InterMune in
accordance with its terms;

         (c) The execution, delivery and performance of this Agreement does not
and will not violate any law, statute, local ordinance, state or federal
regulation, court order, or administrative order ruling, its corporate charter
or bylaws, nor any agreement by which it is bound; and

         (d) In the event InterMune has voted against development of the
Development Technology for use with a particular indication or its rights and
licenses to a Product have been terminated, InterMune, its Affiliates,
sub-agents, distributors and licensees may not thereafter, market, promote,
advertise or detail a Product for off-label uses for such indication. If either
MoliChem or InterMune become aware of any off-label use of a Product, the
Parties agree to work

                                      E-80
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together to implement the appropriate commercially reasonable measures to
restrict sales of the Product for such off-label uses.

         9.2 MoliChem's Representations and Warranties. MoliChem hereby
represents and warrants to InterMune that as of the Effective Date:

         (a) To the best of MoliChem's knowledge, Moli1901 has not been
misappropriated from any Third Party nor is it the result of any misuse of any
Third Party's intellectual property;

         (b) To the best of MoliChem's knowledge, all the Patents in connection
with the Glaxo/UNC Agreements represent a Valid Claim, and no other 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 such Patents or the Development
Technology;

         (c) It is a corporation duly organized, existing and in good standing
under the laws of the State of North Carolina in the case of MoliChem R&D, Inc.
and Delaware in the case of MoliChem Medicines, Inc., with full right, power and
authority to enter into and perform this Agreement and to grant all of the
rights, property and authorizations herein granted;

         (d) This Agreement has been duly executed and delivered by MoliChem and
is a legal, valid and binding obligation enforceable against MoliChem in
accordance with its terms;

         (e) To the best of MoliChem's knowledge, the execution, delivery and
performance of this Agreement does not and will not violate any law, statute,
local ordinance, state or federal regulation, court order, or administrative
order ruling, its corporate charter or bylaws, nor any agreement by which it is
bound;

         (f) Before entering into this Agreement, MoliChem delivered to
InterMune certain documents and information concerning MoliChem and Moli1901
(collectively, the "MoliChem Information Documents"). The MoliChem Information
 Documents are accurate, complete and correct in all material respects. MoliChem
has not failed to disclose to InterMune orally, or in this Agreement, the
MoliChem Information Documents or otherwise, any material information relating
to MoliChem or Moli1901;

         (g) MoliChem has no material liabilities and has not received notice of
any material contingent liabilities not disclosed in the MoliChem Information
Documents, except current liabilities incurred in the ordinary course of
business;

         (h) To the best of MoliChem's knowledge, there is no action, suit,
proceeding or investigation pending or threatened in a written notice against
MoliChem that challenges the validity of this Agreement or the right of MoliChem
to enter into this Agreement, or to consummate the transactions contemplated
hereby, or which might result, either individually or in the aggregate, in any
material adverse change in the development of Moli1901 or commercial sales of a
Product hereunder. The foregoing includes, without limitation, actions pending
or threatened involving the

                                      E-81
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prior employment of any of MoliChem's employees, their use in connection with
MoliChem's business or any information or techniques allegedly proprietary to
any of their former employers, or their obligations under any agreements with
prior employers;

         (i) MoliChem is not a party or subject to the provisions of any order,
writ, injunction, judgment or decree of any court or government agency or
instrumentality that would have a material adverse effect on sales of any
Product;

         (j) To the best of MoliChem's knowledge, MoliChem is not in violation
of any applicable statute, rule, regulation, order or restriction of any
domestic or foreign government or any instrumentality or agency thereof in
respect of the conduct of its business or the ownership of its properties which
violation would have a material adverse effect on the development of Moli1901 or
the sales of a Product;

         (k) To the best of MoliChem's knowledge, MoliChem has all franchises,
permits, licenses and any similar authority necessary for the development and
commercialization of Moli1901 hereunder, as of the Effective Date , except for
those which would not have a material adverse effect on such activities;
provided however, MoliChem makes no representation or warranty that licenses to
third party technology may not be required in order to commercialize certain of
the Products as set forth in this Agreement;

         (l) MoliChem owns or controls under valid licenses and has the right to
license or sublicense, all right, title and interest in and to the Development
Patents listed on Exhibit D, subject to limitations on patent registrations as
set forth in the UNC License;

         (m) Exhibit D presents a complete list of the Patents as of the
Effective Date, relating to Moli1901, including the Moli1901 compositions and
methods of using Moli1901; and

         (n) To the best of MoliChem's knowledge, UNC has not elected to file
any foreign Patent applications pursuant to Section 9.2 of the UNC Agreement.

         9.3 By Both Parties. Each Party represents and warrants that it will
use its best efforts to maintain in full force and effect all necessary
licenses, permits and other authorizations required by Applicable Law to carry
out its duties and obligations under this Agreement. Each Party shall comply
with all Applicable Laws, provided that InterMune shall be solely responsible
for compliance with those Applicable Laws pertaining to the activities conducted
by it hereunder (including, without limitation, those Applicable Laws that apply
to documentation and records retention pertaining to the marketing, advertising,
promotion and detailing of Product worldwide). Without limiting the generality
of the foregoing, InterMune shall not, without the prior written consent of
MoliChem, such consent not to be unreasonably withheld or delayed, promote,
advertise or detail any Product for any indications not contained in the
approvals, applications and registration and product listing which have been
received for such Product or in any manner in conflict with the approved product
labeling and all Applicable Laws. Each Party shall cooperate with the other to
provide such letters, documentation and other information on a timely basis as
the other Party may reasonably require to fulfill its reporting and other
obligations under Applicable Laws to applicable regulatory authorities. Except
for such amounts as are expressly required to be paid by a Party to the other
under this

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Agreement, each Party shall be solely responsible for any costs incurred by it
to comply with its obligations under Applicable Laws. Each Party shall conduct
its activities hereunder in an ethical and professional manner.

10.      INDEMNIFICATION AND INSURANCE

         10.1 By InterMune. Subject to MoliChem's compliance with Section 10.4,
InterMune hereby agrees to indemnify, defend and hold harmless MoliChem 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
MoliChem's breach of any of its covenants or representations and warranties
hereunder or MoliChem's negligence or wrongdoing.

         10.2 By MoliChem. Subject to InterMune's compliance with Section 10.4,
MoliChem hereby agrees to indemnify, defend and hold harmless InterMune and its
officers, directors, agents and employees from and against any and all Losses
from any Third Party claim resulting directly or indirectly from MoliChem's
breach of any of its covenants or representations and warranties hereunder, or
MoliChem'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.

         10.3 Joint Liability. The Parties hereby agree that the Parties shall
be jointly liable for any third party claims made against either Party as a
result of the actions taken pursuant to the Development Program or the
Commercialization Program, provided that such actions have been specifically
authorized by either the Development Committee or the Commercialization
Committee, except to the extent those claims are based on the other Party's
breach of any of its covenants or representations and warranties hereunder or
the other Party's negligence or wrongdoing.

         10.4 Notice and Procedures. In all cases where one Party seeks
indemnification by the other under this Section 10, 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.

         10.5 Insurance. Each Party, at its own expense, shall maintain
comprehensive general liability insurance and clinical trial insurance coverage
in amounts reasonable and customary in the industry, but not less than
$1,000,000 per occurrence and $3,000,000 in the aggregate. InterMune shall
purchase product liability insurance with a reputable insurance company in an
amount that is

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determined by the Commercialization Committee prior to the first commercial sale
or distribution of Product. The University of North Carolina and MoliChem shall
be named in such policy as additional insured parties. Each Party shall provide
documentation that such coverage exists upon request of the other Party. Each
Party shall maintain such insurance for so long as it continues to research,
develop, manufacture, commercialize, and market Products, and thereafter for so
long as it customarily maintains insurance for itself covering similar
activities with its other similar products.

11.      TERM AND TERMINATION

         11.1 Term.

         (a) Term. The term of this Agreement shall commence upon the Effective
Date and shall expire, unless earlier terminated as set forth in this Section
11, upon the date of the last to expire payment obligation under this Agreement.
The Parties agree that for so long as a Product is being developed or
commercialized hereunder, any payment obligation set forth herein shall
continue. Prior to expiration, the Parties shall agree upon the surviving rights
and obligations of the Parties and the disposition of any joint assets and/or
Development Technology.

         (b) Effect of Expiration. Upon expiration of the term of this Agreement
as set forth in this Section 11.1:

         (i) each Party shall have discontinued all use, development, marketing,
         promotion, detailing, manufacturing and selling of Products, if any,
         and discontinued the use of any trademarks solely or jointly owned by
         the other Party relating to the Products; and

         (ii) each Party shall promptly return all of the other Party's
         materials, documents and Information related to the Development
         Programs, the Commercialization Programs and otherwise created
         hereunder, and all Confidential Information of the other Party;
         provided however, each Party may retain one copy of each document of
         the other Party's Confidential Information to enable such Party to
         determine its surviving obligations of confidentiality and non- use
         with respect to the other Party's Confidential Information.

         11.2 Termination of Development Program or Commercialization for Cause.

         (a) Right to Terminate. Either Party may terminate, for cause, a
Development Program or Commercialization Program for any Product upon thirty
(30) days' prior written notice:

         (i) if there is a reasonable basis upon which to conclude that the
         safety of human subjects is at risk during or after dosing of Moli1901;

         (ii) if Moli1901 unequivocally fails any material toxicology study to
         support multi-dose use in humans;

         (iii) if prior to the initiation of a Phase II clinical trial for the
         initial Product, the Parties have not been able to demonstrate that
         Moli1901 can be manufactured in accordance with: (i) U.S. "Good
         Manufacturing Practices" and with an auditable quality system for the

                                      E-84
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         manufacturing process and (ii) the specifications set by the
         Development Committee, provided that such termination shall only be
         with respect to the initial Product; or

         (iv) if the Parties learn that a Third Party has rights to a Patent or
         invention that would prevent commercialization of the Product and
         negotiations to obtain a necessary license from such Third Party are
         unsuccessful.

         (b) Effect of Termination. If a Party terminates the Development
Program or Commercialization Program pursuant to Section 11.2(a), and the other
Party elects to continue with the development and/or commercialization of the
terminated Product:

         (i) the terminating Party shall discontinue all use, development,
         marketing, promotion, detailing, manufacturing and selling of the
         terminated Product;

         (ii) the license grants for the Development Technology set forth in
         Section 2.1 and Section 2.2, as the case may be, shall become exclusive
         with respect to such terminated Product in favor of the other Party
         even as to (i.e., in lieu of "alongside") the terminating Party;

         (iii) the terminating Party shall be entitled to its Initial Product
         Profit Share with respect to the initial Product, and with respect to
         all subsequent Products developed by the other Party shall be entitled
         to its Future Product Profit Share;

         (iv) in the event that MoliChem is the terminating Party, InterMune
         shall remain obligated to pay to MoliChem all the milestone payments
         for such terminated Product as set forth in Section 6.3;

         (v) the terminating Party, if able, shall timely provide commercially
         reasonable assistance with respect to development and commercialization
         of such Product as requested by the other Party, at the expense of the
         requesting Party; and

         (vi) the non-terminating Party shall indemnify, defend and hold the
         terminating Party and its agents, employees, officers and directors
         harmless from and against any and all liability, damage, loss, cost or
         expense, (including reasonable attorneys' fees) arising out of third
         party suits after the date of the date of the terminating Party's
         notice of termination and related to the non-terminating Party's
         development and/or commercialization of the terminated Products, except
         for those Losses arising from the gross negligence or willful
         misconduct of the terminating Party, its agents, employees, officers or
         directors.

         11.3 Termination of Agreement for Cause.

         (a) Right to Terminate. Either Party may terminate this Agreement for
cause upon thirty (30) days' prior written notice:

         (i) if the initial Product has been terminated as set forth in Section
         11.2(a) above; or

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         (ii) if all Development Programs and Commercialization Programs have
         been terminated pursuant to Section 11.2(a) above.

         (b) Effect of Termination. If a Party terminates this Agreement
pursuant to Section 11.3(a), all the rights and obligations of the Parties and
all licenses granted hereunder shall terminate; provided that:

         (i) each Party shall have the rights and obligations with respect to
         each terminated Product as set forth in Section 11.2(b) above: and

         (ii) each Party shall promptly return all of the other Party's
         materials, documents and Information related to the Development
         Program, the Commercialization Program and otherwise created hereunder,
         and all Confidential Information of the other Party; provided however,
         each Party may retain one single copy of each document of the other
         Party's Confidential Information to solely enable such Party to
         determine its surviving obligations of confidentiality and non-use with
         respect to the other Party's Confidential Information.

         11.4 Termination of Agreement for Material Breach.

         (a) Right to Terminate. 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
immediately upon expiration of such sixty- (60) day period. The term "Material
Breach" includes, without limitation, the following: A Party's gross negligence,
material omission, material misrepresentation or fraud related to the
development and/or commercialization of the Products.

         (b) Effect of Termination. If a non-breaching Party terminates the
Agreement pursuant to Section 11.4(a), each Party's rights and obligations
hereunder shall terminate; provided that:

         (i) the terminated Party shall discontinue all use, development,
         marketing, promotion, detailing, manufacturing and selling of the
         Products;

         (ii) the license grants for the Development Technology set forth in
         Section 2.1 and Section 2.2, as the case may be, shall become exclusive
         in favor of the non-breaching Party even as to (i.e., in lieu of
         "alongside") the breaching Party;

         (iii) the breaching Party shall be entitled to its Initial Product
         Profit Share with respect to the initial Product, and with respect to
         all subsequent Products developed by the other Party shall be entitled
         its Future Product Profit Share;

         (iv) in the event that MoliChem is the breaching Party, InterMune shall
         be obligated to pay to MoliChem all the milestone payments for all
         Products as set forth in Section 6.3;

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         (v) the breaching Party shall, if able, timely provide all commercially
         reasonable assistance with respect to development and commercialization
         of any Products as requested by the other Party, at the expense of the
         requesting Party;

         (vi) the non-breaching Party shall indemnify, defend and hold the
         breaching Party and its agents, employees, officers and directors
         harmless from and against any and all liability, damage, loss, cost or
         expense, (including reasonable attorneys' fees) arising out of third
         party suits after the date of the date of the termination and related
         to the non-terminating Party's development and/or commercialization of
         the terminated Products, except for those Losses arising from the gross
         negligence or willful misconduct of the terminating Party, its agents,
         employees, officers or directors;

         (vii) if InterMune is the Party that has elected to terminate this
         Agreement and continue with the development and/or commercialization of
         the Product(s), and InterMune has failed to commercialize the
         Product(s), in the major markets for such Product(s) within a
         commercially reasonable time after U.S. NDA approval, in accordance
         with the standards of the industry, and as negotiated by the Parties as
         of the termination date, InterMune's rights with respect to such
         Product(s) and major markets for which it has failed to meet such
         commercialization obligations will terminate;

         (viii) each Party shall promptly return all of the other Party's
         materials, documents and Information related to the Development
         Program, the Commercialization Program and otherwise created hereunder,
         and all Confidential Information of the other Party; provided however,
         each Party may retain one copy of each document of the other Party's
         Confidential Information to enable such Party to determine its
         surviving obligations of confidentiality and non- use with respect to
         the other Party's Confidential Information; and

         (ix) the non-breaching Party may pursue all rights and remedies it may
         have hereunder or at law or in equity with respect to any breach of
         this Agreement as set forth in this Section 11.4.

         11.5 Termination of Agreement for Failure to Contribute to Initial
Product.

         (a) Right to Terminate. In the event either Party fails to contribute
fifty percent (50%) of the Development Expenses for the initial Product incurred
prior to the approval of the U.S. registration for such Product, in accordance
Section 3 of Exhibit A, the other Party shall have the right to terminate this
Agreement upon prior written notice.

         (b) Effect of Termination.

         (i) The terminated Party shall have no further right or obligation to
         financially contribute to the development and/or commercialization of
         subsequent Products; provided however, if a Development Budget has been
         approved by the Development Committee for a subsequent Product, the
         terminated Party's rights in and to development and commercialization
         of such subsequent Product in development shall continue as though the
         Agreement had not been

                                      E-87
<PAGE>

         terminated, and shall in no way limit the terminated Party's right to
         continue to fund the development of such subsequent Product;

         (ii) the license grants for the Development Technology set forth in
         Section 2.1 and Section 2.2, as the case may be, shall become exclusive
         in favor of the non-terminated Party even as to (i.e., in lieu of
         "alongside") the terminated Party for all Products other than the
         initial Product or Products in development prior to termination;

         (iii) the terminated Party shall be entitled to its Initial Product
         Profit Share, and with respect to all subsequent Products shall be
         entitled to a percentage of its Future Product Profit Share;

         (iv) in the event that MoliChem is the terminated Party, InterMune
         shall be obligated to pay to MoliChem all the milestone payments for
         all Products as set forth in Section 6.3;

         (v) the terminated Party shall, if able, timely provide all
         commercially reasonable assistance with respect to development and
         commercialization of any Products as requested by the other Party, at
         the expense of the requesting Party;

         (vi) the Development Committee and the Commercialization Committee with
         respect to each Product developed shall continue and the terminated
         Party shall have the right to participate in such Committees, provided
         that the number of members shall be proportional to its contribution to
         the initial Product;

         (vii) the continuing Party shall indemnify, defend and hold the
         terminating Party and its agents, employees, officers and directors
         harmless from and against any and all liability, damage, loss, cost or
         expense, (including reasonable attorneys' fees) arising out of third
         party suits after the date of the date of the termination and related
         to the continuing Party's development and/or commercialization of the
         terminated Products, except for those Losses arising from the gross
         negligence or willful misconduct of the terminating Party, its agents,
         employees, officers or directors;

         (viii) if InterMune is the Party that has elected to continue with the
         development and/or commercialization of the terminated Product, and
         InterMune has failed to commercialize the terminated Product, in the
         major markets for such Product within a commercially reasonable time
         after U.S. NDA approval, in accordance with the standards of the
         industry, and as negotiated by the Parties as of the termination date,
         InterMune's rights with respect to such Product and major markets for
         which it has failed to meet such commercialization obligations shall
         terminate; and

         (ix) each Party shall promptly return all of the other Party's
         materials, documents and Information related to the Development
         Program, the Commercialization Program and otherwise created hereunder,
         and all Confidential Information of the other Party; provided however,
         each Party may retain one copy of each document of the other Party's
         Confidential Information to enable such Party to determine its
         surviving obligations of confidentiality and non- use with respect to
         the other Party's Confidential Information.

                                      E-88
<PAGE>

         11.6 Termination of Agreement for Bankruptcy. All rights and licenses
granted under or pursuant to this Agreement are, and shall otherwise be deemed
to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code, licenses of
rights to "intellectual property" as defined under Section 101 of the U.S.
Bankruptcy Code. The Parties agree that each, as a licensee of such rights under
this Agreement, shall retain and may fully exercise all of their rights and
elections under the U.S. Bankruptcy Code; provided however, nothing herein shall
be deemed to constitute a present exercise of such rights and elections. The
Parties further agree that, in the event of the commencement of a bankruptcy
proceeding by or against a Party under the U.S. Bankruptcy Code, the other Party
shall be entitled to a complete duplicate of (or complete access to, as
appropriate) any such intellectual property and all embodiments of such
intellectual property, and same, if not already in its possession, shall be
promptly delivered to such Party (a) upon any such commencement of a bankruptcy
proceeding upon their written request therefore, unless the bankrupt Party
elects to continue to perform all of its obligations under this Agreement, or
(b) if not delivered under (a) above, upon rejection of this Agreement by or on
behalf of the bankrupt Party upon written request therefore by the non-bankrupt
Party.

         (a) Right to Terminate. In the event of the bankruptcy of a Party, the
other Party may terminate this Agreement.

         (b) Effect of Termination. If a Party terminates this Agreement
pursuant to Section 11.6(a):

         (i) the bankrupt Party shall have no further right to develop or
         commercialize the Products;

         (ii) the license grants for the Development Technology set forth in
         Section 2.1 and Section 2.2, as the case may be, shall become exclusive
         in favor of the terminating Party even as to (i.e., in lieu of
         "alongside") the bankrupt Party;

         (iii) the bankrupt Party shall be entitled to its Initial Product
         Profit Share with respect to the initial Product and shall be entitled
         to its Future Product Profit Share with respect to the subsequent
         Products;

         (iv) the bankrupt Party, if able, shall timely provide all commercially
         reasonable assistance with respect to development and commercialization
         of such Product as requested by the other Party, at the expense of the
         requesting Party;

         (v) in the event that MoliChem is the bankrupt Party, InterMune shall
         remain obligated to pay to MoliChem all the milestone payments for such
         Product set forth in Section 6.3; and

         (vi) the bankrupt Party shall promptly return all of the other Party's
         materials, documents and Information related to the Development
         Program, the Commercialization Program and otherwise created hereunder,
         and all Confidential Information of the other Party; provided however,
         the bankrupt Party may retain one single copy of each document of the
         other

                                      E-89
<PAGE>

         Party's Confidential Information to enable such bankrupt Party solely
         to determine its surviving obligations of confidentiality and non-use
         with respect to the other Party's Confidential Information.

         11.7 Termination of Rights to Additional Products.

         (a) Right to Terminate Participation with Respect to Additional
Products. In the event both Parties have contributed fifty percent (50%) of the
Development Expenses for the initial Product incurred prior to the approval of
the U.S. registration for such Product, in accordance Section 3 of Exhibit A,
either Party shall have the right to elect not to participate in the development
or commercialization of any subsequent Product; provided that the development of
such Product has been voted upon by the Development Committee for such Product.

         (b) Effect of Termination. If a Party terminates its participation with
respect to any Product pursuant to Section 11.7(a):

         (i) the terminating Party may not develop or commercialize the
         terminated Product;

         (ii) the license grants for the Development Technology set forth in
         Section 2.1 and Section 2.2, as the case may be, shall become exclusive
         with respect to such terminated Product in favor of the other Party
         even as to (i.e., in lieu of "alongside") such terminating Party;

         (iii) such terminating Party shall be entitled to a Profit percentage
         in accordance with solely Section 1.19(ii) of the Future Product Profit
         Share for such terminated Product;

         (iv) in the event that MoliChem is the terminating Party, InterMune
         shall remain obligated to pay to MoliChem all the milestone payments
         for such terminated Product set forth in Section 6.3;

         (v) the terminating Party, if able, shall timely provide all
         commercially reasonable assistance with respect to development and
         commercialization of such terminated Product as requested by the other
         Party, at the expense of the requesting Party; and

         (vi) for so long as the Development Committee and/or the
         Commercialization Committee for the initial Product continue, the
         continuing Party shall, from time to time, report back to such
         committees with respect to the status, progress, problems, strategy,
         objectives and other relevant factors related to the development and
         commercialization of the terminated Product, and upon termination of
         the last Development Committee and Commercialization Committee, the
         continuing Party shall coordinate with the terminating Party, in a
         manner to be determined by the Parties, such that the terminating Party
         is adequately informed as to the status, progress, problems, strategy,
         objective and other relevant factors related to the development and
         commercialization of the terminated Product.

         11.8 Survival. The following provisions shall survive termination or
expiration of this Agreement: Sections 1, 2.1 (only as incorporated by Section

                                      E-90
<PAGE>

11), 2.2(only as incorporated by Section 11), 3.5 (with respect to the
registration name for regulatory filings), 3.10, 6.3, 6.4, 6.5, 7, 8 (for five
years), 9, 10, 11.3(b), 11.4(b) 11.5(b), 11.6(b), 12 and Exhibits A.2, A.3, A.4,
A.5 and A.7. Termination or expiration of this Agreement shall not relieve
either Party of any liability that 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.

12.      MISCELLANEOUS

         12.1 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, including without limitation that certain Nondisclosure and
Nonuse Agreement, dated as of September 12, 2000, and that certain Exclusive
Dealing Binder, dated as of November 10, 2000, as amended on December 12, 2000,
on February 9, 2001, on March 15, 2001, on April 12, 2001 and on May 4, 2001.
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.

         12.2 Dispute Resolution. The Parties agree to consult and negotiate in
good faith to try to resolve any dispute, controversy or claim that arises out
of or relates to this Agreement. In the event of any controversy or claim
arising out of, relating to or in connection with Development Committee, the
Commercialization Committee or any other 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 of MoliChem 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 MoliChem 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, the Board of Directors of each Party
shall meet to resolve the dispute. In the even the Board of Directors of each
Party 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
binding arbitration. This procedure shall be a prerequisite before a Party is
entitled to seek any legal or equitable remedy, except in cases presenting
extreme urgency in which a Party may seek other appropriate preliminary,
injunctive or extraordinary legal or equitable relief. The foregoing dispute
resolutions provisions shall not apply to any disputes, controversies or claims
arising under Article 8 (Confidentiality) and Article 10 (Indemnification).

         12.3 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

                                      E-91
<PAGE>

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, , 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.

         12.4 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, Inc.
                                            1710 Gilbreth Road
                                            Suite 301
                                            Burlingame, CA 94101
                                            Fax: (650) 259 0774
                                            Attention: General Counsel

                  FOR MOLICHEM:             207 South Elliot Road
                                            PMB#231
                                            Chapel Hill, NC 27514
                                            Fax:
                                            Attention: Dr. Luis Molina

                  With Copy to:             Daniels & Daniels, P.A.
                                            PO Drawer 12218
                                            Research Triangle Park, NC  27709
                                            ATTN: Caroline H. Rockafellow

         12.5 Limitation of Liability. In no event will either Party be liable
to the other Party for any indirect, collateral, consequential, special or
punitive damages or for any lost profits of the other Party, however caused and
on any theory of liability, arising out of the performance or failure to perform
any obligations set forth herein, except for those damages caused by a Party's
gross negligence, omissions or willful malfeasance.

         12.6 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.

                                      E-92
<PAGE>

         12.7 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.

         12.8 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.

         12.9 United States Dollars. References in this Agreement to "Dollars"
or "$" shall mean the legal tender of the United States of America.

         12.10 Assignment. Neither Party to this Agreement may assign or
transfer this Agreement or any rights or obligations hereunder without the prior
written consent of the other Party. Notwithstanding the foregoing, either Party
may assign or transfer this Agreement to a successor of a controlling interest
of such Party. Any permitted successor or assignee of rights and/or obligations
hereunder shall, in 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 permitted successors-in-interest and
permitted assigns. Any assignment or attempted assignment by either Party in
violation of the terms of this Section 12.10 shall be null and void and of no
legal effect.

         12.11 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.

         12.12 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.

         12.13 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
such that the objectives contemplated by the Parties when entering this
Agreement may be realized.

         12.14 Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event of an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement.

         12.15 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.

                                      E-93
<PAGE>

         12.16 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.

         12.17 Governing Law; Jurisdiction and Venue. This Agreement will be
governed and construed in accordance with the laws of the State of New York. No
lawsuit pertaining to any matter arising under or growing out of this Agreement
shall be instituted in any jurisdiction other than in the state of the defendant
to any such action and the Parties consent to exclusive jurisdiction before the
federal or state courts of state of the defendant to any such action.

         12.18 Change of Law. It is the intention of the Parties to conform
strictly to all Applicable Laws, including but not limited to the Anti-kickback
Statute. Accordingly, upon the written request of either Party, the
Commercialization Committee shall engage at InterMoli's expense, a qualified and
experienced health care regulatory counsel acceptable to both Parties to deliver
an opinion that to the effect that, based upon the interpretation of prevailing
legal and regulatory authority, the compensation arrangement described in
Exhibit A is fully compliant with all Applicable Laws. In the event that the
Commercialization Committee is unable to provide such requested legal opinion
or the Commercialization Committee provides such legal opinion but it is
qualified and not otherwise unequivocal in support of the compliance of the
compensation arrangement described in Exhibit A, then in such event, the
Parties, in coordination with the Commercialization Committee, shall negotiate
in good faith such changes to the structure and terms of the transactions
provided for in this Agreement as may be necessary to make these arrangements,
as restructured, lawful under Applicable Laws, without materially disadvantaging
either Party, and this Agreement shall be deemed reformed in accordance with the
terms negotiated by the Parties. In the event that the Commercialization
Committee is unable to agree on appropriate adjustments, then the matter shall
be resolved pursuant to Section 12.2.

         12.19 Legal Fees. If any dispute arises between the Parties with
respect to the matters covered by this Agreement which leads to a proceeding to
resolve such dispute, the prevailing party in such proceeding shall be entitled
to receive its reasonable attorneys' fees, expert witness fees and out-of-pocket
costs incurred in connection with such proceeding, in addition to any other
relief it may be awarded.

         12.20 Injunctive Relief. A breach of any of the promises or agreements
contained in this Agreement may result in irreparable and continuing damage to a
Party for which there may be no adequate remedy at law, and each Party is
therefore entitled to seek injunctive relief as well as such other and further
relief as may be appropriate. The obligations provided under Section 8 of this
Agreement are acknowledged as necessary and reasonable in order to protect each
Party and its business, and the Parties expressly agree that monetary damages
would be inadequate to compensate either Party for the breach thereof.
Accordingly, each Party agrees and acknowledges that any such violation or
threatened violation will cause irreparable injury to the other Party and that,
in addition to any other remedies that may be available, in law, in equity or
otherwise, each Party shall be entitled to obtain injunctive relief against the
breach or threatened breach by the other Party of Section 8, without the
necessity of proving actual damages.

                                      E-94
<PAGE>

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

INTERMUNE, INC.                           MOLICHEM R&D, INC.

By:                                       By:
    ---------------------------------         ----------------------------------

Print Name:                               Print Name:
            -------------------------                 --------------------------

Title:                                    Title:
       ------------------------------            -------------------------------

MOLICHEM MEDICINES, INC.

By:
   --------------------------------------------------

Print Name:
           ------------------------------------------

Title:
      -----------------------------------------------

                                      E-95
<PAGE>

                                    EXHIBIT A

                     SHARING OF COSTS AND PROFITS OR LOSSES
              FOR THE INTERMUNE/MOLICHEM EXCLUSIVE DEVELOPMENT AND
                          COMMERCIALIZATION AGREEMENT

                This Exhibit A, incorporated by reference into that certain
Exclusive Development and Commercialization Agreement (the "Agreement"), dated
as of May 11, 2001, 2001, among INTERMUNE, INC. ("InterMune"), MOLICHEM R&D,
INC. and MOLICHEM MEDICINES, INC. (collectively "MoliChem"), addresses the
accounting policies and procedures to be followed in determining development and
commercialization costs, and profits or losses from sales of any Product
pursuant to the Development Program and/or Commercialization Program.
Capitalized terms not defined in this Exhibit A will have the meanings set forth
in the Agreement.

         The Parties' development and commercialization costs, and profits or
losses from sales of any Product, together with certain related costs and
expenses, and the receipt of any applicable royalties and non-royalty payments
for the Product (collectively "Profits or Losses"), will be deemed to be the
Profits or Losses of InterMoli. InterMoli is not and is not intended to be a
legal entity and has been defined for accounting identification purposes only.

1.              OBLIGATIONS AND BUDGETS

         Unless otherwise set forth herein or in the Agreement, the Parties
shall equally support (i.e., 50%/50%) the Development Program and
Commercialization Program. Work on or directly related to the Development
Program or Commercialization Program performed by the Parties' employees or
consultants shall include only those tasks set forth in the Development Plan,
Commercialization Plan and respective Budget for such plan. While it is
estimated that the amounts in the respective Budget will be sufficient to
conduct the Development Program or Commercialization Program, as the case may
be, the Parties may agree on a revised Budget requesting additional funds to
conduct such program. However, neither Party is liable for any actual cost
exceeding a quarterly Budget.

2.              CALCULATION OF PROFIT OR LOSS

         The Profits or Losses for Product will be equal to: ** All calculations
hereunder will be made using, and all defined and undefined terms will be
construed in accordance with, U.S. generally accepted accounting principles
("GAAP"), consistently applied, and consistent with generally accepted methods
for activity-based project costing for similar products in similar industries.
Without limiting the foregoing, no cost item subject to sharing by the Parties
hereunder will be included more than once in calculating Profits or Losses.

                                      E-96
<PAGE>

3.              REPORTING AND PAYMENTS

         (a) Reporting. The fiscal year of InterMoli will be a 12-month period
ending on December 31, or such portion thereof as will be applicable.
InterMoli's quarters will end on March 31, June 30, September 30 and December
31, respectively.

         InterMune will be responsible for the preparation of reports,
calculation of the Profits or Losses to be shared and determination of the cash
settlement between the Parties; provided however, MoliChem shall make
commercially reasonable efforts to, within five (5) business days after the end
of a quarter, report to InterMune all costs and expenses related to InterMoli.
After such submission by MoliChem, InterMune shall report InterMoli revenues and
expenses as follows:

<TABLE>
<CAPTION>
------------------------------------- ----------------------------------- -----------------------------------
          Reporting Event                         Frequency                 Timing of Submission
------------------------------------- ----------------------------------- -----------------------------------
<S>                                   <C>                                 <C>
Actuals                               Quarterly                           30 days following the end of each
                                                                          quarter
------------------------------------- ----------------------------------- -----------------------------------
Adjustment                            Annual                              45 days following InterMune's
                                                                          fiscal year end
------------------------------------- ----------------------------------- -----------------------------------
</TABLE>

         InterMune shall also provide MoliChem with InterMune's internal,
unaudited financial statements for InterMoli for each of the first two (2)
months of each quarter promptly after each such financial statement is
distributed internally at InterMune. Similarly, MoliChem shall make commercially
reasonable efforts to, within five (5) business days after the end of a month,
report to InterMune all costs and expenses related to InterMoli.

         (b) Payments. As provided in Section 6.2 of the Agreement, the Parties
shall share equally (50%/50%) the Profits or Losses for each quarterly period.
No later than forty-five (45) days following the close of each calendar quarter,
InterMune shall submit an invoice to each Party for the amount of any balancing
payment required to meet fifty percent (50%) of the Budget for the preceding
quarter. The amounts invoiced shall be payable no later than sixty (60) days
following the close of each calendar quarter.

These payments include payments to one Party in the event that:

         (i) the Budget obligates such Party to spend more for the quarter than
the other Party. (For example, if under a Budget for a quarter, MoliChem is
obligated to spend $1.0 million and InterMune is obligated to spend $500,000,
then InterMune would make a balancing quarterly payment to MoliChem of
$250,000); and

         (ii) there are other items such as reasonable working capital
allocations that reflect differences between recognized cash flows and
recognized revenues with respect to a Product and capital expenditures.

                                      E-97
<PAGE>

         Such balancing payment adjustments between the Parties will be made as
necessary based on Profits or Losses. To determine such adjustments, InterMune
will provide to MoliChem, by the submission dates shown above, a statement
showing the InterMoli results for the preceding calendar quarter and
year-to-date in the format set forth in Schedule A-1, comparing quarterly and
year-to-date results to revenue forecasts and expense budgets, calculating the
Profits or Losses as provided in Section 2 above and Schedule A-1, and
determining the cash settlement required, if any. To the extent any quarterly or
year-end adjustments to InterMoli are determined in good faith by InterMune to
be appropriate, an appropriate adjustment to Profits or Losses for the
applicable quarter or year will be made, and an appropriate payment will be made
by the applicable Party within sixty (60) days following the close of each
calendar quarter. The submission provided to MoliChem shall also include
itemizations of each expense in sufficient detail to permit MoliChem to
determine the accuracy of such expenses.

         If any of the payments set forth in this Section 3 are not timely made,
then such payment amount shall be increased by an interest payment of one
percent (1%) for each 30 days that such payment is late.

         Any failure by either Party to contribute 50% to the Development
Expenses for a Product, prior to the approval of the U.S. NDA for such Product,
shall not be a Material Breach of this Agreement, but shall result in such
Party's loss of the right to participate equally in the Profits for the Product
to which the failure is attributed. If a Party fails to contribute 50% to the
Development Expenses for the initial Product prior to the approval of the U.S.
NDA for such Product, such Party shall be entitled to its Initial Product Profit
Share, and if it has contributed equally to the initial Product development, but
it fails to contribute equally to subsequent Products, it shall be entitled to a
Profit percentage in accordance with the Future Product Profit Share for
subsequent Products.

         All Commercialization Expenses shall be initially paid by InterMune,
and InterMune shall be reimbursed for its payment of Commercialization Expenses
from revenues received for the sale of the Product in proportion to MoliChem's
share of the Profits as determined above, prior to any distribution of Profits
for such Product; provided however, if the Product fails to generate Profits,
MoliChem shall be obligated to reimburse InterMune for the percentage of the
Commercialization Expenses equal to the MoliChem Profit share for such Product.
If MoliChem fails to make such payments for Commercialization Expenses or if
InterMune fails to pay its 50% of the Commercialization Expenses in accordance
with this Section 3(b) for two consecutive quarters, the non-paying Party shall
automatically be in Material Breach of the Agreement pursuant to Section 11.4(a)
of the Agreement and shall have, after receiving the other Party's written
notice of breach, 30 days to cure instead of 60. The preceding sentence shall
not apply if such non-paying Party during the first 30-day period notifies the
other Party in writing that there is a dispute, in which case Section 3(c) of
this Exhibit A shall control.

         A failure to equally contribute to the Development Expenses or
Commercialization Expenses, after a respective Development Budget or
Commercialization Budget has been approved for a Product, shall also result in
the failing Party's loss of seats on the Development Committee and/or the
Commercialization Committee for such Product, such that the number of

                                      E-98
<PAGE>

remaining seats held by such Party shall be proportional to that Party's
contribution to such Product, but in no event less than one member on each of
the respective committees.

         (c) Disputes. In the event of a dispute between the Parties with
respect to whether any such adjustment or any other adjustment requested is
appropriate, such dispute will be resolved by the Development Committee or
Commercialization Committee, as the case may be, or subsequently, pursuant to
Section 12.2 of the Agreement. Any such disputed adjustment payment amount will
be: (i) without interest if such amount is less than the greater of (a) two
percent (2%) of Profits or Losses for such year or (b) $100,000, or (ii) with
interest at the rate of one percent (1%) per 30 days if such amount is greater
than or equal to the greater of (x) two percent (2%) of Profits or Losses for
such year or (y) $100,000. If such disputed payment amount is not paid within 30
days of the resolution by the Parties of the amount, the non-paying Party's
rights to Profits for such Product and right to participate in the Development
Committee and Commercialization Committee for such Product shall be as set forth
in Section 3(b) of this Exhibit A.

4.              DEFINITIONS FOR EXHIBIT A AND SCHEDULE A-1

         For purposes of this Exhibit A and Schedule A-1, the following terms
shall have the meanings specified as follows:

         (a) "Allowable Costs and Expenses" means those costs and expenses
incurred by the Parties or for their account that are specifically attributable
or related to the development (to the extent consistent with the terms of the
Agreement), manufacturing, marketing or selling of the Product, and consisting
of: (i) Cost of Goods Sold, (ii) Development Expenses and (iii) Sales and
Marketing Expenses.

                  (i) "Cost of Goods Sold" means the manufactured cost of
Product shipped in final therapeutic form, calculated on a fully burdened basis.
The "cost of Product shipped in final therapeutic form" will mean the cost of
Product shipped in bulk form plus the cost of final manufacturing. The "cost of
a Product shipped in bulk form" means the standard unit cost of Product in bulk
form calculated in accordance with the customary cost accounting methods,
consistently applied, of the Party performing the work. Standard unit cost
generally consists of direct material, direct labor specifically attributable to
the Product at standard. The cost of final manufacturing will be calculated in
accordance with customary cost accounting methods, consistently applied, of the
Party performing the work. Final manufacturing costs generally consist of direct
material, direct labor directly attributable to the Product at standard.

         Direct material costs will include, but not be limited to, the costs
incurred in purchasing raw materials and finished goods, including (without
limitation) freight, sales and excise taxes imposed thereon and customs duty and
charges levied by government authorities, and all costs of packaging components.

         Direct labor will include, but not be limited to, the cost of employees
engaged in direct manufacturing activities who are directly employed in Product
manufacturing and packaging for

                                      E-99
<PAGE>

the Territory/ and all internal costs at the applicable FTE Reimbursement Rate
related to manufacturing.

         Costs of Goods Sold will also include, but not be limited to, (i)
manufacturing variances and other attributable costs not in standard (but
excluding capacity not incorporated into standard manufacturing unit costs) such
as, but not limited to, material price variances, labor hour variances, material
usage variances, excess and obsolescence, inventory reserves and batches that do
not conform to specification, and (ii) actual Third Party royalty expenses.

         Third Party royalty expenses will include, but not be limited to,
royalties or other compensation payable to a Third Party possessing or having a
license under patents and/or other technology rights relating to the
manufacture, sale, use, offer for sale or import of a Product for the Territory.

                  (ii) "Development Expenses" means the expenses incurred by a
Party or for its account, pursuant to an approved Development Budget, that are
attributable to the development of Product, calculated on a fully burdened
basis. Without limiting the generality of the foregoing, "Development Expenses"
will mean amounts paid by a Party to any Third Party involved in the development
of the Product, and all internal costs at the applicable FTE Reimbursement Rate
incurred by a Party in connection with Development Expenses for the Product.
Development Expenses will include, but are not limited to, the following costs
incurred for the development of Product: the costs of modifying and optimizing
the Product, including its chemical structure and formulation, to achieve
product development goals regarding efficacy, safety, dosing and route of
administration; the cost of studies on the toxicological, pharmacokinetic,
metabolic or clinical aspects of Product conducted internally or by individual
investigators or consultants necessary or desirable for the purpose of obtaining
and/or maintaining Regulatory Approval of Product in a country; costs (and
related fees) for preparing, submitting, reviewing or developing data or
information for the purpose of submission to a governmental authority to obtain
and/or maintain Regulatory Approval of the Product in a country; and
manufacturing process development and scale-up for Product in bulk and finished
form for purposes of conducting preclinical and clinical studies necessary to
obtain and/or maintain Regulatory Approval of the Products in a country. In
addition, Development Expenses include, but are not limited to, the following
development costs incurred by the Parties in support of or for extension of the
Product after the First Commercial Sale, pursuant to an approved Development
Budget: Phase IV clinical trials or studies; ongoing product development (e.g.,
new formulations and routes of administration); ongoing product support; ongoing
medical affairs; and fees and expenses of outside consultants and counsel in
respect of regulatory affairs.

                  (iii) "Sales and Marketing Expenses" means the costs that are
incurred or for its account attributable to the distribution, sale, promotion
and marketing of Product, calculated on a fully burdened basis and pursuant to
an approved Commercialization Budget. Sales and Marketing Expenses will mean the
sum of Selling Expenses, Marketing Management, Market and Consumer Research,
Advertising, Trade Promotion, Consumer Promotion, Education Expenses and Freight
and Transportation-Out, each of which is specified below. The costs of
activities which promote a Party's business as a whole without being product
specific (such as corporate image advertising) are specifically excluded from
Sales and Marketing Expenses. To

                                     E-100
<PAGE>

the extent multiple products are involved and some of such products are not the
Product, then such allowances will be allocated on a pro rata basis based upon
net sales of each respective product by such operating unit during the most
recent quarter.

                        (A) "Advertising" will include, but not be limited to,
all media costs associated with Product advertising as follows: production
expense/artwork including set up; design and art work for an advertisement; the
cost of securing print space, air time, etc. in newspapers, magazines, trade
journals, television, radio, billboards, etc.

                        (B) "Consumer Promotion" will include, but not be
limited to, the expenses associated with programs to promote Product directly to
the prescriber or end user. This category will include, but not be limited to,
expenses associated with promoting products directly to the professional
community such as professional samples, professional literature, promotional
material costs, patient aids and detailing aids. To the extent multiple products
are involved and some of such products are not the Product, then such allowances
will be allocated on a pro rata basis based upon net sales of each respective
product by such operating unit during the most recent quarter.

                        (C) "Education" will include, but not be limited to,
expenses associated with professional education with respect to Product through
any means not covered above, including, but not limited to, articles appearing
in journals, newspapers, magazines or other media; seminars, scientific
exhibits, and conventions; and symposia, advisory boards and opinion leader
development activities.

                        (D) "Freight and Transportation-Out" will include (to
the extent not already recovered in the calculation of Net Sales), but not
limited to, the portion of distribution costs relating to moving Product goods
from a warehouse to the customer as follows: outbound transportation costs;
costs of moving goods from a manufacturing point to a warehouse at another
location from which it is ultimately to be distributed to a customer; the costs
of the traffic department where there is a separate department that has
responsibility for administration of freight costs.

                        (E) "Market and Consumer Research" will include, but not
be limited to, compensation and departmental expenses for market and consumer
research personnel and payments to Third Parties related to conducting and
monitoring professional and consumer appraisals of Product, such as market share
services (e.g., IMS data), special research testing and focus groups.

                        (F) "Marketing Management" will include, but not be
limited to, product management and sales promotion management compensation and
departmental expenses. This will include, but not be limited to, all internal
costs at the applicable FTE Reimbursement Rate for and all costs associated with
developing overall sales and marketing strategies (e.g., product line or
customer segment), as well as planning and programs for Product. In addition,
payments to Third Parties in connection with trademark selection, filing,
prosecution and enforcement will be included in this category.

                                     E-101
<PAGE>

                        (G) "Selling Expenses" will include, but not be limited
to, the following costs directly associated with the efforts of field sales
representatives with respect to Product: field sales force; field sales offices;
home offices; staffs directly involved in the management of and the performance
of the selling functions; and payments to Third Parties under contract sales and
marketing agreements. The costs of detailing sales calls will be allocated on a
weighted average basis based on the proportionate time and effort given to the
detailing of Product versus product other than the Product at an accounting
charge rate consistently applied within and across a Party's or a Third Party's
operating units and which is no less favorable than the internal charge rate
used by such Party or such Third Party for its own internal cost accounting
purposes for products other than the Product (excluding internal profit margins
and markups).

                        (H) "Trade Promotion" will include, but not be limited
to, the allowances given to retailers, brokers, distributors, hospital buying
groups, etc. for purchasing, promoting, and distribution of Product. This will
include, but not be limited to, purchasing, advertising, new distribution, and
display allowances as well as free goods, wholesale allowances and reasonable
field sales samples.

         (b) "FTE" means a full-time person dedicated to the Development Program
and/or Commercialization Program, or in the case of less than a full-time
dedicated person, a full-time equivalent person year, based upon a total of
forty-seven (47) weeks (i.e., one thousand eight hundred eighty (1,880) hours)
per year of work on or directly related to the Development Program and/or
Commercialization Program.

         (c) "FTE Reimbursement Rate" means amount per year per the applicable
fully allocated/burdened FTE rate (the "FTE Reimbursement Rate") for each
employee or consultant as provided in the annual Budget that has been approved
by the respective committee for the Development Program and the
Commercialization Program. Each employee and consultant shall be obligated to
submit time cards to either MoliChem or InterMune for the calculation of the
number of hours of services performed by such employee or consultant directly
related to development or commercialization of a Product. The Development
Committee shall determine the FTE Reimbursement Rate for employees of similar
positions and responsibilities to be at an equal rate for InterMune and
MoliChem, regardless of the actual compensation of such employee. The FTE
Reimbursement Rate for consultants shall be the consultant's actual rate charged
to MoliChem or InterMune.

         (d) "Net Sales," for purposes of calculating Profits or Losses only,
will have the meaning ascribed to it in Section 1.19 of the Agreement.

         (e) "Operating Unit" means the standard operating unit in which a
profit and loss statement is prepared for management accounting purposes in the
Party's normal accounting procedures, consistently applied within and across its
operating units.

         (f) "Other Non-Operating and Extraordinary Gains (Losses)" means gains
or losses incurred either from secondary or auxiliary activities of InterMoli,
outside the ordinary and primary course of business, or unusual and infrequent
gains and losses of material amounts.

                                     E-102
<PAGE>

         (g) "Sublicense Revenues" means the amounts received by InterMune or
its Affiliates from any sublicensors of the Product. Sublicensed Revenues shall
include any upfront payments, milestones, royalties on end-product sales, or any
other revenue received from end product sales of the Product; provided that any
cavity investment in InterMune by a Third Party shall be excluded. Any expenses
incurred by InterMune in relation to Sublicense Revenues or reimbursements made
by InterMune to Sublicensors shall be deducted from the profit and loss
financial statement.

5.              AUDITS

         (a) MoliChem shall have the right to request that an independent public
accounting firm perform an audit of InterMune's books of accounts for the sole
purpose of verifying compliance with this Exhibit A. Such audits will be
conducted at the expense of MoliChem; provided, however, that if the audit
results in an adjustment exceeding the greater of (i) 2% of Losses or Profits or
(ii) $50,000 in any quarter, the reasonable cost of the audit will be borne by
InterMune. Any disputes with regard to the foregoing will be resolved in
accordance with Section 12.2 of the Agreement. Audit results will be shared with
both Parties. Audits are limited to two per InterMoli fiscal year.

         (b) InterMune shall have the right to request that an independent
public accounting firm perform an audit of MoliChem's books of accounts for the
sole purpose of verifying invoices for MoliChem's Allowable Costs and Expenses
submitted to InterMune hereunder. Such audits will be conducted at the expense
of InterMune; provided, however, that if the audit results in an adjustment
exceeding the greater of (i) 2% of MoliChem's Allowable Costs and Expenses in
any quarter, or (ii) $50,000 in any quarter, the reasonable cost of the audit
will be borne by MoliChem. Audit results will be shared with both Parties.
Audits are limited to two per InterMoli fiscal year.

6.              CAPITAL INVESTMENTS

         Notwithstanding any other provisions set forth in the Agreement or
herein, any capital investments that a majority of the Development Committee or
Commercialization Committee decides is required to be made in connection with
the Product (e.g., a capital investment in a manufacturing facility) shall be
borne by InterMoli; provided however, title to such capital investment shall be
held jointly in the names of both InterMune and MoliChem.

7.              FOREIGN EXCHANGE

                The functional currency for accounting for Profits or Losses
will be U.S. Dollars ($$$$). The statement of Profits or Losses will be
translated into U.S. Dollars using, for each currency, the arithmetic average of
the daily exchange rates (obtained as described below) during the reporting
period; each daily exchange rate will be obtained from the Reuters Daily Rate
Report or The Wall Street Journal, Eastern U.S. Edition, or, if not so
available, as otherwise agreed to by the Parties.

                                     E-103
<PAGE>

                                  SCHEDULE A-1
                   PROFIT AND LOSS FINANCIAL STATEMENT FORMAT
                                       **

                                     E-104
<PAGE>

                                                                       Exhibit B

                            CONTRACTS AND COMMITMENTS

o        Assignment Agreement among the Wellcome Foundation Ltd., Glaxo
         Wellcome, Inc. and Molichem Medicines, Inc., dated December 1, 1995

o        Assignment Agreement by and between Glaxo Wellcome, Inc. and Molichem
         Medicines, Inc., dated December 1, 1995

o        License Agreement by and between Molichem Medicines, Inc. and the
         University of North Carolina at Chapel Hill, dated June 4, 1997, as
         amended July 24, 1998 and April 17, 2001

o        Letters awarding grant support to Molichem Medicines, Inc. from the
         Cystic Fibrosis Foundation, dated July 26, 1996, October 23, 1998,
         November 9, 1998, February 12, 1999 and February 29, 2000.

o        Manufacturing Agreement by and between MoliChem Medicine and Apotex
         Fermentation Inc., dated March, 2001.

o        Research Agreement between The Johns Hopkins University and Molichem
         Medicines, Inc./Molichem-Magellan dated September 21, 2000.

o        Research Agreement between Children's Hospital and Molichem Medicines,
         Inc., dated January 29, 2001

o        Stability Testing Agreements between MoliChem Medicines, Inc. and
         Magellan Laboratories, dated August 23, 2000, November 30, 2000 and
         January 2, 2001.

                                     E-105
<PAGE>

                                                                       Exhibit C

<TABLE>
<CAPTION>
      Timeline                                                            START            COMPLETE
      --------                                                            -----            --------
<S>                               <C>                                 <C>                <C>
       Ph I(1)                        CF Single Dose Safety              Q1 '01             Q3 '01
       Mfg(2)                              Make new lot                  Q1 '01             Q3 `01
      PhI/II(3)                      Single Dose MC Clearance            Q3 `01             Q4 `01
         Tox                            Go/No Go Decision
       Tox(4)                        Multi-dose (dogs & rats)            Q4 `01             Q2 `02
Assay(5) Development                                                     Q4 `01             Q2 `02
        Ph II                        Multi-dose, dose ranging            Q3 `02             Q1 `03
       Ph III                          Go / No Go Decision               Q2 `03

<CAPTION>
                                   BUDGET Estimates
                                   ----------------
<S>                                                                   <C>
                           2001(6)                                     $2.5-3M
                            2002                                        $3-5M
                          2001-2002                                    $5.5-8M
                   Total Through Phase III                             $20-25M
</TABLE>

(1)            **

(2)            **

(3)            **

(4)            **

(5)            **

(6)            **

                                     E-106
<PAGE>

                                                                       Exhibit D

                                    MOLICHEM

               PATENT PORTFOLIO RELATED TO LANTIBIOTIC TECHNOLOGY

                                  U.S. PATENTS

L. Molina et al., Method of Treating Retained Pulmonary Secretions, U.S.
Application Serial No. 08/074,315, filed June 9, 1993.

     ISSUED as U.S. Patent No. 5,512,269, April 30, 1996.

L. Molina et al., Method of Treating Retained Pulmonary Secretions, Divisional
U.S. Application Serial No. 08/431,659, filed May 2, 1995 (divisional of Ser.
No. 08/074,315)

     ISSUED as U.S. Patent No. 5,716,931, February 10, 1998.

L. Molina et al., Method of Treating Retained Pulmonary Secretions, Divisional
U.S. Application Serial No. 08/432,984, filed May 2, 1995 (divisional of Ser.
No. 08/074,315).

     ISSUED as U.S. Patent No. 5,651,957, July 29, 1997.

L. Molina et al., Method of Treating Retained Pulmonary Secretions, Divisional
U.S. Application Serial No. 08/433,872, filed May 2, 1995 (divisional of Ser.
No. 08/074,315)

     ISSUED as U.S. Patent No. 5,683,675, November 4, 1997.

                                     E-107
<PAGE>

L. Molina et al., Method of Treating Retained Asthma Pulmonary Secretions,
Divisional U.S. Application, filed January 28, 1998 (divisional of Ser. No.
08/431,659).

     ISSUED as U.S. Patent No. 5,849,706, December 15, 1998.

                                 NON-U.S. CASES

Canada L. Molina et al. Method of Treating Retained Pulmonary Secretions,
Canadian Patent Application Serial No. 2,164,517; **

Japan L. Molina et al., Method of Treating Retained Pulmonary Secretions,
Japanese Patent Application Serial No. 502083/95; **

EPO (designating Austria, Belgium, Denmark, France, Germany, Greece, Ireland,
Italy, Latvia, Luxembourg, Monaco, Netherlands, Portugal, Slovenia, Spain,
Sweden, Switzerland/Liechtenstein and United Kingdom); L. Molina et al., Method
of Treating Retained Pulmonary Secretions; European Application No. 94/919422.9;
**

**

Australia L. Molina et al., Method of Treating Retained Pulmonary Secretions;
Australian Patent Application Serial No. 70578/94.

     ISSUED as Australian Patent No. 696374.

                                     E-108

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