Document:

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                         INTERMUNE PHARMACEUTICALS, INC.
                          ----------------------------

                             COLLABORATION AGREEMENT

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

                                 APRIL 27, 1999

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                         INTERMUNE PHARMACEUTICALS, INC.

                             COLLABORATION AGREEMENT

         THIS COLLABORATION AGREEMENT is made effective as of the 27th day of
April, 1999 (the "Effective Date") by and between INTERMUNE PHARMACEUTICALS,
INC., a California corporation (the "Company"), and CONNETICS CORPORATION, a
Delaware corporation ("Connetics"). Each of the Company and Connetics may be
referred to herein as a "Party" or together as the "Parties."

                                    RECITALS

         WHEREAS, as of even date herewith, the Company and Connetics have
amended and restated that certain Exclusive Sublicense Agreement, dated August
21, 1998, pursuant to which, among other things, InterMune shall make certain
milestone and royalty payments to Connetics; and

         WHEREAS, as of even date herewith, the Company and Connetics have
entered into a Transition Agreement pursuant to which, among other things,
Connetics shall book net revenues, expenses, and net profits of Actimmune Units
for the treatment of Chronic Granulomatous Disease from January 15, 1999 through
December 31, 2001; and

         WHEREAS, as of April 7, 1999 herewith, the Company and Connetics have
amended and restated that certain Service Agreement, dated October 12, 1998 (the
"Service Agreement"), pursuant to which, among other things, Connetics provides
to the Company certain information services, payroll, facilities, human
resources, accounting, employee benefits administration, and R&D related
services; and

         WHEREAS, pursuant to the terms of that certain term sheet between the
Company and certain of the Series A-1 and A-2 Preferred Stock investors, the
Board of Directors of the Company intends to declare and pay a dividend (the
"Dividend") of four million seven hundred twenty one thousand eight hundred
seventy six dollars and seventy two cents ($4,721,876.72) to Connetics as the
sole holder of shares of Series A Preferred Stock, following the closing of the
Series A-1 and A-2 Preferred Stock financing; and

         WHEREAS, Connetics has delivered concurrently herewith a notice of
conversion, pursuant to which, in accordance with the Company's Amended and
Restated Articles of Incorporation, all of Connetics' 11,200,000 shares of
Series A Preferred shall be converted into 960,000 shares of Series A-1
Preferred Stock once the Dividend has been paid to Connetics.

         NOW, THEREFORE, in consideration of the foregoing recitals and mutual
promises hereinafter set forth, the parties hereby agree as follows:

                                       1.

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1.       CASH PAYMENTS.

         1.1 COLLABORATION AGREEMENT CASH PAYMENT. On the Effective Date, the
Company shall pay to Connetics five hundred thousand dollars ($500,000) by wire
transfer.

         1.2 TRANSITION AGREEMENT CASH PAYMENT. On the Effective Date, the
Company shall pay to Connetics one hundred fifty three thousand six hundred
fifty five dollars ($153,655) by wire transfer as payment representing the
Actimmune Gross Margin for the period from January 15, 1999 to the Effective
Date, pursuant to Section 2.3(c) of the Transition Agreement.

         1.3 AMENDED AND RESTATED SERVICE AGREEMENT CASH PAYMENT. On the
Effective Date, the Company shall pay to Connetics two hundred two thousand nine
hundred eighty nine dollars ($202,989) by wire transfer as payment for services
provided from January 1, 1999, through March 31, 1999 under the Service
Agreement.

         1.4 REIMBURSEMENT FOR PREPAID EXPENSES. On the Effective Date, the
Company shall pay to Connetics fifty one thousand eight hundred thirty dollars
($51,830) by wire transfer as payment for the prepaid expenses provided from
January 1, 1999, through March 31, 1999.

2. CONVERSION OF SERIES A PREFERRED INTO SERIES A-1 PREFERRED.

         2.1 CONVERSION NOTICE. Connetics shall deliver, concurrent with the
execution of this Agreement, a notice of conversion of all of Connetics'
11,200,000 shares of Series A Preferred Stock into an aggregate of 960,000
shares of Series A-1 Preferred Stock. Such notice shall be in the form attached
hereto as EXHIBIT A (the "Conversion Notice").

         2.2 CONVERSION. Promptly following payment of the dividend declared by
the Board of Directors of the Company to Connetics, Connetics shall deliver to
the Company its Series A Preferred Stock certificate. The Company shall then
convert the Series A Preferred Stock into Series A-1 Preferred Stock in
accordance with Article III.E.1 of the Company's Amended and Restated Articles
of Incorporation.

3.       COMMITMENT TO PAY CASH OR ISSUE PROMISSORY NOTE.

         3.1 COMMITMENT. On March 31, 2001, the Company shall, in its sole
discretion, either pay to Connetics (i) five hundred thousand dollars
($500,000.00) by check or by wire transfer or (ii) two hundred thousand dollars
($200,000) by check or by wire transfer and deliver a promissory note in the
form attached hereto as EXHIBIT B (the "Note").

         3.2 PROMISSORY NOTE. The Note will be due and payable in two principal
payments of $150,000 each with the first payment on or before June 30, 2001, and
the second payment on or before September 30, 2001.

                                       2.

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         3.3 MILESTONE PAYMENT. The Company shall pay to Connetics a milestone
payment of one million five hundred thousand dollars ($1,500,000) in the form
and at the times set forth in Section 5.2 of the Amended and Restated Exclusive
Sublicense Agreement.

4.       ISSUANCE OF SERIES B PREFERRED.

         4.1 SERIES B PREFERRED. Effective upon the closing of the Company's
Series B Preferred Stock Financing (the "Series B Financing"), the Company shall
issue to Connetics shares of Series B Preferred Stock (the "Series B Preferred")
in an amount equal to the quotient of five hundred thousand dollars ($500,000)
divided by the price per share of Series B Preferred paid by the purchasers of
the Series B Preferred. The Company shall use its best efforts to assure that
the terms, conditions, rights, preferences and privileges of the Series B
Preferred issued to Connetics by the Company in the Series B Financing shall be
the same as those of the Series B Preferred issued to the other purchasers,
provided however, that such efforts shall not require the Company to accept a
lower price per share or make other material concessions to the other purchasers
of the Series B Preferred. Notwithstanding the foregoing, in the event of either
a Company Sale (as defined below) or a firm underwritten public offering of the
Company's Common Stock either of which occurs prior to a Series B Financing, the
Company shall, in its sole discretion, either (i) deliver to Connetics five
hundred thousand dollars ($500,000) by check or wire transfer or (ii) issue to
Connetics four hundred thousand (400,000) shares of Series A-2 Preferred Stock
concurrently with the closing of such Company Sale or public offering.

         4.2 COMPANY SALE. For the purposes of this Agreement, a "Company Sale"
shall mean (a) any capital reorganization or reclassification of the capital
stock of the Company, or consolidation or merger of the Company with another
corporation after which fifty percent (50%) or more of the voting securities of
the surviving corporation is held by persons who were not stockholders of the
Company immediately prior to such reorganization, reclassification,
consolidation, or (b) the sale of all or substantially all of the Company's
assets or of any successor corporation's property and assets to any other
corporation or corporations, including, without limitation, a sale, assignment,
transfer or termination in any manner in whole or in part of the License
Agreement(s) between the Company and Connetics, Genentech and U.C. Davis and/or
patent rights described in the License Agreement.

5.       ISSUANCE OF SERIES C PREFERRED

         5.1 SERIES C PREFERRED. In addition to and not in lieu of Section 4.1,
effective upon the closing of the Company's Series C Preferred Stock Financing
(the "Series C Financing"), the Company shall issue shares to Connetics of
Series C Preferred Stock (the "Series C Preferred") in an amount equal to the
quotient of one million dollars ($1,000,000) divided by the price per share of
Series C Preferred paid by the purchasers of the Series C Preferred. The Company
shall use its best efforts to assure that the terms, conditions, rights,
preferences and privileges of the Series C Preferred issued to Connetics by the
Company in the Series C Financing shall be same as those of the Series C
Preferred issued to the other purchasers, provided however, that such efforts
shall not require the Company to accept a lower price per share or make other
material

                                       3.

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concessions to the other purchasers of the Series C Preferred. Notwithstanding
the foregoing, in the event of either a Company Sale or a firm underwritten
public offering of the Company's Common Stock either of which occurs prior to
the Series B Financing or Series C Financing (if the Series B Financing has
occurred), the Company shall, in its sole discretion, either (i) deliver to
Connetics one million dollars ($1,000,000) or (ii) issue to Connetics either
eight hundred thousand (800,000) shares of Series A-2 Preferred Stock (if the
Series B Financing has not occurred) or that number of shares of Series B
Preferred in an amount equal to one million dollars ($1,000,000) divided by the
price paid per share for the Series B Preferred in the Series B Financing,
concurrently with the closing of such Company Sale or public offering .

6.       REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY

         The Company hereby represents and warrants to Connetics as follows:

         6.1 CORPORATE POWER. The Company has all requisite corporate power to
execute and deliver this Agreement and to carry out and perform its obligations
under the terms of this Agreement.

         6.2 AUTHORIZATION. All corporate action on the part of the Company and
its Board of Directors necessary for the authorization, execution, delivery and
performance of this Agreement by the Company and the performance of the
Company's obligations hereunder has been taken, except for the authorization and
reservation of the Series B Preferred and Series C Preferred. This Agreement and
the Note, when executed and delivered by the Company, shall constitute valid and
binding obligations of the Company enforceable in accordance with their terms,
subject to laws of general application relating to bankruptcy, insolvency, the
relief of debtors and, with respect to rights to indemnity, subject to federal
and state securities laws. The Series B Preferred and Series C Preferred of the
Company, when issued in compliance with the provisions of this Agreement, will
be validly issued, fully paid and nonassessable and free of any liens or
encumbrances, other than restrictions on transfer under the applicable state and
federal securities laws.

         6.3 OFFERING. Assuming the accuracy of the representations and
warranties of Connetics contained in Section 5 hereof, the issuance of the Note
will be exempt from the registration and prospectus delivery requirements of the
Securities Act of 1933, as amended (the "1933 Act"), and has been registered or
qualified (or are exempt from registration and qualification) under the
registration, permit, or qualification requirements of all applicable state
securities laws.

7.       REPRESENTATIONS AND WARRANTIES OF CONNETICS

         7.1 PURCHASE FOR OWN ACCOUNT. Connetics represents that it shall be
acquiring the Note, the Series B Preferred and Series C Preferred solely for its
own account and beneficial interest for investment and not for sale or with a
view to distribution of the Note, Series B Preferred and Series C Preferred or
any part thereof, has no present intention of selling (in

                                       4.

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connection with a distribution or otherwise), granting any participation in, or
otherwise distributing the same, and does not presently have reason to
anticipate a change in such intention.

         7.2 INFORMATION AND SOPHISTICATION. Connetics acknowledges that it has
received all the information it has requested from the Company and it considers
necessary or appropriate for deciding whether to acquire the Note, the Series B
Preferred, and Series C Preferred. Connetics represents that it has had an
opportunity to ask questions and receive answers from the Company regarding the
terms and conditions of the offering of the Note, the Series B Preferred, and
the Series C Preferred, and to obtain any additional information necessary to
verify the accuracy of the information given Connetics. Connetics further
represents that it has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risk of this investment.

         7.3 ABILITY TO BEAR ECONOMIC RISK. Connetics acknowledges that
investment in the Note, the Series B Preferred and Series C Preferred involves a
high degree of risk, and represents that it is able, without materially
impairing its financial condition, to hold the Note, the Series B Preferred and
the Series C Preferred for an indefinite period of time and to suffer a complete
loss of its investment.

         7.4 FURTHER LIMITATIONS ON DISPOSITION. Without in any way limiting the
representations set forth above, Connetics further agrees not to make any
disposition of all or any portion of the Note, the Series B Preferred and the
Series C Preferred unless and until:

                  (a) There is then in effect a registration statement under the
1933 Act covering such proposed disposition and such disposition is made in
accordance with such registration statement; or

                  (b) Connetics shall have notified the Company of the proposed
disposition and shall have furnished the Company with a detailed statement of
the circumstances surrounding the proposed disposition, and if reasonably
requested by the Company, Connetics shall have furnished the Company with an
opinion of counsel, reasonably satisfactory to the Company, that such
disposition will not require registration under the 1933 Act or any applicable
state securities laws.

                  (c) Notwithstanding the provisions of paragraphs (a) and (b)
above, no such registration statement or opinion of counsel shall be necessary
for a transfer by Connetics to a shareholder or partner (or retired partner) of
such Connetics, or transfers by gift, will or intestate succession to any spouse
or lineal descendants or ancestors, if all transferees agree in writing to be
subject to the terms hereof to the same extent as if they were Connetics
hereunder.

         7.5 EXPERIENCE. Connetics is an "accredited" investor as such term is
defined in Rule 501 under the Securities Act.

         7.6 FURTHER ASSURANCES. Connetics agrees and covenants that at any time
and from time to time it will promptly execute and deliver to the Company such
further instruments and

                                       5.

<PAGE>
documents and take such further action as the Company may reasonably require in
order to carry out the full intent and purpose of this Agreement.

         7.7 INSURANCE. Connetics agrees and covenants that the Company shall be
covered as an insured party under Connetics' general liability and products
liability policy until May 31, 1999.

8.       CONFIDENTIALITY.

         8.1 CONFIDENTIAL INFORMATION OBLIGATIONS. As used herein, "Confidential
Information" means all information that a Party discloses to the other Party
under this Agreement, provided that "Confidential Information" shall not include
such information excluded under Section 8.2. Except to the extent expressly
authorized by this Agreement or otherwise agreed in writing by the Parties, each
Party agrees that, during the term of this Agreement and for five (5) years
after the expiration or termination of this Agreement, it shall keep
confidential and shall not publish or otherwise disclose and shall not use for
any purpose other than as provided for in this Agreement any Confidential
Information furnished to it by the other Party pursuant to this Agreement.

         8.2 EXCEPTIONS. The obligations set forth in Section 8.1 shall not
apply to any Information that the receiving Party can demonstrate by competent
evidence:

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

                  (b) was generally available to the public or otherwise part of
the public domain at the time of its disclosure to the receiving Party by the
other 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 the receiving Party in breach of this Agreement;

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

                  (e) is independently developed by the receiving Party without
using any of the other Party's Confidential Information.

         8.3 PERMITTED DISCLOSURE. Notwithstanding the limitations in this
Section 8, each Party may disclose Confidential Information belonging to the
other Party (or otherwise subject to this Section 8), to the extent such
disclosure is reasonably necessary in the following instances, but solely for
the limited purpose of such necessity:

                  (a) regulatory and tax filings;

                                       6.

<PAGE>

                  (b) prosecuting or defending litigation;

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

                  (d) disclosure to affiliates, employees, consultants or agents
who agree to be bound by similar terms of confidentiality and non-use at least
equivalent in scope to those set forth in this Section 8.

         Notwithstanding the foregoing, in the event a Party is required to make
a disclosure of the other Party's Confidential Information pursuant to Section
8.3, it will give reasonable advance notice to the other Party of such
disclosure and endeavor in good faith to secure confidential treatment of such
information. In any event, the Parties agree to take all reasonable action to
avoid disclosure of Confidential Information hereunder. Further, the Parties
agree to consult with one another on the provisions of this Agreement to be
redacted in any filings made by a Party with the United States Securities and
Exchange Commission or as otherwise required by law.

9.       MISCELLANEOUS

         9.1 BINDING AGREEMENT. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective successors and
assigns of the parties. Nothing in this Agreement, express or implied, is
intended to confer upon any third party any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.

         9.2 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of California, as such laws are applied to
agreements among California residents, made and to be performed entirely within
the State of California.

         9.3 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.

         9.4 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.

         9.5 NOTICES. Any notice required or permitted under this Agreement
shall be given in writing and shall be deemed effectively given upon personal
delivery or upon two (2) days after deposit with the United States Post Office,
postage prepaid, addressed to the Company, or to Connetics at its address at
3400 West Bayshore Road, Palo Alto, CA 94303, or at such other address as such
Party may designate by ten (10) days advance written notice to the other Party.

                                       7.

<PAGE>

         9.6 MODIFICATION; WAIVER. No modification or waiver of any provision of
this Agreement or consent to departure therefrom shall be effective unless in
writing and approved by the Company and Connetics.

         9.7 INDEPENDENT COUNSEL. Connetics acknowledges that this Agreement has
been prepared on behalf of the Company by Cooley Godward LLP, counsel to the
Company, and that Cooley Godward LLP does not represent, and is not acting on
behalf of, Connetics. Connetics has been provided with an opportunity to consult
with its own counsel with respect to this Agreement.

         9.8 ENTIRE AGREEMENT. This Agreement and the Exhibits hereto, the
Transition Agreement, the Amended and Restated Exclusive Sublicense Agreement,
and the Amended and Restated Service Agreement (collectively, the "Intercompany
Agreements") constitute the full and entire understanding and agreement between
the parties with regard to the subjects of the Intercompany Agreements and no
Party shall be liable or bound to any other in any manner by any
representations, warranties, covenants and agreements except as specifically set
forth in the Intercompany Agreements.

                                       8.

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         IN WITNESS WHEREOF, the parties have executed this COLLABORATION
AGREEMENT as of the date first written above.

                                             INTERMUNE PHARMACEUTICALS, INC.

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

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

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

                                             CONNETICS CORPORATION

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

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

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

                             COLLABORATION AGREEMENT
                                 SIGNATURE PAGE

<PAGE>

                                    EXHIBIT A

                            FORM OF CONVERSION NOTICE

<PAGE>

                            FORM OF CONVERSION NOTICE

         April ___, 1999

         InterMune Pharmaceuticals, Inc.
         3294 West Bayshore Road
         Palo Alto, CA 94303

         RE:      CONVERSION OF SERIES A PREFERRED STOCK INTO SERIES A-1
                  PREFERRED STOCK

         In accordance with Article III.E.1 of the Amended and Restated Articles
of Incorporation of InterMune Pharmaceuticals, Inc. (the "Company"), Connetics
Corporation hereby gives irrevocable notice of its election to convert its
shares of Series A Preferred Stock into shares of Series A-1 Preferred Stock.

         Enclosed please find a copy of the Series A Preferred Stock certificate
PA-1 evidencing ownership by Connetics Corporation of 11,200,000 shares of
Series A Preferred Stock of the Company (the "Stock Certificate"), which Stock
Certificate shall be delivered to the Company upon payment of the dividend
referenced in the recitals of the Collaboration Agreement. Upon the closing of
the Series A-1 and A-2 Preferred Stock financing and receipt of the original
Stock Certificate, please deliver the certificate for 960,000 shares of Series
A-1 Preferred Stock to Connetics Corporation at the address shown on the
Company's record books.

                                             Sincerely,

                                             Connetics Corporation

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

                                             Name:
                                                  ------------------------------

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

<PAGE>

                                    EXHIBIT B

                             FORM OF PROMISSORY NOTE

<PAGE>

                                 PROMISSORY NOTE

$300,000.00                                                       March 31, 2001
                                                           Palo Alto, California

         For value received INTERMUNE PHARMACEUTICALS, INC., a California
corporation ("PAYOR") promises to pay to Connetics Corporation or its assigns
("HOLDER") the principal sum of $300,000.00 with interest on the outstanding
principal amount at the prime rate plus two percent (2%) per annum. Interest
shall commence with the date hereof and shall continue on the outstanding
principal until paid in full.

         1. This note (the "Note") is issued to the Holder pursuant to the terms
of that certain Agreement dated as of April ___, 1999 between the Company and
the Holders.

         2. All payments of interest and principal shall be in lawful money of
the United States of America. All payments shall be applied first to accrued
interest, and thereafter to principal.

         3. $150,000 of the outstanding principal balance and all unpaid accrued
interest shall become fully due and payable on June 30, 2001, and $150,000 of
the outstanding principal balance and all unpaid accrued interest shall become
due and payable on September 30, 2001.

         4. In the event of any default hereunder, Payor shall pay all
reasonable attorneys' fees and court costs incurred by Holder in enforcing and
collecting this Note.

         5. Payor hereby waives demand, notice, presentment, protest and notice
of dishonor.

         6. The terms of this Note shall be construed in accordance with the
laws of the State of California, as applied to contracts entered into by
California residents within the State of California, which contracts are to be
performed entirely within the State of California.

         7. Any term of this Note may be amended or waived with the written
consent of Payor and the Holder.

                                             INTERMUNE PHARMACEUTICALS, INC.

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

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

                                             Title:
                                                   -----------------------------<PAGE>

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

                                                                   EXHIBIT 10.14
                                TRANSITION AGREEMENT

This TRANSITION AGREEMENT ("Agreement"), dated as of April 27, 1999 ("Effective
Date"), is entered into by and between Connetics Corporation, a Delaware
corporation ("Connetics") and InterMune Pharmaceuticals, Inc., a California
corporation ("InterMune").  Connetics and InterMune are also referred to as a
"Party" or "Parties" to this Agreement.

                                     BACKGROUND

A.   Connetics is party to a License Agreement with Genentech, Inc. dated May 5,
     1998, as amended, ("Genentech License") pursuant to which Genentech
     licensed to Connetics certain rights to Actimmune (as defined below).

B.   Connetics has sublicensed to InterMune its rights under the Genentech
     License and under the Supply Agreement between Connetics and Genentech
     dated May 5, 1998 ("Genentech Supply Agreement"), all done pursuant to the
     Exclusive Sublicense Agreement between Connetics and InterMune dated as of
     August 21, 1998, as amended and restated effective April 27, 1999.

C.   The Genentech Supply Agreement includes provisions for Connetics to
     transfer manufacturing of Actimmune to a third party manufacturer [ * ],
     and Connetics desires to create an incentive for InterMune (as Connetics'
     sublicensee) to accelerate the transfer of manufacturing.

D.   InterMune and Connetics have entered into a Term Sheet as of February 26,
     1999 (the "Term Sheet") pursuant to which, among other things, InterMune
     agreed that Connetics will have the right to book certain net revenues,
     expenses and net profits related to sales of Actimmune Units for the
     treatment of CGD (defined below) until December 31, 2001 (the "CGD
     Revenues").

E.   InterMune and Connetics have entered into that certain Collaboration
     Agreement (the "Collaboration Agreement") and certain other related
     documents as of even date herewith, which collectively set forth the
     transaction contemplated by the Term Sheet (the "Transaction").

F.   In connection with the Transaction, InterMune and Connetics desire to enter
     into this Transition Agreement to outline the mechanism by which Connetics
     shall book the CGD Revenues.

NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained in this Agreement, and intending to be legally bound, the Parties
agree as follows:

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

                                  PAGE 1 OF 12

<PAGE>

                                     AGREEMENT

                                     SECTION 1
                                    DEFINITIONS

     1.1  ACTIMMUNE.  "Actimmune" means the filled and finished form of the
protein encoded by the interferon gamma-1b gene, and sold and distributed under
the trademark ACTIMMUNE-Registered Trademark-, which is owned by Genentech and
licensed to Connetics and its sublicensees under the Genentech License.

     1.2  ACTIMMUNE GROSS MARGIN.  "Actimmune Gross Margin" means Actimmune Net
Sales less all applicable [ * ].

     1.3  ACTIMMUNE GROSS SALES.  "Actimmune Gross Sales" means [ * ].

     1.4  ACTIMMUNE NET SALES.  "Actimmune Net Sales" means Actimmune Gross
Sales less adjustments for the following: [ * ].

     1.5  ACTIMMUNE UNITS.  "Actimmune Units" means vials of
ACTIMMUNE-Registered Trademark- that are sold [ * ].

     1.6  BASELINE.  "Baseline" means [ * ] Actimmune Units in 1999; [ * ]
Actimmune Units in 2000; and [ * ] Actimmune Units in 2001, adjusted as
applicable pursuant to Section 2.3(c).  For clarity, the Parties intend that the
applicable Baseline shall represent the sales of Actimmune Units for the
treatment of CGD in each of the foregoing years.

     1.7  CGD.  "CGD" means chronic granulomatous disease, which is the only FDA
approved indication for the sale of Actimmune as of the Effective Date.

     1.8  COLLECTION PERIOD.  "Collection Period" means one full calendar month
during the Period.

     1.9  CORD DISTRIBUTION COSTS.  "CORD Distribution Costs" means the actual
monthly payment by InterMune to CORD Logistics, Inc., for distribution services
for sales of Actimmune up to the Baseline.

     1.10 GNE ROYALTIES. "GNE Royalties" means the amount of royalties payable
to Genentech, Inc. pursuant to Section 8.3 of the Genentech License for
Actimmune Net Sales.

     1.11 PERIOD.  "Period" means the time from April 1, 1999 through December
31, 2001.

     1.12 PRODUCT COST.  "Product Cost" means actual cost paid by InterMune to
the manufacturer for each Actimmune Unit, regardless of whether the manufacturer
is Genentech or a third party manufacturer qualified pursuant to the
manufacturing transition contemplated by Section 3.

     1.13 PRODUCT MANAGEMENT COSTS.  "Product Management Costs" means
InterMune's actual costs to manage sales of Actimmune Units for the treatment of
CGD up to the Baseline,

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

                                  PAGE 2 OF 12

<PAGE>

including all expenses and services related to sales of such Actimmune Units,
such as maintenance of safety databases, etc., tracked on a regular basis and
properly accounted for, at hourly rates to be agreed on by the Parties.

                                     SECTION 2
                            SERVICES PERFORMED; PAYMENTS

     2.1  SERVICES.  During the Period, InterMune shall perform, or have
performed, order entry, packaging, shipping, invoicing, and credit and
collection services (subject to Section 2.3(b)) related to sales of Actimmune
Units.  All such services shall be performed on a timely basis consistent with
standard industry practices.

     2.2  PRODUCT MANAGEMENT COSTS.  Except for Product Management Costs,
InterMune shall receive no separate consideration for providing services
under this Agreement.  No later than thirty (30) days after the end of each
Collection Period, InterMune shall invoice Connetics for Product Management
Costs for such Collection Period, and Connetics shall remit payment on such
invoices within thirty (30) days after receipt of the invoice.  InterMune's
invoice shall be accompanied by a statement itemizing such Product Management
Costs, including a list of all relevant projects, services provided, travel
and other expenses. InterMune agrees that it will not include in Product
Management Costs any non-headcount related expenses or extraordinary expenses
without first obtaining Connetics' authorization to incur such expenses.  Any
expenses incurred with the consent of the Commercialization Committee formed
pursuant to Section 2.7 shall be deemed to have been authorized by Connetics
for purposes of this Section 2.2.

     2.3  ACCOUNTING FOR ACTIMMUNE UNIT SALES; PAYMENTS TO CONNETICS.

          (a)  RECORDING REVENUE.  During the Period, InterMune agrees that
     Connetics shall be entitled to book the Actimmune Net Sales until the total
     Actimmune Units sold reaches the Baseline applicable for each calendar year
     during the Period, all in accordance with generally accepted accounting
     principles, and InterMune will not book such Net Sales or otherwise record
     the revenue related to the Net Sales that Connetics is entitled to book
     pursuant to this Agreement.  For clarification, the payment which Connetics
     receives from InterMune pursuant to subsection (c) below, and the sales of
     Actimmune Units represented thereby, shall accrue to the total Actimmune
     Net Sales booked by Connetics for 1999.  InterMune shall be entitled to
     book the Actimmune Net Sales for sales of all Actimmune Units above the
     Baseline, after the Baseline is met in a given calendar year.

          (b)  PAYMENTS TO CONNETICS.  InterMune shall pay to Connetics the
     amount of Actimmune Gross Margin each Collection Period, until the total
     Actimmune Units sold reaches the applicable Baseline in each calendar year
     during the Period, according to the following schedule:  no later than
     [ * ] business days after the end of each Collection Period, InterMune
     shall (i) submit to Connetics the reports required pursuant to Section 2.4
     for the Collection Period just ended, and (ii) remit payment for the
     Collection Period immediately preceding such Collection Period, together
     with a statement as described in Section 2.4.  For purposes of this
     Agreement, payments for a given Collection Period shall be due on the
     [ * ] business day after the end of the first full calendar month following
     that Collection Period

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

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<PAGE>

     ("Due Date").  To the extent that InterMune has not received payment for
     sales of Actimmune Units for a given Collection Period, InterMune's
     remittance on the Due Date may exclude any such unpaid amounts, but
     InterMune shall remit such amount withheld from Actimmune Gross Margin on
     the next Due Date, regardless of whether InterMune has received payment.
     Notwithstanding the foregoing, if such unpaid amount from a purchaser of
     Actimmune Units remains unpaid six (6) months after the date of invoice
     ("Bad Debt"), then Connetics shall reimburse InterMune for such Bad Debt
     within thirty (30) days following the end of such six month period.  In
     such case, InterMune shall provide to Connetics the necessary documentation
     in its possession for the accounting for and  collection of such Bad Debt,
     and shall permit Connetics to pursue collection for such Bad Debt.

          (c)  GROSS MARGIN FOR THE FIRST QUARTER OF 1999.  InterMune will make
     a one-time payment to Connetics on the Effective Date equal to Actimmune
     Gross Margin for the period from January 15, 1999 to March 31, 1999, in the
     amount of [ * ], together with supporting documentation as described in
     this Article 2.  The amount paid will count toward the total Actimmune Net
     Sales booked by Connetics for 1999, as set forth in paragraph (a) above.

          (d)  OVERDUE PAYMENTS.  For each Collection Period, if InterMune fails
     to remit payment by the Due Date, the amount due shall accrue interest at
     the rate of [ * ] per year until the amount due together with all accrued
     interest are paid in full.  If InterMune fails for [ * ] consecutive
     Collection Periods to remit payment by the Due Date, InterMune hereby
     agrees that Connetics shall have the right (at its sole option) to modify
     the payment structure described in subsection (b) above so that Connetics
     collects all revenue with respect to sales of Actimmune Units, withholds
     the Actimmune Gross Margin, and remits the balance to InterMune.  In such
     event:

               (i)   InterMune shall take all action necessary to provide
          Connetics with the necessary permissions and authorization to make
          such modifications to the payment structure, in accordance with a
          payment and reporting schedule equivalent to that set forth in
          Subsection (b) above;

               (ii)  The provisions of Sections 2.4 and 2.6 shall apply MUTATIS
          MUTANDIS; and

               (iii) At the termination or expiration of this Agreement,
          Connetics' right to collect revenues for the sales of Actimmune Units
          shall terminate and InterMune shall thereafter have the right to
          collect all revenues for such sales.  Connetics shall take all action
          necessary to provide InterMune with the necessary permissions and
          authorization to allow InterMune to collect such revenues.

          (e)  SALES BELOW BASELINE.  The Parties agree that, if Actimmune Unit
     sales are [ * ] or more below the Baseline (on a quarterly-adjusted basis)
     for a period of [ * ] days following [ * ], they will meet to evaluate the
     effect of [ * ] on sales volume compared with historical trends and other
     market dynamics.  If the sales of Actimmune Units remain below the Baseline
     for the second [ * ] day period following such price increase, the Parties
     agree

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

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<PAGE>

     to re-set the Baseline, provided that such lower sales are not attributable
     to an extraordinary circumstance, such as an interruption in supply.  If,
     however, sales of Actimmune Units increase during such second [ * ] day
     period, the Parties agree to review the market dynamics and trends from
     prior years with respect to CGD patients, and to make a final decision
     regarding whether and to what extent to re-set the Baseline.  The revised
     Baseline number shall be deemed to be the Baseline for all relevant
     purposes of this Agreement beginning with the date the revised Baseline is
     agreed upon (or such earlier date as the Parties may agree).  If the
     Parties cannot agree on an appropriate adjustment to the Baseline following
     [ * ] as set forth in this subsection, then the proposals of each Party
     shall be referred for resolution according to the mechanism set forth in
     Section 5.9.

          (f)  SALES ABOVE THE BASELINE.  During [ * ], if Actimmune Net Sales
     in any given calendar quarter exceed the Baseline (as may be adjusted
     pursuant to subsection (e) above) for that quarter by more than [ * ],
     Connetics agrees that it will [ * ] for the purpose of offsetting any
     deferred net profits that InterMune might have realized for such quarter
     had it been entitled to book those Actimmune Net Sales.  The Parties agree
     to [ * ], in an amount that approximates the profits deferred by InterMune
     for Actimmune Unit sales above Baseline for the relevant quarter, [ * ]
     InterMune's right to book sales after Baseline is met for the year.  [ * ]
     to be mutually agreed upon at the time of [ * ].

     2.4  MONTHLY STATEMENTS AND REPORTS TO BE PROVIDED BY INTERMUNE. On the
[ * ] business day of each month, InterMune shall furnish to Connetics:

          (a)  with respect to the Collection Period just ended, a report or
     reports (in a format reasonably acceptable to Connetics), listing the
     quantities of Actimmune Units sold and related sales dollars (itemized by
     customer and/or distributor), cost of Actimmune Units sold, inventory of
     Actimmune Units as of the end of the Collection Period, accounts receivable
     aging summary, returns, chargebacks, and rebates; and

          (b)  with respect to the Collection Period ended a month earlier,
     payment of the Actimmune Gross Margin together with a statement that
     reconciles the payment submitted with the reports submitted for the same
     Collection Period in the prior month, and which includes all the
     information necessary to calculate Actimmune Gross Sales, Actimmune Net
     Sales, Actimmune Gross Margin and the payment made to Connetics.  The
     principal financial officer of InterMune shall certify that such monthly
     statement complies with this Agreement.

In addition to the periodic reporting outlined above, InterMune shall continue
to permit Connetics [ * ] as InterMune might use during the term of this
Agreement.  The initial report pursuant to subsection 2.4(a) shall be due on
May 4, 1999, and the initial statement and payment pursuant to subsection 2.4(b)
shall be due on June 2, 1999.  InterMune's obligation to submit reports,
statements and payments shall continue after the term of this Agreement, until
all Collection Periods during the term have been fully accounted for.

     2.5  ROYALTY PAYMENTS TO GENENTECH.  InterMune shall remit to Genentech any
amounts payable on Actimmune Net Sales for third party royalties and for GNE
Royalties, all as required by the Genentech License.  InterMune covenants and
agrees to remit the full amount of

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

                                  PAGE 5 OF 12

<PAGE>

such royalties directly to Genentech or the applicable third party, and shall
[ * ] after the Effective Date and during the term of this Agreement.

     2.6  AUDIT.  During the term of this Agreement, and for [ * ] years after
expiration or termination of this Agreement, InterMune shall permit an
independent auditor, reasonably acceptable to InterMune, to have access to
InterMune's records as may be necessary to verify the accuracy of the statements
provided to Connetics under this Agreement, including Actimmune Gross Sales,
Actimmune Net Sales, and Actimmune Gross Margin, and to assure that InterMune
has complied with the payment terms of this Agreement.  Such records shall be
open during reasonable business hours for examination at Connetics' expense, and
not more often than once each calendar year, by such independent auditor (who
shall be required to enter into a binder of confidentiality with InterMune).

     2.7  COMMERCIALIZATION COMMITTEE. The Parties shall establish a
Commercialization Committee which shall be responsible for monitoring progress,
managing information exchange between the Parties, deciding key strategies and
solving problems with respect to commercialization and promotion of Actimmune
for the CGD market.  At the first meeting of the Commercialization Committee,
the members shall establish a regular meeting time and structure, and appoint a
secretary whose responsibility it will be to coordinate the timing, notice, and
agendas for Commercialization Committee meetings.

                                     SECTION 3
                           MANUFACTURING COST TRANSITION

     3.1  OFFSET TO TRANSITION COSTS.  The Parties anticipate that the transfer
of manufacturing to a third party manufacturer could result in a substantial
reduction in the Product Cost for Actimmune.  As an incentive to InterMune to
complete the transfer of manufacturing of Actimmune to a third party
manufacturer pursuant to Section 4.1 of the Genentech Supply Agreement before
May 2001, and in consideration of an increase in Actimmune Gross Margin during
the Period by virtue of such lower Product Cost, Connetics agrees to reimburse
InterMune for [ * ] of InterMune's actual costs to effect such transfer of
manufacturing up to a maximum payment of [ * ], subject to adjustment as follows
for each subsequent quarter that the transfer is not complete:

<TABLE>
<CAPTION>
  Amount Payable by Connetics*           If Transfer is Complete by:
  ----------------------------           ---------------------------
<S>                                      <C>
              [ * ]                                 [ * ]

              [ * ]                                 [ * ]

              [ * ]                                 [ * ]

              [ * ]                                 [ * ]

              [ * ]                                 [ * ]

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

                                  PAGE 6 OF 12

<PAGE>

 <CAPTION>
  Amount Payable by Connetics*           If Transfer is Complete by:
  ----------------------------           ---------------------------
<S>                                      <C>
              [ * ]                                 [ * ]
</TABLE>

----------------
* The amounts payable by Connetics listed above assume a [ * ] as of the
Effective Date).  Accordingly, if the transition is completed by the target date
but results in a [ * ], the amount payable by Connetics shall be [ * ].  By way
of example, if the transfer is completed before [ * ].

     3.2  COMPLETION OF MANUFACTURING TRANSFER.  For purposes of this Agreement,
the transfer of manufacturing from Genentech to a third party manufacturer shall
be deemed to be complete in the first Collection Period for which [ * ].

     3.3  PAYMENT TERMS.  Any payment by Connetics pursuant to this Section 3
shall be payable in cash no later than thirty (30) days following completion of
the manufacturing transfer as set forth in Section 3.2.

                                     SECTION 4
                                  CONFIDENTIALITY

4.1  CONFIDENTIAL INFORMATION OBLIGATIONS.  As used herein, "Confidential
Information" means all information that a Party discloses to the other Party
under this Agreement, provided that "Confidential Information" shall not include
such information excluded under Section 4.2.  Except to the extent expressly
authorized by this Agreement or otherwise agreed in writing by the Parties, each
Party agrees that, during the term of this Agreement and for [ * ] years after
the expiration or termination of this Agreement, it shall keep confidential and
shall not publish or otherwise disclose and shall not use for any purpose other
than as provided for in this Agreement any Confidential Information furnished to
it by the other Party pursuant to this Agreement.

4.2  EXCEPTIONS.  The obligations set forth in Section 4.1 shall not apply to
any Information that the receiving Party can demonstrate by competent evidence:

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

     (b)  was generally available to the public or otherwise part of the public
     domain at the time of its disclosure to the receiving Party by the other
     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 the receiving Party in breach of this Agreement;

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

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

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<PAGE>

     (e)  is independently developed by the receiving Party without using any of
     the other Party's Confidential Information.

4.3  PERMITTED DISCLOSURE.  Notwithstanding the limitations in this Article 4,
each Party may disclose Confidential Information belonging to the other Party
(or otherwise subject to this Article 4), to the extent such disclosure is
reasonably necessary in the following instances, but solely for the limited
purpose of such necessity:

     (a)  regulatory and tax filings;

     (b)  prosecuting or defending litigation;

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

     (d)  disclosure to affiliates, employees, consultants or agents who agree
     to be bound by similar terms of confidentiality and non-use at least
     equivalent in scope to those set forth in this Article 4.

Notwithstanding the foregoing, in the event a Party is required to make a
disclosure of the other Party's Confidential Information pursuant to Section
4.4, it will give reasonable advance notice to the other Party of such
disclosure and endeavor in good faith to secure confidential treatment of such
information.  In any event, the Parties agree to take all reasonable action to
avoid disclosure of Confidential Information hereunder.  Further, the Parties
agree to consult with one another on the provisions of this Agreement to be
redacted in any filings made by a Party with the United States Securities and
Exchange Commission or as otherwise required by law.

                                     SECTION 5
                                 GENERAL PROVISIONS

     5.1  NO OFFSET.  Neither Party shall be entitled to offset any amounts due
to the other Party under this Agreement against any amounts due from such other
Party pursuant to this Agreement or other agreements between the Parties.
Notwithstanding the foregoing sentence, any amounts due to a Party under this
Agreement that are [ * ] or more days overdue may be offset by such Party
against any amounts such Party owes the other Party under this Agreement.

     5.2  SURVIVAL.  The payment and reporting obligations set forth in Article
2, and the provisions of Section 2.6 and Article 4 shall survive any expiration
or termination of this Agreement, as will all rights accrued and obligations
incurred hereunder prior to such expiration or termination.

     5.3  TERM AND TERMINATION.  The term of this Agreement shall coincide with
the Period, and this Agreement will expire with no further action required by
either Party on December 31, 2001.  In addition, either Party may terminate this
Agreement on no less than [ * ] days' notice to the other Party for material
breach of this Agreement by that Party.

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

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<PAGE>

     5.4  WAIVER.  No waiver by either Party of any breach or default of any of
the covenants or agreements set forth in this Agreement shall be deemed a waiver
as to any subsequent or similar breach or default.

     5.5  ASSIGNMENT.  This Agreement shall be binding upon and inure to the
benefit of the Parties and their permitted successors and assigns; PROVIDED,
HOWEVER, that neither Party shall assign any of its rights and obligations under
this Agreement without the prior written consent of the other Party, except as
incident to the merger, consolidation, reorganization or acquisition of stock or
assets affecting substantially all of the assets or actual voting control of the
assigning Party.  Any assignment or attempted assignment by either Party in
violation of the terms of this Section 4.2 shall be null and void and of no
legal effect.

     5.6  NOTICES.  Any notice or other communication required or permitted to
be given to either Party shall be in writing and shall be deemed to have been
properly given and to be effective on the date of delivery if delivered in
person or by facsimile or five (5) days after mailing by registered or certified
mail, postage paid, to the other Party at the following address:

     In the case of InterMune:          InterMune, Inc.
                                        3294 West Bayshore Road
                                        Palo Alto, CA 94303
                                        Fax: (650) 858-2937
                                        Attention:  President

     In the case of Connetics:          Connetics Corporation
                                        3400 West Bayshore Road
                                        Palo Alto, CA 94303
                                        Fax: (650) 843-2899
                                        Attention:  Chief Executive Officer

Either Party may change its address for communications by a notice to the other
Party in accordance with this Section.

     5.7  HEADINGS.  The headings of the several sections are inserted for
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement.

     5.8  AMENDMENT.  No amendment or modification hereof shall be valid or
binding upon the Parties unless made in writing and signed by both Parties.

     5.9  GOVERNING LAW.  This Agreement shall be governed exclusively by the
laws of the California, as such law applies to contracts entered into between
and to be performed by California residents entirely in California.

     5.10 DISPUTE RESOLUTION.

          (a)  In the event of any controversy or claim arising out of, relating
to or in connection with any provision of this Agreement, or the rights or
obligations of the Parties, the Parties shall try to settle their differences
amicably between themselves by referring the disputed

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

                                  PAGE 9 OF 12

<PAGE>

matter to the President of InterMune and the Chief Executive Officer of
Connetics 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 after such notice such representatives of
the Parties shall meet for attempted resolution by good faith negotiations.

          (b)  If such personnel are unable to resolve such dispute within
thirty (30) days of initiating such negotiations, either Party may seek to have
such dispute resolved by binding arbitration under this Section 5.9.  The
arbitration shall be held in Palo Alto, California according to the Commercial
Arbitration Rules of the American Arbitration Association (the "Rules").  The
arbitration will be conducted by a panel of three (3) arbitrators who are
knowledgeable in the subject matter that is at issue in the dispute, are not
affiliated directly or indirectly with either Party, and are selected by mutual
agreement of the Parties.  Failing such agreement, the arbitrators shall be
selected appointed as provided in the Rules.  During the arbitration, the
Parties shall have such discovery rights as the arbitrators may allow,
consistent with the discovery permitted by the Federal Code of Civil Procedure.
In conducting the arbitration, the arbitrators shall apply the rules of evidence
applicable in California, and shall be able to decree any and all relief of an
equitable nature, including but not limited to such relief as a temporary
restraining order, a preliminary injunction, or a permanent injunction, as well
as specific performance.  The arbitrators shall also be able to award direct and
indirect damages, but shall not award any other form of damage (E.G., punitive
or exemplary damages).

          (c)  The reasonable fees and expenses, of the arbitrators, along with
the reasonable legal fees and expenses of the prevailing Party (including all
expert witness fees and expenses), the fees and expenses of a court reporter,
and any expenses for a hearing room, shall be paid as follows:  If the
arbitrators rule in favor of one Party on all disputed issues in the
arbitration, the losing Party shall pay 100% of such fees and expenses; if the
arbitrators rule in favor of one Party on some issues and the other Party on
other issues, the arbitrators shall issue with the rulings a written
determination as to how such fees and expenses shall be allocated between the
Parties.  The arbitrators shall allocate fees and expenses in a way that bears a
reasonable relationship to the outcome of the arbitration, with the Party
prevailing on more issues, or on issues of greater value or gravity, recovering
a relatively larger share of its legal fees and expenses.

          (d)  The decision of the arbitrators shall be final and may be
entered, sued on or enforced by the Party in whose favor it runs in any court of
competent jurisdiction at the option of such Party.  Whether a claim, dispute or
other matter in question would be barred by the applicable statute of
limitations, which statute of limitations also shall apply to any claim or
disputes subject to arbitration under this Section, shall be determined by
binding arbitration pursuant to this Section.

     5.11 FORCE MAJEURE.  Any delays in performance by any Party under this
Agreement shall not be considered a breach of this Agreement if and to the
extent caused by occurrences beyond the reasonable control of the Party
affected, including but not limited to acts of God, embargoes, governmental
restrictions, fire, flood, explosion, riots, wars, civil disorder, rebellion or
sabotage.  The Party suffering such occurrence shall immediately notify the
other Party as soon as practicable, and any time for performance hereunder shall
be extended by the actual time of delay caused by the occurrence.

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

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     5.12 INDEPENDENT CONTRACTORS.  In making and performing this Agreement,
InterMune and Connetics act and shall act at all times as independent
contractors and nothing contained in this Agreement shall be construed or
implied to create an agency, partnership or employer and employee relationship
between InterMune and Connetics.  At no time shall one Party make commitments or
incur any charges or expenses for or in the name of the other Party.

     5.13 SEVERABILITY.  If any part of this Agreement is declared invalid by
any legally governing authority having jurisdiction over either Party, then such
declaration shall not affect the remainder of the Agreement and the Parties
shall revise the invalidated part in a manner that will render such provision
valid without impairing the Parties' original interest.

     5.14 CUMULATIVE RIGHTS.  The rights, powers and remedies under this
Agreement shall be in addition to, and not in limitation of, all rights, powers
and remedies provided at law or in equity, or under any other agreement between
the Parties.  All of such rights, powers and remedies shall be cumulative, and
may be exercised successively or cumulatively.

     5.15 COUNTERPARTS.  This Agreement may be executed in two or more
counterparts, each of which shall be an original and all of which shall
constitute together the same document.

     5.16 ENTIRE AGREEMENT.  This Agreement, in conjunction with the other
"Intercompany Agreements" (as that term is described in the Collaboration
Agreement),  embodies the entire understanding of the Parties with respect to
the subject matter of the Intercompany Agreements, and supersedes and terminates
all previous communications, representations or understandings, either oral or
written, between the Parties relating to the subject matter of the Intercompany
Agreements.

                             [INTENTIONALLY LEFT BLANK]

                               SIGNATURE PAGE FOLLOWS

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

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<PAGE>

     IN WITNESS WHEREOF, both InterMune and Connetics have executed this
Agreement, as of the day and year first written above.

INTERMUNE PHARMACEUTICALS, INC.              CONNETICS CORPORATION

By:  /s/ W. Scott Harkonen         By:  /s/ T. Wiggans
   ------------------------------     ------------------------------------------

Name:  W. Scott Harkonen           Name:  Thomas G. Wiggans
     ----------------------------       ----------------------------------------

Title:  President                  Title:  President and Chief Executive Officer
      ---------------------------        ---------------------------------------

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

                                 PAGE 12 OF 12

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