<PAGE>   1
                               SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
                                (Amendment No. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
    14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12

                        IDEC PHARMACEUTICALS CORPORATION
                   (Name of Registrant as Specified in its Charter)

              ----------------------------------------------------------
       (Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X]  No fee required.

[ ]  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11

     (1) Title of each class of securities to which transaction applies:

         .......................................................................
     (2) Aggregate number of securities to which transaction applies:

         .......................................................................
     (3) Per unit price or other underlying value of transaction computed
         pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
         filing fee is calculated and state how it was determined):

         .......................................................................
     (4) Proposed maximum aggregate value of transaction:

         .......................................................................
     (5) Total fee paid

[ ]  Fee paid previously with preliminary materials.

[ ]  Check box if any part of the fee is offset as provided by Exchange Act Rule
     0-11(a)(2) and identify the filing for which the offsetting fee was paid
     previously.  Identify the previous filing by registration statement number,
     or the Form or Schedule and the date of its filing.

     (1) Amount Previously Paid:

         .......................................................................
     (2) Form, Schedule or Registration Statement No.:

         .......................................................................
     (3) Filing Party:

         .......................................................................
     (4) Date Filed:

         .......................................................................


<PAGE>   2
 
                                      LOGO
 
                                                                   April 8, 1998
 
Dear Stockholder:
 
     You are cordially invited to attend the Annual Meeting of Stockholders (the
"Annual Meeting") of IDEC Pharmaceuticals Corporation (the "Company") which will
be held on May 21, 1998, at 10:00 a.m., at the Sheraton Grande Torrey Pines,
10950 North Torrey Pines Road, La Jolla, California.
 
     Details of the business to be conducted at the Annual Meeting are given in
the attached Notice of the Annual Meeting of Stockholders and Proxy Statement.
 
     After careful consideration, the Company's Board of Directors has
unanimously approved each of the proposals set forth in the enclosed Proxy
Statement and recommends that you vote FOR each of such proposals.
 
     After reading the Proxy Statement, please mark, date, sign and return, by
no later than May 15, 1998, the enclosed proxy in the prepaid envelope addressed
to ChaseMellon Shareholder Services, our stock transfer agent, to ensure that
your shares will be represented. If you decide to attend the Annual Meeting,
please notify the Secretary of the Company that you wish to vote in person and
your proxy will not be voted. YOUR SHARES CANNOT BE VOTED UNLESS YOU SIGN, DATE
AND RETURN THE ENCLOSED PROXY, OR ATTEND THE ANNUAL MEETING IN PERSON.
 
     A copy of the Company's 1997 Annual Report and Form 10-K for the fiscal
year ended December 31, 1997 is also enclosed.
 
     We look forward to seeing you at the Annual Meeting.
 
                                          Sincerely,
 
                                          /s/ WILLIAM H. RASTETTER

                                          William H. Rastetter, Ph.D.
                                          Chairman, President and
                                          Chief Executive Officer

<PAGE>   3
                        IDEC PHARMACEUTICALS CORPORATION
 

                    NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
                            TO BE HELD MAY 21, 1998
 
     The Annual Meeting of Stockholders (the "Annual Meeting") of IDEC
Pharmaceuticals Corporation (the "Company") will be held at the Sheraton Grande
Torrey Pines, 10950 North Torrey Pines Road, La Jolla, California, on Thursday
May 21, 1998 at 10:00 a.m. local time, for the following purposes, as more fully
described in the Proxy Statement accompanying this Notice:
 
        1. To elect three Class I directors to serve for a three year term
           ending in the year 2001 or until their successor's are elected and
           qualified.
 
        2. To consider and vote on the Company's proposal to amend the 1988
           Stock Option Plan of the Company to increase the total number of
           shares of the Company's common stock authorized for issuance
           thereunder from 5,480,000 shares to a total of 6,335,000 shares.
 
        3. To consider and vote on the Company's proposal to approve a series of
           amendments to the 1993 Non-Employee Directors Stock Option Plan,
           including an increase to the total number of common shares authorized
           for issuance thereunder from 250,000 shares to a total of 370,000
           shares.
 
        4. To ratify the selection of KPMG Peat Marwick LLP as the Company's
           independent public accountants for the fiscal year ending December
           31, 1998.
 
        5. To transact such other business as may properly come before the
           Annual Meeting and any adjournment of the Annual Meeting.
 
     Only stockholders of record at the close of business on April 2, 1998 are
entitled to receive notice of and to vote at the Annual Meeting and any
adjournment thereof. The stock transfer books will not be closed between the
record date and the date of the Annual Meeting. A complete list of stockholders
entitled to vote will be available from the Secretary of the Company at the
Company's executive offices at 11011 Torreyana Road, San Diego, California
92121, for a period of ten days before the meeting.
 
     YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. IF
YOU DO NOT EXPECT TO ATTEND IN PERSON, PLEASE PROMPTLY MARK, DATE, SIGN AND
RETURN THE ENCLOSED PROXY.
 
                                          By Order of the Board of Directors,
 
                                          Kenneth J. Woolcott
                                          Secretary
A
pril 8, 1998

<PAGE>   4
 
                        IDEC PHARMACEUTICALS CORPORATION
 
                                PROXY STATEMENT
 
                     FOR THE ANNUAL MEETING OF STOCKHOLDERS
 
                           To Be Held on May 21, 1998
 
GENERAL
 
     The enclosed proxy ("Proxy") is solicited on behalf of the Board of
Directors of IDEC Pharmaceuticals Corporation, a Delaware corporation with
corporate headquarters located at 11011 Torreyana Road, San Diego, California
92121 (the "Company"), for use at the Annual Meeting of Stockholders to be held
on May 21, 1998 (the "Annual Meeting"). The Annual Meeting will be held at 10:00
a.m. local time at the Sheraton Grande Torrey Pines, 10950 North Torrey Pines
Road, La Jolla, California 92037. These proxy solicitation materials were first
mailed on or about April 14, 1998, to all stockholders entitled to vote at the
Annual Meeting.
 
VOTING
 
     The specific proposals to be considered and acted upon at the Annual
Meeting are summarized in the accompanying Notice and are described in more
detail in this Proxy Statement. On April 2, 1998, the record date for
determination of stockholders entitled to notice of and to vote at the Annual
Meeting, approximately 19,755,918 shares of the Company's common stock, $0.001
par value ("common stock"), were issued and outstanding. Each stockholder is
entitled to one vote for each share of common stock held by such stockholder on
April 2, 1998. The Certificate of Incorporation of the Company does not provide
for cumulative voting. Provided a quorum is present, the three nominees for
directors who receive the highest number of votes will be elected. The other
matters submitted for stockholder approval at this Annual Meeting will be
decided by the affirmative vote of a majority of shares present in person or
represented by proxy and entitled to vote on each such matter. Abstentions with
respect to any matter are treated as shares present or represented and entitled
to vote on that matter and thus have the same effect as negative votes. If,
however, shares are not voted by the broker who is the record holder of the
shares, or if shares are not voted in other circumstances in which proxy
authority is defective or has been withheld with respect to any matter, these
non-voted shares are not deemed to be present or represented for purposes of
determining whether stockholder approval of that matter has been obtained, but
are counted for quorum purposes.
 
PROXIES
 
     If the enclosed form of Proxy is properly signed and returned, the shares
represented thereby will be voted at the Annual Meeting in accordance with the
instructions specified thereon. If the proxy does not specify how the shares
represented thereby are to be voted, the proxy will be voted FOR the election of
the three directors proposed by the Board unless the authority to vote for the
election of directors (or for any one or more nominees) is withheld and, if no
contrary instructions are given, the proxy will be voted FOR the approval of
Proposals 2, 3 and 4 described in the accompanying Notice and Proxy Statement.
You may revoke or change your Proxy at any time before the Annual Meeting by
filing with the Secretary of the Company at the Company's principal executive
offices, a notice of revocation or another signed Proxy with a later date. Your
Proxy will be automatically revoked if you attend the Annual Meeting and vote in
person.
 
SOLICITATION
 
     The Company will bear the entire cost of solicitation, including the
preparation, assembly, printing and mailing of this Proxy Statement, the Proxy
and any additional soliciting materials furnished to stockholders. Copies of
solicitation materials will be furnished to brokerage houses, fiduciaries, and
custodians holding shares in their names that are beneficially owned by others
so that they may forward this solicitation material to such beneficial owners.
In addition, the Company may reimburse such persons for their costs in
forwarding

<PAGE>   5
 
the solicitation materials to such beneficial owners. The original solicitation
of proxies by mail may be supplemented by a solicitation by telephone, telegram,
or other means by directors, officers or employees. No additional compensation
will be paid to these individuals for any such services. The Company has engaged
Beacon Hill Partners, Inc. ("Beacon Hill Partners") to solicit proxies and
distribute materials to brokers, banks, custodians, fiduciaries and other
nominee holders. The Company will pay Beacon Hill Partners approximately $3,500
for these services.
 

                                 PROPOSAL NO. 1
 
                             ELECTION OF DIRECTORS
 
     The Company's Certificate of Incorporation provides for a classified Board
of Directors consisting of three classes of directors having staggered
three-year terms. The Company has named these three classes Class I, Class II
and Class III, respectively, with each class consisting, as nearly as possible,
of one-third of the total number of directors. The Board currently consists of
ten persons. Class I, the class of directors whose term of office expires at the
Annual Meeting, currently consists of three directors. The directors elected to
this class will serve for a term of three years, expiring at the year 2001
annual meeting of stockholders or until their successors have been elected and
qualified. All nominees are currently directors of the Company with terms
expiring at the Annual Meeting.
 
     All three nominees for election have agreed to serve if elected, and
management has no reason to believe that any nominee will be unable to serve. In
the event that any nominee is unable or declines to serve as a director at the
time of the Annual Meeting, the proxies will be voted for any nominee who may be
designated by the present Board of Directors to fill the vacancy. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
FOR the nominees named below provided a quorum is present. The three candidates
receiving the highest number of affirmative votes of the shares represented and
voting on this Proposal will be elected directors of the Company, to serve their
respective terms and until their successors have been duly elected and
qualified.
 
BUSINESS EXPERIENCE OF BOARD NOMINEES
 
     Set forth below are the names and ages of the nominees, the principal
occupations of each nominee and for the past five years, certain directorships
held by each, and the year in which each became a director of the Company.
 

<TABLE>
<CAPTION>
CLASS I DIRECTOR NOMINEES       POSITION WITH THE COMPANY         AGE
- -------------------------       -------------------------         ---
<S>                             <C>                               <C>
Kazuhiro Hashimoto              Director                          57
Franklin P. Johnson, Jr.        Director                          69
Bruce R. Ross                   Director                          56
</TABLE>

 
     Mr. Hashimoto has been, since 1994, President of Zenyaku Kogyo Co., Ltd.
("Zenyaku"), a private pharmaceutical company in Tokyo, Japan, and an investor
in the Company. He has also served as Zenyaku's Director of Research and
Development since 1981 and has served on Zenyaku's board of directors since
1977. Mr. Hashimoto is a director of various privately held companies and has
held a seat on the Board of Trustees of Tamagawa Gakuen University since 1996.
Mr. Hashimoto received his B.A. in Commerce from Tamagawa Gakuen University and
his B.A. in Business Administration from Lewis & Clark College. Mr. Hashimoto
has served as a Director of the Company since July 1991.
 
     Mr. Johnson has been, since 1967, the general partner of Asset Management
Partners ("Asset Management"), an investor in the Company. Mr. Johnson is also
Chairman of the Board of Boole and Babbage, Inc., and a director of Amgen, Inc.
and of various privately held companies. Mr. Johnson received his B.S. in
Mechanical Engineering from Stanford University and received his M.B.A. from
Harvard University. Mr. Johnson has served as a Director of the Company since
1986.
 
     Mr. Ross is currently President of Cancer Rx, a health care consulting
firm. Immediately prior to launching Cancer Rx, Mr. Ross was Chief Executive
Officer of the National Comprehensive Cancer Network,
 
                                        2

<PAGE>   6
 
an association of fifteen of the largest cancer centers in the United States. He
previously held senior management positions, during a 27-year career, at
Bristol-Myers Squibb, including Senior Vice President, Policy, Planning and
Development, Bristol-Myers Squibb Pharmaceutical Group and President,
Bristol-Myers Squibb U.S. Pharmaceutical Group. Mr. Ross currently serves as a
director for Fox Chase Cancer Center and Sugen, Inc. He received his B.S. from
Syracuse University and later was a Bristol-Myers Scholar at the Yale School of
Organization and Management. Mr. Ross has served as a Director of the Company
since July 1997.
 
 
    THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE NOMINEES
LISTED ABOVE.
 
BUSINESS EXPERIENCE OF CONTINUING DIRECTORS
 
     Set forth below are the names and ages of each other director whose term
will continue after the Annual Meeting, the principal occupations of each
director at present and for the past five years, certain directorships held by
each, and the year in which each became a director of the Company.
 

<TABLE>
<CAPTION>
CLASS II DIRECTOR --
TERM EXPIRING IN 1999           POSITION WITH THE COMPANY         AGE
- ---------------------           -------------------------         ---
<S>                             <C>                               <C>
Charles C. Edwards, M.D.        Director                          74
John Groom                      Director                          59
The Honorable Lynn Schenk       Director                          53
</TABLE>

 

<TABLE>
<CAPTION>
CLASS III DIRECTOR --
TERM EXPIRING IN 2000           POSITION(S) WITH THE COMPANY      AGE
- ---------------------           ----------------------------      ---
<S>                             <C>                               <C>
William H. Rastetter, Ph.D.     Chairman, President, and Chief    49
                                Executive Officer
Alan B. Glassberg, M.D.         Director                          61
Robert W. Pangia                Director                          46
William D. Young                Director                          53
</TABLE>

 
     Dr. Rastetter was appointed Chairman of the Board of Directors of the
Company in May 1996. He has served as President and Chief Executive Officer of
the Company since December 1986 and Chief Financial Officer from 1988 to 1993.
Dr. Rastetter has served as a Director of the Company since 1986. From 1984 to
1986, he was Director of Corporate Ventures at Genentech. From 1982 to 1984, Dr.
Rastetter served in a scientific capacity at Genentech, directing the
Biocatalysis and Chemical Sciences groups. From 1975 to 1982, he held various
faculty positions at the Massachusetts Institute of Technology. Dr. Rastetter
received his B.S. in chemistry from the Massachusetts Institute of Technology
and his M.A. and Ph.D. in chemistry from Harvard University.
 
     Dr. Edwards is the retired President and Chief Executive Officer of Scripps
Institution of Medicine and Science (the "Institute"). Dr. Edwards joined the
Institute in 1991 and retired in 1994. Dr. Edwards served as the President and
Chief Executive Officer of Scripps Clinic and Research Foundation from 1977 to
1991. Previously, Dr. Edwards held a number of positions with private, public
and governmental entities including Commissioner of the FDA and several
positions with the American Medical Association. Dr. Edwards is director of
three other publicly traded companies, Bergen Brunswig Corporation, Molecular
Biosystems, Inc., Northern Trust of California and of various privately held
companies. He received his B.S., M.D. and Honorary Degree, Doctor of Science
from the University of Colorado and received his M.S. in Surgery from the
University of Minnesota. Dr. Edwards has served as a Director of the Company
since May 1995.
 
     Dr. Glassberg is Associate Director of Clinical Care and Director of
General Oncology at the University of California San Francisco Cancer Center,
and also serves as Director of Hematology and Medical Oncology at Mount Zion
Medical Center in San Francisco, California. Dr. Glassberg has been associated
with the University of California, San Francisco since 1970 and is currently a
Clinical Professor of Medicine. He received his M.D. from the Medical University
of South Carolina in Charleston. Dr. Glassberg has served as a Director of the
Company since February 1997.
 
                                        3

<PAGE>   7
 
     Mr. Groom has been President, Chief Operating Officer, and a Director of
Elan Corporation plc, a public company registered in Ireland, since July 1996.
Mr. Groom served as the President and Chief Executive Officer of Athena
Neurosciences, Inc., a biotechnology company ("Athena"), from 1987 to June 1996
prior to Athena's acquisition by Elan Corporation. From 1960 to 1985, Mr. Groom
was employed by Smith Kline & French Laboratories ("SK&F"), the pharmaceutical
division of the former SmithKline Beckman Corporation. He held a number of
positions at SK&F, including President of SK&F International from 1980 to 1985.
Mr. Groom has served as Chairman of the International Section of the
Pharmaceutical Manufacturers Association. He serves as a director of Ligand
Pharmaceuticals Incorporated and as a public trustee to the Research Foundation
of the American Academy of Neurology. Mr. Groom is a Fellow of the Association
of Certified Accountants (U.K.) and has served as a Director of the Company
since September 1992.
 
     Mr. Pangia has worked in investment banking for 20 years and is currently
self-employed in that capacity. Most recently, he served as Executive Vice
President and Director of Investment Banking for PaineWebber Incorporated of New
York ("PaineWebber"). He held other various senior management positions at
PaineWebber including member of the board of directors of PaineWebber, Inc.,
Chairman of the board of directors of PaineWebber Properties, Inc., member of
PaineWebber's executive and operating committees, chairman of the equity
commitment committee and member of the debt commitment committee. Prior to his
positions at PaineWebber, Mr. Pangia held other senior positions including
Managing Director of Investment Banking for Drexel Burnham Lambert of New York
and Vice President of Investment Banking for Kidder, Peabody & Co. of New York.
Mr. Pangia is a director of two other publicly traded companies, IWS Corporation
and Ryan, Beck & Co. He received his A.B. from Brown University and his M.B.A.
from Columbia University. Mr. Pangia has served as a Director of the Company
since September 1997.
 
     Ms. Schenk is currently an attorney in private practice and previously
served as the U.S. Congresswoman for the 49th District of the State of
California from 1993 to 1995. She worked as an attorney in private practice from
1983 to 1993 and served as the California Secretary of Business, Transportation
and Housing from 1980 to 1983. Ms. Schenk is also a director of Cal Fed Bank.
She received her B.A. in Political Science from the University of California at
Los Angeles, earned her J.D. from the University of San Diego and attended the
London School of Economics. Ms. Schenk has served as a Director of the Company
since May 1995.
 
     Mr. Young is currently Chief Operating Officer of Genentech Inc.
("Genentech"). Mr. Young joined Genentech in 1980 as Director of Manufacturing
and Process Sciences and became Vice President in 1983. He was promoted to
Senior Vice President in 1989 where he was responsible for Process Sciences,
Manufacturing, Engineering, Quality, Regulatory Affairs, Product Development and
Pharmacological Sciences. In 1986, Mr. Young was promoted to Executive Vice
President. He became Chief Operating Officer in 1997, taking on the additional
responsibilities for Medical Affairs and Business Development and Sales and
Marketing. Prior to joining Genentech, Mr. Young was with Eli Lilly & Co., where
he held several positions in pharmaceutical engineering, antibiotic process
development and manufacturing management. Mr. Young holds a B.S. in Chemical
Engineering from Purdue University and an M.B.A. from Indiana University. He was
elected to the National Academy of Engineering in 1993 for his contributions to
biotechnology. Mr. Young is also a director of Energy Biosystems, Inc. Mr. Young
has served as a Director of the Company since May 1997.
 
BOARD MEETINGS AND COMMITTEES
 
     During the fiscal year ended December 31, 1997 the Board of Directors held
five regularly scheduled meetings, one special telephonic meeting and acted by
unanimous written consent five times. The Board of Directors has appointed a
Compensation Committee, an Audit and Finance Committee, a Regulatory Oversight
Committee and a Nominating Committee. All Directors (who have served on the
Board of Directors throughout the year) have attended at least 75% of the
aggregate number of meetings of the Board of Directors and of the Committees,
respectively, on which such Directors serve.
 
     During the fiscal year ended December 31, 1997 the members of the
Compensation Committee were Franklin P. Johnson, Jr. (Chair), Charles C.
Edwards, M.D., John Groom and Bruce R. Ross, who was appointed to the
Compensation Committee in November 1997. The Compensation Committee held five
 
                                        4

<PAGE>   8
 
regularly scheduled meetings, one special telephonic meeting and acted once by
unanimous written consent during the 1997 fiscal year. The Compensation
Committee's functions are to determine and review the compensation to be paid to
officers and directors of the Company, to administer the Company's 1988 Stock
Option Plan (the "Option Plan") and the 1995 Employee Stock Purchase Plan.
 
     During the fiscal year ended December 31, 1997 the members of the Audit and
Finance Committee were John Groom (Chair) and Lynn Schenk. The Audit and Finance
Committee held one regularly scheduled meeting and one special telephonic
meeting during the 1997 fiscal year. The Audit and Finance Committee's functions
are to monitor the effectiveness of the internal and external audit controls, to
oversee the Company's financial and accounting organization and financial
reporting, to oversee the Company's equity and debt financings, to oversee the
Company's capital expenditure activities and to select a firm of independent
public accountants whose duty it is to audit the books and accounts of the
Company for the fiscal year for which they are appointed. In 1998, the Audit and
Finance Committee will consist of three directors: John Groom (Chair), Robert W.
Pangia and Lynn Schenk.
 
     During the fiscal year ended December 31, 1997 the members of the
Regulatory Oversight Committee were Charles C. Edwards, M.D. (Chair), Alan B.
Glassberg, M.D. and William D. Young. The Regulatory Oversight Committee held no
meetings during the 1997 fiscal year. The Regulatory Oversight Committee is
responsible for advising the Company on matters pertaining to the filing of
Investigational New Drug applications, Biological License Applications, Product
License Applications and other regulatory matters.
 
     The members of the Nominating Committee are Lynn Schenk (Chair), Charles C.
Edwards, M.D., John Groom and Franklin P. Johnson, Jr. The Nominating Committee
held one meeting during the 1997 fiscal year. The Nominating Committee is
responsible for proposing a slate of directors which the Board proposes for
election by stockholders at each annual meeting and to select and nominate
nominees to fill any vacancies on the Board.
 
DIRECTOR COMPENSATION
 
     All Board members except (i) employee directors or (ii) directors who are
affiliated with the Company's corporate development partners, will receive
$2,000 for each day of Board meetings attended. Each Board Committee member
except (i) employee directors or (ii) directors who are affiliated with the
Company's corporate development partners, will receive $500 for each Board
Committee meeting attended. Additionally, all Board members will be reimbursed
for actual expenses incurred in attending Board meetings. During 1997, Dr.
Edwards earned $15,000, Dr. Glassberg earned $10,000, Mr. Groom earned $13,500,
Mr. Johnson earned $15,000, Mr. Pangia earned $6,000, Mr. Ross earned $8,500 and
Ms. Schenk earned $13,500 for their services as Directors.
 
     The 1993 Non-Employee Directors Stock Option Plan (the "Directors Plan")
was originally adopted by the Company on September 14, 1993 and approved by the
stockholders on May 19, 1994 and has subsequently been amended. The Directors
Plan is designed to serve as an equity incentive program to attract and retain
the services of highly qualified individuals with substantial experience
relevant to the life sciences industry. In accordance with the Directors Plan,
individuals who are first elected or appointed as non-employee Board members,
whether through appointment by the Board of Directors or election by the
Company's stockholders, will automatically be granted, on the date of such
initial election or appointment, a non-statutory stock option to purchase 17,500
shares of common stock. Accordingly, on February 24, 1997, July 22, 1997 and
September 24, 1997, Dr. Glassberg, Mr. Ross and Mr. Pangia each received, in
connection with their appointment to the Board, an option to purchase 17,500
shares each of common stock at an exercise price of $24.38 per share, $38.25 per
share and $28.00 per share, respectively, with each such exercise price
representing the fair market value per share of the Company's common stock on
the grant date. Each of these options is immediately exercisable for all the
option shares, but any shares purchased under the option will be subject to
repurchase by the Company, at the option exercise price paid per share, in the
event the optionee
 
                                        5

<PAGE>   9
 
should cease Board service prior to vesting in the shares. The option shares
will vest in a series of four successive equal annual installments upon the
optionee's completion of each year of Board service over the four-year period
measured from the grant date.
 
     Individuals who continue to serve as non-employee Board members receive
option grants at annual intervals under the Directors Plan. Accordingly, on
January 2, 1997, each individual serving as a non-employee Board member at that
time received an option grant to purchase an additional 5,000 shares of common
stock at an exercise price of $22.50 per share, the fair market value per share
on the grant date. On January 2, 1998, each individual serving as a non-employee
Board member at that time received an option grant for 5,000 shares of common
stock at an exercise price of $33.88 per share, the fair market value per share
on the grant date. Each such annual grant is immediately exercisable for all the
option shares, but any shares purchased under the option will be subject to
repurchase by the Company, at the option price paid per share, should the
optionee cease to remain a Board member for any reason (other than death or
disability) within one year after the grant date. Each option grant under the
Directors Plan, whether an initial grant or an annual grant, has a maximum term
of ten years measured from the grant date, subject to earlier termination
following the optionee's cessation of Board service. The shares subject to each
option grant held by a non-employee Board member under the Directors Plan will
immediately vest in full upon (i) certain changes in the ownership or control of
the Company or (ii) the death or disability of such individual while serving as
a Board member. In addition, upon the successful completion of a hostile tender
offer for 50% or more of the Company's outstanding voting securities, each such
option may be surrendered to the Company for a cash distribution per surrendered
option share in an amount equal to the excess of (a) the tender offer price paid
per share of common stock over (b) the exercise price payable for such option
share.
 
                                        6

<PAGE>   10
 

         SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
     The following table sets forth certain information known to the Company
with respect to the beneficial ownership of the Company's common stock as of
January 31, 1998, unless otherwise noted, by (i) all persons who are beneficial
owners of five percent or more of the Company's common stock, (ii) each director
and nominee for director at the Annual Meeting, (iii) the Chief Executive
Officer and each of the next four most highly compensated executive officers
named in the Summary Compensation Table below, and (iv) all current directors
and executive officers as a group. Unless otherwise noted, each of the
stockholders has sole voting and dispositive power with respect to the shares
beneficially owned, subject to community property laws, where applicable.
 

<TABLE>
<CAPTION>
 
        NAME AND ADDRESS, IF REQUIRED,                  SHARES            PERCENT OF SHARES
               OF BENEFICIAL OWNER                 BENEFICIALLY OWNED    BENEFICIALLY OWNED(1)
         ------------------------------            ------------------    ---------------------
<S>                                                <C>                   <C>
Larry N. Feinberg................................      1,647,700                  8.4%
  712 Fifth Avenue, 45th Floor
  New York, New York 10019
Genentech, Inc.(2)...............................      1,490,793                  7.1%
  One DNA Way
  South San Francisco, California 94080
Morgan Stanley, Dean Witter, Discover & Co.(3)...      1,193,110                  6.1%
  1585 Broadway
  New York, New York 10036
American Century Companies, Inc.(4)..............      1,153,700                  5.9%
  4500 Main Street, 15th Floor
  Kansas City, Missouri 64111
Charles C. Edwards, M.D.(5)......................         33,500                     *
John Geigert, Ph.D.(6)...........................         28,224                     *
Alan B. Glassberg, M.D.(7).......................         22,500                     *
Antonio J. Grillo-Lopez, M.D.(8).................        171,946                     *
John Groom(9)....................................         42,500                     *
Nabil Hanna, Ph.D.(10)...........................        293,507                  1.5%
Kazuhiro Hashimoto(11)...........................        691,667                  3.5%
Franklin P. Johnson, Jr.(12).....................         81,737                     *
Robert W. Pangia(13).............................         18,500                     *
William H. Rastetter, Ph.D.(14)..................        513,371                  2.6%
William R. Rohn(15)..............................        173,491                     *
Bruce R. Ross(16)................................         17,500                     *
The Honorable Lynn Schenk(17)....................         34,500                     *
William D. Young(2)..............................      1,490,793                  7.1%
All directors and executive officers as a group
  (18 persons) (2 and 5 through 18)..............      4,177,141                 18.3%
</TABLE>

 
- ---------------
* Less than one percent of the Company's outstanding common stock.
 
 (1) Percentage of beneficial ownership is calculated assuming 19,630,694 shares
     of common stock were outstanding on January 31, 1998. Beneficial ownership
     is determined in accordance with the rules of the United States Securities
     and Exchange Commission ("SEC") and generally includes voting or
     dispositive power with respect to securities. Shares of common stock
     subject to stock options and Non-voting Convertible Preferred Stock
     currently exercisable or convertible or exercisable or convertible within
     60 days after January 31, 1998, are deemed outstanding for computing the
     percentage of the person holding such stock options and Non-voting
     Convertible Preferred Stock but are not deemed outstanding for computing
     the percentage of any other person.
 
                                        7

<PAGE>   11
 
 (2) Includes Non-voting Convertible Preferred Stock convertible into 1,490,793
     common shares held by Genentech. Mr. Young, a director of the Company and
     the Chief Operating Officer of Genentech, disclaims beneficial ownership of
     the Non-voting Convertible Preferred Stock held by Genentech.
 
 (3) Pursuant to a Schedule 13G filed with the SEC on February 17, 1998, Morgan
     Stanley, Dean Witter, Discover & Co. ("MSDW") reported that, as of December
     31, 1997, it had shared voting and dispositive power over 1,193,110 shares.
     The Schedule 13G was also filed on behalf of Dean Witter InterCapital Inc.
     ("DWI"). DWI, an investment advisor registered under Section 203 of the
     Investment Advisors Act of 1940, is a wholly-owned subsidiary of MSDW. No
     account managed on a discretionary basis by DWI holds more than five
     percent of the class of securities which are subject of the Schedule 13G.
     MSDW, as a result of its ownership of DWI, is also deemed to beneficially
     own all such securities deemed to be beneficially owned by DWI. DWI
     reported shared voting and dispositive power over 1,116,900 shares.
 
 (4) Pursuant to a Schedule 13G filed with the SEC on February 4, 1998, American
     Century Companies, Inc., ("ACC") reported that, as of December 31, 1997, it
     had sole voting and dispositive power over 1,153,700 shares. The Schedule
     13G was also filed on behalf of American Century Investment Management,
     Inc., ("ACIM"), American Century Mutual Funds, Inc. ("ACMF") and James E.
     Stowers. ACIM is a wholly-owned subsidiary of ACC. As a result of its
     status as an investment advisor to thirteen investment companies registered
     under Section 8 of the Investment Company Act and to several institutional
     investors, ACIM is deemed to be the beneficial owner of more than five
     percent of the class of securities which are subject of the Schedule 13G.
     ACC, as a result of its control of ACIM, and Mr. Stowers, as a result of
     his beneficial ownership of a majority of the voting stock of ACC, are also
     deemed to beneficially own all such securities deemed to be beneficially
     owned by ACIM. Mr. Stowers, ACC and ACIM all disclaim beneficial ownership
     of such securities. The ownership of one investment company client of ACIM,
     ACMF, totaled more than five percent of the Company's common stock. ACIM
     and Mr. Stowers each reported sole voting and dispositive power over
     1,153,700 shares and ACMF reported sole voting and dispositive power over
     1,131,200 shares.
 
 (5) Includes stock options to purchase 32,500 common shares held by Dr.
     Edwards.
 
 (6) Includes stock options to purchase 27,968 common shares held by Dr.
     Geigert.
 
 (7) Includes stock options to purchase 22,500 common shares held by Dr.
     Glassberg.
 
 (8) Includes stock options to purchase 161,998 common shares held by Dr.
     Grillo-Lopez.
 
 (9) Includes stock options to purchase 42,500 common shares held by Mr. Groom.
 
(10) Includes stock options to purchase 281,095 common shares held by Dr. Hanna.
 
(11) Includes 666,667 common shares held by Zenyaku. Mr. Hashimoto, a director
     of the Company and the President of Zenyaku, disclaims beneficial ownership
     of such common shares. Includes stock options to purchase 25,000 common
     shares held by Mr. Hashimoto.
 
(12) Includes 34,303 common shares beneficially owned by Asset Management. Mr.
     Johnson, a Director of the Company and the General Partner of Asset
     Management, disclaims beneficial ownership of such common shares except to
     the extent of his pecuniary interest arising from his interest in Asset
     Management. Includes stock options to purchase 25,000 common shares held by
     Mr. Johnson.
 
(13) Includes stock options to purchase 18,500 common shares held by Mr. Pangia.
 
(14) Includes stock options to purchase 415,719 common shares held by Dr.
     Rastetter.
 
(15) Includes stock options to purchase 146,266 common shares held by Mr. Rohn.
 
(16) Includes stock options to purchase 17,500 common shares held by Mr. Ross.
 
(17) Includes stock options to purchase 32,500 common shares held by Ms. Schenk.
 
(18) Includes stock options to purchase 1,699,280 common shares and Non-voting
     Convertible Preferred Stock convertible into 1,490,793 common shares.
 
                                        8

<PAGE>   12
 
                 EXECUTIVE COMPENSATION AND RELATED INFORMATION
 
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
 
     As members of the Compensation Committee of the Company's Board of
Directors, it is our duty to set the base salary of certain executive officers
each fiscal year and to approve the individual bonus programs to be in effect
for those individuals. In addition, we have the exclusive authority to award
stock options under the Company's Option Plan to the Company's executive
officers and other key employees. The following is a summary of the policies
which governed our decisions concerning the compensation paid to the Company's
executive officers, including the compensation reflected in the tables which
appear elsewhere in this Proxy Statement.
 
GENERAL COMPENSATION POLICY
 
     Introduction.  We have developed a compensation policy which is designed to
attract and retain qualified key executive officers critical to the Company's
success. In developing this policy, we have concluded that it is not appropriate
to base a significant percentage of the compensation payable to the executive
officers upon traditional financial targets, such as return on equity. This is
primarily because the Company's products other than Rituxan (launched in
December 1997) are still in either development or clinical testing phases and
because, through the end of 1997, the Company had not yet realized any
significant revenues or product sales. Instead, we base our decisions upon the
following standards: (i) base salary levels which are commensurate with those of
comparable positions at other biopharmaceutical companies, given the level of
seniority and skills possessed by the executive officer, and which reflect the
individual's performance with the Company over time, (ii) annual bonuses tied to
the achievement of corporate and individual performance objectives and the
Company's financial performance, and (iii) long-term, stock-based incentive
awards intended to strengthen the mutuality of interests between the executive
officers and the Company's stockholders.
 
     Factors.  The primary factors which we considered in establishing the
components of each executive officer's compensation package for the 1997 fiscal
year are summarized below. We may, however, apply entirely different factors,
particularly different measures of performance, in setting executive
compensation for future fiscal years.
 
     - Base Salary.  The base salary of each executive officer is initially
established through negotiation at the time the officer is hired. Base salary is
subsequently adjusted at periodic intervals, usually on an annual basis. When
establishing or reviewing base salary levels for each executive officer, we
consider the following factors: the qualifications of the executive officer and
the relevant individual experience he or she brings to the Company, strategic
goals for which the executive officer has responsibility, compensation levels at
biopharmaceutical companies at a development stage comparable to the Company and
at other companies which compete with the Company for executive talent. For the
1997 fiscal year, the base salaries for one of the Company's executive officers
exceeded the 90th percentile, three of the Company's executive officers ranged
from the 50th to the 90th percentile and four of the Company's executive
officers were less than the 50th percentile of salary levels in effect for
comparable positions in development-stage companies in the biopharmaceutical
industry, as determined on the basis of an independent compensation survey
compiled by Radford Associates. For one of the Company's executive officers
there was no comparable position provided by the independent compensation survey
compiled by Radford Associates. A number of adjustments were made to the market
data to reflect differences in management experience, organizational structure
and corporate culture, geographic location, product development stage and market
capitalization between the Company and the surveyed entities. Because of the
adjustments we have made in order to identify a limited group of companies
comparable in development stage to the Company, there is not a meaningful
correlation between the companies we have taken into account for comparative
compensation purposes and the companies included in the Industry Group Index
which appears later in this Proxy Statement for purposes of evaluating the price
performance of the Company's common stock.
 
                                        9

<PAGE>   13
 
     -  Annual Incentive Compensation.  Annual bonuses payable in cash were
awarded based on achievement of corporate and individual performance objectives
and annual bonuses payable in the form of stock option grants, were awarded
based on achievement of corporate performance objectives. For the 1997 fiscal
year, the corporate performance objectives were tied to the following measures
of financial success: (i) the filing of a Biologics License Application for and
U.S. regulatory approval of Rituxan, (ii) certain clinical testing and
manufacturing milestones for the Company's products, (iii) the granting of a
third license of the Company's propriety vector technology, (iv) certain
research and development objectives and (v) the attainment of certain per share
targets. Each objective was assigned a relative weight in determining the amount
of the bonus attributable to corporate performance.
 
     Thirty percent (30%) of the individual cash bonuses were based upon
achievement of corporate objectives and seventy percent (70%) of the individual
cash bonuses were based upon attainment of each officer's individual performance
objectives. The individual performance objectives for the 1997 fiscal year were
achieved at an overall average rate of 86% and the corporate performance
objectives for the 1997 fiscal year were achieved at an overall rate of 89%.
Accordingly, the bonuses payable to the executive officers in 1997 on the basis
of corporate and individual performance for the 1997 fiscal year were made in
the form of cash and stock option grants. The number of common shares subject to
each such bonus grant was determined pursuant to a formula under which a
specific number of option shares was targeted for each executive officer at the
start of the fiscal year, and the number of option shares actually awarded was
based upon the percentage to which the individual and corporate performance
targets for the fiscal year were attained. Each option will become exercisable
in periodic installments over a four-year period, contingent upon the executive
officer's continued employment with the Company.
 
     The size of the stock option grant to each executive officer is set at a
level which we feel is appropriate to create a meaningful opportunity for stock
ownership based upon the executive officer's current position with the Company,
internal comparability with stock option grants made to other Company
executives, the executive officer's current level of performance and his or her
potential for future responsibility and promotion over the option term. We also
take into account comparable equity incentives provided to individuals in
similar positions in the biopharmaceutical industry, as reflected in external
surveys, and the number of unvested options held by the executive officer at the
time of the new grant. We have established certain general guidelines by which
we seek to target a fixed number of unvested option shares for each executive
officer based upon his or her current position with the Company and his or her
potential for growth within the Company, i.e. future responsibilities and
possible promotions over the option term. However, we do not strictly adhere to
these guidelines in making stock option grants, and the relative weight which we
give to the various factors varies from individual to individual, as the
circumstances warrant.
 
CEO COMPENSATION
 
     In establishing Dr. Rastetter's base salary, it was the intent of the
Compensation Committee to provide him with a level of stability and certainty
each year and not to have this particular component of compensation affected to
any significant degree by Company performance factors. Accordingly, we primarily
took Dr. Rastetter's personal performance into consideration in setting his base
salary at $300,000. The remaining components of Dr. Rastetter's compensation
package provide no dollar guarantees and are contingent upon the attainment of
performance objectives.
 
     Dr. Rastetter was paid a cash bonus of $108,000 and was awarded a stock
bonus for the 1997 fiscal year in the form of a stock option grant on February
5, 1998 for 62,300 shares of common stock at an exercise price of $41.50 per
share, based primarily upon the Company's progress in meeting the performance
objectives identified above for the year. The stock option grant reflected the
Company's continuing policy to maintain Dr. Rastetter's option holdings at a
level consistent with that for other chief executive officers of comparable
development-stage companies in the biopharmaceutical industry and to subject a
portion of his overall compensation each year to the market performance of the
Company's common stock. Accordingly, the stock option grants will be of no value
to Dr. Rastetter unless there is appreciation in the value of the Company's
common stock over the option term.
 
                                       10

<PAGE>   14
 
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M)
 
     As a result of Section 162(m) of the Internal Revenue Code, the Company
will not be allowed a federal income tax deduction for compensation paid to
certain executive officers, to the extent that compensation exceeds $1 million
per officer in any one year. This limitation will apply to all compensation paid
to the covered executive officers which is not considered to be performance
based. Compensation which does qualify as performance-based compensation will
not have to be taken into account for purposes of this limitation. At the 1994
Annual Meeting of Stockholders, the Company obtained stockholder approval for
certain amendments to the Company's Option Plan which were intended to assure
that any compensation deemed paid in connection with the exercise of stock
options granted under that plan with an exercise price equal to the market price
of the option shares on the grant date will qualify as performance-based
compensation.
 
     Because it is very unlikely that the cash compensation payable to any of
the Company's executive officers will approach the $1 million limit in the
foreseeable future, we have decided at this time not to take any other action to
limit or restructure the elements of cash compensation payable to the Company's
executive officers. We will reconsider this decision should the individual cash
compensation of any executive officer ever approach the $1 million level.
 
     The foregoing report has been submitted by the undersigned in our capacity
as members of the Compensation Committee of the Company's Board of Directors.
 
                                          Charles C. Edwards, M.D.
                                          John Groom
                                          Franklin P. Johnson, Jr.
 
                                       11

<PAGE>   15
 
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
 
     The following table sets forth the compensation earned by the Company's
Chief Executive Officer and the Company's four next highest-paid executive
officers for the 1997 fiscal year for services rendered in all capacities to the
Company for the 1997, 1996 and 1995 fiscal years. No executive officer resigned
or terminated employment during the 1997 fiscal year who would have otherwise
been includible in such table on the basis of salary and bonus earned for that
fiscal year.
 

                           SUMMARY COMPENSATION TABLE
 

<TABLE>
<CAPTION>
                                                                                        LONG TERM
                                                                                       COMPENSATION
                                                                                          AWARDS
                                                                                       ------------
                                                     ANNUAL COMPENSATION                NUMBER OF
                                          ------------------------------------------    SECURITIES
                                                                        OTHER ANNUAL    UNDERLYING
NAME AND PRINCIPAL POSITION(S)            YEAR    SALARY    BONUS (1)   COMPENSATION     OPTIONS
- ------------------------------            ----   --------   ---------   ------------   ------------
<S>                                       <C>    <C>        <C>         <C>            <C>
William H. Rastetter, Ph.D                1997   $300,000   $108,000      $    --         45,100
President, Chief Executive                1996    275,000    106,906           --        125,000
Officer and Chairman                      1995    213,580     90,000           --         20,000
 
Antonio J. Grillo-Lopez, M.D              1997    229,000     68,128           --         27,100
Sr. Vice President, Medical               1996    212,000     70,490       56,000        115,000
and Regulatory Affairs                    1995    192,266     70,000       63,500         12,000
 
Nabil Hanna, Ph.D                         1997    235,400     60,969           --         27,100
Sr. Vice President, Research              1996    214,000     69,058           --         75,000
and Preclinical Development               1995    190,044     70,000           --         12,000
 
William H. Rohn                           1997    235,000     75,670       35,554(2)      27,100
Sr. Vice President,                       1996    208,000     63,518       42,223         75,000
Commercial Operations                     1995    188,152     69,125       42,224        188,152
 
John Geigert, Ph.D                        1997    170,000     52,955       36,697(3)      28,850
Vice President, Quality                   1996     99,696         --       63,871         50,000
                                          1995         --         --           --             --
</TABLE>

 
- ---------------
(1) The amounts shown under the Bonus column include cash bonuses earned for the
    indicated fiscal years, but paid in the following year.
 
(2) Includes (i) $24,438 of indebtedness forgiven by the Company and (ii)
    housing assistance of $11,116.
 
(3) Represents relocation assistance of $36,697.
 
                                       12

<PAGE>   16
 
STOCK OPTIONS
 
     The following table provides information with respect to the stock option
grants made during the 1997 fiscal year under the Company's Option Plan to the
Company's Chief Executive Officer and the Company's four next highest-paid
executive officers for such fiscal year. Except for the limited stock
appreciation right described in Footnote (1) below which formed part of the
option grant made to each named executive officer, no stock appreciation rights
were granted to such executive officers during the 1997 fiscal year.
 
                     OPTION/SAR GRANTS IN LAST FISCAL YEAR
 

<TABLE>
<CAPTION>
                                                   INDIVIDUAL GRANTS                    POTENTIAL REALIZABLE
                                   --------------------------------------------------     VALUE AT ASSUMED
                                   NUMBER OF     % OF TOTAL                             ANNUAL RATE OF STOCK
                                   SECURITIES     OPTIONS      EXERCISE                  PRICE APPRECIATION
                                   UNDERLYING    GRANTED TO     OR BASE                    FOR OPTION TERM
                                    OPTIONS     EMPLOYEES IN   PRICE(2)    EXPIRATION   ---------------------
NAME                               GRANTED(1)   FISCAL YEAR    ($/SHARE)      DATE       5%(3)       10%(3)
- ----                               ----------   ------------   ---------   ----------   --------   ----------
<S>                                <C>          <C>            <C>         <C>          <C>        <C>
William H. Rastetter, Ph.D.......    45,000(4)     5.51%        $21.00       1/14/07    $594,100   $1,505,447
                                        100(5)     0.01%         37.88      11/18/97       2,381        6,034
Antonio J. Grillo-Lopez, M.D.....    27,000(4)     3.31%         21.00       1/14/07     356,460      903,268
                                        100(5)     0.01%         37.88      11/18/97       2,381        6,034
Nabil Hanna, Ph.D................    27,000(4)     3.31%         21.00       1/14/07     356,460      903,268
                                        100(5)     0.01%         37.88      11/18/97       2,381        6,034
William H. Rohn..................    27,000(4)     3.31%         21.00       1/14/07     356,460      903,268
                                        100(5)     0.01%         37.88      11/18/97       2,381        6,034
John Geigert, Ph.D...............    13,750(4)     1.68%         21.00       1/14/07     181,530      459,998
                                        100(5)     0.01%         37.88      11/18/07       2,381        6,034
                                     15,000(6)     1.84%         35.56      11/24/07     335,360      849,801
</TABLE>

 
- ---------------
(1) The shares subject to each option will immediately vest in the event the
    Company is acquired by a merger or asset sale, unless the option is assumed
    or replaced by the acquiring entity. The Plan Administrator also has the
    discretionary authority to provide for accelerated vesting of the option
    shares upon the termination of the optionee's employment following a hostile
    change in control of the Company, whether by tender offer for 25% or more of
    the Company's outstanding voting stock or one or more proxy contests for the
    election of Board members. For further information concerning these vesting
    acceleration provisions, see "Management Contracts and Change in Control
    Agreements." Each option has a maximum term of ten years, subject to earlier
    termination in the event of the optionee's cessation of service with the
    Company.
 
    Each option includes a limited stock appreciation right which will result in
    the cancellation of that option, to the extent exercisable for vested
    shares, upon the successful completion of a hostile tender for securities
    possessing more than 25% of the combined voting power of the Company's
    outstanding voting securities. In return for the cancelled option, the
    optionee will receive a cash distribution per cancelled option share equal
    to the excess of (i) the highest price paid per share of the Company's
    common stock in such hostile tender offer over (ii) the exercise price
    payable per share under the cancelled option.
 
(2) The exercise price may be paid in cash, in shares of the Company's common
    stock valued at fair market value on the exercise date or through a cashless
    exercise procedure involving a same-day sale of the purchased shares. The
    Company may also finance the option exercise by loaning the optionee
    sufficient funds to pay the exercise price for the purchased shares and the
    Federal and State income tax liability incurred by the optionee in
    connection with such exercise. The optionee may be permitted, subject to the
    approval of the Plan Administrator, to apply a portion of the shares
    purchased under the option (or to deliver existing shares of common stock)
    in satisfaction of such tax liability. The exercise price for options
    granted was equal to the fair market value of the Company's common stock on
    the grant date.
 
(3) There is no assurance provided to any executive officer or any other holder
    of the Company's securities that the actual stock price appreciation over
    the ten-year option term will be at the assumed 5% and 10%
 
                                       13

<PAGE>   17
 
    levels or at any other defined level. Unless the market price of the common
    stock appreciates over the option term, no value will be realized from the
    option grants made to the executive officers.
 
(4) Each of these options will become exercisable for 25% of the option shares
    upon the optionee's completion of one year of service measured from the
    vesting commencement date, January 1, 1997, and will become exercisable for
    the balance of the option shares in 36 successive equal monthly installments
    upon the optionee's completion of each additional month of service
    thereafter. The grant date for these options was January 15, 1997.
 
(5) Each of these options will become fully exercisable upon the optionee's
    completion of one year of service measured from the vesting commencement
    date, November 19, 1997, which is also the grant date for these options.
 
(6) This option will become exercisable for 25% of the option shares upon Dr.
    Giegert's completion of one year of service measured from the vesting
    commencement date, November 25, 1997, and will become exercisable for the
    balance of the option shares in 36 successive equal monthly installments
    upon Dr. Giegert's completion of each additional month of service
    thereafter. The grant date for this option was November 25, 1997.
 
OPTION EXERCISES AND HOLDINGS
 
     The table below sets forth information concerning the exercise of options
during the 1997 fiscal year and unexercised options held as of the end of such
year by the Company's Chief Executive Officer and the Company's four next
highest-paid executive officers for such fiscal year. No stock appreciation
rights were exercised during such fiscal year, and except for the limited stock
appreciation right described in Footnote (1) to the Option Grants Table which
forms part of each outstanding stock option, no stock appreciation rights were
outstanding at the end of that fiscal year.
 
                AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
                       AND FISCAL YEAR-END OPTION VALUES
 

<TABLE>
<CAPTION>
                                                           NUMBER OF SECURITIES
                               NUMBER                     UNDERLYING UNEXERCISED      VALUE OF UNEXERCISED IN-THE-
                              OF SHARES                         OPTIONS AT                  MONEY OPTIONS AT
                              ACQUIRED     AGGREGATE         DECEMBER 31, 1997            DECEMBER 31, 1997(2)
                                 ON          VALUE      ---------------------------   -----------------------------
NAME                          EXERCISE    REALIZED(1)   EXERCISABLE   UNEXERCISABLE   EXERCISABLE    UNEXERCISABLE
- ----                          ---------   -----------   -----------   -------------   ------------   --------------
<S>                           <C>         <C>           <C>           <C>             <C>            <C>
William H. Rastetter,              --     $       --      410,410        149,577      $11,991,016      $2,752,313
  Ph.D......................
Antonio J. Grillo-Lopez,       68,000      1,669,812      136,629        116,470        3,333,904       2,128,815
  M.D.......................
Nabil Hanna, Ph.D...........   34,000      1,168,667      256,211         92,651        7,436,663       1,741,870
William H. Rohn.............   52,067      1,450,977      124,258         89,775        3,277,887       1,651,636
John Geigert, Ph.D..........       --             --       20,833         58,017          171,872         424,534
</TABLE>

 
- ---------------
(1) Based on the closing price of the purchased shares on the option exercise
    date less the exercise price paid for such shares.
 
(2) Based on fair market value of the common stock at fiscal year end ($34.38
    per share) less the option exercise price payable per share.
 
MANAGEMENT CONTRACTS AND CHANGE IN CONTROL AGREEMENTS
 
     The Company has an employment agreement with Dr. Antonio Grillo-Lopez under
which he serves as Sr. Vice President, Medical and Regulatory Affairs. Under the
employment agreement, in the event of termination of Dr. Grillo-Lopez's
employment by the Company, with or without cause, the Company or its successors
or assigns, whether as a result of bankruptcy, takeover or merger, will pay him
a severance benefit equal to his most recent annual cash compensation (including
salary plus bonus).
 
                                       14

<PAGE>   18
 
     The Company has entered into agreements with each of Dr. Rastetter, Mr.
Burman, Dr. Grillo-Lopez, Dr. Hanna, Mr. Rohn, Dr. Geigert, Ms. Matsui, Mr.
Schneider and Mr. Woolcott that provide for accelerated vesting of the shares of
common stock subject to the outstanding options held by each individual under
the Company's Option Plan in the event his or her employment is involuntarily
terminated following a Corporate Transaction or Change in Control which does not
otherwise trigger the accelerated vesting of those option shares.
 
     For purposes of these agreements, the following definitional provisions
will be in effect:
 
     -  Corporate Transaction: an acquisition of the Company by merger or
        consolidation or by sale of all or substantially all of the Company's
        assets.
 
     -  Change in Control: (i) an acquisition by any person or related group of
        persons (other than the Company or its affiliates) of twenty-five
        percent (25%) or more of the outstanding voting stock pursuant to a
        tender or exchange offer made directly to the Company's stockholders
        which the Board does not recommend such stockholders to accept or (ii) a
        change in the individuals comprising the majority of the Board effected
        within a period specified in such agreement through one or more
        proxy-contested elections for Board membership.
 
     An involuntary termination of employment will be deemed to occur under
these Change in Control agreements should the officer's employment with the
Company terminate by reason of: (i) such individual's dismissal or discharge for
reasons other than willful misconduct, fraud or other conduct likely to result
in material, economic loss to the Company, or (ii) such individual's resignation
following (A) a change in such individual's position with the Company which
materially reduces his level of responsibility, (B) a reduction in his level of
compensation or (C) a significant relocation of such individual's primary place
of employment.
 
C
OMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
 
     During the fiscal year ended December 31, 1997, Charles C. Edwards, M.D.,
John Groom, Franklin P. Johnson, Jr. and Bruce R. Ross served as members of the
Compensation Committee of the Board of Directors. No member of the Compensation
Committee was at any time during the 1997 fiscal year an officer or employee of
the Company or its subsidiary. No member of the Compensation Committee has
previously been an officer or employee of the Company.
 
     No executive officer of the Company serves as a member of the board of
directors or compensation committee of any entity which has one or more
executive officers serving as a member of the Company's Board of Directors or
Compensation Committee.
 

                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
     Pursuant to the Delaware General Corporation Law, the Company has adopted
provisions in its Amended and Restated Certificate of Incorporation, which
eliminates the personal liability of its directors to the Company and its
stockholders for monetary damages for breach of the directors' fiduciary duties
in certain circumstances and which authorize the Company to indemnify its
directors, officers and other agents, by bylaw, agreement or otherwise, to the
fullest extent permitted by law. The Company's Bylaws require the Company to
indemnify its directors and allow the Board of Directors in its discretion to
indemnify officers, employees and other agents to the fullest extent permitted
by law, including those circumstances in which indemnification would otherwise
be discretionary; provided, however, that the corporation shall indemnify any
such agent in connection with a proceeding initiated by such agent only if such
proceeding was authorized by the Board of Directors of the Company.
Additionally, the Company shall advance to the Director, prior to any final
disposition of any threatened or pending action, suit or proceeding, whether
civil, criminal, administrative or investigative, any and all reasonable
expenses (including legal fees and expenses) incurred in investigating or
defending any such action, suit or proceeding within ten (10) days after
receiving copies of invoices presented to Director for such expenses.
 
                                       15

<PAGE>   19
 
     The Company's Amended and Restated Certificate of Incorporation and Bylaws
expressly authorize the use of indemnification agreements and, with the approval
of its stockholders, the Company has entered into separate indemnification
agreements with its directors and executive officers. The Company's Board of
Directors has authorized similar indemnification agreements for the Company's
officers and the Company has entered into separate indemnification agreements
with certain of its officers and key employees. These agreements may require the
Company, among other things, to indemnify directors and officers against certain
liabilities that may arise by reason of their status or service as directors and
officers. Management believes that these provisions in its Amended and Restated
Certificate of Incorporation and its Bylaws and contractual indemnification are
necessary to attract and retain qualified persons as directors and officers.
 
     At present, there is no pending litigation or proceeding involving a
director, officer, employee or agent of the Company where indemnification will
be required or permitted. The Company is not aware of any threatened litigation
or proceeding which may result in a claim for such indemnification.
 
     In March 1995, the Company and Genentech entered into a collaboration for
the clinical development and commercialization of the Company's anti-CD20
monoclonal antibody, Rituxan, for the treatment of non-Hodgkin's B-cell
lymphomas. As part of the collaboration, Genentech became a principal
stockholder of the Company and Mr. William D. Young, Chief Operating Officer of
Genentech, is serving as a director of the Company. Concurrent with the
collaborative agreement, the Company and Genentech entered into an expression
technology license agreement for a propriety gene expression technology
developed by the Company and a preferred stock purchase agreement providing for
certain equity investments in the Company by Genentech. Under the terms of these
agreements, the Company may receive payments totaling $58.0 million, subject to
the attainment of certain milestone events. In addition, the Company and
Genentech will co-promote Rituxan in the United States with the Company
receiving a share of operating results. Under the terms of separate agreements
with Genentech, commercialization of Rituxan outside the United States will be
the responsibility of F. Hoffmann-La Roche, Inc. except in Japan, where Zenyaku
will be responsible for development, marketing and sales. The Company will
receive royalties on sales of Rituxan outside the United States. During 1997,
the Company received a $15.0 million product development milestone payment from
Genentech for the regulatory approval of Rituxan by the U.S. Food and Drug
Administration on November 26, 1997, $2.4 million in contract revenue pursuant
to its collaboration with Genentech, $10.6 million from the sale of bulk Rituxan
to Genentech, $3.0 million in reimbursements from Genentech for the Company's
Rituxan related sales force and development expenses and incurred a $4.4 million
liability to Genentech for the Company's share of the pretax operating results
generated from its joint business arrangement with Genentech for the
commercialization of Rituxan. During 1997, the joint business recorded an
operating loss due to the significant shared expenses related to the product
launch of Rituxan in the United States in December 1997.
 

      COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
 
     Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than 10% of a
registered class of the Company's equity securities, to file with the SEC
initial reports of ownership and reports of changes in ownership of common stock
and other equity securities of the Company. Officers, directors and greater than
10% stockholders are required by SEC regulation to furnish the Company with
copies of all Section 16(a) reports they file.
 
     Based solely upon review of the copies of such reports furnished to the
Company and written representations that no other reports were required, the
Company believes that during the fiscal year ended December 31, 1997, its
officers, directors and holders of more than 10% of the Company's common stock
complied with all Section 16(a) filing requirements.
 
                                       16

<PAGE>   20
 
C
OMPARATIVE STOCK PERFORMANCE GRAPH
 
     The graph depicted below shows the Company's cumulative total stockholder
return as an index assuming $100 invested in the Company's common stock, along
with the performance of the Center for Research in Security Prices ("CRSP")
Nasdaq Stock Market Index and an Industry Group Index for the last five years
ended December 31, 1997. The returns were calculated assuming the investment in
the Company's common stock, the Nasdaq Stock Market (U.S. Companies) and the
Industry Group on December 31, 1992, and that dividends were reinvested. Total
return calculations were provided to the Company by the CRSP at The University
of Chicago Graduate School of Business and the Industry Group Index consist of
the following public companies whose prices are reported by the Nasdaq National
Market: Centocor, Inc.; Cytogen Corporation; Immunogen, Inc.; Immunomedics,
Inc.; NeoRx Corporation; and Xoma Corporation. The Company originally selected
the companies in the Industry Group Index as a peer group index because it
provided a representative sample of biopharmaceutical companies based primarily
on antibody technology.
 
     IT SHOULD BE NOTED THAT THIS GRAPH REPRESENTS HISTORICAL STOCK PRICE
PERFORMANCE AND IS NOT NECESSARILY INDICATIVE OF ANY FUTURE STOCK PRICE
PERFORMANCE.
 
                            STOCK PERFORMANCE GRAPH
 

<TABLE>
<CAPTION>
                                          IDEC
        MEASUREMENT PERIOD           PHARMACEUTICALS       CRSP NASDAQ
      (FISCAL YEAR COVERED)            CORPORATION        STOCK MARKET       INDUSTRY GROUP
<S>                                 <C>                 <C>                 <C>
DEC-92                                   100.000             100.000             100.000
JUN-93                                    62.857             103.826              57.773
DEC-93                                    65.714             114.790              56.053
JUN-94                                    27.857             104.822              41.594
DEC-94                                    24.286             112.206              52.569
JUN-95                                    64.286             139.921              48.192
DEC-95                                   222.857             158.688              91.694
JUN-96                                   264.286             179.646             103.617
DEC-96                                   271.428             195.180             103.409
JUN-97                                   277.143             218.441              90.200
DEC-97                                   392.857             239.567              90.076
</TABLE>

 
     NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN THE COMPANY'S
PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT
OF 1934 THAT MIGHT INCORPORATE FUTURE FILINGS MADE BY THE COMPANY UNDER THOSE
STATUTES, INCLUDING THE FILING OF THIS PROXY STATEMENT, THE COMPENSATION
COMMITTEE REPORT ON EXECUTIVE COMPENSATION AND THE STOCK PERFORMANCE GRAPH
CONTAINED IN THIS PROXY STATEMENT ARE NOT TO BE INCORPORATED BY REFERENCE INTO
THOSE PREVIOUS FILINGS, NOR IS SUCH REPORT OR GRAPH TO BE INCORPORATED INTO ANY
FUTURE FILINGS MADE BY THE COMPANY UNDER THOSE STATUTES.
 
                                       17

<PAGE>   21
 

                                 PROPOSAL NO. 2
 
                    AMENDMENT TO THE 1988 STOCK OPTION PLAN
                      OF IDEC PHARMACEUTICALS CORPORATION
 
     The Option Plan was originally adopted by the Board of Directors on July
19, 1988 and approved by the stockholders on March 29, 1989 and has subsequently
been amended. In order to: (i) continue to provide equity incentives to
employees (including officers) and independent consultants who provide valuable
services to the Company, especially to retain key employees who have become
substantially vested in previous stock option grants; (ii) create an additional
stock option pool for use in recruiting personnel in connection with the
expansion of the Company's operations; and (iii) ensure that the Company's stock
option grants to employees are competitive with practices in comparable
companies in the biopharmaceutical industry, the Board of Directors amended the
Option Plan on February 20, 1998, to increase the number of shares of the
Company's common stock authorized for issuance under the Option Plan by an
additional 855,000 shares, subject to stockholder approval at the Annual
Meeting.
 
     The Option Plan provides for the grant of options which qualify for
favorable tax treatment as incentive stock options ("Incentive Options") under
Section 422 of the Internal Revenue Code and non-qualified stock options which
are not entitled to such treatment. The total number of shares of common stock
issuable over the term of the Option Plan may not exceed 6,335,000 shares,
inclusive of the 855,000 share increase for which stockholder approval is sought
under this Proposal.
 
     The following is a summary of the principal features of the Option Plan.
The summary, however, does not purport to be a complete description of all the
provisions of the Option Plan. Any stockholder who wishes to obtain a copy of
the actual Option Plan document may do so by written request to the Corporate
Secretary at the Company's executive offices in San Diego, California.
 
ADMINISTRATION
 
     The Option Plan is administered by the Compensation Committee of the Board
of Directors. The members of the Compensation Committee are appointed by the
Board of Directors and may be removed by the Board of Directors at any time. The
Compensation Committee, which will be referred to in this summary as the Plan
Administrator, has full authority, subject to the provisions of the Option Plan,
to determine the eligible individuals who are to receive option grants and/or
stock appreciation rights under the Option Plan, the type of option (incentive
stock option or non-qualified stock option) or stock appreciation right (tandem
or limited) to be granted, the number of shares to be covered by each granted
option or right, the date or dates on which the option or right is to become
exercisable, and the maximum term for which the option or right is to remain
outstanding.
 
ELIGIBILITY AND PARTICIPATION
 
     The Option Plan authorizes the grant of stock options and stock
appreciation rights to key employees (including officers and directors),
non-employee Board members and independent consultants of the Company or any
subsidiary corporation.
 
     As of February 28, 1998, approximately 35 independent consultants, nine (9)
non-employee directors and 339 employees, including nine (9) executive officers,
were eligible to participate in the Option Plan. The non-employee Board members
are also eligible to receive periodic option grants under the Company's
Directors Plan
 
ISSUABLE SHARES
 
     The maximum number of shares of common stock issuable over the term of the
Option Plan may not exceed 6,335,000 shares, subject to adjustment from time to
time in the event of certain changes to the Company's capital structure. The
issuable shares may be made available either from the authorized but unissued
shares of common stock or from shares of common stock repurchased by the
Company, including shares purchased on the open market.
                                       18

<PAGE>   22
 
   
    
     In no event may any one individual participating in the Option Plan be
granted stock options or separately-exercisable stock appreciation rights for
more than 1,250,000 shares of common stock in the aggregate over the term of the
Option Plan, subject to adjustment from time to time in the event of certain
changes to the Company's capital structure. For purposes of such limitation, any
options or stock appreciation rights granted prior to January 1, 1994 will not
be taken into account. Stockholder approval of this Proposal will also
constitute the re-approval of such share limitation.
 
     Should an option expire or terminate for any reason prior to exercise in
full the shares subject to the portion of the option not so exercised will be
available for subsequent option grants under the Option Plan. Unvested shares
issued under the Option Plan and subsequently repurchased by the Company at the
option exercise price paid per share will be added back to the share reserve and
will be available for subsequent issuance under the Option Plan. Shares subject
to any option surrendered or cancelled in accordance with the stock appreciation
right provisions of the Option Plan will not be available for subsequent grants.
 
     As of February 28, 1998, approximately 1,341,099 shares of common stock
have been issued under the Option Plan, 3,983,941 shares of common stock were
subject to outstanding options, and 1,009,960 shares of common stock(1) were
available for future option grants, inclusive of the 855,000 share increase for
which stockholder approval is sought under this Proposal.
 
PRICE AND EXERCISABILITY
 
     The exercise price of options granted under the Option Plan may not be less
than 85% of the fair market value of the common stock on the grant date. If the
granted option is an Incentive Option, the exercise price must not be less than
100% of the fair market value of the common stock on the date of grant. The
maximum period during which any option may remain outstanding under the Option
Plan may not exceed ten (10) years.
 
     Options granted under the Option Plan may be immediately exercisable for
the full number of shares purchasable thereunder or may become exercisable in
cumulative increments over a period of months or years as determined by the Plan
Administrator.
 
     The exercise price is payable in cash or with shares of the Company's
common stock. The exercise price may also be paid through a same-day sale
program, pursuant to which a designated brokerage firm is to effect the
immediate sale of the shares purchased under the option and pay over to the
Company, out of the sale proceeds available on the settlement date, sufficient
funds to cover the exercise price for the purchased shares plus all applicable
withholding taxes.
 
     The Plan Administrator may also assist one or more optionees (including an
officer or director) in the exercise of their outstanding options by (i)
authorizing a loan from the Company or (ii) permitting the optionee to pay the
exercise price in installments over a period of years. The terms and conditions
of any such loan or installment payment will be established by the Plan
Administrator in its sole discretion, but in no event may the maximum credit
extended to the optionee exceed the aggregate exercise price payable for the
purchased shares plus any Federal or state income or employment taxes incurred
in connection with the purchase.
 
VALUATION
 
     For purposes of establishing the option exercise price and for all other
valuation purposes under the Option Plan, the fair market value per share of
common stock on any relevant date will be deemed equal to the closing selling
price per share on such date, as quoted on The Nasdaq National Market. If there
is no reported selling price for such date, then the closing selling price for
the last previous date for which such quotation
 
- ---------------
 
(1) The number of shares available for future option grants will be increased by
    the number of shares subject to currently outstanding options which
    terminate or expire prior to exercise and will also be adjusted in the
    event of certain changes to the Company's capital structure.
                                       19

<PAGE>   23
 
exists will be determinative of fair market value. The closing selling price of
the Company's common stock on February 28, 1998 was $45.38 per share.
 
TERMINATION OF SERVICE
 
     Should the optionee cease to remain in the Company's service while holding
one or more options under the Option Plan, then such optionee will not have more
than a thirty-six (36) month period (or such shorter period as the Plan
Administrator may specify at the time of grant) following such cessation of
service in which to exercise such options, unless the Plan Administrator
determines that such exercise period should subsequently be extended for one or
more additional months or years. Under no circumstances, however, may any option
be exercised after the specified expiration date of the option term. Each such
option will, during such limited period, normally be exercisable only for the
number of shares for which the option is exercisable on the date of the
optionee's cessation of service. However, the Plan Administrator will have
complete discretion to accelerate in whole or in part the vesting of any
outstanding options held by the optionee at the time of his or her cessation of
service and may exercise such discretion at any time while the option remains
outstanding.
 
     Should the optionee die while holding one or more outstanding options, then
the personal representative of the optionee's estate or the person or persons to
whom each such option is transferred pursuant to the optionee's will or in
accordance with the laws of inheritance will have the right to exercise such
option for any or all of the shares for which the option is exercisable on the
date of the optionee's cessation of service, less any option shares subsequently
purchased by the optionee prior to death. Such right will lapse, and the option
will terminate, upon the earlier of (i) the third anniversary of the date of the
optionee's death or (ii) the specified expiration date of the option term.
 
     For purposes of the Option Plan, the optionee will be deemed to be in the
service of the Company for so long as such individual renders periodic services
to the Company or any subsidiary, whether as an employee, non-employee board
member or independent consultant.
 
REPURCHASE RIGHTS
 
     Any unvested shares of common stock issued under the Option Plan will be
subject to repurchase by the Company, at the original exercise price paid per
share, upon the optionee's cessation of service prior to vesting in such shares.
The Plan Administrator will have complete discretion in establishing the vesting
schedule for any such unvested shares and will have full authority to cancel the
Company's outstanding repurchase rights with respect to one or more unvested
shares held by the optionee at the time of his or her cessation of service and
may exercise this discretion at any time, whether before or after the optionee's
service actually ceases.
 
ACCELERATION OF OPTIONS
 
     Corporate Transaction.  In the event of any one of the following
transactions (a "Corporate Transaction"):
 
          (a) a merger or consolidation in which the Company is not the
     surviving entity,
 
          (b) the sale, transfer or other disposition of substantially all of
     the Company's assets in liquidation or dissolution of the Company, or
 
          (c) any reverse merger in which the Company is the surviving entity
     but in which 50% or more of the Company's outstanding voting securities are
     transferred to persons other than those who held such securities
     immediately prior to the merger,
 
each outstanding option will automatically become exercisable, immediately prior
to the effective date of the Corporate Transaction, for all of the shares of
common stock at the time subject to such option and may be exercised for any or
all of such shares as fully-vested shares. However, the exercisability of an
outstanding option will not so accelerate if and to the extent: (i) such option
is either to be assumed by the successor corporation (or parent thereof) or is
otherwise to be replaced by a comparable option to purchase shares of the
 
                                       20

<PAGE>   24
 
capital stock of the successor corporation (or parent thereof) or (ii) the
acceleration of such option is subject to other limitations imposed by the Plan
Administrator at the time of grant.
 
     The Company's outstanding repurchase rights under the Option Plan will also
terminate, and the shares subject to such repurchase rights will become fully
vested, upon the Corporate Transaction, except to the extent (i) one or more of
such repurchase rights are to be assigned to the successor corporation (or its
parent company) or (ii) such accelerated vesting is precluded by other
limitations imposed by the Plan Administrator at the time the repurchase rights
are issued.
 
     Immediately following the consummation of the Corporate Transaction, all
outstanding options will, to the extent not previously exercised by the
optionees or assumed by the successor corporation (or its parent company),
terminate and cease to be exercisable.
 
     Change in Control.  The Plan Administrator has full power and authority,
exercisable either at the time the option is granted or at any time which the
option remains outstanding, to provide for the acceleration of one or more
outstanding options under the Option Plan so that each such option will,
immediately prior to a Change in Control, become exercisable for all of the
shares of the common stock at the time subject to such option and may be
exercised for any or all of such shares as fully-vested shares. The Plan
Administrator will have complete discretion in establishing the specific terms
and conditions upon which one or more outstanding options are to accelerate in
connection with the Change in Control or upon which any of the Company's
outstanding repurchase rights under the Option Plan are to terminate.
Alternatively, the Plan Administrator may condition such accelerated option
vesting and termination of the repurchase rights upon the optionee's cessation
of service under certain prescribed circumstances following the Change in
Control.
 
     A Change in Control will be deemed to occur:
 
          (a) should a person or related group of persons (other than the
     Company or its affiliates) acquire ownership of twenty-five percent (25%)
     or more of the Company's outstanding voting stock pursuant to a tender or
     exchange offer made directly to the Company's stockholders which the Board
     of Directors does not recommend such stockholders to accept; or
 
          (b) on the first date within any period of 24 consecutive months or
     less on which there is effected a change in the composition of the Board of
     Directors such that a majority of the Board members ceases, by reason of
     one or more contested elections for Board membership, to be comprised of
     individuals who either (i) have been members of the Board continuously
     since the beginning of such period or (ii) have been elected or nominated
     for election as Board members during such period by at least a majority of
     the Board members described in clause (i) who were still in office at the
     time such election or nomination was approved by the Board.
 
     Upon a Change in Control, each outstanding option will remain exercisable
until the expiration or sooner termination of the option term specified in the
instrument evidencing such grant.
 
     Special Acceleration Agreements.  The Company has entered into agreements
with certain of its officers to provide for the automatic acceleration of their
outstanding options in the event their services are terminated in connection
with a Corporate Transaction or Change in Control. The purpose of these
agreements is to assure such individuals that either their services will
continue to be required after the Corporate Transaction or Change in Control or
that they will in fact receive the appreciated value of their outstanding
options despite such Corporate Transaction or Change in Control. As of February
28, 1998, the number of option shares subject to these acceleration agreements
was as follows for the Company's Chief Executive Officer and the Company's four
most highly compensated executive officers for the 1997 fiscal year: William H.
Rastetter, Ph.D., 592,287 shares; Antonio J. Grillo-Lopez, M.D., 290,479 shares;
Nabil Hanna, Ph.D., 361,242 shares; William H. Rohn, 241,413 shares; and John
Geigert, Ph.D., 110,000 shares.
 
     The acceleration of options in the event of a Corporate Transaction or
Change in Control may be seen as an anti-takeover provision and may have the
effect of discouraging a merger proposal, a takeover attempt or other efforts to
gain control of the Company.
 
                                       21

<PAGE>   25
 
STOCK APPRECIATION RIGHTS
 
     At the discretion of the Plan Administrator, options may be granted with
stock appreciation rights. Two types of stock appreciation rights are authorized
for issuance under the Option Plan: (i) tandem rights which require the
optionholder to elect between the exercise of the underlying option for shares
of common stock and the surrender of such option for an appreciation
distribution and (ii) limited rights which are automatically exercised upon the
occurrence of a Hostile Take-Over (hereinafter defined).
 
     The appreciation distribution payable by the Company upon the exercise of a
tandem stock appreciation right will be equal in amount to the excess of (i) the
fair market value (on the exercise date) of the shares of common stock in which
the optionee is at the time vested under the surrendered option over (ii) the
aggregate exercise price payable for such shares. Such appreciation distribution
may, at the discretion of the Plan Administrator, be made in shares of common
stock valued at fair market value on the exercise date, in cash or in a
combination of cash and common stock.
 
     One or more officers of the Company subject to the short-swing profit
restrictions of the Federal securities laws may, in the discretion of the Plan
Administrator, be granted limited stock appreciation rights as part of any stock
option grants made to such officers. Any option with such a limited stock
appreciation right will automatically be cancelled upon the occurrence of a
Hostile Take-Over, to the extent the option is at such time exercisable for
vested shares (including any shares which vest in connection with such Hostile
Take-Over). In return, the optionee will be entitled to a cash distribution from
the Company in an amount equal to the excess of (i) the Take-Over Price
(hereinafter defined) of the shares of common stock at the time subject to the
cancelled option (or cancelled portion) over (ii) the aggregate exercise price
payable for such shares. The balance of the option (if any) will continue to
remain outstanding and exercisable in accordance with the agreement evidencing
such grant.
 
     For purposes of such limited stock appreciation right, the following
definitions are in effect under the Option Plan:
 
          Hostile Take-Over: (i) the acquisition by any person or related group
     of persons (other than the Company or its affiliates) of securities
     possessing more than 25% of the combined voting power of the Company's
     outstanding securities pursuant to a tender or exchange offer made directly
     to the Company's stockholders which the Board of Directors does not
     recommend such stockholders to accept.
 
          Take-Over Price: the greater of (i) the fair market value of the
     vested shares subject to the cancelled option, measured on the option
     cancellation date in accordance with the valuation provisions of the Option
     Plan described above, or (ii) the highest reported price per share paid by
     the tender offeror in effecting the Hostile Take-Over.
 
STOCKHOLDER RIGHTS AND OPTION ASSIGNABILITY
 
     No optionee is to have any stockholder rights with respect to the option
shares until such optionee has exercised the option and paid the option price
for the purchased shares. Options are not assignable or transferable other than
by will or by the laws of inheritance and, during the optionee's lifetime, the
option may be exercised only by such optionee. However, the Plan Administrator
may allow non-qualified options to be transferred or assigned during the
optionee's lifetime to one or more members of the optionee's immediate family or
to a trust established exclusively for one or more such family members, to the
extent such transfer or assignment is in furtherance of the optionee's estate
plan.
 
CHANGES IN CAPITALIZATION
 
     In the event any change is made to the common stock issuable under the
Option Plan by reason of any stock split, stock dividend, combination of shares,
exchange of shares or other change affecting the outstanding common stock as a
class without the Company's receipt of consideration, appropriate adjustments
will be made to (i) the aggregate class and/or number of securities issuable
under the Option Plan, (ii) the maximum number and/or class of securities for
which any one individual may be granted stock options and separately exercisable
stock appreciation rights under the Option Plan after December 31, 1993 and
(iii) the
                                       22

<PAGE>   26
 
class and/or number of securities and exercise price per share in effect under
each outstanding option in order to prevent dilution or enlargement of benefits
thereunder.
 
     Each outstanding option which is assumed or is otherwise to continue in
effect after a Corporate Transaction will be appropriately adjusted to apply and
pertain to the number and class of securities which would have been issued, in
connection with such Corporate Transaction, to the holder of such option had the
option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments will also be made to the exercise price payable per
share and to the number and class of securities subsequently available for
issuance under the Option Plan on both an aggregate and per participant basis.
 
     The grant of stock options or stock appreciation rights under the Option
Plan will not affect the right of the Company to adjust, reclassify, reorganize
or otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.
 
CANCELLATION AND REGRANT OF OPTIONS
 
     The Plan Administrator has the authority to effect the cancellation of any
or all options outstanding under the Option Plan and to grant in substitution
therefor new options covering the same or different numbers of shares of common
stock but with an exercise price per share not less than 85% of the fair market
value of the common stock on the new grant date (or 100% of such fair market
value if the new option is to be an Incentive Option).
 
EXCESS GRANTS
 
     The Option Plan permits the grant of options to purchase shares of common
stock in excess of the number of shares then available for issuance under the
Option Plan. Any options so granted cannot be exercised prior to stockholder
approval of an amendment sufficiently increasing the number of shares available
for issuance under the Option Plan.
 
AMENDMENT OF THE STOCK OPTION PLAN
 
     The Board of Directors may amend or modify the Option Plan in any or all
respects whatsoever. No such amendment may adversely affect the rights of
existing optionees without their consent. In addition, certain amendments may
require stockholder approval pursuant to applicable laws or regulations.
 
     The Board may terminate the Option Plan at any time, and the Option Plan
will in all events terminate on December 31, 2002. Each stock option or stock
appreciation right outstanding at the time of such termination will remain in
force in accordance with the provisions of the instruments evidencing such
grant.
 
                                       23

<PAGE>   27
 
STOCK AWARDS
 
     The table below shows, as to each of the Company's executive officers named
in the Summary Compensation Table and the various indicated individuals and
groups, the following information with respect to stock option transactions
effected during the period from January 1, 1997 to February 28, 1998 under the
Option Plan: (i) the number of shares of common stock subject to options granted
during the period and (ii) the weighted average option price payable per share.
 

<TABLE>
<CAPTION>
                                                                           WEIGHTED AVERAGE
                                                       OPTIONS GRANTED     EXERCISE PRICE OF
NAME                                                  (NUMBER OF SHARES)    OPTIONS GRANTED
- ----                                                  ------------------   -----------------
<S>                                                   <C>                  <C>
William H. Rastetter, Ph.D.........................        107,400              $32.91
Antonio J. Grillo-Lopez, M.D.......................         64,480               32.91
Nabil Hanna, Ph.D..................................         64,480               32.91
William H. Rohn....................................         64,480               32.91
John Geigert, Ph.D.................................         60,000               35.31
All current executive officers as a group (9
  persons).........................................        626,570               33.31
All non-executive directors and director nominees
  as a group (9 persons)...........................          1,000               25.13
All individuals, including current officers who are
  not executive officers as a group (approximately
  338 persons).....................................        576,103               29.19
</TABLE>

 
ACCOUNTING TREATMENT
 
     Option grants with exercise prices less than the fair market value of the
option shares on the grant date will result in a compensation expense to the
Company's operations equal to the difference between such exercise prices and
the fair market value of the shares on the grant date. Such expense will be
accrued by the Company over the period the optionee vests in the shares
purchasable under the option. Option grants with exercise prices equal to the
fair market value of the shares on the grant date will not result in any charge
to the Company's operations. However, the Company must make pro forma
disclosures, in the notes to the Company's consolidated financial statements, of
the impact those options would have on the Company's operating results were the
value of those options at the time of grant treated as compensation expense.
Whether or not granted at a discount, the number of outstanding options may be a
factor in determining the Company's earnings per share.
 
     Should one or more optionees be granted stock appreciation rights which
have no conditions upon exercisability other than a service or employment
requirement, then such rights will result in a compensation expense to be
charged against the Company's operations. Accordingly, at the end of each fiscal
quarter, the amount (if any) by which the fair market value of the shares of
common stock subject to such outstanding stock appreciation rights has increased
from prior quarter-end will be accrued as compensation expense, to the extent
such fair market value is in excess of the aggregate exercise price in effect
for such rights.
 
FEDERAL TAX CONSEQUENCES
 
     Options granted under the Option Plan may be either Incentive Options which
satisfy the requirements of Section 422 of the Internal Revenue Code or
non-qualified stock options which are not intended to meet such requirements.
The Federal income tax treatment for the two types of options differs as
follows:
 
     Incentive Options.  No taxable income is recognized by the optionee at the
time of the option grant and no taxable income is generally recognized at the
time the option is exercised. The optionee will, however, recognize taxable
income in the year in which the purchased shares are sold or otherwise made the
subject of disposition.
 
     For Federal income tax purposes, dispositions are divided into two
categories: (i) qualifying and (ii) disqualifying. The optionee will make a
qualifying disposition of the purchased shares if the sale or other
 
                                       24

<PAGE>   28
 
disposition of such shares is made after the optionee has held the shares for
more than two (2) years after the grant date of the option and more than one (1)
year after the exercise date. If the optionee fails to satisfy either of these
two holding periods prior to the sale or other disposition of the purchased
shares, then a disqualifying disposition will result.
 
     Upon a qualifying disposition of the shares, the optionee will recognize a
long-term capital gain in an amount equal to the excess of (i) the amount
realized upon the sale or other disposition of the purchased shares over (ii)
the exercise price paid for such shares. If there is a disqualifying disposition
of the shares, then the excess of (i) the fair market value of those shares on
the date the option was exercised over (ii) the exercise price paid for the
shares will be taxable as ordinary income. Any additional gain recognized upon
the disposition will be a capital gain.
 
     If the optionee makes a disqualifying disposition of the purchased shares,
then the Company will be entitled to an income tax deduction, for the taxable
year in which such disposition occurs, equal to the excess of (i) the fair
market value of such shares on the date the option was exercised over (ii) the
exercise price paid for the shares. In no other instance will the Company be
allowed a business expense deduction with respect to the optionee's disposition
of the purchased shares. The Company anticipates that any compensation deemed
paid by the Company upon one or more disqualifying dispositions of incentive
stock option shares will not have to be taken into account for purposes of the
$1 million limitation per covered individual on the deductibility of the
compensation paid to certain executive officers of the Company.
 
     Non-Qualified Options.  No taxable income is recognized by an optionee upon
the grant of a non-qualified option.
 
     The optionee will in general recognize ordinary income in the year in which
the option is exercised, equal to the excess of the fair market value of the
purchased shares on the exercise date over the exercise price paid for the
shares, and the optionee will be required to satisfy the tax withholding
requirements applicable to such income.
 
     Special provisions of the Internal Revenue Code apply to the acquisition of
common stock under a non-qualified option, if the purchased shares are subject
to repurchase by the Company. These special provisions may be summarized as
follows:
 
          (a) If the shares acquired upon exercise of the non-qualified option
     are subject to repurchase by the Company at the original exercise price in
     the event of the optionee's termination of service prior to vesting in such
     shares, the optionee will not recognize any taxable income at the time of
     exercise but will have to report as ordinary income, as and when the
     Company's repurchase right lapses, an amount equal to the excess of (i) the
     fair market value of the shares on the date the Company's repurchase right
     lapses with respect to such shares over (ii) the exercise price paid for
     the shares.
 
          (b) The optionee may, however, elect under Section 83(b) of the
     Internal Revenue Code to include as ordinary income in the year of exercise
     of the non-qualified option an amount equal to the excess of (i) the fair
     market value of the purchased shares on the exercise date (determined as if
     the shares were not subject to the Company's repurchase right) over (ii)
     the exercise price paid for such shares. If the Section 83(b) election is
     made, the optionee will not recognize any additional income as and when the
     Company's repurchase right lapses.
 
     The Company will be entitled to a business expense deduction equal to the
amount of ordinary income recognized by the optionee with respect to the
exercised non-qualified option. The deduction will in general be allowed for the
taxable year of the Company in which such ordinary income is recognized by the
optionee. The Company anticipates that the compensation deemed paid by the
Company upon the exercise of non-statutory options granted with an exercise
price equal to the fair market value of the option shares will not have to be
taken into account for purposes of the $1 million limitation per covered
individual on the deductibility of the compensation paid to certain executive
officers of the Company.
 
     Stock Appreciation Rights.  An optionee who is granted a stock appreciation
right will recognize ordinary income in the year of exercise equal to the amount
of the appreciation distribution. The Company
 
                                       25

<PAGE>   29
 
will be entitled to a business expense deduction equal to the appreciation
distribution for the taxable year of the Company in which the ordinary income is
recognized by the optionee.
 
NEW PLAN BENEFITS
 
     As of February 28, 1998, no stock options have been granted on the basis of
the 855,000 share increase subject to stockholder approval at the Annual
Meeting.
 
STOCKHOLDER APPROVAL
 
     The affirmative vote of a majority of the shares of the Company's
outstanding voting stock present or represented by proxy and voting at the
Annual Meeting is required for approval to amend the Option Plan to increase the
number of shares issuable under the Option Plan from 5,480,000 shares to
6,335,000 shares. Should such stockholder approval not be obtained, then any
stock options granted on the basis of the 855,000 share increase will terminate
without becoming exercisable for any of the shares of common stock subject to
those options, and no further options will be granted on the basis of such share
increase. However, the Option Plan will continue to remain in effect and stock
option grants may continue to be made pursuant to the provisions of the Option
Plan in effect, until the available reserve of common stock as last approved by
the stockholders has been issued pursuant to stock option grants made under the
Option Plan.
 
 
    THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE APPROVAL OF
THE AMENDMENT TO THE 1988 STOCK OPTION PLAN OF THE COMPANY.
 
                                       26

<PAGE>   30
 

                                 PROPOSAL NO. 3
 
         APPROVAL OF AMENDMENT OF THE IDEC PHARMACEUTICALS CORPORATION
                 1993 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
 
     The Directors Plan was originally adopted by the Board of Directors on
September 14, 1993 and approved by the stockholders on May 19, 1994 and has
subsequently been amended. The Plan is designed to serve as an equity incentive
program to attract and retain the services of highly qualified individuals with
substantial experience in the biopharmaceutical industry. In order to: (i)
continue to provide equity incentives to non-employee Board members who provide
valuable services to the Company, especially to retain those non-employee Board
members who have become substantially vested in previous stock option grants;
(ii) ensure that the Company's stock option grants to non-employee Board members
are competitive with practices in comparable companies in the biopharmaceutical
industry; and (iii) facilitate plan administration by eliminating a number of
limitations and restrictions previously incorporated into the Directors Plan to
comply with the applicable requirements of Rule 16b-3 of the Securities and
Exchange Commission prior to its recent amendment, the Board of Directors
adopted a series of amendments to the Directors Plan on February 20, 1998,
subject to stockholder approval at the Annual Meeting.
 
     Should stockholders approve the amendments to the Directors Plan, the
following changes will be effected: (i) increase the maximum number of shares of
common stock authorized for issuance over the term of the Directors Plan from
250,000 shares to 370,000 shares; (ii) allow unvested shares issued under the
Directors Plan and subsequently repurchased by the Company at the option
exercise price paid per share to be reissued under the Directors Plan; and (iii)
effect a series of additional changes to the provisions of the Directors Plan
(including the stockholder approval requirements, the transferability of
non-statutory stock options and the elimination of the six (6) month holding
period requirement as a condition to the exercise of stock appreciation rights)
in order to take advantage of the recent amendments to Rule 16b-3 of the
Securities and Exchange Commission which exempts certain transactions by Board
members under the Directors Plan from the short-swing liability provisions of
the federal securities laws.
 
     The following is a summary of the principal features of the Directors Plan,
as amended. The summary, however, does not purport to be a complete description
of all the provisions of the Directors Plan. Any stockholder who wishes to
obtain a copy of the actual plan document may do so by written request to the
Corporate Secretary at the Company's executive offices.
 
ADMINISTRATION
 
     The terms and conditions of each automatic option grant (including the
timing and pricing of the option grant) will be determined by the express terms
and conditions of the Directors Plan, and neither the Board of Directors nor the
Compensation Committee of the Board of Directors will exercise any discretionary
functions with respect to such option grants.
 
ELIGIBILITY AND PARTICIPATION
 
     The individuals eligible to receive such automatic option grants will be
limited to (i) those individuals who are first elected or appointed as
non-employee Board members after September 14, 1993, whether through appointment
by the Board of Directors or election by the Company's stockholders, and (ii)
those individuals who continue to serve as non-employee Board members after
September 14, 1993, whether or not they commenced Board service prior to
September 14, 1993. In no event, however, will any non-employee Board member be
eligible to participate in the Directors Plan if such individual has previously
been in the employ of the Company (or any parent or subsidiary corporation) at
any time after December 31, 1989.
 
ISSUABLE SHARES
 
     The maximum number of shares of common stock issuable over the term of the
Option Plan may not exceed 370,000 shares, subject to adjustment from time to
time to reflect certain changes in the Company's capital structure.
 
                                       27

<PAGE>   31
     Should one or more outstanding options under this Directors Plan expire or
terminate for any reason prior to exercise in full, then the shares subject to
the portion of each option not so exercised will be available for subsequent
option grants under the Directors Plan. Unvested shares issued under the
Directors Plan and subsequently repurchased by the Company at the option
exercise price paid per share will be added back to the share reserve and will
accordingly be available for subsequent issuance under the Directors Plan.
Shares subject to any option or portion thereof surrendered in accordance with
the cash out provisions of the Directors Plan described below will reduce on a
share-for-share basis the number of shares available for subsequent option
grants under the Directors Plan.
 
     Should any change be made to the common stock issuable under the Directors
Plan by reason of any stock split, stock dividend, recapitalization, combination
of shares, exchange of shares or other change affecting the outstanding common
stock as a class without the Company's receipt of consideration, then
appropriate adjustments shall be made to (i) the maximum number and/or class of
securities issuable under the Directors Plan, (ii) the number and/or class of
securities for which automatic option grants are to be subsequently made to each
newly-elected or continuing non-employee Board member, and (iii) the number
and/or class of securities and price per share in effect under each option
outstanding under the Directors Plan. Such adjustments are to be effected in a
manner which shall preclude the enlargement or dilution of rights and benefits
under such options.
 
     As of February 28, 1998, 35,000 shares of common stock have been issued
under the Directors Plan, 197,500 shares of common stock were subject to
outstanding options and 137,500 shares of common stock(2) were available for
future option grants, inclusive of the 120,000 share increase subject to
stockholder approval at the Annual Meeting.
 
AUTOMATIC OPTION GRANTS
 
     Each individual who is first elected or appointed as a non-employee Board
member, whether through appointment by the Board of Directors or election by the
Company's stockholders, after September 14, 1993 will automatically be granted,
on the date of such initial election or appointment, a non-statutory stock
option to purchase 17,500 shares of common stock.
 
     On the first Nasdaq National Market trading day in January of each calendar
year, each individual who is at the time serving as an eligible non-employee
Board member will automatically be granted on such date a non-statutory option
to purchase 5,000 shares of common stock, provided such individual has served as
a Board member for a period of at least six (6) months.
 
     There is no limit on the number of 5,000-share option grants any one
non-employee Board member may receive over his or her period of Board service.
 
     Stockholder approval of this Proposal will also constitute pre-approval of
each option grant subsequently made under the Directors Plan and the exercise of
that option in accordance with the terms of such plan.
 
- ---------------
 
(2) The number of shares available for future option grants will be increased by
    the number of shares subject to currently-outstanding options which
    terminate or expire prior to exercise and will also be adjusted in the
    event of certain changes to the Company's capital structure.
                                       28

<PAGE>   32
 
OPTION GRANTS
 
     The table below shows, as to each of the non-employee Board member and
Board member nominees, the following information with respect to stock option
transactions effected during the period from the January 1, 1997 to February 28,
1998: (i) the number of shares of common stock subject to the automatic option
grants made during such period under the Directors Plan and (ii) the weighted
average option price payable per share.
 

<TABLE>
<CAPTION>
                                                                   WEIGHTED AVERAGE
                                              OPTIONS GRANTED      EXERCISE PRICE OF
                   NAME                      (NUMBER OF SHARES)     OPTIONS GRANTED
                   ----                      ------------------    -----------------
<S>                                          <C>                   <C>
Charles C. Edwards, M.D...................         10,000               $28.19
Alan B. Glassberg, M.D....................         22,500                26.49
John Groom................................         10,000                28.19
Kazuhiro Hashimoto........................         10,000                28.19
Franklin P. Johnson, Jr...................         10,000                28.19
Robert W. Pangia..........................         17,500                38.25
Bruce R. Ross.............................         17,500                28.00
The Honorable Lynn Schenk.................         10,000                28.19
William D. Young..........................             --                   --
All current non-employee directors as a
  group (9 persons).......................        112,500                29.13
</TABLE>

 
PRICE AND EXERCISABILITY
 
     The exercise price per share of common stock subject to each automatic
option grant will be equal to one hundred percent (100%) of the fair market
value per share of common stock on the automatic grant date. Such fair market
value will be deemed equal to the last reported selling price per share of the
Company's common stock on the date in question, as reported on the Nasdaq
National Market. On February 28, 1998, the fair market value per share was
$45.38. The maximum period during which any option may remain outstanding under
the Directors Plan may not exceed ten (10) years measured from the automatic
grant date.
 
     The exercise price is payable in cash or with shares of the Company's
common stock. The exercise price may also be paid through a same-day sale
program, pursuant to which a designated brokerage firm is to effect the
immediate sale of the shares purchased under the option and pay over to the
Company, out of the sale proceeds available on the settlement date, sufficient
funds to cover the exercise price for the purchased shares plus all applicable
withholding taxes.
 
     Each automatic grant will be immediately exercisable for any or all of the
option shares. However, any shares purchased under the option will be subject to
repurchase by the Company, at the exercise price paid per share, upon the
optionee's cessation of Board service prior to vesting in those shares. Each
initial 17,500 share option will vest, and the Company's repurchase right will
lapse, in a series of four (4) successive equal annual installments over the
optionee's period of continued service as a Board member, with the first such
installment to vest upon the optionee's completion of one (1) year of Board
service measured from the grant date. Each additional 5,000-share automatic
grant will vest, and the Company's repurchase with respect thereto will lapse,
upon optionee's completion of one (1) year of Board service measured from the
automatic grant date.
 
NON-TRANSFERABILITY
 
     During the lifetime of the optionee, each automatic option grant, together
with the limited stock appreciation right pertaining to such option, will be
exercisable only by the optionee and will not be assignable or transferable
other than (i) a transfer of the option effected by will or by the laws of
inheritance following the optionee's death or (ii) a transfer during the
optionee's lifetime to one or more members of the optionee's immediate family or
to a trust established exclusively for one or more such family members, to the
extent of such transfer or assignment is in furtherance of the optionee's estate
plan.
 
                                       29

<PAGE>   33
 
TERMINATION OF BOARD SERVICE
 
     Should the optionee cease to serve as a Board member for any reason (other
than death or permanent disability) while holding one or more automatic option
grants under the Directors Plan, then such individual will have a six (6)-month
period following the date of such cessation of Board service in which to
exercise each such option for any or all of the option shares in which the
optionee is vested at the time of such cessation of Board service. Each such
option will immediately terminate and cease to be outstanding, at the time of
such cessation of Board service, with respect to any option shares in which the
optionee is not otherwise at that time vested.
 
     Should the optionee die within six (6) months after cessation of Board
service, then any automatic option grant held by the optionee at the time of
death may subsequently be exercised, for any or all of the option shares in
which the optionee is vested at the time of his or her cessation of Board
service, by the personal representative of the optionee's estate or by the
person or persons to whom the option is transferred pursuant to the optionee's
will or in accordance with the laws of inheritance. The right to exercise each
such option will lapse upon the expiration of the twelve (12)-month period
measured from the date of the optionee's death.
 
     Should the optionee die or become permanently disabled while serving as a
Board member, then the shares of common stock at the time subject to each
automatic option grant held by such optionee will immediately vest in full (and
the Company's repurchase right with respect to such shares will terminate), and
the optionee (or the representative of the optionee's estate or the person or
persons to whom the option is transferred upon the optionee's death) will have a
twelve (12)-month period following the date of the optionee's cessation of Board
service in which to exercise such option for any or all of those vested shares
of common stock.
 
     In no event will any automatic grant under this Directors Plan remain
exercisable after the expiration date of the ten (10)-year option term.
 
STOCKHOLDER RIGHTS
 
     The holder of an automatic option grant will have none of the rights of a
stockholder with respect to any shares subject to such option until such
individual shall have exercised the option and paid the exercise price for the
purchased shares.
 
ACCELERATION OF OPTIONS
 
     Corporate Transaction.  In the event of any one of the following
transactions (a "Corporate Transaction"):
 
          (a) a merger or consolidation in which the Company is not the
     surviving entity, except for a transaction the principal purpose of which
     is to change the State in which the Company is incorporated,
 
          (b) the sale, transfer or other disposition of all or substantially
     all of the Company assets in liquidation or dissolution of the Company, or
 
          (c) any reverse merger in which the Company is the surviving entity
     but in which 50% or more of the Company's outstanding voting securities are
     transferred to persons other than those who held such securities
     immediately prior to the merger,
 
the shares of common stock at the time subject to each outstanding option under
the Directors Plan but not otherwise vested will automatically vest in full so
that each such option will, immediately prior to the specified effective date
for the Corporate Transaction, become fully exercisable for all of the shares of
common stock at the time subject to that option and may be exercised for all or
any portion of such shares as fully-vested shares of common stock. Immediately
following the consummation of the Corporate Transaction, each automatic option
grant under the Directors Plan will terminate and cease to be outstanding,
except to the extent assumed by the successor entity.
 
                                       30

<PAGE>   34
 
     Change in Control.  A Change in Control will be deemed to occur if:
 
          (a) any person or related group of persons (other than the Company or
     its affiliates) directly or indirectly acquires beneficial ownership of
     securities possessing fifty percent (50%) or more of the total combined
     voting power of the Company's outstanding securities pursuant to a tender
     or exchange offer made directly to the Company's stockholders to accept; or
 
          (b) there is a change in the composition of the Board of Directors
     over a period of twenty-four (24) consecutive months or less such that a
     majority of the Board members ceases, by reason of one or more proxy
     contests for the election of Board members, to be comprised of individuals
     who either (A) have been Board members continuously since the beginning of
     such period or (B) have been elected or nominated for election as Board
     members during such period by at least a majority of the Board members
     described in clause (A) who were still in office at the time such election
     or nomination was approved by the Board of Directors.
 
     The shares of common stock at the time subject to each outstanding option
under the Directors Plan but not otherwise vested will automatically vest in
full so that each such option will, immediately prior to the specified effective
date for the Change in Control, become fully exercisable for all of the shares
of common stock at the time subject to that option and may be exercised for all
or any portion of such shares as fully-vested shares of common stock. Each such
option will remain so exercisable until the expiration or sooner termination of
the option term.
 
     Hostile Take-Over.  A Hostile Take-Over will be deemed to occur if any
person or related group of persons (other than the Company or its affiliates)
directly or indirectly acquires beneficial ownership of securities possessing
fifty percent (50%) or more of the total combined voting power of the Company's
outstanding securities pursuant to a tender or exchange offer made directly to
the Company's stockholders which the Board of Directors does not recommend such
stockholders to accept.
 
     Upon the occurrence of a Hostile Take-Over, the optionee will have a thirty
(30)-day period in which to surrender to the Company each automatic option grant
held by him or her under the Directors Plan. The optionee will in return be
entitled to a cash distribution from the Company in an amount equal to the
excess of (i) the Take-Over Price of the shares of common stock at the time
subject to the surrendered option (whether or not the optionee is otherwise at
the time vested in those shares) over (ii) the aggregate exercise price payable
for such shares. Such cash distribution will be paid within five (5) days
following the surrender of the option to the Company. Stockholder approval of
this Proposal will also constitute pre-approval of each option subsequently
granted with such a surrender right and the exercise of that right in accordance
with the foregoing terms. Neither the approval of the Plan Administrator nor the
consent of the Board will be required at the time of the actual option surrender
and cash distribution.
 
     The shares of common stock subject to each option surrendered in connection
with the Hostile Take-Over will not be available for subsequent option grant
under the Directors Plan.
 
     The automatic option grants outstanding under the Directors Plan will in no
way affect the right of the Company to adjust, reclassify, reorganize or
otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.
 
AMENDMENT OF THE DIRECTORS PLAN AND AWARDS
 
     The Board of Directors has complete and exclusive power and authority to
amend or modify the Directors Plan in any or all respects whatsoever. However,
no such amendment or modification will adversely affect rights and obligations
with respect to options at the time outstanding under the Directors Plan, unless
the affected optionees consent to such amendment. In addition, certain
amendments may require stockholder approval pursuant to applicable laws or
regulations.
 
                                       31

<PAGE>   35
 
TERM OF THE DIRECTORS PLAN
 
     The Directors Plan will terminate upon the earlier of (i) September 13,
2003 or (ii) the date on which all shares available for issuance under the
Directors Plan have been issued as vested shares or cancelled pursuant to the
cash-out provisions of the Directors Plan. If the date of termination is
determined under clause (i) above, then all option grants outstanding on such
date will thereafter continue to have force and effect in accordance with the
provisions of the instruments evidencing such grants.
 
FEDERAL INCOME TAX CONSEQUENCES
 
     Options granted under the Directors Plan will be non-statutory options
which do not satisfy the requirement of Section 422 of the Internal Revenue
Code. No taxable income will be recognized by an optionee upon the grant of the
non-statutory option, but the optionee will normally recognize ordinary income
in the year in which the option is exercised. The amount of such ordinary income
will be equal to the fair market value of the purchased shares on the exercise
date over the option exercise price paid for the shares.
 
     Special provisions of the Internal Revenue Code apply to the acquisition of
unvested shares of the Company's common stock under a non-statutory option.
These special provisions may be summarized as follows:
 
          (a) If the shares acquired upon exercise of the non-statutory option
     are subject to repurchase by the Company at the original exercise price in
     the event of the optionee's termination of Board service prior to vesting
     in those shares, then the optionee will not recognize any taxable income at
     the time of exercise but will have to report as ordinary income, as and
     when the optionee vests in the shares, an amount equal to the excess of (i)
     the fair market value of the shares on the date the optionee vests in those
     shares over (ii) the option exercise price paid for such shares.
 
          (b) The optionee may, however, elect under Section 83(b) of the
     Internal Revenue Code to include as ordinary income in the year of exercise
     of the non-statutory option an amount equal to the excess of (i) the fair
     market value of the purchased shares on the exercise date over (ii) the
     option exercise price paid for such shares. If the Section 83(b) election
     is made, the optionee will not recognize any additional income as and when
     he or she vests in such shares.
 
     The Company will be entitled to a business expense deduction equal to the
amount of ordinary income recognized by the optionee with respect to the
exercised non-statutory option. The deduction will in general be allowed for the
taxable year of the Company in which such ordinary income is recognized by the
optionee.
 
NEW PLAN BENEFITS
 
     As of March 31, 1998, no stock options have been granted on the basis of
the 120,000 share increase subject to stockholder approval at the Annual
Meeting.
 
STOCKHOLDER APPROVAL
 
     The affirmative vote of a majority of the shares of the Company's
outstanding voting stock present or represented by proxy and voting at the
Annual Meeting is required for approval of the amendments to the Directors Plan.
Should such stockholder approval not be obtained, then any options granted on
the basis of the 120,000 share increase which forms part of this Proposal will
terminate without becoming exercisable for any of the shares of common stock
subject to those options, and no further options will be granted on the basis of
such share increase. In addition, any unvested shares repurchased by the Company
at the option exercise paid per share will not be added back to the share
reserve for reissuance, and none of the changes to the stockholder approval
provisions of the Directors Plan will be implemented. However, the Directors
Plan will continue to remain in effect, and option grants may continue to be
made pursuant to the provisions of the Directors Plan in effect prior to the
amendments summarized in the Proposal, until the available reserve of common
stock as last approved by the stockholders has been issued pursuant to option
grants made under the Directors Plan.
 
                                       32

<PAGE>   36
 
 
    THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE APPROVAL OF
THE AMENDMENTS TO THE 1993 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN OF THE
COMPANY.
 
                                       33

<PAGE>   37
 

                                 PROPOSAL NO. 4
 
                 RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
 
     Upon the recommendation of the Audit and Finance Committee, the Board of
Directors has appointed the firm of KPMG Peat Marwick LLP as the Company's
independent public accountants for the fiscal year ending December 31, 1998,
subject to ratification of the stockholders. KPMG Peat Marwick LLP has been
employed regularly by the Company to audit its consolidated financial statements
and for other purposes since inception of the Company. Representatives of KPMG
Peat Marwick LLP are expected to be present at the Company's Annual Meeting.
They will have an opportunity to make a statement, if they desire to do so, and
will be available to respond to appropriate questions.
 
 
    THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSAL TO
RATIFY THE SELECTION OF KPMG PEAT MARWICK LLP AS THE COMPANY'S INDEPENDENT
PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1998.
 
                                 OTHER BUSINESS
 
     The Board of Directors is not aware of any other matter which may be
presented for action at the Annual Meeting other than the matters set forth in
this Proxy Statement. Should any other matter requiring a vote of the
stockholders arise, it is intended that the persons named as proxy holders on
the enclosed proxy card will vote the shares represented thereby in accordance
with their best judgment in the interest of the Company. Discretionary authority
with respect to such other matters is granted by the execution of the enclosed
proxy.
 
                             STOCKHOLDER PROPOSALS
 
     Under the present rules of the SEC, the deadline for stockholders to submit
proposals to be considered for inclusion in the Company's Proxy Statement for
the 1998 Annual Meeting of Stockholders is expected to be December 15, 1998.
Such proposals may be included in next year's Proxy Statement if they comply
with certain rules and regulations promulgated by the SEC.
 
                                 ANNUAL REPORT
 
     A copy of the Annual Report of the Company for the fiscal year ended
December 31, 1997 has been mailed concurrently with this Proxy Statement to all
stockholders entitled to notice of and to vote at the Annual Meeting. The Annual
Report is not incorporated into this Proxy Statement and is not considered proxy
solicitation material.
 
                                   FORM 10-K
 
     The Company filed an Annual Report on Form 10-K with the SEC. A copy of the
Annual Report on Form 10-K for the fiscal year ended December 31, 1997 has been
mailed concurrently with this Proxy Statement to all stockholders entitled to
notice of and to vote at the Annual Meeting.
 
                                          THE BOARD OF DIRECTORS OF
                                          IDEC PHARMACEUTICALS CORPORATION
 
Dated: April 8, 1998
 
                                       34

<PAGE>   38


                        IDEC PHARMACEUTICALS CORPORATION

                  1993 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
                (AMENDED AND RESTATED THROUGH FEBRUARY 20, 1998)

      I.       PURPOSE OF THE PLAN

               This 1993 Non-Employee Directors Stock Option Plan (the "Plan")
is intended to promote the interests of IDEC Pharmaceuticals Corporation, a
Delaware corporation (the "Corporation"), by providing the non-employee members
of the Corporation's Board of Directors with the opportunity to acquire a
proprietary interest, or otherwise increase their proprietary interest, in the
Corporation as an incentive for them to remain in the service of the
Corporation.

     II.       DEFINITIONS

               For purposes of the Plan, the following definitions shall be in
effect:

               BOARD:  the Corporation's Board of Directors.

               CODE:  the Internal Revenue Code of 1986, as amended.

               COMMON STOCK:  shares of the Corporation's common stock.

               CHANGE IN CONTROL: a change in ownership or control of the
Corporation effected through either of the following transactions:

                      a. any person or related group of persons (other than the
        Corporation or a person that directly or indirectly controls, is
        controlled by, or is under common control with, the Corporation)
        directly or indirectly acquires beneficial ownership (within the meaning
        of Rule 13d-3 of the Securities Exchange Act of 1934, as amended) of
        securities possessing fifty percent (50%) or more of the total combined
        voting power of the Corporation's outstanding securities pursuant to a
        tender or exchange offer made directly to the Corporation's
        stockholders; or

                      b. there is a change in the composition of the Board over
        a period of twenty-four (24) consecutive months or less such that a
        majority of the Board members ceases, by reason of one or more proxy
        contests for the election of Board members, to be comprised of
        individuals who either (A) have been Board members continuously since
        the beginning of such period or (B) have been elected or nominated for
        election as Board members during such period by at least a majority of
        the Board members described in clause (A) who were still in office at
        the time such election or nomination was approved by the Board.




<PAGE>   39

               CORPORATE TRANSACTION: any of the following stockholder-approved
transactions to which the Corporation is a party:

                      a. a merger or consolidation in which the Corporation is
        not the surviving entity, except for a transaction the principal purpose
        of which is to change the State in which the Corporation is
        incorporated,

                      b. the sale, transfer or other disposition of all or
        substantially all of the assets of the Corporation in complete
        liquidation or dissolution of the Corporation, or

                      c. any reverse merger in which the Corporation is the
        surviving entity but in which securities possessing fifty percent (50%)
        or more of the total combined voting power of the Corporation's
        outstanding securities are transferred to person or persons different
        from those who held such securities immediately prior to such merger.

               EFFECTIVE DATE: September 14, 1993, the date on which the Plan
was adopted by the Board. This restatement of the Plan has an effective date of
February 20, 1998, the date of adoption by the Board, but such restatement is
subject to stockholder approval at the 1998 Annual Meeting.

               FAIR MARKET VALUE: the Fair Market Value per share of Common
Stock determined in accordance with the following provisions:

                      a. If the Common Stock is not at the time listed or
        admitted to trading on any national stock exchange but is traded on the
        Nasdaq National Market, the Fair Market Value shall be the closing
        selling price per share on the date in question, as such price is
        reported by the National Association of Securities Dealers on the Nasdaq
        National Market. If there is no reported closing selling price for the
        Common Stock on the date in question, then the closing selling price on
        the last preceding date for which such quotation exists shall be
        determinative of Fair Market Value.

                      b. If the Common Stock is at the time listed or admitted
        to trading on any national stock exchange, then the Fair Market Value
        shall be the closing selling price per share on the date in question on
        the exchange determined by the Plan Administrator to be the primary
        market for the Common Stock, as such price is officially quoted in the
        composite tape of transactions on such exchange. If there is no reported
        sale of Common Stock on such exchange on the date in question, then the
        Fair Market Value shall be the closing selling price on the exchange on
        the last preceding date for which such quotation exists.



                                       2.


<PAGE>   40

               HOSTILE TAKE-OVER: the direct or indirect acquisition by any
person or related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common control
with, the Corporation) of beneficial ownership (within the meaning of Rule 13d-3
of the Securities Exchange Act of 1934, as amended) of securities possessing
fifty percent (50%) or more of the total combined voting power of the
Corporation's outstanding securities pursuant to a tender or exchange offer made
directly to the Corporation's stockholders which the Board does not recommend
such stockholders to accept.

               1934 ACT:  the Securities Exchange Act of 1934, as amended.

               OPTIONEE: any person to whom an option is granted under the Plan.

               PERMANENT DISABILITY OR PERMANENTLY DISABLED: the inability of
the Optionee to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment expected to result in death
or to be of continuous duration of twelve (12) months or more.

               SERVICE: the performance of services as a member of the Board.

               TAKE-OVER PRICE: the greater of (a) the Fair Market Value per
share of Common Stock on the date the option is surrendered to the Corporation
in connection with a Hostile Take-Over or (b) the highest reported price per
share of Common Stock paid by the tender offeror in effecting such Hostile
Take-Over.

    III.       ADMINISTRATION OF THE PLAN

               The terms and conditions of each automatic option grant
(including the timing and pricing of the option grant) shall be determined by
the express terms and conditions of the Plan, and neither the Board nor any
committee of the Board shall exercise any discretionary functions with respect
to option grants made pursuant to the Plan.

     IV.       STOCK SUBJECT TO THE PLAN

               A. Shares of the Corporation's Common Stock shall be available
for issuance under the Plan and shall be drawn from either the Corporation's
authorized but unissued shares of Common Stock or from reacquired shares of
Common Stock, including shares repurchased by the Corporation on the open
market. The maximum number of shares of Common Stock which may be issued over
the term of the Plan shall not exceed 370,000 shares(1), subject to adjustment
from time to time in accordance with the provisions of this Article IV.



- ----------

   (1)  Includes the 120,000-share increase authorized by the Board on February
        20, 1998, subject to stockholder approval at the 1998 Annual Meeting.



                                       3.


<PAGE>   41

               B. Should one or more outstanding options under this Plan expire
or terminate for any reason prior to exercise in full, then the shares subject
to the portion of each option not so exercised shall be available for subsequent
option grants under the Plan. Unvested shares issued under the Plan and
subsequently repurchased by the Corporation, at the option exercise price paid
per share, pursuant to the Corporation's repurchase rights under the Plan, shall
be added back to the number of shares of Common Stock reserved for issuance
under the Plan and shall accordingly be available for reissuance through one or
more subsequent option grants under the Plan. Shares subject to any option or
portion thereof surrendered in accordance with Article VII shall reduce on a
share-for-share basis the number of shares of Common Stock available for
subsequent option grants under the Plan. In addition, should the exercise price
of an outstanding option under the Plan be paid with shares of Common Stock,
then the number of shares of Common Stock available for issuance under the Plan
shall be reduced by the gross number of shares for which the option is
exercised, and not by the net number of shares of Common Stock actually issued
to the option holder.

               C. Should any change be made to the Common Stock issuable under
the Plan by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation's receipt of
consideration, then appropriate adjustments shall be made to (i) the maximum
number and/or class of securities issuable under the Plan, (ii) the number
and/or class of securities for which automatic option grants are to be
subsequently made per each newly-elected or continuing non-employee Board member
under the Plan, and (iii) the number and/or class of securities and price per
share in effect under each option outstanding under the Plan. Such adjustments
to the outstanding options are to be effected in a manner which shall preclude
the enlargement or dilution of rights and benefits under such options. The
adjustments determined by the Board shall be final, binding and conclusive.

      V.       ELIGIBILITY

               A. Eligible Optionees. The individuals eligible to receive
automatic option grants pursuant to the provisions of this Plan shall be limited
to (i) those individuals who are first elected or appointed as non-employee
Board members after the Effective Date, whether through appointment by the Board
or election by the Corporation's stockholders, and (ii) those individuals who
continue to serve as non-employee Board members after such Effective Date,
whether or not they commenced Board service prior to such Effective Date. In no
event, however, shall any non-employee Board member be eligible to participate
in the Plan if such individual has previously been in the employ of the
Corporation (or any parent or subsidiary corporation) at any time after December
31, 1989. Each non-employee Board member eligible to participate in the Plan
pursuant to the foregoing criteria shall be designated an Eligible Director for
purposes of the Plan.



                                       4.


<PAGE>   42

     VI.       TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS

               A. Grant Date. Option grants shall be made on the dates specified
below:

                      - Each individual who is first elected or appointed as an
        Eligible Director, whether through appointment by the Board or election
        by the Corporation's stockholders, after the Effective Date shall
        automatically be granted, on the date of such initial election or
        appointment, a non-statutory stock option to purchase 17,500 shares of
        Common Stock.

                      - On the first Nasdaq trading day in January of each
        calendar year (commencing with the 1994 calendar year), each individual
        who is at the time serving as an Eligible Director shall automatically
        be granted on such date a non-statutory option to purchase 5,000 shares
        of Common Stock, provided such individual has served as a Board member
        for a period of at least six (6) months.

               There shall be no limit on the number of 5,000-share option
grants any one Eligible Director may receive over his or her period of Board
service.

               Stockholder approval of this February 20, 1998 restatement at the
1998 Annual Meeting shall constitute pre-approval of each option grant
subsequently made pursuant to the provisions of the Plan and the subsequent
exercise of that option in accordance with its terms.

               B. Exercise Price. The exercise price per share of Common Stock
subject to each automatic option grant shall be equal to one hundred percent
(100%) of the Fair Market Value per share of Common Stock on the automatic grant
date.

               C.     Payment.

                      The exercise  price shall become  immediately  due upon
exercise of the option and shall be payable in one of the alternative forms
specified below:

                      (i) full payment in cash or check made payable to the
        Corporation's order; or

                      (ii) full payment in shares of Common Stock held for the
        requisite period necessary to avoid a charge to the Corporation's
        earnings for financial-reporting purposes and valued at Fair Market
        Value on the Exercise Date (as such term is defined below); or

                      (iii) full payment in a combination of shares of Common
        Stock held for the requisite period necessary to avoid a charge to the
        Corporation's earnings for financial-reporting purposes and valued at
        Fair Market Value on the Exercise Date and cash or check payable to the
        Corporation's order; or



                                       5.


<PAGE>   43


                      (iv) to the extent the option is exercised for vested
        shares, full payment through a broker-dealer sale and remittance
        procedure pursuant to which the non-employee Board member (I) shall
        provide irrevocable instructions to a Corporation-designated brokerage
        firm to effect the immediate sale of the purchased shares and remit to
        the Corporation, out of the sale proceeds available on the settlement
        date, sufficient funds to cover the aggregate exercise price payable for
        the purchased shares and (II) shall concurrently provide directives to
        the Corporation to deliver the certificates for the purchased shares
        directly to such brokerage firm in order to complete the sale
        transaction.

               For purposes of this subparagraph VI.C, the Exercise Date shall
be the date on which written notice of the option exercise is delivered to the
Corporation. Except to the extent the sale and remittance procedure specified
above is utilized in connection with the exercise of the option for vested
shares, payment of the option price for the purchased shares must accompany the
exercise notice. However, if the option is exercised for any unvested shares,
then the optionee must also execute and deliver to the Corporation a stock
purchase agreement for those unvested shares which provides the Corporation with
the right to repurchase, at the exercise price paid per share, any unvested
shares held by the optionee at the time of cessation of Board service and which
precludes the sale, transfer or other disposition of any shares purchased under
the option, to the extent those shares are subject to the Corporation's
repurchase right.

               D. Option Term. Each automatic grant under the Plan shall have a
maximum term of ten (10) years measured from the automatic grant date.

               E. Exercisability/Vesting. Each automatic grant shall be
immediately exercisable for any or all of the option shares. However, any shares
purchased under the option shall be subject to repurchase by the Corporation, at
the exercise price paid per share, upon the Optionee's cessation of Board
service prior to vesting in those shares. Each initial 17,500 share option shall
vest, and the Corporation's repurchase right shall lapse, in a series of four
(4) equal and successive annual installments over the Optionee's period of
continued service as a Board member, with the first such installment to vest
upon Optionee's completion of one (1) year of Board service measured from the
grant date. Each additional 5,000-share automatic grant shall vest, and the
Corporation's repurchase with respect thereto shall lapse, upon Optionee's
completion of one (1) year of Board service measured from the automatic grant
date. Vesting of the option shares shall be subject to acceleration as provided
in Section VI.G and Article VII. In no event, however, shall any additional
option shares vest after the Optionee's cessation of Board service.

               F. Non-Transferability. During the lifetime of the Optionee, each
automatic option grant, together with the limited stock appreciation right
pertaining to such option, shall be exercisable only by the Optionee and shall
not be assignable or transferable by the Optionee other than (i) a transfer of
the option effected by will or by the laws of descent and distribution following
Optionee's death or (ii) a transfer of the option during the optionee's lifetime
to one or more members of the optionee's immediate family or to a trust
established exclusively for one



                                       6.


<PAGE>   44

or more such family members, to the extent such transfer is effected pursuant to
the optionee's estate plan. The assigned portion may only be exercised by the
person or persons who acquire a proprietary interest in the option pursuant to
the assignment. The terms applicable to the assigned portion shall be the same
as those in effect for the option immediately prior to such assignment and shall
be set forth in such documents issued to the assignee as the Corporation may
deem appropriate.

               G.     Effect of Termination of Board Service.

                      1.     Should  the  Optionee  cease to serve as a Board
member for any reason (other than death or Permanent Disability) while holding
one or more automatic option grants under the Plan, then such individual shall
have a six (6)-month period following the date of such cessation of Board
service in which to exercise each such option for any or all of the option
shares in which the Optionee is vested at the time of such cessation of Board
service. Each such option shall immediately terminate and cease to be
outstanding, at the time of such cessation of Board service, with respect to any
option shares in which the Optionee is not otherwise at that time vested.

                      2.     Should the  Optionee  die within six (6) months
after cessation of Board service, then any automatic option grant held by the
Optionee at the time of death may subsequently be exercised, for any or all of
the option shares in which the Optionee is vested at the time of his or her
cessation of Board service (less any option shares subsequently purchased by the
Optionee prior to death), by the personal representative of the Optionee's
estate or by the person or persons to whom the option is transferred pursuant to
the Optionee's will or in accordance with the laws of descent and distribution.
The right to exercise each such option shall lapse upon the expiration of the
twelve (12)-month period measured from after the date of the Optionee's death.

                      3.     Should  the  Optionee  die or  become  Permanent
Disabled while serving as a Board member, then the shares of Common Stock at the
time subject to each automatic option grant held by such Optionee shall
immediately vest in full (and the Corporation's repurchase right with respect to
such shares shall terminate), and the Optionee (or the representative of the
Optionee's estate or the person or persons to whom the option is transferred
upon the Optionee's death) shall have a twelve (12)-month period following the
date of the Optionee's cessation of Board service in which to exercise such
option for any or all of those vested shares of Common Stock.

                      4. In no event shall any automatic grant under this Plan
remain exercisable after the expiration date of the ten (10)-year option term.
Upon the expiration of the applicable post-service exercise period under
subparagraphs 1 through 3 above or (if earlier) upon the expiration of the ten
(10)-year option term, the automatic grant shall terminate and cease to be
outstanding for any option shares in which the Optionee was vested at the time
of his or her cessation of Board service but for which such option was not
otherwise exercised.



                                       7.


<PAGE>   45

               H. Stockholder Rights. The holder of an automatic option grant
shall have none of the rights of a stockholder with respect to any shares
subject to such option until such individual shall have exercised the option and
paid the exercise price for the purchased shares.

               I.     Remaining  Terms.  The remaining  terms and conditions of
each automatic option grant shall be as set forth in the form Non-statutory
Stock Option Agreement attached as Exhibit A.

    VII.       CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER

               A. In the event of any Corporate Transaction, the shares of
Common Stock at the time subject to each outstanding option but not otherwise
vested shall automatically vest in full so that each such option shall,
immediately prior to the specified effective date for the Corporate Transaction,
become fully exercisable for all of the shares of Common Stock at the time
subject to that option and may be exercised for all or any portion of such
shares as fully-vested shares of Common Stock. Immediately following the
consummation of the Corporate Transaction, each automatic option grant under the
Plan shall terminate and cease to be outstanding, except to the extent assumed
by the successor entity (or parent thereof).

               B. In connection with any Change in Control of the Corporation,
the shares of Common Stock at the time subject to each outstanding option but
not otherwise vested shall automatically vest in full so that each such option
shall, immediately prior to the specified effective date for the Change in
Control, become fully exercisable for all of the shares of Common Stock at the
time subject to that option and may be exercised for all or any portion of such
shares as fully-vested shares of Common Stock. Each such option shall remain
fully exercisable for the option shares which vest in connection with the Change
in Control until the expiration or sooner termination of the option term.

               C. The Optionee shall have the right, exercisable at any time
within the thirty (30)-day period immediately following the effective date of a
Hostile Take-Over, to surrender to the Corporation each automatic option grant
held by him or her under this Plan. The Optionee shall in return be entitled to
a cash distribution from the Corporation in an amount equal to the excess of (i)
the Take-Over Price of the shares of Common Stock at the time subject to the
surrendered option (whether or not the Optionee is otherwise at the time vested
in those shares) over (ii) the aggregate exercise price payable for such shares.
Such cash distribution shall be paid within five (5) days following the
surrender of the option to the Corporation. Stockholder approval of this
February 20, 1998 restatement at the 1998 Annual Meeting shall constitute the
pre-approval of each option subsequently granted with such a surrender right and
the subsequent exercise of that right in accordance with the provisions of this
Section VII.C. Neither the approval of the Plan Administrator nor the consent of
the Board shall be required at the time of the actual option surrender and cash
distribution.



                                       8.


<PAGE>   46

               D. The shares of Common Stock subject to each option surrendered
in connection with the Hostile Take-Over shall NOT be available for subsequent
option grant under this Plan.

               E. The automatic option grants outstanding under the Plan shall
in no way affect the right of the Corporation to adjust, reclassify, reorganize
or otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.

   VIII.       AMENDMENT OF THE PLAN AND AWARDS

               The Board has complete and exclusive power and authority to amend
or modify the Plan (or any component thereof) in any or all respects whatsoever.
However, no such amendment or modification shall adversely affect rights and
obligations with respect to options at the time outstanding under the Plan,
unless the affected optionees consent to such amendment. In addition, certain
amendments to the Plan may require stockholder approval pursuant to applicable
law or regulation.

     IX.       EFFECTIVE DATE AND TERM OF PLAN

               A. The Plan became effective immediately upon adoption by the
Board on September 14, 1993 and was approved by the Corporation's stockholders
at the 1994 Annual Meeting. On January 25, 1995, the Board adopted an amendment
to the Plan which increased the number of shares of Common Stock issuable
thereunder by an additional 100,000 shares, and that amendment was approved by
the stockholders at the 1995 Annual Meeting.

               B. On February 20, 1998, the Board adopted a series of amendments
to the Plan (the "1997 Amendments") which (i) increased the number of shares of
Common Stock reserved for issuance over the term of the Plan by an additional
120,000 shares, (ii) allowed unvested shares issued under the Plan and
subsequently repurchased by the Corporation at the option exercise price paid
per share to be reissued under the Plan and (iii) effected a series of
additional changes to the provisions of the Plan (including the stockholder
approval requirements, the transferability of non-statutory stock options and
the elimination of the six (6)-month holding period requirement as a condition
to the exercise of stock appreciation rights) in order to take advantage of the
recent amendments to Rule 16b-3 of the 1934 Act which exempts certain
transactions by Board members under the Plan from the short-swing liability
provisions of the federal securities laws. The 1997 Amendments are subject to
stockholder approval at the 1998 Annual Meeting and shall not be implemented if
such stockholder approval is not obtained.

               C. The Plan shall terminate upon the earlier of (i) September 13,
2003 or (ii) the date on which all shares available for issuance under the Plan
shall have been issued as vested shares or cancelled pursuant to the cash-out
provisions of the Plan. If the date of termination is determined under clause
(i) above, then all option grants outstanding on such date shall thereafter



                                       9.


<PAGE>   47

continue to have force and effect in accordance with the provisions of the
instruments evidencing such grants.

      X.       USE OF PROCEEDS

               Any cash proceeds received by the Corporation from the sale of
shares pursuant to option grants or share issuances under the Plan shall be used
for general corporate purposes

     XI.       REGULATORY APPROVALS

               A. The implementation of the Plan, the granting of any option
under the Plan and the issuance of Common Stock upon the exercise of the option
grants made hereunder shall be subject to the Corporation's procurement of all
approvals and permits required by regulatory authorities having jurisdiction
over the Plan, the options granted under it, and the Common Stock issued
pursuant to it.

               B. No shares of Common Stock or other assets shall be issued or
delivered under this Plan unless and until there shall have been compliance with
all applicable requirements of Federal and state securities laws, including the
filing and effectiveness of the Form S-8 registration statement for the shares
of Common Stock issuable under the Plan, and all applicable listing requirements
of any securities exchange on which the Common Stock is then listed for trading.

    XII.       NO IMPAIRMENT OF RIGHTS

               Neither the action of the Corporation in establishing the Plan
nor any provision of the Plan shall be construed or interpreted so as to affect
adversely or otherwise impair the right of the Corporation or the stockholders
to remove any individual from the Board at any time in accordance with the
provisions of applicable law.

   XIII.       MISCELLANEOUS PROVISIONS

               A. The right to acquire Common Stock or other assets under the
Plan may not be assigned, encumbered or otherwise transferred by any Optionee.

               B. The provisions of the Plan relating to the exercise of options
and the vesting of shares shall be governed by the laws of the State of
California, as such laws are applied to contracts entered into and performed in
such State.

               C. The provisions of the Plan shall inure to the benefit of, and
be binding upon, the Corporation and its successors or assigns, whether by
Corporate Transaction or otherwise, and the Optionees, the legal representatives
of their respective estates, their respective heirs or legatees and their
permitted assignees.



                                      10.

<PAGE>   48

                        IDEC PHARMACEUTICALS CORPORATION
                             1988 STOCK OPTION PLAN

                (AMENDED AND RESTATED THROUGH FEBRUARY 20, 1998)


      I.       PURPOSES OF THE PLAN

               (a) This Stock Option Plan (the "Plan") is intended to promote
the interests of IDEC Pharmaceuticals Corporation, a Delaware corporation (the
"Corporation"), by providing a method whereby (i) key employees (including
officers and directors) of the Corporation (or its parent or subsidiary
corporations) responsible for the management, growth and financial success of
the Corporation (or its parent or subsidiary corporations), (ii) the
non-employee members of the Corporation's Board of Directors (or any parent or
subsidiary corporations) and (iii) independent consultants and advisors who
provide valuable services to the Corporation (or its parent or subsidiary
corporations) may be offered incentives and rewards which will encourage them to
acquire a proprietary interest, or otherwise increase their proprietary
interest, in the Corporation and continue to render services to the Corporation
(or its parent or subsidiary corporations).

               (b) The following provisions shall be applicable in determining
the parent and subsidiary corporations of the Corporation:

                           (i) Any corporation (other than the Corporation) in
        an unbroken chain of corporations ending with the Corporation shall be
        considered to be a PARENT corporation of the Corporation, provided each
        such corporation in the unbroken chain (other than the Corporation)
        owns, at the time of the determination, stock possessing fifty percent
        (50%) or more of the total combined voting power of all classes of stock
        in one of the other corporations in such chain.

                          (ii) Each corporation (other than the Corporation) in
        an unbroken chain of corporations beginning with the Corporation shall
        be considered to be a SUBSIDIARY of the Corporation, provided each such
        corporation (other than the last corporation) in the unbroken chain
        owns, at the time of the determination, stock possessing fifty percent
        (50%) or more of the total combined voting power of all classes of stock
        in one of the other corporations in such chain.

     II.       ADMINISTRATION OF THE PLAN

               (a) The Corporation's Board of Directors (the "Board") shall
appoint a committee ("Committee") of two (2) or more non-employee Board members
to assume full responsibility for the administration of the Plan. Members of the
Committee shall serve for such period of time as the Board may determine and
shall be subject to removal by the Board at any time.




<PAGE>   49

               (b) The Committee as Plan Administrator shall have full power and
authority (subject to the express provisions of the Plan) to establish such
rules and regulations as it may deem appropriate for the proper administration
of the Plan and to make such determinations under, and issue such
interpretations of, the Plan and any outstanding option grants or stock
issuances as it may deem necessary or advisable. Decisions of the Plan
Administrator shall be final and binding on all parties who have an interest in
the Plan or any outstanding option or stock issuance thereunder.

    III.       ELIGIBILITY FOR OPTION GRANTS

               (a) The persons eligible to receive option grants under the Plan
are as follows:

                           (i) key employees (including officers and directors)
        of the Corporation (or its parent or subsidiary corporations) who render
        services which contribute to the success and growth of the Corporation
        (or its parent or subsidiary corporations) or which may reasonably be
        anticipated to contribute to the future success and growth of the
        Corporation (or its parent or subsidiary corporations);

                          (ii) the non-employee members of the Board or the
        non-employee members of the board of directors of any parent or
        subsidiary corporations; and

                         (iii) those independent consultants or other advisors
        who provide valuable services to the Corporation (or its parent or
        subsidiary corporations).

               (b) The Plan Administrator shall have full authority to determine
which eligible individuals are to receive option grants under the Plan, the
number of shares to be covered by each such grant, whether the granted option is
to be an incentive stock option ("Incentive Option") which satisfies the
requirements of Section 422 of the Internal Revenue Code or a non-statutory
option not intended to meet such requirements, the time or times at which each
such option is to become exercisable, and the maximum term for which the option
is to be outstanding.

     IV.       STOCK SUBJECT TO THE PLAN

               (a) The stock issuable under the Plan shall be shares of the
Corporation's authorized but unissued or reacquired Common Stock. The maximum
number of shares which may be issued under the Plan shall not exceed 6,335,000
shares.*/ The total number of shares



- ----------
*/ Adjusted to reflect (i) the 1 for 2.5 reverse Common Stock split effected by
the Company on August 18, 1991, (ii) the 670,000 share increase authorized by
the Board on March 18, 1992 and approved by the shareholders at the 1992 Annual
Meeting, (iii) the 700,000 share increase



                                       2.


<PAGE>   50

issuable under the Plan shall be subject to adjustment from time to time in
accordance with Section IV(d) of the Plan.

               (b) In no event may the aggregate number of shares of Common
Stock for which any one individual participating in the Plan may be granted
stock options and separately exercisable stock appreciation rights exceed
1,250,000 shares in the aggregate over the remaining term of the Plan, subject
to adjustment from time to time in accordance with Section IV(d) of the Plan.
For purposes of such limitation, no stock options or stock appreciation rights
granted prior to January 1, 1994 shall be taken into account.

               (c) Should an option expire or terminate for any reason prior to
exercise in full (including options cancelled in accordance with the
cancellation-regrant provisions of Section VIII of the Plan), the shares subject
to the portion of the option not so exercised shall be available for subsequent
option grants under the Plan. Unvested shares issued under the Plan and
subsequently repurchased by the Corporation, at the option exercise price paid
per share, pursuant to the Corporation's repurchase rights under the Plan, shall
be added back to the number of shares of Common Stock reserved for issuance
under the Plan and shall accordingly be available for reissuance through one or
more subsequent option grants under the Plan. Shares subject to any option
cancelled in accordance with Section IX of the Plan shall reduce on a
share-for-share basis the number of shares of Common Stock available for
subsequent option grants under this Plan. In addition, should the exercise price
of an outstanding option under the Plan be paid with shares of Common Stock,
then the number of shares of Common Stock available for issuance under the Plan
shall be reduced by the gross number of shares for which the option is
exercised, and not by the net number of shares of Common Stock actually issued
to the option holder.

               (d) In the event any change is made to the Common Stock issuable
under the Plan by reason of any stock split, stock dividend, combination of
shares, exchange of shares or other change affecting the outstanding Common
Stock as a class without the Corporation's receipt of consideration, then
appropriate adjustments shall be made to (I) the maximum number and/or class of
securities issuable under the Plan, (II) the maximum number and/or class of
securities



- ----------
authorized by the Board on January 13, 1993 and approved by the shareholders at
the 1993 Annual Meeting, (iv) the 650,000 share increase authorized by the Board
on February 28, 1994 and approved by the shareholders at the 1994 Annual
Meeting, (v) the 500,000 share increase authorized by the Board on January 25,
1995, and approved by the shareholders at the 1995 Annual Meeting, (vi) the
1,200,000 share increase authorized by the Board on January 24, 1996, and
approved by the shareholders at the 1996 Annual Meeting, (vii) the 800,000 share
increase authorized by the Board on February 24, 1997, and approved by the
shareholders at the 1997 Annual Meeting and (viii) the 855,000 share increase
authorized by the Board on February 20, 1998, subject to shareholder approval at
the 1998 Annual Meeting. In no event, however, shall more than 4,178,739 shares
of Common Stock be issued under the Plan after February 20, 1998, subject to
adjustment under Section IV(d) in the event of changes in the Company's capital
structure.



                                       3.


<PAGE>   51

for which stock options and separately exercisable stock appreciation rights may
be granted to any one participant in the aggregate after December 31, 1993 and
(III) the number and/or class of securities and exercise price per share in
effect under each outstanding option in order to prevent the dilution or
enlargement of benefits thereunder. The adjustments determined by the Plan
Administrator shall be final, binding and conclusive.

      V.       TERMS AND CONDITIONS OF OPTIONS

               Options granted pursuant to the Plan shall be authorized by
action of the Plan Administrator and may, at the Plan Administrator's
discretion, be either Incentive Options or non-statutory options. Individuals
who are not Employees (as defined in Section V.3.D below) may only be granted
non-statutory options. Each granted option shall be evidenced by one or more
instruments in the form approved by the Plan Administrator; provided, however,
that each such instrument shall comply with the terms and conditions specified
below. Each instrument evidencing an Incentive Option shall, in addition, be
subject to the applicable provisions of Section VI.

               1.     Option Price.

                      A.     The  option   price  per  share   shall  be  fixed
by the Plan Administrator, but in no event shall the option price per share be
less than eighty-five percent (85%) of the fair market value of a share of
Common Stock on the date of the option grant.

                       B.    The option price shall become immediately due
upon exercise of the option and shall, subject to the provisions of Section X
and the instrument evidencing the grant, be payable in one of the alternative
forms specified below:

                      (i) full payment in cash or check payable to the
        Corporation; or

                      (ii) full payment in shares of Common Stock held by the
        optionee for the requisite period necessary to avoid a charge to the
        Corporation's reported earnings and valued at fair market value on the
        Exercise Date (as such term is defined below); or

                      (iii) full payment through a combination of shares of
        Common Stock held by the optionee for the requisite period necessary to
        avoid a charge to the Corporation's reported earnings and valued at fair
        market value on the Exercise Date and cash or check payable to the
        Corporation; or

                      (iv) full payment effected through a broker-dealer sale
        and remittance procedure pursuant to which the optionee shall provide
        irrevocable instructions (I) to a Corporation-designated brokerage firm
        to (A) effect the immediate sale of a sufficient number of the purchased
        shares to enable such firm



                                       4


<PAGE>   52

        to remit to the Corporation, out of the sale proceeds available on the
        settlement date, sufficient funds to cover the aggregate option price
        payable for the purchased shares plus all applicable Federal and State
        income and employment taxes required to be withheld by the Corporation
        in connection with such purchase and (B) remit those funds to the
        Corporation on the settlement date, and (II) to the Corporation to
        deliver the certificates for the purchased shares directly to such
        brokerage firm.

                      For purposes of this subparagraph B, the Exercise Date
shall be the date on which written notice of the option exercise is received by
the Corporation. Except to the extent the sale and remittance procedure is
utilized in connection with the exercise of the option, payment of the option
price for the purchased shares must accompany such notice.

                      C. The fair market value per share of Common Stock on any
relevant date under subparagraph A or B (and for all other valuation purposes
under the Plan) shall be determined in accordance with the following provisions:

                           (i) If the Common Stock is not at the time listed or
        admitted to trading on any national stock exchange but is traded on the
        Nasdaq National Market, the fair market value shall be the closing
        selling price per share of Common Stock on the date in question, as
        reported by the National Association of Securities Dealers on the Nasdaq
        National Market. If there is no reported closing selling price for the
        Common Stock on the date in question, then the closing selling price on
        the last preceding date for which such quotation exists shall be
        determinative of fair market value.

                          (ii) If the Common Stock is at the time listed or
        admitted to trading on any national stock exchange, then the fair market
        value shall be the closing selling price per share of Common Stock on
        the date in question on the stock exchange determined by the Plan
        Administrator to be the primary market for the Common Stock, as such
        price is officially quoted in the composite tape of transactions on such
        exchange. If there is no reported sale of Common Stock on such exchange
        on the date in question, then the fair market value shall be the closing
        selling price on the exchange on the last preceding date for which such
        quotation exists.

               2. Term and Exercise of Options. Each option granted under the
Plan shall be exercisable at such time or times, during such period, and for
such number of shares as shall be determined by the Plan Administrator and set
forth in the instrument evidencing such option; provided, however, that no such
option shall have a term in excess of ten (10) years from the grant date.



                                       5.


<PAGE>   53

               3. Limited Transferability of Options. During the lifetime of the
optionee, Incentive Options shall be exercisable only by the optionee and shall
not be assignable or transferable other than by will or by the laws of descent
and distribution following the optionee's death. However, non-statutory options
may, in connection with the optionee's estate plan, be assigned in whole or in
part during the optionee's lifetime to one or more members of the optionee's
immediate family or to a trust established exclusively for one or more such
family members. The assigned portion may only be exercised by the person or
persons who acquire a proprietary interest in the option pursuant to the
assignment. The terms applicable to the assigned portion shall be the same as
those in effect for the option immediately prior to such assignment and shall be
set forth in such documents issued to the assignee as the Plan Administrator may
deem appropriate.

               4. Effect of Termination of Service.

                      A. Should an optionee cease to remain in Service (as
defined in subparagraph D below) for any reason (including death or permanent
disability as defined in Section 22(e)(3) of the Internal Revenue Code) while
the holder of one or more outstanding options granted to such optionee under the
Plan, then such option or options shall not (except to the extent otherwise
provided pursuant to Section XI below) remain exercisable for more than a
thirty-six (36)-month period (or such shorter period determined by the Plan
Administrator and specified in the instrument evidencing the grant) following
the date of such cessation of Service. Under no circumstances, however, shall
any such option be exercisable after the specified expiration date of the option
term. Each such option shall, during such thirty-six (36)-month or shorter
period, be exercisable only to the extent of the number of shares (if any) for
which the option is exercisable on the date of the optionee's cessation of
Service. Upon the expiration of such thirty-six (36)-month or shorter period or
(if earlier) upon the expiration of the option term, the option shall terminate
and cease to be exercisable. However, the option shall, immediately upon the
optionee's cessation of Service for any reason, terminate and cease to be
outstanding for any option shares for which the option is not otherwise at that
time exercisable.

                      B. Any outstanding option held by the optionee and
exercisable in whole or in part on the date of his or her death may be
subsequently exercised, but only to the extent of the number of shares (if any)
for which the option is exercisable on the date of the optionee's cessation of
Service (less any option shares subsequently purchased by the optionee prior to
death), by the personal representative of the optionee's estate or by the person
or persons to whom the option is transferred pursuant to the optionee's will or
in accordance with the laws of descent and distribution. The right to exercise
the option for those shares shall terminate upon the earlier of (i) the third
anniversary of the date of the optionee's cessation of Service or (ii) the
specified expiration date of the option term.

                      C. Notwithstanding subparagraphs A and B above, the Plan
Administrator shall have complete discretion, exercisable either at the time the
option is granted or at any time while the option remains outstanding, to permit
one or more options held by the optionee under the Plan to be exercised, during
the limited period of exercisability provided under



                                       6.


<PAGE>   54

Section V.4.A above, not only with respect to the number of shares for which
each such option is exercisable at the time of the optionee's cessation of
Service but also with respect to one or more subsequent installments for which
the option would otherwise have become exercisable had such cessation of Service
not occurred.

                      D. For purposes of the foregoing provisions of this
Section V.4 (and all other provisions of the Plan), the optionee shall be deemed
to remain in the Service of the Corporation for so long as such individual
renders services on a periodic basis to the Corporation or any parent or
subsidiary corporation in the capacity of an Employee, a non-employee member of
the board of directors or an independent consultant or advisor, unless the
option agreement evidencing the option grant and/or the purchase agreement
evidencing the purchased option shares specifically provides otherwise. The
optionee shall be considered to be an EMPLOYEE for so long as such individual
remains in the employ of the Corporation or one or more of its parent or
subsidiary corporations, subject to the control and direction of the employer
entity as to the work to be performed and as to the manner and method of
performance.

               5. Stockholder Rights. An optionee shall have none of the rights
of a stockholder with respect to any shares covered by the option until such
individual shall have exercised the option and paid the option price for the
purchased shares.

               6. Repurchase Rights. Unvested shares of Common Stock may be
issued under the Plan which are subject to repurchase by the Corporation in
accordance with the following provisions:

                      (a) Upon the optionee's cessation of Service while holding
        unvested shares under the Plan, the Corporation shall have the right to
        repurchase any or all of those unvested shares at the option price paid
        per share. The terms and conditions upon which such repurchase right
        shall be exercisable (including the period and procedure for exercise
        and the appropriate vesting schedule for the purchased shares) shall be
        established by the Plan Administrator and set forth in the instrument
        evidencing such repurchase right.

                      (b) All of the Corporation's outstanding repurchase rights
        shall automatically terminate, and all shares subject to such terminated
        rights shall immediately vest in full, upon the occurrence of any
        Corporate Transaction under Section VII of this Plan, except to the
        extent: (i) any such repurchase right is to be assigned to the successor
        corporation (or parent thereof) in connection with the Corporate
        Transaction or (ii) such accelerated vesting is precluded by other
        limitations imposed by the Plan Administrator at the time the repurchase
        right is issued.



                                       7.


<PAGE>   55

                      (c) The Plan Administrator shall have the discretionary
        authority, exercisable either before or after the optionee's cessation
        of Service, to cancel the Corporation's outstanding repurchase rights
        with respect to any or all unvested shares purchased or purchasable by
        the optionee under the Plan and thereby accelerate the vesting of those
        shares in whole or in part at any time.

     VI.       INCENTIVE OPTIONS.

               The terms and conditions specified below shall be applicable to
all Incentive Options granted under the Plan. Incentive Options may only be
granted to individuals who are Employees. Options which are specifically
designated as "non-statutory" options when issued under the Plan shall not be
subject to such terms and conditions.

               (a) Option Price. The option price per share of the Common Stock
subject to an Incentive Option shall in no event be less than one hundred
percent (100%) of the fair market value of a share of Common Stock on the date
of grant.

               (b) Dollar Limitation. The aggregate fair market value
(determined as of the respective date or dates of grant) of the Common Stock for
which one or more options granted to any Employee under this Plan (or any other
option plan of the Corporation or its parent or subsidiary corporations) may for
the first time become exercisable as incentive stock options under the Federal
tax laws during any one calendar year shall not exceed the sum of One Hundred
Thousand Dollars ($100,000). To the extent the Employee holds two or more such
options which become exercisable for the first time in the same calendar year,
the foregoing limitation on the exercisability of such options as incentive
stock options under the Federal tax laws shall be applied on the basis of the
order in which such options are granted. Should the number of shares of Common
Stock for which an Incentive Option first becomes exercisable in any calendar
year exceed the applicable One Hundred Thousand Dollar ($100,000) limitation,
the option may nevertheless be exercised for those excess shares in such
calendar year as a non-statutory option.

               (c) 10% Stockholder. If any individual to whom the Incentive
Option is granted is the owner of stock (as determined under Section 424(d) of
the Internal Revenue Code) possessing ten percent (10%) or more of the total
combined voting power of all classes of stock of the Corporation or any one of
its parent or subsidiary corporations, then the option price per share shall not
be less than one hundred and ten percent (110%) of the fair market value per
share of Common Stock on the grant date, and the option term shall not exceed
five (5) years, measured from such grant date.

               Except as modified by the preceding provisions of this Section
VI, all the provisions of the Plan shall be applicable to the Incentive Options
granted hereunder.



                                       8.


<PAGE>   56

    VII.       CORPORATE TRANSACTION/CHANGE IN CONTROL

               (a) In the event of any of the following transactions (a
"Corporate Transaction"):

                           (i) a merger or consolidation in which the
        Corporation is not the surviving entity, except for a transaction the
        principal purpose of which is to change the State of the Corporation's
        incorporation,

                          (ii) the sale, transfer or other disposition of all or
        substantially all of the assets of the Corporation in liquidation or
        dissolution of the Corporation, or

                         (iii) any reverse merger in which the Corporation is
        the surviving entity but in which fifty percent (50%) or more of the
        Corporation's outstanding voting stock is transferred to persons
        different from those who held the stock immediately prior to such
        merger,

                      each outstanding option under the Plan shall automatically
accelerate so that each such option shall, immediately prior to the specified
effective date for the Corporate Transaction, become exercisable for the total
number of shares of Common Stock at the time subject to such option and may be
exercised for all or any portion of those shares as fully-vested shares of
Common Stock. However, an outstanding option under the Plan shall not so
accelerate if and to the extent: (i) such option is, in connection with the
Corporate Transaction, either to be assumed by the successor corporation or
parent thereof or be replaced with a comparable option to purchase shares of the
capital stock of the successor corporation or parent thereof or (ii) the
acceleration of such option is subject to other applicable limitations imposed
by the Plan Administrator at the time of grant. The determination of
comparability under clause (i) above shall be made by the Plan Administrator and
its determination shall be final, binding and conclusive.

               (b) Each outstanding option under the Plan which is assumed in
connection with the Corporate Transaction or is otherwise to continue in effect
shall be appropriately adjusted, immediately after such Corporate Transaction,
to apply and pertain to the number and class of securities which would have been
issued, in consummation of such Corporate Transaction, to an actual holder of
the same number of shares of Common Stock as are subject to such option
immediately prior to such Corporate Transaction. Appropriate adjustments shall
also be made to the option price payable per share, provided the aggregate
option price payable for such securities shall remain the same. In addition, the
class and number of securities available for issuance under the Plan on both an
aggregate and per participant basis shall be appropriately adjusted to reflect
the effect of the Corporate Transaction upon the Corporation's capital
structure.



                                       9.


<PAGE>   57

               (c) In connection with any Change in Control (as defined below),
the Plan Administrator shall have full power and authority, exercisable either
at the time the option is granted or at any time while the option remains
outstanding, to provide for the automatic acceleration of each outstanding
option under the Plan so that each such option shall, immediately prior to the
effective date of the Change in Control, become exercisable for the total number
of shares at the time subject to such option and may be exercised for all or any
portion of those shares as fully-vested shares of Common Stock. The Plan
Administrator shall also have full power and authority to condition such option
acceleration, and the termination of any of the Corporation's repurchase rights
with respect to any unvested shares purchased or purchasable under the Plan,
upon the subsequent termination of the optionee's Service within a designated
period following the Change in Control.

           A CHANGE IN CONTROL shall be deemed to occur in the event:

                           (i) twenty-five percent (25%) or more of the
        Corporation's outstanding voting stock is acquired pursuant to a tender
        or exchange offer (A) which is made directly to the Corporation's
        stockholders by any person or related group of persons (other than the
        Corporation or a person that directly or indirectly controls, is
        controlled by or is under common control with, the Corporation) and (B)
        which the Board does not recommend the stockholders to accept; or

                          (ii) there is a change in the composition of the Board
        over a period of twenty-four (24) consecutive months or less such that a
        majority of the Board members ceases, by reason of one or more proxy
        contests for the election of Board members, to be comprised of
        individuals who either (A) have been Board members continuously since
        the beginning of such period or (B) have been elected or nominated for
        election as Board members during such period by at least a majority of
        the Board members described in clause (A) who were still in office at
        the time such election or nomination was approved by the Board.

               (d) Immediately following the consummation of a Corporate
Transaction, all outstanding options under the Plan shall terminate and cease to
be outstanding, except to the extent assumed by the successor corporation or its
parent company. Upon a Change in Control, each outstanding option accelerated
pursuant to subsection VII(c) above shall remain fully exercisable until the
expiration or sooner termination of the option term specified in the agreement
evidencing such grant.

               (e) The exercisability as incentive stock options under the
Federal tax laws of any options accelerated in connection with a Corporate
Transaction or Change in Control shall remain subject to the dollar limitation
of Section VI(b) of the Plan. To the extent such dollar limitation is exceeded,
the accelerated option shall be exercisable as a non-statutory option under the
Federal tax laws.



                                      10.


<PAGE>   58

               (f) The grant of options under this Plan shall in no way affect
the right of the Corporation to adjust, reclassify, reorganize or otherwise
change its capital or business structure or to merge, consolidate, dissolve,
liquidate or sell or transfer all or any part of its business or assets.

   VIII.       CANCELLATION AND REGRANT OF OPTIONS

               The Plan Administrator shall have the authority to effect, at any
time and from time to time, with the consent of the affected optionees, the
cancellation of any or all outstanding options under the Plan and to grant in
substitution therefor new options under the Plan covering the same or different
numbers of shares of Common Stock but having an option price per share not less
than (i) eighty-five percent (85%) of the fair market value per share of the
Common Stock on the new grant date or (ii) one hundred percent (100%) of such
fair market value in the case of an Incentive Option or (iii) one hundred and
ten percent (110%) of such fair market value in the case of an Incentive Option
granted to a 10% Stockholder.

     IX.       STOCK APPRECIATION RIGHTS

               (a) Provided and only if the Plan Administrator determines in its
discretion to implement the stock appreciation right provisions of this Section
IX, one or more optionees may be granted the right, exercisable upon such terms
and conditions as the Plan Administrator may establish, to surrender all or part
of an unexercised option under the Plan in exchange for a distribution from the
Corporation in an amount equal to the excess of (i) the fair market value (on
the option surrender date) of the number of shares in which the optionee is at
the time vested under the surrendered option (or surrendered portion thereof)
over (ii) the aggregate option price payable for such vested shares.

               (b) No surrender of an option shall be effective hereunder unless
it is approved by the Plan Administrator. If the surrender is so approved, then
the distribution to which the optionee shall accordingly become entitled under
this Section IX may be made in shares of Common Stock valued at fair market
value on the option surrender date, in cash, or partly in shares and partly in
cash, as the Plan Administrator shall in its sole discretion deem appropriate.

               (c) If the surrender of an option is rejected by the Plan
Administrator, then the optionee shall retain whatever rights the optionee had
under the surrendered option (or surrendered portion thereof) on the option
surrender date and may exercise such rights at any time prior to the later of
(i) five (5) business days after the receipt of the rejection notice or (ii) the
last day on which the option is otherwise exercisable in accordance with the
terms of the instrument evidencing such option, but in no event may such rights
be exercised more than ten (10) years after the date of the option grant.

               (d) One or more officers of the Corporation subject to the
short-swing profit restrictions of the Federal securities laws may, in the Plan
Administrator's sole discretion, be granted limited stock appreciation rights in
tandem with their outstanding options under the Plan.



                                      11.


<PAGE>   59

Upon the occurrence of a Hostile Take-Over, each outstanding option with such a
limited stock appreciation right shall automatically be cancelled, to the extent
such option is at the time exercisable for fully-vested shares of Common Stock
(including any shares which may vest in connection with such Hostile Take-Over).
The optionee shall in return be entitled to a cash distribution from the
Corporation in an amount equal to the excess of (i) the Take-Over Price of the
vested shares of Common Stock at the time subject to the cancelled option (or
cancelled portion of such option) over (ii) the aggregate exercise price payable
for such shares. The cash distribution payable upon such cancellation shall be
made within five (5) days following the consummation of the Hostile Take-Over.
The Plan Administrator shall pre-approve, at the time the limited stock
appreciation right is granted, the subsequent exercise of that right in
accordance with the terms of the grant and the provisions of this Section IX(d).
No additional approval of the Plan Administrator or the Board shall be required
at the time of the actual option cancellation and cash distribution. The balance
of the option (if any) shall continue to remain outstanding and exercisable in
accordance with the terms and conditions of the instrument evidencing such
grant.

               (e) For purposes of Section IX(d), the following definitions
shall be in effect:

                      A HOSTILE TAKE-OVER shall be deemed to occur in the event
        any person or related group of persons (other than the Corporation or a
        person that directly or indirectly controls, is controlled by, or is
        under common control with, the Corporation) directly or indirectly
        acquires beneficial ownership (within the meaning of Rule 13d-3 of the
        Securities Exchange Act of 1934) of securities possessing more than
        twenty-five percent (25%) of the total combined voting power of the
        Corporation's outstanding securities pursuant to a tender or exchange
        offer made directly to the Corporation's stockholders which the Board
        does not recommend such stockholders to accept.

                      The TAKE-OVER PRICE per share shall be deemed to be equal
        to the greater of (a) the fair market value per share on the date of
        cancellation, as determined pursuant to the valuation provisions of
        Section V.1.C, or (b) the highest reported price per share paid by the
        acquiring entity in effecting such Hostile Take-Over. However, to the
        extent the cancelled option is an Incentive Option, the Take-Over Price
        shall not exceed the clause (a) price per share.

               (f) The shares of Common Stock subject to any option surrendered
or cancelled for an appreciation distribution pursuant to this Section IX shall
NOT be available for subsequent option grant under the Plan.

      X.       LOANS OR INSTALLMENT PAYMENTS

               The Plan Administrator may, in its discretion, assist any
optionee (including any officer or director of the Corporation) in the exercise
of one or more options granted to such individual under the Plan, including the
satisfaction of any Federal and State income and employment tax obligations
arising therefrom, by (i) authorizing the extension of a loan from the



                                      12.


<PAGE>   60

Corporation to such optionee or (ii) permitting the optionee to pay the option
price for the purchased Common Stock in installments over a period of years. The
terms of any such loan or installment method of payment (including the interest
rate and terms of repayment) will be upon such terms as the Plan Administrator
specifies in the applicable option agreement or otherwise deems appropriate
under the circumstances. Loans or installment payments may be granted with or
without security or collateral (other than to individuals who are independent
consultants or advisors, in which event the loan must be adequately secured by
collateral other than the purchased shares). However, the maximum credit
available to the optionee may not exceed the option price of the acquired shares
(less the par value of those shares) plus any Federal and State income and
employment tax liability incurred by the optionee in connection with the
exercise of the option.

     XI.       EXTENSION OF EXERCISE PERIOD

               The Plan Administrator shall have full power and authority, to
extend the period of time for which the option is to remain exercisable
following the optionee's cessation of Service from the thirty-six (36) month or
shorter period set forth in the option agreement to such greater period of time
as the Plan Administrator shall deem appropriate. In no event, however, shall
such option be exercisable after the specified expiration date of the option
term.

    XII.       AMENDMENT OF THE PLAN

               The Board shall have complete and exclusive power and authority
to amend or modify the Plan in any or all respects whatsoever; provided,
however, that no such amendment or modification shall, without the consent of
the holders, adversely affect rights and obligations with respect to options at
the time outstanding under the Plan. In addition, certain amendments may require
stockholder approval pursuant to applicable laws or regulations.

   XIII.       EFFECTIVE DATE AND TERM OF PLAN

               (a) The Plan was initially adopted by the Board on July 19, 1988
and approved by the Corporation's stockholders on March 29, 1989. The Plan was
subsequently amended by the Board on July 18, 1990, and such amendment was
approved by the Corporation's stockholders in October, 1990. In January 1991,
the Plan was again amended to increase by 480,000 shares the number of shares of
Common Stock issuable under the Plan, and such share increase was approved by
the Corporation's stockholders on March 20, 1991. The Board further amended the
Plan on May 22, 1991, with such amendments to become effective as of the date
the Corporation's Common Stock first became traded on the Nasdaq National
Market, in order to revise certain provisions previously required when the Plan
was subject to the permit requirements of the California Corporations
Department. On March 18, 1992, the Plan was amended and restated in its
entirety, including an increase of 670,000 shares to the number of shares of
Common Stock issuable thereunder. The 1992 restatement, including the
670,000-share increase, was approved by the stockholders at the 1992 Annual
Meeting. On January 13, 1993, the Board amended the Plan to increase by an
additional 700,000 shares the number of shares of



                                      13.


<PAGE>   61

Common Stock issuable under the Plan, and such share increase was approved by
the stockholders at the 1993 Annual Meeting. On February 28, 1994, the Board
amended the Plan to increase by an additional 650,000 shares the number of
shares of Common Stock issuable under the Plan, and such increase was approved
by the stockholders at the 1994 Annual Meeting. On January 25, 1995, the Board
amended the Plan to increase by an additional 500,000 shares the number of
shares of Common Stock issuable under the Plan, and such increase was approved
by the stockholders at the 1995 Annual Meeting. On January 24, 1996, the Board
adopted an amendment which increased the number of shares of Common Stock
issuable under the Plan by an additional 1,200,000 shares, and such increase was
approved by the stockholders at the 1996 Annual Meeting.

               On February 24, 1997, the Board adopted a series of amendments to
the Plan (the "1997 Amendments") which (i) increased the number of shares of
Common Stock reserved for issuance over the term of the Plan by an additional
800,000 shares, (ii) rendered non-employee Board members serving as Plan
Administrator eligible to receive option grants under the Plan, (iii) allowed
unvested shares issued under the Plan and subsequently repurchased by the
Corporation at the option exercise price paid per share to be reissued under the
Plan, (iv) removed certain restrictions on the eligibility of non-employee Board
members to serve as Plan Administrator, (v) extended the term of the Option Plan
from July 19, 1998 to December 31, 2002 and (vi) effected a series of additional
changes to the provisions of the Plan (including the stockholder approval
requirements, the transferability of non-statutory stock options and the
elimination of the six (6)-month holding period requirement as a condition to
the exercise of stock appreciation rights) in order to take advantage of the
recent amendments to Rule 16b-3 of the 1934 Act which exempts certain officer
and director transactions under the Plan from the short-swing liability
provisions of the federal securities laws. The 1997 Amendments were approved by
the Corporation's stockholders at the 1997 Annual Meeting.

               On February 20, 1998, the Board authorized an increase of 855,000
shares of Common Stock to the share reserve under the Plan, subject to
shareholder approval at the 1998 Annual Meeting. No option granted on the basis
of that share increase shall become exercisable in whole or in part unless and
until such shareholder approval is obtained. Should the shareholders not approve
the share increase, then any options granted on the basis of that increase shall
terminate without ever becoming exercisable for those excess shares, and no
further options shall be granted on the basis of such increase.

               (b) The provisions of the 1992 restatement and of each subsequent
amendment to the Plan shall apply only to stock options and stock appreciation
rights granted under the Plan from and after the applicable effective date of
such restatement or amendment. All stock options and stock appreciation rights
issued and outstanding under the Plan immediately prior to each such effective
date shall continue to be governed by the terms and conditions of the Plan (and
the respective agreements evidencing each such option or stock appreciation
right) as in effect on the date each such option or stock appreciation right was
previously granted, and nothing in the 1992 restatement or in any subsequent
amendment shall be deemed to affect or otherwise modify the rights or
obligations of the holders of such prior options or stock appreciation rights



                                      14.


<PAGE>   62

with respect to their acquisition of shares of Common Stock under such options
or their exercise of such stock appreciation rights. However, the Plan
Administrator may, in its discretion, modify stock option or stock appreciation
right issued and outstanding immediately prior to the effective date of the 1992
restatement or any subsequent amendment to include one or more provisions to the
Plan added by such restatement or amendment.

               (c) Unless sooner terminated in accordance with Section VII, the
Plan shall terminate upon the earlier of (i) December 31, 2002 or (ii) the date
on which all shares available for issuance under the Plan shall have been issued
or cancelled pursuant to the exercise, surrender of cash-out of the stock
options and stock appreciation rights granted hereunder. If the date of
termination is determined under clause (i) above, then each stock option or
stock appreciation right outstanding on such date shall thereafter continue to
have force and effect in accordance with the provisions of the instruments
evidencing such grant.

               (d) Options may be granted under this Plan to purchase shares of
Common Stock in excess of the number of shares then available for issuance under
the Plan, provided any excess shares actually issued under the Plan are held in
escrow until stockholder approval is obtained for a sufficient increase in the
number of shares available for issuance under the Plan. If such stockholder
approval is not obtained within twelve (12) months after the date the first such
excess option grants are made, then (I) any unexercised excess options shall
terminate and cease to be exercisable and (II) the Corporation shall promptly
refund the purchase price paid for any excess shares actually issued under the
Plan and held in escrow, together with interest (at the applicable Short Term
Federal Rate) for the period the shares were held in escrow.

    XIV.       USE OF PROCEEDS

               Any cash proceeds received by the Corporation from the sale of
shares pursuant to options granted under the Plan shall be used for general
corporate purposes.

     XV.       REGULATORY APPROVALS

               The implementation of the Plan, the granting of any stock option
or stock appreciation right hereunder, and the issuance of stock upon the
exercise of any such option or stock appreciation right shall be subject to the
procurement by the Corporation of all approvals and permits required by
regulatory authorities having jurisdiction over the Plan, the options and stock
appreciation rights granted under it and the stock issued pursuant to it.



                                      15.

<PAGE>   63
                    PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
                        IDEC PHARMACEUTICALS CORPORATION
          THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

     The undersign appoints WILLIAM H. RASTETTER and KENNETH J. WOOLCOTT, and
each of them, proxies with full power of substitution, to vote all shares of
common stock of IDEC Pharmaceuticals Corporation ("IDEC Pharmaceuticals") held
of record by the undersigned as of April 2, 1998 at the Annual Meeting of
Stockholders ("Annual Meeting") of IDEC Pharmaceuticals to be held at Sheraton
Grande Torrey Pines, 10950 North Torrey Pines Road, La Jolla, California on May
21, 1998, at 10:00 a.m., local time, and at all adjournments thereof, upon the
following matters:

(1) Election of Directors [ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY
                              below (except as marked     to vote for all
                              to the contrary below)      nominees listed below

         Kazuhiro Hashimoto, Franklin P. Johnson, Jr. and Bruce R. Ross

(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW).
- -------------------------------------------------------------------------------

(2) Proposal to amend the 1988 Stock Option Plan of IDEC Pharmaceuticals to
    increase the number of shares issuable thereunder from 5,480,000 shares to
    a total of 6,335,000 shares.
              [ ] FOR            [ ] AGAINST            [ ] ABSTAIN             

(3) Proposal to make a series of amendments to the Non-Employee Directors Stock
    Option Plan of IDEC Pharmaceuticals including an increase the number of 
    shares issuable thereunder from 250,000 shares to a total of 370,000 shares.
              [ ] FOR            [ ] AGAINST            [ ] ABSTAIN         

(4) Ratification of the selection of KPMG Peat Marwick LLP as independent public
    accountants for the 1998 fiscal year.
              [ ] FOR            [ ] AGAINST            [ ] ABSTAIN         

(5) In accordance with the discretion of the proxy holders, to act upon all
    matters incident to the conduct of the Annual Meeting and upon other
    matters as may properly come before the Annual Meeting.
              [ ] FOR            [ ] AGAINST            [ ] ABSTAIN         

     THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF ANY NOMINEE NAMED ABOVE DECLINES OR
IS UNABLE TO SERVE AS A DIRECTOR, THE PERSONS NAMED AS PROXIES SHALL HAVE FULL
DISCRETION TO VOTE FOR ANY OTHER PERSON WHO MAY BE NOMINATED.
                                   
                                       Dated: _________________________, 1998 

                                       ______________________________________

                                       ______________________________________
                                       Signature or Signatures of Stockholder

                                       (This signature should conform to your
                                       name as printed hereon. Co-owners should
                                       both sign.)