<SUBMISSION>
<ACCESSION-NUMBER>0000891020-00-001499
<TYPE>10-Q
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<PERIOD>20000630
<FILING-DATE>20000814
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<COMPANY-DATA>
<CONFORMED-NAME>SONUS PHARMACEUTICALS INC
<CIK>0000949858
<ASSIGNED-SIC>2835
<IRS-NUMBER>954343413
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1231
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<FORM-TYPE>10-Q
<ACT>34
<FILE-NUMBER>000-21243
<FILM-NUMBER>698483
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>22026 2OTH AVE SE
<STREET2>STE 102
<CITY>BOTHELL
<STATE>WA
<ZIP>98021
<PHONE>2064879500
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>22026 20TH AVENUE SE, SUITE 102
<CITY>BOTHELL
<STATE>WA
<ZIP>98021
</MAIL-ADDRESS>
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<TYPE>10-Q
<SEQUENCE>1
<FILENAME>e10-q.txt
<DESCRIPTION>FORM 10-Q FOR THE PERIOD ENDED JUNE 30, 2000.
<TEXT>

<PAGE>   1
================================================================================

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON D.C. 20549


                                    FORM 10-Q


      [X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
           EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000

                                       or

      [ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
           EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______________
           TO ____________.


                         Commission file number 0-26866


                           SONUS PHARMACEUTICALS, INC.
             (Exact Name of Registrant as Specified in Its Charter)


              DELAWARE                                 95-4343413
   (State or Other Jurisdiction of       (I.R.S. Employer Identification Number)
   Incorporation or Organization)

                  22026 20TH AVE. SE, BOTHELL, WASHINGTON 98021
                    (Address of Principal Executive Offices)

                                 (425) 487-9500
              (Registrant's Telephone Number, Including Area Code)


    Indicate by check whether the issuer (1) has filed all reports required to
    be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
    during the preceding 12 months (or for such shorter period that the
    registrant was required to file such reports), and (2) has been subject to
    such filing requirements for the past 90 days. Yes [X]  No[ ]

    State the number of shares outstanding of each of the issuer's classes of
    common equity as of the latest practicable date.

                 Class                        Outstanding at July 15, 2000

     Common Stock, $.001 par value                       9,157,938

                               Page 1 of 15 Pages
                        Exhibit Index appears on Page 14


================================================================================



<PAGE>   2
                           SONUS PHARMACEUTICALS, INC.
                               INDEX TO FORM 10-Q




<TABLE>
<CAPTION>
                                                                                                    Page
                                                                                                   Number
                                                                                                   ------

<S>                                                                                                <C>
PART I.  FINANCIAL INFORMATION

       Item 1. Financial Statements

                Balance Sheets as of June 30, 2000 (unaudited) and December 31, 1999 ............       3

                Statements of Operations (unaudited) for the three and six months ended
                    June 30, 2000 and June 30, 1999 .............................................       4

                Statements of Cash Flows (unaudited) for the six months ended
                    June 30, 2000 and June 30, 1999 .............................................       5

                Notes to Financial Statements ...................................................       6


      Item 2.  Management's Discussion and Analysis of Financial Condition and
                 Results of Operations ..........................................................       7

      Item 3.  Market Risk ......................................................................      11

PART II.  OTHER INFORMATION

       Item 1.  Legal Proceedings ...............................................................      12

       Item 6.  Exhibits and Reports on Form 8-K ................................................      14

       Items 2, 3 and 5 are not applicable and therefore have been omitted.

SIGNATURES ......................................................................................      15
</TABLE>



                                       2
<PAGE>   3
PART I. FINANCIAL INFORMATION


ITEM 1. FINANCIAL STATEMENTS


                           SONUS PHARMACEUTICALS, INC.
                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                      JUNE 30,        DECEMBER 31,
                                                                       2000               1999
                                                                   ------------       ------------
                                                                    (UNAUDITED)
<S>                                                                <C>                <C>
ASSETS
Current assets:
   Cash, cash equivalents and marketable securities .........      $ 17,344,044       $ 16,804,486
   Other current assets .....................................           354,421            422,851
                                                                   ------------       ------------

      Total current assets ..................................        17,698,465         17,227,337

Equipment, furniture and leasehold improvements, net of
   accumulated depreciation of $3,396,614 and $3,179,956 ....           649,949            861,434
                                                                   ------------       ------------

Total assets ................................................      $ 18,348,414       $ 18,088,771
                                                                   ============       ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Bank line of credit ......................................      $  5,000,000       $  5,000,000
   Accounts payable and accrued expenses ....................         2,662,896          2,826,169
   Accrued clinical trial expenses ..........................           149,292            215,102
                                                                   ------------       ------------

      Total current liabilities .............................         7,812,188          8,041,271

Commitments and contingencies Stockholders' equity:
   Preferred stock; $.001 par value;
      5,000,000 authorized; no shares issued or
      outstanding ...........................................                --                 --
    Common stock; $.001 par value;
      30,000,000 shares authorized; 9,157,938 and
      8,989,225 shares issued and outstanding at
      June 30, 2000 and December 31, 1999, respectively .....        37,719,736         37,142,965
   Accumulated deficit ......................................       (27,165,799)       (27,071,604)
   Accumulated other comprehensive loss .....................           (17,711)           (23,861)
                                                                   ------------       ------------
      Total stockholders' equity ............................        10,536,226         10,047,500
                                                                   ------------       ------------

Total liabilities and stockholders' equity ..................      $ 18,348,414       $ 18,088,771
                                                                   ============       ============
</TABLE>


                             See accompanying notes.



                                        3
<PAGE>   4
                           SONUS PHARMACEUTICALS, INC.
                            STATEMENTS OF OPERATIONS
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                              THREE MONTHS                         SIX MONTHS
                                                              ENDED JUNE 30,                      ENDED JUNE 30,
                                                      -----------------------------       -----------------------------
                                                          2000           1999                 2000             1999
                                                      -------------  --------------       -------------    ------------
<S>                                                   <C>            <C>                  <C>              <C>
Revenues:
   Collaborative agreements ....................      $        --       $   350,000       $        --       $ 2,050,000
   Royalty revenue .............................           44,969                --            44,969                --
                                                      -----------       -----------       -----------       -----------
Total revenue ..................................           44,969           350,000            44,969         2,050,000
                                                      -----------       -----------       -----------       -----------
Operating expenses:
   Research and development ....................        1,288,089         1,701,602         2,378,659         3,191,481
   General and administrative ..................        1,136,107         1,872,607         2,521,288         3,583,244
                                                      -----------       -----------       -----------       -----------
Total operating expenses .......................        2,424,196         3,574,209         4,899,947         6,774,725
                                                      -----------       -----------       -----------       -----------

Operating loss .................................       (2,379,227)       (3,224,209)       (4,854,978)       (4,724,725)

Other income (expense):
   Interest income .............................          196,889           123,676           352,595           292,192
   Interest expense ............................          (12,153)          (22,244)          (18,750)          (71,480)
   Other income ................................        4,250,000                --         4,250,000                --
                                                      -----------       -----------       -----------       -----------

Income (loss) before taxes .....................        2,055,509        (3,122,777)         (271,133)       (4,504,013)
Income taxes ...................................               --                --          (176,939)               --
                                                      -----------       -----------       -----------       -----------

Net income (loss) ..............................      $ 2,055,509       $(3,122,777)      $   (94,194)      $(4,504,013)
                                                      ===========       ===========       ===========       ===========


Net income (loss) per common share:
   Basic .......................................      $      0.22       $     (0.36)      $     (0.01)      $     (0.52)
   Diluted .....................................      $      0.22       $     (0.36)      $     (0.01)      $     (0.52)

Shares used in computation of per share amounts:
   Basic .......................................        9,155,897         8,741,513         9,112,787         8,687,423
   Diluted .....................................        9,184,625         8,741,513         9,166,712         8,687,423
</TABLE>


                             See accompanying notes.



                                       4
<PAGE>   5
                           SONUS PHARMACEUTICALS, INC.
                            STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                        SIX MONTHS ENDED JUNE 30,
                                                                    --------------------------------
                                                                          2000              1999
                                                                    ---------------    -------------
<S>                                                                 <C>                <C>
OPERATING ACTIVITIES:
Net loss .......................................................    $    (94,194)      $ (4,504,013)
Adjustments to reconcile net loss to net cash used in
   operating activities:
   Depreciation and amortization ...............................         216,657            385,664
   Amortization of premium (discount) on marketable securities .              --            104,540
   Realized gain on marketable securities ......................              --             (1,708)
   Changes in operating assets and liabilities:
      Other current assets .....................................          68,430            192,722
      Accounts payable and accrued expenses ....................        (163,273)           530,616
      Accrued clinical trial expenses ..........................         (65,810)          (457,001)
                                                                    ------------       ------------
Net cash used in operating activities ..........................         (38,190)        (3,749,180)

INVESTING ACTIVITIES:
Purchases of equipment, furniture and leasehold improvements ...          (5,173)           (39,098)
Purchases of marketable securities .............................      (5,977,254)        (7,682,352)
Proceeds from sale of marketable securities ....................         499,995          9,618,687
Proceeds from maturities of marketable securities ..............       6,899,268          2,049,865
                                                                    ------------       ------------
Net cash provided by investing activities ......................       1,416,836          3,947,102

FINANCING ACTIVITIES:
Proceeds from bank line of credit ..............................      10,000,000         10,000,000
Repayment of bank line of credit ...............................     (10,000,000)       (10,000,000)
Increase in long-term debt .....................................              --             30,783
Repayment of capitalized lease obligations .....................              --            (51,393)
Proceeds from issuance of common stock .........................         576,771             41,668
                                                                    ------------       ------------
Net cash provided by financing activities ......................         576,771             21,058
                                                                    ------------       ------------
Increase in cash and cash equivalents for the period ...........       1,955,417            218,980
Cash and cash equivalents at beginning of period ...............       5,894,194          5,203,925
                                                                    ------------       ------------
Cash and cash equivalents at end of period .....................       7,849,611          5,422,905
Marketable securities at end of period .........................       9,494,433          7,643,762
                                                                    ------------       ------------
Total cash, cash equivalents and marketable securities .........    $ 17,344,044       $ 13,066,667
                                                                    ============       ============
Supplemental cash flow information:
   Conversion of long-term debt to common stock ................    $         --       $  2,080,005
   Interest paid ...............................................    $     13,542       $     16,895
   Income taxes paid ...........................................    $         --       $         --
</TABLE>


                             See accompanying notes.



                                       5
<PAGE>   6
                          SONUS PHARMACEUTICALS, INC.
                         NOTES TO FINANCIAL STATEMENTS
                                  (UNAUDITED)

1.  BASIS OF PRESENTATION

    The unaudited financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-Q. Accordingly, they do not include all of the
information and footnotes required to be presented for complete financial
statements. The accompanying financial statements reflect all adjustments
(consisting only of normal recurring items) which are, in the opinion of
management, necessary for a fair presentation of the results for the interim
periods presented.

    The financial statements and related disclosures have been prepared with the
assumption that users of the interim financial information have read or have
access to the audited financial statements for the preceding fiscal year.
Accordingly, these financial statements should be read in conjunction with the
audited financial statements and the related notes thereto included in the Form
10-K for the year ended December 31, 1999 and filed with the SEC on February 29,
2000.


2.    CONTINGENCIES

    The Company has a manufacturing and supply agreement with Abbott
Laboratories ("Abbott") for the manufacture of the Company's ultrasound contrast
agents. Under this agreement, Abbott will manufacture the Company's first
ultrasound contrast product, EchoGen, following FDA approval, if obtained, for a
period of two years but in no event later than July 1, 2002.

    The Company also has a commercial supply agreement with a third party for
certain medical grade raw materials for the Company's initial product in the
U.S., EchoGen. The Company is obligated to purchase certain minimum quantities
of the material over a five-year period subsequent to U.S. regulatory approval
of EchoGen, if obtained.

    The Company is also party to certain litigation related to its business. See
"Part II. Other Information; Item 1. Legal Proceedings."



                                       6
<PAGE>   7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS


FORWARD-LOOKING STATEMENTS

    This report contains certain forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, and we intend that such
forward-looking statements be subject to the safe harbors created thereby.
Examples of these forward-looking statements include, but are not limited to:

    -   the submission of applications for and the timing or likelihood of
        marketing approvals for one or more indications;
    -   market acceptance of our products;
    -   our anticipated future capital requirements and the terms of any capital
        financing;
    -   our ability to locate and enter into agreements with distributors for
        U.S. and international territories;
    -   our ability to identify and enter into acceptable arrangements with
        alternative sources of supply of EchoGen should Abbott determine not to
        continue to manufacture EchoGen;
    -   the progress and results of clinical trials;
    -   the timing and amount of future contractual payments, revenues and
        operating expenses; and
    -   the anticipated outcome or financial impact of legal matters.

While these statements made by us are based on our current beliefs and judgment,
they are subject to risks and uncertainties that could cause actual results to
vary.

    In evaluating such statements, stockholders and investors should
specifically consider a number of factors and assumptions, including those
discussed in the text of this report and the risk factors detailed from time to
time in our other filings with the Securities and Exchange Commission. As
discussed in our Annual Report on Form 10-K for the year ended December 31,
1999, actual results could differ materially from those projected in the
forward-looking statement as a result of the following factors, among others:

    -   uncertainty of governmental regulatory requirements and lengthy approval
        process;
    -   unproven safety and efficacy of products and uncertainty of clinical
        trials;
    -   history of operating losses and uncertainty of future financial results;
    -   future capital requirements and uncertainty of
        additional funding;
    -   dependence on third parties for funding, clinical development and
        distribution;
    -   competition and risk of technological obsolescence;
    -   limited manufacturing experience and dependence on limited contract
        manufacturers and suppliers;
    -   lack of marketing and sales experience;
    -   uncertainty of market acceptance;
    -   dependence on patents and proprietary rights;
    -   limitations on third-party reimbursement;
    -   uncertainty associated with drug delivery technology;
    -   continued listing on the NASDAQ National Market; and
    -   dependence on key employees.



                                       7
<PAGE>   8
MD&A OVERVIEW

   In Management's Discussion and Analysis we explain the general financial
condition and the results of operations for our Company, including:

   -   an overview of our Company's business;
   -   regulatory progress;
   -   contractual agreements;
   -   results of operations and why those results are different from the prior
       year;
   -   the capital resources our Company currently has and possible sources
       of additional funding for future capital requirements; and
   -   the market risk of our investment portfolio.

BUSINESS OVERVIEW

    Our Company is engaged in the research, development and commercialization of
ultrasound contrast agents and drug delivery systems based on our proprietary
technology. Our products are being developed for use in the diagnosis and
treatment of heart disease, cancer and other debilitating conditions. We have
financed our research and development and clinical trials through payments
received under contractual agreements, private equity and debt financings, and a
public offering of common stock. Clinical trials of our initial ultrasound
contrast product under development, EchoGen(R) (perflenapent injectable
emulsion), began in January 1994. In 1996, we filed a New Drug Application
("NDA") with the U.S. Food and Drug Administration ("FDA") for EchoGen as well
as a Marketing Authorization Application ("MAA") with the European Medicines
Evaluation Agency ("EMEA").

REGULATORY PROGRESS

United States

    In April 1999, we received an "approvable letter" from the FDA for EchoGen.
The FDA letter gave the conditions that must be satisfied before final approval.
In September 1999, we filed a formal response to the conditions of the
approvable letter. In March 2000, we received an action letter from the FDA that
extended the approvable status for EchoGen. In April 2000, we filed our response
to the March action letter. The FDA accepted our filed response as complete for
review and has indicated that it will complete its review of our response by the
end of October 2000. Although it is inappropriate for us to speculate on the
outcome of the FDA review, we believe we have addressed the conditions requested
by the FDA. No assurance can be given that the FDA will review the response to
the action letter in a timely manner or that the FDA will ultimately approve
EchoGen.

Europe

     In March 1998, the EMEA's Committee for Proprietary Medicinal Products
("CPMP") issued a positive opinion on EchoGen for use as a transpulmonary
echocardiographic contrast agent in patients with suspected or established
cardiovascular disease who have had previous inconclusive non-contrast studies.
In July 1998, the EMEA ratified the CPMP recommendation and granted a marketing
authorization for EchoGen in the 15 countries of the European Union ("E.U.").
During 1998 and 1999, we submitted to the EMEA certain variations of our
marketing authorization to bring the manufacturing process and specifications
for European product in line with the process and specifications submitted to
the FDA for approval in the U.S. Also during 1999, we received notifications
that the variations to our marketing license were approved by the EMEA with the
final notification received in December 1999.



                                       8
<PAGE>   9
CONTRACTUAL AGREEMENTS

    In 1999, we entered into a license agreement with Nycomed Imaging AS
("Nycomed") for the cross-license of certain proprietary ultrasound contrast
agent technologies. Under the terms of the agreement, we provided Nycomed with
an exclusive license to our ultrasound contrast patents except as related to
perfluoropentane, the gas we use in our ultrasound contrast products. Under the
exclusive license to the patents, Nycomed also has the right to freely
sublicense to other companies with a portion of any sublicense fees to be paid
to us. In addition, we have a worldwide, non-exclusive license to certain of
Nycomed's ultrasound contrast agent patents. We also have the right to
sublicense these patents to our collaborative partners. Under the agreement,
Nycomed paid us in 1999 a license fee of $10.0 million. In addition, both
companies have agreed to pay royalties to each other based on future sales of
our respective ultrasound contrast agents.

    Also, under the license agreement, we transferred to Nycomed the
responsibilities and legal costs associated with our patent infringement
litigation with Molecular Biosystems, Inc. (MBI) and Mallinckrodt Medical Inc.
On May 8, 2000, the parties announced a settlement of the patent infringement
litigation. The settlement followed a summary judgement by the court which found
that MBI and Mallinckrodt infringed certain of our patents and rejected various
challenges made by MBI and Mallinckrodt to the validity of those patents. The
summary judgement also dismissed the counterclaims filed by MBI and
Mallinckrodt. Under terms of the settlement, we received a one-time payment of
$2.5 million from Nycomed pursuant to our license agreement with Nycomed. We
will also receive royalties on future sales of ultrasound contrast products by
MBI, Mallinckrodt and Nycomed in all territories of the world except Japan and
nine other Pacific Rim countries. Also, MBI and Mallinckrodt agreed to drop
their counterclaims against us. See "Part II. Other Information; Item 1. Legal
Proceedings."

    In addition to the development of our ultrasound contrast agents, we believe
our drug delivery technology can be applied to the formulation of many water
insoluble active compounds, which are either currently in use or being
investigated as therapeutic agents. Our strategy is to enter into feasibility
study agreements with companies who own active compounds, typically large
pharmaceutical companies, to confirm that their active compounds can be
formulated with our proprietary delivery vehicle, and that the resulting
formulation enhances the properties of that drug, including efficacy and
toxicity. In December 1999, we entered into our first feasibility study
agreement. Under this feasibility study agreement, we have agreed to use our
reasonable best efforts to develop new formulations of an active compound and
provide them to the pharmaceutical company for further evaluation.


RESULTS OF OPERATIONS

    Our results of operations have varied and will continue to vary
significantly and depend on, among other factors:

    -   timing of payments under contractual and license agreements;
    -   timing of regulatory approvals;
    -   entering into additional contractual agreements; and
    -   timing and costs of clinical trials, legal matters and expenses related
        to product commercialization.

    Revenue in the second quarter of 2000 was $45,000 compared to $350,000 in
the second quarter of 1999. For the six months ended June 30, 2000, revenue was
$45,000 compared to $2.1 million for the prior year period. Revenue for the
prior year periods were derived from payments received under collaborative
agreements with third parties. Revenue in the current period represents
royalties payable to us by Nycomed pursuant to our license agreement with
Nycomed.



                                       9
<PAGE>   10
    Total operating expenses were $2.4 million for the second quarter of 2000
compared with $3.6 million for the second quarter of 1999. Total operating
expenses for the six months ended June 30, 2000 were $4.9 million compared to
$6.8 million for the six months ended June 30, 1999. The decrease in operating
expenses from the prior year was primarily due to a lower level of research and
development and clinical trial spending as well as a reduction in legal costs as
a result of the transfer of ongoing patent litigation responsibilities to
Nycomed Amersham under the patent license agreement that we entered into with
Nycomed in late 1999 and the recent patent litigation settlement announced in
May 2000.

    We anticipate total operating expenses will increase in future quarters due
to ongoing and planned clinical trials to study additional indications for
EchoGen and future products and due to higher marketing and administrative
expenses as we continue to prepare for commercialization of EchoGen if approved
for marketing in the U.S.

    Other income in the second quarter of 2000 represents payments received of
$4.25 million from patent litigation and insurance settlements. As part of the
settlement of our patent litigation, we received a one-time payment of $2.5
million from Nycomed pursuant to our license agreement with Nycomed. In a
separate matter, we reached an agreement on a pre-existing insurance coverage
dispute from which we received a settlement of $1.75 million.

    Interest income, net of interest expense, was $185,000 for the second
quarter of 2000 compared with $101,000 for the same period of the prior year and
$334,000 and $221,000 for the six months ended June 30, 2000 and 1999,
respectively. The increase in net interest income was primarily due to higher
levels of invested cash in 2000. In addition, we incurred lower levels of
interest expense in 2000 as approximately $2.1 million of long-term debt payable
to Abbott was converted into common stock in June 1999.

    In the first quarter of 2000, we received a refund in the amount of $176,939
for international withholding taxes paid in 1995.

LIQUIDITY AND CAPITAL RESOURCES

    We have historically financed operations with payments from contractual
agreements with third parties, proceeds from equity financings and a bank line
of credit. At June 30, 2000, we had cash, cash equivalents and marketable
securities of $17.3 million compared to $16.8 million at December 31, 1999. The
slight increase was primarily due to cash received from the exercise of stock
options.

    We have a bank loan agreement which provides for a $5.0 million revolving
line of credit facility and bears interest at the prime rate plus 1.0%. At June
30, 2000, we had borrowings of $5.0 million outstanding under the line of
credit. The line of credit expires August 30, 2000 and is secured by our
tangible assets. We are required to maintain a minimum of $4.0 million of cash
in order to borrow under the line of credit, and the borrowed funds are required
to be held at the bank. We cannot give assurance that we will be able to renew
the loan agreement or that we will be able to maintain the minimum balances
necessary to borrow under the line of credit.

    We expect that our cash needs will increase significantly in future periods
due to pending and planned clinical trials and higher administrative and
marketing expenses as we prepare for commercialization of EchoGen, if approved
for marketing in the United States. Based on our current operating plan, we
estimate that existing cash and marketable securities will be sufficient to meet
our cash requirements through 2000. We plan to seek additional funding through
available means, which may include debt and/or equity financing or funding under
additional third party agreements. Our future capital requirements depend on
many factors including:

    -   the ability to obtain continued funding under existing contractual and
        licensing agreements;



                                       10
<PAGE>   11
    -   the ability to attract and retain new partners;
    -   the ability to maintain our bank line of credit;
    -   the time and costs required to gain regulatory approvals;
    -   the progress of our research and development programs and clinical
        trials;
    -   the costs of filing, prosecuting and enforcing patents, patent
        applications, patent claims and trademarks;
    -   the costs of marketing and distribution;
    -   the status of competing products;
    -   the market acceptance and third-party reimbursement of our products, if
        and when approved; and
    -   the cost of defending, and any damages or settlement payments that may
        be paid pursuant to legal proceedings.

We cannot give assurance that U.S. regulatory approval will be achieved in the
near-term or at all or that, in any event, additional financing will be
available on acceptable terms, if at all. Any equity financing would likely
result in substantial dilution to our existing stockholders. If we are unable to
raise additional financing, we may be required to curtail or delay the
development of our products and new product research and development, which
could seriously harm our business.


ITEM 3. MARKET RISK

    The market risk inherent in our short-term investment portfolio represents
the potential loss that could arise from adverse changes in interest rates. If
market rates hypothetically increase immediately and uniformly by 100 basis
points from levels at June 30, 2000, the decline in the fair value of the
investment portfolio would not be material. Because we have the ability to hold
our fixed income investments until maturity, we do not expect our operating
results or cash flows to be affected to any significant degree by a sudden
change in market interest rates.



                                       11
<PAGE>   12
PART II.  OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS

a. In January 1998, we announced that we had filed a patent infringement action
in the U.S. District Court in Seattle, Washington, against Molecular Biosystems
Inc. ("MBI") and Mallinckrodt Medical Inc. ("Mallinckrodt"). The suit alleged
that one of MBI's ultrasound contrast agents infringed one or more of our
patents. MBI filed counterclaims alleging that the patents asserted by us were
invalid and not infringed, and that we made false public statements and engaged
in other actions intended to damage MBI.

    Under our agreement with Nycomed, Nycomed is an exclusive licensee of our
patents in a field of use including non-perfluoropentane ultrasound contrast
agents. Shortly after we entered into the agreement with Nycomed, Nycomed was
added as a plaintiff in our lawsuit against MBI and Mallinckrodt and took
control of the patent infringement portion of that lawsuit.

    On May 8, 2000, the parties announced a settlement of the patent
infringement litigation. The settlement followed a summary judgement by the
court which found that MBI and Mallinckrodt infringed certain of our patents and
rejected various challenges made by MBI and Mallinckrodt to the validity of
those patents. The summary judgement also dismissed the counterclaims filed by
MBI and Mallinckrodt. Under terms of the settlement, we received a one-time
payment of $2.5 million from Nycomed pursuant to our license agreement with
Nycomed. We will also receive royalties on future sales of ultrasound contrast
products by MBI, Mallinckrodt and Nycomed in all territories of the world except
Japan and nine other Pacific Rim countries. Also, MBI and Mallinckrodt agreed to
drop their counterclaims against us.

    In a separate matter related to the MBI and Mallinckrodt patent litigation,
we also announced that we reached an agreement on a pre-existing insurance
coverage dispute. Under the agreement, we received an insurance payment of $1.75
million.

b. In July 2000, DuPont Pharmaceuticals Company, DuPont Contrast Imaging, Inc.,
E.I. Du Pont de Nemours & Co., Inc. and DuPont Pharma, Inc. (collectively
"DuPont") filed a complaint in the United States District Court for the District
of Massachusetts against us and Nycomed Amersham. DuPont's complaint seeks a
declaratory judgment that certain ultrasound contrast patents owned by us and
licensed to Nycomed are invalid and not infringed by DuPont.

    We believe DuPont's complaint is without merit and intend to vigorously
defend against these allegations. Nycomed and we have filed motions to dismiss
DuPont's complaint or alternatively that the case be transferred to the U.S.
District Court for the Western District of Washington. Under our license
agreement with Nycomed, Nycomed has the right to enforce the patents in the
field of non-perfluoropentane ultrasound contrast agents on behalf of Nycomed
and on our behalf, at Nycomed's expense. Pursuant to this right, Nycomed and we
also have filed against DuPont a patent infringement action in the U.S. District
Court for the Western District of Washington alleging that DuPont's contrast
agent known as "Definity" infringes patents we own and have licensed to Nycomed.
Pursuant to our license agreement with Nycomed, Nycomed will bear all costs and
expenses associated with the prosecution of this action.

c. In August and September 1998, various class action complaints were filed in
the Superior Court of Washington (the "State Action") and in the U.S. District
Court for the Western District of Washington (the "Federal Action") against us
and certain of our officers and directors, alleging violations of Washington
State and U.S. securities laws. In October 1998, we and the individual
defendants moved to dismiss and stay the State Action. The state law claims in
the State Action were subsequently re-filed in the Federal Action. In February
1999, plaintiffs filed a consolidated and amended complaint in the



                                       12
<PAGE>   13

Federal Action, alleging violations of Washington State and U.S. securities
laws. In March 1999, we and the individual defendants filed a motion to dismiss
the consolidated amended complaint in the Federal Action. In July 1999, the
Court entered an order denying in part and granting in part the motion to
dismiss the complaint in the Federal Action. In November 1999, we filed motions
for summary judgment and to stay discovery.

    In July 2000, we, with the consent of our insurance carrier, entered into a
Memorandum of Understanding with plaintiffs to settle the Federal Action for an
amount within our directors and officers' insurance policy limits. The
settlement is subject to approval of the Court after notice and an opportunity
to object is provided to the shareholder class. Because of the time involved in
providing notice and obtaining approvals, it is likely that the final approval
will be obtained at the end of the year or in early 2001. Given the
uncertainties of litigation, we believe that the settlement is in the best
interests of our shareholders. However, there can be no assurance that the
settlement will be approved by the Court.



                                       13
<PAGE>   14
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

    Information regarding matters submitted to a vote of security holders at our
annual meeting of stockholders held on April 27, 2000, is set forth in our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2000.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

    (a)  EXHIBITS

         10.41      2000 Stock Incentive Plan (the "2000 Plan")

         10.42      Form of Stock Option Agreement pertaining to the 2000 Plan

         27.1       Financial Data Schedule



    (b)  REPORTS ON FORM 8-K

         The Company filed the following report on Form 8-K during the quarter
         ended June 30, 2000:

         1.    The Registrant filed a report on Form 8-K on May 25, 2000 in
               connection with the announcement that the U.S. Food and Drug
               Administration (FDA) has accepted as complete for review our
               response to the March 2000 FDA action letter for our first
               ultrasound contrast agent, EchoGen.



    ITEMS 2, 3, AND 5 ARE NOT APPLICABLE AND HAVE BEEN OMITTED.



                                       14
<PAGE>   15
                                   SIGNATURES


In accordance with the requirements of the Securities Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

                                            SONUS PHARMACEUTICALS, INC.

Date:   August 14, 2000                            By: /s/  Richard J. Klein
                                                       ---------------------
                                                   Richard J. Klein
                                                   Vice President, Finance and
                                                   Assistant Secretary



                                       15
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.41
<SEQUENCE>2
<FILENAME>ex10-41.txt
<DESCRIPTION>EXHIBIT 10.41
<TEXT>

<PAGE>   1
                                                                   EXHIBIT 10.41
                           SONUS PHARMACEUTICALS, INC.
                            2000 STOCK INCENTIVE PLAN


        This 2000 STOCK INCENTIVE PLAN (the "Plan") is hereby established and
adopted this 9th day of February, 2000 (the "Effective Date") by Sonus
Pharmaceuticals, Inc., a Delaware corporation (the "Company").


                                    ARTICLE 1

                              PURPOSES OF THE PLAN

        1.1 PURPOSES. The purposes of the Plan are (a) to enhance the Company's
ability to attract, motivate and retain the services of qualified employees,
officers, directors, consultants and other service providers (to the extent
qualifying under Article 3 hereof) upon whose judgment, initiative and efforts
the successful conduct and development of the Company's business largely
depends, and (b) to provide additional incentives to such persons or entities to
devote their utmost effort and skill to the advancement and betterment of the
Company, by providing them an opportunity to participate in the ownership of the
Company and thereby have an interest in the success and increased value of the
Company.


                                    ARTICLE 2

                                   DEFINITIONS

        For purposes of this Plan, the following terms shall have the meanings
        indicated:

        2.1 ADMINISTRATOR. "Administrator" means the Board or, if the Board
delegates responsibility for any matter to the Committee, the term Administrator
shall mean the Committee.

        2.2 AFFILIATED COMPANY. "Affiliated Company" means any "parent
corporation" or "subsidiary corporation" of the Company, whether now existing or
hereafter created or acquired, as those terms are defined in Sections 424(e) and
424(f) of the Code, respectively.

        2.3 BOARD. "Board" means the Board of Directors of the Company.

        2.4 CAUSE. "Cause" means, with respect to the termination of a
Participant's employment, termination of such employment by the Company for any
of the following reasons:

               (a) The continued refusal or omission by the Participant to
perform any material duties required of him by the Company if such duties are
consistent with duties customary for the position held with the Company;




<PAGE>   2
               (b) Any material act or omission by the Participant involving
malfeasance or gross negligence in the performance of Participant's duties to,
or material deviation from any of the policies or directives of, the Company;

               (c) Conduct on the part of Participant which constitutes the
breach of any statutory or common law duty of loyalty to the Company; or

               (d) Any illegal act by Participant which materially and adversely
affects the business of the Company or any felony committed by Participant, as
evidenced by conviction thereof, provided that the Company may suspend
Participant with pay while any allegation of such illegal or felonious act is
investigated.

        2.5 CHANGE IN CONTROL. "Change in Control" shall mean (i) the
acquisition, directly or indirectly, by any person or group (within the meaning
of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) of the
beneficial ownership of more than fifty percent (50%) of the outstanding
securities of the Company; (ii) 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; (iii) the
sale, transfer or other disposition of all or substantially all of the assets of
the Company; (iv) a complete liquidation or dissolution of the Company; or (v)
any reverse merger in which the Company is the surviving entity but in which
securities possessing more than fifty percent (50%) of the total combined voting
power of the Company's outstanding securities are transferred to a person or
persons different from the persons holding those securities immediately prior to
such merger.

        2.6 CODE. "Code" means the Internal Revenue Code of 1986, as amended
from time to time.

        2.7 COMMITTEE. "Committee" means a committee of two or more members of
the Board appointed to administer the Plan, as set forth in Section 7.1 hereof.

        2.8 COMMON STOCK. "Common Stock" means the Common Stock, $0.001 par
value of the Company, subject to adjustment pursuant to Section 4.2 hereof.

        2.9 DISABILITY. "Disability" means permanent and total disability as
defined in Section 22(e)(3) of the Code. The Administrator's determination of a
Disability or the absence thereof shall be conclusive and binding on all
interested parties.

        2.10 EFFECTIVE DATE. "Effective Date" means February 9, 2000, which was
the date on which the Plan was originally adopted by the Board.

        2.11 EXERCISE PRICE. "Exercise Price" means the purchase price per share
of Common Stock payable upon exercise of an Option.

        2.12 FAIR MARKET VALUE. "Fair Market Value" on any given date means the
value of one share of Common Stock, determined as follows:

                  (a) If the Common Stock is then listed or admitted to trading
on a Nasdaq market system or a stock exchange which reports closing sale prices,
the Fair Market Value shall be the closing sale price on the date of valuation
on such Nasdaq market system or principal stock exchange



                                       2
<PAGE>   3
on which the Common Stock is then listed or admitted to trading, or, if no
closing sale price is quoted on such day, then the Fair Market Value shall be
the closing sale price of the Common Stock on such Nasdaq market system or such
exchange on the next preceding day on which a closing sale price is quoted.

                  (b) If the Common Stock is not then listed or admitted to
trading on a Nasdaq market system or a stock exchange which reports closing sale
prices, the Fair Market Value shall be the average of the closing bid and asked
prices of the Common Stock in the over-the-counter market on the date of
valuation.

                  (c) If neither (a) nor (b) is applicable as of the date of
valuation, then the Fair Market Value shall be determined by the Administrator
in good faith using any reasonable method of evaluation, which determination
shall be conclusive and binding on all interested parties.

        2.13 INCENTIVE OPTION. "Incentive Option" means any Option designated
and qualified as an "incentive stock option" as defined in Section 422 of the
Code.

        2.14 INCENTIVE OPTION AGREEMENT. "Incentive Option Agreement" means an
Option Agreement with respect to an Incentive Option.

        2.15 NASD DEALER. "NASD Dealer" means a broker-dealer that is a member
of the National Association of Securities Dealers, Inc.

        2.16 NONQUALIFIED OPTION. "Nonqualified Option" means any Option that is
not an Incentive Option. To the extent that any Option designated as an
Incentive Option fails in whole or in part to qualify as an Incentive Option,
including, without limitation, for failure to meet the limitations applicable to
a 10% Stockholder or because it exceeds the annual limit provided for in Section
5.6 below, it shall to that extent constitute a Nonqualified Option.

        2.17 NONQUALIFIED OPTION AGREEMENT. "Nonqualified Option Agreement"
means an Option Agreement with respect to a Nonqualified Option.

        2.18 OFFEREE. "Offeree" means a Participant to whom a Right to Purchase
has been offered or who has acquired Restricted Stock under the Plan.

        2.19 OPTION. "Option" means any option to purchase Common Stock granted
pursuant to the Plan.

        2.20 OPTION AGREEMENT. "Option Agreement" means the written agreement
entered into between the Company and the Optionee with respect to an Option
granted under the Plan.

        2.21   OPTIONEE.  "Optionee" means a Participant who holds an Option.

        2.22 PARTICIPANT. "Participant" means an individual or entity who holds
an Option, a Right to Purchase or Restricted Stock under the Plan.

        2.23 PURCHASE PRICE. "Purchase Price" means the purchase price per share
of Restricted Stock payable upon acceptance of a Right to Purchase.



                                       3
<PAGE>   4
        2.24 RESTRICTED STOCK. "Restricted Stock" means shares of Common Stock
issued pursuant to Article 6 hereof, subject to any restrictions and conditions
as are established pursuant to such Article 6.

        2.25 RIGHT TO PURCHASE. "Right to Purchase" means a right to purchase
Restricted Stock granted to an Offeree pursuant to Article 6 hereof.

        2.26 SERVICE PROVIDER. "Service Provider" means a consultant or other
person or entity who provides services to the Company or an Affiliated Company
and who the Administrator authorizes to become a Participant in the Plan.

        2.27 STOCK PURCHASE AGREEMENT. "Stock Purchase Agreement" means the
written agreement entered into between the Company and the Offeree with respect
to a Right to Purchase offered under the Plan.

        2.28 10% STOCKHOLDER. "10% Stockholder" means a person who, as of a
relevant date, owns or is deemed to own (by reason of the attribution rules
applicable under Section 424(d) of the Code) stock possessing more than 10% of
the total combined voting power of all classes of stock of the Company or of an
Affiliated Company.


                                    ARTICLE 3

                                   ELIGIBILITY

        3.1 INCENTIVE OPTIONS. Subject to Section 3.4, officers and other key
employees of the Company or of an Affiliated Company (including members of the
Board if they are employees of the Company or of an Affiliated Company) are
eligible to receive Incentive Options under the Plan.

        3.2 NONQUALIFIED OPTIONS AND RIGHTS TO PURCHASE. Subject to Section 3.4,
officers and other key employees of the Company or of an Affiliated Company,
members of the Board (whether or not employed by the Company or an Affiliated
Company), and Service Providers are eligible to receive Nonqualified Options or
Rights to Purchase under the Plan.

        3.3 LIMITATION ON SHARES. In no event shall any Participant be granted
Rights to Purchase or Options in any one calendar year pursuant to which the
aggregate number of shares of Common Stock that may be acquired thereunder
exceeds 400,000 shares.


        3.4 RESTRICTIONS. Notwithstanding anything contained in this Plan to the
contrary, including, without limitation, Sections 3.1 and 3.2 above, (i) no
Incentive Options shall be issued under the Plan; and (ii) no director or
officer of the Company or any Affiliated Company shall be eligible to receive
any Incentive Option, Nonqualified Option or Right to Purchase, or any right to
receive the same, pursuant to this Plan unless and until this Plan has been
approved by the affirmative vote of holders of a majority of the outstanding
shares of the Company's Common Stock.



                                       4
<PAGE>   5
                                    ARTICLE 4

                                   PLAN SHARES

        4.1 SHARES SUBJECT TO THE PLAN. The number of shares of Common Stock
that may be issued under the Plan shall be equal to the sum of (a) 500,000
shares, plus (b) as of the last day of each calendar year during the term of the
Plan, commencing December 31, 2000, an additional number of shares equal to four
percent (4%) of the shares of the Company's Common Stock outstanding as of such
date, subject to adjustment as to the number and kind of shares pursuant to
Section 4.2 hereof. Notwithstanding the previous sentence, the maximum number of
shares issuable under the Plan shall be 5,000,000. For purposes of this
limitation, in the event that (a) all or any portion of any Option or Right to
Purchase granted or offered under the Plan can no longer under any circumstances
be exercised, or (b) any shares of Common Stock are reacquired by the Company
pursuant to an Incentive Option Agreement, Nonqualified Option Agreement or
Stock Purchase Agreement, the shares of Common Stock allocable to the
unexercised portion of such Option or such Right to Purchase, or the shares so
reacquired, shall again be available for grant or issuance under the Plan.

        4.2 CHANGES IN CAPITAL STRUCTURE. In the event that the outstanding
shares of Common Stock are hereafter increased or decreased or changed into or
exchanged for a different number or kind of shares or other securities of the
Company by reason of a recapitalization, stock split, combination of shares,
reclassification, stock dividend, or other change in the capital structure of
the Company, then appropriate adjustments shall be made by the Administrator to
the aggregate number and kind of shares subject to this Plan, and the number and
kind of shares and the price per share subject to outstanding Option Agreements,
Rights to Purchase and Stock Purchase Agreements in order to preserve, as nearly
as practical, but not to increase, the benefits to Participants.


                                    ARTICLE 5

                                     OPTIONS

        5.1 OPTION AGREEMENT. Each Option granted pursuant to this Plan shall be
evidenced by an Option Agreement which shall specify the number of shares
subject thereto, vesting provisions relating to such Option, the Exercise Price
per share, and whether the Option is an Incentive Option or Nonqualified Option.
As soon as is practical following the grant of an Option, an Option Agreement
shall be duly executed and delivered by or on behalf of the Company to the
Optionee to whom such Option was granted. Each Option Agreement shall be in such
form and contain such additional terms and conditions, not inconsistent with the
provisions of this Plan, as the Administrator shall, from time to time, deem
desirable, including, without limitation, the imposition of any rights of first
refusal and resale obligations upon any shares of Common Stock acquired pursuant
to an Option Agreement. Each Option Agreement may be different from each other
Option Agreement.

        5.2 EXERCISE PRICE. The Exercise Price per share of Common Stock covered
by each Option shall be determined by the Administrator, subject to the
following: (a) the Exercise Price of an Incentive Option shall not be less than
100% of Fair Market Value on the date the Incentive Option is granted, (b) the
Exercise Price of a Nonqualified Option shall not be less than 85% of Fair



                                       5
<PAGE>   6
Market Value on the date the Nonqualified Option is granted, and (c) if the
person to whom an Option is granted is a 10% Stockholder on the date of grant,
the Exercise Price shall not be less than 110% of Fair Market Value on the date
the Option is granted.

        5.3 PAYMENT OF EXERCISE PRICE. Payment of the Exercise Price shall be
made upon exercise of an Option and may be made, in the discretion of the
Administrator, subject to any legal restrictions, by: (a) cash; (b) check; (c)
the surrender of shares of Common Stock owned by the Optionee, which surrendered
shares shall be valued at Fair Market Value as of the date of such exercise; (d)
the Optionee's promissory note in a form and on terms acceptable to the
Administrator; (e) the cancellation of indebtedness of the Company to the
Optionee; (f) the waiver of compensation due or accrued to the Optionee for
services rendered; (g) provided that a public market for the Common Stock
exists, a "same day sale" commitment from the Optionee and an NASD Dealer
whereby the Optionee irrevocably elects to exercise the Option and to sell a
portion of the shares so purchased to pay for the Exercise Price and whereby the
NASD Dealer irrevocably commits upon receipt of such shares to forward the
Exercise Price directly to the Company; (h) provided that a public market for
the Common Stock exists, a "margin" commitment from the Optionee and an NASD
Dealer whereby the Optionee irrevocably elects to exercise the Option and to
pledge the shares so purchased to the NASD Dealer in a margin account as
security for a loan from the NASD Dealer in the amount of the Exercise Price,
and whereby the NASD Dealer irrevocably commits upon receipt of such shares to
forward the Exercise Price directly to the Company; or (i) any combination of
the foregoing methods of payment or any other consideration or method of payment
as shall be permitted by applicable corporate law.

        5.4 TERM AND TERMINATION OF OPTIONS. The term and termination of each
Option shall be as fixed by the Administrator, but no Option may be exercisable
more than ten (10) years after the date it is granted. An Incentive Option
granted to a person who is a 10% Stockholder on the date of grant shall not be
exercisable more than five (5) years after the date it is granted.

        5.5 VESTING AND EXERCISE OF OPTIONS. Each Option shall vest and become
exercisable in one or more installments at such time or times and subject to
such conditions, including without limitation the achievement of specified
performance goals or objectives, as shall be determined by the Administrator.

        5.6 ANNUAL LIMIT ON INCENTIVE OPTIONS. To the extent required for
"incentive stock option" treatment under Section 422 of the Code, the aggregate
Fair Market Value (determined as of the time of grant) of the Common Stock shall
not, with respect to which Incentive Options granted under this Plan and any
other plan of the Company or any Affiliated Company become exercisable for the
first time by an Optionee during any calendar year, exceed $100,000.

        5.7 NONTRANSFERABILITY OF OPTIONS. No Option shall be assignable or
transferable except by will or the laws of descent and distribution, and during
the life of the Optionee shall be exercisable only by such Optionee; provided,
however, that, in the discretion of the Administrator, any Option may be
assigned or transferred in any manner which such Option is permitted to be
assigned or transferred under the Code.

        5.8 RIGHTS AS STOCKHOLDER. An Optionee or permitted transferee of an
Option shall have no rights or privileges as a Stockholder with respect to any
shares covered by an Option until such



                                       6
<PAGE>   7
Option has been duly exercised and certificates representing shares purchased
upon such exercise have been issued to such person.

                                    ARTICLE 6

                               RIGHTS TO PURCHASE

        6.1 NATURE OF RIGHT TO PURCHASE. A Right to Purchase granted to an
Offeree entitles the Offeree to purchase, for a Purchase Price determined by the
Administrator, shares of Common Stock subject to such terms, restrictions and
conditions as the Administrator may determine at the time of grant ("Restricted
Stock"). Such conditions may include, but are not limited to, continued
employment or the achievement of specified performance goals or objectives.

        6.2 ACCEPTANCE OF RIGHT TO PURCHASE. An Offeree shall have no rights
with respect to the Restricted Stock subject to a Right to Purchase unless the
Offeree shall have accepted the Right to Purchase within ten (10) days (or such
longer or shorter period as the Administrator may specify) following the grant
of the Right to Purchase by making payment of the full Purchase Price to the
Company in the manner set forth in Section 6.3 hereof and by executing and
delivering to the Company a Stock Purchase Agreement. Each Stock Purchase
Agreement shall be in such form, and shall set forth the Purchase Price and such
other terms, conditions and restrictions of the Restricted Stock, not
inconsistent with the provisions of this Plan, as the Administrator shall, from
time to time, deem desirable. Each Stock Purchase Agreement may be different
from each other Stock Purchase Agreement.

        6.3 PAYMENT OF PURCHASE PRICE. Subject to any legal restrictions,
payment of the Purchase Price upon acceptance of a Right to Purchase Restricted
Stock may be made, in the discretion of the Administrator, by: (a) cash; (b)
check; (c) the surrender of shares of Common Stock owned by the Offeree that
have been held by the Offeree for at least six (6) months, which surrendered
shares shall be valued at Fair Market Value as of the date of such exercise; (d)
the Offeree's promissory note in a form and on terms acceptable to the
Administrator; (e) the cancellation of indebtedness of the Company to the
Offeree; (f) the waiver of compensation due or accrued to the Offeree for
services rendered; or (g) any combination of the foregoing methods of payment or
any other consideration or method of payment as shall be permitted by applicable
corporate law.

        6.4 RIGHTS AS A STOCKHOLDER. Upon complying with the provisions of
Section 6.2 hereof, an Offeree shall have the rights of a Stockholder with
respect to the Restricted Stock purchased pursuant to the Right to Purchase,
including voting and dividend rights, subject to the terms, restrictions and
conditions as are set forth in the Stock Purchase Agreement. Unless the
Administrator shall determine otherwise, certificates evidencing shares of
Restricted Stock shall remain in the possession of the Company in accordance
with the terms of the Stock Purchase Agreement.

        6.5 RESTRICTIONS. Shares of Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of except as
specifically provided in the Stock Purchase Agreement or by the Administrator.
In the event of termination of a Participant's employment, service as a director
of the Company or Service Provider status for any reason whatsoever (including
death or disability), the Stock Purchase Agreement may provide, in the



                                       7
<PAGE>   8
discretion of the Administrator, that the Company shall have the right,
exercisable at the discretion of the Administrator, to repurchase (i) at the
original Purchase Price, any shares of Restricted Stock which have not vested as
of the date of termination, and (ii) at Fair Market Value, any shares of
Restricted Stock which have vested as of such date, on such terms as may be
provided in the Stock Purchase Agreement.

        6.6 VESTING OF RESTRICTED STOCK. The Stock Purchase Agreement shall
specify the date or dates, the performance goals or objectives which must be
achieved, and any other conditions on which the Restricted Stock may vest.

        6.7 DIVIDENDS. If payment for shares of Restricted Stock is made by
promissory note, any cash dividends paid with respect to the Restricted Stock
may be applied, in the discretion of the Administrator, to repayment of such
note.

        6.8 NONASSIGNABILITY OF RIGHTS. No Right to Purchase shall be assignable
or transferable except by will or the laws of descent and distribution or as
otherwise provided by the Administrator.


                                    ARTICLE 7

                           ADMINISTRATION OF THE PLAN

        7.1 ADMINISTRATOR. Authority to control and manage the operation and
administration of the Plan shall be vested in the Board, which may delegate such
responsibilities in whole or in part to a committee consisting of two (2) or
more members of the Board (the "Committee"). Members of the Committee may be
appointed from time to time by, and shall serve at the pleasure of, the Board.
As used herein, the term "Administrator" means the Board or, with respect to any
matter as to which responsibility has been delegated to the Committee, the term
Administrator shall mean the Committee.

        7.2 POWERS OF THE ADMINISTRATOR. In addition to any other powers or
authority conferred upon the Administrator elsewhere in the Plan or by law, the
Administrator shall have full power and authority: (a) to determine the persons
to whom, and the time or times at which, Incentive Options or Nonqualified
Options shall be granted and Rights to Purchase shall be offered, the number of
shares to be represented by each Option and Right to Purchase and the
consideration to be received by the Company upon the exercise thereof; (b) to
interpret the Plan; (c) to create, amend or rescind rules and regulations
relating to the Plan; (d) to determine the terms, conditions and restrictions
contained in, and the form of, Option Agreements and Stock Purchase Agreements;
(e) to determine the identity or capacity of any persons who may be entitled to
exercise a Participant's rights under any Option or Right to Purchase under the
Plan; (f) to correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any Option Agreement or Stock Purchase
Agreement; (g) to accelerate the vesting of any Option or release or waive any
repurchase rights of the Company with respect to Restricted Stock; (h) to extend
the exercise date of any Option or acceptance date of any Right to Purchase; (i)
to provide for rights of first refusal and/or repurchase rights; (j) to amend
outstanding Option Agreements and Stock Purchase Agreements to provide for,
among other things, any change or modification which the Administrator could
have provided for upon the grant of an Option or Right to Purchase or in
furtherance of the powers provided for herein; and (k) to make all other
determinations necessary or advisable for the administration of the Plan, but



                                       8
<PAGE>   9
only to the extent not contrary to the express provisions of the Plan. Any
action, decision, interpretation or determination made in good faith by the
Administrator in the exercise of its authority conferred upon it under the Plan
shall be final and binding on the Company and all Participants.

        7.3 LIMITATION ON LIABILITY. No employee of the Company or member of the
Board or Committee shall be subject to any liability with respect to duties
under the Plan unless the person acts fraudulently or in bad faith. To the
extent permitted by law, the Company shall indemnify each member of the Board or
Committee, and any employee of the Company with duties under the Plan, who was
or is a party, or is threatened to be made a party, to any threatened, pending
or completed proceeding, whether civil, criminal, administrative or
investigative, by reason of such person's conduct in the performance of duties
under the Plan.


                                    ARTICLE 8

                                CHANGE IN CONTROL

        8.1 CHANGE IN CONTROL. In order to preserve a Participant's rights in
the event of a Change in Control of the Company (i) the time period relating to
the exercise or realization of all outstanding Options and Rights to Purchase
shall automatically accelerate immediately prior to consummation of such Change
in Control if the Administrator does not take the action described in subitem
(C) of this Section 8.1 and (ii) with respect to Options and Rights to Purchase,
the Administrator in its discretion may, at any time an Option or Right to
Purchase is granted, or at any time thereafter, take one or more of the
following actions: (A) provide for the purchase of each Option or Right to
Purchase for an amount of cash or other property that could have been received
upon the exercise of the Option or Right to Purchase had the Option been
currently exercisable, (B) adjust the terms of the Options and Rights to
Purchase in a manner determined by the Administrator to reflect the Change in
Control, (C) cause the Options and Rights to Purchase to be assumed, or new
rights substituted therefor, by another entity, through the continuance of the
Plan and the assumption of outstanding Options and Rights to Purchase, or the
substitution for such Options and Rights to Purchase of new options and new
rights to purchase of comparable value covering shares of a successor
corporation, with appropriate adjustments as to the number and kind of shares
and Exercise Prices, in which event the Plan and such Options and Rights to
Purchase, or the new options and rights to purchase substituted therefor, shall
continue in the manner and under the terms so provided or (D) make such other
provision as the Committee may consider equitable. If the Administrator does not
take any of the forgoing actions, all Options and Rights to Purchase shall
terminate upon the consummation of the Change in Control and the Administrator
shall cause written notice of the proposed transaction to be given to all
Participants not less than fifteen (15) days prior to the anticipated effective
date of the proposed transaction.

                                    ARTICLE 9

                      AMENDMENT AND TERMINATION OF THE PLAN

        9.1 AMENDMENTS. The Board may from time to time alter, amend, suspend or
terminate the Plan in such respects as the Board may deem advisable. No such
alteration, amendment, suspension or termination shall be made which shall
substantially affect or impair the rights of any



                                       9
<PAGE>   10
Participant under an outstanding Option Agreement or Stock Purchase Agreement
without such Participant's consent. The Board may alter or amend the Plan to
comply with requirements under the Code relating to Incentive Options or other
types of options which give Optionee more favorable tax treatment than that
applicable to Options granted under this Plan as of the date of its adoption.
Upon any such alteration or amendment, any outstanding Option granted hereunder
may, if the Administrator so determines and if permitted by applicable law, be
subject to the more favorable tax treatment afforded to an Optionee pursuant to
such terms and conditions.

        9.2 PLAN TERMINATION. Unless the Plan shall theretofore have been
terminated, the Plan shall terminate on the tenth (10th) anniversary of the
Effective Date and no Options or Rights to Purchase may be granted under the
Plan thereafter, but Option Agreements, Stock Purchase Agreements and Rights to
Purchase then outstanding shall continue in effect in accordance with their
respective terms.


                                   ARTICLE 10

                            CANCELLATION & RECISSION

        10.1 NON-COMPETITION. Unless an Option Agreement specifies otherwise,
the Administrator may cancel, rescind, suspend, withhold or otherwise limit or
restrict any unexpired, unpaid, or deferred Options at any time if the
Participant in nor in compliance with all applicable provisions of the Option
Agreement and the Plan, or if the Participant engages in any "Adverse Activity."
For purposes of this Section 10, "Adverse Activity" shall include: (i) the
disclosure to anyone outside the Company, or the use in other than the Company's
business, without prior written authorization from the Company, of any
confidential information or material relating to the business of the Company,
acquired by the Participant either during or after employment with the Company;
(ii) the failure or refusal to disclose promptly and to assign to the Company
all right, title and interest in any invention or idea, patentable or not, made
or conceived by the Participant during employment by the Company, relating in
any manner to the actual or anticipated business, research or development work
of the Company; or (iii) activity that results in termination of the
Participant's employment for Cause.

        10.2 AGREEMENT UPON EXERCISE. Upon exercise, payment or delivery
pursuant to an Option Agreement, the Participant shall certify in a manner
acceptable to the Company that he or she is in compliance with the terms and
conditions of the Plan. In the event a Participant fails to comply with the
provisions of paragraphs (i)-(iii) of Section 10.1 prior to, or during the six
(6) months after, any exercise, payment or delivery pursuant to an Option
Agreement, such exercise, payment or delivery may be rescinded within two years
thereafter. In the event of any such rescission, the Participant shall pay to
the Company the amount of any gain realized or payment received as a result of
the exercise, payment or delivery, in such manner and on such terms and
conditions as may be required, and the Company shall be entitled to set-off
against the amount of any such gain any amount owed to the Participant by the
Company.



                                       10
<PAGE>   11
                                   ARTICLE 11

                                 TAX WITHHOLDING

        11.1 WITHHOLDING. The Company shall have the power to withhold, or
require a Participant to remit to the Company, an amount sufficient to satisfy
any applicable Federal, state, and local tax withholding requirements with
respect to any Options exercised or Restricted Stock issued under the Plan. To
the extent permissible under applicable tax, securities and other laws, the
Administrator may, in its sole discretion and upon such terms and conditions as
it may deem appropriate, permit a Participant to satisfy his or her obligation
to pay any such tax, in whole or in part, up to an amount determined on the
basis of the highest marginal tax rate applicable to such Participant, by (a)
directing the Company to apply shares of Common Stock to which the Participant
is entitled as a result of the exercise of an Option or as a result of the
purchase of or lapse of restrictions on Restricted Stock or (b) delivering to
the Company shares of Common Stock owned by the Participant. The shares of
Common Stock so applied or delivered in satisfaction of the Participant's tax
withholding obligation shall be valued at their Fair Market Value as of the date
of measurement of the amount of income subject to withholding.


                                   ARTICLE 12

                                  MISCELLANEOUS

        12.1 BENEFITS NOT ALIENABLE. Other than as provided above, benefits
under the Plan may not be assigned or alienated, whether voluntarily or
involuntarily. Any unauthorized attempt at assignment, transfer, pledge or other
disposition shall be without effect.

        12.2 NO ENLARGEMENT OF EMPLOYEE RIGHTS. This Plan is strictly a
voluntary undertaking on the part of the Company and shall not be deemed to
constitute a contract between the Company and any Participant to be
consideration for, or an inducement to, or a condition of, the employment of any
Participant. Nothing contained in the Plan shall be deemed to give the right to
any Participant to be retained as an employee of the Company or any Affiliated
Company or to interfere with the right of the Company or any Affiliated Company
to discharge any Participant at any time.

        12.3 APPLICATION OF FUNDS. The proceeds received by the Company from the
sale of Common Stock pursuant to Option Agreements and Stock Purchase
Agreements, except as otherwise provided herein, will be used for general
corporate purposes.

        12.4 ANNUAL REPORTS. During the term of this Plan, the Company will
furnish to each Participant copies of annual financial reports that the Company
distributes generally to its stockholders.



                                       11
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.42
<SEQUENCE>3
<FILENAME>ex10-42.txt
<DESCRIPTION>EXHIBIT 10.42
<TEXT>

<PAGE>   1
                                                                   EXHIBIT 10.42
                          SONUS PHARMACEUTICALS, INC.

                             STOCK OPTION AGREEMENT

        TYPE OF OPTION (CHECK ONE): [ ] INCENTIVE  [ ] NONQUALIFIED

        This Stock Option Agreement (the "Agreement") is entered into as of
_____________, 200_, by and between SONUS PHARMACEUTICALS, INC., a Delaware
corporation (the "Company"), and _____________ (the "Optionee") pursuant to the
Company's 2000 Stock Incentive Plan (the "Plan"). Any capitalized term not
defined herein shall have the meaning ascribed to it in the Plan.

        1. GRANT OF OPTION. The Company hereby grants to Optionee an option (the
"Option") to purchase all or any portion of a total of________________(________)
shares (the "Shares") of the Common Stock of the Company at a purchase price of
_____________ ($________ ) per share (the "Exercise Price"), subject to the
terms and conditions set forth herein and the provisions of the Plan. If the box
marked "Incentive" above is checked, then this Option is intended to qualify as
an "incentive stock option" as defined in Section 422 of the Internal Revenue
Code of l986, as amended (the "Code"). If this Option fails in whole or in part
to qualify as an incentive stock option, or if the box marked "Nonqualified" is
checked, then this Option shall to that extent constitute a nonqualified stock
option.

        2. VESTING OF OPTION. The right to exercise this Option shall vest in
installments, and this Option shall be exercisable from time to time in whole or
in part as to any vested installment, as follows:

<TABLE>
<CAPTION>
                                                          This Option shall be
                   On or After:                            Exercisable as to
                   ------------                            -----------------
 <S>                                                          <C>
 (i)  the first anniversary of this Agreement:                       __ % of the Shares

 (ii) the second anniversary of this Agreement:        an additional __ % of the Shares

 (iii)  the third anniversary of this Agreement:       an additional __ % of the Shares

 (iv)  the fourth anniversary of this Agreement:       an additional __ % of the Shares

 (v)  the fifth anniversary of this Agreement:         an additional __ % of the Shares
</TABLE>

No additional shares shall vest after the date of termination of Optionee's
Continuous Service, as defined below, but this Option shall continue to be
exercisable in accordance with Section 3 hereof with respect to that number of
shares that have vested as of the date of termination of Optionee's Continuous
Service. As used in this Agreement, the term "Continuous Service" means (i)
employment by either the Company or any parent or subsidiary corporation of the
Company, or by a corporation or a parent or subsidiary of a corporation issuing
or assuming a stock option in a transaction to which Section 424(a) of the
Internal Revenue Code of 1986, as amended (the "Code") applies, which is
uninterrupted except for vacations, illness (except for permanent disability, as
defined in Section 22(e)(3) of the Code), or leaves of absence which are
approved in writing by the Company or any of such other employer corporations,
if applicable, (ii) service as a member of the Board of Directors or as an
officer of the Company until Optionee resigns, is removed from office, or
Optionee's term of office expires and he is not reelected, or (iii) so long as
Optionee is engaged as a consultant or service provider to the Company or other
corporation referred to in clause (i) above.



<PAGE>   2


        3. TERM OF OPTION. Optionee's right to exercise this Option shall
terminate immediately upon the first to occur of the following:

               (a) the expiration of ten (10) years from the date of this
Agreement;

               (b) termination of Optionee's Continuous Service if such
termination occurs for any reason other than permanent disability, death or
voluntary resignation;

               (c) the expiration of ___ (_) month from the date of termination
of Optionee's Continuous Service if such termination occurs due to voluntary
resignation; provided, however, that if Optionee dies during such one-month
period the provisions of Section 3(e) below shall apply;

               (d) the expiration of one (1) year from the date of termination
of Optionee's Continuous Service if such termination is due to permanent
disability of the Optionee (as defined in Section 22(e)(3) of the Code);

               (e) the expiration of one (1) year from the date of termination
of Optionee's Continuous Service if such termination is due to Optionee's death
or if death occurs during the one-month period following termination of
Optionee's Continuous Service pursuant to Section 3(c) above; or

               (f) upon the consummation of a "Change in Control" (as defined in
Section 2.5 of the Plan), unless otherwise provided pursuant to Section 11
below.

        4. EXERCISE OF OPTION. On or after the vesting of any portion of this
Option in accordance with Sections 2 or 11 hereof, and until termination of the
right to exercise this Option in accordance with Section 3 above, the portion of
this Option which has vested may be exercised in whole or in part by the
Optionee (or, after his or her death, by the person designated in Section 5
below) upon delivery of the following to the Company at its principal executive
offices:

               (a) a written notice of exercise which identifies this Agreement
and states the number of Shares then being purchased (but no fractional Shares
may be purchased);

               (b) a check or cash in the amount of the Exercise Price (or
payment of the Exercise Price in such other form of lawful consideration as the
Administrator may approve from time to time under the provisions of Section 5.3
of the Plan);

               (c) a check or cash in the amount reasonably requested by the
Company to satisfy the Company's withholding obligations under federal, state or
other applicable tax laws with respect to the taxable income, if any, recognized
by the Optionee in connection with the exercise of this Option (unless the
Company and Optionee shall have made other arrangements for deductions or
withholding from Optionee's wages, bonus or other compensation payable to
Optionee, or by the withholding of Shares issuable upon exercise of this Option
or the delivery of Shares owned by the Optionee in accordance with Section 11.1
of the Plan, provided such arrangements satisfy the requirements of applicable
tax laws); and

               (d) a letter, if requested by the Company, in such form and
substance as the Company may require, setting forth the investment intent of the
Optionee, or person designated in Section 5 below, as the case may be.



                                       2
<PAGE>   3
        5. DEATH OF OPTIONEE; NO ASSIGNMENT. The rights of the Optionee under
this Agreement may not be assigned or transferred except by will or by the laws
of descent and distribution, and may be exercised during the lifetime of the
Optionee only by such Optionee. Any attempt to sell, pledge, assign,
hypothecate, transfer or dispose of this Option in contravention of this
Agreement or the Plan shall be void and shall have no effect. If the Optionee's
Continuous Service terminates as a result of his or her death, and provided
Optionee's rights hereunder shall have vested pursuant to Section 2 hereof,
Optionee's legal representative, his or her legatee, or the person who acquired
the right to exercise this Option by reason of the death of the Optionee
(individually, a "Successor") shall succeed to the Optionee's rights and
obligations under this Agreement. After the death of the Optionee, only a
Successor may exercise this Option.

        6. REPRESENTATIONS AND WARRANTIES OF OPTIONEE.

               (a) Optionee represents and warrants that this Option is being
acquired by Optionee for Optionee's personal account, for investment purposes
only, and not with a view to the distribution, resale or other disposition
thereof.

               (b) Optionee acknowledges that the Company may issue Shares upon
the exercise of the Option without registering such Shares under the Securities
Act of l933, as amended (the "Securities Act"), on the basis of certain
exemptions from such registration requirement. Accordingly, Optionee agrees that
his or her exercise of the Option may be expressly conditioned upon his or her
delivery to the Company of an investment certificate including such
representations and undertakings as the Company may reasonably require in order
to assure the availability of such exemptions, including a representation that
Optionee is acquiring the Shares for investment and not with a present intention
of selling or otherwise disposing thereof and an agreement by Optionee that the
certificates evidencing the Shares may bear a legend indicating such
non-registration under the Securities Act and the resulting restrictions on
transfer. Optionee acknowledges that, because Shares received upon exercise of
an Option may be unregistered, Optionee may be required to hold the Shares
indefinitely unless they are subsequently registered for resale under the
Securities Act or an exemption from such registration is available.

               (c) Optionee acknowledges receipt of a copy of the Plan and
understands that all rights and obligations connected with this Option are set
forth in this Agreement and in the Plan.

        7. RIGHT OF FIRST REFUSAL.

               (a) The Shares acquired pursuant to the exercise of this Option
may be sold by the Optionee only in compliance with the provisions of this
Section 7, and subject in all cases to compliance with the provisions of Section
6(b) hereof. Prior to any intended sale, Optionee shall first give written
notice (the "Offer Notice") to the Company specifying (i) his or her bona fide
intention to sell or otherwise transfer such Shares, (ii) the name and address
of the proposed purchaser(s), (iii) the number of Shares the Optionee proposes
to sell (the "Offered Shares"), (iv) the price for which he or she proposes to
sell the Offered Shares, and (v) all other material terms and conditions of the
proposed sale.

               (b) Within thirty (30) days after receipt of the Offer Notice,
the Company or its nominee(s) may elect to purchase all or any portion of the
Offered Shares at the price and on the terms and conditions set forth in the
Offer Notice by delivery of written notice (the "Acceptance Notice") to the
Optionee specifying the number of Offered Shares that the Company or its
nominees



                                       3
<PAGE>   4
elect to purchase. Within fifteen (15) days after delivery of the Acceptance
Notice to the Optionee, the Company and/or its nominee(s) shall deliver to the
Optionee payment of the amount of the purchase price of the Offered Shares to be
purchased pursuant to this Section 7, against delivery by the Optionee of a
certificate or certificates representing the Offered Shares to be purchased,
duly endorsed for transfer to the Company or such nominee(s), as the case may
be. Payment shall be made on the same terms as set forth in the Offer Notice or,
at the election of the Company or its nominees(s), by check or wire transfer of
funds. If the Company and/or its nominee(s) do not elect to purchase all of the
Offered Shares, the Optionee shall be entitled to sell the balance of the
Offered Shares to the purchaser(s) named in the Offer Notice at the price
specified in the Offer Notice or at a higher price and on the terms and
conditions set forth in the Offer Notice; provided, however, that such sale or
other transfer must be consummated within 60 days from the date of the Offer
Notice and any proposed sale after such 60-day period may be made only by again
complying with the procedures set forth in this Section 7.

               (c) The Optionee may transfer all or any portion of the Shares to
a trust established for the sole benefit of the Optionee and/or his or her
spouse or children without such transfer being subject to the right of first
refusal set forth in this Section 7, provided that the Shares so transferred
shall remain subject to the terms and conditions of this Agreement and no
further transfer of such Shares may be made without complying with the
provisions of this Section 7.

               (d) Any Successor of Optionee pursuant to Section 5 hereof, and
any transferee of the Shares pursuant to this Section 7, shall hold the Shares
subject to the terms and conditions of this Agreement and no further transfer of
the Shares may be made without complying with the provisions of this Section 7
and the Plan.

               (e) The provisions of this Section 7 shall not apply to a sale of
the Shares to the Company pursuant to Section 8 below.

               (f) The rights provided the Company and its nominee(s) under this
Section 7 shall terminate upon the closing of the initial public offering of
shares of the Company's Common Stock pursuant to a registration statement filed
with and declared effective by the Securities and Exchange Commission under the
Securities Act.

        8. COMPANY'S REPURCHASE RIGHT.

               (a) The Company shall have the right (but not the obligation) to
repurchase (the "Repurchase Right") any or all of the Shares acquired pursuant
to the exercise of this Option in the event that the Optionee's Continuous
Service should terminate for any reason whatsoever, including without limitation
Optionee's death, disability, voluntary resignation or termination by the
Company with or without cause. Upon exercise of the Repurchase Right, the
Optionee shall be obligated to sell his or her Shares to the Company, as
provided in this Section 8. The Repurchase Right may be exercised by the Company
at any time during the period commencing on the date of termination of
Optionee's Continuous Service and ending one-hundred twenty (120) days after the
last to occur of the following:

                      (i)    the termination of Optionee's Continuous Service;

                      (ii)   the expiration of Optionee's right to exercise this
Option pursuant to Section 3 hereof; or



                                       4
<PAGE>   5
                      (iii)  in the event of Optionee's death, receipt by the
Company of notice of the identity and address of Optionee's Successor (as
defined in Section 5 hereof).

               (b) The purchase price for Shares repurchased hereunder (the
"Repurchase Price") shall be the Fair Market Value per share of Common Stock
(determined in accordance with Section 2.12 of the Plan) as of the date of
termination of Optionee's Continuous Service.

               (c) Written notice of exercise of the Repurchase Right, stating
the number of Shares to be repurchased and the Repurchase Price per Share, shall
be given by the Company to the Optionee or his or her Successor, as the case may
be, during the period specified in Section 8(a) above.

               (d) The Repurchase Price shall be payable, at the option of the
Company, by check or by cancellation of all or a portion of any outstanding
indebtedness of Optionee to the Company, or by any combination thereof. The
Repurchase Price shall be paid without interest within sixty (60) days after
delivery of the notice of exercise of the Repurchase Right, against delivery by
the Optionee or his or her Successor of a certificate or certificates
representing the Shares to be repurchased, duly endorsed for transfer to the
Company.

               (e) The rights provided the Company under this Section 8 shall
terminate upon the closing of the initial public offering of shares of the
Company's Common Stock pursuant to a registration statement filed with and
declared effective by the Securities and Exchange Commission under the
Securities Act.

        9. RESTRICTIVE LEGENDS.

               (a) Optionee hereby acknowledges that federal securities laws and
the securities laws of the state in which he or she resides may require the
placement of certain restrictive legends upon the Shares issued upon exercise of
this Option, and Optionee hereby consents to the placing of any such legends
upon certificates evidencing the Shares as the Company, or its counsel, may deem
necessary or advisable.

               (b) In addition, all stock certificates evidencing the Shares
shall be imprinted with a legend substantially as follows:

        THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
        CERTAIN RESTRICTIONS ON TRANSFER, REPURCHASE RIGHTS AND A RIGHT OF FIRST
        REFUSAL IN FAVOR OF THE CORPORATION AND/OR ITS NOMINEE(S), AS SET FORTH
        IN A STOCK OPTION AGREEMENT. TRANSFER OF THESE SHARES MAY BE MADE ONLY
        IN COMPLIANCE WITH THE PROVISIONS OF SAID AGREEMENT, A COPY OF WHICH IS
        ON FILE AT THE PRINCIPAL OFFICE OF SAID CORPORATION. SUCH TRANSFER
        RESTRICTIONS, REPURCHASE RIGHTS AND RIGHT OF FIRST REFUSAL ARE BINDING
        ON TRANSFEREES OF THESE SHARES.

        10. ADJUSTMENTS UPON CHANGES IN CAPITAL STRUCTURE. In the event that the
outstanding shares of Common Stock of the Company are hereafter increased or
decreased or changed into or exchanged for a different number or kind of shares
or other securities of the Company by reason of a



                                       5
<PAGE>   6
recapitalization, stock split, combination of shares, reclassification, stock
dividend or other similar change in the capital structure of the Company, then
appropriate adjustment shall be made by the Administrator to the number of
Shares subject to the unexercised portion of this Option and to the Exercise
Price per share, in order to preserve, as nearly as practical, but not to
increase, the benefits of the Optionee under this Option, in accordance with the
provisions of Section 4.2 of the Plan.

        11. CHANGE IN CONTROL. In the event of a Change in Control of the
Company, (i) the vesting of this Option pursuant to Section 2 above shall
automatically accelerate immediately prior to the consummation of such Change in
Control if the Administrator does not take the action described in subitem (C)
of this Section 11, and (ii) the Administrator in its discretion may take one or
more of the following actions: (A) provide for the purchase or exchange of this
Option for an amount of cash or other property having a value equal to the
difference, or spread, between (x) the value of the cash or other property that
the Optionee would have received pursuant to such Change in Control transaction
in exchange for the shares issuable upon exercise of this Option had this Option
been exercised immediately prior to such Change in Control transaction and (y)
the Exercise Price, (B) adjust the terms of this Option in a manner determined
by the Administrator to reflect the Change in Control, (C) cause this Option to
be assumed, or new rights substituted therefor, by another entity, through the
continuance of the Plan and the assumption of this Option, or the substitution
for this Option of a new option of comparable value covering shares of a
successor corporation, with appropriate adjustments as to the number and kind of
shares and Exercise Price, in which event the Plan and this Option, or the new
option substituted therefor, shall continue in the manner and under the terms so
provided, or (D) make such other provision as the Administrator may consider
equitable. If the Administrator does not take any of the forgoing actions, this
Option shall terminate upon the consummation of the Change in Control and the
Administrator shall cause written notice of the proposed transaction to be given
to the Optionee not less than fifteen (15) days prior to the anticipated
effective date of the proposed transaction.

        12. NO EMPLOYMENT CONTRACT CREATED. Neither the granting of this Option
nor the exercise hereof shall be construed as granting to the Optionee any right
with respect to continuance of employment by the Company or any of its
subsidiaries. The right of the Company or any of its subsidiaries to terminate
at will the Optionee's employment at any time (whether by dismissal, discharge
or otherwise), with or without cause, is specifically reserved.

        13. RIGHTS AS SHAREHOLDER. The Optionee (or transferee of this option by
will or by the laws of descent and distribution) shall have no rights as a
shareholder with respect to any Shares covered by this Option until the date of
the issuance of a stock certificate or certificates to him or her for such
Shares, notwithstanding the exercise of this Option.

        14. "MARKET STAND-OFF" AGREEMENT. Optionee agrees that, if requested by
the Company or the managing underwriter of any proposed public offering of the
Company's securities, Optionee will not sell or otherwise transfer or dispose of
any Shares held by Optionee without the prior written consent of the Company or
such underwriter, as the case may be, during such period of time, not to exceed
180 days following the effective date of the registration statement filed by the
Company with respect to such offering, as the Company or the underwriter may
specify.

        15. INTERPRETATION. This Option is granted pursuant to the terms of the
Plan, and shall in all respects be interpreted in accordance therewith. The
Administrator shall interpret and construe this Option and the Plan, and any
action, decision, interpretation or determination made in good faith by the
Administrator shall be final and binding on the Company and the Optionee. As
used in this



                                       6
<PAGE>   7
Agreement, the term "Administrator" shall refer to the committee of the Board of
Directors of the Company appointed to administer the Plan, and if no such
committee has been appointed, the term Administrator shall mean the Board of
Directors.

        16. NOTICES. Any notice, demand or request required or permitted to be
given under this Agreement shall be in writing and shall be deemed given when
delivered personally or three (3) days after being deposited in the United
States mail, as certified or registered mail, with postage prepaid, and
addressed, if to the Company, at its principal place of business, Attention: the
Chief Financial Officer, and if to the Optionee, at his or her most recent
address as shown in the employment or stock records of the Company.

        18. GOVERNING LAW. The validity, construction, interpretation, and
effect of this Option shall be governed by and determined in accordance with the
laws of the State of California.

        19. SEVERABILITY. Should any provision or portion of this Agreement be
held to be unenforceable or invalid for any reason, the remaining provisions and
portions of this Agreement shall be unaffected by such holding.

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

        21. CALIFORNIA CORPORATE SECURITIES LAW. The sale of the shares that are
the subject of this Agreement has not been qualified with the Commissioner of
Corporations of the State of California and the issuance of such shares or the
payment or receipt of any part of the consideration therefor prior to such
qualification is unlawful, unless the sale of such shares is exempt from such
qualification by Section 25100, 25102 or 25105 of the California Corporate
Securities Law of l968, as amended. The rights of all parties to this Agreement
are expressly conditioned upon such qualification being obtained, unless the
sale is so exempt.

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

SONUS PHARMACEUTICALS, INC.            "OPTIONEE"


By:_______________________             __________________________
                                               (Signature)

Its:______________________             __________________________
                                          (Type or print name)



                                       7
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-27.1
<SEQUENCE>4
<FILENAME>ex27-1.txt
<DESCRIPTION>EXHIBIT 27.1
<TEXT>

<TABLE> <S> <C>

<ARTICLE> 5

<S>                             <C>
<PERIOD-TYPE>                   3-MOS
<FISCAL-YEAR-END>                          DEC-31-2000
<PERIOD-START>                             APR-01-2000
<PERIOD-END>                               JUN-30-2000
<CASH>                                       7,849,611
<SECURITIES>                                 9,494,433
<RECEIVABLES>                                        0
<ALLOWANCES>                                         0
<INVENTORY>                                          0
<CURRENT-ASSETS>                            17,698,465
<PP&E>                                       4,046,563
<DEPRECIATION>                             (3,396,614)
<TOTAL-ASSETS>                              18,348,414
<CURRENT-LIABILITIES>                        7,812,188
<BONDS>                                              0
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                    37,719,736
<OTHER-SE>                                (27,183,510)
<TOTAL-LIABILITY-AND-EQUITY>                18,348,414
<SALES>                                              0
<TOTAL-REVENUES>                                44,969
<CGS>                                                0
<TOTAL-COSTS>                                2,424,196
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                            (12,153)
<INCOME-PRETAX>                              2,055,509
<INCOME-TAX>                                         0
<INCOME-CONTINUING>                          2,055,509
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                 2,055,509
<EPS-BASIC>                                       0.22
<EPS-DILUTED>                                     0.22


</TABLE>
</TEXT>
</DOCUMENT>
</SUBMISSION>
