Exhibit 10.24

FACILITY AGREEMENT

FACILITY AGREEMENT (this “Agreement”), dated as of October 30, 2007, between
Hana  Biosciences Inc., a Delaware corporation (the “Borrower”), and Deerfield
Private Design Fund, L.P. (“Deerfield Private Design Fund”), Deerfield Special
Situations Fund L.P., a limited partnership organized under the laws of
Delaware, Deerfield Special Situations Fund International Limited, a company
organized under the laws of the British Virgin Islands (“Deerfield
International”) and Deerfield Private Design International, L.P. (“Deerfield
Private Design International” and together with Deerfield International, the
“Offshore Lenders”), a limited partnership organized under the laws of the
British Virgin Islands (together the “Lenders” and, together with the Lenders,
the “Parties”).

W I T N E S S E T H:

WHEREAS, the Borrower wishes to borrow from the Lenders up to thirty million
Dollars ($30,000,000) for the purposes described in Section 2.1; and

WHEREAS, the Lenders desire on the terms hereinafter set forth to make loans to
the Borrower from time to time for such purposes;

NOW, THEREFORE, in consideration of the mutual agreements set forth herein, the
Lenders and the Borrower agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1

General Definitions.  Wherever used in this Agreement, or the Exhibits or
Schedules attached hereto, unless the context otherwise requires, the following
terms have the following meanings:

“Additional Amounts” has the meaning given to it in Section 2.6(b).

“Affiliate” means, with respect to any Person, (a) any other Person directly or
indirectly controlling, controlled by, or under common control with that Person;
(b) any other Person owning beneficially or controlling ten percent (10%) or
more of the equity interest in such Person; (c) any officer, director, partner,
member, or shareholder of such Person; or (d) any spouse, parent, sibling
(natural born or adopted) or child (natural born or adopted) of such Person.  As
used in this definition of “Affiliate,” the term “control” means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through ownership of voting
securities or partnership or other ownership interest, by contract, or
otherwise.

“Business Day” means a day on which banks are open for business in The City of
New York.

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“Code” means the Internal Revenue Code of 1986, as amended, and any Treasury
Regulations promulgated thereunder.

“Collateral” means all right, title and interest of the Borrower in and to all
of the Borrower’s assets and properties of any kind, whether tangible or
intangible and whether now owned or hereafter acquired, being the assets and
properties

“Commitment Period Expiration Date” means the earliest to occur of (a) the date
on which any Commitment Termination Event occurs, and (b) October 30, 2009.

“Commitment Termination Event” means the occurrence of any Event of Default.

“Common Stock” means the common stock, par value $0.001 per share, of the
Borrower.

“Default” means any event which, at the giving of notice, lapse of time or
fulfillment of any other applicable condition (or any combination of the
foregoing), would constitute an Event of Default.

“Disbursement” has the meaning given to it in Section 2.2(a).

“Disbursement Date” means the date on which a Disbursement occurs.

“Disbursement Request” has the meaning given to it in Section 2.2(a).

“Dollars” and the “$” sign mean the lawful currency of the United States of
America.

“Event of Default” has the meaning given to it in Section 6.1.

“Evidence of Disbursement” has the meaning given to it in Section 2.2(a).

“Exchange Act” means the Securities Exchange Act of 1934, as amended, including
the rules and regulations promulgated thereunder.

“Excluded Taxes” means all income taxes, minimum or alternative minimum income
taxes, withholding taxes imposed on gross amounts, any tax determined based upon
income, capital gains, gross income, sales, net profits, windfall profits or
similar items, franchise taxes (or any other tax measured by capital, capital
stock or net worth), gross receipts taxes, branch profits taxes, margin taxes
(or any other taxes imposed on or measured by net income, or imposed in lieu of
net income) payable by the Lenders in any jurisdiction to any Government
Authority (or political subdivision or taxing authority thereof) in connection
with any payments received under this Agreement by the Lenders, or any such tax
imposed in connection with the execution and delivery of, and the performance of
its obligations under, this Agreement.  

“FDA” means the United States Food and Drug Administration.

“Final Payment” means such amount as may be necessary to repay the Loan in full
and any other amounts owing by the Borrower to the Lenders pursuant to the
Financing Documents.

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“Final Payment Date” means the earlier of (i) the date on which the borrower
repays the outstanding principal of the Loan (together with any other amounts
accrued and unpaid under this Agreement) to the Lenders pursuant to this
Agreement and (ii) the sixth anniversary of the date of this Agreement.

“Financing Documents” means this Agreement, the Note, the Security Agreement,
the Registration Rights Agreement, the Warrants and any other document or
instrument delivered in connection with any of the foregoing whether or not
specifically mentioned herein or therein.

“GAAP” means generally accepted accounting principles in the United States of
America in effect from time to time, and applied on a consistent basis.

“Government Authority” means any government, governmental department, ministry,
cabinet, commission, board, bureau, agency, tribunal, regulatory authority,
instrumentality, judicial, legislative, fiscal, or administrative body or
entity, domestic or foreign, federal, state or local having jurisdiction over
the matter or matters and Person or Persons in question, including, with
limitation, the FDA and the SEC.

“Indemnified Person” has the meaning given to it in Section 7.12.

“Indemnity” has the meaning given to it in Section 7.12.

“Initial Exercise Price of the Warrant” shall equal the last closing bid price
of the Common Stock at such time as this Agreement is entered into, as reported
on The NASDAQ Global Market (“NASDAQ”) (or such other exchange or trading market
that then serves as the principal trading market for Common Stock).

“Lien” means any lien, pledge, preferential arrangement, mortgage, security
interest, deed of trust, charge, assignment, hypothecation, title retention,
privilege or other encumbrance on or with respect to property or interest in
property having the practical effect of constituting a security interest with
respect to the payment of any obligation with, or from the proceeds of, any
asset or revenue of any kind.

“Loan” means the loan to be made available by the Lenders to the Borrower
pursuant to Section 2.2 in the maximum aggregate amount of thirty million
Dollars ($30,000,000) or, as the context may require, the principal amount
thereof from time to time outstanding.

“Loss” has the meaning given to it in Section 7.12.

“Material Adverse Effect” means a material adverse effect on (a) the business,
operations, prospects, condition (financial or otherwise) or property of the
Borrower; (b) the validity or enforceability of any provision of any Financing
Document; (c) the ability of the Borrower to timely perform its obligations
under each Financing Document; or (d) the rights and remedies of the Lenders
under any Financing Document.

“Milestones” mean the numbered event or events set forth on Exhibit B.

“Milestone Products” means the product candidates described in Exhibit B.

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“Notes” means the notes issued to the Lenders in the form attached hereto
Exhibit A-1 or Exhibit A-2.

“Obligations” means all obligations (monetary or otherwise) of the Borrower
arising under or in connection with the Financing Documents.

“Organizational Documents” means the Certificate of Incorporation and By-laws of
the Borrower.

“Permitted Indebtedness” means: (i) Indebtedness of Borrower in favor of Lenders
arising under this Agreement or any other financial document; (ii) Indebtedness
existing as of the date hereof (which the Borrower represents to not be in
excess of $250,000 (iii)  Indebtedness to trade creditors incurred in the
ordinary course of business; (iv) Subordinated Debt; and (v) extensions,
refinancing and renewals of any items of Permitted Indebtedness, provided that
the principal amounts is not increased or the terms modified to impose more
burdensome terms upon the Borrower.

“Permitted Liens” means: (i) Liens existing on the date hereof and disclosed on
Exhibit D hereof; (ii) Liens in favor of the Lenders; (iii) statutory Liens
created by operation of applicable law; (iv) Liens arising in the ordinary
course of business and securing obligations that are not overdue or are being
contested in good faith by appropriate proceedings; (v) Liens securing purchase
money or capitalized lease equipment financing; and (vi) Liens for Taxes not yet
due and payable or that are being contested in good faith by appropriate
proceedings.

“Person” means and includes any natural person, individual, partnership, joint
venture, corporation, trust, limited liability company, limited company, joint
stock company, unincorporated organization, government entity or any political
subdivision or agency thereof, or any other entity.

“Registration Rights Agreement” means the Registration Rights Agreement, dated
as of the date hereof, by and between the Borrower and the Lenders.

“SEC” means the United States Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended, including the
rules and regulations promulgated thereunder

“Security Agreement” means the Security Agreement with respect to the
Collateral, dated as of the date hereof, by and between the Borrower and the
Lenders.

“Subordinated Debt” means Indebtedness of Borrower subject to a Subordination
Agreement in the form of Exhibit D hereto.

“Subsidiary or Subsidiaries: means, as to Borrower, any corporation or other
entity of which securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other persons performing
similar functions are at the time directly or indirectly owned by such Borrower.

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“Taxes” means all deductions or withholdings for any and all present and future
taxes, levies, imposts, stamp or other duties, fees, assessments, deductions,
withholdings, all other governmental charges, and all liabilities with respect
thereto.

“Trading Day” shall mean any day on which the Common Stock is traded for any
period on NASDAQ, or on the principal securities exchange or other securities
market on which the Common Stock is then being traded.

“Warrants” means the warrants attached hereto as part of Exhibit C issued
pursuant to Section 2.11.

Section 1.2

Interpretation.  In this Agreement, unless the context otherwise requires, all
words and personal pronouns relating thereto shall be read and construed as the
number and gender of the party or parties requires and the verb shall be read
and construed as agreeing with the required word and pronoun; the division of
this Agreement into Articles and Sections and the use of headings and captions
is for convenience of reference only and shall not modify or affect the
interpretation or construction of this Agreement or any of its provisions; the
words “herein,” “hereof,” “hereunder,” “hereinafter” and “hereto” and words of
similar import refer to this Agreement as a whole and not to any particular
Article or Section hereof; the words “include,” “including,” and derivations
thereof shall be deemed to have the phrase “without limitation” attached thereto
unless otherwise expressly stated; references to a specified Article, Exhibit,
Section or Schedule shall be construed as a reference to that specified Article,
Exhibit, Section or Schedule of this Agreement; and any reference to this
Agreement or any of the Financing Documents means such agreement or document as
the same shall be amended, supplemented or modified and from time to time in
effect.

Section 1.3

Business Day Adjustment.  Where the day by which a payment is due to be made is
not a Business Day, that payment shall be made by the next succeeding Business
Day unless that next succeeding Business Day falls in a different calendar
month, in which case that payment shall be made by the Business Day immediately
preceding the day by which such payment is due to be made.

ARTICLE II

AGREEMENT FOR THE LOAN

Section 2.1

Use of Proceeds.  The Borrower shall use the Loan proceeds to engage in the
clinical development of the Milestone Products and its other product candidates,
and for general corporate purposes, including the potential licensing,
acquisition and development of new products or product candidates.  The Borrower
represents and warrants that it has no present understandings, commitments or
agreement with respect to any acquisitions, in-licensing transactions or other
strategic transactions, and no portion of the Loan proceeds has been allocated
for any such transaction.

Section 2.2

Disbursements.

(a)

Subject to satisfaction of the conditions contained in Article IV, a
disbursement of a portion of the Loan (each a “Disbursement”) in an amount set
forth on

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Exhibit B for each Milestone shall be made when indicated on Exhibit B for such
Milestone upon the Borrower’s request (a “Disbursement Request”) in the form of
Schedule 1, delivered to the Lenders not less than fifteen Business Days prior
to the proposed date of such Disbursement.  Against each Disbursement, the
Borrower shall deliver to the Lenders a completed receipt (the “Evidence of
Disbursement”) in the form of Schedule 2, which receipt shall not be effective
until the Disbursement is actually advanced to the Borrower.  

(b)

The Lenders shall not be required to make any Loan if (a) the Commitment Period
Expiration Date shall have occurred, or (b) after giving effect thereto, the
aggregate outstanding principal amount of the Loans would exceed $30,000,000.

Section 2.3

Repayment.  The Borrower shall remit the Final Payment to Lenders on the earlier
to occur of (i) the Final Payment Date and (ii) a Commitment Termination Event.

Section 2.4

Initial Payment.  The Borrower represents and warrants that on the date hereof,
the Borrower has paid to Deerfield Management Company, L.P. a commitment fee of
$1,050,000.

Section 2.5

Payments.  Payments of any amounts due to the Lenders under this Agreement shall
be made in Dollars in immediately available funds prior to 11:00 a.m New York
City time on such date that any such payment is due, at such bank or places, as
Deerfield Private Design shall from time to time designate in writing.  The
Borrower shall pay all and any costs (administrative or otherwise) imposed by
banks, clearing houses, or any other financial institution, in connection with
making any payments under any of the Financing Documents, except for any costs
imposed by the Lenders’ banking institutions.

Section 2.6

Taxes, Duties and Fees.

(a)

The Borrower shall pay or cause to be paid all present and future Taxes (other
than Excluded Taxes, if any), duties, fees and other charges of whatsoever
nature, if any, now or at any time hereafter levied or imposed by any Government
Authority, by any department, agency, political subdivision or taxing or other
authority thereof or therein, by any organization of which the applicable
Government Authority is a member, or by any jurisdiction through which the
Borrower makes payments hereunder, on or in connection with the payment of any
and all amounts due under this Agreement, and all payments of principal and
other amounts due under this Agreement shall be made without deduction for or on
account of any such Taxes, duties, fees and other charges, except for Excluded
Taxes, which may be deducted or withheld from payments made by the Borrower only
if such deduction or withholding is required by applicable law.

(b)

If the Borrower is required to withhold any such amount or is prevented by
operation of law or otherwise from paying or causing to be paid such Taxes,
duties, fees or other charges as aforesaid except for Excluded Taxes, the
principal or other amounts due under this Agreement (as applicable) shall be
increased to such amount as shall be necessary to yield and remit to the Lenders
the full amount it would have

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received taking into account any such Taxes (except for Excluded Taxes), duties,
fees or other charges payable on amounts payable by the Borrower under this
Section 2.6(b) had such payment been made without deduction of such Taxes,
duties, fees or other charges (all and any of such additional amounts, herein
referred to as the “Additional Amounts”).

(c)

If Section 2.6(b) above applies and the Lenders so require the Borrower shall
deliver to the Lenders official tax receipts evidencing payment (or certified
copies of them) of the Additional Amounts within thirty (30) days of the date of
payment.

(d)

If the Lenders receive a refund from a Government Authority to which the
Borrower has paid withholding Taxes pursuant to this Section 2.6, the Lenders
shall pay such refund to the Borrower.

Section 2.7

Costs, Expenses and Losses.  If, as a result of any failure by the Borrower to
pay any sums due under this Agreement on the due date therefor, or to borrow in
accordance with a request for Disbursement made pursuant to Section 2.2, the
Lenders shall incur costs, expenses and/or losses, by reason of the liquidation
or redeployment of deposits from third parties or in connection with obtaining
funds to make or maintain any Disbursement, the Borrower shall pay to the
Lenders upon request by the Lenders, the amount of such costs, expenses and/or
losses within fifteen (15) days after receipt by it of a certificate from the
Lenders setting forth in reasonable detail such costs, expenses and/or losses.
 For the purposes of the preceding sentence, “costs, expenses and/or losses”
shall include, without limitation, any interest paid or payable to carry any
unpaid amount and any loss, premium, penalty or expense which may be incurred in
obtaining, liquidating or employing deposits of or borrowings from third parties
in order to make, maintain or fund the Loan or any portion thereof.

Section 2.8

Interest Rate.

The Loan shall bear interest (calculated on the basis of the actual number of
days elapsed in each month) at a rate per annum equal to 9.85% (the “Interest
Rate”). Interest shall be paid quarterly in arrears commencing on December 31,
2007 and on the last Business Day of each March, June, September and December
thereafter.

Section 2.9

Interest on Late Payments.  Without limiting the remedies available to the
Lenders under the Financing Documents or otherwise, to the maximum extent
permitted by applicable law, if the Borrower fails to make any payment of
principal or interest with respect to the Loan, the Borrower shall pay, in
respect of the outstanding principal amount and interest  of the Loan, interest
at the rate per annum equal to the Interest Rate plus five hundred (500) basis
points for so long as such payment remains outstanding (the “Default Interest”).
 Such interest shall be payable on demand.

Section 2.10

Payment in Common Stock.    In lieu of making any payment required under the
Notes, the Borrower, with the prior written consent of the Lenders which consent
may be withheld in their sole and absolute discretion for any reason whatsoever
or for no reason, may issue to the Lenders shares of Common Stock registered for
resale under the Securities Act of 1933 with a value equal to the value of such
payment under the Notes based on a per share value to be agreed upon by the
Borrowers and the Lenders; provided, however, that such value may never be less
than an amount equal to the Initial Exercise Price of the Warrant (subject to
appropriate adjustment to reflect any stock splits, recapitalization or
reclassification or other

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similar events occurring subsequent to the date hereof) Notwithstanding the
foregoing, no payments under the Note may be made in shares of Common Stock to
the extent the number of shares so issued, together with the number of other
shares of Common Stock beneficially owned by the Lenders and their affiliates
and any other persons or entities whose beneficial ownership of Common Stock
would be aggregated with the Lenders for purposes of Section 13(d) of the
Securities Exchange Act of 1934 (includes “group” members), would exceed 9.98%
of the total number of shares of Common Stock of the Borrower then outstanding.

Section 2.11

Delivery of Warrants.   On the date hereof, the Borrower shall issue to the
Lenders Warrants to purchase the number of shares of Common Stock set forth in
Exhibit C (subject to adjustment as set forth in the Warrant) at an initial
Exercise Price (as defined in the Warrant) equal to the Initial Exercise Price
of the Warrant (the “Initial Warrant”). Subsequent to the date of such issuance,
upon disbursement of the funds described in Items 5-7 of Exhibit B, the Borrower
shall issue to the Lenders, on the date such applicable disbursements has/have
been made, Warrants to purchase the number of shares of Common Stock set forth
opposite such condition(s) as set forth on Exhibit C (subject to appropriate
adjustment to reflect any stock splits, recapitalizations, reclassifications or
other similar events occurring between the date hereof and the date of issuance
of such Warrants and further subject to increase in the number of Warrant Shares
subject to such Warrants to reflect the issuance or sale of shares of Common
Stock between the date hereof and the date of issuance of such Warrants so as to
give effect to the provisions of Section 5(d) of the Warrant as if such Warrants
were issued as of the date hereof).  The initial Exercise Price of such
additional Warrants shall also be equal to the Initial Exercise Price of the
Warrant (subject to appropriate adjustment to reflect any stock splits,
recapitalizations, reclassifications or other similar events occurring between
the date hereof and the date of the issuance of such Warrants). In addition, on
the date hereof, the Borrower shall issue to the Lenders Warrants to purchase
400,000 shares of Common Stock (subject to adjustment as set forth in the
Warrant) (the “Additional Warrants”) at an initial exercise price equal to the
Initial Exercise Price of the Warrant.  All Warrants issuable hereunder shall be
in the form annexed hereto as Exhibit C; provided, however, that the Additional
Warrants shall not contain Section 5(d) in the form annexed hereto as Exhibit C.
 

Section 2.12

Warrant Anti-Dilution Buy-Out.  Borrower shall have the right and option to
terminate any further adjustments following the exercise of such option to the
number of shares underlying the Warrant pursuant to Section 5(d) of the Warrants
in accordance with this Section 2.12 (the “Anti-Dilution Buy Down Option”). The
Borrower may exercise the Anti-Dilution Buy Down Option at any time during the
30-day period following the third (3rd) anniversary of the date of this
Agreement by delivering to the Lenders written notice of such exercise, together
with payment of $2,500,000 in immediately available funds.  The Borrower may
also exercise the Anti-Dilution Buy Down Option at any time during the 30-day
period following the fourth (4th) anniversary of the date of this Agreement by
delivering to the Lenders written notice of such exercise, together with payment
of $1,500,000 in immediately available funds.  Notwithstanding the foregoing,
the Borrower may not exercise the Anti-Dilution Buy Down Option unless it has
fully repaid or otherwise satisfied all amounts owing to the Lenders under the
Notes.

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ARTICLE III

REPRESENTATIONS AND WARRANTIES

Section 3.1

Representations and Warranties of the Borrower.  The Borrower represents and
warrants as of the date hereof and as of each Disbursement Date as follows:

(a)

The Borrower is a corporation duly organized and validly existing under the laws
of the State of Delaware.

(b)

The Borrower is conducting its business in compliance with its Organizational
Documents.  The Organizational Documents of the Borrower (including all
amendments thereto) as currently in effect have been furnished to the Lenders
and remain in full force and effect with no defaults outstanding thereunder.

(c)

The Borrower has full power and authority to enter into each of the Financing
Documents and to make the borrowings and the other transactions contemplated
thereby.

(d)

All authorizations, consents, approvals, registrations, exemptions and licenses
with or from Government Authorities or other Persons that are necessary for the
conduct of its business as currently conducted and as proposed to be conducted,
for the borrowing hereunder, the execution and delivery of the Financing
Documents and the performance by the Borrower of its obligations thereunder,
have been obtained and are in full force and effect.

(e)

Each Financing Document has been duly authorized, executed and delivered by the
Borrower and constitutes the valid and legally binding obligation of the
Borrower, enforceable in accordance with its terms, except as such
enforceability may be limited by (i) applicable insolvency, bankruptcy,
reorganization, moratorium or other similar laws affecting creditors’ rights
generally, and (ii) applicable equitable principles (whether considered in a
proceeding at law or in equity).

(f)

No Default or Event of Default (or any other default or event of default,
however described) has occurred under any of the Financing Documents.

(g)

Neither the entering into any of the Financing Documents nor the compliance with
any of its terms conflicts with, violates or results in a breach of any of the
terms of, or constitutes a default or event of default (however described) or
requires any consent under, any agreement or to which the Borrower is a party or
by which it is bound, or violates any of the terms of the Organizational
Documents or any judgment, decree, resolution, award or order or any statute,
rule or regulation applicable to the Borrower or its assets.

(h)

The Borrower is not engaged in or the subject of any litigation, arbitration,
administrative regulatory compliance proceeding, or investigation, nor are there
any litigation, arbitration, administrative regulatory compliance proceedings or
investigations pending or, to the knowledge of the Borrower, threatened before
any court or arbitrator or

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before or by any Government Authority against the Borrower, and the Borrower is
not aware of any facts likely to give rise to any such proceedings.

(i)

The Borrower (i) is capable of paying its debts as they fall due, is not unable
and has not admitted its inability to pay debts as they fall due, (ii) is not
bankrupt or insolvent and (iii) has not taken action, and no such action has
been taken by a third party, for the Borrower’s winding up, dissolution, or
liquidation or similar executory or judicial proceeding or for the appointment
of a liquidator, custodian, receiver, trustee, administrator or other similar
officer for the Borrower or any or all of its assets or revenues.

(j)

No Lien exists on Borrower’s property, except for Permitted Liens.

(k)

The obligation of the Borrower to make any payment under this Agreement
(together with all charges in connection therewith) is absolute and
unconditional, and there exists no right of setoff or recoupment, counterclaim,
cross-claim or defense of any nature whatsoever to any such payment.

Section 3.2

Borrower Acknowledgment.  The Borrower acknowledges that it has made the
representations and warranties referred to in Section 3.1 with the intention of
persuading the Lenders to enter into the Financing Documents and that the
Lenders has entered into this Financing Documents on the basis of, and in full
reliance on, each of such representations and warrantiess.  The Borrower
represents and warrants to the Lenders that none of such representations and
warranties omits any matter the omission of which makes any of such
representations and warranties misleading.

Section 3.3

Representations and Warranties of the Lenders.  Each of the Lenders represents
and warrants to the Borrower as of the date hereof and as of each date Warrants
are granted pursuant to this Agreement that:

(a)

It is acquiring the Warrants and the Exercise Shares solely for its account for
investment and not with a view to or for sale or distribution of the Warrants or
Exercise Shares or any part thereof.  Each of the Lenders also represents that
the entire legal and beneficial interests of the Warrants and Exercise Shares
such Lender is acquiring is being acquired for, and will be held for, its
account only.

(b)

The Warrants and the Exercise Shares have not been registered under the
Securities Act on the basis that no distribution or public offering of the stock
of the Borrower is to be effected.  Each of the Lenders realizes that the basis
for the exemptions may not be present, if notwithstanding its representations
such Lender has a present intention of acquiring the securities for a fixed or
determinable period in the future, selling (in connection with a distribution or
otherwise), granting any participation in, or otherwise distributing the
securities.  None of the Lenders has such present intention.

(c)

The Warrants and the Exercise Shares must be held indefinitely unless they are
subsequently registered under the Securities Act or an exemption for such
registration is available.  

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(d)

Neither the Warrants nor the Exercise Shares may be sold pursuant to Rule 144
adopted under the Securities Act unless certain conditions are met, including,
among other things, the existence of a public market for the shares, the
availability of certain current public information about the Borrower, the
resale following the required holding period under Rule 144 and the number of
shares being sold during any three month period not exceeding specified
limitation.

(e)

It will not make any disposition of all or any part of the Warrants or Exercise
Shares until:

(i)

The Borrower shall have received a  letter secured by such Lender from the SEC
stating that no action will be recommended to the Commission with respect to the
proposed disposition;

(ii)

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

(iii)

Such Lender shall have notified the Borrower of the proposed disposition and, in
the case of a sale or transfer in a so called “4(1) and a half” transaction,
shall have furnished counsel for the Borrower with an opinion of counsel,
substantially in the form annexed as Exhibit C to the Warrant.  The Borrower
agrees that it will not require an opinion of counsel with respect to
transactions under Rule 144 of the Securities Act.

(f)

It understands and agrees that all certificates evidencing the shares to be
issued to the Lenders may bear the following legend.

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.
 THE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER SAID ACT, OR PURSUANT
TO AN EXEMPTION FROM REGISTRATION UNDER SAID ACT INCLUDING, WITHOUT LIMITATION,
PURSUANT TO RULES 144 OR 144A UNDER SAID ACT OR PURSUANT TO A PRIVATE SALE
EFFECTED UNDER APPLICABLE FORMAL OR INFORMAL SEC INTERPRETATION OR GUIDANCE,
SUCH AS A SO-CALLED “4(1) AND A HALF” SALE.”

“THE SALE, TRANSFER OR ASSIGNMENT OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN REGISTRATION
RIGHTS AGREEMENT DATED AS OF
OCTOBER __, 2007. AS AMENDED FROM TIME TO TIME, AMONG THE COMPANY AND CERTAIN
HOLDERS OF ITS OUTSTANDING SECURITIES.  COPIES OF SUCH AGREEMENT MAY BE OBTAINED
AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE
TO THE SECRETARY OF THE COMPANY.”

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(g)

Such Lender is an “accredited investor” as defined in Regulation D promulgated
under Act.

(h)

Such Lender is a limited partnership duly organized and validly existing under
the laws of the jurisdiction of its formation.

ARTICLE IV

CONDITIONS OF DISBURSEMENTS

Section 4.1

Conditions to Initial Disbursement of the Loan.  The obligation of the Lenders
to make the initial Disbursement of the Loan shall be subject to the fulfillment
of the following conditions:

(a)

Deerfield Private Design shall have received a copy of all documents authorizing
the Borrower to execute, deliver and perform each of the Financing Documents and
to engage in the transactions contemplated thereby and an opinion of Borrower’s
counsel satisfactory to Deerfield Private Design.

(b)

Unless otherwise notified by the Borrower and without prejudice to the
generality of this Section 4.1, the right of the Lenders to require compliance
with any condition under this Agreement which may be waived by the Lenders in
respect of any Disbursement is expressly preserved for the purpose of any
subsequent Disbursement.

ARTICLE V

PARTICULAR COVENANTS

Section 5.1

Affirmative Covenants.  Unless the Lenders shall otherwise agree:

(a)

The Borrower shall (i) maintain its existence and qualify and remain qualified
to do its business as currently conducted; (ii) maintain all approvals necessary
for the Financing Documents; and (iii) operate its business with due diligence,
efficiency and in conformity with sound business practices except where the
failure to so maintain or operate, individually or in the aggregate, could not
have a Material Adverse Effect.

(b)

The Borrower shall comply in all material respects with  all applicable laws,
rules, regulations and orders of any Government Authority, except where the
necessity of compliance therewith is contested in good faith by appropriate
proceedings or where the failure to so comply, individually or in the aggregate,
would not have a Material Adverse Effect.

(c)

The Borrower shall obtain, make and keep in full force and effect all licenses,
contracts, consents, approvals and authorizations from and registrations with
Government Authorities that may be required to conduct its business.

(d)

The Borrower shall promptly notify the Lenders of the occurrence of (i) any
Default or Event of Default; or (ii) any claims, litigation, arbitration,
mediation or

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administrative or regulatory proceedings that are instituted or threatened
against the Borrower, except for matters that, individually or in the aggregate,
could not have a Material Adverse Effect; and (iii) each event which, at the
giving of notice, lapse of time, determination of materiality or fulfillment of
any other applicable condition (or any combination of the foregoing), could
constitute an event of default (however described) under any of the Financing
Documents.

(e)

The Borrower shall use reasonable commercial efforts to carry out the
development program contemplated by the Milestones.

(f)

The Borrower shall comply with the terms of each of the Financing Documents.

(g)

(i) the Borrower will  timely file with the SEC (subject to appropriate
extensions made under Rule 12b-25 of  the Securities Exchange Act) any annual
reports, quarterly reports and other periodic reports pursuant to Section 13 or
15(d) of the Exchange Act prepared by the Borrower as soon as available; and
(ii) the Borrower and its Subsidiaries will provide to Deerfield Private Design
copies of all documents, reports, financial data and other information as
Deerfield Private Design may reasonably request, and permit the Lenders to visit
and inspect any of the properties of the Borrower and its Subsidiaries, and to
discuss its and their affairs, finances and accounts with its and their
officers, all at such times as Deerfield Private Design may reasonably request;
and (iv) Lenders shall have the right to consult with and advise the management
of the Borrower and its Subsidiaries on matters relating to the operation of the
Borrower and it Subsidiaries.

Section 5.2

Negative Covenants. Unless the Lenders shall otherwise agree:

(a)

The Borrower shall not undertake or permit any (i) conversion of the Borrower
into another form; or (ii) any sale, transfer, lease or exchange or other action
with respect to the disposal of, or disposition of rights to assets or business
lines of the Borrower that are necessary for the development of the Milestone
Products in a single transaction or series of transactions; provided, however,
that the  Borrower may enter into any collaborative arrangements, licensing
agreement, joint venture or partnership provided the development or commercial
exploitation of the technology or products of the Borrower whereby its income or
profits are or might be shared with any other Person.

(b)

The Borrower shall not (i) liquidate or dissolve or (ii) consolidate with or
merge into any other entity or reorganize without the consent of the Lenders;
provided, however, that the Lenders can withhold such consent only if they
reasonably determine that the consolidation or merger would have a Material
Adverse Effect, or (iii) engage in any transaction with an Affiliate that would
be reportable under Item 404 of Regulation S-K promulgated by the SEC, or (iv)
enter into any transaction whereby its income or profits are, or might be shared
with any other Person, or enter into any management contract or similar
arrangement whereby its business or operations are managed by another Person;
provided, however, that the  Borrower may enter into any collaborative
arrangements, licensing agreement, joint venture or partnership provided the

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development or commercial exploitation of the technology or products of the
Borrower whereby its income or profits are or might be shared with any other
Person.

(c)

The Borrower shall not:  (i) create, incur or suffer any Lien upon any of its
assets, now owned or hereafter acquired, except Permitted Liens; or (ii) assign,
sell transfer or otherwise dispose of, any of the Financing Documents, or the
rights and obligations thereunder.

(d)

The Borrower shall not create, incur assume, guarantee or be remain liable with
respect to any Indebtedness, other than Permitted Indebtedness, or prepay any
Indebtedness or take any actions which impose on the Borrower an obligation to
prepay any Indebtedness, except Indebtedness to the Lenders.

(e)

The Borrower shall not sell, license, transfer, assign, encumber or otherwise
dispose of any ownership rights to the intellectual property relating to any of
the Milestone Products or any product developed from such intellectual property,
except in connection with any collaborative arrangements, licensing agreement,
joint venture or partnership to develop or commercially exploit such Milestone
Product or other products.

In connection with any discussions between the Borrower and the Lenders
reasonably necessary to obtain the Lenders’ consent to the transactions and
events described in paragraphs (a) through (e) of this Section 5.2, the Parties
acknowledge that it may be necessary for the Borrower to disclose to the Lenders
certain material non-public information.  In order for the Borrower to disclose
such information in accordance with federal securities laws, including
Regulation FD promulgated by the SEC, the Lenders agree to enter into a
reasonable and customary confidentiality agreement pursuant to which they agree
to maintain such information in confidence and to refrain from trading in the
Company’s securities until such time as the information no longer constitutes
material non-public information.

Section 5.3

Reimbursement of Taxes.  The Borrower shall pay all Taxes, duties, fees or other
charges payable on or in connection with the execution, issue, delivery,
registration, notarization or enforcement of the Financing Documents and shall,
upon notice from the Lenders, reimburse the Lenders for any such Taxes, duties,
fees or other charges paid by the Lenders thereon; provided, however, that
notwithstanding the foregoing, under no circumstances shall the Borrower have
any obligation to reimburse the Lenders for Excluded Taxes.

ARTICLE VI

EVENTS OF DEFAULT

Section 6.1

General Acceleration Provision upon Events of Default.  If one or more of the
events specified in this Section 6.1 (each an “Event of Default”) shall have
happened and be continuing beyond the applicable cure period, the Lenders, by
written notice to the Borrower, may cancel the Borrower’s right to request
Disbursements and declare the principal of, and all  fees on, the Loan or any
part of any of them (together with any other amounts accrued or payable under
this Agreement) to be, and the same shall thereupon become, immediately due and
payable

14

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without prepayment premium without any further notice and without any
presentment, demand or protest of any kind, all of which are hereby expressly
waived by the Borrower, and take any further action available at law or in
equity, including, without limitation, the sale of the Loan and all other rights
acquired in connection with the Loan:

(a)

A Lender shall have failed to receive the Warrants when required to be issued
under this Agreement or payment when due of principal, or any other amounts due
under the Loan or the Note.

(b)

The Borrower shall have defaulted or failed to comply in any material respect
with the due observance or performance of any covenant contained in this
Agreement or any Note and such default or failure to comply shall not have been
cured by Borrower within 15 days after receiving written notice of such default
or failure from Deerfield Private Design.

(c)

Any representation or warranty made by the Borrower in any Financing Document
shall be found to have been incorrect, false or misleading in any material
respect as of the date it was made, deemed made, reaffirmed or confirmed.

(d)

(i)  The Borrower shall generally not pay its debts as such debts become due, or
shall admit in writing its inability to pay its debts as they come due or shall
make a general assignment for the benefit of creditors; (ii) the Borrower shall
declare a moratorium on the payment of its debts; (iii) the commencement by the
Borrower of proceedings to be adjudicated bankrupt or insolvent, or the consent
by it to the commencement of bankruptcy or insolvency proceedings against it, or
the filing by it of a petition or answer or consent seeking reorganization,
intervention or other similar relief under any applicable law, or the consent by
it to the filing of any such petition or to the appointment of an intervenor,
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) or of any substantial part of its assets; (iv) the commencement
against the Borrower or any substantial part of its assets of a proceeding in
any court of competent jurisdiction under any bankruptcy or other applicable law
(as now or hereafter in effect) seeking its liquidation, winding up,
dissolution, reorganization, arrangement, adjustment, or the appointment of an
intervenor, receiver, liquidator, assignee, trustee, sequestrator (or other
similar official), and any such proceeding shall continue undismissed, or any
order, judgment or decree approving or ordering any of the foregoing shall
continue unstayed or otherwise in effect, for a period of ninety (90) days; (v)
the making by the Borrower of an assignment for the benefit of creditors, or the
admission by it in writing of its inability to pay its debt generally as they
become due; or (vi) any other event shall have occurred which under any
applicable law would have an effect analogous to any of those events listed
above in this subsection.

(e)

One or more judgments against the Borrower taken as a whole or attachments
against any of its property, which in the aggregate exceed one million dollars
($1,000,000), or which could reasonable expected to interfere materially and
adversely with the conduct of the business of the borrower remain(s) unpaid,
unstayed on appeal, undischarged, unbonded or undismissed for a period of thirty
(30) days from the date of entry of such judgment.

15

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(f)

Any license, permit or approval held by the Borrower including, without
limitation from any Government Authority shall have been suspended, canceled or
revoked provided, however, that an Event of Default shall not have been deemed
to occur if the FDA (or a comparable Government Authority in any foreign
jurisdiction) (i) suspends a clinical trial of any Borrower product candidate,
including issuing a “clinical hold” letter, or (ii) denies a new drug
application, or similar application requesting marketing approval of a Borrower
drug candidate.

(g)

Any authorization necessary for the execution, delivery or performance of any
Financing Document or for the validity or enforceability of any of the
Borrower’s obligations under any Financing Document is not effected or given or
is withdrawn or ceases to remain in full force or effect.

(h)

The validity of or any Financing Document shall be contested by any legislative,
executive or judicial body of any jurisdiction, or any treaty, law, regulation,
communiqué, decree, ordinance or policy of any jurisdiction shall purport to
render any material provision of any Financing Document invalid or unenforceable
or shall purport to prevent or materially delay the performance or observance by
the Borrower of its obligations hereunder or thereunder (as applicable).

(i)

The Borrower has failed to comply with the requirements of the Securities
 Exchange Act in a manner which could reasonably expected to interfere
materially and adversely with the conduct of the business of the Borrower.

(j)

If there is a default or other failure to perform in any agreement to which
Borrower is a party with a third party or parties resulting in a right by such
third party or parties, whether or not exercised, to accelerate the maturity of
any Indebtedness in an amount in excess of $1,000,000.

(k)

If an Event of Default pursuant to the Warrants (as such term is defined in the
Warrants) shall have occurred.

Section 6.2

Automatic Acceleration on Dissolution or Bankruptcy.  Notwithstanding any other
provisions of this Agreement, if an Event of Default under Section 6.1(d) shall
occur, the principal of the Loan (together with any other amounts accrued or
payable under this Agreement) shall thereupon become immediately due and payable
without any presentment, demand, protest or notice of any kind, all of which are
hereby expressly waived by the Borrower.

Section 6.3

Recovery of Amounts Due.  If any amount payable hereunder is not paid as and
when due, the Borrower hereby authorizes Deerfield Private Design to proceed, to
the fullest extent permitted by applicable law, without prior notice, by right
of set-off, banker’s lien or counterclaim, against any moneys or other assets of
the Borrower to the full extent of all amounts payable to the Lenders.

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ARTICLE VII

MISCELLANEOUS

Section 7.1

Notices.  Any notice, request or other communication to be given or made under
this Agreement to the Parties shall be in writing.  Such notice, request or
other communication shall be deemed to have been duly given or made when it
shall be delivered by hand, international courier (confirmed by facsimile), or
facsimile (with a hard copy delivered within two (2) Business Days) to the Party
to which it is required or permitted to be given or made at such Party’s address
specified below or at such other address as such Party shall have designated by
notice to the Party giving or making such notice, request or other
communication, it being understood that the failure to deliver a copy of any
notice, request or other communication to  whom copies are to be sent shall not
affect the validity of any such notice, request or other communication or
constitute a breach of this Agreement.

For the Borrower:

7000 Shoreline Court, Suite 370

South San Francisco, CA  94080

Attention:  Chief Executive Officer

Facsimile:  (650) 588-2787  

with a copy (which shall not constitute notice) to:

Maslon Edelman Borman & Brand LLP

90 South Seventh Street, Suite 3300

Minneapolis, Minnesota 55402

Attention: Christopher J. Melsha

Facsimile:  612-642-8343

For the Lenders c/o:

Deerfield Private Design Fund, L.P.

780 Third Avenue, 37th Floor

New York, New York  10017

Attention:  James E. Flynn

Facsimile:  (212) 573-8111

 

with a copy (which shall not constitute notice) to:

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Katten Muchin Rosenman LLP

575 Madison Avenue

New York, New York 10022-2585

Facsimile: (212) 894-5827

Attention:  Robert I. Fisher

Section 7.2

Waiver of Notice.  Whenever any notice is required to be given to the Lenders or
the Borrower under the any of the Financing Documents, a waiver thereof in
writing signed by the person or persons entitled to such notice, whether before
or after the time stated therein, shall be deemed equivalent to the giving of
such notice.  

Section 7.3

Reimbursement of Legal and Other Expenses.  If any amount owing to the Lenders
under any Financing Document shall be collected through enforcement of this
Agreement, any refinancing or restructuring of the Loan in the nature of a
work-out, settlement, negotiation, or any process of law, or shall be placed in
the hands of third Persons for collection, the Borrower shall pay (in addition
to all monies then due in respect of the Loan or otherwise payable under any
Financing Document) documented attorneys’ and other fees and expenses incurred
in respect of such collection.

Section 7.4

Applicable Law and Consent to Non-Exclusive New York Jurisdiction.  This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York, United States of America, without giving effect to the
conflicts of laws principles thereof other than Sections 5-1401 and 5-1402 of
the General Obligations Law of the State of New York.

(a)

The Financing Documents, and any rights of the Lenders arising out of or
relating to any Financing Documents, may, at the option of the Lenders, be
enforced by the Lenders in the courts of the United States of America located in
the Southern District of the State of New York or in any other courts having
jurisdiction.  For the benefit of the Lenders, the Borrower hereby irrevocably
agrees that any legal action, suit or other proceeding arising out of any
Financing Document may be brought in the courts of the State of New York or of
the United States of America for the Southern District of New York.  By the
execution and delivery of this Agreement, the Borrower hereby irrevocably
consents and submits to the jurisdiction of any such court in any such action,
suit or other proceeding.  Final judgment against the Borrower in any such
action, suit or other proceeding shall be conclusive and may be enforced in any
other jurisdiction by suit on the judgment.  Nothing contained in any Financing
Document shall affect the right of the Lenders to commence legal proceedings or
otherwise sue the Borrower in any court having jurisdiction, or concurrently in
more than one jurisdiction, or to serve process, pleadings and other legal
papers upon the Borrower in any manner authorized by the laws of any such
jurisdiction.

(b)

The Borrower irrevocably waives, to the fullest extent permitted by applicable
law, any objection which it may now or hereafter have to the laying of venue of
any action, suit or other proceeding arising out of or relating to any
 Financing

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Document, brought in the courts of the State of New York or in the United States
District Court for the Southern District of New York, and any claim that any
such action, suit or other proceeding brought in any such court has been brought
in an inconvenient forum.  

(c)

The Borrower hereby waives any and all rights to demand a trial by jury in any
action, suit or other proceeding arising out of any Financing Document or the
transactions contemplated by any Financing Document.

(d)

To the extent that the Parties may, in any suit, action or other proceeding
brought in any court arising out of or in connection with any Financing
Document, be entitled to the benefit of any provision of law requiring the
Borrower or the Lenders, as applicable,  in such suit, action or other
proceeding to post security for the costs of the Borrower or the Lenders, as
applicable, or to post a bond or to take similar action, the Parties hereby
irrevocably waive such benefit, in each case to the fullest extent now or
hereafter permitted under any applicable laws.

Section 7.5

Successor and Assigns.  

(a)

This Agreement shall bind and inure to the respective successors and assigns of
the Parties, except that the Borrower may not assign or otherwise transfer all
or any part of its rights or obligations under this Agreement without the prior
written consent of the Lenders.

(b)

With respect to the Loans made by the Offshore Lenders, an Affiliate of the
Lender shall maintain, as agent to, and on behalf of the Borrower, a register
for the recordation of the names and addresses of each assignee and the
principal amount of the Loans owing to each Offshore Lender and each assignee
from time to time (the “Register”).  The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error, and the Borrower
and each Offshore Lender may treat each Person whose name is recorded in the
Register as a “Lender” hereunder for the purposes of this Agreement.  The
Register shall be available for inspection by the Borrower and each Offshore
Lender at any reasonable time and from time to time upon reasonable prior
notice.  Until an Offshore Lender has notified the Borrower that a Note has been
assigned and that the assignee’s name and address and the principal amount of
the Loans being assigned have been recorded in the Register, the Borrower shall
recognize the relevant Offshore Lender as the “Lender” with respect to such
Loans.

(c)

Notwithstanding anything to the contrary contained herein, if any assignment or
participation is to any Person that is not a "United States person" within the
meaning of Section 7701(a)(30) of the Code, then such Person shall submit to the
Borrower, on or before the date of such assignment or participation an IRS Form
W-8BEN (or any successor form) certifying as to such Person’s status for
purposes of determining exemption from United States withholding tax,
information reporting and backup withholding with respect to all payments to be
made to such Person. Any attempted assignment or participation in violation of
this Section 7.5 shall be void and of no force and effect. Until there has been
a valid assignment of this Agreement and of all of the rights hereunder by a
Lender in accordance with this Section 7.5, the Borrower

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shall deem and treat such Lender as the absolute beneficial owner and holder of
this Agreement and of all of the rights hereunder for all purposes.

Section 7.6

Entire Agreement.  The Financing Documents contain the entire understanding of
the Parties with respect to the matters covered thereby and supersede any and
all other written and oral communications, negotiations, commitments and
writings with respect thereto.  The provisions of this Agreement may be waived,
modified, supplemented or amended only by an instrument in writing signed by the
authorized officer of each Party.

Section 7.7

Amendments.  Any provision of this Agreement may be amended or waived if, but
only if, such amendment or waiver is in writing and is signed by the Parties.

Section 7.8

Severability.  If any one or more of the provisions contained in this Agreement
shall be invalid, illegal or unenforceable in any respect under any law, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.  The Parties shall endeavor in good
faith negotiations to replace the invalid, illegal or unenforceable provisions
with valid provisions the economic effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions.

Section 7.9

Counterparts.  This Agreement may be executed in several counterparts, and by
each Party on separate counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same agreement.

Section 7.10

Survival.

(a)

This Agreement and all agreements, representations and warranties made  in the
Financing Documents, and in any document, certificate or statement delivered
pursuant thereto or in connection therewith shall be considered to have been
relied upon by the other Parties and shall survive the execution and delivery of
this Agreement and the making of the Loan hereunder regardless of any
investigation made by any such other Party or on its behalf, and shall continue
in force until all amounts payable under the Financing Documents shall have been
fully paid in accordance with the provisions hereof and thereof, and the Lenders
shall not be deemed to have waived, by reason of making the Loan, any Default
that may arise by reason of such representation or warranty proving to have been
false or misleading, notwithstanding that the Lenders may have had notice or
knowledge of any such Default or may have had notice or knowledge that such
representation or warranty was false or misleading at the time any Disbursement
was made hereunder.

(b)

The obligations of the Borrower under Sections 2.6 and 2.7 and the obligations
of the Borrower and the Lenders under this Article VII hereof shall survive and
remain in full force and effect regardless of the consummation of the
transactions contemplated hereby, the repayment of the Loan, or the termination
of this Agreement or any provision hereof.

Section 7.11

Waiver.  Neither the failure of, nor any delay on the part of, any Party in
exercising any right, power or privilege hereunder, or under any agreement,
document or instrument mentioned herein, shall operate as a waiver thereof, nor
shall any single or partial

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exercise of any right, power or privilege hereunder, or under any agreement,
document or instrument mentioned herein, preclude other or further exercise
thereof or the exercise of any other right, power or privilege; nor shall any
waiver of any right, power, privilege or default hereunder, or under any
agreement, document or instrument mentioned herein, constitute a waiver of any
other right, power, privilege or default or constitute a waiver of any default
of the same or of any other term or provision.  No course of dealing and no
delay in exercising, or omission to exercise, any right, power or remedy
accruing to the Lenders upon any default under this Agreement, or any other
agreement shall impair any such right, power or remedy or be construed to be a
waiver thereof or an acquiescence therein; nor shall the action of the Lenders
in respect of any such default, or any acquiescence by it therein, affect or
impair any right, power or remedy of the Lenders in respect of any other
default. All rights and remedies herein provided are cumulative and not
exclusive of any rights or remedies otherwise provided by law.

Section 7.12

Indemnity.

(a)

The Parties shall, at all times, indemnify and hold each other harmless (the
“Indemnity”) and each of their respective directors, partners, officers,
employees, agents, counsel and advisors (each, an “Indemnified Person”) in
connection with any losses, claims (including the cost of defending against such
claims), damages, liabilities, penalties, or other expenses arising out of, or
relating to, the Financing Documents, the extension of credit hereunder or the
Loan or the use or intended use of the Loan, which an Indemnified Person may
incur or to which an Indemnified Person may become subject (each, a “Loss”).
 The Indemnity shall not apply to the extent that a court or arbitral tribunal
with jurisdiction over the subject matter of the Loss, and over the Lenders or
the Borrower, as applicable, and such other Indemnified Person that had an
adequate opportunity to defend its interests, determines that such Loss resulted
from the gross negligence or willful misconduct of the Indemnified Person, which
determination results in a final, non-appealable judgment or decision of a court
or tribunal of competent jurisdiction.  The Indemnity is independent of and in
addition to any other agreement of any Party under any Financing Document to pay
any amount to the Lenders or the Borrower, as applicable, and any exclusion of
any obligation to pay any amount under this subsection shall not affect the
requirement to pay such amount under any other section hereof or under any other
agreement.

(b)

Without prejudice to the survival of any other agreement of any of the Parties
hereunder, the agreements and the obligations of the Parties contained in this
Section 7.12 shall survive the termination of each other provision hereof and
the payment of all amounts payable to the Lenders hereunder.

Section 7.13

No Usury.  The Financing Documents are hereby expressly limited so that in no
contingency or event whatsoever, whether by reason of acceleration or otherwise,
shall the amount paid or agreed to be paid to the Lenders for the Loan exceed
the maximum amount permissible under applicable law.  If from any circumstance
whatsoever fulfillment of any provision hereof, at the time performance of such
provision shall be due, shall involve transcending the limit of validity
prescribed by law, then, ipso facto, the obligation to be fulfilled shall be
reduced to the limit of such validity, and if from any such circumstance the
Lenders shall ever receive anything which might be deemed interest under
applicable law, that would exceed

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the highest lawful rate, such amount that would be deemed excessive interest
shall be applied to the reduction of the principal amount owing on account of
the Loan, or if such deemed excessive interest exceeds the unpaid balance of
principal of the Loan, such deemed excess shall be refunded to the Borrower.
 All sums paid or agreed to be paid to the Lenders for the Loan shall, to the
extent permitted by applicable law, be deemed to be amortized, prorated,
allocated and spread throughout the full term of the Loan  until payment in full
so that the deemed  rate of interest on account of the Loan is uniform
throughout the term thereof.  The terms and provisions of this paragraph shall
control and supersede every other provision of this Agreement and the Notes.

Section 7.14

Further Assurances.  From time to time, the Borrower shall perform any and all
acts and execute and deliver to the Lenders such additional documents as may be
necessary or as requested by the Lenders to carry out the purposes of any
Financing Document or any or to preserve and protect the Lenders’ rights as
contemplated therein.

Section 7.15

Termination.  Subject to the provisions of Section 7.10(b), upon repayment of
all outstanding principal of the Loan (together with any other amounts accrued
and unpaid under this Agreement), the Borrower may terminate this Agreement upon
10 days’ notice to the Lenders.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the Parties, acting through their duly authorized
representatives, have caused this Agreement to be signed in their respective
names as of the date first above written.

BORROWER
HANA BIOSCIENCES, INC.

LENDER
DEERFIELD PRIVATE DESIGN
FUND, L.P.

By:

/s/ Steven R. Deitcher

 

By:

/s/ James Flynn

 

Name: Steven R. Deitcher
Title President & CEO
  

 

Name James Flynn
Title General Partner

 

 

 

LENDER:
DEERFIELD PRIVATE DESIGN INTERNATIONAL, L.P.

LENDER:
DEERFIELD SPECIAL SITUATIONS
FUND L.P.

 

 

 

By:

/s/ James Flynn

 

By:

/s/ James Flynn

 

Name James Flynn
Title General Partner

 

Name James Flynn
Title General Partner

 

 

 

 

 

LENDER
DEERFIELD SPECIAL SITUATIONS
FUND INTERNATIONAL LIMITED

 

 

 

 

 

 

By:

/s/ James Flynn

 

 

 

 

Name James Flynn
Title General Partner

23

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SCHEDULE 1

FORM OF DISBURSEMENT REQUEST

[LETTERHEAD OF THE BORROWER]

[Date]

Ladies and Gentlemen:

Request for Disbursement of the Loan

1.

Please refer to the Facility Agreement (the “Facility Agreement”), dated as of
October 30, 2007, between Hana Biosciences, Inc.  (the “Borrower”) and Deerfield
Private Design Fund, L.P., Deerfield Special Situations Fund, L.P., Deerfield
Special Situations Fund International Limited and Deerfield Private Design
International, L.P. (together the “Lenders”).

2.

Terms defined in the Facility Agreement shall have the same meanings herein.

3.

The Borrower hereby requests a Disbursement, on [date], of the amount of [amount
of drawdown], in accordance with the provisions of Section 2.2 of the Facility
Agreement.  You are requested to pay the amount to the following account
[account number] at [name of bank].

4.

Attached hereto is a signed but undated receipt for the amount hereby requested
to be disbursed, and we hereby authorize the Lenders to date such receipt as of
the date of actual disbursement by the Lenders of the funds hereby requested to
be disbursed.

5.

The Borrower hereby certifies as follows:

(a)

The representations and warranties in Article III of the Facility Agreement are
true in all material respects on the date hereof with the same effect as though
such representations and warranties had been made on today’s date; provided,
however, that for the purposes of this clause (a), the representation and
warranty in Section 3.1(h) shall be deemed to refer to litigation, arbitration,
proceeding or investigation that could have a Material Adverse Effect.

(b)

All of the conditions set forth in Article IV of the Facility Agreement have
been satisfied; and

(c)

The Milestone, if any, required to be satisfied before the Borrower may request
the Disbursement provided for herein has been achieved and the Borrower has

1

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provided evidence to the Lenders evidencing such achievement.  Such Disbursement
is to be used solely to reimburse the Borrower for expenses it incurred in
achieving such Milestone, if any.

6.

The above certifications are effective as of the date of this request for
Disbursement and will continue to be effective as of the Disbursement Date.  If
any of these certifications is no longer valid as of or prior to the
Disbursement Date, the Borrower will immediately notify the Lenders and will
repay the amount disbursed upon demand by the Lenders if Disbursement is made
prior to the receipt of such notice.

HANA BIOSCIENCES, INC.

By:  _________________________

Name: _______________________

Title: ________________________

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SCHEDULE 2

FORM OF EVIDENCE OF DISBURSEMENT

[LETTERHEAD OF THE BORROWER]

[Date]

Ladies and Gentlemen:

Re: Disbursement Receipt

Hana Biosciences, Inc. (the “Borrower”) hereby acknowledge receipt of the sum of
[insert amount of disbursement] disbursed to us by Deerfield Private Design
Fund, L.P., Deerfield Special Situations Fund L.P., Deerfield Special Situations
Fund International Limited and Deerfield Private Design International, L.P.
(together the “Lenders”) under the Loan provided for in the Facility Agreement,
dated as of October 30, 2007, between the Borrower and the Lenders.

Yours faithfully,

HANA BIOSCIENCES, INC.

By:  _________________________

Name: _______________________

Title: ________________________

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EXHIBIT A-1

FORM OF PROMISSORY NOTE

[See Exhibit 4.9 filed with Registrant’s Annual Report on Form 10-K

for the fiscal year ended December 31, 2007]

1

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EXHIBIT A-2

FORM OF PROMISSORY NOTE

[See Exhibit 4.9 filed with Registrant’s Annual Report on Form 10-K

for the fiscal year ended December 31, 2007]

1

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EXHIBIT B

 SCHEDULE OF AND CONDITIONS TO DISBURSEMENTS; MILESTONES; MILESTONE PRODUCTS

1.   

Borrower shall be eligible to receive $7,500,000 from Lenders on or after
execution of this Agreement.

2.

Borrower shall be eligible to receive $5,000,000 from Lenders on or after April
30, 2008.

3.

Borrower shall be eligible to receive $2,500,000 from Lenders on or after
October 30, 2008.

4.

Borrower shall be eligible to receive $5,000,000 from Lenders on or after April
30, 2009.

5.

Borrower shall be eligible to receive $2,500,000 from Lenders on or after the
enrollment of first human subject in a trial using menadione that is intended to
demonstrate amelioration or prevention of EGFR-inhibitor induced rash.

6.

Borrower shall be eligible to receive $5,000,000 from Lenders on or after the
public announcement of non-futility of the RALLY Study allowing continuation of
the Study.

7.

Borrower shall be eligible to receive $2,500,000 from Lenders on or after the
enrollment of first human subject in a Phase 2 treatment or prevention trial
with menadione.

Deerfield Private Design Fund shall determine, in the exercise of its reasonable
discretion, if the conditions identified for disbursements 5, 6 and 7 have been
achieved.  In making such determination, Deerfield Private Design Fund shall use
principles generally accepted for the development of pharmaceutical products.

For the purpose of this Exhibit B, the RALLY Study shall consist of the
following:

(a) Study Disease: Philadelphia chromosome negative acute lymphoblastic leukemia
or lymphoblastic lymphoma.

(b) Study Population: Adults in second relapse or those who have relapsed
following 2 prior lines of therapy.

(c) Study Design: Multi-center, multi-national, single-arm, open-label trial.

(d) Study Treatment: Single-agent weekly intravenous Marqibo at a dose of 2.25
mg/m2 with no dose cap.

(e) Primary Outcome Measure: Confirmed complete remission (CR) or complete
remission without full platelet recovery (CRp).

(f) Sample Size: 56 evaluable subjects.

1

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EXHIBIT C

Allocation of Warrants

Condition Set Forth

 In

Exhibit B

Deerfield Private
Design Fund, L.P.

 

Deerfield Private Design
International, L.P.

 

Deerfield Special
Situations Fund L.P.

 

Deerfield Special Situations Fund International Limited

 

Total

Initial  Warrants:

127,667 

 

205,666 

 

23,533 

 

43,134 

 

400,000 

1.

1,540,117 

 

2,481,077 

 

283,896 

 

520,343 

 

4,825,433 

5.

89,840 

 

144,730 

 

16,561 

 

30,353 

 

281,484 

6.

179,680 

 

289,459 

 

33,121 

 

60,707 

 

562,967 

7.

89,840 

 

144,730 

 

16,561 

 

30,353 

 

281,484 

 

 

 

 

 

 

 

 

 

 

TOTAL:

2,027,144 

 

3,265,662 

 

373,672 

 

684,890 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

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EXHIBIT D

SCHEDULE OF PERMITTED LIENS

The security interest to be granted to NovaDel Pharma, Inc. (“NovaDel”), as
contemplated by Section 4.1.3 of that certain Amended and Restated License
Agreement dated July 31, 2007 between the Company and NovaDel and Section 6.3.4
of that certain Product Development and Commercialization Sublicense Agreement
dated July 31, 2007 among the Company, Par Pharmaceutical, Inc. and NovaDel.