<PAGE>

                                                                   EXHIBIT 10.20

         *** CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT
         (INDICATED BY ASTERISKS) HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
         SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
         CONFIDENTIAL TREATMENT UNDER 17 C.F.R. SECTIONS 200.80(B)(4), 200.83
         AND 230.406.

                                                                    Page 1 of 13

                          TECHNOLOGY LICENSE AGREEMENT

                                     between

               EMBL Enterprise Management Technology Transfer GmbH
                                 Boxbergring 107
                                69126 Heidelberg

                      represented by the Managing Director
                              - hereafter EMBLEM -

                                       and

                           ANADYS PHARMACEUTICALS, INC
                                    Delaware

                      represented by the Managing Director
                              - hereafter ANADYS -

                                    PREAMBLE

ANADYS desires to employ proprietary technologies developed at the European
Molecular Biology Laboratory (EMBL) -represented by EMBLEM in accordance with
the Master License Agreement between EMBL and EMBLEM from December 10, 1999- to
identify, characterize and functionally analyze RNA-containing subcellular
complexes and assemblies sourced from normal and / or pathological tissues of
all species. ANADYS intends to utilize this information to identify drug targets
used or useful in the discovery or development of drugs, diagnostics or
vaccines.

The EMBL technology platforms that ANADYS seeks to utilize include, but are not
limited to, mass spectrometry, computational biology, retrieval and purification
of RNA-protein complexes, genetic screens, microscopy, biological and
biochemical assays, in vivo RNA assays, genomics and virology. The access of
ANADYS to these technology platforms will be limited to applications in ANADYS's
field of research.

ANADYS will pursue programs with respect to any human disease, including without
limitation, infectious diseases, proliferative diseases, and diseases of the
cardiovascular and central nervous system.

<PAGE>

ANADYS TECHNOLOGY LICENSE AGREEMENT

                                                                    Page 2 of 13

                                    ARTICLE 1
                                   DEFINITIONS

For the purpose of this contract the following definitions apply.

(1)      "Field" means ANADYS's field of research and development specified as
follows: ANADYS's field includes proprietary and non-proprietary substances,
components, techniques and methods in the area of RNA biology, including
posttranscriptional gene expression and its regulation. The Field includes
substances, compounds and molecular components derived from normal, infected,
pathological or engineered cells of all species, for use and application to any
human disease, excluding diseases related to metal metabolism.

(2)      "Licensed Patents" means the patents and patent applications of
EMBL/EMBLEM, that are listed in ANNEX 1 including reissues, continuations,
continuations-in-part, divisions, extensions and reexaminations thereof, and the
patents and patent applications that the parties shall subsequently include in
ANNEX 1 by mutual agreement.

(3)      "Licensed Technology" means the Licensed Patents and methods, results,
data, substances, processes, compositions of matter, biological and other
material, formulas, know-how, inventions and information developed by EMBL in
the Field, whether tangible or intangible, whether or not utilizing Licensed
Patents, that are listed in ANNEX 2 and that the parties shall subsequently
include in ANNEX 2 by mutual agreement.

(4)      "Founders" are the following scientists at EMBL:

-        Iain Mattaj

-        Matthias Hentze

The term "Founder" in this agreement does in no way prejudice the distribution
of equity or the personal involvement of these persons or of other persons in
ANADYS.

(5)      "Research groups of Founders" means all members of personnel who are
employed or hold fellowships at EMBL for research purposes and who are assigned
to the respective Founder as Group Leader.

(6)      "Intellectual Property" means the following, in the Field:

         (i)      inventions, patents, patent applications and statutory
                  invention registrations, including reissues, continuations,
                  continuations-in-part, divisions, extensions and
                  reexaminations thereof, and

         (ii)     confidential and proprietary information, including trade
                  secrets and know-how, methods, results, data, substances,
                  processes, compositions of matter, biological and other
                  material, and formulas.


<PAGE>

ANADYS TECHNOLOGY LICENSE AGREEMENT

                                                                    Page 3 of 13

                                    ARTICLE 2
                                     LICENSE

(1)      EMBLEM grants ANADYS an exclusive royalty free worldwide license to the
Licensed Technology and to make, use, sell and offer to sell products, methods
and processes claimed in the Licensed Patents with the right to sublicense.
ANADYS grants to EMBLEM a non-exclusive, royalty-free sublicense to use the
Licensed Technology and to make and use products, methods and processes claimed
in the Licensed Patents for EMBL academic research. EMBLEM shall have no right
to further sub-license these rights except that EMBLEM/EMBL may make available
to academic researchers, under appropriate material transfer agreements (forms
of which will be made available to ANADYS) non-transferable non-exclusive
licenses for their own non-commercial research. EMBLEM will provide ANADYS with
a quarterly list of those institutions that have been granted rights to use the
Licensed Patents and the Licensed Technology.

(2)      During a period of four years after May 19, 2000 and subject to
existing commitments to others, EMBLEM shall provide to ANADYS in writing under
confidentiality according to article 7 of this agreement, a summary notification
about any Intellectual Property concerning methods or techniques in the Field
developed by or held by EMBLEM and not covered by Article 2, Paragraph (3), when
such Intellectual Property becomes available for licensing. No field medical use
and no composition are included in the scope of this provision. Such
notification shall be non-exclusive and shall not constitute a license. Any
subsequently negotiated license to ANADYS shall be at fair market value.

(3)      EMBLEM shall provide ANADYS exclusive written information for
Intellectual Property in the Field developed in the EMBL groups of the Founders
within a period of four years after May 19, 2000. ANADYS shall notify EMBL
within thirty days after having received this written information about the
patents or technologies if it wishes to accept the license. If ANADYS wishes to
accept the license, EMBLEM and ANADYS agree that this Intellectual Property will
be added to ANNEX 1 as Licensed Patents or Licensed Technology in accordance
with the terms of this agreement. In the absence of a request by ANADYS to
license the Intellectual Property, EMBL is free to publish, utilize or license
the Intellectual Property at its discretion and to other parties. In the case of
Intellectual Property which is not yet patented or otherwise protected, ANADYS
shall also notify EMBLEM in writing within thirty days if EMBL must seek patent
protection for the technology at ANADYS's expense, and exclusively under
ANADYS's control. If no such notification is given, EMBL/EMBLEM is free to
patent the technology at its own expense. In any case, preparation of patent
protection must not require delay in submission for relevant publication for
more than 60 days from the original notification by EMBLEM/EMBL.

(4)      ANADYS Inc shall maintain considerable facilities for the exploitation
and, the use of the licensed technology in Europe.

(5)      ANADYS shall impose the limitations of the licenses granted under this
agreement to it's sub-licensees.


<PAGE>

                                                                    Page 4 of 13

                                    ARTICLE 3
                              INTELLECTUAL PROPERTY

(1)      All Intellectual Property, whether protected or not, developed by one
of the parties to this agreement shall belong to the party of the inventor(s).
Discoveries made jointly by inventors from both parties shall become Joint
Intellectual Property. For such Joint Intellectual Property, the parties will
agree on the share of each party. During the term of this agreement, ANADYS will
control, and will assume the costs of, filing, prosecuting, and maintaining
patent applications on Joint Intellectual Property. During the terms of this
agreement, ANADYS will assume the costs of, as well as retain any damages
recovered in an action for infringement or misappropriation of Joint
Intellectual Property. If it becomes necessary for EMBLFM to join as a party to
an action to protect the Joint Intellectual Property, EMBLFM agrees to join such
an action, with its reasonable costs to be borne by ANADYS.

(2)      If ANADYS does not wish to protect a certain piece of Joint
Intellectual Property or no longer wishes to maintain the protection, ANADYS
shall inform EMBLEM. EMBLEM is then free to protect or maintain protection to
this piece of Joint Intellectual Property at its own costs.

(3)      For a period of four years from May 19, 2000 Joint Intellectual
Property developed jointly by ANADYS and the groups of the Founders shall be
treated as Licensed Technology or Licensed Patents under this agreement (see
Article 2). For Intellectual Property developed jointly by ANADYS and other
groups in EMBL, the parties will negotiate in good faith respective licenses at
fair market value.

(4)      [...***...]

(5)      If and to the extent that ANADYS is made subject of a litigation with
respect to the use of the Licensed Rights or the Licensed Technology on the
basis of violation of a third party's intellectual property rights, ANADYS shall
inform EMBLEM immediately of such litigation. EMBLEM shall be obligated to join
ANADYS as intervening party (als Nebenintervenient beitreten) on demand of
ANADYS and to support ANADYS' defense. ANADYS shall bear the costs of such
intervention unless the infringement is based on gross negligence or willful
intent by EMBLEM.

(6)      If and to the extent that EMBLEM is made subject of a litigation with
respect to a third party's intellectual property rights and if such litigation
could adversely effect ANADYS' right hereunder, EMBLEM is obligated to use its
best efforts as to the defense of its rights and the rights of ANADYS. EMBLEM
shall inform

                                             ***CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

                                                                    Page 5 of 13

ANADYS immediately of such litigation. ANADYS has the right but not the
obligation to join EMBLEM as intervening party (als Nebenintervenient beitreten)
and support EMBLEM's defense. ANADYS shall bear the costs of such intervention
unless the infringement is based on gross negligence or willful intent by
EMBLEM.

                                    ARTICLE 4
                             COOPERATION AND SUPPORT

(1)      EMBLEM via EMBL shall assist ANADYS with training and support: in
practicing the Licensed Technology. The amount of such training and support
shall be limited to a reasonable level, which will be agreed by the parties in
good faith.

(2)      Within the framework of Technology Transfer Policies at EMBL,
EMBLEM/EMBL agrees that the Founders may consult or otherwise spend part of
their time for ANADYS subject to individual agreements with ANADYS that require
approval of EMBL/EMBLEM.

(3)      EMBLEM shall also assist ANADYS with respect to filing, prosecuting,
and maintaining the Licensed Patents.

                                    ARTICLE 5
                                  CONSIDERATION

(1)      [...***...]

(2)      For any license granted to ANADYS according to Article 2, Paragraph
(3), ANADYS shall pay a sum to be negotiated in good faith between the parties
to EMBLEM within sixty days after notifying EMBLEM of its acceptance of such
license, or within sixty days after a royalty is negotiated, whichever is later.
If the parties do not agree a fair value, the payment shall be set at EUROs
25.000 per license.

(3)      ANADYS will not broker Licensed Rights and Licensed Technology by
sublicensing to third parties without adding significant value. In case ANADYS
sublicenses part or all of the Licensed Rights or Licensed Technology without
adding additional value to it, ANADYS shall pay appropriate compensation to
EMBL.

                                             ***CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

                                                                    Page 6 of 13

(4)      EMBLEM shall have the right to access ANADYS' books and accounting upon
request limited to information relating to royalty payments on sublicenses.

                                    ARTICLE 6
                            WARRANTIES AND LIABILITY

(1)      EMBLEM assures that it is not aware of any third party rights
conflicting with the rights granted to ANADYS by EMBLEM. EMBLEM further assures
that, to the best of its knowledge, that the issued Licensed Patents are valid
and enforceable. Beyond the warranties given under this section EMBLEM shall not
assume any liability for the protectability of the rights granted.

(2)      In the event that the documents furnished by EMBLEM (drawings,
descriptions, etc.) are faulty, inconsistent, incomplete or otherwise impaired,
EMBL shall supply to ANADYS revised copies without delay. EMBLEM shall be liable
for faulty documents prepared by EMBLEM only if supplied intentionally or by
gross negligence.

(3)      EMBLEM shall not assume any responsibility for the commercial
exploitability of the Licensed Patents or Licensed Technology.

(4)      EMBLEM shall not be liable for damages caused by products manufactured
in exploitation of the Licensed Patents or Licensed Technology. The observance
of any provisions, rules and regulations of the law shall be the responsibility
of ANADYS. In particular ANADYS shall be responsible for the observance of
regulations on quality assurance, product safety, and the assumption of product
liability. This shall also apply if EMBLEM/EMBL provides advice, instructions or
training to ANADYS or its staff.

(5)      If EMBLEM makes available to ANADYS any equipment or devices this shall
only be considered as a service rendered as a favor and shall not establish any
rights of ANADYS, in. particular for warranties or damage compensation.

(6)      ANADYS shall ensure that EMBLEM is exempted from any claims that may be
raised against EMBLEM either as manufacturer or as quasi-manufacturer of the
products produced by .ANADYS.

(7)      EMBLEM shall be held liable on whichever legal grounds only for damages
caused by intent or gross negligence. Such liability shall not exceed EURO
1,000,000. If this limitation is invalid in certain cases, the liability of EMBL
shall be restricted to an amount foreseeable at the time of conclusion of this
contract.

                                    ARTICLE 7
                        CONFIDENTIALITY AND PUBLICATIONS

(1)      Each party may mark any written information confidential.

<PAGE>

ANADYS TECHNOLOGY LICENSE AGREEMENT

                                                                    Page 7 of 13

(2)      The parties agree that confidentiality is essential for the realization
and discharge of this contract. Therefore, they both incur the firm commitment
to develop and conclude a fairly negotiated agreement on confidentiality and
publications within 30 days after the date hereof. This agreement shall enable
both parties to mark information confidential and shall also stipulate the
general extent and duration of confidentiality obligations of either party.

(3)      During the term of this agreement and for a period of three years after
termination of the agreement the parties agree to utilize any secrets or any
know-how gained during their relationship from other party exclusively to the
extent stipulated in this agreement. They shall not disclose or make available
such information to third parties

(4)      This obligation shall not extend to any information which.

         (a)      is already known to the receiving party,

         (b)      is or becomes in the public domain without breach of the
                  confidentiality provisions by the receiving party,

         (c)      Is received by the receiving party from a third party not
                  under an obligation of confidentiality to the other party,

         (d)      Is independently developed by the receiving party without use
                  of the confidential information of the disclosing party.

The obligation shall also not apply to the extent that disclosure is required by
law.

(5)      The parties shall extend this obligation to their employees and to
third party companies as may be involved.

(6)      Each party has the right to review any materials or publications using
this party's name prior to publication.

                                    ARTICLE 8
                                      TAXES

Taxes that are due on license fees are borne by ANADYS. ANADYS has the right to
deduct certain taxes from the license fee payments due, provided that

-    EMBLEM is entitled for reimbursement of those taxes and

-    that ANADYS delivers immediately to EMBLEM all tax certificates or other
     evidence in a format that is acceptable to the tax authorities responsible
     for the reimbursement.


<PAGE>

ANADYS TECHNOLOGY LICENSE AGREEMENT

                                                                    Page 8 of 13

                                    ARTICLE 9
                               GENERAL PROVISIONS

(1)      This agreement was done in two originals. Each party has received one
original.

(2)      No oral alterations or amendments to this agreement have been made. Any
alterations or amendments shall be made in writing. This provision can only be
waived in writing.

(3)      If any term or provision of this agreement shall be or becomes invalid,
such invalidity shall not affect the validity of the remaining provisions of
this agreement. Gaps in the agreement, invalid terms or provisions shall be
replaced in such a way that comes as closely as possible to the original
intentions of the parties and the economic results of the original provision.

                                   ARTICLE 10
                                  EXPLOITATION

(1)      ANADYS will provide to EMBLEM by October 1 for the following year,
first on October 1, 2000, an annual development plan setting forth reasonable
goals for, as well as ANADYS's progress in, development and exploitation of the
Licensed Technology and Licensed Patents and will endeavor to reach these goals.

(2)      ANADYS will use the Licensed Technology and the Licensed Rights only in
accordance with the applicable laws and regulations.

(3)      In case of bankruptcy of ANADYS receivership, composition with
creditors, or in cases of enforcement of title into Licensed Technology and the
Licensed Rights, the respective license terminates with immediate effect.

(4)      In the event that ANADYS at any time shall directly or indirectly
merge, acquire or otherwise join with, or come under direct or indirect control
or direction of any other entity, ANADYS shall take into account EMBLEM's due
interest and shall inform EMBLEM prior to taking a decision.

                                   ARTICLE 11
                              TERM AND TERMINATION

(1)      This agreement expires upon expiration of the last of the Licensed
Patents or any earlier date as the parties mutually agree upon.

(2)      Both parties may terminate this agreement for important reasons
(Kundigung aus wichtigem Grund) as there are - but not limited to -- material
breach of contract,

<PAGE>

ANADYS TECHNOLOGY LICENSE AGREEMENT

                                                                    Page 9 of 13

or dissolution or bankruptcy of the other party. The termination has to be
effected in writing by registered letter to the other party. The letter shall be
deemed received after seven days of dispatch if sent to the last known address
of the other recipient. The party responsible for breach of the agreement may
affect a remedy to cure the breach within (90) days from receipt of notification
of termination from the other party.

(3)      Material breach of contract includes but is not limited to breach of
         Articles 2(4), 5(1), or 6(6) of this agreement.

(4)      The right to ANADYS to use the Licensed Technology, the Licensed
         Patents and to all other items acquired under this agreement cease.

                                   ARTICLE 12
                                   ARBITRATION

(1)      Any dispute arising out of, or in connection with, the agreement shall
be exclusively settled by a panel of three arbitrators under the rules
(Schiedsgerichtsordnung) of the Deutsche Institution fur Schiedsgerischtsbarkeit
e.V. unless otherwise specified below. The procedures shall be governed in
analogous application of the German Ordinance of Civil Procedure
(Zivilprozessordnung) then in effect unless otherwise specified below.

(2)      Each party shall name one arbitrator. The two arbitrators shall appoint
one presiding arbitrator who must be qualified as a judge under German law
(Befdhigung zum Richteramt). The arbitrators must speak and write the English
language unless the parties agree otherwise.

(3)      The party taking recourse to arbitration shall inform the other party
by registered letter stating subject and reasons of their claim, specifying a
motion and nominating one arbitrator. The defendant shall nominate an arbitrator
within three weeks of receipt of the claim. If the defendant fails to name an
arbitrator within this period or if the two arbitrators fail to appoint a
presiding arbitrator within three weeks of the appointment of the arbitrator
named by the defendant, the President of the Oberlandesgericht Karlsruhe shall
appoint the arbitrator or presiding arbitrator upon request of either party.

(4)      The arbitrators shall decide on the place of arbitration. In case they
reach no decision within two weeks after their appointment, the arbitration
shall take place in The Hague, Netherlands (or shall be determined by lottery).
The language of the proceedings shall be in English unless the parties agree
otherwise. Before the arbitration panel decides each party must have the
opportunity to express their views. An oral proceeding shall take place unless
the parties agree otherwise.

(5)      The arbitration panel shall fix the costs of the proceedings. The
arbitration decision is not subject to appeals.


<PAGE>

                                                                   Page 10 of 13

Done at ________________________ the ____ day of ___________________, 2001.

         ____________________         _________________________________________
         EMBLEM                       ANADYS PHARMACEUTICALS, INC.

                   EMBLEM
          Technology Transfer GmbH
               Boxbergring 107
              69126 Heidelberg
                   Germany

         ANNEXES:
         ANNEX 1 LICENSED PATENTS
         ANNEX 2 LICENSED TECHNOLOGY
         ANNEX 3 OTHER PARTICIPATING INDIVIDUALS

<PAGE>

                                                                   Page 11 of 13

                                     ANNEX 1

                                LICENSED PATENTS

                                   [...***...]

                                             ***CONFIDENTIAL TREATMENT REQUESTED

<PAGE>

                                                                   Page 12 of 13

                                     ANNEX 2

                               LICENSED TECHNOLOGY

Licensed Technology comprises

-    Methods and access to experimental results and data

-    Know-how and information

developed at EMBL in the field of RNA-RNA and RNA-protein interactions and
complexes, including but not limited to the following areas:

-    pre-mRNA splicing

-    mRNA polyadenylation

-    RNA transport

-    mRNA translation

-    mRNA turnover

-    nucleo-cytoplasmic transport.

and licensed under article 2 of the agreement.

<PAGE>

ANADYS TECHNOLOGY LICENSE AGREEMENT

                                                                   Page 13 of 13

                                     ANNEX 3

                         OTHER PARTICIPATING INDIVIDUALS

Peer Bork              120,000 shares of restricted common stock

[...***...]            [...***...]

                                             ***CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

                 AMENDMENT TO THE "TECHNOLOGY LICENSE AGREEMENT"
                              DATED JANUARY 9, 2001

                                     BETWEEN

         EMBL ENTERPRISE MANAGEMENT TECHNOLOGY TRANSFER GMBH ("EMBLEM")

                                       AND

                     ANADYS PHARMACEUTICALS, INC. ("ANADYS")

1.       ANADYS and EMBLEM agree to replace the wording of Article 3(4) by the
         following wording:

         "ANADYS shall direct and control the filing, prosecution and
         maintenance of the Licensed Patents or Licensed Technology at its own
         expense for the duration of the license. ANADYS shall retain patent
         counsel reasonably acceptable to EMBLEM to conduct such prosecution.
         ANADYS shall provide to EMBLEM, and EMBLEM shall be entitled to review
         and comment upon, any documents related to and required for obtaining
         patent protection; provided that EMBLEM shall convey such comments
         within a reasonable time period. The above includes all documents to be
         filed or received from the applicable patent offices relating to the
         prosecution of the Licensed Patents or Licensed Technology, and other
         correspondence relating to such prosecution efforts, excluding
         privileged correspondence. ANADYS's patent counsel shall use diligent
         efforts to incorporate all reasonable comments of EMBLEM regarding such
         prosecution. ANADYS will assume the costs of, as well as retain any
         damages recovered in, an action for infringement or misappropriation of
         Licensed Patents or of Licensed Technology. EMBLEM will bring actions
         to protect the Licensed Patents or Licensed Technology at Anadys's
         request. If it becomes necessary to join EMBLEM as a party to an action
         to protect the Licensed Patents or Licensed Technology, EMBLEM agrees
         to join such an action, with the reasonable costs to be borne by
         ANADYS. If ANADYS decides not to further prosecute or maintain any of
         the patent applications or patents mentioned in or covered by Licensed
         Patents or Licensed Technology (including foreign or national phase
         counterparts thereof) including any patent rights involved in an appeal
         or patents involved in an opposition proceedings (referred to herein as
         "Available Rights"), ANADYS shall so advise EMBLEM in time to enable
         EMBLEM to take all appropriate actions to further prosecute or maintain
         any of the Available Rights if EMBLEM desires to do so, and unless
         impracticable, shall provide such notice at least sixty (60) days in
         advance of any filing or response deadlines with the applicable patent
         office(s). All Available Rights for which EMBLEM takes all appropriate
         actions to further prosecute or maintain, will return to EMBLEM
         (referred to herein as "EMBLEM Rights") subject to the Right of First
         Refusal

<PAGE>

         described in the following four sentences. If EMBLEM desires at any
         time to grant to a third party any license to any EMBLEM Rights, then
         EMBLEM shall provide Anadys with written notice of its intention,
         identifying the EMBLEM Rights proposed to be licensed and the identity
         of the proposed licensee (provided that disclosure of the identity of
         the proposed licensee would not render EMBLEM in breach of its express
         confidentiality obligations with such proposed licensee) and describing
         the terms under which EMBLEM proposes to license such rights. Anadys
         shall have sixty (60) days from the date such notice is given to agree
         to license EMBLEM Rights offered to a third party set forth in the
         notice under the same terms specified in the notice, by giving written
         notice to EMBLEM. In the event that ANADYS fails to exercise its right
         of first refusal within the sixty (60) day period, EMBLEM shall be free
         to license such rights to such proposed licensee (on not more favorable
         terms or conditions than those offered to Anadys) following the written
         disclosure to Anadys. At no time shall EMBLEM grant any license with
         respect to EMBLEM Rights to any third party on terms more favorable to
         the licensee than those last offered to Anadys.

2. Anadys and EMBLEM agree to add a new Article 1(7) as follows:

"Intellectual Property Information" means the following, in the Field: (1)
inventions, patents, patent applications and statutory invention registrations,
including reissues, continuations, continuations-in-part, divisions, extensions
and reexaminations thereof, and (2) such other technical information, data and
technology accessible to EMBLEM and/or EMBL concerning methods or techniques
developed by or held by EMBLEM and/or EMBL, which will be provided to ANADYS
under the restrictions of the Confidential Disclosure Agreement between the
Parties dated _____________.

3. ANADYS and EMBLEM agree to substitute in Articles 2 (2) and 2 (3), the
defined term "Intellectual Property Information" in all places where the defined
term "Intellectual Property" is used.

4. ANADYS waives any and all rights under Article 2(2) and Article 2(3)
to access and license Intellectual Property as defined in Article 1(6) to the
extent such information has not been and is not included in the definition of
Intellectual Property Information under Article 1 (7).

5. All other terms and conditions of the Technology License Agreement shall
remain the same and in full force and effect.

The Parties acknowledge that Sections 2, 3 and 4 of this Amendment are intended
only to correct a technical defect in EMBLEM's ability to provide know-how under
Article 2(2) and Article 2(3), with access to Intellectual Property as it is
defined in Article 1(6), and this Amendment provides for EMBL and EMBLEM to make
Intellectual Property Information, as more accurately defined above, available
to ANADYS for the purposes set forth in Article 2. At no time have the Parties
altered their original intent which is to provide ANADYS with exclusive and
first priority access to Intellectual Property

<PAGE>

Information in the Field developed in the EMBL groups of the Founders and first
priority access to Intellectual Property Information developed in the Field at
EMBL, in order to allow ANADYS an opportunity to license relevant technology for
research and commercial purposes.

Heidelberg, Germany the 14th day of November, 2002.

_______________________________       __________________________________________
Gabor Lamm, Managing Director         Kleanthis G. Xanthopoulos, President & CEO
EMBLEM                                ANADYS PHARMACEUTICALS, INC.

<PAGE>

                  *** CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS
                  DOCUMENT (INDICATED BY ASTERISKS) HAS BEEN OMITTED AND FILED
                  SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
                  PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT UNDER 17
                  C.F.R. SECTIONS 200.80(B)(4), 200.83 AND 230.406.

               AMENDMENT #2 TO THE "TECHNOLOGY LICENSE AGREEMENT"
                              DATED JANUARY 9, 2001

                                     BETWEEN

         EMBL ENTERPRISE MANAGEMENT TECHNOLOGY TRANSFER GMBH ("EMBLEM")

                                       AND

                     ANADYS PHARMACEUTICALS, INC. ("ANADYS")

1.       ANADYS and EMBLEM agree to replace the wording of Article 5(1) by the
         following wording:

         "As consideration in full for the grant of the license under this
         agreement, ANADYS shall grant to i) EMBL ii)EMBLEM Technology Transfer
         GmbH and iii) certain other participating individuals as listed on
         Annex 3, a total of 1,649,413 shares of restricted Common Stock of
         ANADYS Pharmaceuticals, Inc. The grant to EMBL includes without
         limitation, all shares of restricted Common Stock of ANADYS, Inc. which
         ANADYS has designated for the Founders and which EMBL will assign to
         the Founders by mutual agreement between EMBL and the Founders
         following the entry into force of this Agreement. ANADYS will deliver
         the shares to the EMBLEM and the other individuals within 30 days
         following receipt of the payment of the nominal cost of the shares."

2.       Annex 3 is revised to delete reference to [...***...].

3.       All other terms and conditions of the Technology License Agreement
shall remain the same and in full force and effect.

Heidelberg, Germany the 9th day of September, 2003.

         ________________________               ________________________________
         Gabor M. Lamm, Ph.D.                   Kleanthis G. Xanthopoulos, Ph.D.
         Managing Director                      President & CEO
         EMBLEM                                 Anadys Pharmaceuticals, Inc.

                                             ***CONFIDENTIAL TREATMENT REQUESTED