<PAGE>

                                                                   EXHIBIT 10.14

                           *** 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.

                        RESEARCH COLLABORATION AGREEMENT

THIS RESEARCH COLLABORATION AGREEMENT ("AGREEMENT") is made effective as of
February 21, 2003 ("EFFECTIVE DATE") by and between ANADYS PHARMACEUTICALS,
INC., a Delaware corporation ("ANADYS"), with its principal place of business at
9050 Camino Santa Fe, San Diego, CA 92121, USA, and AMGEN INC., a Delaware
corporation ("AMGEN"), with its principal place of business at One Amgen Center
Drive, Thousand Oaks, CA, 91320 USA. Anadys and Amgen are sometimes referred to
in this Agreement individually as a "PARTY" and collectively as the "PARTIES".

                                    RECITALS

         A.       Anadys has certain proprietary technology known or referred to
as ATLAS(TM) (Any Target Ligand Affinity Screen), which can be used for
high-throughput screening for protein targets of both known or unknown function
to rapidly identify compounds that bind to protein targets.

         B.       Amgen desires to identify small molecule compounds active
against a specific target as candidates for pharmaceutical development.

         C.       The Parties desire to utilize ATLAS for the specific target
using (a) Amgen's small molecule compound library and (b) Anadys' small molecule
compound library to identify potential lead compounds for further research and
optimization to generate compounds for potential preclinical and clinical
development, manufacturing and commercialization by Amgen.

         D.       The Parties desire that Amgen should obtain ownership of or
exclusive rights to certain of the compounds active against the specific target
in exchange for certain fees, milestone payments and royalties payable to
Anadys.

         In consideration of the foregoing recitals and the covenants contained
herein, Anadys and Amgen hereby agree as follows:

                                    AGREEMENT

         1.       DEFINITIONS

                  (a)      "AFFILIATE" means, with respect to a Party, an entity
that, directly or indirectly, through one or more intermediaries, controls, is
controlled by or is under common control with such Party. For purposes of this
definition, "control" means the possession, direct or indirect, of the power to
cause the direction of the management and policies of a Person, whether through
ownership of fifty percent (50%) or more of the voting securities of such
Person, by contract or otherwise.

                  (b)      "AMGEN KNOW HOW" means (i) Information that Amgen
provides to Anadys that is necessary or useful for purposes of the Research
Program or for research, development, manufacturing and commercialization of
Collaboration Products, that Amgen or any of its Affiliates Controls on the
Effective Date or during the term of the Agreement, (ii)

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Amgen Materials; (iii) the Amgen Library Compounds; and in each case, any
replication or any part of any of the foregoing.

                  (c)      "AMGEN LIBRARY COMPOUNDS" means one or more of the
small molecule compounds represented in Amgen's compound library, which are
supplied to Anadys for screening as part of the Research Plan.

                  (d)      "AMGEN LIBRARY VALIDATED HIT" means (i) an Amgen
Library Compound(s) that is/are a Qualified Hit(s); and (ii) any Derivative(s)
of an Amgen Library Compound(s) that meets the inhibition and [...***...]
requirements of a Qualified Hit, in each casE, that meets the Validation
Criteria.

                  (e)      "AMGEN MATERIALS" means, other than Amgen Library
Compounds, any materials Controlled by Amgen that Amgen provides to Anadys,
including, without limitation biological materials or chemical compounds,
screens, animal models, cell lines, cells, nucleic acids, proteins (e.g., the
Target) and reagents, together with any analogs, derivatives, fragments,
progeny, sub-cellular constituents or expression products thereof, for use in
the conduct of the Research Program.

                  (f)      "AMGEN-SELECTED VALIDATED HIT" has the meaning
provided in Section 5(i). Each Amgen-Selected Validated Hit shall include
analogs, homologs, isomers, prodrugs, chemical formulations or bioisosteres
(whether derived in single or multiple steps) of a chemical compound(s) thereof
that are Anadys Library Compounds that interact with and regulate the activity
of the Target.

                  (g)      "ANADYS KNOW-HOW" means other than Research Results,
(i) Information that is necessary or useful for purposes of the Research Program
or for research, development, manufacturing and commercialization of
Collaboration Products, that Anadys or any of its Affiliates Controls on the
Effective Date or during the term of the Agreement, and (ii) the Anadys Library
Compounds; and in each case, any replication or any part of any of the
foregoing.

                  (h)      "ANADYS LIBRARY COMPOUNDS" means one or more of the
approximately [...***...] ([...***...]) small molecule compounds represenTed in
Anadys' compound library.

                  (i)      "ANADYS LIBRARY VALIDATED HIT" means (i) an Anadys
Library Compound(s) that is/are a Qualified Hit(s); and (ii) any Derivative(s)
of an Anadys Library Compound(s) that meets the inhibition and [...***...]
requirements of a Qualified Hit, in each case, that meets the Validation
Criteria.

                  (j)      "ASSAY TECHNOLOGY" means all inventions, discoveries,
works of authorship, trade secrets and other know-how or developments, including
observations, conclusions, hypotheses, identifications, data and other
information, and all Intellectual Property appurtenant thereto, that are made,
conceived, reduced to practice, authored, or otherwise generated or obtained
directly or indirectly by Anadys in whole or in part in the course of
performance of the Research Plan that are modifications or improvements of ATLAS
screening technology, including assay design, development, validation,
implementation, application, and

                                             ***CONFIDENTIAL TREATMENT REQUESTED

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performance, that are generally useful for ATLAS screening assays without
respect to a particular target, compound, or set of compounds.

                  (k)      "ATLAS" means Any Target Ligand Affinity Screen,
Anadys' proprietary technology which can be used for high-throughput screening
for protein targets of both known or unknown function to identify compounds that
bind to protein targets.

                  (l)      "COLLABORATION PRODUCT" means a pharmaceutical
composition that contains a Lead Compound.

                  (m)      "COMPOUND" means a Primary Hit, Qualified Hit and/or
Validated Hit or any Derivative of the foregoing.

                  (n)      "CONFIDENTIAL INFORMATION" means, subject to the
limitations set forth in Section 6(b), (i) all proprietary or confidential
Information, disclosed by one Party to the other Party in the course of
performing under this Agreement; and (ii) all "Confidential Information" as
defined in and exchanged pursuant to the [...***...] by and between the Parties.

                  (o)      "CONTROL", "CONTROLS" and "CONTROLLED" mean, with
respect to a particular item of information or property right, that the
applicable Party owns or has a license to such item or right and has the ability
to grant to the other Party access to and a license or sublicense (as
applicable) under such item or rights as provided for herein without violating
the terms of any agreement or other arrangement with any Third Party existing as
of the Effective Date.

                  (p)      "COMMERCIALLY REASONABLE EFFORTS" means the level of
efforts and resources commonly used in the research-based pharmaceutical
industry for the development, manufacturing and commercialization of a product
of similar market potential at a similar stage in its product life as that of a
Royalty Bearing Collaboration Product, taking into account efficacy, the
competitiveness of alternative products and product candidates in development or
in the marketplace (excluding other products owned or controlled by Amgen), the
patent and other proprietary position of the product, the likelihood of
regulatory approval given the regulatory structure involved, the profitability
of the product including the royalties payable to licensors of patent rights,
alternative products and product candidates and other relevant factors.
Commercially Reasonable Efforts shall be determined on a market-by-market and
country-by-country basis of a particular Royalty Bearing Collaboration Product,
and it is anticipated that the level of effort would change over time,
reflecting changes in the status of the Royalty Bearing Collaboration Product
and the market and/or country involved.

                  (q)      "COMPENSATION" means any payment, to the extent
applicable, to Anadys pursuant to Section 5(e), 5(f), 5(g) or 5(i) of this
Agreement.

                  (r)      "DERIVATIVE" means an analog, homolog, isomer,
prodrug, chemical formulation or bioisostere (whether derived in single or
multiple steps) of a chemical compound(s) Controlled by Anadys or Amgen and made
under an analoging program or a chemical synthesis program by Anadys under the
Research Program or Amgen (or by a Third Party on behalf of Amgen). For the
avoidance of doubt, "Derivative" also means any compound which is a chemical
modification of another Derivative.

                                             ***CONFIDENTIAL TREATMENT REQUESTED

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<PAGE>

                  (s)      "FDA" means the United States Food and Drug
Administration, or any successor agency thereto.

                  (t)      "FIRST COMMERCIAL SALE" means, with respect to a
particular Royalty Bearing Collaboration Product, the first sale for end-use or
consumption of such Royalty Bearing Collaboration Product in a country after the
governing health regulatory authority of such country has granted Regulatory
Approval. Sale to an Affiliate or Sublicensee will not constitute a First
Commercial Sale unless the Affiliate or Sublicensee is the last entity in the
distribution chain of the Royalty Bearing Collaboration Product.

                  (u)      "FTE" means the equivalent of the work of one
employee full-time for one (1) year (consisting of at least a total of
[...***...] weeks or [...***...] hours per year (excluding vacations and
holidays) of work during and directly in furtherance of the REsearch Program,
carried out by an Anadys employee or Third Party mutually agreed upon by the
JSC. Overtime shall not be counted toward the number of hours that are used to
calculate the FTE contribution. No one person shall be permitted to account for
more than one FTE. Scientific work to be performed by Anadys employees or
mutually agreeable Third Parties in furtherance of this Agreement may include,
but is not limited to, experimental laboratory work, recording and writing up
results, reviewing literature and references, holding scientific discussions and
directing the activities of laboratory personnel.

                  (v)      "IND FILING" means the filing of an Investigational
New Drug Application (as defined in 21 C.F.R. 312 or any successor regulation)
with the FDA or the equivalent application or filing filed with any equivalent
agency or governmental authority in the European Union necessary to commence
human clinical trials in such jurisdiction.

                  (w)      "INFORMATION" means all tangible and intangible
techniques, technology, practices, discoveries, works of authorship, trade
secrets, inventions (whether patentable or not), structures, formulations,
assays, methods, processes, formulas, knowledge, and other know-how or
developments (including observations, conclusions, hypotheses, identifications),
conclusions, skill, experience, data and results (including pharmacological,
toxicological and clinical test data and results and analytical and quality
control data and results), drawings, diagrams, descriptions, software and
algorithms.

                  (x)      "INTELLECTUAL PROPERTY" means all Patent Rights,
trade marks, service marks, registered designs, applications for any of the
foregoing and the right to apply for any of the foregoing in any part of the
world, copyright, approvals, data exclusivity rights, database rights and rights
in databases, design right, inventions, Confidential Information, know-how,
trade secrets and any other similar right situated in any country in the world.

                  (y)      "JOINT STEERING COMMITTEE" or "JSC" means the
committee established and operating in accordance with Section 2(b).

                  (z)      "LEAD COMPOUND" means a Validated Hit and/or
Derivative(s) thereof that [...***...] that is designated by Amgen as a clinical
candidate pursuant to Section 3(b). For the avoidance of doubt, a Derivative of
a Validated Hit shall include such Derivative(s) made by

                                             ***CONFIDENTIAL TREATMENT REQUESTED

                                       4
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Anadys prior to, or subsequent to, Amgen's designation of such Validated Hit as
a Lead Compound.

                  (aa)     "NDA" means (i) a New Drug Application and all
amendments and supplements thereto filed with the FDA; or (ii) the equivalent
application, including, without limitation, a Marketing Authorization
Application filed with any equivalent agency or governmental authority in the
European Union (i.e., the EMEA)) requiring such filing, including all documents,
data and other information concerning a pharmaceutical product which are
necessary for gaining Regulatory Approval to market and sell such pharmaceutical
product.

                  (bb)     "NDA APPROVAL" means the approval by the FDA (or
equivalent agency or governmental authority in the European Union (i.e., the
EMEA)) of an NDA.

                  (cc)     "NDA SUBMISSION" means the submission of an NDA with
the FDA (or equivalent agency or governmental authority in the European Union
(i.e., the EMEA)) in the United States (or European Union).

                  (dd)     "NET SALES" means the gross billings, recognized in
accordance with the generally accepted accounting principles (GAAP) consistently
applied, for the sale to a Third Party of Royalty Bearing Collaboration Product
in finished product form made by Amgen, its Affiliates or Sublicensees, as
applicable, less the following deductions:

                           (i)      amounts repaid or credited by reason of
timely rejections, recalls, returns or wastage replacement (whether in cash or
trade);

                           (ii)     taxes, excises, duties or other governmental
charges (other than income taxes);

                           (iii)    bad debt and retroactive price reductions;

                           (iv)     shipping, transportation, packing and
delivery charges actually incurred, including shipping insurance; and

                           (v)      normal and customary trade, cash and
quantity discounts, free goods, rebates, charge backs, credits and allowances
granted to Third Parties, including mandatory rebates to governmental agencies.

Notwithstanding anything else in this Section 1(dd), amounts received by Amgen
or its Affiliates or Sublicensees for the sale of Royalty Bearing Collaboration
Products among Amgen and its Affiliates or Sublicensees for resale shall not be
included in the computation of Net Sales hereunder.

                  (ee)     "PATENT RIGHTS" means (a) United States patents,
reexaminations, reissues, additions, renewals, extensions and term restorations,
and foreign counterparts thereof, (b) pending applications for United States
patents, including, without limitation, provisional applications, continuations,
continuations-in-part, divisional and substitute applications, including without
limitations, inventors' certificates, and (c) foreign counterparts thereof.

                                       5
<PAGE>

                  (ff)     "PERSON" means an individual, partnership, limited
liability company, joint venture, corporation, trust, estate, unincorporated
organization, or any other entity, or any government or any department or agency
thereof.

                  (gg)     "PHASE 1" means that portion of the Research Plan to
be conducted by Anadys pursuant to this Research Collaboration Agreement as set
forth in Section 2(c)(i).

                  (hh)     "PHASE 2" means that portion of the Research Plan to
be conducted by Anadys pursuant to this Research Collaboration Agreement as set
forth in Section 2(c)(ii).

                  (ii)     "PHASE 3" means additional research activities to
support lead optimization efforts. At Amgen's option, all or a portion of Phase
3 may be performed by Anadys pursuant this Agreement, as set forth in Section
2(c)(iv).

                  (jj)     "PHASE 3 INTEREST NOTICE" means a written notice
given by Amgen to Anadys pursuant to Section 2(c)(iv) during the term of the
Agreement which specifies (i) Amgen's election to proceed with Phase 3 and (ii)
whether Amgen elects to have Anadys perform all or a portion of Phase 3.

                  (kk)     "PRIMARY HITS" mean an Amgen Library Compound(s) or
Anadys Library Compound(s) that is screened by Anadys during the Research
Program using the Screening Assay, and that
[...***...] or such other criteria determined by the JSC.

                  (ll)     "PROGRAM COMPOUNDS" shall mean (i) Amgen Library
Compounds, Amgen-Selected Validated Hit(s), Lead Compound(s), and/or
Collaboration Product(s) and any Derivatives of the foregoing; and (ii)
Derivatives of Anadys Library Validated Hits that are not Amgen-Selected
Validated Hits.

                  (mm)     "QUALIFIED HITS" mean an Amgen Library Compound(s) or
Anadys Library Compound(s) that is screened by Anadys during the Research
Program using the Screening Assay, qualifies as a Primary Hit(s) and, further,
that [...***...] or such other criteria as designated by the JSC.

                  (nn)     "REGULATORY APPROVAL" means any and all approvals
(including pricing and reimbursement approvals), product and/or establishment
licenses, registrations or authorizations of any national, supra-national,
regional, state, or local regulatory agency, department, bureau commission,
council or other government entity that is necessary for the manufacture, use,
storage, import, export, transport and sale of a Collaboration Product in a
regulatory jurisdiction.

                  (oo)     REGULATORY FILINGS" means, collectively, INDs,
biologic license applications (BLAs), NDAs, establishment license applications
(ELAs) and drug master files (DMFs), applications for designation of a
Collaboration Product(s) such as an "Orphan Product(s)" under the Orphan Drug
Act, or any other similar filings (including any foreign equivalents), including
any related correspondence and discussions as may be required or requested by
the FDA or equivalent foreign governmental authority(ies), for the clinical
testing, manufacture or sale of a Collaboration Product.

                                             ***CONFIDENTIAL TREATMENT REQUESTED

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                  (pp)     "RESEARCH PLAN" means the work plan, as it may be
amended from time to time in accordance with Section 2(a), for Phase 1, Phase 2
(if applicable) and at Amgen's discretion Phase 3 of the Research Program. The
initial Research Plan is attached to this Agreement as Exhibit B.

                  (qq)     "RESEARCH PROGRAM" means the work conducted pursuant
to this Agreement and the Research Plan during Phase 1 and Phase 2 (if
applicable) and the work that may be conducted at Amgen's discretion during
Phase 3.

                  (rr)     "RESEARCH RESULTS" means, other than Assay
Technology, (i) all Information that is made, conceived, reduced to practice,
authored, or otherwise generated or obtained directly or indirectly by Anadys or
Amgen in whole or in part in the course of performance of this Agreement or of
the Research Program; and (ii) Program Compounds and all intellectual property
(including Patent Rights) appurtenant thereto.

                  (ss)     "RESEARCH TERM" means the term commencing on the
Effective Date and continuing until completion of Anadys' responsibilities under
the Research Plan unless earlier terminated or extended by Amgen.

                  (tt)     "ROYALTY TERM" shall mean, with respect to any
Royalty Bearing Collaboration Product in any country, the period of time
commencing on the First Commercial Sale of such Royalty Bearing Collaboration
Product in such country and ending upon the expiration of the last to expire of
the Anadys Patent Rights relating to such Royalty Bearing Collaboration Product
in such country.

                  (uu)     "ROYALTY BEARING COLLABORATION PRODUCT" means a
Collaboration Product containing a Lead Compound that is an Anadys Library
Validated Hit, and further, for which Amgen is obligated to pay Anadys a royalty
payment for the Royalty Term pursuant to Section 5(g) of this Agreement.

                  (vv)     "SCREENING ASSAY" means a screening assay employing
ATLAS that is suitable, as determined by the JSC, for use in screening Amgen
Library Compounds and Anadys Library Compounds against the Target in a
high-throughput screening format, that Anadys develops under the Research Plan
as described in Section 2(c)(i).

                  (ww)     "START OF PHASE III CLINICAL TRIALS" means the first
dosing of a patient in a trial, which trial shall be on sufficient numbers of
patients that, if the defined end-points are met, are designed (and agreed to by
the governing health regulatory authority of such country or jurisdiction in
which such trial is to be conducted) based upon existing data in the same
patient population as of the start of the trial, to definitively establish that
a pharmaceutical product is safe and efficacious for its intended use, and to
define warnings, precautions and adverse reactions that are associated with the
pharmaceutical product in the dosage range to be prescribed, and to provide
pivotal data supporting Regulatory Approval of such pharmaceutical product or
label expansion of such pharmaceutical product and that satisfy the requirements
of 21 C.F.R. 321.21(c) (or its successor regulation), or its foreign equivalent.

                  (xx)     "SUBLICENSEE" means any Affiliate or Third Party to
which Amgen grants any right to develop, make, have made, market, import,
export, distribute, use, offer for sale, sell

                                       7
<PAGE>

or have sold Collaboration Products. Solely for purposes of Compensation payable
to Anadys under Section 5(g) of this Agreement, a Third Party who is granted
only the right to sell a Royalty Bearing Collaboration Product (such as a
wholesaler, distributor, contract sales force or a Person providing products
directly to patients in a home health care setting) or to use a Royalty Bearing
Collaboration Product (such as a customer receiving an implied license as a
consequence of purchase) shall not be considered a Sublicensee.

                  (yy)     "TARGET" means [...***...]. For the avoidance of
doubt, "Target" shall include, without limitation, [...***...] or [...***...] of
[...***...].

                  (zz)     "THIRD PARTY" means any person or entity other than
Amgen, Anadys, and their respective Affiliates.

                  (aaa)    "VALIDATED HIT" means an Anadys Library Validated Hit
or an Amgen Library Validated Hit.

                  (bbb)    "VALIDATION CRITERIA" means, as established by the
JSC, the validation criteria set forth in the Research Plan that qualify a
Qualified Hit as a Validated Hit.

         2.       RESEARCH PROGRAM.

                  (a)      RESEARCH PLAN AND GENERAL OBLIGATIONS. The initial
Research Plan, attached to this Agreement as Exhibit B, sets forth the specific
activities that Anadys and Amgen will undertake during Phase 1, Phase 2 (if
applicable) and at Amgen's discretion (and Anadys' agreement to perform Phase 3
work for Amgen) Phase 3 of the Research Program. The Research Plan may be
amended only with the approval of the JSC. Anadys will use diligent,
commercially reasonable efforts to carry out the responsibilities assigned to it
under the Research Plan according to the schedule set forth therein. Anadys
shall not subcontract any of its obligations under the Research Plan to any
Third Party without the prior written consent of Amgen. Any approved
subcontracting shall be performed pursuant to a written agreement containing
appropriate provisions as determined by the JSC, including, without limitation,
provisions of confidentiality, non-use and intellectual property at least as
restrictive as set forth herein.

                  (b)      JOINT STEERING COMMITTEE.

                           (i)      FORMATION. Within ten (10) business days of
the Effective Date, the Parties will establish a JSC comprised of three (3)
members from each Party, which members shall initially be the persons set forth
on Exhibit C. Amgen will designate one of its members to act as chairperson of
the JSC. A Party may designate substitute(s) for its JSC members to participate
if one or more of such Party's members cannot attend a meeting. A Party may
replace any of its JSC members by giving the other Party written notice stating
the name(s) of the member(s) to be replaced and the replacement, and Exhibit C
shall be updated accordingly. The chairperson will call meetings as scheduled in
Section 2(b)(iii) or as requested by a Party's members, prepare and circulate an
agenda in advance of each meeting, and prepare and issue minutes of each meeting
within thirty (30) days thereafter. Anadys, via a designated Anadys JSC member,
shall confirm the accuracy of such minutes in writing, within ten (10) days of
issuance of such minutes, or, if not confirmed within such ten (10) day period,
such minutes shall be deemed accurate.

                                             ***CONFIDENTIAL TREATMENT REQUESTED

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                           (ii)     RESPONSIBILITIES. The JSC shall have overall
responsibility for managing, directing and overseeing the Research Program,
including, but not limited to (1) approving modifications to the Research Plan,
(2) monitoring and coordinating communication regarding the Parties' efforts
under the Research Plan, (3) establishing the Validation Criteria for Anadys
Library Compounds and Amgen Library Compounds screened by Anadys using the
Screening Assay, to qualify a Qualified Hit as a Validated Hit, (4) facilitating
receipt of and discussing information as to Amgen's designation of Lead
Compounds, (5) determining whether Phase 1 (or any other phase) of the Research
Program has been completed; (6) manage, review and evaluate the progress of the
Research Program and the ongoing research conducted under the Research Plan; (7)
allocate responsibilities for the various Research Program activities to be
conducted under the Research Plan; (8) establish criteria for and determine when
successful development of Screening Assay has been completed; (9) establish
criteria for and identify Primary Hits and Qualified Hits for Screening Assay;
(10) establish criteria for successful validation of therapeutic activity of
Validated Hits and identify potential Lead Compounds from Validated Hits; and
(11) facilitating the resolution of disputes that may arise with respect to the
Research Plan and its conduct. The JSC shall not have any power to amend, modify
or waive compliance with the terms of this Agreement.

                           (iii)    MEETINGS. During the Research Term, the JSC
will meet quarterly, or at any other time as reasonably requested by a Party.
The JSC will meet via teleconference or videoconference, or the Parties may meet
at Amgen's facilities in Thousand Oaks, California, Anadys' facilities in San
Diego, California, or such other location as the Parties may agree. With the
prior consent of the other Party's JSC members, a Party may include other of its
personnel or consultants in JSC meetings as nonvoting participants. Each Party
shall be responsible for all of its own expenses of participating in the JSC. To
be effective, meetings of the JSC must have the presence or participation of at
least one (1) member of each Party.

                           (iv)     DECISION-MAKING. The JSC will attempt in
good faith to make decisions by consensus with respect to any matters that
properly come before it. Each member of the JSC shall have one vote. In the
event that the JSC is unable to agree on a specific matter by unanimous vote,
the chair of the JSC shall exercise a deciding vote. Notwithstanding the
foregoing, in no event shall Anadys become obligated to perform additional work
outside the scope of the Research Plan that would cause Anadys to incur
additional costs beyond those provided in this Agreement that Amgen does not
approve for reimbursement to Anadys, without Anadys'approval.

                  (c)      CONDUCT OF RESEARCH PROGRAM.

                           (i)      PHASE 1. Amgen will, at its own expense,
supply to Anadys the quantities of protein of the Target set forth in the
Research Plan and the Amgen Library Compounds, as selected by Amgen. As
described in the Research Plan, Anadys will use its screen development
capabilities to develop one (1) screening assay for use with ATLAS for the
Target. Anadys shall validate the Screening Assay to the reasonable satisfaction
of the JSC.

                                       9
<PAGE>

Anadys will provide Amgen with oral or written updates as to the progress of the
Screening Assay development, will consider in good faith any guidance or
comments that Amgen provides with respect to such development, and, for any
candidate Screening Assay, will provide Amgen with a written report on such
assay, including relevant testing and validation results, sufficient for Amgen
to evaluate such assay against the required parameters and specifications and
Anadys' description of the assay. The Parties anticipate that Phase 1 shall be
completed no later than [...***...] months from the Effective Date. Upon
completion of Phase 1, the JSC will determine in its sole discretion whether to
perform Phase 2.

                           (ii)     PHASE 2. If determined by the JSC, Anadys
will screen the Target against all of the Amgen Library Compounds ([...***...])
anD the Anadys Library Compounds as designated in the Research Plan for activity
in the Screening Assay to identify Primary Hits. Anadys will screen the Target
against Primary Hits selected by the JSC and perform such other work as set
forth in the Research Plan to identify Qualified Hits. In accordance with the
Validation Criteria, the JSC shall identify Validated Hits. Anadys will provide
Amgen with monthly written updates as to the progress of the screening and will
identify all Validated Hits not previously identified to Amgen, and their
relevant Screening Assay results. At the end of the screening using a Screening
Assay, Anadys will provide Amgen with a written report including comprehensive
results of the screening.

                           (iii)    DISCLOSURE OF STRUCTURES. The Parties
recognize that Amgen may want to consider through indirect means the structure
of some or all of the Compounds and Amgen Independent Compounds as set forth in
Section 4(iv)(C). In such event, Amgen shall identify to Anadys through the JSC
the compound designation of each Compound for which disclosure of structural
information is requested. In the case of Compounds that are Anadys Library
Compounds and/or Derivative(s) thereof, Anadys shall deliver to a mutually
agreed upon Third Party consultant structure information and all activity data
related to the Target for each such Compound that is, or is derived from, an
Anadys Library Compound. For Compounds that are Amgen Library Compounds and/or
Derivative(s) thereof, Anadys shall deliver to such Third Party consultant all
activity data for each such Compound that is, or is derived from an Amgen
Library Compound, and sufficient information to allow such Third Party
consultant to identify the structure of each such Compound. In the case of Amgen
Independent Compounds as set forth in Section 4(iv)(C), Amgen shall deliver to
such Third Party consultant structure information sufficient to allow such Third
Party consultant to determine which if any Compounds that are Anadys Library
Compounds are similar in structure to Amgen Independent Compounds. In the event
that Amgen elects to use a Third Party consultant for consideration of
structural information, Amgen shall ensure that the Third Party consultant is
obligated to maintain confidentiality of (i) any Anadys confidential information
disclosed by Anadys to the Third Party consultant, as to Amgen and any Third
Party; and (ii) any Amgen confidential information disclosed by Amgen to the
Third Party consultant, as to Anadys and any Third Party; in each case, under
terms that are at least as stringent as the obligations of confidentiality
undertaken by the Parties through this Agreement; provided, however, that such
Third Party consultant shall be permitted to inform Amgen as to the existence of
any structurally similar Compounds, and shall be permitted to identify such
Compound(s) that is/are, or is/are derived from, an Amgen Library Compound. The
Parties agree that (i) any Compound that is an Anadys Library Compound or
Derivative thereof that is identified by the Third Party consultant to be
structurally identical to any Compound that is an Amgen Library Compound or
Derivative

                                             ***CONFIDENTIAL TREATMENT REQUESTED

                                       10
<PAGE>

thereof shall be deemed a Compound that is, or is derived from, an Amgen Library
Compound; (ii) any Compound that is an Anadys Library Compound or Derivative
thereof that is identified by the Third Party consultant to be structurally
similar to an Amgen Library Compound or Derivative thereof shall be deemed a
Compound that is, or is derived from, an Amgen Library Compound, unless such
Compound that is an Anadys Library Compound or Derivative thereof [...***...]
the Compound that is the Amgen Library Compound or Derivative thereof, in which
case such Compound shall be deemed a Compound that is, or is derived from, an
Anadys Library Compound; (iii) any Amgen Independent Compound that is identified
by the Third Party consultant to be structurally identical to any Anadys Library
Compound or Derivative thereof shall be deemed to not be a Compound; and (iv)
any Amgen Independent Compound that is identified by the Third Party consultant
to be structurally similar to any Anadys Library Compound or Derivative thereof
shall be deemed to not be a Compound, unless such Anadys Library Compound or
Derivative thereof [...***...] the Compound that is the Amgen Independent
Compound, in which case such Anadys Library Compound or Derivative thereof shall
be deemed a Compound that is, or is derived from, an Anadys Library Compound.

                           (iv)     PHASE 3. At any time during the term of this
Agreement, Amgen may, at its sole discretion, submit a Phase 3 Interest Notice,
which may include a request to have Anadys conduct additional work under the
Research Program. Subject to Section 3(a), Phase 3 work will involve, among
other things, medicinal chemistry to [...***...]. If Amgen elects to have Anadys
perform Phase 3 worK, and Anadys agrees to perform such Phase 3 work, the
Parties shall negotiate in good faith the terms of such Phase 3 work (except
that the research funding for Phase 3 shall be as set forth in Section 5(d) of
this Agreement). For the avoidance of doubt, nothing contained in this Agreement
shall be construed to obligate either Party to proceed with Phase 3.

                  (d)      MATERIALS AND EQUIPMENT; COSTS. Other than with
respect to Amgen Materials and Amgen Library Compounds provided by Amgen
pursuant to the Research Plan, Anadys shall be responsible for the procurement
and documentation of the quality of all materials, equipment and facilities used
for the Research Program. Anadys covenants that the materials, equipment and
facilities to be used by Anadys under this Agreement shall be of the same
quality as Anadys in its experience and best scientific judgment uses in its own
research of similar nature. Except for funding of the Research Program paid to
Anadys by Amgen pursuant to Section 5(b) (and to the extent applicable, Sections
5(c) and 5(d)), each Party will bear its own costs and expenses for its
activities under the Research Plan, including without limitation materials,
labor, equipment and overhead costs, and, in the case of Anadys, storing,
handling, transporting and disposing of chemical synthesis by-products generated
by Anadys during the performance of the Research Program.

                  (e)      RESEARCH REPORTS. Anadys will keep Amgen fully
informed as to all discoveries and technical developments (including, without
limitation, any inventions) made in the course of performing activities under
the Research Program. In addition, prior to each meeting of the JSC, Anadys and
Amgen each will prepare and distribute to all members of the JSC (no later than
ten (10) business days prior to each such meeting) a reasonably detailed written
summary report setting forth information regarding the Research Results and
progress of performance of the Research Program (since the last report). The
information contained in the report shall be accurate in the reporting Party's
best scientific judgment. At Amgen's request, at

                                             ***CONFIDENTIAL TREATMENT REQUESTED

                                       11
<PAGE>

any time during the Research Term, Anadys shall provide written reports of any
studies performed by Anadys as part of the Research Program which Amgen may need
to support its regulatory submissions relating to Collaboration Products and
shall allow Amgen to use the data included in such reports to support such
submissions. Nothing herein will require either Party to disclose information
received from a Third Party that remains subject to bona fide confidentiality
obligations to such Third Party.

                  (f)      TECHNICAL ASSISTANCE. During the course of the
Research Program, each Party shall provide the other Party with reasonable
technical assistance relating to the use of such Party's technology, solely to
the extent permitted under the license(s) granted to the other Party in this
Agreement.

                  (g)      PERFORMANCE STANDARDS. Anadys shall use reasonable
best efforts, and shall commit the personnel, facilities and resources, to
screen and identify the Compounds and to perform its other obligations under the
Research Plan. Amgen will use reasonable best efforts to perform its obligations
under the Research Plan. Each Party shall conduct its activities under the
Research Program in good scientific manner and in compliance in all material
respects with applicable laws, rules and regulations and with applicable good
laboratory practices and good manufacturing practices. Each Party shall prepare
and maintain complete and accurate written records with respect to its
activities under the Research Plan consistent with industry standards including,
for purposes of patent and regulatory matters, prompt signing and corroboration
of laboratory notebooks and conception documents. Upon Amgen's written request
and within twenty (20) business days after such request, Anadys shall make the
source data (including laboratory notebook records) of the Research Results
available for inspection by an authorized representative of Amgen at any
reasonable time during Anadys' regular working hours, and copies of all or any
part of such data and all records (whether in tangible or electronic form) shall
be furnished to Amgen upon request.

                  (h)      ANADYS RESEARCHERS. Amgen and Anadys acknowledge the
importance of having personnel devoted full-time to work in the Research
Program. Accordingly, in order to maximize the effective conduct of the Research
Program, Anadys shall use reasonable best efforts to maximize the continuity of
Anadys researchers conducting the Research Program, particularly with respect to
any Phase 3 work that Amgen may, in its sole discretion, elect to have Anadys
perform (and Anadys agrees to perform for Amgen). Prior to beginning work on the
Research Program and/or being given access to Anadys Know-How, Amgen Know-How
and Research Results, each employee, consultant or agent of Anadys shall have
signed or shall be required to sign a non-disclosure and invention assignment
agreement pursuant to which each such person shall agree to comply with all of
the obligations of Anadys or Amgen, as appropriate, substantially including: (a)
promptly reporting any invention, discovery, process, software program or other
intellectual property right, as appropriate within Anadys Know-How, Amgen
Know-How and Research Results; (b) assigning to Anadys or Amgen, as appropriate,
all of his or her right, title and interest in and to any such invention,
discovery, process, software program or other Intellectual Property; (c)
cooperating in the preparation, filing, prosecution, maintenance and enforcement
of any patent rights; (d) performing all acts and signing, executing,
acknowledging and delivering any and all papers, documents and instruments
required for effecting the obligations and purposes of this Agreement and (e)
abiding by the obligations of confidentiality and non-use set forth in this
Agreement. It is understood and

                                       12
<PAGE>

agreed that any such non-disclosure and invention assignment agreement need not
be specific to this Agreement.

                  (i)      MATERIALS TRANSFER In order to facilitate the
Research Program, Amgen may provide to Anadys, Amgen Materials for use by Anadys
in furtherance of the Research Program. All such Amgen Materials and Amgen
Library Compounds delivered to Anadys shall remain the sole property of Amgen,
shall be used only in furtherance of the Research Program in accordance with
this Agreement and remain solely under the control of Anadys, shall not be used
or delivered to or for the benefit of any Third Party without the prior written
consent of Amgen, and shall not be used in research or testing involving human
subjects, except to the extent permitted by applicable law and permitted by the
licenses granted hereunder. The Amgen Materials supplied under this Section 2(i)
and Amgen Library Compounds must be used with prudence and appropriate caution
in any experimental work, because not all of their characteristics may be known.
Except as expressly set forth in this Agreement, THE AMGEN MATERIALS AND AMGEN
LIBRARY COMPOUNDS ARE PROVIDED "AS IS" AND WITHOUT ANY REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTY
OF MERCHANTABILITY OR OF FITNESS FOR ANY PARTICULAR PURPOSE OR ANY WARRANTY THAT
THE USE OF THE MATERIALS WILL NOT INFRINGE OR VIOLATE ANY PATENT OR OTHER
PROPRIETARY RIGHTS OF ANY THIRD PARTY.

         3.       AMGEN'S FURTHER RESEARCH, DEVELOPMENT AND COMMERCIALIZATION.

                  (a)      INVESTIGATION AND CHARACTERIZATION OF COMPOUNDS. Once
the JSC identifies Validated Hits, Amgen will be responsible for all further
evaluation, characterization and optimization of such Validated Hits and for the
generation and designation of Lead Compounds, subject to the possibility that
Anadys may perform certain such activities pursuant to Section 2(c)(iv).
Activities included within Amgen's responsibility may include, as determined in
Amgen's sole discretion, performing initial optimization and other chemical
modification of Validated Hits in order to generate additional compounds for
evaluation as potential Lead Compounds, characterizing Validated Hits or
potential Lead Compounds, and other research and investigation work with respect
to any such compound.

                  (b)      DESIGNATION OF LEAD COMPOUNDS. Amgen may, in its sole
discretion and acting in good faith, designate as a Lead Compound any Validated
Hit or any Derivative of a Validated Hit. In the event that Amgen designates as
a Lead Compound an Anadys Library Validated Hit that had not been previously
deemed an Amgen-Selected Validated Hit, such Anadys Library Validated Hit shall
become an Amgen-Selected Validated Hit and shall be subject to Compensation
under Section 5(i) of this Agreement. Once Amgen designates a Lead Compound, it
will promptly so notify Anadys in writing, and provide Anadys with a designation
for such Lead Compound for future reporting purposes. Amgen may conduct such
further research and optimization and other chemical modification activities
with respect to Lead Compounds, including revising its list of Lead Compounds,
at its sole discretion and in good faith. Amgen will provide Anadys with
quarterly written updates as to any revisions to the list of Lead Compounds.

                                       13
<PAGE>

                  (c)      RESPONSIBILITY. After conclusion of the Research
Term, Amgen shall have sole and full control, authority, discretion and right to
conduct (by itself or via a Third Party) and make all decisions regarding
continued research, activities and all development (e.g., pre-clinical
development, nomination of clinical candidates, clinical trial design),
regulatory activities (e.g., interaction with all governmental authorities and
preparation of any Regulatory Filings), manufacturing and commercialization
(e.g., determination of price, sales and distribution, packaging, labeling,
language to be included on the package insert, promotion, detailing and
selection of trademarks and Phase IV clinical trials) of the Target and Program
Compounds. At Amgen's request and expense, Anadys shall make its employees,
consultants and agents reasonably available upon reasonable notice during normal
business hours at its place of employment to consult with Amgen on issues
arising during or from the Research Program and in connection with any request
from any regulatory agency, including those relating to regulatory, scientific
and technical issues.

                  (d)      DILIGENCE.

                           (i)      After the conclusion of the Research
Program, Amgen will devote Commercially Reasonable Efforts to pursue research,
development and commercialization with respect to Collaboration Products that is
the subject of Compensation under Section 5(e) or 5(f) below. For the avoidance
of doubt, by way of example and not by way of a minimum obligation, if Amgen
pursues research, development and/or commercialization of one (1) Collaboration
Product, Amgen shall be deemed to have used Commercially Reasonable Efforts
under this Agreement.

                  (e)      CESSATION OF DEVELOPMENT AND COMMERCIALIZATION. If
Amgen makes a final determination in its sole discretion that it will cease all
activities under this Agreement to identify and designate Lead Compounds, all
research and preclinical development activities with respect to Collaboration
Products, and terminate all development and commercialization of Royalty Bearing
Collaboration Products, it will so notify Anadys in writing within [...***...]
days of such determination.

                  (f)      COMMUNICATIONS WITH ANADYS.

                           (i)      GENERAL REPORTS. After conclusion of the
Research Program, in the event that Amgen nominates a clinical candidate that
would be deemed a Collaboration Product, Amgen will submit to Anadys an annual
written report summarizing the status of the clinical and regulatory
development, marketing and commercialization activities with respect to any such
Collaboration Product to allow Anadys to monitor Amgen's compliance with Section
3(d). Such reports shall be deemed to be Confidential Information of Amgen.

                           (ii)     CLINICAL AND REGULATORY DEVELOPMENT. Amgen
shall own all right, title and interest in and to Regulatory Filings and
Regulatory Approvals relating to Program Compounds, and be responsible for all
communications with all regulatory agencies.

                                             ***CONFIDENTIAL TREATMENT REQUESTED

                                       14
<PAGE>

         4.       OWNERSHIP, LICENSES AND NEGATIVE COVENANTS.

                  (a)      INVENTORSHIP AND AUTHORSHIP. Inventorship of
discoveries or inventions, and authorship of works of authorship shall be
determined in accordance with the patent and copyright laws of the United States
of America, respectively.

                  (b)      OWNERSHIP. Ownership shall be determined in
accordance with this Section 4(b), notwithstanding affiliation with a Party of
inventors or authors or the determination of inventorship or authorship in
accordance with Section 4(a).

                           (i)      As between the Parties, subject to the
license granted to Anadys under Section 4(d), Amgen shall solely own all right,
title and interest in and to Amgen Know How, Research Results, and all
Intellectual Property appurtenant thereto (the "Amgen Intellectual Property"),
which shall vest in Amgen as the absolute owner thereof and Anadys will, and
hereby does, assign to Amgen all or part of the right, title and interest of
Anadys in and to the Research Results. For avoidance of doubt: (i) Amgen may
freely grant licenses or other rights, through multiple tiers of licensees and
Sublicensees, under the Amgen Intellectual Property, provided, however, that no
grant of such a license or sublicense shall be construed as relieving Amgen of
its obligations under this Agreement; (ii) Amgen shall have the unrestricted
right to use Research Results (whether during or after the Research Program
and/or the term of this Agreement) and to own all Intellectual Property,
including but not limited to any Information and compounds, resulting from such
use; and (iii) Amgen shall solely own all right, title and interest in and to
any compounds arising or resulting from the license granted by Anadys to Amgen
under Section 4(c).

                           (ii)     Subject to the license granted to Amgen
under Section 4(c), Anadys shall retain sole ownership of Anadys Know-How, and
all Intellectual Property appurtenant thereto. Subject to the license granted to
Amgen under Section 4(c), Anadys shall solely own all right, title and interest
in and to the Screening Assay and the Assay Technology.

                           (iii)    In the event Amgen decides to proceed with
Phase 3 and provides the requisite notice in accordance with Section 2(c)(iv),
Anadys shall transfer to Amgen any chemistry methodologies relating to any
Validated Hits selected for Phase 3. Anadys shall grant Amgen a non-exclusive,
royalty-free license in perpetuity including the right to sublicense under the
Anadys Know How and under Intellectual Property owned or licensed by Anadys to
use or have used for Amgen's benefit any such methodologies.

                           (iv)     ASSIGNMENT AND CONTROL OF INVENTIONS.

                           (A)      Anadys will provide reasonable assistance to
Amgen, at Amgen's expense, in obtaining and from time to time enforcing and
defending Amgen's rights as set forth in Section 4(b), to Research Results,
including without limitation and as applicable, the assignment to Amgen of all
or part of the right, title and interest of its employees or independent
contractors in and to such Research Results to perfect Amgen's right, title and
interest in and to the Research Results, and reasonably cooperating, at Amgen's
request, in filing, prosecuting, maintaining, defending and enforcing Amgen's
Patent Rights included within the Research Results. Each Party will solely own
all Patent Rights included in its solely owned Intellectual

                                       15
<PAGE>

Property and shall have the sole right, but not the obligation, at its expense,
to file, prosecute, maintain, and prosecute, defend and otherwise control other
administrative proceedings for such Patent Rights that it owns pursuant to
Section 4(b), and to initiate, prosecute and control any action with respect to
any infringement of such Patent Rights.

                           (B)      At Amgen's sole expense, Anadys agrees to
cooperate fully (and to cause any employee, consultant or agent who worked on
the Research Program to cooperate) in the preparation, filing, prosecution and
defense of any Patent Rights relating to Research Results under this Agreement.
Such cooperation includes, but is not limited to executing all papers and
instruments, or requiring its employees or agents to execute such papers and
instruments, so as to effectuate the ownership of inventions set forth in
Section 4(b) and Patent Rights claiming such inventions, and to enable Amgen to
apply for and to prosecute patent applications in any country; and promptly
informing Amgen of any matters coming to Anadys' attention that may affect the
preparation, filing, prosecution or defense of any such patent applications.

                           (C)      For the avoidance of doubt and
notwithstanding any other provision of this Agreement, if Amgen or its
Affiliate, through in-licensing from a Third Party or research efforts that are
independent of the Research Program and without the use or assistance of any
Confidential Information of Anadys or Research Results, has identified or
identifies a compound that has the biological activity to otherwise meet the
criteria of a Compound, such compound shall not be considered a Collaboration
Product and Amgen or its Affiliate(s) as applicable shall be free to develop and
commercialize such compound without obligation to Anadys (but, in any event,
provided that neither Amgen nor such Affiliate(s) utilizes any Confidential
Information of Anadys or Research Results in connection with such development
and commercialization efforts). In furtherance of the foregoing, Amgen may
identify to the Third Party consultant pursuant to Section 2(c)(iii), compounds
for which Amgen has identified without the use or assistance of any Confidential
Information of Anadys or Research Results ("Amgen Independent Compounds"). In
the event that any Amgen Independent Compound is deemed not to be a Compound
under Section 2(c)(iii), the Anadys Library Compounds associated with each such
Amgen Independent Compound shall not be included within the Research Results and
neither the Third Party consultant nor Anadys shall disclose to Amgen such
Anadys Library Compounds or any Confidential Information of Anadys related
thereto. For the avoidance of doubt and notwithstanding the foregoing sentence,
as to Anadys, any Information regarding Amgen Independent Compounds deemed not
to be Compounds under Section 2(c)(iii) by the Third Party consultant shall be
included within the Research Results.

                           (D)      Subject to Anadys' negative covenants in
Section 4(e) of this Agreement, Anadys shall not be precluded from having rights
to Information that it independently develops without the use of Amgen
Confidential Information, Amgen Know-How or Research Results.

                  (c)      LICENSE GRANT BY ANADYS. Anadys hereby grants to
Amgen a nonexclusive, worldwide, paid up license with the right to sublicense,
under Intellectual Property and Anadys Know-How Controlled by Anadys (except
ATLAS) solely for the purpose of (i) performance by Amgen of its
responsibilities under the Research Program; (ii) to research, develop, make,
have made, use, sell, offer for sale, have sold, import, export or otherwise
exploit or transfer physical possession of or title in Program Compounds; and
(iii) to research, develop,

                                       16
<PAGE>

make, have made or use any Compound that is an Anadys Library Compound. For the
avoidance of doubt, Compensation shall not be affected by the fact that the
license granted by Anadys to Amgen in this Section 4(c) is a paid up license.

                  (d)      LICENSE GRANT BY AMGEN. Amgen hereby grants to Anadys
a nonexclusive, worldwide, paid up license without the right to sublicense,
under the Amgen Know How solely for purpose of performance by Anadys of its
responsibilities under the Research Program.

                  (e)      NEGATIVE COVENANTS.

                           (i)      Anadys shall not use the quantities of
protein of the Target supplied by Amgen or the Amgen Library Compounds or the
Research Results for any purpose other than the conduct of the Research Plan in
accordance with this Agreement; provided, however, that Anadys may use the
statistic data of the number of hits obtained from Phase 2 activities for
internal research purposes and may disclose to Third Parties without reference
to the Research Results, the statistic of the number of hits obtained from the
Phase 2 activities and the fact that the Target is [...***...], without
disclosing any other Information, including, without limitation, the identity of
the Target, Amgen or the nature of the relationship with Amgen.

                           (ii)     For a period beginning on the Effective Date
and ending upon the later of (A) the date that is one (1) year after the
termination of the Research Term or (B) the date that Amgen provides notice to
Anadys pursuant to Section 3(e), Anadys shall not develop or use assays for, or
conduct compound screening utilizing ATLAS for, or knowingly permit or knowingly
enable any Third Party to conduct any such activities with respect to, the
Target on its own behalf or for any Third Party and shall not develop or
commercialize, on its own behalf or for any Third Party, any compound which
binds the Target.

                           (iii)    Anadys shall not knowingly assert or file
any Patent Rights related to or claiming Research Results made, conceived,
reduced to practice, authored, or otherwise generated or obtained: (i) by Anadys
in whole or in part in the course of performance of this Agreement or of the
Research Program; or (ii) by Amgen in whole or in part in the course of the
Research Program.

                  (f)      NO IMPLIED LICENSES. Except as expressly stated in
this Section 4, nothing in this Agreement shall be deemed to grant either Party
any license or other rights to practice any Intellectual Property of the other
Party or such other Party's Confidential Information, other information or other
rights except as expressly stated in this Section 4, including that nothing in
this Agreement is intended to, or shall, give Amgen any license or other right
to practice ATLAS.

         5.       COMPENSATION.

                  (a)      TECHNOLOGY ACCESS FEE. Within five (5) business days
following the Effective Date, Amgen will pay Anadys a one-time, non-refundable
technology access fee of [...***...] ($[...***...]).

                                             ***CONFIDENTIAL TREATMENT REQUESTED

                                       17
<PAGE>

                  (b)      PHASE 1 RESEARCH FUNDING. Amgen shall pay to Anadys
[...***...] for performance of the Phase 1 activities, payable as followS:
[...***...] shall be remitted to Anadys prior to the commencement of Phase 1 and
[...***...] shall be remitted to Anadys upon completiOn of Phase 1 (as
determined by the JSC), with each of the foregoing payments being due within (5)
five business days after Amgen's receipt of an invoice from Anadys.

                  (c)      PHASE 2 RESEARCH FUNDING. If Anadys performs Phase 2
work, Amgen shall pay to Anadys [...***...] for performance of the PhasE 2
activities, payable as follows: [...***...] shall be remitted to Anadys prior to
the commencement of Phase 2 and [...***...] shall be remitted to Anadys upon
completion of Phase 2, with each of the foregoing payments being due within (5)
five business days after Amgen's receipt of an invoice from Anadys.

                  (d)      PHASE 3 RESEARCH FUNDING. If Phase 3 occurs pursuant
to Section 2(c)(iv) of this Agreement, Amgen will pay Anadys research funding
during Phase 3 based on the number of FTEs at Anadys designated pursuant to
Section 2(c)(iv). For each such FTE, Amgen will pay Anadys at a rate of
[...***...] Dollars ($[...***...]) per FTE per year. Amgen will pay such amounts
to Anadys on a calendar quartEr basis in advance, during Phase 3, pursuant to an
invoice from Anadys. Anadys shall deliver written reports (certified by an
officer of Anadys) to Amgen on a quarterly basis within thirty (30) days after
the end of such quarter setting forth the number of FTEs actually devoted by
Anadys to Phase 3 work and a summary of such FTE-funded activities with respect
to such Phase 3 work during such quarter. Anadys shall promptly refund any
overpayment of such FTE costs to Amgen, within thirty (30) days of receipt
thereof. If Anadys' commitment of FTEs to performance of the Phase 3 work
increases during a calendar quarter pursuant to written request by Amgen, Amgen
will pay Anadys research funding for such additional FTEs for the remainder of
the quarter at the same rate of [...***...] Dollars ($[...***...]) per FTE per
year pursuant to an invoice from Anadys. In no event should Amgen be obligated
to pay Anadys for FTEs beyond the number of FTEs approved by Amgen.

                  (e)      RESEARCH MILESTONE PAYMENT. Amgen shall pay Anadys a
one-time research milestone payment of [...***...] Dollars ($[...***...]) within
thirty (30) days after Amgen selects, by written notice to Anadys, the first
Validated Hit (regardless of whether such Validated Hit is an Amgen Library
Validated Hit or an Anadys Library Validated Hit) for Phase 3.

                  (f)      CLINICAL MILESTONE PAYMENTS. Amgen will pay to Anadys
the following one-time clinical development milestone payments as set forth in
this Section 5(f) ("Milestone Payment(s)") within thirty (30) days after the
first achievement of the corresponding milestone events ("Milestone Events") for
the first Collaboration Product.

<TABLE>
<CAPTION>
MILESTONE EVENT                       MILESTONE PAYMENT AMOUNT
---------------                       ------------------------
<S>                                   <C>
[...***...]                                 $[...***...]

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

[...***...]                                 $[...***...]
</TABLE>

                                             ***CONFIDENTIAL TREATMENT REQUESTED

                                       18
<PAGE>

<TABLE>
<S>                                         <C>
[...***...]                                 $[...***...]
                                            ------------

   TOTAL                                    $[...***...]
</TABLE>

         For avoidance of doubt, each of the above Milestone Payments under
Section 5(f) shall be payable only with respect to and upon the first
Collaboration Product to first achieve each corresponding Milestone Event
regardless of the number of times such Collaboration Product or other
Collaboration Product(s) subsequently achieves each such Milestone Event.

                  (g)      ROYALTIES. During each applicable Royalty Term in a
country, Amgen will pay Anadys a royalty payment equal to [...***...] percent
([...***...]%) of Net Sales for each Royalty Bearing Collaboration Product sold
by Amgen, its Affiliates or Sublicensees, in sUch country.

                  (h)      CUMULATIVE ROYALTIES. The obligation under Section
5(g) to pay royalties on the Net Sales of a Royalty Bearing Collaboration
Product shall be imposed only once with respect to the same unit of said Royalty
Bearing Collaboration Product regardless of the number of claims within Anadys'
Patent Rights relating to such Royalty Bearing Collaboration Product in such
country.

                  (i)      COMPENSATION FOR AMGEN-SELECTED VALIDATED HITS. In
the event that any Validated Hit selected by Amgen is an Anadys Library
Validated Hit, Amgen shall have the option, in its sole discretion, to select
such Anadys Library Validated Hit as a Program Compound by providing written
notice to Anadys ("Amgen-Selected Validated Hit"). Amgen shall pay Anadys
$[...***...] for each such Amgen-SelecTed Validated Hit within thirty (30) days
of the foregoing written notice or written notice under Section 3(b) above.

                  (j)      PAID-UP LICENSE. Upon the expiration of Amgen's
obligation under Section 5(g) to pay royalties on Net Sales of a Royalty Bearing
Collaboration Product in a country, Amgen shall have a fully paid-up,
non-exclusive license, with the right to sublicense, under Anadys Know-How and
Patent Rights to research, develop, make, have made, use, sell, offer for sale,
have sold, import, export or otherwise exploit, or transfer physical possession
of or title in such Royalty Bearing Collaboration Product for any use in that
country.

                  (k)      NO OTHER COMPENSATION. Other than as explicitly set
forth (and as applicable) in this Section 5 or pursuant to Section 9 of this
Agreement, Amgen shall not be obligated to pay any additional fees, milestone
payments, royalties or any additional payments to Anadys under this Agreement.

                  (l)      PAYMENT; REPORT. All royalty amounts payable to
Anadys under this Agreement shall be paid in U.S. dollars within [...***...]
([...***...]) days of the end of the calendar quarter in which the Net Sales
giving rise to such royalty were made or as otherwise specifically provided
herein. Each payment of royalty payments shall be accompanied by a statement of
the amount of aggregate worldwide gross sales, and, on a country by country
basis, the amount of gross sales, a calculation of Net Sales showing deductions
provided for in Section 1(dd) (in each case during such quarter and on a
cumulative basis for the current year) and the amount of royalty payments due on
such sales.

                                             ***CONFIDENTIAL TREATMENT REQUESTED

                                       19
<PAGE>

                  (m)      EXCHANGE RATE; MANNER AND PLACE OF PAYMENT.

                           (i)      For purposes of computing such payments, the
Net Sales in countries other than the United States shall be converted into U.S.
Dollars as computed using the average rate of exchange for buying funds as
reported in Bloomberg Professional, a service of Bloomberg L.P for the calendar
quarter in which such Net Sales were made, or in the event Bloomberg
Professional is not available then the Wall Street Journal for the currency of
the country in which the sale is made.

                           (ii)     In any country where conversion of the local
currency is blocked and such currency cannot be removed from the country, Amgen
will pay Anadys in local currency by deposit in a local bank account designated
by Anadys.

                           (iii)    Any payments other than those specified in
Section 5(m)(ii) shall be payable to Anadys by wire transfer at such bank in the
United States as Anadys shall specify from time to time.

                  (n)      TAXES. All taxes levied on account of royalties
payable to Anadys hereunder shall be paid by Anadys. In the event laws or
regulations require withholding of taxes from any payment of royalties, the
taxes will be deducted from the royalty payment by Amgen and will be paid by
Amgen to the proper taxing authority. Amgen will furnish Anadys with the
original copies of all official receipts for such taxes. In the event of any
such withholding, the Parties agree to confer regarding other measures to
minimize such withholding.

                  (o)      RECORDS AND AUDIT. Amgen will keep complete and
accurate records pertaining to the sale or other disposition of the Royalty
Bearing Collaboration Products in sufficient detail to permit Anadys to confirm
the accuracy of all payments due hereunder. Anadys shall have the right to cause
an independent, certified public accountant to audit such records to confirm
Amgen's Net Sales, royalty payments and other payments for the preceding year.
Prior to audit implementation, Anadys shall submit an audit plan, including
audit scope, to Amgen for Amgen's approval, which shall not be unreasonably
withheld. Such audit rights may be exercised no more often than once a year,
within four (4) years after the calendar quarter to which such records relate,
upon reasonable notice to Amgen and during normal business hours for the sole
purpose of, and only to the extent necessary, to verify the completeness and
accuracy of the records and payments made under this Agreement; provided,
however, that the books and records for any particular calendar year shall only
be subject to one audit. The independent, certified public accountant shall keep
confidential any information obtained during such inspection and shall report to
Anadys only the amounts of Net Sales and royalties due and payable, but may
include, in the event the accountant shall be unable to verify the correctness
of any or all of such payment, the unverifiable amount of such payment and
information relating to why any or all of such payment is unverifiable. Amgen
shall receive a copy of each such report concurrently with receipt by Anadys. In
the event that such payment is unverifiable, Amgen and Anadys shall use good
faith efforts to arrive at an equitable solution. Anadys will bear the full cost
of such audit unless such audit discloses an underpayment of more than
[...***...] percent ([...***...]%) from the amount of total payments due. In
such case, Amgen Will pay, in addition to the amount of any underpayment, the
reasonable cost of Anadys' certified public accountant for the audit. In the
event of an overpayment by Amgen, the amount overpaid shall be credited

                                             ***CONFIDENTIAL TREATMENT REQUESTED

                                       20
<PAGE>

against future royalties owed to Anadys by Amgen. The terms of this Section 5(o)
shall survive any termination or expiration or termination of this Agreement for
a period of [...***...] ([...***...]) years. Upon the expiration of such
[...***...] ([...***...]) year period, the calculation of any such amounts
payable with respect to such particular year shall be binding and conclusive
upon Anadys, and Amgen shall be released from any liability or accountability
with respect to such amounts for such year.

         6.       CONFIDENTIAL INFORMATION.

                  (a)      During the term of this Agreement, and for a period
of [...***...] ([...***...]) years thereafter, each Party will maintain aLl
Confidential Information of the other Party received by it under this Agreement
in trust and confidence and, without the express prior written permission of the
other Party, shall not disclose any such Confidential Information of the other
Party to any Third Party or use any such Confidential Information of the other
Party for any purposes or to an extent other than as necessary or permitted for
performance under this Agreement. Neither Party shall use Confidential
Information of the other Party for any purpose or in any manner that would
constitute a violation of any laws or regulations, including without limitation
the export control laws of the United States. Neither Party shall disclose
Confidential Information of the other Party to any employee, agent, consultant,
Affiliate, or Sublicensee who does not have a need for such information. To the
extent that a Party is authorized under this Agreement to disclose Confidential
Information of the other Party, it will disclose only to its employees,
directors, officers, agents, consultants, Affiliates, Sublicensees or clinical
investigators to whom disclosure is permitted to be made who are subject to
binding obligations to hold in confidence and not make use of such Confidential
Information of the other Party for any purpose other than those permitted by
this Agreement, that are at least as restrictive as those of this Section 6.
Each Party will use at least the same standard of care as it uses to protect its
own Confidential Information of a similar nature to ensure that such employees,
agents, consultants and clinical investigators do not disclose or make any
unauthorized use of Confidential Information of the other Party, but no less
than reasonable care. Each Party will notify the other Party promptly upon
discovery of any unauthorized use or disclosure of the Confidential Information
of the other Party in violation of the foregoing.

                  (b)      EXCEPTIONS. The restrictions on disclosure and use of
Confidential Information set forth in Section 6(a) shall not apply to
Confidential Information that the receiving Party can demonstrate by competent
written evidence:

                           (i)      is now, or hereafter becomes, through no act
or failure to act on the part of the receiving Party, its employees or
contractors in breach hereof, generally known or available;

                           (ii)     is known by the receiving Party at the time
of receiving such information, as evidenced by its contemporaneous written
records;

                           (iii)    is hereafter furnished to the receiving
Party by a Third Party, as a matter of right and without restriction on
disclosure; or

                                             ***CONFIDENTIAL TREATMENT REQUESTED

                                       21
<PAGE>

                           (iv)     is independently developed by the receiving
Party without reference to such Confidential Information, as shown by
independent, contemporaneous, written records.

                  (c)      AUTHORIZED DISCLOSURE. Notwithstanding any other
provision of this Agreement, each Party may disclose Confidential Information if
such disclosure:

                           (i)      is in response to a valid order of a court
or other governmental body of the United States or a foreign country, or any
political subdivision thereof; provided, however, that the receiving Party shall
first have given notice to the other Party hereto;

                           (ii)     is otherwise required by governmental law,
rule or regulation, including without limitation rules or regulations of the
U.S. Securities and Exchange Commission, or by rules of the National Association
of Securities Dealers;

                           (iii)    is otherwise necessary to prosecute or
defend litigation, comply with applicable governmental regulations, make
governmental patent or regulatory filings, or otherwise enforce obligations
under this Agreement, but only to the extent that any such disclosure is
necessary for such enforcement;

                           (iv)     (with respect to Amgen as the disclosing
Party) is to other Third Parties in connection with due diligence or similar
investigations by such Third Parties, in each case who agree to be bound by
similar terms of confidentiality and non-use at least equivalent in scope to
those set forth in this Section 6; or

                           (v)      (with respect to Anadys as the disclosing
Party), is to other Third Parties in connection with financing-related due
diligence or similar investigations by such Third Parties, in each case who
agree to be bound by similar terms of confidentiality and non-use at least
equivalent in scope to those set forth in this Section 6; provided that Anadys
shall only disclose to such Third Parties the following: (i) this Agreement;
(ii) information permitted to be disclosed to Third Parties under Section
4(e)(i)) of this Agreement; and (iii) Amgen's reports under Section 3(f)(i) of
this Agreement;

provided, however, that the Party required or intending to disclose the other
Party's Confidential Information under Section 6(c)(i), (ii) or (iii) shall
first have given prompt notice to such Party to enable it to seek any available
exemptions from or limitations on such disclosure requirement and shall
reasonably cooperate in such efforts by the other Party.

                  (d)      PUBLICITY. Neither Party shall make any disclosure or
public announcement of this Agreement or its terms, or the relationship between
the Parties, without the other Party's prior written consent, unless, in the
reasonable opinion of such Party's counsel, a public disclosure shall be
required by law, regulation or court order, including without limitation in a
public filing by the United States Securities and Exchange Commission, the
disclosing Party shall provide copies of the disclosure reasonably in advance
(but in no event less than fifteen (15) business days) of such filing or other
disclosure for the nondisclosing Party's prior review and comment; the
nondisclosing Party shall provide its comments, if any, on such announcement as
soon as practicable.

                                       22
<PAGE>

                  (e)      USE OF NAMES, LOGOS OR SYMBOLS. Subject to Section
6(d), no Party hereto shall use the name, trademarks, logos, physical likeness,
employee names or owner symbol of any other Party for any purpose, including,
without limitation, private or public securities placements, without the prior
written consent of the affected Party. Nothing contained in this Agreement shall
be construed as granting either Party any rights or license to use any of the
other Party's trademarks or trade names or the names of any employees thereof,
without separate, express written permission of the owner of such trademark or
trade name or name.

                  (f)      PUBLICATIONS. Amgen shall have the sole right, either
directly or indirectly, to publish scientific results and other related
information or work that was generated or conducted during and in furtherance of
this Agreement. Before any such paper including oral presentation materials,
abstracts and the like, is submitted for publication, Amgen will deliver a
complete copy to Anadys at least thirty (30) business days prior to submitting
the paper to a publisher. Anadys will have the right to review any such paper
and give its comments to Amgen within thirty (30) business days of the delivery
of such paper to Anadys. It is understood and agreed that failure by Anadys to
notify Amgen within such thirty (30) business day period shall be deemed consent
by Anadys to such publication. Amgen will comply with Anadys' request to delete
references to Anadys' Confidential Information in any such paper. Any such paper
will include recognition of the contributions of Anadys according to standard
practice for assigning scientific credit, either through authorship or
acknowledgment, as may be appropriate.

         7.       REPRESENTATIONS AND WARRANTIES.

                  (a)      REPRESENTATIONS, WARRANTIES AND COVENANTS OF ANADYS

                           (i)      GRANT OF RIGHTS. As of the Effective Date,
Anadys has sufficient legal and/or beneficial title and ownership under its
Intellectual Property as is necessary to fulfill its obligations under this
Agreement and to grant the licenses to Amgen pursuant to this Agreement. As of
the Effective Date, Anadys has not granted, and shall not during the term of
this Agreement grant, any right, license, consent or privilege to any Third
Party or otherwise undertake any action, either directly or indirectly, which
would conflict with the rights granted to Amgen or interfere with any
obligations of Anadys set forth in this Agreement. As of the Effective Date,
Anadys has not entered into any arrangement, understanding, or agreement with a
Third Party regarding the Target (including, but not limited to, development of
any screening assay to the Target using ATLAS).

                           (ii)     ABSENCE OF LITIGATION, INFRINGEMENT OR
MISAPPROPRIATION. As of the Effective Date, there is no pending or threatened
litigation and Anadys has not received any communication relating thereto which
alleges that Anadys' activities with the Assay Technology using ATLAS or under
this Agreement would infringe or misappropriate any Intellectual Property of any
Third Party. There is no material unauthorized use, infringement or
misappropriation of any of its Intellectual Property that are the subject of the
licenses granted to Amgen hereunder.

                           (iii)    PERFORMANCE. Anadys shall perform all work
under this Agreement in a professional manner and in accordance with applicable
current good laboratory practices and good clinical practices. Anadys shall use
diligent, commercially reasonable efforts

                                       23
<PAGE>

to perform the research and experimentation necessary or useful to accomplish
the goals and objectives set forth in the Research Plan.

                           (iv)     FULL DISCLOSURE. As of the Effective Date,
Anadys has provided Amgen with all information that Amgen has requested for
deciding the merits of entering into this Agreement and all information
reasonably useful or necessary to enable Amgen to make an informed decision
regarding entering into this Agreement, and all such provided information is
true and not misleading.

                           (v)      DETERMINATION OF COMPOUND STRUCTURE. Anadys
covenants that it will not: (i) disclose to Amgen the [...***...] of any Amgen
Library Compound or the structure of any Anadys Library Compound identified as a
Compound unless and until expressly requested by Amgen in writing; or (ii)
determine the structure of any Amgen Library Compound screened by Anadys
pursuant to this Agreement.

                  (b)      MUTUAL REPRESENTATIONS AND WARRANTIES. Each Party
hereby represents and warrants to the other Party as follows:

                           (i)      CORPORATE EXISTENCE AND POWER. It is a
corporation duly organized, validly existing and in good standing under the laws
of the state in which it is incorporated, and has full corporate power and
authority and the legal right to own and operate its property and assets and to
carry on its business as it is now being conducted and as contemplated in this
Agreement, including, without limitation, the right to grant the licenses
granted hereunder.

                           (ii)     AUTHORITY AND BINDING AGREEMENT. As of the
Effective Date, (a) it has the corporate power and authority and the legal right
to enter into this Agreement and perform its obligations hereunder; (b) it has
taken all necessary corporate action on its part required to authorize the
execution and delivery of the Agreement and the performance of its obligations
hereunder; and (c) the Agreement has been duly executed and delivered on behalf
of such Party, and constitutes a legal, valid and binding obligation of such
Party and is enforceable against it in accordance with its terms.

                           (iii)    NO CONFLICT. It has not entered, and will
not enter, into any agreement with any Third Party which is in conflict with the
rights granted to the other Party under this Agreement, and has not taken and
will not take any action that would in any way prevent it from granting the
rights granted to the other Party under this Agreement, or that would otherwise
materially conflict with or adversely affect the rights granted to the other
Party under this Agreement.

                  (c)      NO OTHER REPRESENTATIONS OR WARRANTIES. EXCEPT AS
EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATION OR
WARRANTY TO THE OTHER PARTY OF ANY KIND, EXPRESS, IMPLIED, OR STATUTORY,
INCLUDING WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, NON-INFRINGEMENT OR NON-MISAPPROPRIATION OF THIRD PARTY
INTELLECTUAL PROPERTY RIGHTS, TITLE, CUSTOM OR TRADE.

         8.       TERM AND TERMINATION

                                             ***CONFIDENTIAL TREATMENT REQUESTED

                                       24
<PAGE>

                  (a)      TERM. This Agreement shall commence on the Effective
Date and, unless terminated earlier pursuant to Sections 8(b)(ii) or 8(c), shall
be in full force and effect until the expiration of the last to expire Royalty
Term.

                  (b)      ELECTIVE TERMINATION.

                           (i)      Elective Termination of Research Program.
Amgen shall have the right to elect, at any time, to terminate the Research
Program upon [...***...] ([...***...]) days' notice to Anadys.

                           (ii)     Elective Termination of Agreement. Amgen
shall have the right to elect, at any time, to terminate the Agreement upon
[...***...] ([...***...]) days' notice to Anadys.

                  (c)      TERMINATION FOR CAUSE

                           (i)      In the event any material representation or
warranty made hereunder by a Party shall have been untrue in any material
respect ("Representation Default"), or upon or after the material breach of any
material provision of this Agreement by a Party ("Performance Default"), the
Party not in default ("Non-Defaulting Party") shall have the right to give the
other Party ("Defaulting Party") written notice thereof ("Notice of Default"),
which notice must state the nature of the Representation Default or Performance
Default in reasonable detail and must request the Defaulting Party cure such
Representation Default or Performance Default within [...***...] ([...***...])
days, with all rights and obligations remaining in full force and effect during
such [...***...] ([...***...]) day period. If the Defaulting Party shall dispute
the existence, extent or nature of any default set forth in a Notice of Default,
the parties shall use good faith efforts to resolve the dispute in accordance
with the procedures set forth in Section 10(a).

                           (ii)     In the event of a Representation Default by
Anadys that shall not have been cured within the period set forth above after
receipt of a Notice of Default, Amgen (in addition to any other remedies which
may be available at law or equity) may terminate this Agreement in its entirety
and be entitled to a refund of all monies paid to Anadys.

                           (iii)    In the event of a Performance Default by
Anadys that shall not have been cured within the period set forth above after
receipt of a Notice of Default, Amgen (in addition to any other remedies which
may be available at law or equity), at its option, may (i) terminate the
Agreement, or (ii) if Amgen decides not to terminate the Agreement, Amgen shall
have the right to offset any costs it has incurred as a direct result of curing
such breach against the amounts then or in the future payable to Anadys for the
performance of such obligations provided that Amgen has taken commercially
reasonable efforts to mitigate such costs.

                           (iv)     In the event of a Performance Default by
Amgen regarding Amgen's obligation to pay Anadys any applicable fees, funding,
milestone payments or royalties pursuant to Sections 5(a), 5(b), 5(c), 5(d),
5(e), 5(f), 5(g) or 5(i) of this Agreement, that shall not have been cured
within the period set forth above after receipt of a Notice of Default, Anadys,
at its option, may terminate this Agreement. In the event of a Performance
Default by Amgen other than regarding Amgen's obligation to pay Anadys any
applicable fees, funding, milestone

                                             ***CONFIDENTIAL TREATMENT REQUESTED

                                       25
<PAGE>

payments or royalties pursuant to Sections 5(a), 5(b), 5(c), 5(d), 5(e), 5(f),
5(g) or 5(i) of this Agreement, Anadys shall only be entitled to seek legal
remedies but shall not be entitled to seek termination of this Agreement, and
all of Amgen's rights and obligations under this Agreement shall remain in full
force and effect.

                  (d)      EFFECTS OF TERMINATION. If Amgen terminates the
Research Program pursuant to Section 8(b)(i), this Agreement shall remain in
full force and effect but for the conduct of the Research Plan and Research
Program. If a Party terminates this Agreement under Sections 8(b)(ii) or 8(c),
all terms and provisions not stated expressly in Section 8(f) to survive, shall
terminate as of the effective date of termination.

                           (i)      Upon expiration or termination of this
Agreement, each Party shall cease to use Confidential Information of the other
Party and shall destroy all Confidential Information of the other Party and
shall certify in writing to such other Party the completion thereof. Each Party
shall be entitled to retain one (1) archival copy of the other Party's
Confidential Information for the sole purpose of determining its obligations
hereunder.

                           (ii)     Upon termination of this Agreement, Anadys
will cease to use any Amgen Know How and Research Results and will, at Amgen's
sole discretion, instruction and expense, either return to Amgen or destroy any
such remaining materials and information relating thereto provided by Amgen.
Anadys shall also cease to use the Screening Assay and shall destroy the
Screening Assay and any Information associated therewith; provided, however,
that Anadys shall be free to use the Information in accordance with the
restrictions set forth in Section 6 and will not be required to destroy the
statistic of the number of hits obtained from Phase 2 activities to the extent
its use is permitted under Section 4(e)(i).

                  (e)      TRANSITION. During any sixty (60) day period after
termination of the Agreement, each Party shall assist (and be responsible for
its own expenses) in the transition of affairs in a timely, reasonable and
businesslike manner. In the event that Amgen nominates a clinical candidate that
would be deemed a Collaboration Product, Amgen will submit to Anadys an annual
written report summarizing the status of the clinical and regulatory
development, marketing and commercialization activities with respect to any such
Collaboration Product. Such reports shall be deemed to be Confidential
Information of Amgen.

                  (f)      ACCRUED RIGHTS AND OBLIGATIONS; SURVIVAL. Termination
of this Agreement by a Party pursuant to Section 8(c) shall not be a Party's
sole remedy for a material breach of this Agreement but shall be in addition to
any other rights or remedies of a Party under this Agreement. Termination or
expiration of this Agreement shall not affect any accrued rights or surviving
obligations of the Parties. The provisions of the following sections shall
survive the expiration or termination of this Agreement for any reason
whatsoever, except as expressly set forth in such sections:

                  Section 4(e) (Negative Covenants)

                  Section 5(e) (Research Milestone Payment)

                  Section 5(f) (Clinical Milestone Payment)

                  Section 5(g) (Royalties)

                                       26
<PAGE>

                  Section 5(h) (Cumulative Royalties)

                  Section 5(j) (Paid up License)

                  Section 5(k) (No Other Compensation)

                  Section 5(l) (Payment; Report)

                  Section 5(m) (Exchange Rate; Manner and Place of Payment)

                  Section 5(n) (Taxes)

                  Section 5(o) (Records and Audit)

                  Section 4(b) (Ownership)

                  Section 6 (Confidential Information)

                  Section 8(d) (Effects of Termination)

                  Section 8(e) (Transition)

                  Section 8(f) (Accrued Rights and Obligations; Survival)

                  Section 9 (Indemnification)

                  Section 10 (General Provisions)

         9.       INDEMNIFICATION, INSURANCE, LIMITATIONS OF LIABILITY.

                  (a)      INDEMNIFICATION BY AMGEN. Amgen will indemnify, hold
harmless and defend Anadys, its Affiliates, and their respective employees and
agents against any and all losses, damages, liabilities, judgments, fines,
amounts paid in settlement, expenses and costs of defense (including without
limitation reasonable attorneys' fees and witness fees) ("LOSSES") resulting
from any claim, demand, suit, action or proceeding brought or initiated by a
Third Party ("THIRD PARTY CLAIM") against them to the extent that such Third
Party Claim arises out of (i) the research, development, manufacture, use, sale
or other commercialization of Collaboration Products by Amgen, its Affiliates,
or Sublicensees; (ii) a Representation Default or Performance Default by Amgen;
or (iii) the negligence or willful misconduct of Amgen, its Affiliates, or their
respective employees or agents in the course of performance under this
Agreement; provided, however, that such indemnity shall not apply, in each case,
to the extent such Losses result from the gross negligence or willful misconduct
of Anadys or from a Representation Default or Performance Default by Anadys.

                  (b)      INDEMNIFICATION BY ANADYS. Anadys will indemnify,
hold harmless and defend Amgen, its Affiliates and their respective employees
and agents against any and all Losses resulting from any Third Party Claim
against them to the extent that such Third Party Claim arises out of (i) the
conduct of the Research Plan, Research Program or the use, handling, storage or
other disposition of any product or material used for purposes of the Research
Plan by Anadys or its Affiliates; (ii) a Representation Default or Performance
Default by Anadys; (iii) the practice by Amgen of any license granted hereunder;
or (iv) the negligence or willful misconduct of Anadys, its Affiliates, or their
respective employees or agents in the course of performance under this
Agreement; provided, however, that such indemnity shall not apply, in each case,
to the extent such Losses result from the gross negligence or willful misconduct
of Amgen or from a Representation Default or Performance Default of Amgen.

                                       27
<PAGE>

                  (c)      MECHANICS. In the event a Party entitled to
indemnification under Section 9(a) or 9(b) (the "Indemnified Party") seeks
indemnification thereunder, it will inform the Party obligated to provide
indemnification under Section 9(a) or 9(b) (the "Indemnifying Party") of a Third
Party Claim as soon as reasonably practicable after it receives notice of the
claim, it will permit the Indemnifying Party to assume direction and control of
the defense of the Third Party Claim (including the right to settle the claim
solely for monetary consideration), and will cooperate as requested (at the
expense of the Indemnifying Party) in the defense of the Third Party Claim;
provided, however, that the Indemnified Party shall have the right to retain its
own counsel, with the fees and expenses to be paid by the Indemnified Party, if
representation of such Indemnified Party by the counsel retained by the
Indemnifying Party would be inappropriate due to actual or potential differing
interests between such Indemnified Party and any other Party represented by such
counsel in such proceedings. The indemnity obligation in this Section 9 shall
not apply to amounts paid in settlement of any loss, liability, damage, expense,
claim, demand, action or other proceeding by the Indemnified Party if such
settlement shall be effected without the consent of the Indemnifying Party. The
failure by the Indemnified Party to deliver notice to the Indemnifying Party
within a reasonable time after commencement of any such action, if prejudicial
to its ability to defend such action, shall relieve such Indemnifying Party of
any liability to the Indemnified Party under this Section 9(c), but the omission
to deliver notice to the Indemnifying Party will not relieve the Indemnifying
Party of any liability that it may have to the Indemnified Party other than
under this Section 9(c). The Indemnified Party under Section 9(a) or 9(b) and
its employees and agents shall cooperate reasonably with the Indemnifying Party
and its legal representatives in the investigation of any action, claim or
liability covered by this indemnification.

                  (d)      INSURANCE. Each Party, at its own expense, will
maintain product liability insurance (or self-insure) in an amount consistent
with industry standards during the term of this Agreement and will name the
other Party as an additional insured with respect to such insurance. Each Party
will provide the other Party with a certificate of insurance (or evidence of
self-insurance) evidencing such coverage. Such insurance shall not be construed
to create a limit of the insuring Party's liability with respect to its
indemnification obligations under this Section 9.

                  (e)      LIMITATION OF LIABILITY. NEITHER PARTY SHALL BE
LIABLE TO THE OTHER PARTY FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL OR SPECIAL
DAMAGES, INCLUDING BUT NOT LIMITED TO LOST PROFITS, WHETHER IN CONTRACT, TORT OR
OTHERWISE, ARISING FROM OR RELATING TO ANY BREACH OF OR ACTIVITIES UNDER THIS
AGREEMENT, REGARDLESS OF ANY NOTICE OF THE POSSIBILITY OF SUCH DAMAGES. Nothing
in this Section 9(e) is intended to limit or restrict the indemnification rights
or obligations of any party under this Agreement.

         10.      GENERAL PROVISIONS.

                  (a)      DISPUTE RESOLUTION. The Parties recognize that
disputes may from time to time arise between the Parties during the term of this
Agreement. It is the objective of the Parties to establish procedures to
facilitate the resolution of disputes arising under this Agreement in an
expedient manner by mutual cooperation and without resort to litigation. To
accomplish this objective, the Parties agree to follow the procedures set forth
in this Section 10(a) to resolve any dispute arising under this Agreement. In
the event of such a dispute between the Parties, either Party, by written notice
to the other Party, have such dispute referred

                                       28
<PAGE>

to a senior executive officer of each Party, for attempted resolution by good
faith negotiations within thirty (30) days after such notice is received. If the
designated executive officers are not able to resolve such dispute, either Party
may at any time after such thirty (30) day period pursue any legal or equitable
remedy available to it.

                  (b)      JURISDICTION AND VENUE. In connection with any
dispute arising hereunder or in connection with the subject matter hereof that
is not settled in accordance with Section 10(a), each of the Parties hereby
consents to the exclusive jurisdiction and venue of the U.S. federal courts
located within the state of California and of the California state courts. Each
Party hereby irrevocably waives any right that it may have to assert that any
such court lacks jurisdiction or that such forum is not convenient.

                  (c)      GOVERNING LAW; LANGUAGE. This Agreement shall be
governed and construed in accordance with the laws of the State of California,
except for its choice of law rules. The official text of this Agreement and any
exhibits referenced herein, or any notice given or accounts or statements
required by this Agreement shall be in English. In the event of any dispute
concerning the construction or meaning of this Agreement, reference shall be
made only to this Agreement as written in English and not to any other
translation into any other language.

                  (d)      NOTICE. All notices hereunder shall be in writing and
shall be delivered personally, sent for next day delivery by internationally
recognized courier service or transmitted by facsimile (transmission confirmed),
with confirmation by next day delivery by an internationally recognized courier
service, to the following addresses and facsimiles of the respective Parties or
such other address or facsimile as is notified pursuant to this Section 10(d):

Amgen:                Amgen Inc.
                      One Amgen Center Drive
                      Thousand Oaks, CA 91320-1799
                      Attention: Vice President, Licensing
                      Fax No.: (805) 499-6058

with a copy to:       Amgen Inc.
                      One Amgen Center Drive
                      Thousand Oaks, CA 91320-1799
                      Attention: Senior Vice President, General Counsel
                      Fax No.: (805) 447-8011

Anadys:               Anadys Pharmaceuticals, Inc.
                      9050 Camino Santa Fe
                      San Diego, CA 92121
                      Attention: Michael Kamdar, Vice President,
                      Corporate Development & Strategy
                      Fax: [...***...]

with a copy to:       Anadys Pharmaceuticals, Inc.
                      9050 Camino Santa Fe


                                           ***CONFIDENTIAL TREATMENT REQUESTED

                                       29
<PAGE>

                      San Diego, CA 92121
                      Attention: Elizabeth Reed, Senior Director, Legal Affairs
                      Fax: [...***...]

                  (e)      WAIVER. The failure on the part of a Party to
exercise or enforce any rights conferred upon it hereunder shall not be deemed
to be a waiver of any such rights nor operate to bar the exercise or enforcement
thereof at any time or times hereafter.

                  (f)      ASSIGNMENT. Except as expressly provided hereunder,
neither this Agreement nor any rights or obligations hereunder may be assigned
or otherwise transferred by either Party without the prior express written
consent of the other Party, which shall not be unreasonably withheld; provided,
however, that Amgen may assign this Agreement and its rights and obligations
hereunder without Anadys' consent to any Affiliate, and either Party, may assign
this Agreement and its rights and obligations hereunder without the other
Party's consent in connection with the transfer or sale of all or substantially
all of the business of such Party to which this agreement relates to a Third
Party, whether by merger, sale of stock, sale of assets or otherwise. The rights
and obligations of the Parties under this agreement will be binding upon and
inure to the benefit of the successors and permitted assigns of the Parties. Any
purported assignment not in compliance with this Section 10(f) will be void.

                  (g)      PERFORMANCE BY AFFILIATES. A Party's obligations
under this Agreement may be performed by its Affiliates. Obligations of the
Party for which one of its Affiliates is performing hereunder shall be deemed to
extend to such performing Affiliate. Each Party guarantees performance of this
Agreement by its Affiliates. Wherever in this Agreement the Parties delegate
responsibility to Affiliates or local operating entities, the Parties agree that
such entities shall not make decisions inconsistent with this Agreement, amend
the terms of this Agreement or act contrary to its terms in any way.

                  (h)      BANKRUPTCY. All rights and licenses granted under or
pursuant to this Agreement by Anadys to Amgen are, and shall be deemed to be,
for purposes of Section 365(n) of the Bankruptcy Code and any similar law or
regulation in any other country, licenses of rights to "intellectual property"
as defined under Section 101(35A) of the Bankruptcy Code. The Parties agree that
all Intellectual Property licensed hereunder by Anadys to Amgen are part of the
"intellectual property" as defined under Section 101(35A) of the Bankruptcy Code
subject to the protections afforded the non-bankrupt Party under Section 365(n)
of the Bankruptcy Code, and any similar law or regulation in any other country.
The Parties further agree that, in the event of the commencement of a bankruptcy
proceeding by or against Anadys under the U.S. Bankruptcy Code, Amgen shall be
entitled to a complete duplicate of (or complete access to, as appropriate) any
such intellectual property and all embodiments of such intellectual property,
and same, if not already in its possession, shall be promptly delivered to it
(i) upon any such commencement of a bankruptcy proceeding, upon its written
request therefor, unless Anadys elects to continue to perform all of its
obligations under this Agreement, or (ii) if not delivered under (i) above,
following the rejection of this Agreement by or on behalf of Anadys upon written
request therefor by Amgen.

                  (i)      SEVERABILITY. The provisions of this Agreement are
severable. If any item or provision of this Agreement shall to any extent be
invalid or unenforceable, the remainder of


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this Agreement shall not be affected thereby, and each term and provision of
this Agreement shall be valid and shall be enforced to the fullest extent
permitted by law.

                  (j)      FORCE MAJEURE. Neither Party shall be liable for any
delay or failure of performance to the extent such delay or failure is caused by
circumstances beyond its reasonable control and that by exercise of due
diligence it is unable to prevent, provided that the Party claiming excuse uses
and continues to use commercially reasonable efforts to overcome the same.

                  (k)      ENTIRE AGREEMENT; MODIFICATION. This Agreement,
including any exhibits expressly named and referenced herein, and the
[...***...] constitute the entire agreement and understanding of the Parties and
supersedes any prior agreements or understandings relating to the subject matter
hereof. Any modification of this Agreement shall be effective only to the extent
it is reduced to writing and signed by a duly authorized representative of each
Party hereto. No trade customs, courses of dealing or courses of performance by
the Parties will be relevant to modify, supplement or explain any term(s) used
in this Agreement. This Agreement may not be modified or supplemented by any
purchase order, change order, acknowledgment, order acceptance, standard terms
of sale, invoice or the like.

                  (l)      RELATIONSHIP BETWEEN PARTIES. The Parties'
relationship, as established by this Agreement, shall be solely that of
independent contractors. This Agreement does not create or imply the creation of
a partnership, agency, distributorship, employee-employer, joint venture or
similar business relationship between Amgen and Anadys. Neither Party shall have
any authority (actual or apparent) to bind the other, nor to assume or create
any obligation, representation, warranty or guarantee, express or implied, on
behalf of the other Party for any purpose whatsoever. Each Party shall use its
own discretion and shall have complete and authoritative control over its
employees, Affiliates and sublicensees and the details of performing its
obligations under this Agreement.

                  (m)      EXHIBITS. All Exhibits referenced in and attached
hereto are incorporated in this Agreement by reference. In case of any
discrepancies between language incorporated from the Exhibits and the terms of
the Sections, the terms of the Sections shall prevail; provided, however, where
Sections of this Agreement make explicit reference to a substantive matter
contained in an Exhibit, the substantive matter contained in such Exhibit shall
prevail.

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

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The persons executing this Agreement represent and warrant that they have the
full power and authority to cause their respective entities to enter into this
Agreement.

         IN WITNESS WHEREOF the Parties have executed this Agreement as of the
Effective Date by their duly authorized representatives.

ANADYS PHARMACEUTICALS, INC.                 AMGEN INC.

By:                                          By:
   ---------------------------------            --------------------------------
Name: Michael Kamdar                         Name: Paul Reider

Title: Vice President, Corporate             Title: Vice President, Chemical
       Development and Strategy              Research

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                                    EXHIBIT A

                                   [...***...]

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                                       1
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                                    EXHIBIT B

                                  RESEARCH PLAN

                                   [...***...]

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                                       2
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                                    EXHIBIT C

                                   JSC MEMBERS

ANADYS MEMBERS:   [...***...]

AMGEN MEMBERS:    [...***...]

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                                       3