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                                                                   EXHIBIT 10.4

                          ANADYS PHARMACEUTICALS, INC.
                           2002 EQUITY INCENTIVE PLAN

                             STOCK OPTION AGREEMENT
              (INCENTIVE STOCK OPTION OR NONSTATUTORY STOCK OPTION)

         Pursuant to your Stock Option Grant Notice ("Grant Notice") and this
Stock Option Agreement, Anadys Pharmaceuticals, Inc. (the "Company") has granted
you an option under its 2002 Equity Incentive Plan (the "Plan") to purchase the
number of shares of the Company's Common Stock indicated in your Grant Notice at
the exercise price indicated in your Grant Notice. Defined terms not explicitly
defined in this Stock Option Agreement but defined in the Plan shall have the
same definitions as in the Plan.

         The details of your option are as follows:

         1.       VESTING. Subject to the limitations contained herein, your
option will vest as provided in your Grant Notice, provided that vesting will
cease upon the termination of your Continuous Service.

         2.       NUMBER OF SHARES AND EXERCISE PRICE. The number of shares of
Common Stock subject to your option and your exercise price per share referenced
in your Grant Notice may be adjusted from time to time for Capitalization
Adjustments.

         3.       METHOD OF PAYMENT. Payment of the exercise price is due in
full upon exercise of all or any part of your option. You may elect to make
payment of the exercise price in cash or by check or in any other manner
PERMITTED BY YOUR GRANT NOTICE, which may include one or more of the following:

                  (a)      In the Company's sole discretion at the time your
option is exercised and provided that at the time of exercise the Common Stock
is publicly traded and quoted regularly in The Wall Street Journal, pursuant to
a program developed under Regulation T as promulgated by the Federal Reserve
Board that, prior to the issuance of Common Stock, results in either the receipt
of cash (or check) by the Company or the receipt of irrevocable instructions to
pay the aggregate exercise price to the Company from the sales proceeds.

                  (b)      Provided that at the time of exercise the Common
Stock is publicly traded and quoted regularly in The Wall Street Journal, by
delivery of already-owned shares of Common Stock either that you have held for
the period required to avoid a charge to the Company's reported earnings
(generally six (6) months) or that you did not acquire, directly or indirectly
from the Company, that are owned free and clear of any liens, claims,
encumbrances or security interests, and that are valued at Fair Market Value on
the date of exercise. "Delivery" for these purposes, in the sole discretion of
the Company at the time you exercise your option, shall include delivery to the
Company of your attestation of ownership of such shares of Common Stock in a
form approved by the Company. Notwithstanding the foregoing, you may not
exercise your option by tender to the Company of Common Stock to the extent such
tender

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would violate the provisions of any law, regulation or agreement restricting the
redemption of the Company's stock.

         4.       WHOLE SHARES. You may exercise your option only for whole
shares of Common Stock.

         5.       SECURITIES LAW COMPLIANCE. Notwithstanding anything to the
contrary contained herein, you may not exercise your option unless the shares of
Common Stock issuable upon such exercise are then registered under the
Securities Act or, if such shares of Common Stock are not then so registered,
the Company has determined that such exercise and issuance would be exempt from
the registration requirements of the Securities Act. The exercise of your option
also must comply with other applicable laws and regulations governing your
option, and you may not exercise your option if the Company determines that such
exercise would not be in material compliance with such laws and regulations.

         6.       TERM. You may not exercise your option before the commencement
of its term or after its term expires. The term of your option commences on the
Date of Grant and expires upon the earliest of the following:

                  (a)      immediately upon the termination of your Continuous
Service for Cause;

                  (b)      thirty (30) days after the termination of your
Continuous Service for any reason other than Cause, Disability or death,
provided that if during any part of such thirty (30) day period you may not
exercise your option solely because of the condition set forth in the preceding
paragraph relating to "Securities Law Compliance," your option shall not expire
until the earlier of the Expiration Date or until it shall have been exercisable
for an aggregate period of thirty (30) days after the termination of your
Continuous Service;

                  (c)      six (6) months after the termination of your
Continuous Service due to your Disability;

                  (d)      twelve (12) months after your death if you die either
during your Continuous Service or within thirty (30) days after your Continuous
Service terminates for any reason other than Cause;

                  (e)      the Expiration Date indicated in your Grant Notice;
or

                  (f)      the day before the tenth (10th) anniversary of the
Date of Grant.

         If your option is an Incentive Stock Option, note that, to obtain the
federal income tax advantages associated with an Incentive Stock Option, the
Code requires that at all times beginning on the date of grant of your option
and ending on the day three (3) months before the date of your option's
exercise, you must be an employee of the Company or an Affiliate, except in the
event of your death or Disability. The Company has provided for extended
exercisability of your option under certain circumstances for your benefit but
cannot guarantee that your option will necessarily be treated as an Incentive
Stock Option if you continue to provide services to the Company or an Affiliate
as a Consultant or Director after your employment terminates or if you

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otherwise exercise your option more than three (3) months after the date your
employment terminates.

         7.       EXERCISE.

                  (a)      You may exercise the vested portion of your option
(and the unvested portion of your option if your Grant Notice so permits) during
its term by delivering a Notice of Exercise (in a form designated by the
Company) together with the exercise price to the Secretary of the Company, or to
such other person as the Company may designate, during regular business hours,
together with such additional documents as the Company may then require.

                  (b)      By exercising your option you agree that, as a
condition to any exercise of your option, the Company may require you to enter
into an arrangement providing for the payment by you to the Company of any tax
withholding obligation of the Company arising by reason of (1) the exercise of
your option, (2) the lapse of any substantial risk of forfeiture to which the
shares of Common Stock are subject at the time of exercise, or (3) the
disposition of shares of Common Stock acquired upon such exercise.

                  (c)      If your option is an Incentive Stock Option, by
exercising your option you agree that you will notify the Company in writing
within fifteen (15) days after the date of any disposition of any of the shares
of the Common Stock issued upon exercise of your option that occurs within two
(2) years after the date of your option grant or within one (1) year after such
shares of Common Stock are transferred upon exercise of your option.

                  (d)      By exercising your option you agree that the Company
(or a representative of the underwriter(s)) may, in connection with the first
underwritten registration of the offering of any securities of the Company under
the Securities Act, require that you not sell, dispose of, transfer, make any
short sale of, grant any option for the purchase of, or enter into any hedging
or similar transaction with the same economic effect as a sale with respect to,
any shares of Common Stock or other securities of the Company held by you, for a
period of time specified by the underwriter(s) (not to exceed one hundred eighty
(180) days) following the effective date of the registration statement of the
Company filed under the Securities Act. You further agree to execute and deliver
such other agreements as may be reasonably requested by the Company and/or the
underwriter(s) that are consistent with the foregoing or that are necessary to
give further effect thereto. In order to enforce the foregoing covenant, the
Company may impose stop-transfer instructions with respect to your shares of
Common Stock until the end of such period. The underwriters of the Company's
stock are intended third party beneficiaries of this Section 7(d) and shall have
the right, power and authority to enforce the provisions hereof as though they
were a party hereto.

         8.       TRANSFERABILITY. Your option is not transferable, except by
will or by the laws of descent and distribution, and is exercisable during your
life only by you. Notwithstanding the foregoing, by delivering written notice to
the Company, in a form satisfactory to the Company, you may designate a third
party who, in the event of your death, shall thereafter be entitled to exercise
your option.

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         9.       RIGHT OF FIRST REFUSAL.

                  (a)      Shares of Common Stock that you acquire upon exercise
of your option are subject to any right of first refusal that may be described
in the Company's bylaws in effect at such time the Company elects to exercise
its right; provided, however, that if your option is an Incentive Stock Option
and the right of first refusal described in the Company's bylaws in effect at
the time the Company elects to exercise its right is more beneficial to you than
the right of first refusal described in the Company's bylaws on the Date of
Grant, then the right of first refusal described in the Company's bylaws on the
Date of Grant shall apply. The Company's right of first refusal shall expire on
the Listing Date. For purposes of this Agreement, Listing Date shall mean the
first date upon which any security of the Company is listed (or approved for
listing) upon notice of issuance on a national securities exchange or on the
National Market System of the Nasdaq Stock Market (or any successor to that
entity).

                  (b)      If there is no right of first refusal described in
the Company's bylaws in effect at such time the Company elects to exercise its
right, then you may not validly transfer (as hereinafter defined) any of the
shares of Common Stock that you acquire upon exercise of your option, or any
interest in such shares, unless such transfer is solely for cash consideration
and is made in compliance with the following provisions (the Company's "Right of
First Refusal"):

                           (i)      Before there can be a valid transfer of any
shares or any interest therein, the record holder of the shares to be
transferred (the "Offered Shares") shall give written notice (by registered or
certified mail) to the Company. Such notice shall specify the identity of the
proposed transferee, the cash price offered for the Offered Shares by the
proposed transferee and the other terms and conditions of the proposed transfer.
The date such notice is mailed shall be hereinafter referred to as the "notice
date," and the record holder of the Offered Shares shall be hereinafter referred
to as the "Offeror."

                           (ii)     For a period of thirty (30) calendar days
after the notice date, the Company shall have the option, but not the
obligation, to purchase all (or any part) of the Offered Shares at the purchase
price and on the terms set forth in subsection 9(b)(iii). The Company may
exercise its Right of First Refusal by mailing (by registered or certified mail)
written notice of exercise of its Right of First Refusal to the Offeror prior to
the end of said thirty (30) days.

                           (iii)    The price at which the Company may purchase
the Offered Shares pursuant to the exercise of its Right of First Refusal shall
be the cash price offered for the Offered Shares by the proposed transferee (as
set forth in the notice required under subsection 9(b)(i)). The Company's notice
of exercise of its Right of First Refusal shall be accompanied by full payment
for the Offered Shares and, upon such payment by the Company, the Company shall
acquire full right, title and interest to all of the Offered Shares.

                           (iv)     If, and only if, the option given pursuant
to subsection 9(b)(ii) is not exercised, the transfer proposed in the notice
given pursuant to subsection 9(b)(i) may take place; provided, however, that
such transfer must, in all respects, be exactly as proposed in said notice
except that such transfer may not take place either before the tenth (10th)
calendar day after the expiration of said 30-day option exercise period or after
the ninetieth (90th) calendar

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day after the expiration of said 30-day option exercise period, and if such
transfer has not taken place prior to said ninetieth (90th) day, such transfer
may not take place without once again complying with this subsection 9(b).

                           (v)      As used in this subsection 9(b), the term
"transfer" means any sale, encumbrance, pledge, gift or other form of
disposition or transfer of shares of the Company's stock or any legal or
equitable interest therein; provided, however, that the term "transfer" does not
include a transfer of such shares or interests by will or by the applicable laws
of descent and distribution or a bona fide gift of such shares if the donee
agrees to be bound by the provisions of this Stock Option Agreement.

                           (vi)     None of the shares of the Company's stock
purchased upon exercise of your option shall be transferred on the Company's
books nor shall the Company recognize any such transfer of any such shares or
any interest therein unless and until all applicable provisions of this
subsection 9(b) have been complied with in all respects. The certificates of
stock evidencing shares of stock purchased upon exercise of your option shall
bear an appropriate legend referring to the transfer restrictions imposed by
this subsection 9(b).

                           (vii)    If, from time to time, there is any stock
dividend, stock split or other change in the character or amount of any of the
outstanding stock of the corporation the stock of which is subject to the
provisions of your option, then in such event any and all new, substituted or
additional securities to which you are entitled by reason of your ownership of
the shares acquired under your option shall be immediately subject to the
Company's Right of First Refusal with the same force and effect as the shares
you acquired pursuant to the exercise of your option.

                           (viii)   To ensure that shares subject to the
Company's Right of First Refusal will be available for purchase by the Company,
the Company may require you to deposit the certificate(s) evidencing the shares
that you purchase upon exercise of your option with an escrow agent designated
by the Company under the terms and conditions of an escrow agreement approved by
the Company. If the Company does not require such deposit as a condition of
exercise of your option, the Company reserves the right at any time to require
you to so deposit the certificate(s) in escrow. As soon as practicable after the
expiration of the Company's Right of First Refusal, the agent shall deliver to
you the shares and any other property no longer subject to such restriction. In
the event the shares and any other property held in escrow are subject to the
Company's exercise of its Right of First Refusal, the notices required to be
given to you shall be given to the escrow agent, and any payment required to be
given to you shall be given to the escrow agent. Within thirty (30) days after
payment by the Company for the Offered Shares, the escrow agent shall deliver
the Offered Shares that the Company has purchased to the Company and shall
deliver the payment received from the Company to you.

                  (c)      The Company's Right of First Refusal shall expire on
the Listing Date.

         10.      RIGHT OF REPURCHASE. To the extent provided in the Company's
bylaws in effect at such time the Company elects to exercise its right, the
Company shall have the right to repurchase all or any part of the shares of
Common Stock you acquire pursuant to the exercise of your option.

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         11.      OPTION NOT A SERVICE CONTRACT. Your option is not an
employment or service contract, and nothing in your option shall be deemed to
create in any way whatsoever any obligation on your part to continue in the
employ of the Company or an Affiliate, or of the Company or an Affiliate to
continue your employment. In addition, nothing in your option shall obligate the
Company or an Affiliate, their respective stockholders, Boards of Directors,
Officers or Employees to continue any relationship that you might have as a
Director or Consultant for the Company or an Affiliate.

         12.      WITHHOLDING OBLIGATIONS.

                  (a)      At the time you exercise your option, in whole or in
part, or at any time thereafter as requested by the Company, you hereby
authorize withholding from payroll and any other amounts payable to you, and
otherwise agree to make adequate provision for (including by means of a
"cashless exercise" pursuant to a program developed under Regulation T as
promulgated by the Federal Reserve Board to the extent permitted by the
Company), any sums required to satisfy the federal, state, local and foreign tax
withholding obligations of the Company or an Affiliate, if any, which arise in
connection with the exercise of your option.

                  (b)      Upon your request and subject to approval by the
Company, in its sole discretion, and compliance with any applicable legal
conditions or restrictions, the Company may withhold from fully vested shares of
Common Stock otherwise issuable to you upon the exercise of your option a number
of whole shares of Common Stock having a Fair Market Value, determined by the
Company as of the date of exercise, not in excess of the minimum amount of tax
required to be withheld by law (or such lower amount as may be necessary to
avoid variable award accounting). If the date of determination of any tax
withholding obligation is deferred to a date later than the date of exercise of
your option, share withholding pursuant to the preceding sentence shall not be
permitted unless you make a proper and timely election under Section 83(b) of
the Code, covering the aggregate number of shares of Common Stock acquired upon
such exercise with respect to which such determination is otherwise deferred, to
accelerate the determination of such tax withholding obligation to the date of
exercise of your option. Notwithstanding the filing of such election, shares of
Common Stock shall be withheld solely from fully vested shares of Common Stock
determined as of the date of exercise of your option that are otherwise issuable
to you upon such exercise. Any adverse consequences to you arising in connection
with such share withholding procedure shall be your sole responsibility.

                  (c)      You may not exercise your option unless the tax
withholding obligations of the Company and/or any Affiliate are satisfied.
Accordingly, you may not be able to exercise your option when desired even
though your option is vested, and the Company shall have no obligation to issue
a certificate for such shares of Common Stock or release such shares of Common
Stock from any escrow provided for herein unless such obligations are satisfied.

         13.      NOTICES. Any notices provided for in your option or the Plan
shall be given in writing and shall be deemed effectively given upon receipt or,
in the case of notices delivered by mail by the Company to you, five (5) days
after deposit in the United States mail, postage prepaid, addressed to you at
the last address you provided to the Company.

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         14.      GOVERNING PLAN DOCUMENT. Your option is subject to all the
provisions of the Plan, the provisions of which are hereby made a part of your
option, and is further subject to all interpretations, amendments, rules and
regulations, which may from time to time be promulgated and adopted pursuant to
the Plan. In the event of any conflict between the provisions of your option and
those of the Plan, the provisions of the Plan shall control.

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