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                                                                    EXHIBIT 10.3

                               FINANCIAL COVENANTS

                                ADDENDUM NO. 001

                          TO MASTER SECURITY AGREEMENT

                          DATED AS OF DECEMBER 22, 2004

THIS ADDENDUM NO. 001 (this "ADDENDUM NO. 001") is made as of the 22 day of
December 2004, amends and supplements the above referenced agreement (the
"AGREEMENT"), between GENERAL ELECTRIC CAPITAL CORPORATION (together with its
successors and assigns, if any, "SECURED PARTY") and ALKERMES, INC. ("DEBTOR")
and is hereby incorporated into the Agreement as though fully set forth therein.
Capitalized terms not otherwise defined herein shall have the meanings set forth
in the Lease.

The Agreement is hereby amended by adding the following:

      FINANCIAL COVENANTS.

      "(a) Debtor shall, at all times during the term of the Agreement, comply
with the following:

      Maintain minimum Unrestricted Cash (as defined below) equal to the greater
of (i) $50,000,000 or (ii) 6 months of Monthly Cash Burn (as defined below).
Unrestricted Cash is defined as cash, cash equivalents and investments in
marketable securities with maturities of less than 12 months, less any such
cash, cash equivalents and investments in marketable securities pledged to other
parties. Monthly Cash Burn is defined as the sum of net income (or loss) plus
non-cash charges for the most recent 3 months ended divided by 3, minus current
portions of long-term debt divided by 12. Long-term debt shall include all
indebtedness for borrowed money, other than indebtedness of limited-purpose or
special-purpose subsidiaries of Debtor which indebtedness is non-recourse to
Debtor so long as the terms and conditions of the governing documents of each
such subsidiary and the purchase and sale agreement between Debtor and each such
subsidiary are satisfactory to Secured Party.

      All financial items in the preceding paragraph shall be derived in
accordance with generally accepted accounting principles in the United States of
America ("GAAP").

      If this covenant is violated, Debtor will (i) provide Secured Party within
ten (10) business days of such occurrence a security deposit in an amount equal
to 75% of Debtor's then obligations to Secured Party under the Agreement and
(ii) execute any documentation requested by Secured Party related to the
security deposit."

       (b) COMPLIANCE REPORTS. Debtor's Authorized Representative shall certify
periodically that Debtor is in compliance with the requirements of subsection
(a) above. Such notification and certification shall be provided within thirty
(30) days after the end of each fiscal

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month (the "COMPLIANCE DATE"), reflecting such information as of the end of such
fiscal month. If Debtor fails timely to provide such notification and compliance
certificates, within fifteen (15) days after the Compliance Date, such failure
shall be deemed a default under the Agreement if not cured within two (2)
business days after notice from Secured Party. The reports required under this
section are in addition to and not a substitute for the reports required under
the REPORTS Section of the Agreement.

Except as expressly modified hereby, all terms and provisions of the Agreement
shall remain in full force and effect. This Addendum No.00l is not binding or
effective with respect to the Agreement until executed on behalf of Secured
Party and Debtor by authorized representatives of Secured Party and Debtor.

 IN WITNESS WHEREOF, Debtor and Secured Party have caused this Addendum No.
 001 to be executed by their duly authorized representatives as of the date
 first above written.

 SECURED PARTY:                                 DEBTOR:

 GENERAL ELECTRIC CAPITAL CORPORATION           ALKERMES, INC.

 By: /s/ John Edel                              By: /s/ James Frates
     -------------                                  ----------------
 Name: John Edel                                Name: James Frates

 Title: SVP                                     Title: VP

 ATTEST

 By:_______________________________________

 Name:_____________________________________