**AMENDMENT NO. 3 TO**

**RESEARCH COLLABORATION AND LICENSE AGREEMENT**

ThisAmendment No. 3 to the Research Collaboration and License Agreement (the “Amendment #3”), effective as of September 2, 2009, modifies certain provisions of the Research Collaboration and License Agreement, entered into as ofNovember 24, 2004, as amended by Amendment No. 1 dated March 26, 2007, and Amendment No. 2 dated January 15, 2009, (as previously amended, the “Agreement”) between Achillion Pharmaceuticals, Inc., 300 GeorgeStreet, New Haven, Connecticut 06511 (“Achillion”), and Gilead Sciences, Inc., 333 Lakeside Drive, Foster City, California 94404 (“Gilead”). Capitalized terms used and not otherwise defined herein shall have the meanings assignedto such terms in the Agreement. 

WHEREAS, the Parties arrived at different opinions on the appropriate furtherprogression of ACH-1095 (defined below), the current Lead Compound; 

WHEREAS, the Parties have decided, amongother things, to permit Achillion to clinically Develop ACH-1095 at its own cost, and to make all decisions with respect thereto, subject to Achillion granting Gilead options to again participate in the Development and commercialization of ACH-1095,such options to be exercised, if at all, on or before the end of the Interim Period (defined below); 

WHEREAS,the Parties also desire to amend certain other provisions of the Agreement; 

NOW, THEREFORE, inaccordance with Section 12.12 of the Agreement, Gilead and Achillion hereby modify the Agreement as follows: 

1. **NewDefinitions****.** Section 1 of the Agreement is amended by adding the following definitions: 

““**ACH-1095**” means the Compound known as ACH-1095 (also known as GS-9525).” 

““**Amendment #3 Effective Date**” means September 2, 2009.” 

““**InterimPeriod**” means the period beginning on the Amendment #3 Effective Date and continuing until the earliest of (a) Gilead’s exercise of its opt-in right pursuant to Section 2A.2, (b) forty-five (45) days afterGilead’s receipt of a POC Notice, (c) forty-five (45) days after Gilead’s receipt of a POC Failure Notice.” 

““**Other Compounds**” means Compounds other than ACH-1095.” 

2. **Further Amendment ofExhibit 1.2.** Exhibit 1.2, as previously amended, is hereby amended by inserting the following sentence at the end thereof: 

“Notwithstanding the foregoing, Compounds shall exclude compounds that have not been conceived, made or identified by either Party prior to the Amendment #3 Effective Date.” 

 

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3. **Amendment of Exhibit 1.3.**Exhibit 1.3 is hereby restated in its entirety to readas follows: 

“ “Proof of Concept” means: 

Demonstration of [**]. 

A clinical study of suitable design as described in the prior paragraph[**] from the contract research organization(s) implementing the study.” 

4. **Amendment of Exhibit 2.2.**The sectionof Exhibit 2.2 entitled “Phase 1b Proof-of-Concept Study in HCV Infected Patients” is hereby restated in its entirety to read as follows: 

****“**Phase 1b [**]**

This study will [**] into longer-term studies. This study will [**]. This study will [**],will be agreed to by the Research Committee. [**], the Parties will agree [**] 

5. **Interim Period Activities****.**The following provisions are added as new Section 2A of the Agreement, immediately before Section 3 of the Agreement: 

“**2AINTERIM PERIOD ACTIVITIES**. 

**2A.1*****Interim PeriodActivities*****.** The Parties agree that, notwithstanding anything to the contrary in the Agreement, the following rights and obligations shall apply during the Interim Period: 

(a) Gilead shall not conduct research on, or Develop, ACH-1095; 

(b) the Research Committee shall have no authority with respect to ACH-1095; 

(c) Achillion may conduct, and have sole decision-making authority with respect to, any research and Development activities with respect toACH-1095, in Achillion’s discretion and at Achillion’s expense, without input from the Research Committee or Gilead; provided, however, that Achillion will provide Gilead with regular updates in writing no less than once per calendarquarter summarizing Achillion’s research and Development activities with respect to ACH-1095; 

(d) Achillion shall hold apre-IND consultation with the FDA to determine a possible path to Develop ACH-1095 (the “**FDA Meeting**”); 

(e)Achillion shall provide Gilead with copies of all material correspondence sent to and received from the FDA with respect to ACH-1095; 

 

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(f) Gilead shall not exercise any rights under the license granted to Gilead pursuant toSection 5.1 with respect to ACH-1095 and any Licensed Product containing ACH-1095, and Gilead shall not sublicense any rights thereunder, nor shall Gilead grant any rights to, or enter any agreement with, any Third Party for the sale of anyLicensed Product containing ACH-1095; 

(g) the provisions of Section 9.2(a)(ii) shall apply with respect to any PatentCosts for Achillion Patents; 

(h) the diligence obligations set forth in Section 9.2(c) shall only apply to AchillionPatents relating to ACH-1095 or a Licensed Product containing ACH-1095, provided, however, that Achillion’s rights set forth in Section 9.2(b) with respect to Achillion Patents that are abandoned by Gilead shall remain in full force andeffect with respect to any Achillion Patent; 

(i) the provisions of Section 2.4(c) shall remain in effect with respect toany Research Costs incurred with respect to ACH-1095 on or before the Amendment #3 Effective Date; 

(j) Gilead shall not beresponsible for Research Costs incurred on or after the Amendment #3 Effective Date unless Gilead (i) provides written notice of its intention to do so, or (ii) exercises its opt-in right pursuant to Section 2A.2(a) or 2A.2(b), inwhich case such Research Costs will be reimbursed in accordance with Section 2A.3; 

(k) Achillion shall be solelyresponsible for the US$[**] IND filing milestone payment due to Chiron Corporation pursuant to Section 3.1.7(a) of the License Agreement dated [**] by and between Chiron Corporation and Gilead (the “**Chiron License**”) (or, ifsuch milestone payment amount is reduced pursuant to any applicable provision of the Chiron License, the reduced milestone payment amount), if such milestone payment becomes due based on Achillion’s research and Development activities withrespect to ACH-1095 during the Interim Period; and 

(l) except as provided in this Section 2A, all provisions of theAgreement shall remain in effect with respect to the Other Compounds during the Interim Period. 

**2A.2*****Opt-InRight*****.**

(a) Achillion shall promptly notify Gilead in writing of the outcome of the FDA Meeting, andcontemporaneously shall provide Gilead with copies of all material correspondence sent to and received from the FDA pertaining to such FDA Meeting to the extent not already provided pursuant to Section 2A.1(e) above (such notice andcorrespondence, collectively the “**FDA Meeting Notice**”). Gilead may exercise its right to fully participate in the Development and commercialization of ACH-1095 and to continue the Development and commercialization of the OtherCompounds, and Licensed Products containing any of the Compounds, by delivering written notice of such exercise to Achillion within thirty (30) days after Gilead’s receipt of the complete FDA Meeting Notice. 

 

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(b) Achillion shall promptly notify Gilead upon establishment of Proof of Concept forACH-1095, which notice shall include (i) a full disclosure of all materially relevant data as described in Exhibit 1.3 and Exhibit 2.2, and (ii) a reasonable estimate of the Research Costs that Gilead would be required to reimburse inaccordance with Section 2A.3 below (such notice, data and cost estimate, collectively the “**POC Notice**”). Gilead may exercise its right to fully participate in the Development and commercialization of ACH-1095 and to continuethe Development and commercialization of the Other Compounds, and Licensed Products containing any of the Compounds, by delivering written notice of such exercise to Achillion within forty five (45) days after Gilead’s receipt of thecomplete POC Notice. 

(c) Achillion shall promptly notify Gilead upon Achillion’s failure to establish Proof of Conceptafter Achillion conducts a phase 1b proof-of-concept study in HCV-infected patients, which notice shall include (i) a full disclosure of all materially relevant data generated in the course of Achillion’s research and DevelopmentActivities during the Interim Period, and (ii) a reasonable estimate of the Research Costs that Gilead would be required to reimburse in accordance with Section 2A.3 below (such notice, data and cost estimate, collectively the “POCFailure Notice”). Gilead may exercise its right to fully participate in the Development and commercialization of ACH-1095 and to continue the Development and commercialization of the Other Compounds, and Licensed Products containing any of theCompounds, by delivering written notice of such exercise to Achillion within forty five (45) days after Gilead’s receipt of the complete POC Failure Notice. 

(d) Except as expressly set forth in Sections 2A.1, 2A.2(a), 2A.2(b) and 2A.2(c), Gilead shall have no other right to participate in the Development and commercialization of ACH-1095, or any LicensedProducts containing ACH-1095, during the Interim Period. 

**2A.3*****Effects of Opt-In*****.**

(a) Following Achillion’s receipt of Gilead’s notice of exercise of its opt-in right pursuant to Section 2A.2(a), 2A.2(b) or2A.2(c) (the date of such receipt, the “**Opt-In Date**”), the Agreement shall apply in full, subject to the following**:**(i) the Parties shall again bear all Research Costs incurred thereafter in accordance withSection 2.4(c); (ii) all rights and obligations described as applying upon or after the “establishment of Proof of Concept” (or words of similar effect) shall apply upon or after the later of (A) the Opt-In Date or(B) the establishment of Proof of Concept; and (iii) notwithstanding Section 3.1(a), if the Opt-In Date occurs after the establishment of Proof of Concept, the Development Committee shall be established within ten (10) days afterthe Opt-In Date. 

(b) If Gilead exercises its opt-in right pursuant to Section 2A.2(b) or 2A.2(c), Achillion shallprovide Gilead with an invoice for (i) all Research Costs with respect to conducting research and Development activities with respect to ACH-1095 directed to establishing Proof of Concept pursuant to clause (b) of the “ResearchCosts” definition and incurred by Achillion between the Amendment #3 Effective Date and the Opt-In Date (for which purpose all of Achillion’s reasonable and actual out-of-pocket costs for activities with respect to

 

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the clinical Development of ACH-1095 shall be deemed to have been approved in advance by the Research Committee, to have been reflected in, and consistent with, the Research Plan and the Budgetand to be activities required for obtaining Proof of Concept, for purposes of the “External Research Costs” and “Research Costs” definitions) and (ii) any amount paid by Achillion to Chiron Corporation pursuant toSection 2A.1(k). Gilead shall pay the invoiced amount to Achillion within sixty (60) calendar days after Gilead’s receipt of such invoice. 

**2A.4*****Failure to Opt-In*****.** If Achillion provides a POC Notice under Section 2A.2(b) or a POC Failure Notice under Section 2A.2(c) and Gilead does not exercise its opt-inright pursuant to Section 2A.2(a), 2A.2(b) or 2A.2(c) on or before the expiration of the Interim Period, then ACH-1095 shall cease to be a Compound (and shall cease to be the Lead Compound) under this Agreement, and, with respect to ACH-1095,this Agreement shall be deemed to have been terminated by Gilead in accordance with Section 10.2. The Parties shall discuss whether any Other Compound shall be designated as the Lead Compound, and Gilead will have the sole discretion whether tomake any such designation. If Gilead elects to make such designation, then this Agreement shall remain in force with respect to the Other Compounds; providedthat, (a) concurrently with such designation, Gilead shall provide toAchillion a reasonable plan for the Development of such Lead Compound, (b) thereafter Gilead shall commence preclinical Development of such Lead Compound within one hundred twenty (120) days after such designation and use CommerciallyDiligent Efforts to Develop, commercialize and market at least one Licensed Product in the HCV Field in each Major Market, and (c) the Parties shall again bear all Research Costs incurred thereafter in accordance with Section 2.4(c) withrespect to such Lead Compound. If no such designation is made prior to the expiration of the Interim Period, then the Agreement shall be deemed to have been terminated in its entirety by Gilead in accordance with Section 10.2, effective uponthe expiration of the Interim Period, with the effects described in Section 10.4(a), 10.4(d) and 10.5.” 

6.**Amendment of Section 10.2.** Section 10.2 of the Agreement is hereby restated in its entirety to read as follows: 

“***Elective Termination by Gilead*****.******** Gilead shall have the right in its sole discretion and for any reason to terminate this Agreement in its entirety at any time upon thirty (30) days advancewritten notice to Achillion.” 

7. **Supply of Existing Quantities of ACH-1095.** At any time during the InterimPeriod, Achillion shall have the option to request the transfer of Gilead’s existing inventory of ACH-1095 to Achillion. The terms and conditions governing any such transfer and Achillion’s subsequent use of such ACH-1095 shall be the sameas set forth in Section 10.4(b)(vii) of the Agreement with respect to Licensed Product supplied by Gilead thereunder. 

8.**No Other Amendment.** Except as expressly set forth herein, the amendment provided herein shall not, by implication or otherwise, limit, constitute a waiver of, or otherwise affect the rights and remedies of Gilead or Achillion under theAgreement, nor shall it constitute a waiver of any default, nor shall it alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Agreement. The amendment provided herein shallapply and be effective only with respect to the provisions of the Agreement specifically referred by this Amendment #3. 

 

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9. **Governing Law.** This Amendment #3 shall be governed and construed in accordancewith the laws of the State of New York, except for any of its choice of law rules that would require the application of the laws of another jurisdiction. 

10. **Counterparts.** This Amendment #3 may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall be one and the same document. 

*[Remainder of Page Intentionally Left Blank]*

 

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IN WITNESS WHEREOF, the Parties hereto have executed this Amendment #3 as of the date firstabove written. 

 
ACHILLION PHARMACEUTICALS, INC.By: 
/s/ Michael D. Kishbauch
 Name: Michael D. Kishbauch Title: President and CEOGILEAD SCIENCES, INC.By: 
/s/ John F. Milligan
 Name: John F. Milligan, Ph.D. Title: President and COO
 

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