exv10w21



 





Exhibit 10.21




[Anadys Logo]




VIA HAND DELIVERY



June 21, 2006




James L. Freddo, M.D.

13876 Mira Montana Drive

Del Mar, CA 92014



Dear Dr. Freddo,



I am very pleased to confirm the offer of employment made to you by Anadys Pharmaceuticals, Inc.
for the position of Chief Medical Officer, reporting to Stephen T. Worland, Ph.D., President,
Pharmaceuticals. We anticipate your hire date to be no later than July 10th, 2006. As
we discussed, the details of this offer are as follows:




	 	 	 
	BASE SALARY:

	 	You will receive a base salary of $13,125.00 paid
semi-monthly in accordance with the normal Anadys payroll
cycle, which if annualized, amounts to $315,000 per year.
	 
	 	 
	STOCK OPTIONS:

	 	Upon commencement of your employment with Anadys and subject
to the approval of the Board of Directors, you will be
eligible for an initial stock option grant allowing you to
purchase 200,000 shares of Anadys common stock at a price
established by the Board. These stock options vest over a
four-year period and are subject to the terms and conditions
outlined in the Anadys 2004 Equity Incentive Plan (the
“Plan”). You will be provided full details of the Plan once
you begin employment.
	 
	 	 
	SIGN-ON BONUS:

	 	As a further incentive for you to join Anadys, you will be
given a one-time sign-on bonus of $75,000, less applicable
employment taxes. This bonus will be paid to you within the
first payroll after your hire date. Should you leave the
Company within one year of your hire date, you will be
required to reimburse Anadys for this sign-on bonus within
thirty days after your termination date.
	 
	 	 
	ANNIVERSARY
BONUS:

	 	As a further incentive, you will be given an additional bonus
(less applicable employment taxes) which will be granted to
you on your anniversary date according to the following
schedule:
	 
	 	 
	 

	 	•   $50,000 on July 10th 2007

	 
	 	 
	 

	 	•   $50,000 on July 10th 2008

	 
	 	 
	 

	 	•   $50,000 on July 10th 2009

	 
	 	 
	 

	 	•   $50,000 on July 10th 2010

	 
	 	 
	 

	 	•   $50,000 on July 10th 2011







 









 






James L. Freddo, M.D.

June 21, 2006




	 	 	 
	 

	 	You must be employed by Anadys on the anniversary date of the grant to be
granted this additional bonus. Should you leave the Company within one year
of said grant, you will be required to reimburse Anadys for this additional
bonus within thirty days after your termination date.
	 
	 	 
	BONUS:

	 	You will be eligible to receive an annual discretionary bonus of
between 0 — 30% of your then current annual base salary,
contingent upon your own and the Company’s performance.
	 
	 	 
	BENEFITS:

	 	You will be eligible for group benefits for yourself and your
eligible dependents, effective the first day of the month
following your date of hire, subject to the terms and conditions
of the relevant insurance plan. Basic benefits include
comprehensive health insurance; dental insurance, and vision
care insurance. In addition, you will be eligible for term life
insurance and long-term disability insurance for yourself only.
You will be eligible to participate in the Anadys 401K plan as
well as the Anadys ESPP (Employee Stock Purchase Plan), all in
accordance with Company policy. You will also accrue a pro-rata
share of fifteen days of paid vacation per year, and be eligible
for paid holidays, all in accordance with Company policy.


Effective on the first day of the quarter following your hire date, you will
be eligible to participate in the Anadys 401(k) Retirement Savings Plan.
	 
	 	 
	CHANGE IN
CONTROL:

	 	Subject to approval by the Compensation Committee of the Board
of Directors, it is anticipated that you will be granted the
Change in Control benefits outlined in this section; however,
the applicability of this section is expressly contingent on
approval by the Compensation Committee. Contingent upon
Compensation Committee approval you will be provided with a
Change in Control Agreement (the “Agreement”) which will
provide that in the event that your employment with the Company
is terminated without Cause (as defined in the Agreement ) or
for Good Reason (as defined in the Agreement) within the sixty
(60) day period immediately preceding or the thirteen (13)
month period immediately following a Change in Control (as
defined in the Agreement) of the Company, then upon your
delivery to the Company of an effective Waiver and Release (in
the form attached to the Agreement), you shall be entitled to:
	 

	 	(a) the equivalent of six (6) months of your annual base salary
in effect at the time of termination, less standard deductions
and withholdings, and (b) accelerated vesting of all unvested
shares subject to any outstanding stock options then held by
you, such that all shares shall be vested and fully exercisable
as of the date of your termination.
	 
	 	 
	EMPLOYMENT
AT WILL:

	 	Anadys is an at-will employer and as such your employment must
be entered into voluntarily and for no specified period. As a
result, you are free to resign






 









 






James L. Freddo, M.D.

June 21, 2006




	 	 	 
	 

	 	or the company may terminate your employment at any time, for any reason,
with or without cause. No one other than the President and CEO has the
authority to alter this employment relationship, either verbally or in
writing.





Anadys Pharmaceuticals, Inc. expects that you will not disclose to it any proprietary information
or trade secrets of any former employer or bring onto its premises any unpublished documents or any
property belonging to any former employer. Since this would be improper, such conduct could be a
basis for discipline up to and including termination.



The above is subject to your signing non-disclosure, invention assignment and non-compete
agreements with the Company, and the Company’s review of any agreement you may have with former
employers to ensure that they do not conflict with your employment with the Company. In addition,
within three days after your date of hire, you will be required to submit proof of identity and
eligibility to work in the United States, in compliance with federal immigration laws.



This offer has been extended to you on behalf of Anadys Pharmaceuticals, Inc. and is valid through
Saturday, June 24, 2006 by no later than 5:00 p.m. after which time it will expire.



Jim, we believe you will be able to make an immediate contribution to Anadys’ effort, and think you
will enjoy the rewards of working for an innovative, fast-paced, energetic company. One of the keys
to our accomplishments is our outstanding people. We hope you accept our offer to be one of those
people. Please acknowledge your agreement of these terms by signing this letter and returning it to
my attention in the enclosed envelope.




Sincerely yours,

ANADYS PHARMACEUTICALS, INC.




/s/ Mary
Glanville                                 



Mary Glanville.

Vice President, Human Capital



I hereby accept this offer of employment and accept the terms as stated above. I understand that as
an employee of Anadys, I will be expected to comply with all Company policies:




	 	 	 	 	 
	/s/ James L. Freddo

	 	June 23, 2006
	 	 
	 	 	 
	James L. Freddo, M.D.

	 	Date