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                                                                    EXHIBIT 10.7

                      FIRST AMENDMENT TO SUBLEASE AGREEMENT
                                     between
                       SRM/PCCP HARBOR BAY ASSOCIATES, LLC
                                       and
                         PENINSULA PHARMACEUTICALS INC.

         This First Amendment to Sublease ("First Amendment"), dated as of
November 1, 2003 (the "Execution Date"), is made by and between SRM/PCCP HARBOR
BAY ASSOCIATES, LLC, a Delaware limited liability company (Master Landlord and
Sublessor, hereinafter referred to as "Landlord") and PENINSULA PHARMACEUTICALS
INC., a Delaware corporation (previous Subtenant and now direct Tenant, and for
clarity herein referred to as "Peninsula" and in the Sublease as "Subtenant" or
"Tenant").

                                    RECITALS

A.       Sumitomo Bank Leasing and Finance, Inc., ("Sumitomo") and Lucent
Technologies Inc. predecessor-in-interest to Landlord ("Lucent") previously
entered into that certain Master Lease of Land and Improvements dated as of May
4, 2000 (the "Master Lease") for the entire Lucent Technology Campus (now known
as The Waterfront at Harbor Bay Business Park), including the building located
at 1701 Harbor Bay Parkway, Alameda, California (the "1701 Building").

B.       Lucent and Peninsula previously entered into that certain Sublease
Agreement dated as of October 30, 2002, (the "Sublease") for approximately 7,500
rentable square feet of leased premises in the 1701 Building (the "Subleased
Premises").

C.       Sumitomo previously assigned its rights and interest under the Master
Lease to Lucent and in connection with the previous sale of the Lucent
Technology Campus, Lucent assigned its rights and interest in the Master Lease
and Sublease to Landlord.

D.       By means of an Estoppel Certificate dated as of May 20, 2003, Peninsula
agreed and acknowledged (i) the assignment of Lucent's interest in the Master
Lease to Landlord with respect to the Subleased Premises and (ii) the assignment
of the Sublease, effecting Peninsula to become the direct Tenant to Landlord. In
turn, Landlord has recognized the Sublease with Peninsula.

E.       Peninsula now desires, among other things, to increase the amount of
square footage leased from the Landlord on the Lucent Technology Campus, move to
an adjacent building in the Lucent Technology Campus located at 1751 Harbor Bay
Parkway (the "1751 Building"), and extend the term of the Sublease and
underlying applicable Master Lease, and Landlord has agreed to such
modification, upon all of the terms and conditions contained in this Amendment.

G.       Unless otherwise specified, capitalized terms are used herein as such
terms are defined in the Master Lease and Sublease.

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NOW, THEREFORE, in consideration of the mutual terms and conditions contained in
this First Amendment, and for other valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties agree as follows:

                                    AGREEMENT

1.       Amendment of Property. The definition of "Property" shall be deleted
         and replaced with the following new definition:

         "Property" means certain land and property referred to as The
         Waterfront at Harbor Bay Business Park, located at Harbor Bay Parkway,
         Alameda, California, consisting of 6 buildings, including the 1701
         Building and the 1751 Building, and containing a total of 379,640
         rentable square feet.

2.       Amendment of Building. Commencing upon November 1, 2003, the definition
         of "Building" shall be amended to include the 1751 Building. Commencing
         on January 1, 2004, the definition of "Building" shall be further
         amended to delete from such definition the 1701 Building.

3.       Amendment of Subleased Premises. The Subleased Premises as set forth in
         Section 1(a) of the Sublease are hereby modified as follows:

                  Commencing upon November 1, 2003, the definition of "Subleased
                  Premises" shall be amended to include 12,358 rentable square
                  feet ("rsf"), measured in accordance with the current BOMA
                  standard, on the second floor of 1751 Harbor Bay Parkway (the
                  "1751 Building") as more specifically shown on the attached
                  EXHIBIT A-1. Commencing on January 1, 2004, the definition of
                  "Subleased Premises" shall be amended to delete all rentable
                  square footage in the 1701 Building. The Landlord acknowledges
                  and agrees that, during the period commencing on November 1,
                  2003 and expiring on December 31, 2003, Peninsula shall only
                  be required to pay Base Rent for that portion of the Subleased
                  Premises located in the 1701 Building.

4.       Deletion of Section 1(b). Section 1(b) of the Sublease shall be deleted
         in its entirety.

5.       Amendment of Section 2. Section 2 of the Sublease shall be deleted in
         its entirety and replaced with the following new Section 2:

         "2. Termination of Prime Lease. The parties understand and acknowledge
         that the Prime Lease has been terminated, Landlord is now the fee owner
         of the Property, and the Sublease is now a direct lease between
         Peninsula and Landlord. Notwithstanding the termination of the Prime
         Lease, those provisions of the Prime Lease applicable to the Subleased
         Premises remain incorporated into the Sublease. The terms of the
         leasehold arrangement between Landlord and Tenant are set out

<PAGE>

         in the Prime Lease and this First Amendment to Sublease Agreement, and
         are referred to collectively as the "Lease."

6.       Deletion of Section 3. Section 3 of the Sublease shall be deleted in
         its entirety.

7.       Amendment of Section 4. Section 4 of the Sublease shall be deleted in
         its entirety and replaced with the following new Section 4:

         "4. Obligations under Prime Lease. Sublandlord shall be deemed the
         Prime Landlord under the Prime Lease, and shall be required to perform
         those obligations of the Prime Landlord under the Prime Lease, and
         shall be liable to Peninsula for a breach of all covenants,
         representations, or other undertakings under the Prime Lease that are
         applicable to the Subleased Premises."

8.       Amendment of Term. The definition of "Expiration Date" in Section 5(a)
         of the Sublease shall be changed from 11:59 a.m. on July 31, 2004, to
         11:59 p.m. on December 31, 2008.

9.       Amendment of Exhibit B. As of January 1, 2004, Exhibit B to the
         Sublease shall be replaced in its entirety with the new Exhibit B-1
         "Furniture Inventory" attached to this First Amendment. Tenant has had
         the opportunity to inspect the existing phone and data wiring in the
         1751 Building, and accepts such pre-existing phone and data wiring "As
         Is" "Where Is". During the Term, Tenant shall have access to the
         communications closet on the first floor of the 1751 Building through
         which telecommunications lines enter the 1751 Building and are directed
         to the second floor of the 1751 Building (the "Communications Closet").
         Tenant shall have the right to route phone and data lines from the
         Communications Closet to the Subleased Premises. Landlord covenants
         that at all times during the Term, the Communications Closet shall be a
         Common Area of the 1751 Building that is accessible to all tenants of
         the 1751 Building, including Tenant.

         Part of the Subleased Premises in the 1751 Building includes a server
         room that does not currently have any entry into the Subleased
         Premises, but instead has only an entry from the Common Area of the
         1751 Building (the "Server Room"). Tenant shall have the option, at its
         expense but subject to Landlords approval of final plans,
         specifications and permits, which approval shall not be unreasonably
         withheld, to create a doorway entry that will open directly from the
         Subleased Premises into the Server Room. In addition, Tenant shall have
         the option, at its expense, to deactivate (per instruction from
         Netversant who is Landlord's security consultant) all keycard access to
         the entry of the Server Room from the Common Area of the 1751 Building
         and install a deadbolt or other locks on such entry in order to prevent
         any access to the Server Room from the Common Area of the 1751
         Building. At Landlord's option at the end of the Term, Tenant shall
         remove the entry to the Server Room from the Subleased Premises and
         restore said area to the condition and finish that exists as of the
         Execution Date.

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10.      Amendment of Base Rent. The monthly Base Rent as last set forth in
         Section 7(a) of the Sublease is hereby amended as of January 1, 2004 to
         read as follows:

                  (a)      For the period commencing January 1, 2004 through
         December 31, 2004 (such period, "Year 1"), the total Rent payable by
         Tenant each month shall be equal to $19,772.80, which amount is equal
         to $1.60 per rsf multiplied by 12,358 rsf. Tenant shall not owe any
         other rent amounts to Landlord for Year 1 including, without
         limitation, Additional Rent under Section 7(c); provided, however,
         Tenant shall owe any additional charges for Tenant's non-Business Hours
         utility usage. For clarity, Landlord shall bear all Operating Expenses
         and Taxes during Year 1 and Tenant shall bear all Base Rent and charges
         for Tenant's non-Business Hours utility charges, as applicable, during
         Year 1. Landlord shall provide an invoice to Tenant for Tenant's
         non-Business Hours charges, if any, and Tenant shall pay such invoice
         within thirty (30) days of its receipt thereof. Tenant shall have the
         right to audit Landlord's records to determine the accuracy of the
         invoiced amounts in accordance with the audit procedures set forth in
         Section 8.3(e).

                           Thereafter during the Term, the Base Rent payable by
         Tenant shall be as follows:

<TABLE>
<CAPTION>
          Months                             Monthly Base Rent
          ------                             -----------------
<S>                                         <C>
1/05 through 12/05 ("Year 2")               $14,211.70 per month
1/06 through 12/06 ("Year 3")               $14,829.60 per month
1/07 through 12/07 ("Year 4")               $15,447.50 per month
1/08 through 12/08 ("Year 5")               $16,065.40 per month
</TABLE>

11.      Amendment of Operating Costs. Commencing on January 1, 2005, the terms
         of the Sublease shall be amended from an industrial gross/full service
         to a triple net basis. Section 8 of the Sublease shall be deleted as of
         January 1, 2004. As of January 1, 2005, the following new Section 8
         shall automatically be added with the following language to read as
         follows:

         "8. Operating Expenses and Taxes.

         8.1      Definitions.

                  (a)      For purposes of this Sublease, the following
         definitions shall apply (Tenant means Peninsula).

                           (i) "ADJUSTMENT DATE" shall mean January 1, 2005 and
         each January 1 thereafter falling within the Term.

                           (ii) "ADJUSTMENT YEAR" shall mean each calendar year
         during which an Adjustment Date falls.

                           (iii) "LANDLORD'S STATEMENT" shall mean a written
         statement furnished by Landlord to Tenant containing a computation or
         information relating

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         to any Additional Rent asserted by Landlord to be due pursuant to the
         provisions of this Lease, and containing back up data reasonably
         sufficient for Peninsula to verify the computation of Additional Rent.

                           (iv) "TENANT'S PROPORTIONATE SHARE" shall be (x)
         3.26% with relation to the Campus based on 12,358 rentable square feet
         in the Premises compared to the total of 379,640 rentable square feet
         in the Property, and (y) 16.91% with relation to the Building based on
         12,358 rentable square feet in the Premises compared to 73,081 rentable
         square feet in the Building. All expenditures incurred on a Property
         basis shall be correspondingly allocated on such Property percentage
         basis to Tenant, and all expenditures incurred on a Building basis
         shall be correspondingly allocated on such Building percentage basis to
         Tenant.

                           (v) "OPERATING EXPENSES" shall mean:

                  All reasonable and necessary costs and expenses paid by or
         incurred on behalf of Landlord in respect of the operation, cleaning,
         repair, safety, management, security and maintenance of the Building or
         Property, as the case may be, including the Common Areas of the
         Building and the common exterior areas of the Property (but on the
         basis that the Building and Property, as applicable, are fully
         occupied), and in respect of the services provided to tenants, which
         are reasonable, directly allocable and directly attributable to the
         operation of the Building or Property, as the case may be, including:

                           (1)      salaries, wages and bonuses paid to, and the
         cost of any hospitalization, medical, surgical, union and general
         welfare benefits (including group life insurance), any pension,
         retirement or life insurance plan and other benefits or similar
         expenses relating to, employees of Landlord or its property manager to
         the extent engaged full-time in the operation, cleaning, repair,
         safety, management, security or maintenance of the Property as a whole
         or the Building, as the case may be;

                           (2)      social security, unemployment and other
         payroll taxes, the cost of providing disability and worker's
         compensation coverage imposed by any law or regulation, union contract
         or otherwise in respect of the employees describe in (1) above;

                           (3)      the cost of electricity, gas, steam, water,
         air conditioning and other fuel and utilities solely allocable to the
         exterior common areas of the Property and to the common areas of the
         Building that are not the obligation of any particular tenant;

                           (4)      the reasonable cost of casualty, rent,
         liability, fidelity, plate glass and any other similar insurance, but
         only to the extent a prudent landlord of a comparable building would
         carry the type and amounts of such insurance;

<PAGE>

                           (5)      the reasonable cost of repairs, maintenance
         and painting of the exterior common areas of the Property and the
         Building;

                           (6)      the reasonable cost or rental of all
         building and cleaning supplies, tools, materials and equipment for the
         cleaning and maintenance of the exterior common areas of the Property
         and the Building;

                           (7)      the reasonable cost of supplies for the
         cleaning and maintenance of the exterior common areas of the Property
         and the Building,

                           (8)      the reasonable cost of work uniforms and dry
         cleaning of such uniforms for those employees described in (1) above;

                           (9)      window cleaning, guard, watchman or other
         security personnel, service or system for the exterior common areas of
         the Property and the Building;

                           (10)     management fees not in excess of the lesser
         of five percent (5%) of gross revenue from the Building or the then
         prevailing market rates for management fees payable for buildings with
         similar uses to, similarly situated with, and in the same geographic
         locale as, the Building;

                           (11)     reasonable charges of independent
         contractors performing work included within this definition of
         Operating Expenses;

                           (12)     legal, accounting and other professional
         fees and disbursements incurred in connection with the operation and
         management of the Property or Building, as the case may be. Excluded,
         however, are legal, accounting and other professional fees and
         disbursements incurred in connection with negotiations or disputes with
         tenants, or in connection with leasing, renovating, or improving space
         for tenants or other occupants or prospective tenants or other
         occupants of the Property;

                           (13)     association fees and dues;

                           (14)     depreciation of hand tools and other movable
         equipment used in the operation, cleaning, repair, safety, management,
         security or maintenance of the Campus provided the original cost of
         such equipment did not constitute an Operating Expense;

                           (15)     exterior landscaping for the Property and
         interior landscaping for the common areas of the Building; and

                           (16)     amortization on a straight-line basis across
         the useful life of the cost of capital improvements to the Building,
         the Common Areas and/or the Campus (A) occasioned by any rules, laws or
         regulations effective subsequent to the Commencement Date of this
         Lease, but excluding Landlord's cost of

<PAGE>

         modifications and/or new improvements to the Building, the Common Areas
         and/or the Campus required by the Americans with Disabilities Act as in
         effect as of the Commencement date of this Lease or (B) that are
         commercially reasonable and reduce costs that would otherwise be
         included in Operating Expense or improve life/safety conditions.

         Notwithstanding anything to the contrary contained in this Lease, the
         following shall not be included within Operating Expenses:

                                            (1) Leasing commissions, attorneys'
         fees, costs, disbursements, and other expenses incurred in connection
         with negotiations or disputes with tenants, or in connection with
         leasing, renovating, or improving space for tenants or other occupants
         or prospective tenants or other occupants of the Property.

                                            (2) The cost of any service sold to
         any tenant (including Tenant) or other occupant for which Landlord is
         entitled to be reimbursed as an additional charge or rental over and
         above the basic rent and escalations payable under the lease with that
         tenant.

                                            (3) Any depreciation on the
         Property.

                                            (4) Costs of a capital nature,
         including but not limited to capital improvements and alterations,
         capital repairs, capital equipment, and capital tools as determined in
         accordance with generally accepted accounting principles.

                                            (5) Expenses in connection with
         services or other benefits of a type that are not provided to Tenant
         but which are provided another tenant or occupant of the Property.

                                            (6) Overhead profit increments paid
         to Landlord's subsidiaries or affiliates for management or other
         services on or to the building or for supplies or other materials to
         the extent that the cost of the services, supplies, or materials
         exceeds the cost that would have been paid had the services, supplies,
         or materials been provided by unaffiliated parties on a competitive
         basis.

                                            (7) All interest, loan fees, and
         other carrying costs related to any mortgage or deed of trust or
         related to any capital item, and all rental and other payable due under
         any ground or underlying lease, or any lease for any equipment
         ordinarily considered to be of a capital nature (except janitorial
         equipment which is not affixed to the Property.)

                                            (8) Any compensation paid to clerks,
         attendants, or other persons in commercial concessions operated by
         Landlord.

                                            (9) Advertising and promotional
         expenditures.

<PAGE>

                                            (10) Costs of repairs and other work
         occasioned by fire, windstorm, or other casualty of an insurable
         nature.

                                            (11) Any costs, fines, or penalties
         incurred due to violations by Landlord of any governmental rule or
         authority, this Lease or any other lease in the Property, or due to
         Landlord's negligence or willful misconduct.

                                            (12) The cost of correcting any
         building code or other violations which were violations prior to the
         Commencement Date of this Lease.

                                            (13) The cost of containing,
         removing, or otherwise remediating any contamination of the Property
         (including the underlying land and ground water) by any toxic or
         hazardous materials (including, without limitation, asbestos and
         "PCB's") where such contamination was not caused by Tenant.

                                            (14) Costs for sculpture, paintings,
         or other objects of art (and insurance thereon or extraordinary
         security in connection therewith).

                                            (15) Wages, salaries, or other
         compensation paid to any executive employees above the grade of
         building manager.

                                            (16) Any other expense that under
         generally accepted accounting principles and practice consistently
         applied would not be considered a normal maintenance or operating
         expense.

                  (b)      For each Adjustment Year falling wholly or partially
         within the Term, Tenant shall pay to Landlord as Additional Rent,
         Tenant's Proportionate Share of the amount of Operating Expenses for
         such Adjustment Year.

                  8.2      Tax Expenses.

                  (a)      For purposes of this Sublease the following
         definitions shall apply.

                           (i) "TAXES" shall mean:

                                    (1)      All real estate taxes, assessments
         (special or otherwise), sewer and water rents, rates and charges, and
         any other governmental levies, impositions and charges of a similar
         nature (but not including income taxes, franchise, capital or stock
         taxes, gift or inheritance taxes or any other tax imposed upon or
         measured by Landlord's income or profits) ("IMPOSITIONS"), which may be
         levied, assessed or imposed on or in respect of all or any part of the
         Property, whether or not the same constitute one or more tax lots (but
         not including any Imposition on any tenant's property). If, however, by
         law, any assessment may be divided and paid in annual installments,
         then, for the purposes of this definition, (i) such assessment shall be
         deemed to have been so divided and to be payable in the maximum number
         of annual installments permitted by law,

<PAGE>

         and (ii) there shall be deemed included in Taxes for an Adjustment
         Year, the annual installment of such assessment becoming payable during
         such year, together with interest payable during such year on such
         annual installment and on all installments thereafter becoming due as
         provided by law, all as if such assessment had been so divided.

                                    (2)      Any reasonable and appropriate
         expenses incurred by Landlord in contesting any of the foregoing or the
         assessed valuation of all or any part of the Property.

                                    (3)      If at any time during the Term the
         methods of taxation prevailing at the date hereof shall be altered so
         that in lieu of or in addition to whole or any part of the Impositions
         now levied, assessed or imposed on all or any part of the Property,
         there shall be levied, assessed or imposed (i) an Imposition based on
         the income or rents received therefrom whether or not wholly or
         partially as a capital levy or otherwise, or (ii) an Imposition
         measured by or based in whole or in part upon all or any part of the
         Building and imposed on Landlord, then all such Impositions shall be
         deemed to be Taxes.

                           (ii)     Taxes shall not include any of the
         following: Impositions upon improvements or alterations made by the
         Landlord or other tenants outside of the Building, or upon additions to
         the Property or Building; or penalties; or interest paid by the
         Landlord on account of taxes.

                  (b)      If, as a result of any application or proceeding or
         otherwise, there should be a reduction in the Taxes for any Adjustment
         Year in respect of which Landlord shall have previously rendered a
         Landlord's Statement, Landlord shall refund to Tenant Tenant's
         Proportionate Share of such refund, which refund shall be paid to
         Tenant within twenty (20) days after receipt by Landlord, unless Tenant
         advises Landlord within fifteen (15) days after receipt by Landlord of
         such refund to include an adjustment for the succeeding Adjustment Year
         to reflect such decrease in Taxes. Landlord may deduct from such refund
         all costs and expenses, including reasonable counsel fees, incurred by
         Landlord in connection with the application or proceeding to reduce the
         Taxes in respect of any Adjustment Year. Landlord shall promptly refund
         to Tenant Tenant's Proportionate Share of any refunds in Taxes received
         after the Expiration Date of this Lease.

                  8.3      Payment of Operating Expenses and Taxes.

                  (a)      For each Adjustment Year, Tenant shall pay to
         Landlord, as Additional Rent, Tenant's Proportionate Share of the
         actual Operating Expenses and Taxes. Notwithstanding the foregoing,
         during the applicable Adjustment Year, Tenant shall pay such
         Proportionate Share based on an estimate of such amount provided by
         Landlord in accordance with Section 8.3(b). After the close of each
         Adjustment Year, the parties shall undertake a reconciliation based on
         the estimated Proportionate Share paid by Tenant during the applicable
         Adjustment

<PAGE>

         Year and the actual Proportionate Share for such Adjustment Year in
         accordance with Section 8.3(c).

                  (b)      On or prior to the first Adjustment Date for the
         Subleased Premises and at least forty-five (45) days prior to each
         Adjustment Date thereafter, Landlord shall advise Tenant in writing of
         Landlord's good faith, reasonable estimate of Tenant's Proportionate
         Share of annual Operating Expenses for the applicable Adjustment Year
         and of Taxes for the applicable Adjustment Year. Commencing on the
         first day of each Adjustment Year, Tenant shall pay as Additional Rent
         one-twelfth (1/12th) of Tenant's estimated Proportionate Share of
         Operating Expenses and Taxes concurrently with the monthly Fixed Rent
         payment.

                  (c)      Within ninety (90) days after the close of each
         Adjustment Year, Landlord shall deliver to Tenant an itemized
         Landlord's Statement showing in reasonable detail the (i) actual
         Operating Expenses and Taxes for the previous year broken down by
         component expenses; (ii) Tenant's Proportionate Share of such Operating
         Expenses and Taxes; (iii) the amount of the estimated Proportionate
         Share of such Operating Expenses paid by Tenant during such Adjustment
         Year ;and (iv) the amount of the estimated Proportionate Share of such
         Taxes paid by Tenant during such Adjustment Year. If the amount of the
         estimated Proportionate Share of Operating Expenses and/or Taxes, as
         applicable, paid by Tenant during the applicable Adjustment Year
         exceeds the actual Proportionate Share of Operating Expenses and/or
         Taxes for such Adjustment Year, Landlord shall refund such excess
         amount to Tenant within ninety (90) days after the close of such
         Adjustment Year. Conversely, if the amount of the estimated
         Proportionate Share of Operating Expenses and/or Taxes, as applicable,
         paid by Tenant during the applicable Adjustment Year is less than the
         actual Proportionate Share of Operating Expenses and/or Taxes for such
         Adjustment Year, Tenant shall pay to Landlord the difference between
         the amount paid by Tenant and the amount actually owed for such
         Adjustment Year within thirty (30) days after receipt of Landlord's
         Statement.

                  (d)      Landlord's failure to submit a Landlord's Statement
         to Tenant within six (6) months after the expiration of any Adjustment
         Year shall be deemed a conclusive waiver of Landlord's right to any
         Additional Rent relating to such Landlord's Statement for such
         Adjustment Year. Landlord's failure to submit a Landlord's Statement
         shall not deprive Tenant of its right to recover from Landlord if
         Tenant's estimated payments exceed the amounts actually due from Tenant
         for Operating Expenses or Taxes. If Landlord has not provided a
         Landlord's Statement to Tenant within six (6) months after the
         expiration of any Adjustment Year and Tenant subsequently requests in
         writing that Landlord provide such Landlord's Statement, Landlord shall
         provide such Landlord's Statement to Tenant within thirty (30) days
         after the date on which Landlord receives such request. Subject to the
         preceding sentence, the obligations of Landlord and Tenant with respect
         to any Additional Rent shall survive the expiration or earlier
         termination of the Term.

<PAGE>

                  (e)      Landlord agrees to maintain complete records of all
         costs reimbursable by Tenant under the terms of this Lease, including
         all Operating Expenses and Taxes. All such records shall be maintained
         in accordance with generally accepted accounting practices and shall be
         retained for a period of three (3) years after the end of the
         applicable Adjustment Year. Tenant shall have the right, through itself
         or its representatives, to examine, copy and audit such records at all
         reasonable times at Landlord's office during Business Hours. Each
         Landlord's Statement shall be conclusive and binding upon Tenant
         unless, within six (6) months after the date on which Tenant receives a
         particular Landlord's Statement, Tenant notifies Landlord that it
         disputes the correctness of such Landlord's Statement. Pending the
         determination of such dispute by audit results, agreement or otherwise,
         Tenant shall pay Additional Rent in accordance with the applicable
         Landlord's Statement, and such payment shall be without prejudice to
         the position of Tenant. If Tenant's audit shows that the amount paid by
         Tenant for Operating Expenses and Taxes for any Adjustment Year exceeds
         the amount due for such period, then unless Landlord contests the
         results of the audit as provided below, Landlord shall refund the
         amount overpaid by Tenant, and if the Operating Expenses and Taxes
         exceeded by more than five percent (5%) the amount actually due, then
         Landlord shall also pay for Tenant's audit costs. If such audit shows
         that the amount paid by Tenant for Operating Expenses and Taxes was
         less than that due, then within 30 days following commencement of
         Tenant's audit, Tenant shall pay such shortfall to Landlord. If
         Landlord contests Tenant's audit, then within 30 days following
         Landlord's contest, Tenant may submit the matter to binding arbitration
         conducted by a sole arbitrator under the jurisdiction and the rules of
         the American Arbitration Association in Oakland, California. The
         arbitrator shall award fees and costs to the prevailing party."

12.      Amendment of Commencement Date. The "Commencement Date" with respect to
         the 1751 Building shall mean January 1, 2004.

13.      Amendment of Repairs and Maintenance. On January 1, 2005, the terms of
         the Sublease shall be amended from an industrial gross/full service to
         a triple net basis. Therefore, the terms of Section 12 shall be deleted
         and replaced with the following language to read as follows:

         "12.     Repairs and Maintenance.

                  (a)      During the Term, Landlord shall perform diligently,
         promptly and in a first class and good and workmanlike manner in
         compliance with all applicable Legal Requirements, all maintenance,
         repairs and replacements to: (i) the structural components of the
         Building, including without limitation the roof, exterior walls,
         bearing walls, support beams, foundations, columns, exterior doors and
         windows and lateral support to the Building; (ii) the parking lots,
         areas and garages, and the other exterior Common Areas, including their
         lighting systems; (iii) the exterior improvements to the Building,
         including walkways, shrubbery and landscaping; (iv) the plumbing and
         fire sprinkler systems servicing the Building, including electrical and
         mechanical lines and equipment associated

<PAGE>

         therewith; (vi) the Building heating, ventilation and air conditioning
         systems and electrical and mechanical lines and equipment associated
         therewith, ("HVAC"), and life safety systems for the Building; (vii)
         the elevators of the Building; (viii) the glass including cleaning and
         replacements; (ix) the roof membrane of the Building; (x) the exterior
         surfaces of the Building; and (xi) any part of the Building for which
         Tenant has not expressly assumed responsibility. The costs associated
         with Landlord's maintenance obligations with respect to the Premises
         and Building shall be deemed Operating Expenses for which Tenant shall
         bear its Proportionate Share; provided, however that the Landlord shall
         bear all of such Operating Expenses during Year 1.

                  (b)      If Tenant shall have given Landlord notice of
         Landlord's failure to perform any repair or other work which Landlord
         is required to perform under this Lease, and such failure shall
         continue unremedied for thirty (30) days following notice as aforesaid
         (or if such default is of such nature as the same cannot be cured
         within said thirty (30) day period, then if Landlord shall not have
         promptly commenced to cure such default within said thirty (30) day
         period and thereafter prosecuted the curing of such default to
         completion with due diligence), or without notice to Landlord in the
         case of an emergency, Tenant may, at its option, at any time thereafter
         perform such work and cure such default for the account of Landlord,
         and to the extent that the cost to perform such work reasonably
         expended by Tenant exceeds Tenant's Proportionate Share of the cost
         Tenant would have paid if Landlord had performed its obligations, then
         such excess out-of-pocket costs reasonably incurred by Tenant shall not
         be deemed to be an Operating Expense, Tenant shall not have any
         liability with respect to such excess costs, and Landlord agrees to
         reimburse Tenant such costs within thirty (30) days of written demand
         therefor by Tenant. In the event that Landlord fails to make such
         payment when due, it shall bear interest until paid at the Interest
         Rate.

                  (c)      Except for Landlord's obligations as set forth in
         Paragraph 12(a) above, during the Term, Tenant shall, at its sole
         expense, maintain the interior portion of the Subleased Premises in
         good condition and repair, including, but not limited to, (i) perform
         its own redecorating of the interior of the Subleased Premises if
         desired by Tenant; (ii) be responsible for all maintenance and repairs
         of the interior of the Subleased Premises and any maintenance or
         repairs required as a result of Tenant's negligence, unless covered by
         any insurance policy maintained or required to be maintained by
         Landlord or unless caused by the gross negligence or willful misconduct
         of Landlord, its agents or representatives; and (iii) maintain all
         computer and telecommunications wiring and outlets, any interior glass,
         and Landlord's furniture within the Subleased Premises in as good a
         condition as existed on January 1, 2004, reasonable wear and tear
         excepted. If Tenant fails to do so, Landlord may give Tenant notice
         thereof and if Tenant does not remedy such deficiency within 45 days of
         the giving of such notice, then Landlord may, but shall not be required
         to, enter the Subleased Premises and put them in good condition, and
         Landlord's costs thereof as set forth in Landlord's demand to Tenant
         shall automatically become due and payable as Additional Rent. Tenant
         shall reimburse Landlord within thirty (30) days following its

<PAGE>

         demand for all costs incurred by Landlord, plus an administrative fee
         of five percent (5%) of such costs, in making alterations to the
         structural, mechanical, electrical, plumbing or life safety systems of
         the Building and to the Common Areas which may be required under
         applicable Legal Requirements as a result of Tenant's particular use of
         the Premises or Alterations made within the Premises by Tenant or by
         Landlord at the request of Tenant."

14.      Amendment of Service and Utilities. On January 1, 2005, the terms of
         the Sublease shall be amended from an industrial gross to a triple net
         basis. Therefore, the terms of Section 13 shall be deleted and replaced
         with the following language to read as follows:

         13.      Services and Utilities

                  (a)      Landlord shall provide all services for the Building
         and Subleased Premises consistent with an office flex/research and
         development building in the geographic area where the Property is
         located, the cost of which shall be included in Operating Expenses.

                  (b)      At Tenant's option, Landlord shall provide janitorial
         and cleaning services for the Subleased Premises, the actual,
         reasonable cost of which shall be included in Operating Expenses.

                  (c)      Tenant shall pay for all utilities consumed on the
         Subleased Premises, including after-hours usage.

                  (d)      Parking. Tenant shall have the right to use an
         unlimited number of non-exclusive, non-reserved parking spaces at the
         Building for the use of Tenant's employees and business visitors,
         subject to any applicable rules and regulations. Notwithstanding
         anything in the Prime Lease to the contrary, Tenant shall not be
         entitled to reserved parking. Landlord agrees that none of the tenants,
         in addition to Tenant, in the 1751 Building shall be permitted to have
         any reserved parking.

                  (e)      Signage. Tenant shall have the right to have its
         company name listed in the building directory located in the lobby of
         the Building, if any, at no additional charge to Tenant. Tenant shall
         also be allowed signage on entry doors to Tenant's suite and Landlord
         shall work with Tenant to accommodate reasonable additional signage
         directing visitors to Tenant's suite at no additional charge to Tenant.
         Tenant shall be allowed to have signage in front of the Building at no
         additional charge to Tenant, provided that such signage meets the
         reasonable signage guidelines established by Landlord.

15.      Peninsula's Leasing of Subleased Premises As-Is. Subject to Section 15,
         Peninsula hereby acknowledges and agrees that it is leasing, and hereby
         accepts, the Subleased Premises in the 1751 Building in its AS-IS
         condition and no further improvements shall be made by Landlord, except
         that Landlord agrees to repair the carpeting throughout the Subleased
         Premises, and remove map wallpaper and

<PAGE>

         paint the underlying wall in one of the offices in the Subleased
         Premises prior to December 1, 2003. Tenant shall accept the Premises in
         its "as-is" condition as of the date of delivery by Landlord. Tenant
         shall have the right to use the exisiting furniture within the
         Subleased Premises during the Lease term, and shall return such
         furniture at the Lease term expiration in good condition, subject to
         normal wear and tear only.

16.      Notwithstanding anything to the contrary in this Lease, Landlord
         warrants to the best of its knowledge and without further independant
         investigation, that on the commencement of the term hereof, (a) the
         Property and Building shall comply with all laws, codes, ordinances and
         other governmental requirements then applicable to the Property and
         Building, and (b) the Subleased Premises, including the improvements
         and equipment therein, shall be in good working order, condition, and
         repair.

17.      Each Party's addresses for notice purposes under Section 32 of the
         Sublease shall be deleted and replaced with the following:

         If to Tenant prior to January 1, 2004:

         Peninsula Pharmaceuticals, Inc.
         1701 Harbor Bay Parkway
         Alameda, CA  94502
         Attn:  President & Chief Executive Officer

         If to Tenant on or after January 1, 2004:

         Peninsula Pharmaceuticals, Inc.
         1751 Harbor Bay Parkway
         Alameda, CA  94502
         Attn:  President & Chief Executive Officer

         If to Landlord:

         SRM-PCCP Harbor Bay Associates, LLC
         c/o SRM Associates
         1851 Harbor Bay Parkway, Suit 2000
         Alameda, CA 94501
         Attn: Property Manager

18.      Deletion of Section 38. Section 38 of the Sublease shall be deleted in
         its entirety.

19.      Brokers. Each party hereby acknowledges that no broker, finder or other
         person has represented such party with respect to this Amendment. Each
         party agrees to indemnify, defend and hold the other party harmless
         from all demands, judgments, damages, costs and expenses (including
         attorneys' fees and costs) resulting from any claims that may be
         asserted against the other party by any broker, finder or

<PAGE>

         other person with whom the indemnifying party has or purportedly has
         dealt in connection with this Amendment.

20.      Successors and Assigns. All of the covenants, terms and conditions set
         forth herein shall be binding upon and inure to the benefit of the
         parties hereto and their respective successors and assigns.

21.      Right of First Opportunity. Landlord and Tenant acknowledge that as of
         the date of mutual execution of this First Amendment, the remaining
         space on the second floor of the Building of approximately 25,400 rsf
         ("Adjacent Space") is vacant and available for lease. Subject to any
         superior rights of any third party tenant, provided this Lease is in
         full force and effect and Tenant is not in default hereunder, Landlord
         shall notify Tenant at such time as it receives a bonafide proposal
         from a third party tenant to lease any portion of the Adjacent Space.
         Tenant shall have a right of first opportunity to negotiate with
         Landlord to lease such Adjacent Space. Conversely, Tenant shall keep
         Landlord apprised of its space requirements if, during the Lease term,
         Tenant's space needs exceed the Subleased Premises. Furthermore, if,
         after fifteen (15) days of negotiation, Landlord and Tenant are unable
         to agree on mutually satisfactory terms for Tenant to lease the
         Adjacent Space, then Landlord shall be free to deal with such Adjacent
         Space, with no further regard to Tenant.

                  (Remainder of Page Left Intentionally blank)

<PAGE>

22.      Ratification of Lease Terms. All other non-conflicting terms,
         provisions, covenants and conditions of the Lease, Sublease and all
         exhibits and addendum thereto shall continue in full force and effect
         and are hereby ratified by the parties hereto.

LANDLORD:                                         PENINSULA:
SRM/PCCP HARBOR BAY ASSOCIATES, LLC,              PENINSULA PHARMACEUTICALS INC.
a Delaware limited liability company              a Delaware corporation
     By: PCCP LB Harbor Bay Associates, LLC
         a Delaware limited liability company
         Its: Managing Member
     By: PCCP Equities II, LLC
         a Delaware limited liability company
         Its: Co-Managing Member

By:  /s/ Aaron Giovara                      By: /s/ Paul F. Truex
     -------------------------------            --------------------------------
Name:    Aaron Giovara                      Name:  Paul F. Truex
Title:   Vice President                     Title: President and CEO

<PAGE>

                                   EXHIBIT A-1

                                   [GRAPHIC]

<PAGE>

                                  EXHIBIT B-1

1751 INVENTORY 2ND FLOOR WEST SIDE
10/14/2003

Outside Hallway

                  Black/Red Credence Table 8'                            1

Conference Room 2000/Flight Room

                  Black Leather Chairs                                  14
                  Black/Maroon Training Table 12'                        2
                  Black/Maroon Training Table Round Corner
                        Right side round                                 1
                        Left side round                                  1
                  Black/Maroon Side Table 8'7"                           1
                  Black/Maroon Podium                                    1
                  Black Dry Erase Board 20'x 48"                         1

Room 2004

                  Lab Racks                                              4

Inside Hallway

                  DFM Shelf 48"x 12"                                     1

Room 2201 A & B

                  Black Task Chairs                                      2
                  Black Liberty Guest Chair                              1
                  Rosemount Teardrop                                     1
                  Pedestal    BBF                                        2
                              FF                                         2
                  Rosemount Station with double overhead                 1
                  Rosemount Gray Station                                 1
                  Whiteboard 36" 48"                                     1
                  Meridian two drawer lateral cabinet (locked no key)    1

Kitchen

                  Refrigerator                                           1
                  Dishwasher                                             1
                  Message board 36" x 48"                                1
                  First Aid Cabinet                                      1
                  Recycle Garbage Can                                    1
                  Floor Mat 44" x 65"                                    1

<PAGE>

Room 2202

                  Gray Liberty Guest Chair                               2
                  DFM 36" round table                                    1
                  Black Task Chairs                                      1
                  DFM Station                                            1
                  DFM Dry Erase 48" x 60"                                1
                  DFM Pedestal BBF                                       1
                  DFM Pedestal FF                                        1
                  Putty two drawer lateral file cabinet                  1
                  Black cloth board 102" x 24"                           1

Room 2203

                  DFM Station                                            1
                  DFM three shelf bookcase                               1
                  DFM four drawer lateral file                           1
                  DFM dry erase board 48" x 60"                          1
                  DFM Pedestal BBF                                       1
                  DFM Pedestal FF                                        1
                  Gray Liberty Guest Chairs                              2
                  Black Task chairs                                      1
                  Black cloth board 102" x 24"                           1

Room 2204

                  Rosemount Station                                      1
                  Rosemount Teardrop                                     1
                  Gray Liberty guest chair                               1
                  Black Task Chair                                       1
                  Gray Pedestal BBF                                      1
                  Gray Pedestal FF                                       2
                  Gray two shelf bookcase                                1
                  Whiteboard 36" x 48"                                   1

Room 2205

                  Rosemount Station                                      1
                  Gray Pedestal BBF                                      1
                  Gray Pedestal FF                                       1
                  Black Task Chair                                       1
                  Whiteboard 36" x 48"                                   1

Room 2206

                  DFM Station                                            1
                  DFM three shelf bookcase                               1
                  DFM four drawer lateral file cabinet                   1
                  DFM Dry Erase 48" x 60"                                1
                  Black task chair                                       1
                  Gray Liberty Guest Chair                               2
                  Black cloth board 102" x 24"                           1

<PAGE>

                  DFM Pedestal BBF                                       1
                  DFM Pedestal FF                                        1

Room 2207

                  DFM Station                                            1
                  DFM three shelf bookcase                               1
                  DFM four drawer lateral file cabinet                   1
                  DFM Dry Erase 48" x 60"                                1
                  Black Task Chair                                       1
                  Gray Liberty Guest Chair                               2
                  Wall Picture                                           1
                  DFM Pedestal BBF                                       1
                  DFM Pedestal FF                                        1

Room 2210

                  Rosemount Station                                      1
                  Rosemount Teardrop                                     I
                  Whiteboard 36" x 48"                                   1
                  Black Task Chair                                       1
                  Gray Pedestal BBF                                      1
                  Gray Pedestal FF                                       2
Room 2211

                  Rosemount Station                                      1
                  Gray Pedestal BBF                                      1
                  Gray Pedestal FF                                       1
                  Black Task Chair                                       1

Storage Room/ Room 2212

                  Fire King Safe four drawer letter size                 1
                  Supply Cabinet five shelf 36" x 72"                    1
                  Supply Cabinet four shelf 36" x 66"

Copy Room/ Room 2213

                  Folding tables 60"                                     2
                  Gray three shelf bookcase                              1

Room 2232

                  Rosemount Station                                      1
                  Rosemount Teardrop                                     1
                  Black Task Chair                                       1
                  Whiteboard 36" x 48"                                   1
                  Gray Pedestal BBF                                      1
                  Gray Pedestal FF                                       1

Room 2231/Meeting Room

                  Gray Round table 48"                                   1
                  Gray Conference Room Chairs                            4

<PAGE>

Room 2230

                  Rosemount Station                                      1
                  Black Task Chair                                       1
                  Gray Liberty Guest Chair                               1
                  Gray Pedestal BBF                                      1
                  Gray Pedestal FF                                       1
                  Whiteboard 36" x 48"                                   1

Room 2228

                  DFM Station - long desk                                1
                  DFM two drawer lateral file cabinet                    1
                  DFM three shelf bookcase                               1
                  DFM Dry Erase 48" x 48"                                1
                  DFM Pedestal BBF                                       1
                  DFM four drawer lateral file cabinet                   1
                  Black Task Chair                                       1
                  Gray Liberty Guest Chair                               3
                  Black Cloth board 102" x 24"                           1

Room 2223/Conference Room

                  Black/Gray Conference Table 105"                       1
                  Gray Conference Chairs                                 7
                  Rosemount Teardrop                                     1
                  Whiteboard 36" x 48"                                   1

Room 2222

                  DFM Station                                            1
                  DFM four drawer lateral file cabinet                   1
                  DFM Pedestal BBF                                       1
                  DFM Pedestal FF                                        1
                  DFM three shelf bookcase                               1
                  DFM Dry Erase 48" x 60"                                1
                  Black Cloth board 102" x 24"                           1
                  Black Task Chair                                       1

Room 2221

                  DFM Station                                            1
                  DFM four drawer lateral file cabinet                   1
                  DFM three shelf bookcase                               1
                  DFM Pedestal BBF                                       1
                  DFM Pedestal FF                                        1
                  Black Cloth board 102" x 24"                           2
                  Black Task Chair                                       1
                  DFM Dry Erase 48" x 60"                                1

<PAGE>

Room 2220

                  DFM Station                                            1
                  DFM Pedestal BBF                                       1
                  DFM Pedestal FF                                        1
                  Gray Liberty Guest Chair                               4
                  Black Task Chair                                       1

Cubical #1

                  Portable printer station                               1
                  Gray Pedestal BBF                                     28
                  Gray Pedestal FF                                      27
                  Black Task Chair                                      23
                  Teknion Workstation                                   24
                  Gray Liberty Guest Chair                               3
                  Privacy Screen                                         4
                  Stationary printer station                             1
                  Gray two drawer lateral file cabinet                   1
                  Black Conference Chair                                 1

Cubical #2

                  Teknion Workstation                                    6
                  Gray Pedestal BBF                                     10
                  Gray Pedestal FF                                      10
                  Black Task Chair                                       6
                  Black Liberty Guest Chair                              1
                  Gray two drawer lateral file cabinet                   1

Cubical #3

                  Teknion Workstation                                    8
                  Gray Pedestal BBF                                      8
                  Gray Pedestal FF                                       9
                  Black Task Chair                                       7
                  Gray Conference Chairs                                 1
                  Privacy Screen                                         1
                  Stationary printer station                             2

Cubical #4

                  Teknion Bullpen                                        1
                  Gray Conference Chair                                  1
                  Black Conference Chair                                 1
                  Black Task Chair                                       2

IMPORTANT NOTE: The above list is intended to reflect the inventory of
furnishings and equipment presently within the Premises. Tenant should
independently verify the accuracy of this list. Under no circumstances does the
First Amendment imply that if any item above is not actually located within the
Premises as of the Execution Date that Landlord shall be obligated to procure
same their cost or otherwise.