Document:

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	Exhibit 10(a) 

	INDEPENDENT AUDITORS’ CONSENT

	We consent to the  incorporation by reference in
this  Post-Effective  Amendment  No. 17 to  Registration  Statement No.  33-37103 of
Merrill Lynch  Utilities and  Telecommunications  Fund,  Inc.  (the  “Fund”) on
Form N-1A of our report  dated  January 9, 2004,  appearing in the November 30, 2003
Annual  Report of the Fund,  which is incorporated  by reference in the Statement of
Additional  Information,  which is part of this Registration  Statement.  We also consent
to the reference  to us under the caption “Financial Highlights” in the
Prospectus,  which is also  part of this Registration Statement.

	/s/ Deloitte & Touche LLP

	Princeton, New Jersey  

      March 22, 2004pro

	Exhibit 10(b) 

	CONSENT OF SHEARMAN & STERLING
      LLP

	We hereby consent to the reference to our firm
included in the prospectus and statement of  additional information of Merrill Lynch
Utilities and Telecommunications Fund, Inc. filed as  part of this Post-Effective
Amendment No. 17 to Registration Statement (File No. 33-37103) and  to the use of our
opinion of counsel, incorporated by reference to Exhibit 10(b) to Post-Effective
Amendment No.  15 to the Registration on Form N-1A (File No.33-37103).

	  	/s/ Shearman & Sterling LLP
      

       Shearman & Sterling LLP
    

	New York, New York  
March 18, 2004<PAGE>

                          *** CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS
                    DOCUMENT (INDICATED BY ASTERISKS) HAS BEEN OMITTED AND FILED
                          SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
                       PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT UNDER 17
                                       C.F.R. SECTIONS 200.80(B)(4) AND 230.406.

                                                                   Exhibit 10.32

                              AMENDED AND RESTATED

                           EXCLUSIVE OPTION AGREEMENT

         THIS AMENDED AND RESTATED EXCLUSIVE OPTION AGREEMENT (the "Agreement")
is entered into as of February 24, 2004 with an effective date of February 17,
2004 (the "Effective Date") by and between Anadys Pharmaceuticals, Inc., a
Delaware corporation ("Anadys"), and LG Life Sciences, Ltd., a Korean
corporation ("LGLS").

         WHEREAS, Anadys and LG are parties to that certain Exclusive Option
Agreement dated as of February 17, 2004 (the "Initial Option Agreement");

         WHEREAS, the Initial Option Agreement provided for the parties to
negotiate additional terms of Exhibit A thereto and the parties desire to amend
and restate the Initial Option Agreement to provide for such terms, and to enter
into this Agreement to amend, restate and supersede in its entirety the Initial
Option Agreement;

         WHEREAS, by executing and delivering this Agreement, LGLS and Anadys
have approved the amendment, restatement and superseding of the Initial Option
Agreement in accordance with the requirements set forth in Section 6.5 of the
Initial Option Agreement;

         WHEREAS, Anadys wishes to obtain from LGLS, and LGLS wishes to grant to
Anadys, an exclusive option (defined herein as the "Option") on the terms and
subject to the conditions set forth herein to enter into the License Agreement
(defined herein) with LGLS whereby, among other things (1) LGLS and Anadys would
enter into a co-development program focused on the global clinical development
and registration of the compound known as LB80380 for treating chronic Hepatitis
B Virus ("HBV") infection in humans and (2) LGLS would grant to Anadys the
exclusive right to develop, register and commercialize in the Anadys Territory
the compound known as LB80380 for treating chronic HBV infection in humans, all
as it pertains to the Option on the terms and subject to the conditions set
forth herein; and

         WHEREAS, the parties acknowledge that the purpose of Exhibit A is to
state the basic terms of the understanding between the parties as to the
exclusive license rights to be granted to Anadys upon exercise of the Option,
and that the exclusive license rights are subject to negotiation and preparation
of a definitive agreement that reflects the terms and conditions set forth in
Exhibit A and such other additional terms and conditions to be agreed by the
parties and containing the full terms of the license and collaboration between
the parties, all as provided herein.

<PAGE>

         NOW, THEREFORE, in consideration of the mutual covenants and promises
hereinafter set forth, the parties hereto hereby agree as follows:

         1.       DEFINITIONS

         1.1      "AFFILIATE" means any corporation or other entity which
controls, is controlled by, or is under common control with, a party. A
corporation or other entity shall be regarded as in control of another
corporation or entity if it owns or directly or indirectly controls more than
50% of the voting securities or other ownership interest of the other
corporation or entity, or if it possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies of the corporation
or other entity.

         1.2      "ANADYS DUE DILIGENCE REVIEW" means the due diligence review
of the Compounds for use in treating chronic HBV infection in humans and
pharmaceutical matters reasonably related thereto that Anadys will conduct for
purposes of deciding whether to exercise the Option.

         1.3      "ANADYS TERRITORY" means North America, Europe and all other
countries in the world except the LGLS Territory.

         1.4      "CHINA" means The Peoples Republic of China.

                  1.5      "COMPOUNDS" means (i) the compound designated
LB80380, which has the following structure: [...***...], [...***...] which has
the following structure:[...***...], [...***...] which has the following
structure, [...***...] [...***...]

         1.6      "CONTROL" means in relation to intellectual property rights
possession of the ability to grant a license or sublicense under such
intellectual property rights as provided for herein without violating the terms
of any agreement or other arrangement with any Third Party. For the removal of
doubt, the capitalized term "Control" as used in this Agreement is different
from the uncapitalized term "control" as used in the definition of Affiliate in
Section 1.1.

         1.7      "CRO" means a contract research organization engaged by LGLS
to manage clinical or pre-clinical studies of any Product.

         1.8      "JDC" has the meaning set forth in Section 3.1 of this
Agreement.

         1.9      "LGLS KNOW-HOW" means any know-how, trade secret, experimental
data, formula, expert opinion, experimental procedure, pre-clinical and clinical
data, regulatory data and filings and other confidential and/or proprietary
information concerning any Compound (including, but not limited to the
Development Plan, all results of any experiment or study undertaken pursuant to
the Development Plan, and any intellectual property created as a result of
performing the Development Plan) that is Controlled by LGLS and that is
necessary or useful for either (i) the formulation, manufacture, development,
use, and/or application of any Compound, or (ii) establishing clinical trials
and obtaining registration of any Compound.

                                             ***CONFIDENTIAL TREATMENT REQUESTED

<PAGE>

         1.10     "LGLS PATENT RIGHTS" means (i) the patents and the patent
applications referred to in Exhibit B and any other patents and patent
applications Controlled by LGLS that are necessary for, or contain claims that
are directed to, the manufacture, use, sale, offer for sale or import of the
Compounds; (ii) all foreign counterparts of any of the patents and patent
applications specified in clause (i) of this definition; and (iii) any reissues,
extensions (or other governmental actions that provide exclusive rights to the
patent holder in the applicable patented subject matter beyond the original
patent term or expiration date), substitutions, confirmations, registrations,
revalidations, re-examinations, additions, continuations, continuations-in-part,
and divisions of or to any of the foregoing.

         1.11     "LGLS TERRITORY" means the countries and territories set forth
in Schedule 1.11 attached to this Agreement.

         1.12     "LICENSE AGREEMENT" means the definitive agreement to be
negotiated in accordance with this Agreement and executed by LGLS and Anadys in
the event that Anadys exercises the Option, which agreement shall reflect the
terms set forth in EXHIBIT A as amended and such additional terms as the parties
may negotiate in good faith, provided that such additional terms do not
contradict, in letter or spirit, the terms set forth in EXHIBIT A.

         1.13     "OPTION" has the meaning set forth in Section 2.2 of this
Agreement.

         1.14     "OPTION PERIOD" means the period commencing on the Effective
Date, and ending on the earlier of (a) the date on which Anadys exercises the
Option, or (b) four months from the Effective Date, unless the Option Period is
extended pursuant to Section 2.3, in which case, the Option Period shall expire
on such later date.

         1.15     "PRODUCT" means any pharmaceutical formulation for
administration to humans to treat chronic HBV infection containing a Compound.

         1.16     "THIRD PARTY" means any entity other than Anadys or LGLS or an
Affiliate of Anadys or LGLS.

         2.       OPTION TO LICENSE

         2.1      OPTION FEE. In consideration of the Option granted to Anadys
by LGLS, Anadys has paid to LGLS a one-time, non-refundable fee equal to Five
Hundred Thousand U.S. Dollars (US$500,000) pursuant to the Initial Option
Agreement.

<PAGE>

         2.2      GRANT OF OPTION. LGLS hereby grants to Anadys an exclusive
option to enter into the License Agreement (the "Option"), exercisable during
the Option Period; provided, however, that such Option may not be exercised
before the parties have agreed to the definitive form of the License Agreement
that reflects the terms and conditions set forth in Exhibit A, and such other
additional terms and conditions to be agreed by the parties. If Anadys exercises
the Option in writing pursuant to Section 2.5 below, the parties will enter into
the License Agreement in accordance with the procedures set forth in Section
2.5. If Anadys elects not to exercise the Option during the Option Period, LGLS
shall retain without any restriction whatsoever all rights that LGLS would have
otherwise granted to Anadys pursuant to the License Agreement if the Option had
been exercised.

         2.3      EXTENSION OF OPTION PERIOD. The Option Period shall be
extended (i) automatically in the event of LGLS's delay in providing material
under Section 3.2 that is material to the Anadys Due Diligence Review, in
responding materially to due diligence requests from Anadys under Section 3.3,
or in providing information under Section 3.4 that is material to Anadys's Due
Diligence Review, for an additional period equal to the duration of such delay,
at no cost to Anadys, provided that such delay is not caused by any act or
omission to act by Anadys, including, without limitation, any ambiguous,
unreasonable or untimely request by Anadys, or failure by Anadys to conduct
reasonably promptly the Anadys Due Diligence Review or (ii) subject to LGLS
approval, for a period of [...***...] ([...***...]) [...***...] beyond the
expiration of the then current Option Period upon payment to LGLS of [...***...]
on or prior to the fifth day prior to such expiration.

         2.4      NEGOTIATION OF THE LICENSE AGREEMENT. LGLS and Anadys agree
that they shall use good faith efforts to complete negotiation of the License
Agreement within sixty (60) days following the Effective Date. Failure to so
complete negotiation of the License Agreement shall not constitute a breach by
either party under this Agreement.

         2.5      OPTION EXERCISE. If during the Option Period, in accordance
with this Article 2, Anadys notifies LGLS in writing that Anadys desires to
exercise the Option, the parties will execute the License Agreement immediately
following receipt by LGLS of such notification.
         2.6      OPTION TO NEGOTIATE. LGLS hereby grants to Anadys an exclusive
option to negotiate with LGLS for a license in the Anadys Territory to the
Compounds for purposes of [...***...], exercisable during the Option Period.
         3.       ACTIONS DURING THE OPTION PERIOD

         3.1      JOINT DEVELOPMENT COMMITTEE. Promptly after the Effective
Date, LGLS and Anadys shall establish a Joint Development Committee ("JDC")
comprised of three (3) members from each party and to be chaired by one
representative of LGLS to be designated by LGLS and one representative of Anadys
to be designated by Anadys, with the right of each party to designate successive
substitutes for its designee. The JDC shall have overall responsibility for
managing, directing, overseeing and implementing the development plan of the
Compounds during the Option Period (the "Development Plan"). The JDC shall not
have any power to amend, modify or waive compliance with the terms of this
Agreement. The JDC will attempt in good faith to make decisions by consensus
with respect to any matters that properly come before

                                             ***CONFIDENTIAL TREATMENT REQUESTED

<PAGE>

it. If the JDC cannot reach consensus on a matter during the Option Period,
[...***...]. Subject to the rights granted to Anadys under the License
Agreement, if the Option is exercised, the Development Plan, all results of any
experiment or study undertaken pursuant to the Development Plan during the
Option Period, and any intellectual property created as a result of performing
the Development Plan shall be the property of LGLS whether or not the Option is
exercised, and Anadys agrees to execute and to cause any of its employees,
contractors or the like to execute any and all assignments, affidavits,
instruments or the like necessary or advisable to evidence LGLS's ownership
thereof.

         3.2      EVALUATION. Within [...***...] ([...***...]) days following
the Effective Date, LGLS will ship to Anadys (i) [...***...] ([...***...])
[...***...] of LB80380, (ii) [...***...]. During the Option Period, Anadys, at
its own expense, may evaluate and perform in vitro and in vivo studies on the
Compounds reasonably related to Anadys' Due Diligence Review and in compliance
with all applicable laws and regulations of any jurisdiction where such studies
are performed.

         3.3      DUE DILIGENCE. Within [...***...] ([...***...]) days following
the Effective Date, LGLS will provide to Anadys the due diligence documents,
reports and information described in the [...***...], provided, however, to the
extent that the provision of such items requires the generation of data or
information relating to ongoing studies, then LGLS will use commercially
reasonable efforts to generate such data or information, but failure or delay
by LGLS to provide such data or information shall not constitute grounds for an
extension of the Option Period; and further, provided, however, that LGLS shall
have no obligation whatsoever to commence any studies or experiments in order
to respond to such Diligence Request Memorandum. In addition, [...***...].

         3.4      ACCESS TO INFORMATION. During the Option Period, LGLS will
provide Anadys with access to the LGLS development team that has worked on the
Compounds, [...***...] who have been [...***...] and review the records and data
held by such parties [...***...], assistance with [...***...] relating to the
Compounds that are [...***...],[...***...] to Anadys to enable Anadys to utilize
such information and such other assistance and access to data, information and
personnel regarding the Compounds as Anadys may reasonably request for the
purpose of evaluating whether to exercise the Option; provided that [...***...]
or other [...***...] shall not extend to any information the disclosure of which
to Anadys would violate any privacy laws or regulations, informed consent,
institutional review board protocols or the like applicable to such information.

         3.5      LGLS AGREEMENTS. During the Option Period, LGLS will consult
with Anadys via the JDC and the parties will work in good faith to achieve
consensus prior to (i) [...***...], (ii) [...***...], (iii) [...***...], or (iv)
[...***...]; [...***...], [...***...]; and further provided, however, that this
Section 3.5 shall not apply to any [...***...], [...***...], [...***...] or
[...***...] to which LGLS has committed to undertake or is in the process of
commencing, performing, submitting or entering into prior to the Effective Date,
including without limitation, that certain study designated as the "[...***...]
Study".

                                             ***CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

performing, submitting or entering into prior to the Effective Date, including,
without limitation, that certain study designated as the "[...***...] Study".

         4.       REPRESENTATIONS, WARRANTIES AND COVENANTS

         4.1      CORPORATE POWER. Each party hereby represents and warrants
that it is duly organized, validly existing and in good standing under the laws
of the state or country of its incorporation and has full corporate power and
authority to enter into this Agreement and to carry out the provisions hereof.

         4.2      DUE AUTHORIZATION. Each party hereby represents and warrants
that such party is duly authorized to execute and deliver this Agreement and to
perform its obligations hereunder.

         4.3      BINDING AGREEMENT. Each party hereby represents and warrants
that this Agreement is a legal and valid obligation binding upon it and is
enforceable in accordance with its terms. The execution, delivery and
performance of this Agreement by such party does not conflict with any
agreement, instrument or understanding, oral or written, to which it is a party
or by which it may be bound, nor violate any law or regulation of any court,
governmental body or administrative or other agency having authority over it.

         4.4      NO CONFLICT. LGLS represents and warrants that it is not
presently bound by any agreement with any Third Party materially limiting LGLS's
performance of any of the obligations or activities provided for under this
Agreement or contemplated by the License Agreement, and that it is not aware of
any patents, patent applications and/or know-how that it does not Control that
is necessary for the development or the commercialization of the Compounds as
contemplated by this Agreement and Exhibit A. LG further represents, warrants
and covenants t[...***...]that it will not, during the [...***...](i)
[...***...], (ii) [...***...], or (iii) [...***...].

         4.5      FINANCIAL POSITION. During the Option Period, Anadys will keep
LGLS apprised of the status of its financial position.

         4.6      OWNERSHIP OF PATENT RIGHTS. LGLS represents and warrants that
(a) it is the sole owner of all right, title and interest in and to the LGLS
Patent Rights and it Controls the LGLS Know-How, (b) it has not granted any
license under the LGLS Patent Rights to any Third Party and is under no
obligation to grant any such license, except to Anadys, and (c) there are no
outstanding liens, encumbrances, agreements or understandings of any kind,
either written, oral or implied, regarding the LGLS Patent Rights or the LGLS
Know-How which are materially inconsistent or are materially in conflict with
this Agreement.

         4.7      PATENT PROCEEDINGS. LGLS represents and warrants that, to the
best of its knowledge, no patent application within the LGLS Patent Rights is
the subject of any pending interference, opposition, cancellation or other
protest proceeding.

         4.8      DISCLAIMER OF WARRANTIES. EXCEPT AS EXPRESSLY SET FORTH IN
THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATION OR WARRANTY TO

                                             ***CONFIDENTIAL TREATMENT REQUESTED

<PAGE>

THE OTHER PARTY OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION,
ANY WARRANTY OF NON-INFRINGEMENT, MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.

         4.9      LIMITATION OF LIABILITY. EXCEPT FOR THE AMOUNT PAYABLE UNDER
SECTION 2.1, AND LIABILITY FOR BREACH OF CONFIDENTIALITY OR FOR INFRINGEMENT OR
MISAPPROPRIATION, NEITHER PARTY SHALL BE ENTITLED TO RECOVER FROM THE OTHER
PARTY ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES IN CONNECTION
WITH THE LICENSED TECHNOLOGY OR ANY LICENSE GRANTED HEREUNDER.

         4.10     INDEMNIFICATION BY ANADYS. Anadys hereby agrees to save,
defend, indemnify and hold harmless LGLS and its directors, officers, employees
and agents (each an "LGLS Indemnitee" and collectively, the "LGLS Indemnitees")
from and against any and all liabilities, expenses and losses, including
reasonable legal expense and attorneys' fees ("Losses"), as incurred, arising
directly or indirectly out of (i) the breach of any representation or warranty
made by Anadys hereunder or any Third Party claim or action resulting from the
conduct of the evaluation of the Compounds or the Anadys Due Diligence Review,
except to the extent such[...***...]from the [...***...]or [...***...]of
[...***...], or (ii) any claims brought by any Third Party as a holder of
securities issued by Anadys in their capacity as such. In the event any LGLS
Indemnitee seeks indemnification under this Section 4.10, such LGLS Indemnitee
shall inform Anadys of a claim as soon as reasonably practicable after such LGLS
Indemnitee receives notice of the claim, shall permit Anadys to assume direction
and control of the defense of the claim (including the right to settle the claim
solely for monetary consideration), and shall cooperate as requested (at the
expense of Anadys) in the defense of the claim; provided that such LGLS
Indemnitee shall have the right to employ separate legal counsel in any such
action and participate in the defense thereof, but the fees and expenses of such
legal counsel shall be at the expense of such LGLS Indemnitee unless (i) the
employment of such legal counsel shall have been specifically authorized in
writing by Anadys, (ii) Anadys shall have failed to assume the defense and
employ legal counsel or (iii) the named persons to any such action (including
any third persons to the action) include both Anadys and such LGLS Indemnitee
and such LGLS Indemnitee shall have been advised that there may be one or more
legal defenses available to such LGLS Indemnitee that are different from or
additional to those available to Anadys (in which case Anadys shall not have the
right to assume the defense on behalf of such LGLS Indemnitee). Anadys shall not
bear the fees and expenses of more than one (1) legal counsel for LGLS
Indemnitees pursuant to the immediately preceding sentence. Anadys shall not be
liable for any settlement of any such action effected by any LGLS Indemnitee
without Anadys's written consent but, if settled with the written consent of
Anadys, Anydys agrees to indemnify and hold harmless such LGLS Indemnitee from
and against any loss or liability by reason of such settlement. With respect to
any pending or threatened proceeding in respect of which any LGLS Indemnitee is
or could have been a party and indemnity could have been sought hereunder by
such LGLS Indemnitee, Anadys shall not effect any settlement of such proceeding
without the prior written consent of such LGLS Indemnitee, unless such
settlement includes an unconditional release of such LGLS Indemnitee from all
liability on claims that are the subject matter of such proceeding.

                                             ***CONFIDENTIAL TREATMENT REQUESTED

<PAGE>

         4.11     INDEMNIFICATION BY LGLS. LGLS hereby agrees to save, defend,
indemnify and hold harmless Anadys and its directors, officers, employees and
agents (each an "Anadys Indemnitee" and collectively, the "Anadys Indemnitees")
from and against any and all Losses arising directly or indirectly out of the
breach of any representation or warranty made by LGLS hereunder, except to the
extent such [...***...]from the [...***...]or [...***...]of [...***...], then
this [...***...]to that [...***...]of the [...***...]. Under no circumstances
shall LGLS be required to indemnify Anadys for any Losses arising from any
financing by Anadys or claims asserted against Anadys by any holders of
securities issued by Anadys. In the event any Anadys Indemnitee seeks
indemnification under this Section 4.11, such Anadys Indemnitee shall inform
LGLS of a claim as soon as reasonably practicable after such Anadys Indemnitee
receives notice of the claim, shall permit LGLS to assume direction and control
of the defense of the claim (including the right to settle the claim solely for
monetary consideration), and shall cooperate as requested (at the expense of
LGLS) in the defense of the claim; provided that such Anadys Indemnitee shall
have the right to employ separate legal counsel in any such action and
participate in the defense thereof, but the fees and expenses of such legal
counsel shall be at the expense of such Anadys Indemnitee unless (i) the
employment of such legal counsel shall have been specifically authorized in
writing by LGLS, (ii) LGLS shall have failed to assume the defense and employ
legal counsel or (iii) the named persons to any such action (including any third
persons to the action) include both LGLS and such Anadys Indemnitee and such
Anadys Indemnitee shall have been advised that there may be one or more legal
defenses available to such Anadys Indemnitee that are different from or
additional to those available to LGLS (in which case LGLS shall not have the
right to assume the defense on behalf of such Anadys Indemnitee). LGLS shall not
bear the fees and expenses of more than one (1) legal counsel for Anadys
Indemnitees pursuant to the immediately preceding sentence. LGLS shall not be
liable for any settlement of any such action effected by any Anadys Indemnitee
without LGLS's written consent but, if settled with the written consent of LGLS,
LGLS agrees to indemnify and hold harmless the Anadys Indemnitee from and
against any loss or liability by reason of such settlement. With respect to any
pending or threatened proceeding in respect of which any Anadys Indemnitee is or
could have been a party and indemnity could have been sought hereunder by such
Anadys Indemnitee, LGLS shall not effect any settlement of such proceeding
without the prior written consent of such Anadys Indemnitee, unless such
settlement includes an unconditional release of such Anadys Indemnitee from all
liability on claims that are the subject matter of such proceeding.

         5.       TERM; TERMINATION

         5.1      TERMS. This Agreement shall commence as of the Effective Date
and shall continue until the expiration of the Option Period.

         5.2      TERMINATION.

                  (a)      Either party may terminate this Agreement prior to
the expiration of the term of this Agreement upon the occurrence of any of the
following:

                           (i)      Upon or after the bankruptcy, insolvency,
dissolution or winding up of the other party (other than dissolution or winding
up for the purposes of reconstruction or amalgamation); or

                                             ***CONFIDENTIAL TREATMENT REQUESTED

<PAGE>

                           (ii)     Upon or after the breach of any material
provision of this Agreement by the other party if the breaching party has not
cured such breach within 45 days after written notice thereof by the
non-breaching party; provided, however, that with respect to any such breach, if
(A) the breaching party has commenced actions to cure such breach prior to such
45th day and is continuing in good faith to pursue such cure at such 45th day
and (B) it is more likely than not in the reasonable judgment of the
non-breaching party that such actions of the breaching party will succeed in
curing such breach on or before the 90th day after such written notice, then
this agreement shall not be terminable as a consequence of such breach if such
breach shall be so cured on or before such 90th day after such written notice;
further provided, however, that any breach under Section 5.2(b) shall not be
subject to any such right to cure.

                  (b)      If the parties are not able to reach final agreement
on the definitive form of the License Agreement by the sixtieth (60th) day
following the Effective Date as set forth in Section 2.4, then this Agreement
shall be terminated. In the event of termination pursuant to this Section 5.2(b)
then LGLS shall be entitled to retain the payment received from Anadys under
Section 2.1.

                  (c)      LGLS shall have the right to terminate this Agreement
from and after the sixtieth (60th) day following the Effective Date if Anadys
does not at the close of business on such day have net current assets of at
least US$60,000,000 and net assets of at least US $64,000,000. This Section
5.2(c) shall not be subject to cure as provided in Section 5.2(a)(ii) of this
Agreement, and in the event of termination pursuant to this Section 5.2(c) then
LGLS shall be entitled to retain the payment received from Anadys under Section
2.1.

         5.3      EFFECT OF TERMINATION.

                  (a)      Upon termination of this Agreement, all rights and
obligations of the parties hereunder shall terminate, except as provided in this
Section 5.3.

                  (b)      Upon expiration of this Agreement or termination for
any reason whatsoever prior to exercise of the Option, LGLS shall retain without
any restriction whatsover all rights that LGLS would have otherwise granted to
Anadys pursuant to the License Agreement and ownership of the Development Plan,
all results of any experiment or study undertaken pursuant to the Development
Plan, and any intellectual property created as a result of performing the
Development Plan.

                  (c)      Expiration or termination of this Agreement shall not
relieve the parties of any obligation accruing prior to such expiration or
termination. The provisions of Articles [...***...], [...***...]and [...***...]
and Sections [...***...], [...***...], [...***...], and [...***...] shall
survive termination or expiration of this Agreement.

                  (d)      If this Agreement expires without exercise of the
Option, then LGLS shall be entitled to retain as liquidated damages all payments
received by LGLS from Anadys under Sections 2.1 and 2.3, and Anadys shall not be
liable to LGLS for any other damages whatsoever arising from such failure to
exercise the Option; provided that nothing herein shall limit the
indemnification provisions of Section 4.10.

                                             ***CONFIDENTIAL TREATMENT REQUESTED

<PAGE>

         6.       MISCELLANEOUS

         6.1      ASSIGNMENT. Neither this Agreement nor any rights or
obligations hereunder may be assigned or otherwise transferred by Anadys without
the prior written consent of LGLS. LGLS may assign this Agreement and its rights
and obligations hereunder without the consent of Anadys (a) [...***...]with the
[...***...]or[...***...]of [...***...]or[...***...]all of [...***...]relating to
the [...***...]of this [...***...]to[...***...], (b) in the event of
[...***...]or [...***...]of [...***...]with or into [...***...], or (c) to any
[...***...]of[...***...]. Except as provided above[...***...]may not
[...***...]or [...***...]this[...***...]or any [...***...]or[...***...]hereunder
without the [...***...]of[...***...], [...***...]. The rights and obligations of
the parties under this Agreement shall be binding upon and inure to the benefit
of the successors and permitted assigns of the parties. Any assignment not in
accordance with this Agreement shall be void.

         6.2      SEVERABILITY. In case any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

         6.3      NOTICES. Any notices or communications provided for in this
Agreement to be made by either of the parties to the other shall be in English
in writing and delivered personally or sent by registered or certified mail,
postage paid, by overnight delivery service such as FedEx or UPS or by
facsimile, with confirmation of receipt, addressed as follows:

         IF TO ANADYS:                  Anadys Pharmaceuticals, Inc.
                                        9050 Camino Santa Fe
                                        San Diego, CA 92121
                                        Attn: Michael J. Kamdar
                                        Fax No. [...***...]

         IF TO LGLS:                    LG Life Sciences
                                        [...***...]
                                        20, Yoido-dong, Youngdungpo-gu,
                                        Seoul 150-721, Korea
                                        Attn: [...***...]
                                        Fax No. [...***...]

         Either party may by like notice specify or change an address to which
notices and communications shall thereafter be sent. Notices sent by facsimile
shall be effective upon confirmation of receipt, notices sent by mail or
overnight delivery service shall be effective upon receipt, and notices given
personally shall be effective when delivered.

         6.4      GOVERNING LAW. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the [...***...], without
regard to its choice of law provisions, and any applicable laws of the
[...***...]. Any disputes (except injunctive relief allowed by a court) shall be
finally resolved by Arbitration in accordance with [...***...].

                                             ***CONFIDENTIAL TREATMENT REQUESTED

<PAGE>

         6.5      ENTIRE AGREEMENT; AMENDMENT. This Agreement (including the
exhibits attached hereto) and the Confidentiality Agreement described in Section
6.9 sets forth all of the covenants, promises, agreements, warranties,
representations, conditions and understandings between the parties hereto with
respect to the subject matter hereof, and supersedes and terminates all prior
agreements and understanding between the parties with respect to the subject
matter hereof. There are no covenants, promises, agreements, warranties,
representations conditions or understandings with respect to the subject matter
hereof, either oral or written, between the parties other than as set forth
herein. No subsequent alteration, amendment, change or addition to this
Agreement shall be binding upon the parties hereto unless reduced to writing and
signed by the respective authorized officers of the parties.

         6.6      HEADINGS; REFERENCES. The captions contained in this Agreement
are not a part of this Agreement, but are merely guides or labels to assist in
locating and reading the several Articles hereof. Unless otherwise specified to
the contrary, references to articles and sections in this Agreement shall be to
the articles and sections comprising this Agreement.

         6.7      INDEPENDENT CONTRACTORS. It is expressly agreed that LGLS and
Anadys shall be independent contractors and that the relationship between the
two parties shall not constitute a partnership, joint venture or agency of any
kind. Neither party shall have the authority to make any statements,
representations or commitments of any kind, or to take any action, which shall
be binding on the other, without the prior written consent of the other party.

         6.8      WAIVER. Except as specifically provided for herein, the waiver
from time to time by either of the parties of any of their rights or their
failure to exercise any remedy shall not operate or be construed as a continuing
waiver of the same rights or remedies or of any other of such party's rights or
remedies provided in this Agreement.

<PAGE>

         6.9      CONFIDENTIALITY. The existence and the contents of this
Agreement, the Option, Exhibit A and the existence of the relationship between
LGLS and Anadys and the transactions contemplated by this Agreement shall be
treated under that certain Confidentiality Agreement, dated February 17, 2004,
by and between LGLS and Anadys as Confidential Information (as such term is
defined in such Confidentiality Agreement). To the extent that this Agreement
and Exhibit A must be described in, or attached to or filed with any
governmental agency as an exhibit to or part of, any registration statement,
prospectus, private placement memorandum, securities purchase agreement, term
sheet, application or like instrument relating to the sale of securities by
Anadys or for any other purpose, then the content of such description and any
amendment or revision thereof shall be subject to the prior written approval of
LGLS which shall not be unreasonably withheld or delayed, and, to the extent
that Anadys has the right to apply to any governmental agency for confidential,
non-public treatment of the contents of this Agreement or Exhibit A, LGLS shall
have the right to reasonably request of Anadys those portions of this Agreement
and Exhibit A for which Anadys shall seek such confidential, non-public
treatment, to promptly review any such submission, application, memorandum,
correspondence or the like to such governmental agency seeking, or in support
of, such confidential, non-public treatment prior to the transmission thereof to
such government agency, and Anadys shall not agree to forego such confidential,
non-public treatment of such content so specified by LGLS without the prior
written consent of LGLS, which shall not be unreasonably withheld or delayed,
unless Anadys is required by law or regulation or by the requirements of such
governmental agency, including, without limitation, the Securities and Exchange
Commission, to do so, provided that LGLS shall be given reasonably prompt prior
notice of any such requirement so that LGLS shall have a reasonable opportunity
to limit or otherwise challenge such disclosure.

         6.10     COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

<PAGE>

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.

ANADYS PHARMACEUTICALS, INC.                   LG LIFE SCIENCES, LTD.

By: /s/ Kleanthis G. Xanthopoulos, Ph.D.       By: /s/ Heung Joon Yang, Ph.D.
    ------------------------------------           -----------------------------

Name:   Kleanthis G. Xanthopoulos, Ph.D.       Name: Heung Joon Yang, Ph.D.

Title: President and Chief Executive           Title: President and Chief
         Officer                                         Executive Officer

          [SIGNATURE PAGE TO THE AMENDED AND RESTATED EXCLUSIVE OPTION
           AGREEMENT BETWEEN ANADYS PHARMACEUTICALS, INC. AND LG LIFE
                SCIENCES, LTD. DATED AS OF FEBRUARY 24, 2004 AND
                       EFFECTIVE AS OF FEBRUARY 17, 2004]

<PAGE>

                                    EXHIBIT A

         1.1      SCOPE OF LICENSE:

         (a) LGLS will grant to Anadys exclusive rights, with the right to
sublicense, under all LGLS Patent Rights and LGLS Know-How to develop, make,
have made, use, register, offer to sell, sell, export and import the Compounds
and Products in the Anadys Territory for purposes of treating chronic Hepatitis
B Virus ("HBV") infection in humans.

         1.2      PRODUCT DEVELOPMENT:

Anadys and LGLS will enter into a co-development program focused on the global
clinical development and registration of the Compounds for HBV.

                           (a)      The parties will form a Joint Development
Committee (JDC) to develop a global clinical development and regulatory strategy
and plan (the "Global Plan") for, among other things, clinical studies, to
coordinate and direct resource allocation for implementing such strategy and
plan through, among other things, agreement on a global development budget, and
to coordinate registration and regulatory activities for the global clinical
development of the Compounds. The JDC shall meet at least [...***...]
([...***...]) times per year following its formation during the term of the
License Agreement or at such greater frequency as the JDC agrees, with at least
[...***...] ([...***...]) of such meetings per year being face to face. During
the last JDC meeting of each calendar year, the JDC shall approve the annual
budget for the next calendar year, which annual budget shall be mutually agreed
to by the JDC representatives of the parties and amended only by the written
agreement of a representative from each party. The annual budget will become a
part of the global development budget. Any matters on which the JDC cannot reach
a consensus shall be [...***...] to the [...***...]of[...***...]and[...***...]
and, if the[...***...]to [...***...], then to the
[...***...]of[...***...]and[...***...]Notwithstanding the foregoing, for the
[...***...]of [...***...]of [...***...], if the [...***...]the [...***...]from
the [...***...]the [...***...]is [...***...]to [...***...]for[...***...], then
[...***...]the[...***...]; provided that any [...***...]that is [...***...]the
[...***...].

                           (b)      Anadys and LGLS will each contribute 50% of
the Global Development Costs for the development of the Compounds for treatment
of chronic HBV infection in humans incurred in accordance with the annual budget
approved by the JDC.

                           (c)      Each party will keep records of its Global
Development Costs and will provide the JDC with an invoice for Global
Development Costs incurred in accordance with the annual budget. On a quarterly
basis, the JDC will calculate the Global Development Costs to be shared and will
provide to the parties a statement showing Global Development Costs for the
preceding quarter, comparing actual Global Development Costs to budgeted
expenses. On a

                                             ***CONFIDENTIAL TREATMENT REQUESTED

<PAGE>

[...***...], the JDC will include in such statement the cash settlement required
between the parties. Each party will pay any required cash settlement to the
other party within [...***...] ([...***...]) [...***...] following the JDC's
quarterly statement describing such required cash settlement.

                           (d)      Anadys will assume all regulatory
responsibility for filing and obtaining in Anadys' name all regulatory approvals
for the Compounds in the Anadys Territory. LGLS will assume all regulatory
responsibility for filing and obtaining in LGLS's name all regulatory approvals
for the Compounds in the LGLS Territory.

                           Global Development Costs, defined: The costs incurred
                           for or associated with any [...***...] and
                           [...***...] or other [...***...] which are necessary
                           for [...***...], that are directly related to
                           [...***...] for treatment of chronic HBV infection in
                           humans. In addition, Global Development Costs shall
                           include [...***...] for those activities that
                           [...***...] of the development of the Compound,
                           including, [...***...]; provided, that such
                           allocations are mutually determined and agreed by the
                           JDC prior to such allocation. Global Development
                           Costs shall not include costs related to [...***...],
                           including [...***...] of any [...***...] Global
                           Development Costs will include all the costs related
                           to any studies or development activities (as defined
                           in the agreement) that are initiated during or after
                           the Option Period, including [...***...] studies and
                           the [...***...] study. For studies that have been
                           ongoing when the Option Agreement was executed,
                           Global Development Costs will be incurred from the
                           date Anadys exercises its Option. Anadys will
                           reimburse LGLS, upon the [...***...]of[...***...]of
                           the [...***...]and[...***...]to[...***...]of
                           [...***...]of such [...***...]of these [...***...]
                           that have[...***...] by[...***...]the[...***...].
                           [...***...]
         1.3      MANUFACTURING: LGLS will supply sufficient quantities of the
Compounds [...***...] to support the conduct of human clinical trials therewith
on a global basis [...***...]of[...***...]. All quantities supplied shall be of
GMP quality. LGLS's costs to supply such quantities shall be deemed to be Global
Development Costs. [...***...]the[...***...]to[...***...]to[...***...]such
[...***...]the[...***...]to[...***...]and[...***...]to [...***...]for[...***...]
at a [...***...]a[...***...].

         1.4      COMMERCIALIZATION RIGHTS:

                  (a)      Anadys will have exclusive commercialization rights
         in the Anadys Territory.

                  (b)      LGLS will have exclusive commercialization rights in
         the LGLS Territory.

         1.5      MILESTONES:

                                             ***CONFIDENTIAL TREATMENT REQUESTED

<PAGE>

As partial consideration for the exclusive rights granted, Anadys will make
milestone payments to LGLS as set forth below. The milestone payments will be
one time only.

<TABLE>
<CAPTION>
Milestones                                 Payments ([...***...])
----------                                 ----------------------
<S>                                        <C>
[...***...]                                    [...***...]
[...***...]                                    [...***...]
[...***...]                                    [...***...]
[...***...]                                    [...***...]
[...***...]                                    [...***...]
[...***...]                                    [...***...]
[...***...]                                    [...***...]
[...***...]                                    [...***...]

[...***...]                                    [...***...]

[...***...]                                    [...***...]

[...***...]                                    [...***...]

Total Milestone payments:                      $29,500,000
                                               -----------
</TABLE>

         1.6      ROYALTY:

                  (a) Anadys will pay to LGLS the royalties based upon annual
         net sales of the Product by Anadys or its sublicenseesin the Anadys
         Territory as set forth below.

<TABLE>
<CAPTION>
 Annual Net Sales Thresholds in the Anadys Territory ([...***...])             Royalty
 -----------------------------------------------------------------             --------
<S>                                                                            <C>
[...***...]                                                                    [...***...]%
[...***...]                                                                    [...***...]%
</TABLE>

                  (b) LGLS will pay to Anadys the following royalties based upon
         annual net sales of the Product by LGLS or its sublicensees in China as
         set forth below.

<TABLE>
<CAPTION>
Annual Net Sales Thresholds in China ([...***...])                           Royalty
--------------------------------------------------                           --------
<S>                                                                          <C>
Annual Net Sales                                                             [...***...]%
</TABLE>

Royalties in non-patent countries (supplement to Section 1.6): The royalties
upon annual net sales of Product payable by one party to the other party under
the License Agreement shall be paid on a country-by-country and
product-by-product basis for a term (the "Royalty Term") beginning upon the
first commercial sale of such Product in the applicable country and ending on
the later of (a) the expiration in such country of the last-to-expire valid
claim of an issued patent within the LGLS Patent Rights, or (b)
[...***...]([...***...]) years after the date of such first

                                             ***CONFIDENTIAL TREATMENT REQUESTED

<PAGE>

commercial sale of such Product in such country. Notwithstanding the foregoing,
during the Royalty Term for a given country, the applicable royalty payable on
net sales in such country shall be [...***...].

         1.7      ASSIGNMENT. Neither the License Agreement nor any rights or
obligations thereunder may be assigned or otherwise transferred by Anadys
without the prior written consent of LGLS. LGLS may assign the License Agreement
and its rights and obligations thereunder without the consent of Anadys (a) in
connection with the [...***...]or [...***...]of[...***...]or [...***...]all of
[...***...]to the [...***...]of the [...***...]to[...***...], (b) in the
[...***...]of [...***...] or[...***...]of [...***...]with or [...***...], or (c)
to any [...***...]of [...***...]; [...***...]that in the
[...***...]of[...***...], [...***...]shall[...***...]that the [...***...]will be
[...***...]as those of [...***...]to such [...***...], including[...***...]
under the [...***...], [...***...], [...***...]and related[...***...]and
[...***...]and[...***...]that such [...***...]or [...***...]in[...***...]the
[...***...]to [...***...] in[...***...]with the[...***...]and[...***...]of the
[...***...].[...***...],[...***...]or[...***...]the[...***...]or[...***...]or
[...***...]the[...***...],[...***...]. The rights and obligations of the parties
under the License Agreement shall be binding upon and inure to the benefit of
the successors and permitted assigns of the parties. Any assignment not in
accordance with the License Agreement shall be void.

         1.8      TERMINATION. In addition to customary and usual termination
provisions providing for, among other things, termination in the event of
bankruptcy or insolvency of a party, each party shall have the right to
terminate the License Agreement if the other party materially breaches its
obligations under the License Agreement, including, [...***...]the
[...***...]to[...***...]and[...***...]in the [...***...]in [...***...]with the
[...***...], or [...***...]in such [...***...], or [...***...]
to[...***...]its[...***...]of [...***...]in a [...***...], or to
[...***...]the[...***...]under the [...***...]is[...***...]the [...***...]to be
[...***...]in the [...***...]. [...***...]to[...***...]and to [...***...]in the
[...***...]to [...***...]in the [...***...]of an [...***...] under the
[...***...].

         1.9      FRAMEWORK FOR PATENT FILING, PROSECUTION, MAINTENANCE,
ENFORCEMENT AND DEFENSE

The License Agreement shall contain the following provisions.

         (a)      PROSECUTION OF APPLICATIONS, AND MAINTENANCE ADMINISTRATION

                  (1)      LGLS shall be administratively responsible for
prosecution and maintenance of all patents and patent applications included in
the LGLS Patent Rights throughout the world. For purposes of this Article, the
term "prosecution" includes, without limitation, the preparation and filing of
patent applications and documents and instruments related thereto; and the term
"maintenance", includes, without limitation, the making of maintenance payments.

                  (2)      Regarding the prosecution and maintenance of the LGLS
                  Patent Rights in nations within the Anadys Territory,
                  including, without limitation, the filing of patent
                  applications and other filings and submissions, conferences
                  and appeals,

                                             ***CONFIDENTIAL TREATMENT REQUESTED

<PAGE>

                  interference proceedings and oppositions to, with or in the
                  respective patent offices in such nations,
                  [...***...]will[...***...]with[...***...]and[...***...]in
                  [...***...], will [...***...]the [...***...]to [...***...]in
                  [...***...]any[...***...], and will[...***...]of[...***...]
                  from[...***...]. Any such [...***...]on which [...***...]and
                  [...***...], [...***...]. [...***...] the [...***...]to
                  [...***...]any such [...***...]on which the [...***...].
                  [...***...], [...***...] associated with such [...***...]
                  and/or [...***...], and provided that the [...***...], are not
                  [...***...], or b) [...***...].[...***...]
                  (3)      The parties acknowledge that during the term of the
Option Agreement and the License Agreement one or more employees, agents or
contractors of one party either jointly or not jointly with one or more
employees, agents or contractors of the other party may conceive and/or reduce
to practice one or more inventions that are necessary or useful for the
manufacture, use, sale or import of any Compound or Product. Anadys and LGLS
agree to negotiate in good faith and set forth in the terms of the License
Agreement: a) a definition of such joint inventions and such other inventions,
b) the parties respective rights with respect to such joint inventions and such
other inventions, and c) the administrative procedures for handling the filing,
prosecution, maintenance, enforcement and defense of patent applications and
patents claiming such joint inventions and such other inventions; provided,
that, among other things, such terms shall (A) [...***...]or such
[...***...]that [...***...]in order to [...***...]of the [...***...](B)
[...***...]to [...***...]its[...***...]to[...***...], [...***...].

         (b)      PROSECUTION AND MAINTENANCE EXPENSES

                  (1)      [...***...] to prosecution and maintenance of patents
and patent applications comprising the LGLS Patent Rights and patents and patent
applications claiming any joint inventions or such other inventions referred to
in Section 1.9(a)(3) in nations [...***...].

                  (2)      [...***...] relating to prosecution and maintenance
of patents and patent applications comprising the LGLS Patent Rights and patents
and patent applications claiming any joint inventions or such other inventions
referred to in Section 1.9(a)(3) in nations [...***...].

         (c)      ENFORCEMENT

                  (1)      Each party will be responsible for promptly notifying
the other party of any information that comes to its attention relating to
infringing or possibly infringing activities by third parties with respect to
the LGLS Patent Rights or Joint Patent Rights upon learning of such information,
without regard to whether the nation in which such activities have occurred is
in that party's territory or not.

                  (2)      In nations within the Anadys Territory, [...***...].

                  (3)      The party in whose territory the infringing
activities are or allegedly are occurring shall have primary responsibility for
bringing an action for infringement of the LGLS Patent Rights or Joint Patent
Rights (and any related interference proceeding or opposition

                                             ***CONFIDENTIAL TREATMENT REQUESTED

<PAGE>

proceeding with respect to the LGLS Patent Rights or Joint Patent Rights), but
shall not be obligated to do so. If the party with such primary responsibility
is Anadys, LGLS may join the action. If one party elects to take action against
such infringement or alleged infringement or if the parties agree to take such
action together, each party will provide all reasonable assistance to the
enforcing party in connection with any such action, including being named as a
party to such action or furnishing of a power of attorney to the enforcing
party, if necessary to bring such action.

                  (4)      In nations within the Anadys Territory,

                           (a)      if Anadys brings any such action, it shall
bear its own expenses, except that if LGLS joins in such action in accordance
with Section 1.9(c)(3), then [...***...]will[...***...]the[...***...]and any
[...***...]as a [...***...]of such [...***...]as [...***...]of a [...***...],
[...***...], [...***...].

                           (b)      if Anadys does not bring the action, then

                                    (i)      LGLS may bring the action, and
Anadys must cooperate and join if its standing is required in order for the
action to proceed;

                                    (ii)     LGLS shall bear the expense of such
action and shall be entitled to the full amount of any recovery. If after
receipt of any recovery, [...***...], and the result of the action is a
declaration of validity or other confirmation of the scope of the patent
asserted by LGLS, then [...***...].

                  (5)      Neither party shall have the right to settle any
infringement action with respect to the LGLS Patent Rights or Joint Patent
Rights in the Anadys Territory in a manner that would diminish the rights or
interests of the other party or obligate the other party to make any payment or
take any action without the prior written consent of such other party

         (d)      DEFENSE

                  (1)      Each party will be responsible for notifying the
other party of any claim or threatened claim by a third party alleging
infringement by the Product, or of any declaratory judgment action or opposition
asserting the invalidity or unenforceability of a licensed LGLS Patent Right, or
that a licensed LGLS Patent Right is subject to an interference, inter partes
reexamination or an opposition proceeding instituted by a third party without
regard to whether the nation in which such activities have occurred is in that
party's territory or not.

                  (2)      In nations within the Anadys Territory, the parties
shall consult upon a course of action in defending against such claim or
threatened claim, action or proceeding.

                  (3)      In nations within the Anadys Territory, if named as a
defendant in any action alleging any such claim, each party shall have the right
to defend against such claim at its own expense, subject to any indemnity from
the other party provided under the indemnity

                                             ***CONFIDENTIAL TREATMENT REQUESTED

<PAGE>

provisions in the License Agreement. If the claim is brought within the Anadys
Territory and LGLS is not named as a defendant, LGLS may join in the defense of
such claim [...***...].

                  (4)      In nations within the Anadys Territory, any awards
resulting from counterclaims shall be [...***...].

                  (5)      Neither party shall have the right to settle any
action described in this subsection (d) in the Anadys Territory in a manner that
would diminish the rights or interests of the other party or obligate the other
party to make any payment or take any action without the prior written consent
of such other party.

                                             ***CONFIDENTIAL TREATMENT REQUESTED

<PAGE>

                                    EXHIBIT B

                                  PATENT RIGHTS

<TABLE>
<CAPTION>
                                      Appl. No.        Appl. date      Grant No.       Grant date      Status
-------------------------------------------------------------------------------------------------------------
<S>                  <C>            <C>               <C>             <C>              <C>            <C>
[...***...]          [...***...]    [...***...]       [...***...]
                     [...***...]    [...***...]       [...***...]
                     [...***...]    [...***...]       [...***...]
                     [...***...]    [...***...]       [...***...]
                     [...***...]    [...***...]       [...***...]
                     [...***...]    [...***...]       [...***...]
                     [...***...]    [...***...]       [...***...]
                     [...***...]    [...***...]       [...***...]
                     [...***...]    [...***...]       [...***...]     [...***...]      [...***...]    Enter
                                                                                                      designated
                                                                                                      state
                     [...***...]    [...***...]       [...***...]
                     [...***...]    [...***...]       [...***...]
                     [...***...]    [...***...]       [...***...]
                     [...***...]    [...***...]       [...***...]
                     [...***...]    [...***...]       [...***...]
                     [...***...]    [...***...]       [...***...]
                     [...***...]    [...***...]       [...***...]
                     [...***...]    [...***...]       [...***...]
                     [...***...]    [...***...]       [...***...]
                     [...***...]    [...***...]       [...***...]
                     [...***...]    [...***...]       [...***...]
                     [...***...]                      [...***...]
                     [...***...]    [...***...]       [...***...]
                     [...***...]    [...***...]       [...***...]
                     [...***...]    [...***...]       [...***...]
                     [...***...]    [...***...]       [...***...]
                     [...***...]    [...***...]       [...***...]
</TABLE>

<TABLE>
<CAPTION>
Title                  country        Appl. No.        Appl. date     Grant No.        Grant date     Status
-------------------------------------------------------------------------------------------------------------
<S>                  <C>            <C>               <C>             <C>              <C>            <C>
[...***...]          [...***...]    [...***...]       [...***...]
                     [...***...]    [...***...]       [...***...]
                     [...***...]    [...***...]       [...***...]
                     [...***...]    [...***...]       [...***...]
                     [...***...]    [...***...]       [...***...]
                     [...***...]    [...***...]       [...***...]
                     [...***...]    [...***...]       [...***...]
                     [...***...]    [...***...]       [...***...]
</TABLE>

                                             ***CONFIDENTIAL TREATMENT REQUESTED

<PAGE>

                                  SCHEDULE 1.11

                    LGLS TERRITORY CONSISTS OF THE FOLLOWING:

Korea
--------------------------------------------------------------------------------
China
--------------------------------------------------------------------------------
Taiwan
--------------------------------------------------------------------------------
Hong Kong
--------------------------------------------------------------------------------
Macao
--------------------------------------------------------------------------------
Bangladesh
--------------------------------------------------------------------------------
Bhutan
--------------------------------------------------------------------------------
Nepal
--------------------------------------------------------------------------------
India
--------------------------------------------------------------------------------
Sri Lanka
--------------------------------------------------------------------------------
Pakistan
--------------------------------------------------------------------------------
Thailand
--------------------------------------------------------------------------------
Laos
--------------------------------------------------------------------------------
Myanmar
--------------------------------------------------------------------------------
Philippines
--------------------------------------------------------------------------------
Vietnam
--------------------------------------------------------------------------------
Indonesia
--------------------------------------------------------------------------------
Singapore
--------------------------------------------------------------------------------
Malaysia
--------------------------------------------------------------------------------
Brunei
--------------------------------------------------------------------------------
Cambodia
--------------------------------------------------------------------------------
<PAGE>
                          *** CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS
                              DOCUMENT (INDICATED BY ASTERISKS) HAS BEEN OMITTED
                           AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
                               COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
                    TREATMENT UNDER 17 C.F.R. SECTIONS 200.80(B)(4) AND 230.406.

                                 AMENDMENT #1 TO
                              AMENDED AND RESTATED
                           EXCLUSIVE OPTION AGREEMENT

      Effective as of March 22, 2004, Anadys Pharmaceuticals, Inc., a Delaware
Corporation ("Anadys") and LG Life Sciences, Ltd., a Korean corporation ("LGLS")
enter into this Amendment #1 to the Amended and Restated Exclusive Option
Agreement dated February 24, 2004 and effective as of February 17, 2004 by and
between Anadys and LGLS (the "Agreement").

1.    Terms used herein with capital initial letters (or whole in capital
      letters) and not otherwise defined herein shall have the same meanings as
      set forth in the Agreement.

2.    The Agreement is amended as set forth hereinafter:

      Section 5.2(c) is hereby deleted and replaced in its entirety with the
      following:

                  (c)   LGLS shall have the right to terminate this Agreement
            from and after the sixtieth (60th) day following the Effective Date
            if Anadys does not at the close of business on such day have net
            current assets of at least US$48,000,000 and net assets of at least
            US $52,000,000. This Section 5.2(c) shall not be subject to cure as
            provided in Section 5.2(a)(ii) of this Agreement and in the event of
            termination pursuant to this Section 5.2(c) then LGLS shall be
            entitled to retain the payment received from Anadys under Section
            2.1

      Section 1.5 of Exhibit A of the Agreement is hereby amended to change a)
      the milestone payment payable by Anadys to LGLS upon the occurrence of the
      first listed milestone, which is titled "Within 30 days of execution of
      License Agreement" from $2,000,000 to $4,000,000, and b) the milestone
      payment payable by Anadys to LGLS upon the occurrence of the [...***...]
      milestone, which is titled "Within [...***...] days of achieving
      [...***...]" from [...***...] to [...***...].

      Section 1.6 of Exhibit A of the Agreement is hereby amended to change the
      Royalty percentage that LGLS will pay to Anadys upon annual net sales of
      the Product by LGLS or its sublicensees in China from [...***...]% to
      [...***...]%.

3.    All other provisions of the Agreement shall remain unchanged and the
      Agreement shall remain in full force and effect.

      IN WITNESS WHEREOF, the parties hereto have executed this Amendment #1 as
of the day and year set forth above.

ANADYS PHARMACEUTICALS, INC.                    LG LIFE SCIENCES, LTD

By:  /s/ Kleanthis G. Xanthopoulos, Ph.D        By:   /s/ Heung Joon Yang, Ph.D.
     -----------------------------------            ----------------------------

Name: Kleanthis G. Xanthopoulos, Ph.D.          Name:  Heung  Joon Yang, Ph.D.
      --------------------------------                 -----------------------

Title: President & CEO                          Title: President & CEO
       -----------------------                         ---------------

                                            ***CONFIDENTIAL TREATMENT REQUESTED

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00063-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00063-of-00352.parquet"}], [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00063-of-00352.parquet"}]]