Document:

<PAGE>

                                                                    EXHIBIT 10.2

                       THIRD AMENDMENT TO CREDIT AGREEMENT

                  This THIRD AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is
entered into as of November 21, 2003, among SOLECTRON CORPORATION, a Delaware
corporation (the "Borrower"), BANC OF AMERICA SECURITIES LLC ("BAS"), as joint
lead arranger and joint book runner, GOLDMAN SACHS CREDIT PARTNERS L.P.
("GSCP"), as joint lead arranger, joint book runner and co-syndication agent,
JPMORGAN CHASE BANK ("JPMorgan"), as co-syndication agent, THE BANK OF NOVA
SCOTIA ("Scotiabank"), as documentation agent, the lenders party hereto (each, a
"Lender," and collectively, the "Lenders"), and BANK OF AMERICA, N.A., as
Administrative Agent.

                  The Borrower, BAS, GSCP, JPMorgan, Scotiabank, the Lenders,
and the Administrative Agent entered into an Amended and Restated 364-Day Credit
Agreement dated as of February 13, 2003 which agreement was amended by a First
Amendment Agreement dated as of July 9, 2003 and a Second Amendment and Waiver
dated as of August 27, 2003 ("Second Amendment," and as in effect as of the date
of this Amendment, the "Credit Agreement").

                  The Borrower has requested that the Lenders agree to certain
amendments to the Credit Agreement, and the Lenders party hereto have agreed to
such request, subject to the terms and conditions of this Amendment.

                  In consideration of the mutual covenants and agreements herein
contained, the parties hereto covenant and agree as follows:

1.       Definitions; References; Interpretation.

         (a) Unless otherwise specifically defined herein, each term used herein
(including in the Recitals hereof) which is defined in the Credit Agreement
shall have the meaning assigned to such term in the Credit Agreement.

         (b) As used herein, "Amendment Documents" means this Amendment, the
Consent and Agreement related hereto and the Credit Agreement (as amended by
this Amendment).

         (c) Each reference to "this Agreement," "hereof," "hereunder," "herein"
and "hereby" and each other similar reference contained in the Credit Agreement,
and each reference to "the Credit Agreement" and each other similar reference in
the other Loan Documents, shall from and after the Effective Date refer to the
Credit Agreement as amended hereby.

         (d) The rules of interpretation set forth in Sections 1.02 and 1.05 of
the Credit Agreement shall be applicable to this Amendment.

2.       Amendments to Credit Agreement. Subject to the terms and conditions
hereof, the Credit Agreement is amended as follows, effective as of the
Effective Date:

         (a) The defined term "Applicable Rate" in Section 1.01 of the Credit
Agreement shall be amended by replacing the table contained therein with the
following table:

                                       1
<PAGE>

<TABLE>
<CAPTION>
                                                                        APPLICABLE
                                                                        UTILIZATION         APPLICABLE
                                                                         FEE RATE          UTILIZATION
                                                                          (USAGE             FEE RATE
               DEBT RATINGS        APPLICABLE                           GREATER THAN      (USAGE EQUAL
PRICING            S&P/           FACILITY FEE        APPLICABLE        33% BUT LESS       TO OR GREATER
 LEVEL           MOODY'S              RATE            LIBO RATE          THAN 66%)           THAN 66%)
-------     -----------------     ------------     ---------------     -------------     ---------------
<S>         <C>                   <C>              <C>                 <C>               <C>
   1             BBB/Baa2           12.5 bps           75.0 bps          12.5 bps            12.5 bps
               (or higher)

   2            BBB-/Baa3           20.0 bps          105.0 bps          25.0 bps            25.0 bps

   3             BB+/Ba1            25.0 bps          125.0 bps          25.0 bps            25.0 bps

   4              BB/Ba2            30.0 bps          145.0 bps          50.0 bps            50.0 bps

   5             BB-/Ba3            62.5 bps          175.0 bps          50.0 bps           100.0 bps

   6              B+/B1             75.0 bps          212.5 bps          50.0 bps           100.0 bps
               (or lower)
</TABLE>

         (b) The defined term "Borrowing Base Date" in Section 1.01 of the
Credit Agreement is amended in its entirety to read as follows:

                  "Borrowing Base Date" means November 24, 2003.

         (c) The defined term "Maturity Date" in Section 1.01 of the Credit
Agreement is amended in its entirety to read as follows:

                  "Maturity Date" means February 11, 2004.

         (d) Section 6.16 of the Credit Agreement is amended in its entirety to
read as follows:

                           6.16 BORROWING BASE CERTIFICATE. The Borrower shall
                  deliver to the Administrative Agent, on the date of delivery
                  of the first Loan Notice under this Agreement after the
                  occurrence of the Borrowing Base Date, (a) a completed
                  Borrowing Base Certificate and (b) full and complete reports
                  with respect to the Receivables of the Borrower and its U.S.
                  Subsidiaries, including information as to concentration,
                  aging, identity of Receivables Debtors, letters of credit
                  securing Receivables, disputed Receivables and other matters,
                  as the Administrative Agent shall reasonably request. After
                  (i) the Borrowing Base Date, and (ii) the extension of a
                  Revolving Loan hereunder, the Borrower shall deliver to the
                  Administrative Agent, as soon as available but in any event by
                  no later than ten Business Days after the end of each calendar
                  month, a completed Borrowing Base Certificate,

                                       2
<PAGE>

                  together with the related collateral reports described above.
                  Without limiting any other provisions of the Loan Documents,
                  if the Minimum Capital Raise has not been consummated on or
                  before October 31, 2003, the Borrower shall cooperate fully
                  with and permit access by the Agent-Related Persons and their
                  consultants from after that date for purposes of auditing the
                  Receivables in connection with the implementation of the
                  Borrowing Base and pay to Administrative Agent upon demand all
                  reasonable costs and expenses of such audit.

         (e) Clause (iii) of Section 7.13(b) of the Credit Agreement is amended
to read as follows:

                  (iii) an amount equal to (A) 50% of the aggregate increases in
         Shareholders' Equity of the Borrower and its Subsidiaries after
         November 30, 2002, by reason of the issuance and sale of Capital Stock
         of the Borrower (including upon any conversion of debt securities of
         the Borrower (other than ACES) into such Capital Stock) during any
         fiscal quarter of the Borrower ending subsequent to November 30, 2002,
         plus (B) 100% of the aggregate increases in Shareholders' Equity of the
         Borrower and its Subsidiaries after November 30, 2002, by reason of the
         conversion of ACES into Capital Stock during any fiscal quarter of the
         Borrower ending subsequent to November 30, 2002.

         (f) Clause (i) of Section 7.13(c) of the Credit Agreement shall be
amended by replacing the table contained therein with the following table:

<TABLE>
<CAPTION>
FISCAL QUARTER ENDING                 MINIMUM RATIO
---------------------                 -------------
<S>                                   <C>
November 30, 2003                      1.85 to 1.00
</TABLE>

         (g) Clause (ii) of Section 7.13(e) of the Credit Agreement is amended
by replacing "$500,000,000.00" with "$700,000,000.00".

         (h) References in the Credit Agreement to the Borrowing Base, Borrowing
Base Date and related definitions and provisions, which were deemed to be
deleted from the Credit Agreement pursuant to the Second Amendment, shall be
reinstated in full (except as expressly amended herein); provided, however, that
if the Borrower shall have consummated a Minimum Capital Raise on or before
January 30, 2004, effective the date upon which the Borrower shall notify the
Administrative Agent thereof, references in the Credit Agreement to the
Borrowing Base, Borrowing Base Date and related definitions and provisions shall
again be disregarded and deemed to be deleted from the Credit Agreement.

         (i) Schedule 3 to the Compliance Certificate attached to the Credit
Agreement as Exhibit C, is amended and restated in its entirety to read as set
forth in Annex 1 hereto.

3.       Representations and Warranties. The Borrower hereby represents and
warrants to the Administrative Agent and the Lenders as follows:

                                       3
<PAGE>

         (a) No Default or Event of Default has occurred and is continuing (or
would result from the amendment of the Credit Agreement contemplated hereby).

         (b) The execution, delivery and performance by the Borrower of the
Amendment Documents have been duly authorized by all necessary corporate and
other action and do not and will not require any registration with, consent or
approval of, or notice to or action by, any Person (including any Governmental
Authority) in order to be effective and enforceable.

         (c) The Amendment Documents constitute the legal, valid and binding
obligations of the Borrower, enforceable against it in accordance with their
respective terms, except to the extent that the enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other laws affecting creditor's rights generally and by equitable principles
(regardless of whether enforcement is sought in equity or at law).

         (d) All representations and warranties of the Borrower contained in the
Credit Agreement are true and correct in all material respects (except to the
extent such representations and warranties expressly refer to an earlier date,
in which case they shall be true and correct as of such earlier date and except
that this subsection (d) shall be deemed instead to refer to the last day of the
most recent quarter and year for which financial statements have then been
delivered in respect of the representation and warranty made in Section 5.05 of
the Credit Agreement and to take into account any amendments to the Schedules to
the Credit Agreement and other disclosures made in writing by the Borrower to
the Administrative Agent and the Lenders after the Closing Date and approved by
the Administrative Agent and the Required Lenders).

         (e) There has occurred since August 27, 2003, no event or circumstance
that has resulted or could reasonably be expected to result in a Material
Adverse Effect.

         (f) The Borrower is entering into this Amendment on the basis of its
own investigation and for its own reasons, without reliance upon the
Administrative Agent and the Lenders or any other Person.

         (g) The Borrower's obligations under the Credit Agreement and under the
other Loan Documents are not subject to any defense, counterclaim, set-off,
right of recoupment, abatement or other claim.

4.       Conditions of Effectiveness.

         (a) The effectiveness of Section 2 of this Amendment shall be subject
to the satisfaction of each of the following conditions precedent:

                  (1) The Administrative Agent shall have received from the
Borrower and each Lender a duly executed original (or, if elected by the
Administrative Agent, an executed facsimile copy) of this Amendment.

                  (2) The Administrative Agent shall have received the consent
of the Subsidiaries of the Borrower party to the Pledge Agreement, the Interco
Subordination Agreement, the

                                       4
<PAGE>

Security Agreement or the Guaranty, in form and substance satisfactory to the
Administrative Agent, in their capacities as such, to the execution and delivery
hereof by the Borrower.

                  (3) The Administrative Agent shall have received evidence of
payment by the Borrower of all fees, costs and expenses due and payable as of
the date hereof hereunder and under the Credit Agreement, including any fees
arising under or referenced in Section 5 of this Amendment and any costs and
expenses payable under Section 6(g) of this Amendment (including the
Administrative Agent's Attorney Costs, to the extent invoiced on or prior to the
date hereof).

                  (4) The Administrative Agent shall have received from the
Borrower, in form and substance satisfactory to the Administrative Agent, copies
of the resolutions passed by the board of directors of the Borrower, certified
as of the date hereof by the Secretary or an Assistant Secretary of the
Borrower, authorizing the execution, delivery and performance of this Amendment,
together with such incumbency certificates and/or other certificates of
Responsible Officers of the Borrower, as the Administrative Agent may require to
establish the identities of and verify the authority and capacity of each
Responsible Officer thereof authorized to act as such in connection with this
Amendment and each other Loan Document to which the Borrower is a party.

                  (5) The Administrative Agent shall have received all other
documents it or the Required Lenders may reasonably request relating to any
matters relevant hereto, all in form and substance satisfactory to the
Administrative Agent.

                  (6) The Effective Date shall have occurred on or before 5:00
p.m. (Pacific time) November 21, 2003.

         (b) For purposes of determining compliance with the conditions
specified in Section 4(a), each Lender that has executed this Amendment shall be
deemed to have consented to, approved or accepted, or to be satisfied with, each
document or other matter either sent, or made available for inspection, by the
Administrative Agent to such Lender for consent, approval, acceptance or
satisfaction, or required thereunder to be consented to or approved by or
acceptable or satisfactory to such Lender.

         (c) From and after the Effective Date, the Credit Agreement is amended
as set forth herein. Except as expressly amended pursuant hereto, the Credit
Agreement shall remain unchanged and in full force and effect and is hereby
ratified and confirmed in all respects.

         (d) The Administrative Agent will notify the Borrower and the Lenders
of the occurrence of the Effective Date.

5.       Fees. The Borrower shall pay (through the Administrative Agent) to each
Lender that executes and delivers this Amendment by no later than 12:00 p.m.
(Pacific time) on November 21, 2003, a non-refundable amendment fee equal to
0.05% of such Lender's Revolving Loan Commitment as of the Effective Date. Such
amendment fee shall be fully-earned upon becoming due and payable, shall not be
refundable for any reason whatsoever and shall be in addition to

                                       5
<PAGE>

any fee, cost or expense otherwise payable by the Borrower pursuant to the
Credit Agreement or this Amendment.

6.       Miscellaneous.

         (a) The Borrower acknowledges and agrees that the execution and
delivery by the Administrative Agent and the Lenders of this Amendment shall not
be deemed to create a course of dealing or an obligation to execute similar
waivers or amendments under the same or similar circumstances in the future.

         (b) This Amendment shall be binding upon and inure to the benefit of
the parties hereto and thereto and their respective successors and assigns.

         (c) This Amendment shall be governed by and construed in accordance
with the law of the State of New York (including Sections 5-1401 and 5-1402 of
the General Obligations Law of the State of New York), provided that the
Administrative Agent and the Lenders shall retain all rights arising under
Federal law.

         (d) This Amendment may be executed in any number of counterparts, each
of which shall be deemed an original, but all such counterparts together shall
constitute but one and the same instrument. Each of the parties hereto
understands and agrees that this document (and any other document required
herein) may be delivered by any party thereto either in the form of an executed
original or an executed original sent by facsimile transmission to be followed
promptly by mailing of a hard copy original, and that receipt by the
Administrative Agent of a facsimile transmitted document purportedly bearing the
signature of a Lender or the Borrower shall bind such Lender or the Borrower,
respectively, with the same force and effect as the delivery of a hard copy
original. Any failure by the Administrative Agent to receive the hard copy
executed original of such document shall not diminish the binding effect of
receipt of the facsimile transmitted executed original of such document of the
party whose hard copy page was not received by the Administrative Agent.

         (e) This Amendment and the other Amendment Documents contain the entire
and exclusive agreement of the parties hereto with reference to the matters
discussed herein. This Amendment supersedes all prior drafts and communications
with respect hereto. This Amendment may not be amended except in accordance with
the provisions of Section 10.01 of the Credit Agreement.

         (f) If any term or provision of this Amendment shall be deemed
prohibited by or invalid under any applicable law, such provision shall be
invalidated without affecting the remaining provisions of this Amendment, the
Credit Agreement or the Loan Documents.

         (g) The Borrower agrees to pay or reimburse Bank of America (including
in its capacities as Collateral Agent and as Administrative Agent), GSCP,
JPMorgan and Scotiabank upon demand, for all reasonable costs and expenses
(including reasonable Attorney Costs) incurred by Bank of America (including in
its capacities as Collateral Agent and as Administrative Agent), GSCP, JPMorgan
and Scotiabank in connection with the development, preparation, negotiation,
execution and delivery of the Amendment Documents.

                                       6
<PAGE>

              [Signature pages and Exhibits follow - Not Attached]

                                       7<PAGE>
                                                                  EXHIBIT 10.31

                              *** 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), 200.83 AND 230.406.

                                    AGREEMENT

      THIS AGREEMENT (the "Agreement") is made as of December 8, 2003 (the
"Effective Date"), by and between ANADYS PHARMACEUTICALS, INC., a Delaware
corporation with its offices at 9050 Camino Santa Fe, San Diego, CA 92121
("Anadys") and DAIICHI PHARMACEUTICAL CO. LTD., a Japanese corporation with a
place of business at 14-10, Nihonbashi 3-chome, Chuo-ku, Tokyo 103-8234, Japan
("Daiichi").

                                    RECITALS

      WHEREAS, Daiichi possesses a library of chemically diverse compounds (the
"Daiichi Library") and desires that Anadys perform an evaluation of Anadys'
proprietary affinity based screening technology referred to as ATLAS(TM) (Any
Target Ligand Affinity Screen) ("ATLAS"), which can be used for high throughput
screening for protein targets of both known and unknown function;

      WHEREAS, Daiichi has [...***...] ([...***...]) drug targets (the "Daiichi
Targets") against which it desires that Anadys use ATLAS(TM) to screen up to
[...***...] ([...***...]) compounds from the Daiichi Library (the "Daiichi
Compounds") against each of the [...***...] ([...***...]) Daiichi Targets; and

      WHEREAS, Anadys desires to utilize ATLAS(TM) to screen the Daiichi Targets
against the Daiichi Compounds in order to identify for Daiichi those compounds
which are most likely to show activity in relation to the Daiichi Targets and
therefore may provide Daiichi the opportunity to evaluate ATLAS(TM) affinity
screening performance against the Daiichi Targets relative to other screens
performed by Daiichi on the Daiichi Targets.

      NOW, THEREFORE, in consideration of the foregoing premises and the
covenants set forth below, the Parties hereby agree as follows:

1.    RESEARCH.

      (a) WORK PLAN AND GENERAL OBLIGATIONS. The Parties have agreed upon the
work plan ("WORK PLAN") attached hereto as Exhibit A, which sets forth the
specific activities that Anadys will undertake under this Agreement. The Work
Plan may be amended in writing by the parties.

      (b) JOINT RESEARCH COMMITTEE.

            (i) FORMATION. The Parties will establish after the Effective Date a
joint research committee comprised of three (3) members from each Party ("JOINT
RESEARCH COMMITTEE" or "JRC"). A Party may designate substitutes for its JRC
members to participate if

                                             ***CONFIDENTIAL TREATMENT REQUESTED

                                       1.
<PAGE>
one or more of such Party's members cannot attend a meeting. A Party may replace
any of its JRC members by giving the other Party notice stating the member to be
replaced and the replacement.

            (ii) RESPONSIBILITIES. The JRC shall have overall responsibility for
(1) reviewing modifications to the Work Plan, and (2) facilitating receipt of
and discussing information regarding Hit Compounds (hereinafter defined). The
role of the JRC shall be advisory.

            (iii) MEETINGS. The JRC will meet at least once per calendar
quarter, or as requested by a Party's JRC members. Meetings will take place via
teleconference, videoconference, or face to face meeting.

      (c) CONDUCT OF RESEARCH.

            (i) On or about January 15, 2004, Daiichi will supply to Anadys the
quantities of protein of the Daiichi Targets set forth in the Work Plan and the
Daiichi Compounds, as selected by Daiichi. Anadys will diligently use its assay
development and validation capabilities to develop two (2) validated screening
assays for use with ATLAS(TM) for the Daiichi Targets (each, a "TARGET ASSAY")
pursuant to the Work Plan.

            (ii) Anadys will use the Target Assays to conduct screening of up to
[...***...] Daiichi Compounds (excluding controls) provided by Daiichi pursuant
to 1(c)(i). For purposes of this Agreement, a Hit Compound shall mean a Daiichi
Compound: (1) whose identity and purity has been confirmed by liquid
chromatography mass spectrometry; and (2) that interacts with the Daiichi Target
in an ATLAS assay at a potency of [...***...] ([...***...]) or less.

            (iii) During the term of this Agreement, Daiichi may visit the
Anadys facilities to observe and investigate assay development and screening
conducted under this Agreement; provided that Daiichi gives at least fourteen
(14) days advance notice to Anadys to schedule any such visit.

            (iv) Anadys will provide Daiichi with written updates as to the
progress of the screening and will identify all Hit Compounds and their relevant
Target Assay results. At the end of the screening using a Target Assay, Anadys
will provide Daiichi with a written screening report including results of the
screening, including Target Assay results for all Daiichi Compounds.

      (d) SUCCESS CRITERIA.

            (i) If, during the term of this Agreement, as to one or both of the
Daiichi Targets, (1) Anadys generates assay Z' values of [...***...] or higher
and (2) identifies Hit Compounds; [...***...] percent ([...***...]%) of which
Hit Compounds are confirmed as binders of the target by either: (a) a Biacore
assay, which assay shall be qualified by demonstrating detection of a known
binder and shall be conducted by Daiichi within thirty (30) days after
submission of the screening report; or (b) if Anadys is not satisfied by the
results of

                                             ***CONFIDENTIAL TREATMENT REQUESTED

                                       2.
<PAGE>
such Biacore assay, by a circular dichroism assay, which shall be conducted by
Anadys, then Anadys shall be deemed to have satisfied the "Success Criteria" for
such Daiichi Target and shall be entitled to a Success Payment for such Daiichi
Target, as provided for in Section 4.2.

2.    SHIPMENT OF COMPOUNDS

      2.1 SHIPMENT. All deliveries pursuant to this Agreement shall be shipped
to the address and addressee specified by the receiving party and shall be
prepaid by the shipper.

      2.2 COSTS. Except for the Screening Fee pursuant to Section 4.1, each
Party will bear its own costs and expenses for its activities under the Work
Plan, including without limitation materials, labor, equipment and overhead
costs.

3.    FUTURE AGREEMENT; NO REVERSE ENGINEERING

      3.1 NEGOTIATIONS FOR FUTURE AGREEMENT OF LICENSE OF ATLAS(TM). If Anadys
achieves the Success Criteria with respect to one or both of the Daiichi Targets
and Daiichi wishes to use the ATLAS(TM) technology, then the Parties may enter
into good faith discussions concerning the financial and other terms with
respect to further utilization of ATLAS(TM) and/or the license of ATLAS(TM) by
Anadys, on a limited and non-exclusive basis, to Daiichi for use by Daiichi in
its internal drug discovery efforts.

      3.2 COVENANT NOT TO REVERSE ENGINEER. Anadys shall not attempt to
ascertain, by any means, the chemical structure or any other information
concerning any compound supplied by Daiichi hereunder. Anadys shall not use the
quantities of protein of the Daiichi Targets or the Daiichi Compounds or the
Research Results (as defined in the Work Plan) for any purpose other than the
conduct of the Work Plan in accordance with this Agreement; provided, however,
that upon receiving Daiichi's prior written consent, which consent shall not be
unreasonably withheld, Anadys may use the statistic data of the number of hits
obtained for internal research purposes and may disclose to third parties
without reference to the Research Results, the statistic of the number of hits
obtained and the fact that the Daiichi Targets are in a defined therapeutic
area, without disclosing any other information, including, without limitation,
the identity of the Daiichi Targets.

4.    PAYMENT

      4.1 SCREENING FEE. Daiichi shall pay to Anadys a nonrefundable-screening
fee of [...***...] United States Dollars (US $[...***...]) within twenty-one
(21) days after the Effective Date.

      4.2   SUCCESS PAYMENTS.

            (a) If Anadys satisfies the Success Criteria for a Daiichi Target in
accordance with Section 1(d), then Daiichi will pay to Anadys a Success Payment
of [...***...] United States Dollars (US $[...***...]) for each such Daiichi
Target, payable within twenty one (21) days from the date of achieving the
Success Criteria. If Daiichi pays one or both Success Payments provided for in
this Section 4.2, such Success Payment(s) shall be creditable against

                                             ***CONFIDENTIAL TREATMENT REQUESTED

                                       3.
<PAGE>
any future payments Daiichi may be obligated to pay Anadys under a further
collaboration, if entered into as contemplated by Section 3.1 above.

5.    OWNERSHIP OF INVENTIONS

      5.1 The ownership of inventions conceived of and reduced to practice as
part of the activities under this Agreement ("Inventions") shall belong to
Daiichi, provided, however, that any Invention relating to any improvements to
ATLAS(TM) shall belong to Anadys.

6.    CONFIDENTIAL INFORMATION.

      6.1 NON-DISCLOSURE OBLIGATION. During the term of this Agreement and for
[...***...] ([...***...]) years following its expiration or termination, any and
all knowledge, know-how, assay information, compound structures, practices,
processes or other information received by one party to this Agreement (the
"Receiving Party") from the other party to this Agreement (the "Disclosing
Party") pursuant to this Agreement (hereinafter referred to as "Confidential
Information") shall be received and maintained by the Receiving Party in strict
confidence, shall not be disclosed to any third party, and shall not be used by
the Receiving Party for any purpose other than those purposes specified in this
Agreement, unless the Receiving Party can demonstrate by competent written proof
that such Confidential Information:

            (a) was already known to the Receiving Party, other than under an
obligation of confidentiality, at the time of disclosure by the Disclosing
Party;

            (b) was generally available to the public or otherwise part of the
public domain at the time of its disclosure to the Receiving Party;

            (c) became generally available to the public or otherwise part of
the public domain after its disclosure and other than through any act of
omission of the Receiving Party in breach of this Agreement;

            (d) was disclosed to the Receiving Party, other than under an
obligation of confidentiality to a third party, by a third party who had no
obligation to the Disclosing Party not to disclose such information to others;
or

            (e) was independently discovered or developed by the Receiving Party
without the use of Confidential Information belonging to the Disclosing Party.

It is understood that Daiichi may use and disclose the Target Assay results
without any restraint.

      6.2 AUTHORIZED DISCLOSURE. Each Party may disclose Confidential
Information belonging to the other Party to the extent such disclosure is
reasonably necessary in the following instances:

            (a) filing or prosecuting patents relating to Inventions;

            (b) prosecuting or defending litigation;

                                             ***CONFIDENTIAL TREATMENT REQUESTED

                                       4.
<PAGE>
            (c) complying with applicable governmental regulations;

            (d) disclosure to affiliates, sublicensees, employees, consultants,
or agents each of whom is bound by similar terms of confidentiality and non-use
at least equivalent in scope to those set forth in this Section 6; and

            (e) disclosure to investment bankers.

Notwithstanding the foregoing, in the event a Party is required to make a
disclosure of the other Party's Confidential Information pursuant to this
Section 6.2 it will, except where impracticable, give reasonable advance notice
to the other Party of such disclosure and use best efforts to take all
reasonable action to avoid disclosure of Confidential Information hereunder.

7.    REPRESENTATIONS AND WARRANTIES

      7.1 BY ANADYS. Anadys represents and warrants to Daiichi that it has the
right to carry out the activities under Section 1 above and that it has not
previously entered and will not enter during the term of this Agreement into any
agreement with a third party in conflict with this Agreement.

      7.2 BY DAIICHI. Daiichi represents and warrants to Anadys that it has the
right to provide the protein of the Daiichi Targets and Daiichi Compounds to be
supplied hereunder to Anadys.

8.    TERM; TERMINATION

      8.1 TERM. This Agreement shall become effective as of the Effective Date
and unless earlier terminated in accordance with this Section 8, shall expire
thirty (30) days after submission of the second screening report. The term of
this Agreement may be extended for additional periods from time to time upon
mutual agreement of the parties hereto.

      8.2 TERMINATION FOR BREACH. In the event that either party to this
Agreement shall be in default of any of its material obligations hereunder and
shall fail to remedy such default within thirty (30) days after receipt of
written notice thereof, the party not in default shall have the option of
terminating this Agreement by giving written notice thereof, notwithstanding
anything to the contrary contained in this Agreement.

      8.3 ACCRUED RIGHTS; SURVIVING OBLIGATIONS. Termination of this Agreement
shall not affect any accrued rights of either Party. The terms of Section 3.2
and 8.3 and Sections 5, 6, and 9 of this Agreement shall survive termination of
this Agreement. Promptly after termination of this Agreement Anadys shall return
or dispose of any materials and information of Daiichi in accordance with the
instructions of Daiichi, including without limitation any protein of the Daiichi
Targets and the Daiichi Compounds provided by Daiichi hereunder and written
materials disclosed by Daiichi hereunder.

                                       5.
<PAGE>
9.    GOVERNING LAW; DISPUTE RESOLUTION

      9.1 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the domestic laws of Japan without giving effect to any choice
or conflict of law provision or rule that would cause the application of the
laws of any jurisdiction other than Japan.

      9.2 DISPUTE RESOLUTION. In the event of any controversy or claim arising
out of, relating to or in connection with any provision of this Agreement, the
parties shall try to settle their differences amicably and in good faith between
themselves first, by referring the disputed matter to the respective heads of
research of each Party and, if not resolved by the research heads, then either
party may refer the matter to be settled by binding arbitration. The arbitration
shall be held in Tokyo, Japan if it is initiated by Anadys in accordance with
the arbitration rules of the Japan Commercial Arbitration Association, or in San
Diego, CA, USA, if it is initiated by Daiichi in accordance with the arbitration
rules of the American Arbitration Association.

10.   MISCELLANEOUS

      10.1 NOTICES. All notices required or permitted to be given under this
Agreement shall be in writing and shall be mailed by registered or certified
airmail, postage prepaid, addressed to the signatory to whom such notice is
required or permitted to be given or transmitted by facsimile to the number
indicated below. All notices shall be deemed to have been given when mailed, as
evidenced by the postmark at the point of mailing, or transmitted by facsimile.

      All notices to Daiichi shall be addressed as follows:

                  Daiichi Pharmaceutical Co., Ltd.
                  16-13, Kita-Kasai 1-Chome
                  Edogawa-Ku, Tokyo 134-8630 Japan
                  Attention:  Tadashi Horiuchi, General Manager,
                  Discovery Research Laboratories
                  Fax:  [...***...]

      All notices to Anadys shall be addressed as follows:

                  Anadys Pharmaceuticals, Inc.
                  9050 Camino Santa Fe
                  San Diego, CA 92121
                  Attention: Michael Kamdar, Vice President,
                  Corporate Development & Strategy
                  Fax: [...***...]

                                             ***CONFIDENTIAL TREATMENT REQUESTED

                                       6.
<PAGE>
       with a copy to:

                  Anadys Pharmaceuticals, Inc.
                  9050 Camino Santa Fe
                  San Diego, CA 92121
                  Attention: Elizabeth E. Reed, Senior Director, Legal Affairs
                  Fax: [...***...]

Any Party may, by written notice to the other, designate a new addressee,
address or facsimile number to which notices to the Party giving the notice
shall thereafter be mailed or faxed.

      10.2 INDEPENDENT CONTRACTORS. The Parties shall perform their obligations
under this Agreement as independent contractors and nothing contained in this
Agreement shall be construed to be inconsistent with such relationship status.
This Agreement shall not constitute, create or in any way be interpreted as a
joint venture or partnership of any kind.

      10.3 ENTIRE AGREEMENT; AMENDMENT. This Agreement sets forth all the
covenants, promises, agreements, warranties, representations, conditions and
understandings between the Parties hereto and supersedes and terminates all
prior agreements and understandings between the Parties hereto with regard to
the subject matter hereof, and there are no covenants, promises, agreements,
warranties, representations, conditions or understandings, either oral or
written, between the Parties hereto 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 hereto.

      10.4 AFFILIATES; ASSIGNMENT. Except as otherwise provided in this Section
10.4, neither Party may assign its rights or obligations under this Agreement
without the prior written consent of the other Party, such consent not to be
unreasonably withheld, except that a Party may assign its rights or obligations
to a third party in connection with the merger, consolidation, reorganization or
acquisition of stock or assets affecting substantially all of the assets or
actual voting control of the assigning Party. This Agreement shall be binding
upon the successors and permitted assigns of the Parties. Any attempted
delegation or assignment not in accordance with this Section 10.4 shall be of no
force or effect.

      10.5 HEADINGS. The headings used in this Agreement are for convenience of
reference only and are not intended to be a part of or to affect the meaning or
interpretation of this Agreement.

      10.6 FORCE MAJEURE. Any delays in performance by any Party under this
Agreement shall not be considered a breach of this Agreement if and to the
extent caused by occurrences beyond the reasonable control of the Party
affected, including but not limited to, acts of God, embargoes, governmental
restrictions, strikes or other concerted acts of workers, fire, flood,
explosion, riots, wars, civil disorder, rebellion or sabotage. The Party
suffering such occurrence shall immediately notify the other Party and any time
for performance hereunder shall be extended by the actual time of delay caused
by the occurrence.

                                             ***CONFIDENTIAL TREATMENT REQUESTED

                                       7.
<PAGE>
      10.7 SEVERABILITY. If any term, condition or provision of this Agreement
is held to be unenforceable for any reason, it shall, if possible, be
interpreted rather than voided, in order to achieve the intent of the Parties to
this Agreement to the extent possible. In any event, all other terms, conditions
and provisions of this agreement shall be deemed valid and enforceable to the
full extent.

      10.8 WAIVER. None of the terms, covenants, and conditions of this
Agreement can be waived except by the written consent of the Party waiving
compliance.

      10.9 ENGLISH LANGUAGE. This Agreement has been prepared in the English
language and shall be construed in the English language.

      10.10 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.

      IN WITNESS WHEREOF, the parties have by duly authorized persons, executed
this Agreement, as of the date first above written.

DAIICHI PHARMACEUTICAL CO. LTD.           ANADYS PHARMACEUTICALS, INC.

By: /s/ Tadashi Horiuchi                 By: /s/ Michael J. Kamdar
    -----------------------------------      -----------------------------------

Name: Tadashi Horiuchi                   Name: Michael J. Kamdar
      ---------------------------------        ---------------------------------

Title:  General Manager                  Title: Vice President,
        Discovery Research Laboratories         Corporate Development & Strategy

                                       8.
<PAGE>
                                    Exhibit A

                                    Work Plan

ATLAS(TM) WORK PLAN FOR DAIICHI

PURPOSE:

To validate ATLAS(TM) as an affinity-based screening assay for high-throughput
compound screening and lead discovery through feasibility studies of Daiichi
targets

MATERIALS

Daiichi will provide Anadys the target protein with [...***...] for protein
characterization ([...***...]mg)*, assay development and optimization
([...***...]mg)*, and compounD screening (depending on number of compounds and
ATLAS assay results).

Daiichi will provide Anadys the screening compounds (up to [...***...]
compounds), the format and quantity of which are to be determined. Examples are
3 uL of 2 mg/mL in DMSO Or 50-100 uL of 0.2 mg/mL in 10% DMSO.

* Specific quantity of protein depends on Daiichi target proteins.

PROPOSED WORK PLAN

1.    CHARACTERIZATION OF TARGET PROTEIN

      -     CD (circular dichroism) to assess protein folding

            -     Effect of buffers, pH, salt, additives

      -     CD-melting profiles to assess protein thermal denaturation

            -     Effect of known ligands (if available)

      -     DSC (differential scanning calorimetry) to determine melting
            temperature (Tm)

      -     DLS (dynamic light scattering to assess protein aggregation upon
            thermal denaturation Section Effect of known ligands (if available)

      -     EXPECTED RESULTS

            -     Protein is folded at room temperature (by CD)

            -     Protein undergoes thermal denaturation with a biphasic profile
                  and defined Tm

            -     DSC gives similar Tm

                                             ***CONFIDENTIAL TREATMENT REQUESTED

                                       9.
<PAGE>
            -     DLS indicate aggregation

            -     Known ligands protect thermal denaturation by CD and
                  aggregation by DLS (if known ligands are available)

2.    ASSAY DEVELOPMENT AND OPTIMIZATION

      -     ATLAS profiles at various protein concentration

      -     Optimized conditions for protein conc., antibody conc., buffers, pH,
            salt, additives

      -     Kinetic profiles at various protein concentrations and T-ATLAS

      -     Selection of T-ATLAS

      -     Effect of ATLAS [...***...] by known ligands (if available)

      -     Validation of the ATLAS assay on the robotic system

      -     Screening of [...***...] DMSO plates to assess inner- and
            inter-plate variations and Z' values

      -     EXPECTED RESULTS

            -     ATLAS signal has a >[...***...]-fold window at T-ATLAS

            -     Kinetic traces are linear at T-ATLAS

            -     Protein concentration dependence is linear

            -     Known ligands shift ATLAS profiles (if known ligands are
                  available)

            -     The [...***...]-fold signal window at T-ATLAS is maintained on
                  the robotic system

            -     Z' values are [...***...] or higher

3.    COMPOUND FORMATTING AND ASSAY PLATE PREPARATION

      -     Anadys recommends final screening conc. to be [...***...] ug/mL

      -     May require intermediate dilution of high concentration stocks

4.    PILOT SCREEN

      -     Screening of up to [...***...] compounds in duplicate at [...***...]
            ug/mL from Daiichi library by the robotic system

      -     EXPECTED RESULTS

            -     Z' values for pilot screen are [...***...] or higher

5.    COMPOUND SCREENING

      -     Screening of up to [...***...] compounds excluding controls at
            [...***...] ug/mL in singlet from the Daiichi library by the robotic
            system

      -     EXPECTED RESULTS

            -     Z' values are [...***...] or higher

            -     Identification Hit Compounds

            -     A Hit Compound shall mean a Daiichi Compound:

                  -     (1) whose identity and purity has been confirmed by
                        Liquid Chromatography Mass Spectrometry; and (2) that
                        interacts

                                             ***CONFIDENTIAL TREATMENT REQUESTED

                                       10.
<PAGE>
                        with and regulates the activity of the Target in an
                        ATLAS assay with an IC50 value of [...***...] or less

6.    HIT CONFIRMATION AND FOLLOW UP

                  -     Retest the hits in triplicate at the screening
                        concentration

                  -     Generate dose-response curves for the above confirmed
                        hits

      GENERATION OF A DETAILED SCREENING REPORT FOR EACH OF THE SCREENS,
CONTAINING KEY RESULTS

                                             ***CONFIDENTIAL TREATMENT REQUESTED

                                      11.

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