Document:

exv10w35

 

Exhibit 10.35

BIOSANTE PHARMACEUTICALS, INC.

DESCRIPTION OF NON-EMPLOYEE DIRECTOR

COMPENSATION ARRANGEMENTS

     Retainer and Meeting Fees. Except as described below, each of our non-employee directors is
paid a $20,000 annual retainer and $1,000 for each board or committee meeting attended in person
and $500 for each board or committee meeting attended via telephone. Our Chairman of the Board is
paid a $45,000 annual retainer and our Chairman of the Audit and Finance Committee is a paid a
$25,000 annual retainer.

     Stock
Options.  Non-employee directors are granted options to purchase shares of BioSante
common stock from time to time in the sole discretion of the board of directors.

     Reimbursement of Expenses. Non-employee directors are reimbursed for actual expenses, include
travel expenses, incurred in attending board and committee meetings.exv10w36

 

Exhibit 10.36

BIOSANTE PHARMACEUTICALS, INC.

DESCRIPTION OF EXECUTIVE OFFICER

COMPENSATION ARRANGEMENTS

     BioSante Pharmaceuticals, Inc. has entered into employment agreements with each of its
executive officers, copies of which agreements have been filed with the Securities and Exchange
Commission, as exhibits to BioSante’s annual report on Form 10-KSB. The following is a description
of oral amendments to those employment agreements or additional oral compensation arrangements
between BioSante and the following executive officers of BioSante:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Name of	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Executive	 	 	 	 	 	Base	 	 	Bonus	 	 	Stock	 	 	 	 
	 	Officer	 	 	Title	 	 	Salary	 	 	Arrangements	 	 	Options	 	 	Other	 
	 	Stephen M. Simes

	 	 	Vice Chairman,
President and Chief
Executive Officer
	 	 	$360,000 per year.
See footnote (1)
below
	 	 	See footnote (2)

below
	 	 	Stock options to
purchase shares of
BioSante common
stock are granted
from time to time
in the sole
discretion of the
Compensation
Committee of the
BioSante Board of
Directors.
Historically, such
options have been
granted on an
annual basis. See
footnote (3)
	 	 	Under the BioSante
Pharmaceuticals,
Inc. 401(k) Savings
Plan, participants,
including executive
officers, may
voluntarily request
that BioSante
reduce pre-tax
compensation by up
to 100% (subject to
certain special
limitations) and
contribute such
amounts to a trust.
BioSante
contributed an
amount equal to 50%
of the amount that
each participant
contributed under
this plan.

Executive officers
receive other
benefits received
by other BioSante
employees,
including health,
dental and life
insurance benefits.

	 
	 	Phillip B. Donenberg

	 	 	Chief Financial
Officer, Treasurer
and Secretary
	 	 	$191,000 per year.
See footnote (1)
below
	 	 	See footnote (2)

below
	 	 	See above
	 	 	See above	 
	 	Leah M. Lehman,
Ph.D.

	 	 	Vice President,

Product Development
	 	 	$240,000 per year.
See footnote (1)
below
	 	 	See footnote (2)

below
	 	 	See above
	 	 	See above	 
	 	Steven J. Bell,
Ph.D.

	 	 	Vice President,
Research and
Pre-Clinical
Development
	 	 	$160,000 per year .
See footnote (1)
below
	 	 	See footnote (2)

below
	 	 	See above
	 	 	See above	 
	 

 

 

	(1)	 	Annual base salaries for BioSante’s executive officers are determined each year by
BioSante’s Compensation Committee. The base salaries listed in this table are base
salaries for 2004. As of March 24, 2005, the Compensation Committee had not made a final
determination of the annual base salaries to be paid to BioSante’s executive officers for
2005. Once determined, the new annual base salaries will be effective retroactively as of
January 1, 2005.
	 
	(2)	 	Annual performance bonuses for BioSante’s executive officers are determined each year
by BioSante’s Compensation Committee. As of March 24, 2005, the Compensation Committee
had not made a final determination of the amount, if any, of annual performance bonuses to
be paid to BioSante’s executive officers for the year ended December 31, 2004.
	 
	(3)	 	As of March 24, 2005, the Compensation Committee had not made a final determination of
how many, if any, stock options would be granted this year to BioSante’s executive
officers.<PAGE>

                                                                    EXHIBIT 10.1

                                CONFIDENTIAL TREATMENT REQUESTED - REDACTED COPY
  CONFIDENTIAL TREATMENT REQUESTED: INFORMATION FOR WHICH CONFIDENTIAL TREATMENT
       HAS BEEN REQUESTED IS OMITTED AND NOTED WITH "***." AN UNREDACTED VERSION
   OF THIS DOCUMENT HAS BEEN SUBMITTED SEPARATELY TO THE SECURITIES AND EXCHANGE
       COMMISSION.

                        DEVELOPMENT AND SUPPLY AGREEMENT

      THIS DEVELOPMENT AND SUPPLY AGREEMENT (this "Agreement"), effective as of
March 24, 2005 (the "Effective Date") is entered into between BAXTER HEALTHCARE
CORPORATION with its principal place of business at One Baxter Parkway,
Deerfield, Illinois 60015-4633 ("Baxter"), and HALOZYME, INC. with its principal
place of business at 11588 Sorrento Valley Road, Suite 17, San Diego, California
92121 ("Halozyme").

      WHEREAS Halozyme is the owner or exclusive licensee of certain patents,
formulations and know-how related to the Product (as defined below);

      WHEREAS Baxter, or one or more of its affiliates has the expertise and the
manufacturing facility suitable for the Production (as defined below) of
Product;

      WHEREAS, Halozyme wishes to have Baxter Produce (as defined below) Product
and Baxter wishes to Produce Product for Halozyme for sale and distribution in
the Territory;

      NOW, THEREFORE, in consideration of the premises and the undertakings,
terms, conditions and covenants set forth below, the parties hereto agree as
follows:

      1.    DEFINITIONS.

            1.1   "Affiliate" shall mean, with respect to a party hereto, any
entity that controls or is controlled by such party, or is under common control
with such party. For purposes of this definition, an entity shall be deemed to
control another entity if it owns or controls, directly or indirectly, at least
fifty percent (50%) of the voting equity of another entity (or other comparable
interest for an entity other than a corporation).

            1.2   "API" shall mean the bulk form of the active compound,
recombinant human PH20 hyaluronidase (i.e. a truncated form of native human PH20
hyaluronidase consisting of residues 36-482, inclusive, of the native human PH20
hyaluronidase), to be supplied by Halozyme to Baxter for use in Production of
Product.

            1.3   "API Price" shall mean the amount to be paid by Baxter
Anesthesia and Critical Care ("ACC") to Halozyme for the API as set forth on
Exhibit A.

            1.4   "API Specifications" shall mean the specifications for the API
mutually agreed upon in writing by the parties.

            1.5   "Batch" shall mean a specific quantity of Product comprising a
number of units mutually agreed upon between Halozyme and Baxter, and that (a)
is intended to have uniform character and quality within specified limits, and
(b) is produced according to a single manufacturing order during the same cycle
of manufacture.

            1.6   "Baxter SOPs" shall mean Baxter's Standard Operating
Procedures. Copies of Baxter's Relevant Product Specific Standard Operating
Procedures as per Quality

  *** Confidential material redacted and submitted separately to the Commission

<PAGE>

                                 CONFIDENTIAL TREATMENT REQUESTED--REDACTED COPY

Agreement (Section 5.2.2) have been provided by Baxter to Halozyme
prior to the Effective Date. Baxter shall be responsible at all times to cause
the Product-specific Baxter SOPs to be consistent with the Product Master Plan.

            1.7   "cGMP" shall mean the principles detailed in the US Current
Good Manufacturing Practices (21 CFR 200, 211 and 600), the "Rules Governing
Medicinal Product in The European Community - Volume IV Good Manufacturing
Practice for Medicinal Products," and/or "Cooperative Manufacturing Arrangements
for Licensed Biologics" FDA-CBER.

            1.8   "Components" shall mean all components used by Baxter in
Production of Product under this Agreement.

            1.9   "Confidential Information" shall mean all information and data
that (a) is provided by one party to the other party under this Agreement or the
Confidentiality Agreement signed by Halozyme and Baxter on August 14, 2003 (as
amended, the "Confidentiality Agreement"), and (b) if disclosed in writing or
other tangible medium is marked or identified as confidential at the time of
disclosure to the recipient, or is acknowledged at the time of disclosure to be
confidential, or otherwise should reasonably be deemed to be confidential.
Notwithstanding the foregoing, Confidential Information of a party shall not
include that portion of such information and data which, and only to the extent,
the recipient can establish by written documentation: (i) is known to the
recipient as evidenced by its written records before receipt thereof from the
disclosing party, (ii) is disclosed to the recipient free of confidentiality
obligations by a third person who has the right to make such disclosure, (iii)
is or becomes part of the public domain through no fault of the recipient, or
(iv) the recipient can reasonably establish is independently developed by
persons on behalf of recipient without access to or use of the information
disclosed by the disclosing party.

            1.10  "Development Plan" shall mean the plan for the development of
Product and attached as Exhibit B, as such proposal may be amended, supplemented
or restated from time to time by mutual written agreement of the parties.

            1.11  "Exclusive Distribution Agreement" shall mean the Exclusive
Distribution Agreement dated as of August 13, 2004 entered into between the
parties for the distribution by Baxter of Product.

            1.12  "FDA" shall mean the United States Food and Drug
Administration or any successor entity thereto or any applicable Regulatory
Authority as defined in the Product Master Plan.

            1.13  "FD&C Act" shall mean the United States Federal Food, Drug and
Cosmetic Act, as may be amended from time to time.

            1.14  "IND" shall mean an Investigational New Drug application for
Product, as defined in the FD&C Act or FDA Regulations (21 CFR).

            1.15  "Initial Drug" shall mean up to 1500 USP units per vial of
recombinant human PH20 hyaluronidase as the active pharmaceutical ingredient in
(i) a *** ml liquid

  *** Confidential material redacted and submitted separately to the Commission

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                                 CONFIDENTIAL TREATMENT REQUESTED--REDACTED COPY

injectable formulation in a ***mL *** vial with a serum stopper and *** cap, and
(ii) a lyophilized formulation; in each case for the DESI Review indication of
"enhancing the dispersion and absorption of other injected drugs" (as described
in the Federal Register, Vol. 35, No. 185, p. 14800 (Sept. 23, 1970)).

            1.16  "Initial Product(s)" shall mean up to 1500 USP units per vial
of recombinant human PH20 hyaluronidase as the active pharmaceutical ingredient
in (i) any liquid injectable formulation, and/or (ii) any lyophilized
formulation, which shall include the Initial Drug, in each case for the DESI
Review indication of "enhancing the dispersion and absorption of other injected
drugs" (cf. Federal Register, supra). Initial Product(s) shall also encompass
any of the following improvements to the Initial Drug: line extensions,
packaging, labeling, change of excipient, minor alterations of the Initial Drug
itself (such as variations in the structure of the active compound that do not
substantially alter its properties (i.e. as would not require a new IND and/or a
Supplemental New Drug Application (NDA)), and Initial Drug produced by newly
developed manufacturing methods.

            1.17  "Labeling" shall mean all labels and other written, printed,
or graphic matter upon: (i) Product or any container, carton, or wrapper
utilized with Product or (ii) any written material accompanying Product.

            1.18  "Master Batch Record" or "MBR" shall mean the formal set of
instructions for Production of Product, as amended, supplemented or restated
from time to time by mutual written agreement of the parties. The MBR will be
developed jointly by Halozyme and Baxter and approved by both parties, prior to
Production of Product.

            1.19  "Other Products" shall mean products (other than the Initial
Product(s)) consisting of up to 1500 USP units per vial of recombinant human
PH20 hyaluronidase as the active pharmaceutical ingredient in (i) any liquid
injectable formulation, and/or (ii) any lyophilized formulation in each case for
DESI review indications (cf. Federal Register, supra) (a) "for hypodermoclysis",
and (b) "use as an adjunct in subcutaneous urography for improving the
resorption of radiopaque agents"; and for non-DESI Review indication (c) for use
as a viscoelastic antidote (e.g., Viscolase((TM)) ), in each case that the
parties mutually agree upon in writing in accordance with Section 3.9. Without
redefining the foregoing, "Other Products" expressly excludes the use of
recombinant human PH20 hyaluronidase in (i) drugs with high-unit (i.e. greater
than 1500 USP unit) intravenous or other doses, and (ii) co-formulated or
combination products with molecules not owned or otherwise controlled by Baxter
(unless otherwise agreed to in writing by the parties).

            1.20  "Product(s)" shall mean the Initial Drug and/or Initial
Product(s) other than the Initial Drug to be Produced by Baxter in finished
dosage form under this Agreement.

            1.21  "Production", "Produce", or "Produced" shall mean the filling,
packaging, inspection, labeling, and testing of Product by Baxter.

            1.22  "Product Master Plan" shall mean, collectively, the following:

                  -     the Quality Agreement (Exhibit C)

  *** Confidential material redacted and submitted separately to the Commission

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                                 CONFIDENTIAL TREATMENT REQUESTED--REDACTED COPY

                  -     the Product Specifications; incl. API, Final Product,
                        Components, Excipient (HSA) as in effect upon the
                        Agreement date (Exhibit D)

                  -     the Development Plan (Exhibit B)

                  -     Territories (as per Distribution Agreement)

                  -     the API Price (Exhibit A).

            1.23  "Product Specifications" shall mean those specifications and
testing to be performed for Product as set forth in documents prepared by Baxter
and agreed to in writing by Halozyme in accordance with Section 10 of the
Quality Agreement; provided, however, that Baxter shall include in such
documents any changes required by the FDA. All such Product Specifications shall
be attached to this Agreement as Exhibit D as they exist as of the date of the
execution of this agreement.

            1.24  "Quality Agreement" shall mean the Quality Agreement, in the
form attached as Exhibit C, entered into by Baxter and Halozyme as of the
Agreement Date, as amended, supplemented or restated from time to time in
accordance with Section 2.4 or as the parties otherwise mutually agree in
writing.

            1.25  "Regulatory Authority" shall mean those agencies or
authorities responsible for regulation of Product as described within the
Product Master Plan.

            1.26  "Regulatory Plan" shall mean the plan agreed upon in writing
by the Steering Committee containing regulatory services and support for the
development and maintenance of regulatory submissions and supporting
documentation for Production of Product. The Regulatory Plan will be created,
and may be amended, supplemented or restated from time to time by written
agreement of the Steering Committee.

            1.27  "Released Executed Batch Record" shall mean the completed
batch record (in the form of the applicable Master Batch Record) and associated
deviation reports, investigation reports, and Certificates of Analysis (provided
in accordance with the Quality Agreement) created for each Batch of Product and
approved as released to Halozyme under cGMP by Baxter's quality assurance
department.

            1.28  "Steering Committee" shall mean the joint development and
production committee composed of representatives of Baxter and Halozyme
described in Section 2.3 below.

            1.29  "Territory" shall have the meaning set forth in the Exclusive
Distribution Agreement.

      2.    PRODUCT MASTER PLAN.

            2.1   Product Master Plan. Prior to the Agreement Date, the parties
have mutually agreed upon each of the exhibits attached to this Agreement
comprising the Product Master Plan.

  *** Confidential material redacted and submitted separately to the Commission

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                                 CONFIDENTIAL TREATMENT REQUESTED--REDACTED COPY

            2.2   Amendment of Product Master Plan.

                  2.2.1 Except as otherwise set forth in Sections 2.2.2 and 2.4,
the Product Master Plan may be amended from time to time, as the parties
experience with the Production, testing and use of the Product warrants, only
upon recommendation of the Steering Committee and upon mutual written agreement
of Halozyme and Baxter.

                  2.2.2 At the reasonable request of Halozyme, the parties shall
negotiate in good faith modification(s) to the Product Specifications to address
regulatory concerns raised by any Regulatory Authority or reasonably raised by
Halozyme.

            2.3   Steering Committee.

                  2.3.1 Composition of the Steering Committee. The Steering
Committee shall have the oversight and responsibility to review and propose
changes to the Product Master Plan, to propose and plan clinical programs for
the Product, and to propose Other Products in accordance with the terms and
conditions of this Agreement. The Steering Committee shall be comprised of three
(3) named representatives of Baxter and three (3) named representatives of
Halozyme. The Steering Committee shall be represented from the following
functions: Research/Development, Clinical/Regulatory, Commercial/Marketing or
one other function at each party's discretion. Each party shall appoint its
respective representatives to the Steering Committee from time to time, and may
substitute one or more of its representatives, in its sole discretion, effective
upon notice to the other party of such change but shall use commercially
reasonable efforts to maintain stability of Steering Committee representation.

                  2.3.2 Meetings. The Steering Committee shall meet not less
than twice each calendar year, on such dates and at such times and places as
agreed to by Baxter and Halozyme, alternating between New Providence, NJ and San
Diego, California or such other locations as the parties shall agree. At such
meetings, the Steering Committee shall discuss the development under the
Development Plan and Production and set priorities therefor, and shall discuss
any actual regulatory filings regarding the Product together with any
anticipated regulatory filings with respect to possible Product(s) (i.e. Initial
Product(s) other than the Initial Drug) and any proposed Other Products.

                  2.3.3 Committee Actions. Any approval, determination or other
action agreed to by all of the members of the Steering Committee present at the
relevant Steering Committee meeting shall be the approval, determination or
other action of the Steering Committee; provided, however, that at least one (1)
representative of each party is present at such meeting, and that such approval,
determination or other action is documented in a writing signed by a
representative of each party at such meeting. The Steering Committee may also
act by unanimous written consent without a meeting or between meetings.

                  2.3.4 Steering Committee Minutes and Reports. One
representative of each party shall be designated to take minutes of each
Steering Committee meeting. Within fifteen (15) days following each Steering
Committee meeting during the term of the Agreement, the Steering Committee shall
prepare and provide to each party a reasonably detailed written report which
shall summarize the outcome of the meeting

  *** Confidential material redacted and submitted separately to the Commission

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                                 CONFIDENTIAL TREATMENT REQUESTED--REDACTED COPY

            2.4   Quality Agreement. The effectiveness of this Agreement is
conditioned upon the parties duly executing and delivering the Quality Agreement
on or before the Agreement Date. At the reasonable request of either party, the
parties shall negotiate in good faith amendment(s) to the Quality Agreement (a)
to address matters specific to the Production of Product for sale and use
outside the United States, and (b) to address regulatory concerns raised by any
Regulatory Authority or reasonably raised by either party.

            2.5   No Amendment of Agreement. In the event that the terms of the
Product Master Plan or Quality Agreement are inconsistent with the terms of this
Agreement, this Agreement shall control, unless otherwise explicitly agreed to
in writing by the parties. The Product Master Plan and Quality Agreement shall
be incorporated herein and by reference and made a part of this Agreement.

      3.    DEVELOPMENT AND PRODUCTION OF PRODUCT.

            3.1   Initiation and Conduct. Upon execution of this Agreement,
pursuant to the terms and conditions of this Agreement, Baxter shall, in a
timely manner (a) conduct development of Product pursuant to the Development
Plan and (b) conduct Production of Product necessary for Halozyme to meet its
obligations under the Exclusive Distribution Agreement and otherwise as
necessary to meet market demand.

            3.2   Documentation. Each Batch of Product shall be Produced by
using a copy of the Master Batch Record. Each copy of the Master Batch Record,
known as a "Batch Record" or, when completed, an "Executed Batch Record," for
such Batch of Product shall be assigned a unique batch number. Any deviation
from the manufacturing process specified in the Master Batch Record must be
documented in the copy of the Executed Batch Record for that Batch. Baxter shall
provide Halozyme with required supporting development and Production
documentation in a form reasonably suitable for Halozyme's submission to the
FDA.

            3.3   API.

                  3.3.1 Halozyme shall develop and transfer to Baxter in a
timely manner all (i) API necessary for Baxter to meet its obligations in this
Agreement and (ii) analytical methods and API Specifications, excipients and
final dosage form applicable to the Production of Product. Halozyme will be
responsible for the manufacture or contract manufacture of the API meeting cGMP,
in compliance with the API Specifications and in a manner suitable for use in
the final dosage form of the Product. The manufacturing site of the API must
allow Baxter to audit the site as per the Quality Agreement on a periodic basis
to be no more than once per year. In the event any material or API to be
supplied by Halozyme is imported into the United States for delivery to Baxter,
then Halozyme shall be the importer of record and such material or API shall be
delivered DDP (Incoterms 2000).

                  3.3.2 Baxter shall only use the API to Produce Product under
this Agreement, which Product shall only be sold by Baxter under and in
accordance with the Exclusive Distribution Agreement.

  *** Confidential material redacted and submitted separately to the Commission

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                                 CONFIDENTIAL TREATMENT REQUESTED--REDACTED COPY

                  3.3.3 Halozyme shall sell to Baxter the API at a transfer
price equal to its "API Price" as defined in Exhibit A. Within thirty (30) days
following the receipt of API, unless Baxter properly determines in accordance
with the foregoing that such API does not conform to the API Specifications,
Baxter shall pay to Halozyme the applicable API Price. If the API does not
conform to the API Specifications, Baxter shall promptly return such API, at
Halozyme's cost, and shall not be obligated to pay to Halozyme the API Price
therefor. Shipping shall be FOB destination.

            3.4   Delivery Delays. Each party shall use its commercially
reasonable efforts to ensure a steady supply of the API and Product (as
applicable) or to resolve any associated supply issues with their respective
contractors.

            3.5   Material Safety Data Sheet. Halozyme shall provide Baxter a
Material Safety Data Sheet for API delivered to Baxter. Baxter shall immediately
notify Halozyme of any unusual health or environmental occurrence relating to
Product, including, but not limited to any claim or complaint by any employee of
Baxter or any of its Affiliates or third party that the operations of Baxter
pursuant to this Agreement have resulted in any adverse health or safety effect
on an employee or third party. Baxter agrees to advise Halozyme immediately of
any safety or toxicity problems of which it becomes aware regarding the Product.

            3.6   Vendor and Supplier Audit and Certification. Halozyme shall be
solely responsible for certifying and auditing all Product-related vendors and
suppliers of API. All vendors and suppliers of API shall be subject to
Halozyme's prior written approval.

            3.7   Foreign Corrupt Practices Act. Baxter acknowledges that it is
not the agent of Halozyme and represents and warrants that it has not, and
covenants that it will not, pay anything of value to any government employee in
connection with the resale of the Product.

            3.8   Storage of API and Product.

                  3.8.1 Baxter shall provide, at its expense, appropriate
storage for API and Product in one or more secure, insured and bonded warehouses
with appropriate climate-control for API and Products in a manner consistent
with operating procedures that Baxter uses for its own products and consistent
with storage conditions as provided in the Quality Agreement, Section 5.11. Such
API and Product shall be segregated from Baxter's other products per established
GMP procedures. Following final release of Product by Halozyme, if the Exclusive
Distribution Agreement is then in effect, Product shall be transferred to Baxter
pursuant to the Exclusive Distribution Agreement

                  3.8.2 Upon termination of the Exclusive Distribution
Agreement, (a) all Product that has not yet been transferred to Baxter pursuant
to Section 3.8.1 and all API and Components that are then in Production shall
continue in development to become Product and, at Halozyme's option, all such
Product shall be (i) transferred to Halozyme at Baxter's reasonably incurred
costs for such Product or (ii) transferred to Baxter solely for distribution
under the terms and conditions of the Exclusive Distribution Agreement that
govern distribution of remaining Product following termination, and (b) all API
that has not yet been put into development of Product shall be returned to
Halozyme at an amount equal to the API Price actually paid by

  *** Confidential material redacted and submitted separately to the Commission

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                                 CONFIDENTIAL TREATMENT REQUESTED--REDACTED COPY

Baxter for such API (if any) and reasonable shipping costs therefor. If
termination of the Exclusive Distribution Agreement is due to serious adverse
events, Baxter shall have the right to discontinue all manufacturing under this
Agreement for so long as such adverse events continue.

            3.9   Other Products.

                  3.9.1 The Steering Committee shall engage in good faith
discussions and attempt to reach mutual agreement on the development and
production of Initial Product(s) other than the Initial Drug. Following the date
the Steering Committee unanimously agrees on the applicable terms and conditions
for such development and production, the parties shall enter into a supply
agreement substantially on the terms and conditions contained in this Agreement
with respect to such Initial Product(s) other than the Initial Drug.

                  3.9.2 With regard to potential Other Products, Halozyme hereby
grants to Baxter a first right of refusal (exercisable for six months from the
date of written notice of such potential Other Product to Baxter) to include any
such product within the scope of the Other Product definition and subject to
Section 3.9 of this Agreement. If during such six (6) month period, with respect
to such a product, Baxter notifies Halozyme in writing that it is exercising
such right of first refusal and electing to treat such product as an Other
Product pursuant to the terms of this Agreement and the Exclusive Distribution
Agreement, then such product shall be an Other Product in accordance with this
Agreement and with the Exclusive Distribution Agreement. If Baxter does not
provide such written notice and agree to treat such potential Other Product as
an Other Product Agreement pursuant to the terms of this Agreement and the
Exclusive Distribution Agreement during the applicable six (6) month period,
then such product shall not be an Other Product and Baxter shall have no rights
under such Agreements with respect to such product.

                  3.9.3 Notwithstanding anything to the contrary herein, any
supply agreement between the parties regarding the development and production of
any Other Product shall provide (a) which party shall be responsible for the
costs associated with the development, production, clinical trials, and
regulatory approval of such Other Product; provided, however, that Baxter and
Halozyme shall have the right to recoup such costs from gross sales of such
Other Product under, and in accordance with, the terms and conditions set forth
in the Exclusive Distribution Agreement, and (b) the parties shall equally share
all gross profits realized from the sales of such Other Product. Notwithstanding
the foregoing, if the Steering Committee agrees in writing in advance, either
party may from time-to-time be responsible for some such development,
production, clinical trials, regulatory approval and marketing costs for the
development of new channels of distribution that require substantial additional
investment provided that such funding is reimbursed by the other party (subject
to such party's right to recoup such amounts under the Exclusive Distribution
Agreement) or is otherwise shared equally on a quarterly basis by the parties
(in which case, such party shall not have the right to recoup such amounts under
the Exclusive Distribution Agreement).

      4.    DEVELOPMENT FUNDING.

            4.1   Initial Drug. Halozyme shall be responsible for those costs
(the "Initial Costs") incurred by Baxter or Halozyme in order to Produce the
registration stability and

  *** Confidential material redacted and submitted separately to the Commission

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validation Batches of the Initial Drug as set forth in the Development Plan
including costs resulting from: (a) developing final dosage solution formulation
and process for the Initial Drug, (b) regulatory filings, filing of a DMF or
preparing an equivalent CMC section, (c) costs for API drug substance (excluding
development of the API) and Components for such Initial Drug, (d) costs of
capital equipment Baxter acquires solely, and to the extent necessary, to
Produce the first submission Batches of the Initial Drug, and (e) direct salary
and headcount costs directly related to producing such Initial Drug and testing
to the extent not attributable to other projects; provided, however, that (i)
such costs shall not include any general corporate overhead or headcount, such
as legal, business development or finance services, (ii) such costs shall not
include submission batches required to support a site change supplement to
Baxter's manufacturing facilities for commercial product which shall be paid by
Baxter, and (iii) Halozyme shall only be responsible for funding the Initial
Costs up to an aggregate of *** and any excess amounts requiring Baxter ACC
investment must be approved and shall be included under Production Costs (as
defined in Section 4.2 below). The foregoing costs shall be calculated in
accordance with U.S. Generally Accepted Accounting Principles ("GAAP") and
Baxter's standard accounting practices, consistently applied. Baxter shall
invoice Halozyme at the end of each calendar quarter in which Baxter incurred
Initial Costs and Halozyme shall pay such invoiced amounts within sixty (60)
days following the receipt of such invoice.

            4.2   Shared Costs. Other than the Initial Costs to be borne by
Halozyme in accordance with Section 4.1, the parties shall bear the Production
Costs and Other Costs (as each is defined below), calculated on a fully-burdened
basis, as follows:

                  4.2.1 Baxter shall be responsible for (a) equipment acquired
for Production or Product, (b) costs for the API, (c) changes to Product
Specifications or equipment or facility due to regulatory requirements, (d)
insurance procured solely for such Production, (e) taxes owing for such
Production, and (f) direct salary and headcount costs directly related to such
Production to the extent not attributable to other projects but specifically
excluding general corporate overhead or headcount, such as legal, business
development or finance services (clauses (a) - (f), collectively, the
"Production Costs").

                  4.2.2 The parties shall be responsible for, and shall (a)
equally share any post approval clinical, regulatory or DMF costs for the
Product (Initial Drug), (b) development costs related to Other Products will be
decided pursuant to section 3.9 hereof, (c) clinical, regulatory or DMF costs
for approval of Other Products, as approved from time to time by the Steering
Committee will be decided pursuant to section 3.9 hereof (clauses (a) - (c)
collectively, the "Other Costs"). Unless otherwise agreed to by the Steering
Committee, thirty (30) days following the end of each calendar quarter during
the term of the Agreement, each party shall provide to the other an accounting
of the amount of Other Costs incurred by such party during such calendar
quarter, and the party that has incurred less Other Costs shall within ten (10)
days thereafter make a payment to the other party equal to one-half (1/2) of the
difference between the costs incurred by the parties of the costs that are
shared equally.

                  4.2.3 For the avoidance of doubt, Production Costs and Other
Costs shall not include any costs incurred by Baxter that are included within
Initial Costs. The Production Costs and Other Costs shall be calculated in
accordance with U.S. Generally Accepted

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Accounting Principles ("GAAP") and Baxter's standard accounting practices,
consistently applied.

      5.    TERM AND TERMINATION.

            5.1   Term. This Agreement shall commence on the Agreement Date and
will continue, unless terminated pursuant to this section, as long as the
Exclusive Distribution Agreement is in effect. Upon the expiration or
termination of the Exclusive Distribution Agreement, this Agreement shall
immediately terminate.

            5.2   Termination for Breach. Either party may terminate this
Agreement upon the breach of any provision of this Agreement by the other party
if such breach is not cured by the breaching party within thirty (30) calendar
days for monetary defaults, and thirty (30) calendar days for non-monetary
defaults (or such additional time reasonably necessary to cure such non-monetary
default provided the breaching party has commenced a cure within the thirty (30)
day period and is diligently pursuing completion of such cure) after receipt by
the breaching party of written notice of such default. In the event that the
Production or sale of Product is enjoined due to the alleged infringement by
either party of the proprietary rights of a third party such occurrence shall
not be deemed a breach of this Agreement by Halozyme or Baxter

            5.3   Termination for Bankruptcy. To the extent authorized under
applicable law, this Agreement may be terminated immediately by either party by
giving the other party written notice thereof in the event such other party
makes a general assignment for the benefit of its creditors, or proceedings of a
case are commenced in any court of competent jurisdiction by or against such
party seeking (a) such party's reorganization, liquidation, dissolution,
arrangement or winding up, or the composition or readjustment of its debts, (b)
the appointment of a receiver or trustee for or over such party's property, or
(c) similar relief in respect of such party under any law relating to
bankruptcy, insolvency, reorganization, winding up or composition or adjustment
of debt, and, in each case of clauses (a) - (c) above, such proceedings shall
continue undismissed, or an order with respect to the foregoing shall be entered
and continue unstated, for a period of more than one hundred eighty (180) days.

            5.4   Termination for Failure to Obtain FDA Approval. Baxter shall
have the right to terminate this Agreement by giving 30 days advance written
notice to Halozyme in the event that FDA approval for the Initial Drug in the
Territory is not obtained by Halozyme by the year ***.

            5.5   Additional Rights and Remedies. Subject to Section 14.1,
termination under this Section 5 shall be in addition to the other rights and
remedies of the terminating party. Termination of this Agreement for any reason
shall not relieve any party of any obligations accruing prior to such
termination.

            5.6   Survival. Termination, expiration, cancellation or abandonment
of this Agreement through any means or for any reason, except as set forth in
Section 5.1, shall be without prejudice to the rights and remedies of either
party with respect to any antecedent breach of any of the provisions of this
Agreement. The provisions of Sections 5, 8, 11, 12, 13, 14, 15, 16 and 17 hereof
shall survive expiration or termination of this Agreement.

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            5.7   Files and Records. Within sixty (60) days following the
expiration or termination of this Agreement, Baxter shall make available to
Halozyme copies of all manufacturing and process development documents and
records relating to Product, shall store the originals or electronic copies of
such documents and records according to cGMPs in a safe and secure facility for
at least two (2) years after the expiration date of the last Batch Produced by
Baxter under this Agreement, and shall permit the FDA or other Regulatory
Authorities access to such documents and records to the extent requested
thereby. For a period of twelve (12) months following expiration or termination
of this Agreement, Baxter shall make available to Halozyme for review, from the
DMF or other related regulatory filings, any non-confidential information
contained therein that is reasonably related to Product that may be used by
Halozyme to support any investigational studies or commercial marketing of
Product.

      6.    PRODUCTION OF PRODUCT AND OTHER PRODUCTS.

            6.1   Production. Baxter or one or more of its Affiliates, shall
Produce Product in accordance with the Product Requirements and cGMP's
applicable to each Territory. Subject to compliance with reasonable rules and
regulations of Baxter relating to confidentiality, safety and security, Halozyme
shall have the right to access the Baxter facilities directly affecting the
Production of Product, and all applicable records related thereto, to oversee
Production of Product in accordance with the Quality Agreement and Baxter's
standard visitation policy. Halozyme shall have the right to monitor each
Production run of Product (from Component preparation through final labeling and
assembly) in accordance with the Quality Agreement. Halozyme shall have the
right to render technical advice and direction to Baxter regarding Production of
Product pursuant to their involvement in the generation of the Master Batch
Record or direct communication with the Project Manager or Technical Service
Representative. Baxter promptly shall implement all reasonable advice and
direction provided that such advice and direction is not inconsistent with the
Product Master Plan, Baxter SOPs, and cGMPs. If Halozyme observes or discovers
variances from established standards and methods of Production of Product,
Halozyme shall give written notice thereof to Baxter, and upon receipt of any
such notice, Baxter promptly shall take all appropriate remedial or corrective
action and give written notice to Halozyme describing in reasonable detail such
actions taken. If Baxter disagrees with any such advice and direction, the
parties shall discuss in good faith an appropriate resolution.

            6.2   Audits. Baxter will allow representatives from Halozyme to
have access to their manufacturing, warehousing, laboratory premises, records,
regulatory filings (e.g.,) and communications (e.g., FDA483s and Establishment
Inspection Reports) for audit purposes listed below in Sections 6.2.1 through
6.2.3; provided, however, Baxter has the obligation to protect the confidential
information of its clients.

                  6.2.1 Baxter will permit Halozyme to conduct one preparatory
audit of cGMP manufacture of the Product for pre-approval inspection for
Product. Follow-up to this audit will be considered part of the first audit.
Subsequent, new audits will be subject to Baxter's customary charges.

                  6.2.2 Baxter will permit Halozyme to conduct audits to address
significant Product quality or safety problems as discovered through Product
failures or complaints related to Baxter's manufacturing of the Product.

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                  6.2.3 Baxter will permit Halozyme to perform one standard cGMP
compliance audits per year.

                  6.2.4 Subject to the execution of a confidential disclosure
agreement among Baxter, Halozyme and Halozyme's licensee(s), Baxter will permit
access by Halozyme's licensees to Baxter's premises for audit purposes,
consistent with the limitations listed in Sections 6.2.1 through 6.2.3. Halozyme
will accompany the licensees during each audit, provided the audit is directly
related to Halozyme's Product.

            6.3   Audit Closeout. An exit meeting will be held with
representatives from Baxter and Halozyme to discuss significant audit
observations. Halozyme will provide a written report of all observations within
30 days to Baxter. Within 30 days of the audit report receipt, Baxter will
provide a written response to all findings that details corrective action to be
implemented. Baxter will follow up to ensure that all corrective actions are
implemented

            6.4   Testing. In accordance with the Quality Agreement, Baxter
shall test, or cause to be tested by third party testing facilities audited by
Baxter, in accordance with the Product Requirements, each Batch of Product
Produced pursuant to this Agreement before any release or distribution pursuant
to the Exclusive Distribution Agreement. A certificate of analysis for each
Batch of Product shall set forth the items tested by Baxter, Product
Specifications, and test results in accordance with the Quality Agreement.
Baxter shall send, or cause to be sent, such certificates along with one (1)
copy of the entire Released Executed Batch Record to Halozyme prior to selling
any Product from such Batch and within thirty (30) days following the completion
of such Batch. As required by the FDA, Halozyme shall assume responsibility for
final release of each lot of Product prior to distribution of the applicable
lot.

            6.5   Permits and Licenses.

                  6.5.1 Subject to the terms and conditions of this Agreement,
Halozyme shall have sole responsibility for obtaining all permits and licenses
necessary or required for the sale, marketing and commercialization of each
product produced by Baxter hereunder. Baxter shall be responsible to obtain and
maintain all permits and licenses required for it to carry out its regulatory
and Production obligations hereunder. Baxter shall cooperate with Halozyme by
assisting in preparing and filing any necessary documents to support Halozyme's
applications for permits and licenses.

                  6.5.2 Notwithstanding anything to the contrary in this
Agreement, the parties acknowledge and agree that nothing in this Agreement
gives Halozyme any rights to reference the new drug application (NDA) 6-343 for
Wydase.

            6.6   Regulatory Requirements. Each party promptly shall notify the
other of new regulatory requirements of which it becomes aware which are
relevant to the Production of a Product under this Agreement and which are
required by the FDA, any other applicable Regulatory Authority or other
applicable laws or governmental regulations, and shall confer with each other
with respect to the best means to comply with such requirements. Notwithstanding
anything to the contrary in this Agreement, each party shall be responsible for
its compliance with all regulatory requirements of the United States and all
foreign countries that are applicable

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to such party's facilities and each party's activities in Production, whether or
not a party is aware of such requirements and has failed to give notice to the
other party.

            6.7   Regulatory Approvals/Clinical Trials. In accordance with the
Product Master Plan, Halozyme shall pursue regulatory approval of marketing
licenses for Products Produced by Baxter for Halozyme hereunder. The parties
shall equally share the costs of the filings including any user fees for final
dosage. Halozyme will advise Baxter of document requirements in support of NDA
and similar applications required of foreign governments and agencies including
amendments, license applications, supplements and maintenance of such. Baxter
will provide documents and assist Halozyme in preparation of submissions to
Regulatory Authorities (both U.S. and foreign) designated by Halozyme in support
of Halozyme's NDAs, similar applications required of foreign governments and
licenses. Ownership of appropriate regulatory licenses will be agreed upon by
both parties, on a country by country basis. Halozyme will be responsible for
all contacts with the FDA and all adverse event reporting and complaint
handling. Halozyme will be responsible for conducting and funding all FDA
mandated pre-phase IV clinical trials for safety and efficacy for the DESI
indications for the first Product developed under this Agreement. The cost of
any phase IV clinical trials agreed to by the Steering Committee for such
Product for the US market will be shared equally by the parties. The parties
will agree on the responsibilities for Other Products as set forth in Section
3.9.

            6.8   Regulatory Authority Inspections.

                  6.8.1 Interaction with Regulatory Authorities. All interaction
with Regulatory Authorities (both written and oral) that directly affects
Product or the Production of Product shall be conducted in accordance with the
provisions of this Section 6. At Halozyme's request, Baxter will authorize
Regulatory Authorities to review on Halozyme's behalf applications related to
the Production of Products.

                  6.8.2 Product Pre-Approval Inspection. In the case of a
Product Pre-Approval Inspection by the FDA related to the Products, the
following shall apply: (a) Baxter immediately shall inform Halozyme of the
notice of such inspection; (b) Baxter shall permit a representative of Halozyme
to be present at the Baxter facility that is the subject of such inspection (not
to be present at the inspection or to participate, except to be available on an
as-needed basis as requested by Baxter); (c) Baxter shall apprise such
representative of Halozyme regarding each daily wrap up session for such
inspection and the post-inspection wrap up session for such inspection; (d)
Baxter promptly shall provide Halozyme with copies of all written materials,
including without limitation copies of any Notice of Inspection (FDA Form 482),
other notice of inspection, notice of violation, other similar notice, or
Inspectional Observations (FDA Form 483, its foreign equivalent and
Establishment Inspection Reports) received by Baxter relating to such
inspection, and (e) Baxter shall provide Halozyme with advance copies of all
proposed responses to any such inspections, notices or actions, shall permit
Halozyme reasonable opportunity to review and comment within 3 to 5 business
days on each such response, shall reasonably consider Halozyme's reasonable
comments thereon, and shall provide Halozyme with copies of each such response
as submitted. Baxter shall retain final authority for the content of the
responses to the regulatory authority

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                  6.8.3 Other Product Specific Inspections. In the case of an
inspection (other than the Product Pre-Approval Inspection) by a Regulatory
Authority that directly affects the Production of Products, the following shall
apply: (a) Baxter immediately shall inform Halozyme of the notice of such
inspection; (b) Baxter shall permit a representative of Halozyme to be present
at the Baxter facility that is the subject of such inspection (not to be present
at the inspection or to participate, except to be available on an as-needed
basis as requested by Baxter); (c) Baxter shall apprise such representative of
Halozyme regarding each daily wrap up session for such inspection and the
post-inspection wrap up session for such inspection; (d) Baxter promptly shall
provide Halozyme with copies of all written materials, including without
limitation copies of any Notice of Inspection (FDA Form 482), other notice of
inspection, notice of violation, other similar notice, or Inspectional
Observations (FDA Form 483, its foreign equivalent and Establishment Inspection
Reports) received by Baxter relating to such inspection, and (e) Baxter shall
provide Halozyme with advance copies of all proposed responses that directly
affect Production of Product to any such inspections, notices or actions, shall
permit Halozyme reasonable opportunity to review and comment on each such
response, shall reasonably consider Halozyme's reasonable comments thereon, and
shall provide Halozyme with copies of each such response as submitted.

                  6.8.4 Other Inspections. The parties' respective rights and
obligations with respect to any inspections relating to the Product, other than
those described above, shall be as set forth in the Quality Agreement.

            6.9 Labeling. Labeling development shall be conducted in accordance
with Baxter's standard procedures and as mutually agreed upon by the parties per
the requirements located in Exhibit E.

      7.    ACCEPTANCE OF PRODUCT.

            7.1   Product Conformity. Within the later of forty-five (45)
calendar days following the date of Halozyme's receipt of Product samples or
fifteen (15) calendar days following the date of Halozyme's receipt of the
applicable entire Released Executed Batch Record(s) and related documentation in
accordance with the Product Master Plan, Halozyme shall have the right to
determine whether Product conforms to cGMP, to all other applicable United
States laws and regulations and all applicable foreign laws and regulations, to
the applicable Product Specifications, and to the Quality Agreement
(collectively the "Product Requirements"). Notwithstanding the foregoing, if
Halozyme has conducted at least one test of the applicable Batch and in good
faith has requested in writing, within the time period specified in this Section
7.1, additional time to perform additional testing, then such period shall be
extended as reasonably necessary for Halozyme, or Baxter (if requested by
Halozyme), to perform such additional testing.

                  7.1.1 If (a) any Product conforms to the Product Requirements,
or (b) Halozyme fails to notify Baxter within the time period specified in
Section 7.1 that any Product does not conform to the Product Requirements, then
Halozyme shall be deemed to have accepted such Product and waived its right to
revoke acceptance.

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                  7.1.2 If Halozyme believes any Product does not conform to the
Product Requirements, it shall give written notice to Baxter specifying the
manner in which such Product fails to meet the Product Requirements. Guidelines
for resolving any disputed claims regarding conformity of Product are set forth
in Section 7.1.3.

                  7.1.3 If the parties dispute whether any Product is conforming
or non-conforming, the samples of Product will be submitted to a mutually
acceptable laboratory or consultant for resolution, whose determination of
conformity or non-conformity, and the cause thereof of non-conformity, shall be
binding upon the parties. The non-prevailing party shall bear the costs of such
laboratory or consultant.

            7.2   Remedy for Non Conforming Product. In the event Baxter agrees
that any Product is non-conforming or the laboratory determines that the
shipment of Product is non-conforming, Baxter shall destroy all non-conforming
Product and shall at its option (i) schedule to run a new Batch to replace such
non-conforming Product within the later of (a) sixty (60) calendar days from the
date of determination by the third party of non-conformity, or (b) (60) days
from the receipt of the non-conforming drug substance and agreement by Baxter of
such non-conformity, or (ii) refund the cost of the non-conforming batch. Any
costs incurred by Baxter to run a new Batch pursuant to this Section 7.2 shall
not be Production Costs or Other Costs.

            7.3   Non Conforming API. If Product is rejected by Halozyme, and
such Product's failure to meet the Product Requirements is the result of
non-conforming API and the cause of such non-conformity is demonstrated not to
be a result of the negligence, omission or willful misconduct of Baxter the
rejection will be deemed not to be a breach of Baxter's warranties or
obligations under this Agreement. In the event of non-conforming API, Halozyme
shall be responsible for costs reasonably incurred by Baxter for the rejected
Product.

      8.    PRODUCT RECALLS.

            8.1   Product Recalls. Each party promptly shall notify the other if
any Batch of Product is alleged or proven to be the subject of a recall, market
withdrawal or correction. Halozyme shall be responsible for coordinating any
recall, market withdrawal or field correction of Product, and such recall,
market withdrawal or correction shall be conducted in accordance with the
provisions of the Quality Agreement. Baxter will provide Halozyme with access to
and copies of all consignees and distribution records for the Product and will
cooperate with Halozyme in the execution of the recall action. Halozyme shall
provide Baxter with a copy of all documents relating to such recall, market
withdrawal or field correction. Baxter shall cooperate with Halozyme (including
providing Halozyme with all data, information and documents requested by
Halozyme) in connection with such recall, market withdrawal or field correction,
at Halozyme's expense. Unless such recall is caused solely by the negligence,
omission or willful misconduct of Baxter or solely by Baxter's breach of its
warranties or obligations under this Agreement, Halozyme and Baxter shall
equally share all of the costs and expenses of such recall, market withdrawal or
field correction; provided, however, that if a recall, market withdrawal or
field correction is necessary because both (i) the Product does not conform to
the Product Specifications, and (ii) such non-conformity is solely due to the
negligence, omission or willful misconduct of Baxter, or solely by Baxter's
breach of its warranties or obligations under this

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Agreement, Baxter will bear all reasonable costs associated with such recall,
market withdrawal or field correction (including but not limited to costs
associated with receiving and administering the recalled Product and
notification of the recall to those persons whom Halozyme deems appropriate) and
such costs shall not be included within Production Costs or Other Costs. If such
recall is due solely to the API not conforming to the API Specifications or
caused solely by the negligence, omission or willful misconduct of Halozyme, or
solely by Halozyme's breach of its warranties or obligations under this
Agreement, Halozyme shall bear all costs of such recall, market withdrawal or
field correction (including but not limited to costs associated with receiving
and administering the recalled Product and notification of the recall to those
persons whom Halozyme deems appropriate).

            8.2   Entire Liability of Baxter. This Section 8 sets forth the
entire liability of Baxter in the event of a recall, market withdrawal, or field
correction.

      9.    FORCE MAJEURE EVENTS. Any delay in the performance of any of the
duties or obligations of either party hereto (except the payment of money), to
the extent caused by an event outside the affected party's reasonable control,
shall not be considered a breach of this Agreement, and unless provided to the
contrary herein, the time required for performance shall be extended for a
period equal to the period of such delay. Such events shall include without
limitation, acts of God; acts of public enemies; insurrections; riots;
injunctions; embargoes; labor disputes, including strikes, lockouts, job
actions, or boycotts; fires; explosions; floods; shortages of material or
energy; delays in the delivery of raw materials; acts or orders of any
government or agency thereof or other unforeseeable causes beyond the reasonable
control and without the fault or negligence of the party so affected. The party
so affected shall give prompt written notice to the other party of such cause
and a good faith estimate of the continuing effect of the force majeure
condition and duration of the affected party's nonperformance, and shall take
whatever reasonable steps are appropriate to relieve the effect of such causes
as rapidly as possible. If the period of nonperformance by Baxter because of
force majeure conditions exceeds ninety (90) calendar days, Halozyme may
terminate this Agreement by written notice to Baxter. If the period of
nonperformance by Halozyme because of force majeure conditions exceeds ninety
(90) calendar days, Baxter may terminate this Agreement by written notice to
Halozyme.

      10.   CHANGES IN PRODUCTION.

            10.1  Changes to Product Master Plan. Baxter agrees to inform
Halozyme within fifteen (15) calendar days of the result of any regulatory
development that directly affects the Production of a Product or changes to
Product-specific Baxter SOPs. Baxter shall give written notice to Halozyme of
any such changes, and Halozyme and Baxter will review such development or
changes in accordance with the Quality Agreement; provided, however, that (a)
Baxter shall assure that all such changes to the Product-specific Baxter SOPs
are consistent with the Product Master Plan unless the parties otherwise
expressly agrees in writing, and (b) any changes to the Product Master Plan
shall be made only in accordance with Section 2.2.

            10.2  Product-Specific Changes. If facility, equipment, process or
system changes are required of Baxter as a result of requirements set forth by
the FDA or any other Regulatory Authority, and such regulatory changes apply
primarily to the Production and supply

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of a Product, then Halozyme and Baxter will review such requirements and agree
in writing to such regulatory changes in accordance with the Quality Agreement

      11.   CONFIDENTIALITY.

            11.1  Confidentiality. During the term of this Agreement, and for a
period of five (5) years following the expiration or earlier termination hereof,
each party shall maintain in confidence all Confidential Information disclosed
by the other party (including all Confidential Information disclosed under the
Confidentiality Agreement), and shall not use, grant the use of or disclose to
any third party the Confidential Information of the other party other than as
expressly permitted hereby, or by the Exclusive Distribution Agreement or the
Quality Agreement. Each party shall notify the other promptly upon discovery of
any unauthorized use or disclosure of the other party's Confidential
Information.

            11.2  Permitted Disclosures. Either party may disclose Confidential
Information of the disclosing party (a) on a need-to-know basis, to such party's
directors, officers and employees to the extent such disclosure is reasonably
necessary in connection with such party's activities as expressly authorized by
this Agreement, and (b) to those Affiliates, agents and consultants who need to
know such information to accomplish the purposes of this Agreement
(collectively, "Permitted Recipients"); provided such Permitted Recipients are
bound to maintain such Confidential Information in confidence to the same extent
as set forth in Section 11.1.

            11.3  Litigation and Governmental Disclosure. Each party may
disclose Confidential Information hereunder to the extent such disclosure is
reasonably necessary for prosecuting or defending litigation, complying with
applicable governmental regulations or conducting pre-clinical or clinical
trials, provided that if a party is required by law or regulation to make any
such disclosure of the other party's Confidential Information it will, except
where impractical for necessary disclosures, for example in the event of a
medical emergency, give reasonable advance notice to the other party of such
disclosure requirement and will use good faith efforts to assist such other
party to secure a protective order or confidential treatment of such
Confidential Information required to be disclosed.

            11.4  Limitation of Disclosure. The parties agree that, except as
otherwise may be required by applicable laws, regulations, rules or orders,
including without limitation the rules and regulations promulgated by the United
States Securities and Exchange Commission, and except as may be authorized in
Section 11.4, no information concerning this Agreement and the transactions
contemplated herein shall be made public by either party without the prior
written consent of the other.

            11.5  Publicity and SEC Filings. The parties agree that the public
announcement of the execution of this Agreement shall only be by one or more
press releases mutually agreed to by the parties. The failure of a party to
return a draft of a press release with its proposed amendments or modifications
to such press release to the other party within five (5) business days of such
party's receipt of such press release shall be deemed as such party's approval
of such press release as received by such party. Each party agrees that it shall
cooperate fully and in a timely manner with the other with respect to all
disclosures to the

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Securities and Exchange Commission and any other governmental or regulatory
agencies, including requests for confidential treatment of Confidential
Information of either party included in any such disclosure.

      12.   INVENTIONS

            12.1  Existing Intellectual Property. Except as the parties may
otherwise expressly agree in writing, each party shall continue to own its
existing patents, trademarks, copyrights, trade secrets and other intellectual
property, without conferring any interests therein on the other party. Without
limiting the generality of the preceding sentence, and except as expressly set
forth in this Agreement, Halozyme shall retain all right, title and interest
arising under the United States Patent Act, the United States Trademark Act, the
United States Copyright Act and all other applicable laws, rules and regulations
in and to Product, API, Labeling and Halozyme's trademarks associated therewith
(collectively, "Halozyme's Intellectual Property").

            12.2  Individually Owned Inventions. Except as the parties may
otherwise agree in writing, all Inventions (as defined herein) which are
conceived, reduced to practice, or created by a party in the course of
performing its obligations under this Agreement shall be solely owned and
subject to use and exploitation by the inventing party without a duty to account
to the other party. For purposes of this Agreement, "Invention" shall mean
information relating to any innovation, improvement, development, discovery,
computer program, device, trade secret, method, know-how, process, technique or
the like, whether or not written or otherwise fixed in any form or medium,
regardless of the media on which contained and whether or not patentable or
copyrightable. Baxter hereby grants to Halozyme a royalty-free, non-exclusive,
worldwide license (with the right to grant sublicenses) under all patent rights
and other intellectual property rights covering Inventions which are conceived,
reduced to practice, or created by Baxter in the course of performing its
obligations under this Agreement and which relate directly to recombinant human
hyaluronidase.

                  12.2.1 The party solely owning any Invention shall have the
      world-wide right to control the drafting, filing, prosecution and
      maintenance of patents covering the Invention, including decisions about
      the countries in which to file patent applications. Patent costs
      associated with the patent activities described in this Section 12.2.1
      shall be borne by the sole owner.

            12.3  Jointly Owned Inventions. All Inventions which are conceived,
reduced to practice, or created jointly by the parties and/or their respective
agents (i.e., employees or agents who would be or are properly named as
co-inventors under the laws of the United States on any patent application
claiming such inventions) in the course of the performance of this Agreement
shall be owned jointly by the parties. Each party shall have full rights,
subject to the provisions of this Agreement, to freely exploit, transfer,
license or encumber its rights in any such jointly-owned Inventions and the
patent rights and other intellectual property rights therein without the consent
of, or payment or accounting to, the other party. The parties shall share
equally in the cost of mutually agreed patent filings with respect to all such
jointly owned Inventions. The decision to file for patent coverage on jointly
owned inventions shall be mutually agreed upon and the parties shall select a
mutually agreeable patent counsel to file and prosecute patent

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applications based on such joint Inventions; provided, however, that in the
event that one party (a "Non-Interested Party") notifies the other in writing
that is not interested in rights it may have in a joint Invention (relative to
its corresponding expenses and costs including patent prosecution and
maintenance), the other party (the "Interested Party") may elect to pursue
rights in such a joint Invention at its own cost and expense (in which case the
Non-Interested Party shall assign to the Interested Party the former's interests
in and to the joint Invention). Each party shall cooperate with the other party
in the filing and prosecution of such jointly owned patent applications. Such
cooperation will include, but not be limited to, furnishing supporting data and
affidavits for the prosecution of patent applications and completing and signing
forms needed for the prosecution, assignment and maintenance of patent
applications.

            12.4  Disclaimer. Except as otherwise expressly provided herein,
nothing contained in this Agreement shall be construed or interpreted, either
expressly or by implication, estoppel or otherwise, as: (i) a grant, transfer or
other conveyance by either party to the other of any right, title, license or
other interest of any kind in any of its Inventions or other intellectual
property, (ii) creating an obligation on the part of either party to make any
such grant, transfer or other conveyance or (iii) requiring either party to
participate with the other party in any cooperative development program or
project of any kind or to continue with any such program or project, except to
the extent described in the Development Plan.

            12.5  Confidentiality of IP. IP shall be deemed to be the
Confidential Information of the party owning such IP. The protection of each
party's Confidential Information is described in Section 11. Any disclosure of
information by one party to the other under the provisions of this Section 12
shall be treated as the disclosing party's Confidential Information under this
Agreement. It shall be the responsibility of the party preparing a patent
application to obtain the written permission of the other party, which consent
can not unreasonably be withheld, to use or disclose the other party's
Confidential Information in the patent application before the application is
filed and for other disclosures made during the prosecution of the patent
application.

            12.6  License for Performance of this Agreement. For the avoidance
of doubt, Halozyme hereby grants to Baxter, and its Affiliates, a non-exclusive
license under the Halozyme Intellectual Property solely for and to the extent
necessary for Baxter or such Affiliate to perform its obligations under this
Agreement, including but not limited to, the development of product
formulations, and manufacture and handling of Product under this Agreement.

      13.   REPRESENTATIONS AND WARRANTIES.

            13.1  Mutual Representations. Each party hereby represents and
warrants to the other party that (a) the person executing this Agreement is
authorized to execute this Agreement; (b) this Agreement is legal and valid and
the obligations binding upon such party are enforceable by their terms; and (c)
the execution, delivery and performance of this Agreement does not conflict with
any agreement, instrument or understanding, oral or written, to which such party
may be bound, nor violate any law or regulation of any court, governmental body
or administrative or other agency having jurisdiction over it.

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            13.2  Baxter Warranty. Baxter represents and warrants that, as of
the time of delivery by Baxter of Product to a distributor, end-user or other
third party in accordance with this Agreement and the Exclusive Distribution
Agreement, all Product Produced under this Agreement, (a) conforms to the
Specifications, (b) has been Produced in accordance with cGMP and all applicable
laws and regulations set forth in the Product Master Plan and in accordance with
the applicable Certificates of Analysis (provided in accordance with the Quality
Agreement) accompanying each Batch of Product, and (c) is not adulterated or
misbranded within the meaning of the FD&C Act; provided, however, that the
foregoing warranty will not extend to the API or any Halozyme supplied
components or labeling. Baxter represents and warrants that it has obtained (or
will obtain prior to Producing Product), and will remain in compliance with
during the term of this Agreement, all permits, licenses and other
authorizations (the "Permits") which are required under federal, state and local
laws, rules and regulations applicable to the Production only of Product as
specified in the Product Master Plan; provided, however, Baxter shall have no
obligation to obtain Permits relating to the sale, marketing, distribution or
use of API or Product or with respect to the Labeling of Product. Baxter
represents that to the best of its knowledge (i) no Baxter employees performing
services on behalf of Baxter under this Agreement have been debarred under
Section 306 of the FD&C Act, and (ii) no persons (other than Baxter employees)
performing services on behalf of Baxter under this Agreement have been debarred
under Section 306 of the FD&C Act.

            13.3  Baxter Disclaimer of Warranties. Except for those warranties
set forth in Sections 13.1 and 13.2 of this Agreement, Baxter makes no
warranties, written, oral, express or implied, with respect to Product or the
development and Production of Product. ALL OTHER WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT HEREBY ARE DISCLAIMED BY
BAXTER. NO WARRANTIES OF BAXTER MAY BE CHANGED BY ANY REPRESENTATIVES OF BAXTER.
Halozyme accepts the Production of the Product subject to the terms hereof.

            13.4  Halozyme Warranties. Halozyme warrants that it has the right
to give Baxter any information provided by Halozyme hereunder, and that Baxter
has the right to use such information for the Production of Product. Halozyme
further warrants that the API provided to Baxter hereunder (1) conforms to the
API Specifications, (2) has been produced in accordance with cGMP and all
applicable laws and regulations set forth in the Product Master Plan as relating
to the API and in accordance with the applicable Certificates of Analysis
(provided in accordance with the Quality Agreement) accompanying each Lot of API
and (3) is not adulterated or misbranded within the meaning of the FD&C Act.
Halozyme further warrants that to its knowledge, upon reasonable inquiry,
Halozyme is not aware of, nor has any third party asserted against Halozyme any
claim, notice, or concern regarding the potential infringement of such third
party's proprietary rights as a result of the manufacture, use, offer to sell,
sale, importation or distribution of the Product.

            13.5  Disclaimer of Warranties. Except for those warranties set
forth in Section 13.1 and 13.4 of this Agreement, Halozyme makes no warranties,
written, oral, express or implied, with respect to API or Products. ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE AND

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NONINFRINGEMENT HEREBY ARE DISCLAIMED BY HALOZYME. NO WARRANTIES OF HALOZYME MAY
BE CHANGED BY ANY REPRESENTATIVES OF HALOZYME. Baxter accepts API subject to the
terms hereof

      14.   LIMITATION OF LIABILITY; WAIVER OF SUBROGATION.

            14.1  Limitation of Liability. UNDER NO CIRCUMSTANCES SHALL EITHER
PARTY BE LIABLE FOR LOSS OF USE OR PROFITS OR OTHER COLLATERAL, SPECIAL,
CONSEQUENTIAL, INCIDENTAL OR PUNITIVE DAMAGES, INCLUDING BUT NOT LIMITED TO THE
COST OF A RECALL IN CONNECTION WITH OR BY REASON OF THE PRODUCTION AND DELIVERY
OF PRODUCT UNDER THIS AGREEMENT OR OTHERWISE IN CONNECTION WITH THIS AGREEMENT,
EXCEPT AS SET FORTH IN SECTION 8 AND 15, WHETHER SUCH CLAIMS ARE FOUNDED IN TORT
OR CONTRACT. Without limiting the generality of the foregoing and
notwithstanding anything to the contrary herein, the only liability of Baxter
for any cost of cover claims (i) shall exist in the event of a breach hereof by
Baxter due to its willful misconduct resulting in a failure to Produce
conforming Product; and (ii) shall not include any costs or expenses associated
with qualifying of another supplier or delays if one has not been so qualified
by Halozyme.

            14.2  Waiver of Subrogation. All Components and equipment used by
Baxter in the Production of Product, other than those Components and equipment
that are specifically stated in this Agreement to be owned by Halozyme
(collectively, "Baxter Property"), shall at all times remain the property of
Baxter and Baxter assumes risk of loss for the Baxter Property. Baxter hereby
waives any and all rights of recovery against Halozyme and its Affiliates, and
against any of their respective directors, officers, employees, agents or
representatives, for any loss or damage to Baxter Property to the extent the
loss or damage is covered or could be covered by insurance (whether or not such
insurance is described in this Agreement). Halozyme assumes all risk of loss for
all API supplied by Halozyme (collectively "Halozyme Property") until such
Halozyme Property is received by Baxter or its Affiliates; and Halozyme hereby
waives any and all rights of recovery against Baxter and its Affiliates for any
such loss or damage to the Halozyme Property to the extent that the loss or
damage is covered by or could be covered by insurance (whether or not such
insurance is described in this Agreement).

      15.   INDEMNIFICATION.

            15.1  Halozyme Indemnification. Halozyme shall indemnify, defend and
hold harmless Baxter and its Affiliates and any of their respective directors,
managers, members, officers, employees, authorized subcontractors and agents
(collectively the Baxter "Indemnified Parties") from and against any and all
liabilities, obligations, penalties, judgments, disbursements of any kind and
nature, losses, damages, costs and expenses (including, without limitation,
reasonable attorney's fees and costs) incurred as a result of any claims,
demands, actions or other proceedings by unaffiliated third parties against an
Indemnified Party to the extent arising out of property damage or personal
injury (including without limitation death) of third parties (collectively
"Claims"), resulting from (a) Halozyme's negligence, omission or willful
misconduct, (b) Halozyme's breach of its representations or obligations under
this Agreement, (c) the execution, delivery and performance of this Agreement by
Halozyme conflicting with any other agreement of Halozyme relating to the
production and supply of API, or (d) any claim that

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                                 CONFIDENTIAL TREATMENT REQUESTED--REDACTED COPY

the use of API by Baxter in accordance with this Agreement, violates the patent,
trademark, copyright or other proprietary rights of any third party, except to
the extent any of the foregoing (a) or (d) is caused solely or principally by
the negligence, omission or willful misconduct of the Baxter Indemnified Parties
or solely by the breach by Baxter of its representations or obligations under
this Agreement.

            15.2  Baxter Indemnification. Baxter shall indemnify, defend and
hold harmless Halozyme and its Affiliates and any of their respective directors,
officers, employees, and agents from and against any and all Claims to the
extent resulting from (a) Baxter's negligence, omission or willful misconduct,
(b) Baxter's breach of its representations or obligations under this Agreement,
(c) the execution, delivery and performance of this Agreement by Baxter
conflicting with any other agreement of Baxter relating to the Production and
supply of Product, (d) any claim that the Production of Product by Baxter in
accordance with this Agreement, violates the patent, trademark, copyright or
other proprietary rights of any third party, except to the extent that such
claim is related to the API or the manufacture thereof, or (e) any claim that
Baxter's promotion, marketing or distribution of Product under the Exclusive
Distribution Agreement violates the patent, trademark, copyright or other
proprietary rights of any third party, except to the extent that such claim is
related to the API or the manufacture thereof, or otherwise violates applicable
laws or regulations or rights of any third party; except to the extent any of
the foregoing (a) - (e) is caused solely by the negligence, omission or willful
misconduct of the Halozyme Indemnified Parties or solely or principally by the
breach by Halozyme of its representations or obligations under this Agreement.

            15.3  Indemnitee Obligations. A party (the "Indemnitee") which
intends to claim indemnification under this Section 15 shall promptly notify the
other party (the "Indemnitor") in writing of any claim, demand, action, or other
proceeding in respect of which the Indemnitee intends to claim such
indemnification; provided, however, that failure to provide such notice within a
reasonable period of time shall not relieve the Indemnitor of any of its
obligations hereunder except to the extent the Indemnitor is prejudiced by such
failure. The Indemnitee shall permit, and shall cause its Affiliates, and their
respective directors, officers, employees, subcontractors and agents to permit,
the Indemnitor, at its discretion, to settle any such action, claim or other
matter, and the Indemnitee agrees to the complete control of such defense or
settlement by the Indemnitor. Notwithstanding the foregoing, the Indemnitor
shall not enter into any settlement that would adversely affect the Indemnitee's
rights hereunder, or impose any obligations on the Indemnitee in addition to
those set forth herein, in order for it to exercise such rights, without
Indemnitee's prior written consent, which shall not be unreasonably withheld or
delayed. No such action, claim or other matter shall be settled without the
prior written consent of the Indemnitor, which shall not be unreasonably
withheld or delayed. The Indemnitee, its Affiliates, and their respective
directors, officers, employees, subcontractors and agents shall reasonably
cooperate with the Indemnitor and its legal representatives in the investigation
and defense of any claim, demand, action, or other proceeding covered by the
indemnification obligations of this Section 15. The Indemnitee shall have the
right, but not the obligation, to be represented in such defense by counsel of
its own selection and at its own expense.

      16.   INSURANCE.

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                                 CONFIDENTIAL TREATMENT REQUESTED--REDACTED COPY

            16.1  Baxter INSURANCE. Baxter shall procure and maintain, during
the Term of this Agreement Commercial General Liability Insurance, including,
Product Liability The Successor Insurance shall cover amounts not less than
three million dollars combined single limit.. Baxter retains the right to insure
or self insure in any combination at its sole discretion the above coverages.

            16.2  Halozyme Insurance. Halozyme shall maintain general liability
insurance during the term of this Agreement adequately covering Halozyme's
obligations under this Agreement. Not more than once in any twelve (12) month
period, Halozyme shall provide to Baxter evidence of such insurance, upon
Baxter's written request. Notwithstanding the foregoing, once there is a
commercial sale of Product under the Exclusive Distribution Agreement, Halozyme
shall maintain, at a minimum, during the term of this Agreement and for a period
of three (3) years from the expiration or earlier termination of this Agreement,
(a) commercial general liability insurance with a combined single limit for
bodily injury of not less than one million U.S. Dollars ($1,000,000) each
occurrence and two million U.S. Dollars ($2,000,000) in the aggregate, and (b)
products liability/completed operations coverage with a per claim limit of not
less than three million U.S. Dollars ($3,000,000) for the first year of this
Agreement, four million U.S. Dollars ($4,000,000) for the second year of this
Agreement, and five million U.S. Dollars ($5,000,000) for the remaining term of
this Agreement. With respect to the policy under clause (b), such policy shall
show Baxter as an additional insured and loss payee, and provide that Baxter
will be given thirty (30) days advance written notice of the termination or
cancellation thereof.

      17.   GENERAL PROVISIONS.

            17.1  Notices. All notices hereunder shall be delivered by facsimile
(confirmed by overnight delivery), or by overnight delivery with a reputable
overnight delivery service, to the following address of the respective parties:

            If to Halozyme:              Halozyme, Inc.
                                         11588 Sorrento Valley Road, Suite 17
                                         San Diego, California 92121
                                         Attn: President

                                         Fax:   (858) 259-2539
                                         Phone: (858) 794-8889

            with a copy to:              DLA Piper Rudnick Gray Cary
                                         4365 Executive Drive, Suite 1100
                                         San Diego, California 92121
                                         Attention:  Mark R. Wicker

                                         Fax:   (858) 677-1401
                                         Phone: (858) 677-1489

            If to Baxter:                Baxter Healthcare Corporation
                                         95 Spring Street

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                                         New Providence, New Jersey 07974
                                         Attn: Ron Martin

                                         Fax:   (908) 286-7293
                                         Phone: (908) 286-7104

            With a copy to:              Baxter Healthcare Corporation
                                         One Baxter Parkway
                                         Deerfield, Illinois 60015-4633
                                         Attn: General Counsel

                                         Fax:   847-948-2450
                                         Phone: 847-948-2600

      Notices shall be effective on the day of receipt. A party may change its
address listed above by notice to the other party given in accordance with this
Section 17.1.

            17.2  Entire Agreement. The parties hereto acknowledge that this
Agreement, together with the Product Master Plan, the Confidentiality Agreement,
the Quality Agreement and the Exclusive Distribution Agreement sets forth the
entire agreement and understanding of the parties and supersedes all prior
written or oral agreements or understandings with respect to the subject matter
hereof. No modification of any of the terms of this Agreement, or any amendments
thereto, shall be deemed to be valid unless in writing and signed by an
authorized agent or representative of both parties hereto. No course of dealing
or usage of trade shall be used to modify the terms and conditions herein.

            17.3  Waiver. None of the provisions of this Agreement (including
the Exhibits hereto) or the Product Master Plan shall be considered waived by
any party hereto unless such waiver is agreed to, in writing, by authorized
agents of such party. The failure of a party to insist upon strict conformance
to any of the terms and conditions hereof, or failure or delay to exercise any
rights provided herein or by law shall not be deemed a waiver of any rights of
any party hereto.

            17.4  Obligations to Third Parties. Each party warrants and
represents that this Agreement does not conflict with any contractual
obligations, expressed or implied, undertaken with any third party.

            17.5  Assignment. Neither party shall assign this Agreement or any
part hereof or any interest herein to any non-affiliated third party (or use any
subcontractor) without the written approval of the other party; provided,
however, that either party may assign this Agreement without such consent in the
case of a merger, consolidation, change in control or sale of all or
substantially all of the assets of the party seeking such assignment or transfer
and such transaction relates to the business covered by this Agreement and the
resulting entity assumes all of the obligations under this Agreement. No
assignment shall be valid unless the permitted assignee(s) assumes all
obligations of its assignor under this Agreement. No assignment shall

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                                 CONFIDENTIAL TREATMENT REQUESTED--REDACTED COPY

relieve any party of responsibility for the performance of its obligations
hereunder. Any purported assignment in violation of this Section 17.5 shall be
void.

            17.6  Independent Contractor. Baxter and Halozyme are acting under
this Agreement as independent contractors and neither shall be considered an
agent of, or joint venturer with, the other. Unless otherwise provided herein to
the contrary, each party shall furnish all expertise, labor, supervision,
machining and equipment necessary for the performance of its obligations
hereunder and shall obtain and maintain all building and other permits and
licenses required by public authorities.

            17.7  Governing Law. In any action brought regarding the validity,
construction and enforcement of this Agreement, it shall be governed in all
respects by the laws of the State of New Jersey, without regard to the
principles of conflicts of laws. The courts of the State of California shall
have jurisdiction over the parties hereto in all matters arising hereunder and
the parties hereto agree that the venue will be a state or federal court in
California.

            17.8  Severability. If any term or provision of this Agreement shall
for any reason be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other term or
provision hereof, and this Agreement shall be interpreted and construed as if
such term or provision, to the extent the same shall have been held to be
invalid, illegal or unenforceable, had never been contained herein.

            17.9  Headings, Interpretation. The headings used in this Agreement
are for convenience only and are not part of this Agreement.

            17.10 Counterparts. The 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.

            17.11 Affiliates. Baxter shall notify Halozyme prior to using an
Affiliate to perform any of Baxter's obligations under this Agreement, or
providing any data or information arising from this Agreement (or otherwise
disclosing the Confidential Information, materials or intellectual property of
Halozyme) to an Affiliate. Any such Affiliate of Baxter shall be bound by the
terms and conditions of this Agreement as if such Affiliate was an original
signatory to this Agreement.

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                                 CONFIDENTIAL TREATMENT REQUESTED--REDACTED COPY

IN WITNESS WHEREOF, the parties hereto have each caused this Development and
Supply Agreement to be executed by their duly-authorized representatives as of
the Agreement Date above written.

HALOZYME, INC.                           BAXTER HEALTHCARE
                                         CORPORATION

By:    /s/ Jonathan Lim                  By:    /s/ Daniel Tasse

Name:  Jonathan Lim                      Name:  Daniel Tasse
Title: President and Chief               Title: General Manager - ACCO/Baxter
       Executive Officer

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                                 CONFIDENTIAL TREATMENT REQUESTED--REDACTED COPY

                                    EXHIBIT A

                                    API Price

  The API Price shall be equal to Halozyme's manufacturing costs, shipping,
insurance and associated handling costs (with no mark-up), but in no event shall
the API Price exceed *** per Product vial (for the liquid injectable formulation
contemplated by Section 1.15(i)).

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                                    EXHIBIT B

                                Development Plan

-     Develop manufacturing process for active ingredient - rHuPH20

-     Develop liquid formulation for Enhanze SC drug product

-     Develop lyophilized formulation for Enhanze SC drug product

-     Produce registration stability lots for Enhanze SC drug product

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                                 CONFIDENTIAL TREATMENT REQUESTED--REDACTED COPY

                                    EXHIBIT C

                                Quality Agreement

The Quality Agreement shall include the API Specifications and *** solution Drug
Product. Lyophilized Drug Product specification to be attached once further
development is completed and the Steering Committee determines the dosage to be
marketed.

                                QUALITY AGREEMENT

      This Quality Agreement (this "Agreement"), dated as of March 24 2005 (the
"Effective Date") is entered into between BAXTER HEALTHCARE CORPORATION with its
principal place of business at One Baxter Parkway, Deerfield, Illinois
60015-4633 ("Baxter"), and HALOZYME, INC. with its principal place of business
at 11588 Sorrento Valley Road, Suite 17, San Diego, California 92121
("Halozyme"). The parties hereby agree as follows:

      1.    INTRODUCTION

            1.1   Purpose.

                  1.1.1 This Agreement defines the roles and responsibilities
for Baxter when providing services for Halozyme.

                  1.1.2 This Agreement also defines how Baxter and Halozyme will
interact with each other.

                  1.1.3 For purposes of the NDA filing for the Product described
in the Development and Supply Agreement entered into between the parties dated
March 24, 2005 (the "Development and Supply Agreement") Halozyme is identified
as the "manufacturer," the legal entity in the license application and has
responsibility for compliance per 21 CFR 210, and 211.

            1.2   Relationship to the Development and Supply Agreement.

                  1.2.1 This Agreement shall be incorporated within and
constitute a part of the Development and Supply Agreement between the two
companies.

                  1.2.2 In the event of a conflict between any of the provisions
of the Quality Agreement and the Development and Supply Agreement, the
provisions of the Development and Supply Agreement shall govern.

                  1.2.3 In the event of a conflict between any of the provisions
of the Quality Agreement and the Exclusive Distribution Agreement entered into
between the parties dated August 13, 2004 (the "Exclusive Distribution
Agreement") the provisions of the Exclusive Distribution Agreement shall govern.

                  1.2.4 The definitions set forth in the Development and Supply
Agreement are applicable to this Quality Agreement unless otherwise specified.

      2.    PRODUCT

            2.1   The Product prepared for Halozyme by Baxter is described in
the Supply Agreement.

      3.    ADMINISTRATIVE INFORMATION

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            3.1   Halozyme contact names: See Appendix I

            3.2   Baxter contact names: See Appendix I

            3.3   Emergency contact names and numbers, during and outside
working hours:

                For Halozyme:
                Don Kennard
                Vice President, Quality and Regulatory Affairs
                (858) 353-1541

                For Baxter: ACC
                ___________________________
                ___________________________
                ___________________________
                ___________________________

      4.    DURATION OF AGREEMENT

      The Agreement will expire with termination of the Supply Agreement and/or
Exclusive Distribution Agreement (including any surviving right under the
Exclusive Distribution Agreement to sell inventory of Products). The Agreement
can be modified as needed with the written approval of both parties.

      5.    MANUFACTURING CGMP COMPLIANCE

            5.1   General.

                  5.1.1 The manufacturing operations for the Product to be
performed by Baxter are defined in the Supply Agreement.

                  5.1.2 The manufacturing schemes for Product are generally
described in the Project Plan and Product Master Plan. Halozyme shall advise
Baxter as soon as reasonable of any proposed material change to the
manufacturing schemes that are made and filed in the NDA or license for the
Product. Implementation of these changes will be handled as outlined by Change
Management (see Section 10). Baxter shall advise Halozyme of any proposed
material change to the manufacturing schemes that are made and filed on the NDA
or license for the Product. Any proposed changes shall be approved by Halozyme
prior to their implementation.

            5.2   Premises.

                  5.2.1 Baxter will manufacture the Product at the Baxter
Pharmaceutical Solutions, (BPS) Bloomington, Indiana site. The floor plan of the
manufacturing area and corresponding room classifications will be available for
review during annual audits of the facility.

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                  5.2.2 The premises and equipment used to manufacture the
Product will be maintained according to current domestic and EU regulatory
requirements and in accordance with the Master Batch Record used to manufacture
the Product, which are approved by Halozyme. The production of the Product will
be conducted in a suitably controlled environment, and such facilities will be
regularly monitored for parameters critical to the process to demonstrate
compliance with cGMPs, the Master Batch Record, and Project Plans.

                  5.2.3 Baxter will not sub-contract any portion of the
manufacturing operations without prior written approval of Halozyme.

                  5.2.4 Baxter will maintain controlled access to the premises.
Baxter will maintain all Halozyme confidential information as defined in the
Confidentiality Agreement and the Supply Agreement.

            5.3   cGMP. cGMP shall have the same definition as in the Supply
Agreement.

            5.4   Materials.

                  5.4.1 Baxter will use only chemical materials, packaging, and
labeling components approved by Halozyme and sampled, tested and stored in
accordance with the documentation approved by Halozyme.

                  5.4.2 Materials procured by Baxter.

                        (a) Baxter is responsible for ensuring that all
materials and components procured by Baxter for use in the Product are in full
compliance with the specifications approved by Halozyme. Raw materials are given
an expiration date upon the satisfactory completion of all initial testing.
Testing will be performed at defined time intervals to ensure the chemical and
physical stability of the raw materials for the duration of their useful shelf
life. Baxter is responsible for ensuring that all materials are used correctly
and are appropriately tested upon receipt as well as for holding the relevant
Certificate of Analysis for the materials.

                  5.4.3 Materials Provided by Halozyme for Baxter. Halozyme
shall provide the API as defined in, and in accordance with, the Development and
Supply Agreement.

                        (a) Halozyme is responsible for ensuring that the
materials referenced in the Development and Supply Agreement that are provided
by Baxter for use in the Product are in full compliance with the specifications
registered. Halozyme will provide Baxter a Certificate of Analysis for all
materials supplied by Halozyme. If there is any change to the formulation,
manufacture, testing or specifications of any material supplied by Halozyme,
Halozyme will notify Baxter prior to sending such material to the facility.

                  5.4.4 Halozyme is responsible for certifying and auditing, as
agreed upon, all Product related vendors and suppliers. Baxter will provide
Halozyme with verification of certification or audit as agreed upon. Halozyme is
responsible for all regulatory filings associated with Product vendors and
suppliers.

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<PAGE>

                  5.4.5 Halozyme may audit any vendors, contractors, or
subcontractors that are utilized by Baxter, related to Product. Baxter will use
reasonable efforts to cause such vendors, contractors or subcontractors to allow
such audits. Halozyme will share audit findings with Baxter.

                  5.4.6 Baxter is responsible for providing Halozyme with a
listing all Product related vendors and suppliers. Halozyme and Baxter shall
mutually agree upon vendors and suppliers. Baxter is to provide Halozyme with
advance notice of any change in approved vendors or suppliers. Halozyme is to
provide Baxter with advance notice of any change in approved vendors or
suppliers.

                  5.4.7 Halozyme shall be solely responsible for certifying and
auditing all Product related vendors and suppliers of API to applicable
regulatory standards.

                        (a) Baxter shall have the right to audit any API
                  manufacturer or accompany Halozyme during audits of the API
                  manufacturer. Halozyme shall notify Baxter in advance of any
                  scheduled audit of the API manufacturer.

            5.5   Master Batch Records. Baxter may transcribe the manufacturing
information into its own format and will obtain written approval from Halozyme
for each document version before manufacturing. However, agreed upon changes to
documentation will be handled as outlined by Change Management (see Section 10).

            5.6   Standard Operating Procedures.

                  5.6.1 Baxter is responsible for maintaining any SOPs or
Halozyme methods required to manufacture, test, and store the Product at Baxter
and to support cGMPs. Halozyme must approve Product specific SOP's, Master Batch
Records, Test Methods, and Specifications. The approved documents shall be
subject to the change control provisions in Section 10.

                  5.6.2 Baxter and Halozyme shall create and approve a listing
of Product specific SOP's, Master Batch Records, Test Methods, and
Specifications. The listing will be maintained by the Parties. The listing
defines the documents subject to the provisions of Change Control in Section 10.

            5.7   Batch Numbers.

                  5.7.1 The Baxter manufacturing batch numbering system begins
with the number ,XXXXXX, with the first batch number assigned as .XXXXX1. The
batch numbers are then issued sequentially from that point at the time the batch
record is issued, independent of specific drug product or fill date. Internal or
external sublots may be assigned for process segregations of drug product during
processing. Internal (temporary) sublotting occurs when a given batch is
segregated during processing and rejoined as one lot at the conclusion of a
process. These sublots are assigned a seventh place numeric designator (XXXXXX
becomes XXXXXX 1). External (permanent) sublotting occurs when a batch is
permanently segregated. These batch numbers are assigned a seventh place alpha
designator (XXXXXX becomes

                                       32
<PAGE>

AXXXXXXA). The Baxter packaging batch numbering system appends a sequential
alpha character to the existing manufacturing batch number for each packaging
sublot produced.

                  5.7.2 Baxter will use Baxter's batch number or lot number for
batch identification of Halozyme printed labels, cartons and shippers.

            5.8   Dates of Manufacture and Expiration.

                  5.8.1 Date of Manufacture - The date of Manufacture is defined
as the date of addition of active ingredient during Product formulation.

                  5.8.2 Expiration Date Baxter will calculate the expiry date
from the Date of Manufacture (5.8.1) using the shelf life approved by the FDA or
other regulatory agency as appropriate as communicated by Halozyme to Baxter.
The expiration date will be the last day of the month computed above.

            5.9   Manufacturing and Equipment Data.

                  5.9.1 Baxter is responsible for keeping records of equipment
usage (previous product produced in non-dedicated equipment), cleaning, and any
maintenance/calibration performed.

                  5.9.2 Baxter is responsible for labeling all Product dedicated
equipment and storing this equipment appropriately to prevent its use for other
product(s).

            5.10  Reprocessing and Rework.

                  5.10.1 Reprocessing or rework of the Product will not be
performed without prior written approval by Baxter and Halozyme.

                  5.10.2 Re labeling and re inspection are not considered
rework. Re labeling and re inspection of Product that fails final quality
attribute inspection requires prior written approval by Baxter and Halozyme.

            5.11  Storage and Shipment.

                  5.11.1 Storage - Baxter will store the Product under
conditions approved by Halozyme. Baxter will take reasonable precautions to
minimize the possibility of interference, theft, product contamination or
admixture with other materials during storage and before shipping of the
Product.

                  5.11.2 Packaging and Labeling for Transit - The Product will
be suitably packaged and labeled for transit. Halozyme is responsible for the
configuration of the shipping containers. Product designated for shipment
outside of the United States shall be labeled in accordance with applicable laws
and regulations.

                  5.11.3 Mixing of Product - Baxter will maintain proper
segregation of the Product according to cGMP.

                                       33
<PAGE>

                  5.11.4 Shipment of Product - Halozyme will authorize Baxter to
ship Product upon submission of a Baxter shipment request form. Halozyme will
authorize shipment based upon receipt, review and approval of Release
Documentation, as identified in Appendix II, and receipt and acceptance of
retained samples and any scheduled stability samples. Only released, finished,
labeled Product will be shipped by Baxter, except for Product samples required
for testing. Baxter will ship (in conformity with such methods and procedures as
are established by Halozyme and Baxter) finished, unlabeled Product as Halozyme
directs. Any shipment of unapproved Product (other than test samples) or Product
under Quarantine from Baxter requires prior written authorization by Halozyme
and Baxter.

                  5.11.5 Baxter shall ship Product to designated sites following
procedures approved by Halozyme and agreed to by Baxter which conform to the
Supply Agreement and the NDA for the Product using shipping containers and
temperature controls/recorders validated or otherwise qualified by Halozyme.

      6.    QUALITY CONTROL

            6.1   General.

                  6.1.1 The testing activities for the Product that are to be
performed by Baxter shall be in accordance with the Specifications, as defined
in the Development and Supply Agreement. In general, Baxter is responsible for
performing tests and assays directly related to the filling operation; i.e.,
identity testing, uniformity by unit weight variation, pre-filtration bioburden,
bulk and finished Product sterility, etc., or as otherwise determined by
agreement between Halozyme and Baxter in the Product Master Plan. Halozyme is
responsible for Product release. Baxter is responsible for submitting unlabeled
bulk and finished Product test samples to a mutually agreed upon third-party
contract laboratories.

            6.2   Materials supplied by Baxter.

                  6.2.1 Quality control of materials supplied by Baxter will be
undertaken by Baxter. Baxter will notify Halozyme of any investigations related
to the testing, storage, and handling of any raw materials used in the
manufacturing of the Product or any investigation of Product initiated as a
reject.

            6.3   In-Process and Finished Product Testing.

                  6.3.1 Baxter will perform bulk and finished Product testing,
including but not limited to sterility and uniformity by unit weight variation,
as directed by Halozyme using approved specifications and validated, or
otherwise qualified, methods of analysis.

                  6.3.2 A Statement of Compliance confirming that the Product
has been manufactured, packaged and tested, and meets the requirements of the
Master Batch Record and appropriate approved specifications will be issued by
the Baxter Quality Unit. The release documentation information, pending
regulatory approval, can be found in Appendix II.

                  6.3.3 Halozyme or its licensees may perform testing to confirm
or supplement the Baxter data prior to Product release for distribution.
Halozyme may perform

                                       34
<PAGE>

confirmatory testing during the initial term of the Development and Supply
Agreement to validate the Baxter data. Periodically thereafter, Halozyme may
test material to confirm the Baxter data. Dispute resolutions of conflicting
test data will be handled per Section 9.

                  6.3.4 Shipping of samples to a third party contract laboratory
will be per a qualified shipping method, provided by Baxter. Shipping of samples
at the request of Halozyme shall be per the Baxter qualified shipping method
unless stipulated otherwise.

            6.4   Retain Samples.

                  6.4.1 Baxter is responsible for storing retain samples of
finished Product per 2 1 CFR 2 1 1.170 and any protocols mutually agreed upon in
writing between Baxter and Halozyme.

                  6.4.2 Halozyme will maintain retain samples for the purposes
of complaint and adverse event evaluations.

            6.5   Routine Stability Program.

                  6.5.1 Halozyme is responsible for developing and submitting to
Baxter a routine stability-testing program for the Product. Halozyme is
responsible for identifying the batch number and quantity of samples for each
lot to be placed in the stability program. Baxter is responsible for executing
the stability-testing program and providing summary reports and data per the
agreed upon stability program.

            6.6   Out-of-Specification (OOS) Investigations.

                  6.6.1 Baxter is responsible for investigating any testing
performed by Baxter that fails to meet specifications and notifying Halozyme
within 48 hours of a confirmed OSS result. Each investigation will be reviewed
by Baxter's designated Quality representative, and will follow the procedures
recommended by regulatory agencies and as defined in appropriate Baxter SOPS for
OOS Investigations All completed investigation reports will be included in the
released, executed batch record that will be provided to Halozyme.

      7.    QUALITY ASSURANCE

            7.1   Deviations (Variances) and Investigations.

                  7.1.1 Deviations and Investigation Reports - Any deviation
from the process during manufacture, including but not limited to, batch record
execution, and environmental monitoring excursions or aseptic processing
procedures, must be carefully explained and documented in the batch records.
They must be justified and approved by Baxter Quality Assurance and the affected
area management, and included in the document package. Investigations will be
communicated to Halozyme within 48 hours of the initiation of the investigation.
All investigations related to Product shall be forwarded to Halozyme for review
as part of the released, executed batch record. Halozyme may review such
investigation reports and has final disposition of any batch of Product.

                                       35

<PAGE>

                  7.1.2 Failure Investigations - Baxter is responsible for
investigating any test result or in-process test, which fails to meet
specifications. Each investigation will be reviewed and approved by Baxter's
designated quality representative. The investigation must document that any
failure has not jeopardized the safety, identity, strength, purity, or quality
of the Product prior to release. Halozyme may conduct its own independent
failure investigation, and may participate in the Baxter failure Investigation,
as applicable. Baxter shall retain the final authority for the content of the
investigation report.

                  7.1.3 Halozyme will authorize the destruction of any batch of
Product aborted or rejected by Baxter.

                  7.1.4 Baxter will provide written notification to Halozyme if
any problems that are discovered, including review of media fills and
environmental monitoring trending, that may impact Product batch(es) previously
shipped to Halozyme or its distributor(s) or licensee(s) within 48 hours of
initiation of the investigation.

                  7.1.5 Some deviations/failures may require that additional
testing, stability, or validation be conducted. This work may be performed by
Halozyme and/or Baxter as agreed by both parties.

            7.2   Batch Disposition.

                  7.2.1 For each batch, Baxter will provide the documentation
required in Appendix II.

            7.3   Product Release.

                  7.3.1 Release of the Product is the absolute responsibility of
Halozyme and will be undertaken by Halozyme based on Halozyme's internal
procedures, the full document package provided by Baxter (Appendix II), and
completion of any release testing required by Halozyme.

                  7.3.2 Any problem discovered by Halozyme likely to cause
rejection of the Product will be communicated to Baxter within the later of 15
days from receipt of the full release documentation package or within 45
calendar days following receipt of Product Samples, if applicable, (see Appendix
II). If these conditions cannot be met, Halozyme will notify Baxter and provide
a new target date for completion and justification for the extension.

                  7.3.3 Halozyme will communicate within 15 days, any problem
confirmed by Halozyme that is a change in acceptability of a previously Halozyme
supplied material received at Baxter. Baxter will evaluate the status change for
impact to Baxter systems.

            7.4   Product Complaints, Adverse Events, Serious Adverse Events,
and Recalls.

                  7.4.1 Product Complaints and Adverse Events received by Baxter
- In accordance with Section 5 of the Exclusive Distribution Agreement, Baxter
is responsible for notifying Halozyme of any adverse events or product
complaints within 24 hours. Halozyme is

                                       36
<PAGE>

responsible for receiving and initially investigating any Product complaints and
Adverse Events of which it becomes aware. Halozyme will notify Baxter within 2
days of discovery of any problems thought to be due to manufacture or
distribution of the Product. When requested by Halozyme, Baxter will promptly
perform investigations for these problems. Investigation reports will be
forwarded to Halozyme within 30 days or Baxter will notify Halozyme and provide
a new target date for completion and justification for the extension Halozyme
will provide Baxter with periodic summary reports of all Halozyme product
complaint investigations and conclusions. The responsibility for regulatory
reporting of Adverse Events rests with Halozyme.

                  7.4.2 Product Complaints and Adverse Events received by
Halozyme - Halozyme is responsible for notifying ACC within 24 hours of receipt
of a complaint. Halozyme is responsible for receiving and initially
investigating any Product complaints of which it becomes aware. Halozyme will
notify Baxter within 2 days of discovery of any problems thought to be due to
manufacture or distribution of the Product. Halozyme will provide Baxter with
periodic summary reports of all Halozyme product complaint investigations and
conclusions. The responsibility for regulatory reporting of Adverse Events rests
with Halozyme.

                  7.4.3 Per Section 5 of the Exclusive Distribution Agreement
both Halozyme and Baxter will inform each party of any reported Serious Adverse
Events immediately. Halozyme and Baxter will work closely in any required
investigations of Serious Adverse Events. Halozyme will be responsible for the
investigative plan and execution.

                  7.4.4 Product Recall, Product Withdrawal, Field Alerts and
Advisory Notices-- Halozyme or Baxter may initiate a Product recall, Product
Withdrawal, Field Alerts or Advisory Notices as necessary. Primary
responsibility for any action regarding distributed product will rest with
Halozyme. Either Baxter or Halozyme will notify the other party of any
anticipated action against distributed product within 24 hours of determination
of the need for such action. Halozyme and ACC will work closely to develop and
execute, as appropriate, Product Recall, Withdrawal, Field Alert or Advisory
Notice action strategies. If the action is the result of manufacturing or
distribution problems Halozyme will request investigative support from Baxter as
appropriate.

                  7.4.5 Product Complaint and Product Recall, Product
Withdrawal, Field Alerts and Advisory Notices records will be maintained
respectively by Baxter and Halozyme to the requirements of applicable
regulations but not less than 3 years.

            7.5   Records Retention.

                  7.5.1 Baxter will initially retain original batch production
records for the Product and materials for one year after expiration, and send
the original Halozyme.

                  7.5.2 Subject to Section 5.7 of the Development and Supply
Agreement, Baxter will not destroy any batch production records without first
obtaining written approval from Halozyme for any records less than 18 months
past expiration date.

            7.6   Manufacturing and Quality Presence in the Manufacturing
Facility.

                                       37

<PAGE>

                  7.6.1 Baxter will maintain adequate, qualified Manufacturing
and Quality personnel in the manufacturing facility during the manufacture of
the Product to ensure compliance with cGMPs and the consistent manufacture of
Product.

                  7.6.2 Baxter will permit a maximum of two Halozyme
representatives to be present in the manufacturing facility during the
manufacture and testing of the Product and on-site presence for purposes of
record and data review only during an audit described in Section 6.2 of the
Development and Supply Agreement.

      8.    REGULATORY COMPLIANCE

            8.1   Regulatory Inspections.

                  8.1.1 Baxter will permit access by the regulatory agencies to
Baxter's premises. Baxter will inform Halozyme of any announced regulatory
inspections that directly involve the Product within 24 hours of the
notification to Baxter of such an inspection. Baxter will immediately inform
Halozyme of any unannounced regulatory inspections that directly involve the
Product. Baxter will permit a Halozyme representative to be present in the
facility for a pre approval inspection or any subsequent inspection that
directly involves Product. Both Baxter and Halozyme will mutually agree in good
faith upon the specific Halozyme participation in the inspection. For subsequent
PAIs or "For Cause" inspections, Halozyme personnel will be allowed on-site and
will participate directly in the inspection at the discretion of Baxter.

                  8.1.2 Baxter will secure the agreement of Halozyme prior to
making any commitment to a regulatory agency regarding Product. Halozyme shall
be provided with draft responses to regulatory observations that directly
involve the Product and its manufacture prior to submission to the regulatory
authorities and Baxter shall permit Halozyme's input into responses and
corrective actions within 48 hours. Baxter shall retain the final authority for
the content of the responses to the regulatory authority.

                  8.1.3 Baxter will promptly forward to Halozyme any
observations and responses from a routine regulatory inspection relating to the
facility where Halozyme's Product is manufactured. Baxter reserves the right to
appropriately redact this documentation to preserve any client confidential
information.

                  8.1.4 Halozyme will inform Baxter in writing of any regulatory
issue that impacts Baxter's ability to manufacture the Product.

                  8.1.5 Baxter will forward to Halozyme a redacted summary of
any observations and responses from other clients' product inspections to the
extent that such observations and responses relate directly to Product or
directly to Baxter's ability to supply Product; provided, however, Baxter is not
required to disclose any client confidential information.

                  8.1.6 Halozyme will inform Baxter within 24 hours of any
regulatory inspection related to Product. Halozyme will provide results of
regulatory inspections to Baxter.

                                       38

<PAGE>

            8.2   Regulatory Actions.

                  8.2.1 Halozyme will provide Baxter a copy of the Chemistry,
Manufacturing and Controls (CMC) section of their application prior to
submission for review and comment by Baxter's Regulatory Affairs department.
Upon submission to the regulatory agency Halozyme will provide Baxter a final
copy of the CMC section for Product and any updates submitted thereafter.

                  8.2.2 Halozyme will notify Baxter of any regulatory actions
related to the Product that will impact Baxter.

                  8.2.3 Baxter is responsible for supporting all batch record
investigations associated with regulatory actions.

                  8.2.4 Each party agrees to supply the other with any
manufacturing, testing, or storage data within 48 hours, if requested, as the
result of a regulatory inspection, or a potential regulatory exposure such as a
recall or significant product complaint.

                  8.2.5 Right to Audit. Halozyme shall have the right to audit
as set forth in the Development and Supply Agreement. Baxter shall have the
right to Audit Halozyme as set forth in the Development and Supply Agreement.

                  8.2.6 Information to be made available during Audit. Halozyme
shall have the right to review and obtain confidential copies of validation data
that supports the manufacture of the Product.

            8.3   Disclosure of Information and Regulatory Report.

                  8.3.1 The parties recognize that the holder of a New Drug
Application or regulatory approval may be required to submit information and
file reports with various governmental agencies. To ensure that Halozyme will be
able to fulfill such obligations, Baxter agrees that it will promptly disclose
to Halozyme any and all relevant information, data or changes (prior to
implementation) that impact Product or global regulatory filings. In addition,
Baxter further agrees that it will report in writing all changes (other than
nonmaterial changes which would not affect regulatory approvals or submissions)
related to Product regarding facilities (areas), equipment,
procedures/documentation and personnel at least once annually. Such reports will
include any contemplated efforts to manufacture or process compounds other than
those related to Product in areas or employing equipment that is used to provide
Product. In the event that no changes related to Product are contemplated or
implemented during any particular year, Baxter shall file a report attesting to
that fact.

                  8.3.2 Each party acknowledges that the information given to
such party pursuant to this agreement may contain proprietary and confidential
information of the other party. Neither party shall use any information that
would fall within the definition of the other party's Confidential Information
pursuant to either the Development and Supply Agreement or the Exclusive
Distribution Agreement other than for the purposes set forth herein, and shall
not disclose such information to any third party except as expressly allowed
herein or under such agreements.

                                       39

<PAGE>

      9.    DISPUTE RESOLUTION

            9.1   Non-Conformity Dispute.

                  9.1.1 In the event that a dispute arises between Baxter and
Halozyme in the non-conformity of a batch of the Product, the heads of Quality
from both companies shall in good faith promptly attempt to reach an agreement.
Whatever the outcome, Halozyme retains the absolute right to determine product
release status.

            9.2   Test Result Dispute.

                  9.2.1 In the event that a dispute arises between Baxter and
Halozyme in the testing performed by Baxter for the Product, the resolution will
proceed in stages. The first stage requires direct communication between Quality
management from both parties to determine that the methods of analysis are the
same and are being executed in the same manner at the applicable sites. Second,
carefully controlled and split samples should be sent from one site to another
in an attempt to reach agreement. Should there be a failure to achieve
resolution; QC Management from the parties will be required to meet to work
through the analysis of a mutually agreeable sample. If these actions fail to
achieve resolution, and only after these avenues have been exhausted, a
qualified referee laboratory will be used to achieve resolution. This laboratory
must be agreeable to both parties prior to use. The results from this referee
laboratory will be used as final authority to determine responsibilities, but
whatever the outcome, Halozyme retains the right to determine product release
status.

      10.   CHANGE MANAGEMENT

            10.1  All proposed changes go through a technical, regulatory, and
cGMP impact assessment by the Baxter expert groups. The documents that contain
Halozyme's intellectual property (including specifications for the Product) or
changes that may affect Halozyme's regulatory submissions shall also go through
Halozyme's assessment for regulatory advice and implementation requirements, as
per the agreements between Halozyme and Baxter, and shall not be effective or
implemented until agreed to in writing by Halozyme.

            10.2  The scope of such a Change Management process applies to both
parties and includes chemical manufacturing, pharmaceutical manufacturing,
packaging processes, analytical testing, release, and storage of Product. The
associated changes may relate to: the Master Batch Records (e.g. master
formulas, filling, packaging); bills of materials; Specifications and test
methods (for raw materials and finished product); purchase specifications and
approved supplier lists (for Raw Materials and Packaging Components); Halozyme
specific validated equipment; facilities; utilities; or computer systems used in
the manufacture of Product.

            10.3  The Parties will assess changes within 15 calendar days and
those changes marked urgent within 5 working days. Neither party will unduly
withhold approvals.

      11.   PRODUCT AND PROCESS VALIDATION

            11.1  Process Validation. Halozyme and Baxter are responsible for
ensuring that the manufacturing process is validated. Baxter is responsible for
ensuring that the facilities,

                                       40
<PAGE>

utilities and support systems are validated. The validation should ensure that
the process is capable of consistently achieving the Product acceptance
specification. Baxter shall provide adequate resources to execute process
validations as per mutually approved protocols.

            11.2  Cleaning Verification/Validation. Baxter is responsible for
ensuring that adequate cleaning of product contact parts used in the manufacture
of Product is carried out between batches of different product to prevent
contamination. Halozyme will provide information (i.e. LD50, toxicity,
solubility, batch size, fill volume, product max human dose (MHD) for the
Initial Drug (as defined in the Development and Supply Agreement), to establish
cleaning limits. Until such time as the cleaning procedure and analytical
methodology is validated for the Initial Drug, Halozyme will purchase new
product contact equipment; including but not limited to, glass receiving vessels
and filling needles, to be used in the manufacture of all Product batches.

            11.3  Sterilization and Depyrogenation Validation. Baxter is
responsible for ensuring that sterilization processes are validated and that
adequate sterilization and depyrogenation is carried out on the components and
appropriate equipment prior to the manufacture for each batch of Product.

            11.4  Equipment, Computer, Facility, and Utilities Qualification.
Baxter is responsible for all equipment, computer, facility, and utility
qualification activities associated with the Product consistent with applicable
regulatory requirements.

            11.5  Laboratory Qualification. Baxter is responsible for ensuring
that all laboratories are in compliance with cGMPs and are qualified in all of
the methodology associated with the Product. If Product specific analytical work
is performed at Baxter then Halozyme will provide any relevant analytical
documentation and training to assist in methods transfer or methods validation.
Baxter is responsible for third party laboratory qualification unless such
laboratory is specified by Halozyme and assurance that analytical methods are
validated or otherwise qualified.

      12.   NOTIFICATION OF NEW PRODUCT CLASSIFICATION

            12.1  Baxter will notify Halozyme, per appropriate regulations,
prior to introducing a new product, either approved or unapproved, into the
preparation, formulation, and filling area used for the manufacture of Product.
Halozyme and Baxter will assure that appropriate regulatory approvals will be
obtained prior to actual introduction of the new product into the manufacturing
facility.

      13.   ANNUAL PRODUCT REVIEW, ANNUAL REPORT AND DRUG LISTING

            13.1  Product Review.

                  13.1.1 Baxter will perform an Annual Product Review for the
Product and will issue a report to Halozyme. This report will cover all
manufacturing and testing activities performed by Baxter. It will consist of a
review of any changes at Baxter in the manufacturing, testing, storage, shipping
or validation of the Product in the previous calendar year and a summary of lots
made, released, and rejected. Also, control charting and summarizing of key

                                       41

<PAGE>

Product parameters will be performed. Any abnormalities will be explained in the
annual review. Baxter will provide the requested information to Halozyme
annually commencing with the start of commercial production. Trend analysis of
environmental data, if available, will be available for review during annual
audits.

            13.2  Annual Report.

                  13.2.1 Halozyme is responsible for preparing any Annual Report
as required by applicable regulations, including 21 CFR 314.7(g)(3), and
314.81(b)(2). At least 90 calendar days before the Annual Report due date,
Halozyme shall request in writing from Baxter the chemistry, manufacturing, and
controls data required for submission of the Annual Report. Baxter will provide
the requested information to Halozyme within 30 days as specified in the
Regulatory Plan. Upon submission to the Regulatory Agency, Halozyme will provide
Baxter with a final copy of the Annual Report.

                  13.2.2 Drug Listing - Baxter is responsible for drug listing
as the manufacturer of the Product, while Halozyme is responsible for drug
listing as the distributor of the Product. Halozyme will provide Baxter with all
information needed by them for their listing, including date of approval and
Product launch to the market within three days of such dates, as and to the
extent required by applicable laws and regulations.

      14.   MISCELLANEOUS

            14.1  Entire Agreement. The parties hereto acknowledge that this
Agreement, together with the Supply Agreement, the Confidentiality Agreement (as
defined in the Supply Agreement), and the Exclusive Distribution Agreement
between the parties of even date herewith sets forth the entire agreement and
understanding of the parties and supersedes all prior written or oral agreements
or understandings with respect to the subject matter hereof. No modification of
any of the terms of this Agreement, or any amendments thereto, shall be deemed
to be valid unless in writing and signed by an authorized agent or
representative of both parties hereto. No course of dealing or usage of trade
shall be used to modify the terms and conditions herein.

            14.2  Waiver. None of the provisions of this Agreement shall be
considered waived by any party hereto unless such waiver is agreed to, in
writing, by authorized agents of such party. The failure of a party to insist
upon strict conformance to any of the terms and conditions hereof, or failure or
delay to exercise any rights provided herein or by law shall not be deemed a
waiver of any rights of any party hereto.

            14.3  Obligations to Third Parties. Each party warrants and
represents that this Agreement does not conflict with any contractual
obligations, expressed or implied, undertaken with any third party.

            14.4  Assignment. Neither party shall assign this Agreement or any
part hereof or any interest herein to any third party (or use any subcontractor)
without the written approval of the other party; provided, however, that either
party may assign this Agreement without such consent in the case of a merger,
consolidation, change in control or sale of all or substantially all of the
assets of the party seeking such assignment or transfer and such transaction
relates to the

                                       42

<PAGE>

business covered by this Agreement and the resulting entity assumes all of the
obligations under this Agreement. No assignment shall be valid unless the
permitted assignee(s) assumes all obligations of its assignor under this
Agreement. No assignment shall relieve any party of responsibility for the
performance of its obligations hereunder. Any purported assignment in violation
of this Section 14.4 shall be void.

            14.5  Independent Contractor. Baxter and Halozyme are acting under
this Agreement as independent contractors and neither shall be considered an
agent of, or joint venturer with, the other. Unless otherwise provided herein to
the contrary, each party shall furnish all expertise, labor, supervision,
machining and equipment necessary for the performance of its obligations
hereunder and shall obtain and maintain all building and other permits and
licenses required by public authorities.

            14.6  Governing Law. This Agreement is being delivered and executed
in the State of California. In any action brought regarding the validity,
construction and enforcement of this Agreement, it shall be governed in all
respects by the laws of the State of California, without regard to the
principles of conflicts of laws.

            14.7  Severability. If any term or provision of this Agreement shall
for any reason be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other term or
provision hereof, and this Agreement shall be interpreted and construed as if
such term or provision, to the extent the same shall have been held to be
invalid, illegal or unenforceable, had never been contained herein.

            14.8  Headings, Interpretation. The headings used in this Agreement
are for convenience only and are not part of this Agreement.

            14.9  Counterparts. The 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 hereto have each caused this Quality
Agreement to be executed by their duly-authorized representatives as of the
Effective Date above written.

HALOZYME, INC.                             BAXTER HEALTHCARE
                                           CORPORATION

By:    ___________________________         By:    _____________________________

Name:  ___________________________         Name:  _____________________________

Title: ___________________________         Title: _____________________________

                                       43

<PAGE>

                                   APPENDIX I

                            List of Quality Contacts
                           (Name, Phone, Fax, E-mail)

<TABLE>
<CAPTION>
ISSUE                         Halozyme                    Baxter BPS            Baxter ACC
-------------------  ---------------------------  ----------------------------  ----------
<S>                  <C>                          <C>                           <C>
Production Planning  Carolyn Rynard
                     Ph: (858) 794-8889
                     Email: crynard@halozyme.com

Marketing and Sales  Name
                     Ph: (xxx) xxx-xxxx
                     Fax: (xxx) xxx-xxxx
                     Email:

Product Release      Don Kennard                  Melissa Beard
                     Ph: (858)-794-8889           Ph: (812) 355-4233
                     X208                         melissa_beard@baxter.com
                     dkennard@halozyme.com

QC Testing           Don Kennard                  Bryan Hudson/Dan Larrimore
                     Ph: (858)-794-8889           Ph: (812) 355-4244/4212
                     X208                         bryan_hudson@baxter.com
                     dkennard@halozyme.com        dan_larrimore@baxter.com

Investigations       Don Kennard                  Susan Easton/ Jennifer Walls
                     Ph: (858)-794-8889           Ph: (812) 355-7210/4213
                     X208                         susan_easton@baxter.com
                     dkennard@halozyme.com        jennifer_walls@baxter.com
</TABLE>

                                       44

<PAGE>

<TABLE>
<CAPTION>
ISSUE                         Halozyme                    Baxter BPS                      Baxter ACC
-------------------  ---------------------------  ----------------------------  -----------------------------
<S>                  <C>                          <C>                           <C>
Stability            Carolyn Rynard               Bryan Hudson
                     Ph: (858) 794-8889           Ph: (812) 355-4244
                     crynard@halozyme.com         Bryan_Hudson@baxter.com

Validation           Don Kennard                  Dave Abram
                     Ph: (858)-794-8889           Ph: (812) 355-4134
                     X208                         Dave_abram@baxter.com
                     dkennard@halozyme.com

Compliance Audits    Don Kennard                  Kacinda Boros                 Christopher Butler
                     Ph: (858)-794-8889           Ph: (812) 355-5135            Ph: (908) 286-7436
                     X208                         kacinda_boros@baxter.com      christopher_butler@baxter.com
                     dkennard@halozyme.com

Product Complaints   Don Kennard                  Melissa Beard
                     Ph: (858)-794-8889           Ph: (812) 355-4233
                     X208                         melissa_beard@baxter.com
                     dkennard@halozyme.com

Change Management    Don Kennard                  Jennifer Walls/Kelly Davis
                     Ph: (858)-794-8889           Ph: (812) 355-4213/4246
                     X208                         jennifer_walls@baxter.com
                     dkennard@halozyme.com        kelly_davis@baxter.com

CMC Regulatory       Don Kennard                  Kelly Davis
Issues               Ph: (858)-794-8889           Ph: (812) 355-4246
                     X208                         kelly_davis@baxter.com
                     dkennard@halozyme.com

Shipping and
Distribution
</TABLE>

                                       45

<PAGE>

                                   APPENDIX II

                              Release Documentation

      1. A Statement of Compliance. This document will include the name of the
Product, the batch number and the date of manufacture. The Statement of
Compliance will certify that the Product was manufactured to the requirements of
the Master Batch Record and that the finished Product test results met
specifications.

      2. A Certificate of Analysis. This document will include the name of the
Product, the batch number and the date of manufacture. This document will
include all required finished product specifications, test methods and results
of analysis of the finished product and product disposition.

      3. Analytical Method Assay Raw Data. Report all individual results from
valid assays that were utilized to assess batch release.

      4. Executed Batch Records. Provide a copy of all documents included in the
Master Batch Record as executed for the released batch. This includes;
compounding, filtration, filling, inspection, labeling, packaging and analytical
data from laboratory tests. This will include deviations, variances and out of
specification investigations associated with the released batch.

      5. Environmental Monitoring Data. Provide a copy of all environmental
monitoring data as collected in rooms utilized for the production of the
released batch.

                                       46

<PAGE>

                                  APPENDIX III

                   Current List of Product Specific Documents

Note: Pending finalization based upon Regulatory and Validation Requirements
<TABLE>
<S>   <C>
1.    Enhanze SC: Master Batch Record
2.    Product Specification Sheet: rHuPH20 ID byUV
3.    Product Specification Sheet: rHuPH20 Purity
4.    Product Specification Sheet: HAS ID by SDS Page
5.    In process  pH
6.    In process bioburden
7.    Enhanze SC: pH
8.    Enhanze SC: Osmolality
9.    Enhanze SC: Sterility Test
10.   Enhanze SC: Endotoxin
11.   Enhanze SC: Potency  USP
12.   Enhanze SC: Appearance and description
13.   Enhanze SC: Identity
14.   Enhanze SC: HSA Identity, ELISA
15.   Enhanze SC: Strength vs rHuPH20 Ref. Std. HPLC
16.   Enhanze SC: Purity , HPLC
17.   Enhanze SC: Impurity, HPLC
18.   Enhanze SC: Particulate Matter
19.   Enhanze SC: Volume
20.   Enhanze SC Product Specification Sheet
</TABLE>

                                       47
<PAGE>

                                 CONFIDENTIAL TREATMENT REQUESTED--REDACTED COPY

                                    EXHIBIT D

                             Product Specifications

See Quality Agreement

  *** Confidential material redacted and submitted separately to the Commission

                                       48

<PAGE>

                                 CONFIDENTIAL TREATMENT REQUESTED--REDACTED COPY

                                    EXHIBIT E

                  Baxter Requirements for Packaging Development

1.    Halozyme will provide current approved labeling content that should be
      used for Baxter artwork.

2.    Baxter will determine cap colors.

3.    Halozyme will provide the official manufacturer address.

  *** Confidential material redacted and submitted separately to the Commission

                                       49

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