HALOZYME THERAPEUTICS INC
EXHIBIT 10.1
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>a05968exv10w1.txt
<DESCRIPTION>EXHIBIT 10.1
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                                                                    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.

                           COMMERCIAL SUPPLY AGREEMENT

THIS SUPPLY AGREEMENT (this "Agreement") effective as of February 15, 2005 (the
"Effective Date"), is entered into between Halozyme, Inc., a California
corporation ("HALOZYME"), having a place of business at 11588 Sorrento Valley
Road S17, San Diego, California 92121, and Avid Bioservices, Inc., a Delaware
corporation ("AVID") having a place of business at 14282 Franklin Avenue,
Tustin, California 92780.

WHEREAS, AVID has the expertise and the manufacturing facility suitable for the
Production of protein as Bulk Drug Substance, derived from mammalian cell
culture;

WHEREAS, HALOZYME wishes to have AVID Produce Bulk Drug Substance and AVID
wishes to Produce Bulk Drug Substance for HALOZYME;

NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants set forth below, the parties hereby 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   "AVID SOPs" shall mean AVID's Standard Operating Procedures.
Copies of only those AVID's Standard Operating Procedures specifically written
for the production of Bulk Drug Substance for HALOZYME shall be provided by AVID
to HALOZYME prior to the Effective Date. AVID shall be responsible at all times
to cause the Bulk Drug Substance-specific AVID SOPs to be consistent with the
Bulk Drug Substance Master Plan, provided that each part of the Bulk Drug
Substance Master Plan is in its final approved and signed form with no
outstanding changes.

            1.3   "Batch" shall mean a specific quantity of Bulk Drug Substance
comprising a batch size mutually agreed upon in writing between HALOZYME and
AVID, 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.

            1.4   "Bulk Drug Substance" or "BDS" shall mean recombinant human
PH20 hyaluronidase, to be Produced by AVID in bulk form.

            1.5   "Bulk Drug Substance Invention" means any Invention relating
to the Bulk Drug Substance or its use made in connection with the performance of
this Agreement.

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                                 CONFIDENTIAL TREATMENT REQUESTED--REDACTED COPY

            1.6   "Bulk Drug Substance Master Plan" shall mean, collectively,
the following:

                  1.6.1 the Manufacturing Schedule (Exhibit A);

                  1.6.2 the Purchase Price (Exhibit B);

                  1.6.3 the Quality Agreement (Exhibit C);

                  1.6.4 the Specifications (Exhibit E); and

                  1.6.5 the Master Batch Record.

            1.7   "Bulk Drug Substance Requirements" shall mean (a) cGMP,
(b) the directions, processes, methods, materials and other requirements set
forth in the Master Batch Records and Avid's SOP's, and (c) the Specifications.

            1.8   "Certificate of Analysis" or "COA" means the certificate to be
issued by AVID for each Batch of Bulk Drug Substance delivered hereunder in
compliance with cGMP stating the specifications, the testing completed and
results, the analytical methods used, and the testing results.

            1.9   "Certificate of Compliance" , part of the COA, means the
certificate to be issued by AVID stating that the product was manufactured and
tested in compliance to applicable cGMPs guidelines, internal policies and
procedures.

            1.10  "cGMP" shall mean the current Good Manufacturing Practices
required by the FDA or other Regulatory Authorities as defined in Section 1.20
and set forth in the FD&C Act or FDA Regulations (including without limitation
21 CFR Parts 210, 211 and 600), policies or guidelines, effective as of the date
of the Production of a Batch, for the Production and testing of pharmaceutical
materials as applied solely to Bulk Drug Substance.

            1.11  "Confidential Information" shall mean, with respect to a
party, all information (and all tangible and intangible embodiments thereof)
that is disclosed by such party to the other party and is marked, identified as
or otherwise acknowledged to be confidential at the time of disclosure to the
other party. Notwithstanding the foregoing, Confidential Information of a party
shall not include information that the other party can establish by written
documentation (a) to have been publicly known prior to disclosure of such
information by the disclosing party to the receiving party; (b) to have become
publicly known, without the fault of the receiving party, subsequent to
disclosure of such information by the disclosing party to the receiving party;
(c) to have been received by the receiving party at any time from a source,
other than the disclosing party, rightfully having possession of and the right
to disclose such information; (d) to have been otherwise known by the receiving
party prior to disclosure of such information by the disclosing party to the
receiving party; or (e) to have been independently developed by employees or
agents on behalf of the receiving party without access to or use of

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                                 CONFIDENTIAL TREATMENT REQUESTED--REDACTED COPY

such information disclosed by the disclosing party to the receiving party (each,
a "Confidentiality Exception").

            1.12  "Development" shall mean studies conducted by AVID under this
Agreement to develop a process to Produce Bulk Drug Substance in accordance with
the Specifications and cGMP, provided such studies have been agreed to in
writing by the parties.

            1.13  "EMEA" shall mean the European Agency for the Evaluation of
Medicinal Products, or the European Medicines Evaluation Agency.

            1.14  "FDA" shall mean the United States Food and Drug
Administration or any successor entity thereto.

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

            1.16  "IND" shall mean an Investigational New Drug application for
Bulk Drug Substance, as defined in the FD&C Act or FDA Regulations (21 CFR 314).

            1.17  "Invention" shall mean any invention, discovery, composition,
enhancement, technology, data or information (whether or not patentable) made or
conceived by employees or others on behalf of AVID, HALOZYME or both in the
performance of this Agreement.

            1.18  "Labeling" shall mean all labels and other written, printed,
or graphic matter upon: (i) Bulk Drug Substance or any container, carton, or
wrapper utilized with Bulk Drug Substance or (ii) any written material
accompanying Bulk Drug Substance, including, without limitation, product inserts
that bear the trademarks or trade dress of HALOZYME, or other matter designated
in the Specifications.

            1.19  "Manufacturing Schedule" shall mean the plan containing the
schedule of manufacturing needs and timing for the delivery of each
manufacturing run of the Bulk Drug Substance set forth on Exhibit A, as amended,
supplemented or restated from time to time by mutual written agreement of the
parties.

            1.20  "Master Batch Record" shall have the meaning set forth in
Section 3.2.

            1.21  "Master Cell Bank" means the fully characterized cells
expanded and vialed into a series of aliquots, and maintained in a state of
frozen suspension.

            1.22  "Process Invention(s)" means (a) any proprietary method or
process used in Producing the Bulk Drug Substance that is owned or licensed to
AVID as of the Effective Date; and (b) any Invention made solely by employees or
representatives of AVID that constitutes an improvement or enhancement to any
proprietary method or process of AVID used


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                                 CONFIDENTIAL TREATMENT REQUESTED--REDACTED COPY

in Producing the Bulk Drug Substance, provided that such Invention does not
incorporate, use or otherwise compete with the Bulk Drug Substance.

            1.23  "Production" or "Produce" shall mean the cell culture and
purification, bulk filling, packaging, inspection, labeling, and testing of Bulk
Drug Substance by AVID.

            1.24  "Purchase Price" shall mean the amount to be paid by HALOZYME
for services provided by AVID as set forth in Exhibit B.

            1.25  "Quality Agreement" shall mean the Quality Agreement, in the
form attached as Exhibit C, entered into by AVID and HALOZYME as of the
Effective Date, as amended, supplemented or restated from time to time in
accordance with Section 2.3 or as the parties otherwise mutually agree in
writing.

            1.26  "Reference Standard" means a highly characterized series of
aliquots of recombinant human PH20 hyaluronidase with a defined level of
activity.

            1.27  "Regulatory Authority (ies)" shall mean those agencies or
authorities responsible for regulation of Bulk Drug Substance in the United
States per FDA regulations, in Europe per EMEA regulations, and in Canada per
Health Services, Canada. If AVID needs to comply with other agencies, it will be
addressed on a case-by-case basis as agreed to in writing by both parties.

            1.28  "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 Bulk Drug
Substance and approved as released to HALOZYME under cGMP by AVID.

            1.29  "Specifications" shall mean the written specifications for the
Bulk Drug Substance, containing manufacturing and testing requirements for Bulk
Drug Substance, as well as raw material, packaging component, labeling, and
quality assurance specifications, which are set forth on Exhibit E, as amended,
supplemented or restated from time to time in accordance with Section 2.2.2.

            1.30  "Working Cell Bank" means a secondary population of cells that
originated from the Master Cell Bank that is characterized and vialed into a
series of aliquots and maintained in a state of frozen suspension.

      2.    BULK DRUG SUBSTANCE MASTER PLAN.

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

            2.2   Amendment of Bulk Drug Substance Master Plan.

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                                 CONFIDENTIAL TREATMENT REQUESTED--REDACTED COPY

                  2.2.1 Except as otherwise set forth in Sections 2.2.2 and 2.3,
the Bulk Drug Substance Master Plan may be amended from time to time, as the
parties experience with the Production, testing and use of the Bulk Drug
Substance warrants, only upon mutual written agreement of HALOZYME and AVID.

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

                  2.2.3 In the event of any modification(s) to the
Specifications that result in an increase or decrease in the costs to AVID, then
the parties shall negotiate in good faith an adjustment to the Purchase Price to
reflect such increased or decreased cost. Notwithstanding the foregoing, if
HALOZYME should decide to change the Specifications with regard to the Bulk Drug
Substance, HALOZYME shall be liable for any and all additional costs for
materials, including but not limited to, raw materials, shipping materials or
other items previously purchased by AVID in reasonable anticipation of use under
this Agreement which have become unnecessary as a result of such change and
cannot be used by AVID with its manufacturing efforts for its other customers
(collectively, the "Incurred Material Costs"); provided, however, that AVID has
notified HALOZYME in writing of such Incurred Material Costs prior to the date
of any amendment to the Specifications and HALOZYME has agreed in writing to pay
to AVID such Incurred Material Costs.

                  2.2.4 In the event that any change contemplated under this
Section 2.2 that is requested by HALOZYME has the effect of delaying a scheduled
manufacturing run, AVID shall use its reasonable best efforts to accommodate
such run as soon as reasonably practicable. The parties agree that AVID shall
not be liable to HALOZYME for any loss, damages incurred by HALOZYME to the
extent resulting from such delay.

                  2.2.5 In the event that HALOZYME requests a change, whether
planned or unplanned that causes a delay to a manufacturing run under the
Manufacturing Schedule, HALOZYME shall be liable for any and all Incurred
Material Costs; provided, however, that AVID has notified HALOZYME in writing of
such Incurred Material Costs prior to the date of any amendment to the
Manufacturing Schedule and HALOZYME has agreed in writing to pay to AVID such
Incurred Material Costs. An alteration to the agreed upon Manufacturing Schedule
that is requested by HALOZYME and results in HALOZYME losing a manufacturing
time slot will result in forfeiture of the deposit for that manufacturing time
slot as identified and set forth in the Purchase Price unless AVID, using its
reasonable best efforts, is able to fill such manufacturing time slot with a
manufacturing project for one of its other customers.

                  2.2.6 In the event that AVID requests a change, whether
planned or unplanned, that causes a delay to a manufacturing run under the
Manufacturing Schedule, HALOZYME shall not be liable for any and all Incurred
Material Costs and shall not lose its deposit for any manufacturing slots
identified and set forth in the Purchase Price. AVID shall, in good faith and
using commercially reasonable efforts, limit any delay resulting from such
change to less than thirty (30) days; provided, however, that if the change
requested by AVID results in a delay to the manufacturing run under the
Manufacturing Schedule longer than sixty (60) days

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                                 CONFIDENTIAL TREATMENT REQUESTED--REDACTED COPY

in the aggregate, the parties shall mutually agree upon a fair and equitable
reduction in the Purchase Price for the applicable Bulk Drug Substance to
compensate HALOZYME for such delay, provided that such delay was not caused by
HALOZYME.

            2.3   Quality Agreement. At the reasonable request of either party,
the parties shall negotiate in good faith amendment(s) to the Quality Agreement
(Exhibit C) (a) to address matters specific to the Production of Bulk Drug
Substance for sale and use outside the United States, and (b) to address
regulatory concerns raised by a Regulatory Authority or concerns relating to
regulatory compliance or quality raised by a party.

            2.4   Order of Precedence. In the event that the terms of the Bulk
Drug Substance 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 Bulk Drug Substance Master Plan and
Quality Agreement shall be deemed to be incorporated herein and by reference and
made a part of this Agreement.

            2.5   Raw Materials and Testing. HALOZYME authorizes AVID to procure
from qualified vendors in accordance with the Bulk Drug Substance Master Plan
all necessary raw materials and supplies required to meet the manufacturing
timeline per the Manufacturing Schedule. HALOZYME shall provide AVID with at
least four (4) months advance written notice if HALOZYME would like to delay the
purchase of the raw materials and supplies. In addition, HALOZYME authorizes
AVID to ship out all necessary samples for outside testing as soon as reasonable
practical in accordance with the Bulk Drug Substance Requirements. In accordance
with the Bulk Drug Substance Master Plan, HALOZYME shall pay AVID for all raw
materials, supplies, and outside testing charges procured on behalf of HALOZYME
to manufacture the BDS. In the event the raw materials and supplies are utilized
for other customers of AVID, HALOZYME shall receive credit from AVID for the raw
materials and supplies utilized by other customers of AVID.

                  In the event that a raw material is either not available
despite being ordered in advance adhering to supplier's stated lead-time, or on
back order from a vendor, or received raw materials do not meet Specifications,
and in each case such delay is out of the reasonable control or foresight of the
parties, the Manufacturing Schedule shall be delayed at no cost or liability to
either party; provided, however, that if such delay is caused solely by AVID and
is longer than thirty (30) days in the aggregate, the parties shall mutually
agree upon a fair and equitable reduction in the Purchase Price for the
applicable Bulk Drug Substance to compensate HALOZYME for such delay, provided
that such delay was not caused by HALOZYME. HALOZYME and AVID will use their
reasonable best efforts to locate alternative sources of the back ordered raw
material. If a vendor is located, said vendor must be qualified prior to any
material being used in the manufacture of the Bulk Drug Substance. AVID will
qualify vendor under the terms of this Agreement. AVID shall provide HALOZYME
with the right to secure the next available manufacturing time slot once the raw
material has been received and tested to meet Specifications.

      3.    VALIDATION AND PRODUCTION OF BULK DRUG SUBSTANCE.

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                                 CONFIDENTIAL TREATMENT REQUESTED--REDACTED COPY

            3.1   Initiation and Conduct. Upon execution of this Agreement,
pursuant to the terms and conditions of this Agreement, (a) AVID, with input
from HALOZYME, shall conduct process validation of Bulk Drug Substance as
mutually agreed (including without limitation providing labor and testing for
such process validation), at an additional fee to be mutually determined in
advance in good faith but in no event greater than *** unless agreed upon in
writing, pursuant to the Manufacturing Schedule and conduct Production of Bulk
Drug Substance pursuant to the Bulk Drug Substance Master Plan, and (b) HALOZYME
shall pay AVID the Purchase Price in accordance with Exhibit B, and AVID shall
Produce and deliver to HALOZYME, such quantities of Bulk Drug Substances as set
forth in the Manufacturing Schedule.

            3.2   Documentation. A master batch record and associated SOP's
detailing the processes and procedures for manufacturing the Bulk Drug Substance
in conformance with the Specifications shall be generated by AVID; provided,
however that they must be reviewed and approved in writing by AVID and by
HALOZYME prior to Production (the "Master Batch Record"). Any substantive change
(e.g., one that would require a change in revision level per AVID Document
Control SOP) to the approved Master Batch Record must be reviewed and approved
in writing by AVID and HALOZYME prior to any change being implemented. It is the
responsibility of HALOZYME to ensure that proper Regulatory Authorities approve
the suggested changes, if necessary. Each Batch of Bulk Drug Substance shall be
Produced according to, and shall be documented in, a production copy of the
Master Batch Record, known as an Executed Batch Record. Each copy of the
Executed Batch Record for such Batch of Bulk Drug Substance shall be assigned a
unique batch number by AVID. Any deviation from the manufacturing process
specified in the Master Batch Record must be documented in the copy of the
Master Batch Record for that Batch using a deviation form. AVID shall provide
HALOZYME with one (1) copy of a Released Executed Batch Record with a completed
Batch of Bulk Drug Substance as soon as practical but no later than within two
(2) weeks following completion of such batch. All AVID SOPs shall be made
available to HALOZYME for review at AVID's facility. HALOZYME shall not be
allowed to copy or duplicate any AVID SOPs without the prior written consent of
AVID. After the Effective Date, HALOZYME will be permitted to review all
relevant general SOP's so long as they do not compromise confidentiality of
other clients and all reviews must be on-site only. In no event shall HALOZYME
be provided copies of these general SOP's nor shall HALOZYME remove said
documents from AVID's facility.

            3.3   Delivery Terms. In accordance with the Bulk Drug Substance
Master Plan, AVID shall ship all Bulk Drug Substance, at HALOZYME's expense, to
a location designated by HALOZYME, FCA (Tustin, California, per Incoterms 2000),
by a common carrier designated by HALOZYME in the shipping instructions to be
provided by HALOZYME (the "Shipping Instructions"). AVID shall be responsible
for the loading of the Bulk Drug Substance on departure and shall bear risk of
loss of such loading. HALOZYME shall procure, at its expense, insurance covering
damage or loss of Bulk Drug Substance during shipping. All Shipping Instructions
of HALOZYME shall be in writing and shall include detailed packaging
instructions, the name and address of the recipient and the shipping date.
HALOZYME shall be solely responsible for its own shipping validation studies
prior to the shipment of any BDS and

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                                 CONFIDENTIAL TREATMENT REQUESTED--REDACTED COPY

AVID shall not be responsible for the in-transit BDS provided it complied with
the Shipping Instructions.

            3.4   Payment for Bulk Drug Substance and Development. HALOZYME
shall pay all amounts required to be paid to AVID pursuant to this Agreement no
later than thirty (30) days from the date of invoice in accordance with the
Purchase Price, unless otherwise described herein.

                  3.4.1 Payment Schedule for BDS. With respect to each
manufacturing run of the Bulk Drug Substance, the following payment schedule
shall apply:

                        (a) HALOZYME shall pay AVID a slot reservation deposit
(the "Slot Reservation Deposit") equal to 33% of the price of each Bulk Drug
Substance per the Purchase Price, which amount is due no later than ninety (90)
days prior to the date the applicable batch is scheduled to be manufactured per
the Manufacturing Schedule. In no event shall AVID be required to reserve a
manufacturing slot for HALOZYME until HALOZYME has paid its slot reservation
deposit.

                        (b) HALOZYME shall pay AVID a fee equal to 33% of the
price of each Bulk Drug Substance per the Purchase Price, which amount is due
within thirty (30) days after purification is complete and will be invoiced by
AVID on the date the applicable batch is scheduled to be manufactured per the
Manufacturing Schedule.

                        (c) HALOZYME shall pay a completion fee equal to 34% of
the price of each Bulk Drug Substance per the Purchase Price, which amount is
due within 30 days from HALOZYME's receipt of the associated Released Executed
Batch Record and the COA, provided the BDS met the Bulk Drug Substance
Requirements set forth in Section 5.1.

                  3.4.2 Cancellation Fee. Subject to 2.2.5, HALOZYME recognizes
that AVID will reserve certain manufacturing capacity for HALOZYME to meet the
BDS requirements set forth in the Manufacturing Schedule. In exchange for this
commitment, and as AVID's sole and exclusive remedy for any cancellation of a
manufacturing run set forth in the Manufacturing Schedule, HALOZYME hereby
agrees to pay AVID a cancellation fee solely for the cancellation of
manufacturing runs of the BDS as more particularly described in the Purchase
Price. The cancellation fee shall be calculated by taking the product of (i) the
price for the manufacturing of the BDS per the Purchase Price and (ii) the
applicable percentage based set forth below based on the date of termination:

                Cancellation greater than *** prior to start of ***
                a manufacturing run per Manufacturing
                Schedule
                Cancellation less than *** prior to start of a *** of applicable
                Slot manufacturing run per Manufacturing Reservation Deposit
                Schedule

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                                 CONFIDENTIAL TREATMENT REQUESTED--REDACTED COPY

      Notwithstanding the foregoing, if HALOZYME cancels a manufacturing run
less than *** prior to the scheduled start of the manufacturing run per the
Manufacturing Schedule, HALOZYME shall not owe a cancellation fee if AVID is
able to fill such slot with another of its customers. AVID shall use its best
efforts to attempt to fill a slot created by any such cancellation. HALOZYME
shall notify AVID as soon as practical of any planned or anticipated
manufacturing delays.

                  3.4.3 Monetary Default. If HALOZYME defaults on any payments
due, interest shall accrue on any amount overdue at the rate of one percent (1%)
per month or the maximum rate allowed by law, whichever is lower, and for so
long as such overdue amount is unpaid, AVID shall be entitled to suspend any
additional services under this Agreement by providing written notice to
HALOZYME. The parties agree that AVID shall not be liable to HALOZYME for any
loss, damages incurred by HALOZYME to the extent resulting from such delay.

            3.5   Equipment. During the term of this Agreement, upon the prior
written approval of HALOZYME in each case, HALOZYME shall fund the purchase of
equipment necessary to Produce the Bulk Drug Substance. All such equipment paid
for by HALOZYME shall be owned solely by HALOZYME; provided, however, that such
equipment shall remain at AVID's facility used for Production of Bulk Drug
Substance and shall be available for AVID's use solely in connection with the
Production of Bulk Drug Substance for HALOZYME. AVID shall not use such
equipment for any other purpose, shall not transfer such equipment to any third
party or other location, shall not purport to convey or grant to any third party
an interest in such equipment, and shall take no action inconsistent with
HALOZYME's ownership of such equipment. During the term of this Agreement, AVID
shall be responsible, at HALOZYME's expense, for maintaining, servicing and
insuring (including by means of self-insurance) such equipment to the same
extent and in the same manner as AVID maintains, services and insures (including
by means of self-insurance) its own equipment. AVID shall maintain appropriate
records regarding the use, maintenance and service of such equipment as required
under cGMP. Upon termination of this Agreement, AVID promptly shall deliver such
equipment to HALOZYME at such location as HALOZYME reasonably requests at
HALOZYME's sole expense.

      4.    PRODUCTION OF PRODUCT.

            4.1   Production.AVID shall Produce Bulk Drug Substance in
accordance with the Bulk Drug Substance Requirements. HALOZYME shall have the
right, subject to AVID's standard visitation policy, to access the AVID
facilities, review all applicable records related the Production of Bulk Drug
Substance in accordance with the Quality Agreement and AVID's standard
visitation policy. HALOZYME shall have the right (a) to generally review the
Production of the Bulk Drug Substance, and (b) to review all relevant
documentation; provided, however, that HALOZYME shall not have the right to be
physically present during the manufacturing of the Bulk Drug Substance (from
component preparation through final filling and labeling) except as expressly
set forth in this Agreement. If HALOZYME discovers variances in the
documentation from established standards and methods of Production of Bulk

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Drug Substance, HALOZYME shall give written notice thereof to AVID, and upon
receipt of any such notice, AVID promptly shall take all appropriate remedial or
corrective action and give written notice to HALOZYME describing in reasonable
detail such actions taken.

            4.2   Audits. HALOZYME shall have the right to audit AVID's
facilities in accordance with the Quality Agreement. HALOZYME shall have the
additional right to audit AVID's facilities to address significant Bulk Drug
Substance quality or safety problems (each a "For Cause Audit") as discovered
through Bulk Drug Substance failures or complaints related to AVID's Production
of the Bulk Drug Substance. Such audits shall be scheduled at mutually agreeable
times upon reasonable advance written notice to AVID, shall be at HALOZYME's
expense, and, other than For Cause Audits which may be scheduled and conducted
as applicable, shall not occur more than one (1) time per calendar year or
exceed 3 days in length, after successful completion of a pre-approval
inspection audit, unless required by AVID's compliance status or HALOZYME's
needs or obligations as a license holder. In connection with performing such
audits, HALOZYME shall comply with all reasonable rules and regulations
promulgated by AVID relating to confidentiality, safety and security.

            4.3   Testing. In accordance with the Quality Agreement, AVID shall
test, or cause to be tested by third party testing facilities audited by AVID,
and approved by HALOZYME, in accordance with the Bulk Drug Substance
Requirements, each Batch of Bulk Drug Substance produced pursuant to this
Agreement before delivery to HALOZYME. Any third party testing facilities chosen
by HALOZYME and not previously audited by AVID will be audited by AVID, at
HALOZYME expense. A Certificate of Analysis and a Certificate of Compliance for
each Batch of Bulk Drug Substance delivered to HALOZYME shall set forth the
items tested, specifications, and test results in accordance with the Quality
Agreement. AVID shall send, or cause to be sent, to HALOZYME such certificates
along with one (1) copy of the Released Executed Master Batch Record two (2)
weeks after final QA review (in accordance with the Quality Agreement) and
approval of the executed Master Batch Record. As the drug license holder,
HALOZYME shall assume full responsibility for final disposition of each lot of
Bulk Drug Substance. Prior to use of any raw material or component in the
manufacture of Bulk Drug Substance, HALOZYME shall review the information AVID
has on file regarding the vendor, part number and any relevant testing data used
to qualify that raw material or component. HALOZYME shall approve the use of any
such vendor in writing prior to the initiation of any commercial manufacturing.
In the event a raw material or component is determined at a later stage to
contain an adventitious agent or contaminant liability will be determined
subsequent to an investigation to be conducted by the parties.

            4.4   Permits and Licenses. HALOZYME shall have sole responsibility,
at its expense, for obtaining all permits and licenses, including any licenses
specific (i.e., including, but not limited to licenses for specific cell lines,
expression systems, purification and specific media components, etc.) for
manufacture of the Bulk Drug Substance, necessary or required for the sale,
marketing and commercialization of each Bulk Drug Substance manufactured by AVID
hereunder. AVID shall be responsible, at its expense, to obtain and maintain all
permits and licenses required for it to carry out its regulatory and Production
obligations hereunder. AVID, at HALOZYME's request and expense, shall cooperate
with HALOZYME by assisting in

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preparing and filing any necessary documents to support HALOZYME's applications
for permits and licenses.

            4.5   Regulatory Requirements. Each party shall use its reasonable
best efforts to promptly notify the other of new regulatory requirements of
which it becomes aware which are relevant to the Production of a Bulk Drug
Substance under this Agreement and which are required by the Regulatory
Authorities or other applicable laws or governmental regulations, and shall
confer with each other with respect to the best means to comply with such
requirements.

            4.6   AVID's Facility. AVID is responsible for cGMP compliance with
all Federal, State and local Regulatory Authorities, laws and regulations
("Regulations") as they apply to AVID's facility. AVID shall have no
responsibility for compliance with Regulations as they relate specifically to
final filling, labeling development or marketing. HALOZYME assumes
responsibility for all contact with the FDA and other Regulatory Authorities
pertaining specifically to the Bulk Drug Substance; provided, however, AVID
shall provide to HALOZYME all such information as HALOZYME requires in
connection with such contacts with the FDA and other regulatory bodies and AVID
agrees to otherwise fully cooperate with HALOZYME in connection with such
matters.

            4.7   Regulatory Approvals. AVID shall provide product specific
information at HALOZYME's expense, including documents and assistance for
HALOZYME in preparation of submissions to Regulatory Authorities designated by
HALOZYME in support of HALOZYME's 510(k)s, INDs, New Drug Applications (NDAs),
or similar applications required of US or foreign governments and licenses.

            4.8   Regulatory Authority Inspections.

                  4.8.1 Interaction with Regulatory Authorities. All interaction
with Regulatory Authorities (both written and oral) that directly affects Bulk
Drug Substance or the Production of Bulk Drug Substance shall be conducted in
accordance with the provisions of this Section 4. At HALOZYME's request, AVID
will authorize Regulatory Authorities to review on HALOZYME's behalf
applications related to the Production of the Bulk Drug Substance.

                  4.8.2 Bulk Drug Substance Pre-Approval Inspection. In the case
of the Bulk Drug Substance Pre-Approval Inspection by the FDA or other
Regulatory Authorities related to HALOZYME's Bulk Drug Substances, the following
shall apply: (a) AVID immediately shall inform HALOZYME of the notice of such
inspection; (b) AVID shall permit a representative of HALOZYME to be present at
such inspection providing the HALOZYME representative is a non-participant in
any such meeting, provided that information of other clients of AVID is not
discussed; (c) AVID shall permit such representative of HALOZYME to be present
as a non-participant in, each daily wrap up session for such inspection and the
post-inspection wrap up session for such inspection, provided that information
of other clients of AVID is not discussed; (d) AVID promptly shall provide
HALOZYME with copies of all written materials, including, without limitation,
copies of any Notice of Inspection (FDA Form 482 or equivalent), other notice of
inspection, notice of violation, other similar notice, or Inspectional
Observations (FDA Form 483 or equivalent) received by AVID relating to such
inspection, and

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Establishment Inspection Report (EIR) relating to such inspection (provided that
AVID shall have the right to redact such documents to the extent necessary to
maintain other clients confidentiality, if applicable), and (e) AVID shall
provide HALOZYME with advance copies of all proposed responses to any such
inspections, notices or actions, shall permit HALOZYME reasonable opportunity
(provided that such does not prejudice AVID's ability to respond within 15
working days of its receipt of the Form 483 or equivalent) to review and comment
on each such response, shall consider HALOZYME's comments thereon, and shall
provide HALOZYME with copies of each such response as submitted. Notwithstanding
the foregoing, (i) nothing contained in this Section 4.8.2 shall be deemed to
give HALOZYME the authority to deal directly with the FDA in resolving any
matter arising out of the Pre-Approval Inspection without the prior written
consent of AVID, and (ii) AVID shall use its best efforts to promptly and
diligently correct the deviations and observations identified in the Form 483 or
other regulatory inspection summary. AVID shall implement such corrections at
AVID's expense. If AVID's failure to resolve any deviations and observations
results in delays of HALOZYME's ability to obtain product approval or bring
products to market, the parties shall mutually agree upon a fair and equitable
reduction in the Purchase Price to compensate HALOZYME for such failure. In no
event shall AVID be liable for any lost profits to the extent due to a delay
caused by Regulatory Authorities.

                  4.8.3 Other Bulk Drug Substance Specific Inspections. In the
case of an inspection (other than the Bulk Drug Substance Pre-Approval
Inspection) by a Regulatory Authority the following shall apply: (a) AVID shall,
as soon as reasonably practicable, inform HALOZYME by phone or e-mail to their
head of regulatory and quality of the notice of such inspection; (b) AVID shall,
to the extent the inspection relates to the Production of Bulk Drug Substance
provide HALOZYME with copies of all written materials, including without
limitation copies of any Notice of Inspection (FDA Form 482 or equivalent),
other notice of inspection, notice of violation, other similar notice, or
Inspectional Observations (FDA Form 483 or equivalent) received by AVID relating
to such inspection, and Establishment Inspection Report (EIR) relating to such
inspection (provided that AVID shall have the right to redact such documents to
the extent necessary to maintain other clients confidentiality);and (e)AVID
shall provide HALOZYME with appropriately redacted copies of all responses to
any such inspections, notices or actions as finally submitted. Notwithstanding
the foregoing, AVID shall use its best efforts to promptly and diligently
correct the deviations and observations identified in the Form 483 or other
regulatory inspection summary. AVID shall implement the corrections at AVID's
expense. If AVID's failure to resolve any deviations and observations results in
delays of HALOZYME's ability to obtain product approval or bring products to
market, the parties shall mutually agree upon a fair and equitable reduction in
the Purchase Price to compensate HALOZYME for such failure

                  4.8.4 Other Inspections. In the case of an inspection by a
Regulatory Authority of an AVID facility that does not directly affect the
Production of Bulk Drug Substances, the following shall apply: (a) AVID promptly
shall provide HALOZYME with copies of all written materials (with confidential
information that does not directly affect the Production of Bulk Drug Substances
redacted therefrom), including without limitation copies of any Notice of
Inspection (FDA Form 482 or equivalent), other notice of inspection, notice of

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violation, other similar notice, or Inspectional Observations (FDA Form 483 or
equivalent) received by AVID relating to such inspection, and Establishment
Inspection Report (EIR) relating to such inspection (provided that AVID shall
have the right to redact such documents to the extent necessary to maintain
other clients confidentiality); and (b) AVID promptly shall provide HALOZYME
with copies of all responses to any such inspections, notices or actions (with
confidential information that does not directly affect the Production of Bulk
Drug Substances redacted therefrom).

            4.9   Accelerated Delivery. In the event of any adverse regulatory
action, including without limitation receipt by AVID from the FDA or other
Regulatory Authorities of a warning letter, injunction, restraining order,
notice of intent to do any of the foregoing, or notice of intent to revoke or
suspend any of AVID's licenses that directly affect Bulk Drug Substance or the
Production of Bulk Drug Substance made from AVID's produced Bulk Drug Substance,
AVID shall deliver to HALOZYME or its affiliates, within forty eight (48) hours
of a written request from HALOZYME and after tender by HALOZYME of the
applicable Purchase Price, all Bulk Drug Substance requested by HALOZYME in
AVID's possession; provided that AVID is not prohibited from doing so per any
applicable law, regulation, court or agency order, notice, or ruling.

      5.    ACCEPTANCE OF BULK DRUG SUBSTANCE.

            5.1   Bulk Drug Substance Conformity. With respect to each Batch, no
later than thirty (30) calendar days from AVID'S delivery of the COA and
Released Executed Batch Record (provided by HALOZYME) for such Batch, HALOZYME
shall either (a) accept the Batch and title shall transfer to HALOZYME, or (b)
notify AVID in writing of the failure of the Batch to meet the Bulk Drug
Substance Requirements. All risk of loss for the Bulk Drug Substance shall pass
to HALOZYME at the close of business on the 30th calendar day following the
later of delivery of the COA and Released Executed Batch Record for such Batch
unless HALOZYME has notified AVID of the failure of the Batch to meet the Bulk
Drug Substance Requirements. It shall be the responsibility of HALOZYME to
provide AVID the Shipping Instructions for the Bulk Drug Substance and any
labeling requirements for the Bulk Drug Substance. All reasonable costs and
expenses associated with HALOZYME's packaging and shipping requests shall be
paid by HALOZYME. Notwithstanding the foregoing, if HALOZYME accepts a Batch but
wishes to have AVID store the Bulk Drug Substance under a bill and hold
arrangement beyond the thirty (30) day period, HALOZYME shall provide AVID with
written notice to store the BDS and shall pay AVID *** a month per Batch (not to
exceed six (6) months) and AVID shall store such Batch in accordance with cGMP
at its facilities ("Bill and Hold Arrangement"). Promptly following the end of
such six (6) month period, AVID shall, at HALOZYME's expense, ship the remaining
BDS (if any) to such as address as HALOZYME shall provide. Under the bill and
hold arrangement, HALOZYME shall provide to AVID, prior to the close of the
thirtieth (30th) calendar day following the later of delivery of the COA and
Released Executed Batch Record, a written fixed schedule covering a period not
to exceed such six (6) month period for delivery of the BDS. Other than AVID's
obligations relating to the storage and delivery of the BDS, AVID shall not be
responsible for any additional performance obligations with respect to the BDS
after the thirty (30) day period. HALOZYME agrees that all


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risk of loss of the BDS shall transfer to HALOZYME at the close of the thirtieth
(30th) calendar day following AVID'S delivery of the COA and Released Executed
Batch Record for such Batch under any Bill and Hold Arrangement. HALOZYME shall
pay all amounts required to be paid to AVID pursuant to this Agreement no later
than thirty (30) days from the date of invoice in accordance with the Purchase
Price.

                  5.1.1 If HALOZYME fails to notify AVID within the time period
specified in Section 5.1 that any Bulk Drug Substance does not conform to the
Bulk Drug Substance Requirements, then HALOZYME shall be deemed to have accepted
such Bulk Drug Substance and waived its right to revoke acceptance.

                  5.1.2 If HALOZYME believes any Bulk Drug Substance does not
conform to the Bulk Drug Substance Requirements, it shall give written notice to
AVID specifying the manner in which such Bulk Drug Substance fails to meet the
Bulk Drug Substance Requirements. Guidelines for resolving any disputed claims
regarding conformity of Bulk Drug Substance are set forth in Section 5.1.3.

                  5.1.3 If there is any dispute concerning whether the Bulk Drug
Substance complies with the Bulk Drug Substance Requirements or whether any such
failure is due (in whole or in part) to acts or omissions of HALOZYME after
delivery of the Bulk Drug Substance, the parties first shall refer such matter
to the head of Quality Department of each company for amicable settlement. In
the event that the head of each Quality Department does not settle such dispute
within ten (10) business days (or such later time as the parties may agree in
writing) after one party referred the matter to the other company's Quality
Department, a sample of the Bulk Drug Substance retained by AVID and a sample of
the Bulk Drug Substance delivered to HALOZYME shall be exchanged between the
parties for a counter-check. If such counter-check does not resolve the dispute,
a sample of the Bulk Drug Substance retained by AVID and a sample of the Bulk
Drug Substance delivered to HALOZYME shall be submitted to an independent,
qualified third party laboratory that is mutually acceptable and selected by the
parties promptly in good faith. Such laboratory shall determine whether the Bulk
Drug Substance delivered to HALOZYME met the Bulk Drug Substance Requirements at
the time of delivery by AVID, and such laboratory's determinations shall be
final. In the event the Bulk Drug Substance provided by AVID to the independent,
qualified third party laboratory meets the Bulk Drug Substance Requirements,
HALOZYME shall immediately and without delay pay AVID the Purchase Price. The
non-prevailing party shall bear the costs of such laboratory or consultant,
except as set forth in Section 5.2.2.

         5.2 Remedies for Non Conforming Bulk Drug Substance.

                  5.2.1 In the event AVID agrees that any Bulk Drug Substance is
non-conforming or the independent laboratory determines that the shipment of
Bulk Drug Substance is non-conforming, AVID shall use its best efforts to
replace such non-conforming Bulk Drug Substance as soon as practical in the next
available manufacturing time slot from the date of determination by the third
party of non-conformity or agreement by AVID of such non-conformity.


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                  5.2.2 In the event AVID agrees, or the independent laboratory
or consultant determines, that Bulk Drug Substance is non-conforming due in
whole or in part to the negligence or willful misconduct of AVID, then to the
extent such nonconformity results from the negligence or willful misconduct of
AVID, AVID shall be responsible for the cost of Production and delivery of the
replacement Bulk Drug Substance, subject to, and except as otherwise set forth
in, the provisions of Section 11.

      6. BULK DRUG SUBSTANCE RECALLS. Each party promptly shall notify the other
if any Batch of Bulk Drug Substance 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 Bulk Drug
Substance, and recall, market withdrawal or correction shall be conducted in
accordance with the provisions of the Quality Agreement. HALOZYME shall provide
AVID with a copy of all documents relating to such recall, market withdrawal or
field correction. AVID 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 AVID or solely by AVID's breach of its
warranties or obligations under this Agreement, HALOZYME shall be responsible
for all of the costs and expenses of such recall, market withdrawal or field
correction. In the event a recall, market withdrawal or field correction is
necessary because of AVID's breach of this Agreement or its negligence, omission
or willful misconduct, AVID 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 Drug Substance
and notification of the recall to those persons whom HALOZYME deems
appropriate).

      7. CHANGES IN PRODUCTION. AVID shall inform HALOZYME within fifteen (15)
calendar days of the result of any development that directly affects the
Production of the Bulk Drug Substance or changes to Bulk Drug Substance-specific
AVID SOPs. AVID shall give written notice to HALOZYME of any such changes, and
HALOZYME and AVID will review such development or changes in accordance with the
Quality Agreement. AVID shall assure that all such changes to the Bulk Drug
Substance-specific AVID SOPs are consistent with the Bulk Drug Substance Master
Plan unless the parties otherwise expressly agree in writing. AVID shall only
make changes to the Bulk Drug Substance Master Plan that are in accordance with
Section 2.2.

      8. CONFIDENTIALITY.

            8.1 Confidential Information. Subject in each case to Section 9.3.3,
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 prior to the term of this Agreement
pursuant to a written confidentiality agreement between the parties), and shall
not use, grant the use of or disclose to any third party the Confidential
Information of the other


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party other than as expressly permitted hereby. Each party shall notify the
other promptly upon discovery of any unauthorized use or disclosure of the other
party's Confidential Information.

            8.2 Terms of this Agreement. Except as otherwise provided herein,
during the term of this Agreement and for a period of five (5) years thereafter,
neither party shall disclose any terms or conditions of this Agreement to any
third party without the prior consent of the other party. Notwithstanding the
foregoing, prior to execution of this Agreement, the parties have agreed in
writing upon the substance of information that can be used to describe the terms
of this transaction, and each party may disclose such information, as modified
by mutual agreement from time to time, without the other party's consent.

            8.3 Limitations on Disclosure. Each party shall limit the disclosure
of the Confidential Information of the other party and the terms of this
Agreement on a need-to-know basis to those directors, officers, employees,
consultants, legal and financial advisors, clinical investigators, contractors,
(sub)licensees, distributors or permitted assignees, to the extent such
disclosure is reasonably necessary in connection with such party's activities as
expressly authorized by this Agreement. To the extent that disclosure is
authorized by this Agreement, prior to disclosure, each party hereto shall
obtain agreement of any such Person to hold in confidence and not make use of
the Confidential Information for any purpose other than those permitted by this
Agreement.

            8.4 Permitted Disclosures. The confidentiality obligations contained
in this Section 8 shall not apply to the extent that such disclosure is
reasonably necessary in the following instances: (a) complying with an
applicable law, regulation of a governmental agency (including any regulatory or
governmental body or securities exchange) or order of a court of competent
jurisdiction, or responding to a subpoena, request for production of documents
or other lawful court process, (b) obtaining approval to test or market the Bulk
Drug Substance, (c) filing or prosecuting patents owned by the receiving party,
(d) prosecuting or defending litigation, and (e) disclosure to investment
bankers, investors, and potential investors, each of whom prior to disclosure
must be bound by similar obligations of confidentiality and non-use at least
equivalent in scope to those set forth in this Section 8, provided in each case
that the disclosing party shall provide written notice thereof to the other
party and reasonable opportunity to object to such disclosure or to request
confidential treatment thereof, if available. In the event such Agreement is
required to be disclosed under the laws of the Securities and Exchange
Commission ("SEC"), both parties shall use their reasonable best efforts, to the
extent allowable by the SEC, to redact the financial terms before any submission
to the SEC to protect the confidentiality of the financial terms contained
herein.

      9. INVENTIONS.

            9.1 Existing Intellectual Property.

                  9.1.1 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, HALOZYME shall retain all right, title and


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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 the HALOZYME Process Technology (as defined in Section
9.1.2 below), Bulk Drug Substance, Labeling and trademarks associated therewith
(collectively, "HALOZYME's Intellectual Property"). Neither AVID nor any third
party shall acquire any right, title or interest in HALOZYME's Intellectual
Property by virtue of this Agreement or otherwise, except to the extent
expressly provided herein.

                  9.1.2 In the event that HALOZYME provides any process
technology to AVID for Development and/or Production ("HALOZYME Process
Technology"), AVID acknowledges and agrees that it shall not, without HALOZYME's
prior written consent, (i) use the HALOZYME Process Technology for any purpose
other than Development and/or Production as contemplated herein, (ii) seek to
patent any HALOZYME Process Technology, (iii) modify the HALOZYME Process
Technology, or (iv) incorporate any method or process owned or controlled by
AVID into the HALOZYME Process Technology. Notwithstanding anything to the
contrary herein, AVID shall not use any patented or proprietary process
technology (other than the HALOZYME Process Technology) in the Development or
Production of the BDS without obtaining HALOZYME's prior written approval in
each case.

            9.2 Jointly Owned Inventions. Subject to Section 9.3, 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 acceptable patent counsel to file and prosecute patent
applications based on such joint Inventions. If one party but not the other
wishes to apply for patent protection in any country or countries, the party
wishing to apply may do so at its sole cost and expense in its own name, and the
party not making such an application shall, at the expense of the party making
the application, provide the party making the application all reasonably
necessary assistance, information and instruction, including executing any
reasonable documents necessary to evidence and/or confirm the ownership rights
of the party applying for patent protection in such country. Neither party shall
amend or abandon any patent application, in respect of any intellectual property
which is jointly owned by the parties, without the other party's written
consent, which shall not be unreasonably withheld or delayed. The party making a
patent application for jointly owned intellectual property shall consult with
the other party, and incorporate the other party's reasonable comments and
suggestions, at reasonable intervals concerning the application for and
maintenance of such registration.

            9.3 Inventions.


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                  9.3.1 All right, title and interest in all Bulk Drug Substance
Inventions, together with all patent rights and other intellectual property
rights therein, shall be owned by HALOZYME. AVID hereby sells, assigns and
transfers to HALOZYME all of AVID's right, title and interest therein and
thereto. AVID shall promptly disclose to HALOZYME all data and information
related to any Bulk Drug Substance Invention.

                  9.3.2 All right, title and interest in all Reference Standard,
Master Cell Bank, Working Cell Bank, together with all patent rights and other
intellectual property rights therein, shall be owned by HALOZYME. AVID hereby
sells, assigns and transfers to HALOZYME all of AVID's right, title and interest
therein and thereto.

                  9.3.3 All right, title and interest in all Process Inventions,
together with all patent rights and other intellectual property rights therein,
shall be owned by AVID. AVID shall promptly disclose to HALOZYME any Process
Inventions generated or conceived during the term of this Agreement ("New
Process Inventions"). HALOZYME hereby sells, assigns and transfers to AVID all
of HALOZYME's right, title and interest therein and thereto. AVID hereby grants
to HALOZYME a non-exclusive, non-transferable (except as provided below),
royalty-free, fully paid-up, perpetual license to practice New Process
Inventions solely as required for HALOZYME to manufacture or have manufactured
Bulk Drug Substance. As used herein "have manufactured" shall mean that HALOZYME
shall have the right to utilize, and sublicense the foregoing rights and
disclose applicable technology and information to, a third party manufacturer
solely to manufacture Bulk Drug Substance for and on behalf of HALOZYME. AVID
shall notify HALOZYME in writing of any such technology and information owned by
a third party which AVID is prohibited from licensing to HALOZYME.

            9.4 Rights in Intellectual Property. The party owning any
intellectual property shall have the worldwide right to control the drafting,
filing, prosecution and maintenance of patents covering the Inventions relating
to such intellectual property, including decisions about the countries in which
to file patent applications. Patent costs associated with the patent activities
described in this Section 9.4 shall be borne by the sole owner. Each party will
cooperate with the other party in the filing and prosecution of 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.

            9.5 Confidentiality of Intellectual Property. Intellectual property
shall be deemed to be the Confidential Information of the party owning such
intellectual property. The protection of each party's Confidential Information
is described in Section 8. Any disclosure of information by one party to the
other under the provisions of this Section 9 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 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.

      10. REPRESENTATIONS AND WARRANTIES.


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            10.1 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.

            10.2 AVID Warranty. AVID represents and warrants that, as of the
time of delivery to HALOZYME in accordance with this Agreement, all Bulk Drug
Substance Produced under this Agreement (a) will conform to the Specifications,
(b) will have been Produced in accordance with cGMP and all applicable laws and
regulations set forth in the Bulk Drug Substance Master Plan and in accordance
with the applicable Certificates of Analysis (provided in accordance with the
Quality Agreement) accompanying each Batch of Bulk Drug Substance, and (c) will
not be adulterated or misbranded within the meaning of the FD&C Act. AVID
represents and warrants that it has obtained (or will obtain prior to Producing
Bulk Drug Substance), 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 Bulk Drug Substance as specified in the
Bulk Drug Substance Master Plan; provided, however, AVID shall have no
obligation to obtain Permits relating to the sale, marketing, distribution or
use of Bulk Drug Substance or with respect to the Labeling of Bulk Drug
Substance or as defined in Section 4.4 herein. AVID represents and warrants that
(i) no AVID employees performing services on behalf of AVID under this Agreement
have been debarred under Section 306 of the FD&C Act, and (ii) to its knowledge,
no persons (other than AVID employees) performing services on behalf of AVID
under this Agreement have been debarred under Section 306 of the FD&C Act.

            10.3 HALOZYME represents and warrants that to the best of its
knowledge it owns all right, title and interest in and to, or otherwise has
lawful rights or licenses to practice and use, the HALOZYME Intellectual
Property practiced and used by it in the design, production and manufacture of
the Bulk Drug Substance, and HALOZYME has not received any notice of any present
or threatened claim, action or proceeding alleging that any part of the HALOZYME
Intellectual Property infringes any third party's intellectual property rights,
and AVID may perform its obligations contemplated herein without infringing any
third party's intellectual property rights in respect of the Bulk Drug
Substance, including, without limitation, practicing or using the HALOZYME
Process Technology, and without any royalty, fee or similar payment of any kind
being or becoming due or payable by AVID to any third party in respect of the
Bulk Drug Substance or the practice or use of the HALOZYME Process Technology.

            10.4 Disclaimer of Warranties. Except for those warranties set forth
in Sections 10.1 and 10.2 of this Agreement, AVID makes no warranties, written,
oral, express or implied, with respect to Bulk Drug Substance or the Development
and Production of Bulk Drug Substance. ALL OTHER WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT HEREBY ARE


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DISCLAIMED BY AVID. NO WARRANTIES OF AVID MAY BE CHANGED BY ANY REPRESENTATIVES
OF AVID. HALOZYME accepts Bulk Drug Substance subject to the terms hereof.

            10.5 Disclaimer of Warranties. Except as expressly set forth herein,
HALOZYME makes no warranties, written, oral, express or implied, with respect to
the Bulk Drug Substance. 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 HALOZYME. NO
WARRANTIES OF HALOZYME MAY BE CHANGED BY ANY REPRESENTATIVES OF HALOZYME.

      11. LIMITATION OF LIABILITY. NEITHER PARTY SHALL BE LIABLE TO THE OTHER
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, EXCEPT AS SET FORTH IN SECTIONS 6 AND 12, WHETHER SUCH CLAIMS ARE
FOUNDED IN TORT OR CONTRACT.

      12. INDEMNIFICATION.

            12.1 HALOZYME Indemnification. HALOZYME shall indemnify, defend and
hold harmless AVID and its Affiliates and any of their respective directors,
managers, members, officers, employees, authorized subcontractors and agents
(collectively the "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 attorneys' fees and costs) incurred as a result of any claims,
demands, actions or other proceedings by unaffiliated third parties against an
Indemnified Party (collectively "Claims") to the extent arising out of (a)
property damage or personal injury (including without limitation death) of third
parties resulting from HALOZYME's storage, promotion, labeling, marketing,
distribution, use or sale of Bulk Drug Substances, (b) HALOZYME's negligence,
omission or willful misconduct, (c) any claim that the practice of any HALOZYME
Intellectual Property or the use of any material or information provided by
HALOZYME pursuant to this Agreement infringes or violates the intellectual
property rights of any third party and (d) HALOZYME's breach of its
representations or obligations under this Agreement, except to the extent any of
the foregoing (a) or (c) is caused solely by the negligence, omission or willful
misconduct of the Indemnified Parties or solely by the breach by AVID of its
representations or obligations under this Agreement.

            12.2 AVID Indemnification. AVID 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 resulting
solely from the Indemnified Parties' negligence, omission or willful misconduct,
or solely from AVID's breach of its representations or obligations under this
Agreement.

            12.3 Indemnitee Obligations. A party (the "Indemnitee") which
intends to claim indemnification under this Section 12 shall promptly notify the
other party (the


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"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 12. 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.

      13. INSURANCE. Each party shall maintain such insurance with respect to
the manufacture or distribution of the Bulk Drug Substance, as applicable to
each party, in such amounts as such party customarily maintains with respect to
the manufacture or distribution of similar products. Each party shall maintain
such insurance for not less than one (1) year following the expiration date of
the last Bulk Drug Substance Produced under this Agreement.

14. TERM AND TERMINATION.

            14.1 Term. The term of this Agreement (the "Term") shall commence on
the Effective Date and shall, unless earlier terminated as provided herein,
continue for two (2) years. This Agreement shall, unless earlier terminated as
provided herein, thereafter renew automatically for additional one (1) year
terms. Either party may terminate this Agreement as of the end of the initial
term, or as of the end of any subsequent renewal term, by written notice to the
other party at least sixty (60) days prior to the renewal anniversary date.

            14.2 Termination for Breach. Either party may terminate this
Agreement upon the material breach of any provision of this Agreement by the
other party if such breach is not cured by the breaching party within,
forty-five (45) calendar days as to non-monetary breaches and thirty (30) days
as to monetary breaches, after receipt by the breaching party of written notice
of such default. In the event that the Production or sale of Bulk Drug Substance
is enjoined due to the alleged infringement by either party of the proprietary
rights of a third party, such occurrence shall be deemed a breach of this
Agreement by HALOZYME or AVID.

            14.3 Termination due to Regulatory or Infringement Issues. HALOZYME
may terminate this Agreement upon fifteen (15) days prior written notice to AVID
if (a) a Regulatory Authority withdraws marketing rights for, or otherwise
precludes the sale of, the Bulk Drug


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Substance (or any product for which the Bulk Drug Substance is an active
ingredient), or (b) HALOZYME becomes aware of the possible infringement of a
third party's intellectual property by the making, using, selling or importing
of the Bulk Drug Substance (or any product for which the Bulk Drug Substance is
an active ingredient).

            14.4 Additional Rights and Remedies. Subject to Section 11,
termination under this Section 14 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.

            14.5 Payment on Termination. In the event of the termination of this
Agreement, HALOZYME shall pay the applicable Purchase Price for (i) all finished
Bulk Drug Substance, (ii) all work-in-process commenced by AVID, including
without limitation Incurred Materials (as defined below), except with respect to
clause (ii) in the event the termination is due to a breach by AVID and such
work-in-process cannot be delivered to HALOZYME or a new manufacturer for
completion, and (iii) all outside costs incurred under the Agreement up to the
date of termination, including but not limited to, raw materials, supplies,
travel and other expenses, provided such costs were reasonable and necessary to
complete the approved Manufacturing Schedule as set forth on Exhibit A or any
amendment thereto. AVID promptly shall deliver such finished Bulk Drug Substance
to HALOZYME in accordance with the Shipping Instructions. HALOZYME shall make
payments for all amounts due within thirty (30) calendar days from the date of
receipt by HALOZYME of the applicable invoice, pursuant to Section 5. As used in
this Section, "Incurred Materials" shall mean all raw materials, documentation,
and equipment purchased by AVID for use in the Production of Bulk Drug Substance
under this Agreement, but not yet billed to HALOZYME to the extent any such
materials, documentation or equipment can not be returned to its source for a
refund or used in manufacturing operations with AVID's other customers.

            In the event HALOZYME has caused a monetary default under the
Agreement, AVID shall not be obligated to ship any BDS or work-in-process until
all amounts due and owed as of the date of termination are paid in full.

            14.6 Survival. Termination, expiration, cancellation or abandonment
of this Agreement through any means or for any reason, except as set forth in
Section 14.1, 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 6, 8, 9, 11, 12, 14 and 15 hereof shall
survive expiration or termination of this Agreement.

            14.7 Files, Records, and HALOZYME property. Upon the expiration or
termination of this Agreement, at HALOZYME'S expense, AVID promptly shall make
available to HALOZYME copies of all manufacturing and process development
documents and records relating to Bulk Drug Substance not previously provided to
HALOZYME. Upon expiration or termination of this Agreement and the payment of
all amounts due to AVID by HALOZYME, AVID shall promptly make available to
HALOZYME all remaining units of the Master Cell Bank, Working Cell Bank and
Reference Standard. AVID will provide an inventory record for the Master Cell
Bank, Working Cell Bank and Reference Standard. Material deficiencies and


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discrepancies in the inventory record that result in a reduction of theoretical
inventory shall be AVID'S responsibility, and may be charged accordingly. Avid
shall store the originals or electronic copies of such documents and records
according to cGMPs in a safe and secure facility for at least one (1) year
following the expiration date or five (5) years from the date of manufacture if
there is no expiration date 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, AVID shall make available to HALOZYME for review,
any non-confidential information contained therein that is reasonably related to
Bulk Drug Substance that may be used by HALOZYME to support any investigational
studies or commercial marketing of Bulk Drug Substance.

            14.8 Technology Transfer; Commercial Supply.

                  14.8.1 Transfer of Technology upon Expiration of Agreement.
If, following the completion and delivery to HALOZYME of the last Batch,
HALOZYME desires to (or desires a third party to) process or manufacture Bulk
Drug Substance, then (i) AVID grants to HALOZYME a worldwide, royalty-free,
non-exclusive license under the AVID Know-How (as defined below) and AVID Patent
Rights (as defined below) solely to make and have made Bulk Drug Substance, (ii)
AVID shall transfer to HALOZYME all data, know-how, technology, or information
generated during the performance of this Agreement that is reasonably necessary
to make and have made Bulk Drug Substance, and AVID shall provide reasonable
assistance required to enable HALOZYME to manufacture the Bulk Drug Substance
for itself or through a third party (but in no event shall AVID be obligated to
provide more than *** to any such technology transfer activities unless AVID
agrees in writing thereto, provided such time does not unreasonably interfere
with normal operations); provided, however, that any such data, know-how,
technology, or information comprising AVID Know-How shall continue to be AVID
Confidential Information, but may be disclosed to such third party manufacturers
pursuant to written agreements containing confidentiality and non-use provisions
no less restrictive than those set forth herein, and (iii) HALOZYME shall pay to
AVID the fully burdened costs of assisting in any such technology transfer of
***, plus all out-of-pocket costs related thereto.

                  14.8.2 Transfer of Technology upon Breach by AVID. If,
following the uncured breach of a provision of this Agreement by AVID, HALOZYME
desires to (or desires a third party manufacturer (selected in good faith by
HALOZYME) to) process or manufacture the Bulk Drug Substance, then (i) AVID
grants to HALOZYME a worldwide, royalty-free, non-exclusive license under the
AVID Know-How and AVID Patent Rights solely to make and have made Bulk Drug
Substance, and (ii) AVID shall transfer to HALOZYME all data, know-how,
technology, or information generated during the performance of this Agreement
that is reasonably necessary (***) to make and have made Bulk Drug Substance,
and AVID shall provide reasonable assistance (***) required to enable HALOZYME
to manufacture the Bulk Drug Substance for itself or through a third party;
provided, however, that any such data, know-how, technology, or information
comprising AVID Know-How shall continue to be AVID Confidential Information, but
may be disclosed to such third party manufacturers pursuant to written
agreements containing confidentiality and non-use provisions no less restrictive
than


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those set forth herein. If the FDA has issues during the pre-approval inspection
process that result in manufacturing delays, this section does not activate
until the earlier of (a) the date upon which the FDA time period required to
implement corrective action has expired, or (b) one hundred twenty (120) days
following notice of the applicable FDA action.

                  14.8.3 Definitions.

                        (a) "AVID Know-How" shall mean all technical and other
information owned or controlled by AVID, which is reasonably necessary by
HALOZYME or a third party to make Bulk Drug Substance.

                        (b) "AVID Patent Rights" shall mean all U.S. and foreign
patents, patent applications, provisional patent applications, certificates of
invention and applications therefore, divisions, continuations or
continuations-in-part, or continuing prosecution applications, together with any
extensions, registrations, confirmations, reissues, re-examinations, renewals or
supplementary protection certificates and other forms of government-issued
patent protection directed to the inventions claimed in the foregoing owned or
controlled by AVID, in each case the claims of which would necessarily be
infringed by making Bulk Drug Substance.

      15. GENERAL PROVISIONS.

            15.1 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 and CEO

      With a copy to: DLA Piper Rudnick Gray Cary US LLP
                      4365 Executive Drive, Suite 1100
                      San Diego, CA 92121-2133
                      Attn: Mark R. Wicker, Esq.

      If to AVID:     AVID Bioservices, Inc.
                      14282 Franklin Avenue
                      Tustin, California 92780
                      Attn: Chief Operating Officer

      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 15.1.

            15.2 Entire Agreement. The parties hereto acknowledge that this
Agreement, together with the Bulk Drug Substance Master Plan, the Agreement for
Services entered into


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between the parties dated November 19, 2003 and the Mutual Confidential
Disclosure Agreement entered into between the parties on August 11, 2003 sets
forth the entire agreement and understanding of the parties and supersedes all
prior written or oral agreements, representations 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.

            15.3 Waiver. None of the provisions of this Agreement (including the
Exhibits hereto) or the Bulk Drug Substance 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.

            15.4 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.

            15.5 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, without such consent, assign this Agreement in the case of a
transaction involving the 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 relieve
any party of responsibility for the performance of its obligations hereunder.
Any purported assignment in violation of this Section 15.5 shall be void.

            15.6 Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto, their successors and
permitted assigns.

            15.7 Independent Contractor. AVID 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.

            15.8 Force Majeure. Neither party shall be liable for any delay in
performing or for failure to perform its obligations hereunder if such delay or
failure resulted from acts of God or other occurrences beyond its reasonable
control and without its fault or negligence. Such acts or occurrences shall
include, but are not limited, to earthquakes, floods, fires, power failures,
communications failures, epidemics, strikes, lockouts, war, component shortage,
terrorist activity or government regulation which occur after the Effective Date
(each an "event of force


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majeure"). If an event of force majeure occurs, the date(s) for performance of
the obligation affected shall be postponed to the extent necessary by the event
of force majeure, provided that if any event of force majeure continues for a
period of or exceeding three (3) months, either party shall have the right to
terminate this Agreement forthwith by written notice to the other party. Each
party shall use its reasonable best efforts to minimize the effects of any event
of force majeure.

            15.9 Variations. No variation or amendment to this AGREEMENT shall
bind either party unless made in writing and signed by both parties hereto.

            15.10 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.

            15.11 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.

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

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

HALOZYME, INC.                                AVID BIOSERVICES, INC.

By:    /s/ Jonathan Lim                    By:       /s/ William J. Treat
      ----------------------------                  ----------------------------
Name:  Jonathan Lim                        Name:     William J. Treat
      ----------------------------                  ----------------------------
Title: President and CEO                   Title:    Chief Operating Officer
      ----------------------------                  ----------------------------

See Attachments: Exhibits A, B, C, E must be attached for this Commerical Supply
Agreement to be valid. [Exhibit D reserved and not included in this document]


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  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.


            EXHIBIT A: MANUFACTURING SCHEDULE (COMMERCIAL AGREEMENT)


The schedule for manufacturing is an estimate based upon *** for 2005. HALOZYME
will use commercially reasonable efforts to provide AVID with a 2006
Manufacturing Schedule by the end of the ***. Times are based upon the process
developed and used for the *** that have been manufactured. The process consists
of ***.

                           Manufacturing Schedule 2005

                                       ***


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  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.


                EXHIBIT B: PURCHASE PRICE (COMMERCIAL AGREEMENT)

                                    OVERVIEW

The manufacturing process will be in conformance with ICH Q7A guidelines and
will meet Avid's internal policies and procedures for the manufacturing in a
multi-product facility. Currently, the facility is *** based upon *** and ***.
*** are operated in a dedicated manner consistent with current good
manufacturing practices and the Q7A guidelines.

TO BE SUPPLIED BY HALOZYME

      1.    Timeline for delivery of tested and released bulk filled material.

      2.    Instructions for shipment of material to inventory location.

      3.    Final specifications for bulk filling.

TO BE SUPPLIED BY AVID

      1.    Production slot schedule after review of HALOZYME's requirements.

QUOTE LIMITATIONS

      This quote is for (1) up to 7 manufacturing runs per year at the 100L
      scale and (2) is *** except where noted below for a period of the two (2)
      years.

         PROJECT:          CGMP MANUFACTURING AT ***

         TIMELINE:         ***
         BATCH PRICE:

                            ***                                  ***
                            ***                                  ***
                            ***                                  ***
                            ***                                  ***
                            ***                                  ***
                            ***                                  ***
                            ***                                  ***
                            ***                                  ***
                            ***                                  ***
                            ***                                  ***
                            ***                                  ***
                            ***                                  ***

      **    Estimated applicable sales tax based on current sales tax rate of
            7.75% for San Diego county. Sales taxes will not be charged if
            HALOZYME provides AVID with a reseller's permit prior to the date of
            shipment.

      (1)   Such fee was based on the general supplies, chemicals, materials
            testing, release


                                       i


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            testing, and in-process testing included in the attachments to this
            Exhibit B. If additional procedures or testing is required, HALOZYME
            will be billed an additional amount as mutually agreed upon.

      (2)   Price reflects cost for independent runs. If raw materials are
            purchased in bulk for multiple runs resulting in cost savings, the
            cost savings will be passed through to HALOZYME. If during the
            course of the contract, the manufacturer of chemicals raises or
            lowers their prices by greater than ***, the price for the run will
            be adjusted to reflect this change. The price of the first run under
            this contract will be reduced for available raw material inventory
            previously paid for by HALOZYME and utilized during the
            manufacturing run.

PROCESS STEPS:

                  1.    AVID will perform cGMP manufacturing at *** to produce
                        commercial Bulk Drug Substance and including filling up
                        to *** of bulk product.

                  2.    AVID will perform materials testing, release testing,
                        and in-process testing in accordance with the
                        attachment.

                  3.    AVID will arrange all outside product testing for bulk
                        material in accordance with the attachment.

                  4.    AVID will generate a Certificate of Analysis for the
                        final vialed product.

                  5.    AVID will provide one copy of AVID's Released Executed
                        Batch Record.

                  6.    AVID will add additional testing if required by HALOZYME
                        at cost.


      PROJECT:   CGMP MANUFACTURING AT *** (OPTION)*
      TIMELINE:  ***
      MANUFACTURING BATCH FEE:   ***
      PROCESS STEPS:

                  1.    AVID will perform cGMP manufacturing at *** to produce
                        commercial Bulk Drug Substance.

                  2.    AVID will perform in process and final bulk product
                        testing of in-house assays according to Exhibit E.

                  3.    AVID will arrange all outside product testing for bulk
                        material at HALOZYME's expense.

                  4.    AVID will generate a Certificate of Analysis for the
                        final bulk product.

                  5.    AVID will provide one copy of AVID's Released Executed
                        Batch Record.

                  6.    Batch Price excludes all raw materials, raw material
                        identity testing, supplies, outside testing charges ,
                        shipping fees, and other external costs as deemed
                        necessary to complete the project which will billed at
                        cost plus mark-up consistent with existing contract. (At
                        the time of this document, final pricing in all of the
                        above areas was still TBD and will require modification
                        to the appropriate General Terms sections)

      PROJECT: CGMP BULK FILLING


                                       ii


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      TIMELINE:  ***
      PRICE:     ***
      PROCESS STEPS:

                  1.    AVID will sterile filter and fill with aseptic
                        processing conditions from ***

                  2.    For validation studies, the vial size, number and
                        sequence must be determined prior to initiation of the
                        ***.

                  3.    AVID will perform visual inspection of vials under
                        current SOPs.

                  4.    AVID to label and package filled product using existing
                        labeling and packaging methods provided by HALOZYME.

                  5.    AVID will procure vials, stoppers, overseals, labels,
                        and packaging to be billed to HALOZYME at cost.

      *Excludes any process validation procedures that are required prior to any
      cGMP runs.

ATTACHMENTS:
1. COSTING- GENERAL SUPPLIES
2. COSTING- MATERIAL TESTING
3. COSTING- CHEMICALS
4. COSTING- IN PROCESS
5. COSTING- RELEASE TESTING


                                       iii


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  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.


                    Exhibit C: Quality Agreement (Commercial)

      This Standard Quality Agreement (SQA) is a required and integral part, but
      does not supersede any sections in the overall controlling document hence
      forth referred to as the Commercial Supply Agreement between HALOZYME and
      AVID dated February 15, 2005 (the "Commercial Supply Agreement"). For the
      avoidance of doubt, if there is any conflict or variance between this SQA
      and the Commercial Supply Agreement, the Commercial Supply Agreement shall
      control. The Quality Agreement is Exhibit C of the Commercial Supply
      Agreement. The SQA is effective upon final signature approvals and may be
      updated from time to time upon written agreement of the parties. The SQA
      shall also terminate no sooner than one year past the expiration date of
      the last batch of the Bulk Drug Substance (rHuPH20) and upon complete
      transfer of all requested records documents and retained samples to
      HALOZYME.

1. Purpose of the Quality Agreement

      This agreement outlines the responsibilities of HALOZYME and AVID with
      respect to the quality assurance of Bulk Drug Substance referenced in the
      Commercial Supply Agreement. AVID agrees not to subcontract any of the
      manufacturing, packaging, labeling, testing, release, and handling of
      HALOZYME's Bulk Drug Substance unless prior written authorization is
      obtained from HALOZYME. All product manufacturing will occur at AVID's
      facility at 14282 Franklin Avenue, Tustin, CA.

      A matrix of responsibilities included at the end of this document lists
      the responsible party for the various aspects of this SQA in a table and
      in a checklist.

2. SQA Specific Information

      This SQA commences with the effective date of the Commercial Supply
      Agreement for BDS between HALOZYME and AVID and extends through the term
      of that Agreement. In the event that the Commercial Supply Agreement for
      BDS is terminated for any reason provided for therein, the SQA shall also
      terminate one year beyond the date of the production of the last lot of
      BDS at AVID.

3. Abbreviations and Definitions of Terms Any Capitalized terms not defined in
this Agreement shall have the definition assigned to it in the Commercial Supply
Agreement.

      3.1   Abbreviations

         Batch History Record: BHR

         Batch Production Record: BPR

         Bulk Drug Substance: BDS

         Certificate of Analysis: COA


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  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.


         Certificate of Compliance: COC

         Current Good Manufacturing Practices: cGMPs

         Drug Substance and Drug Product: DSP

         Non-Conforming Material Reports: NCMR

         Not More Than: NMT

         Not Less Than: NLT

         Quality Assurance: QA

         Quality Control: QC

         Standard Operating Procedure: SOP

         Standard Quality Agreement: SQA

         International Conference on Harmonization: ICH

         Active Pharmaceutical Ingredient:rHu PH20

      3.2   Definitions of Terms

            All defined terms have the meaning set forth in the Commercial
            Supply Agreement, between HALOZYME and AVID, including the following
            definitions that apply to this Quality Agreement:

      Batch History Record

            The batch history record consists of manufacturing instructions,
            formulae, appropriate packaging bill and instructions, and exception
            documentation, such as NCMRs, deviations, variance reports, and
            additional documentation which may have been processed as part of
            the production record of the batch

      Bulk Drug Substance

            For the purposes of this SQA Bulk Drug Substance shall mean
            recombinant human PH20 hyaluronidase, to be produced by AVID in bulk
            form not to exceed *** per manufacturing run.


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      Contractor

            Any manufacturer, packager, or other BDS support service provider
            who performs processing or packaging of a BDS or any intermediate
            step of manufacture, or other BDS support service, is a contractor.

      Cumulase(TM)

            For the purposes of this Quality Agreement, Cumulase(TM) will mean a
            final fill finished medical device product that incorporates the BDS
            as an active ingredient.

      Current Good Manufacturing Practices

            For the purposes of this SQA cGMP relates to the United States
            requirements for the manufacture and distribution of drugs and
            medical devices as codified under Title 21 Code of Federal
            Regulations Sections 210, 211 and 820 and United States Food and
            Drug administration published guidelines, regulations and
            requirements. Also for the purposes of this SQA cGMP relates to the
            published International Conference on Harmonization (ICH) Q7A and
            consensus draft texts and guidelines agreed to by the appropriate
            ICH Expert Working group and agreed to as applicable by both
            parties.

      Deviation

            The document used to obtain approvals of either planned or unplanned
            deviations to temporarily modify or to document excursions from
            operating, manufacturing, testing instructions, target and
            informational test results, or procedures. The deviation does not
            permanently change existing instructions, BPRs, or procedures; it is
            intended to be a specific one time use document.

      Formal Investigation

            Formal Investigations: Written reports detailing the specifics of an
            investigation resulting from an exception event. The investigation
            includes a description of the incident, investigation, conclusions,
            and corrective action or action plan, if applicable.

      Lot Number

            Note: This definition may be elaborated to include Control Number or
            other additional supporting information. A Lot Number is used to
            identify a specific lot or batch of manufactured material.


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      Material

            All actives, excipients, printed or unprinted commodities which are
            used during the manufacturing or finishing process for BDS.

      Nonconforming Materials Report (NCMR)

            A document used for recording review and disposition of
            nonconforming materials. The NCMR document, when formally approved
            with appropriate sign-off, becomes the specification for the
            disposition of that specific lot of material only. Actions taken to
            investigate the nonconformance and to justify the release of that
            lot must be fully documented.

      EnhanzeSC(TM)

            For the purposes of this Quality Agreement, EnhanzeSC(TM) will mean
            a final fill finished drug product that incorporates BDS as an
            active drug substance.

      Re-inspection

            A visual or mechanical evaluation performed to remove or correct
            defective units for which the process is not expected to have an
            adverse effect on BDS quality. Re-inspection should involve the use
            of a deviation, except where standard procedure allows for such
            routine activity in the course of normal processing.

      Reprocessing

            Duplication of a step or steps currently in the manufacturing
            process in order to bring BDS into conformance with specifications
            and which will not alter the safety, identity, strength, quality, or
            purity of the drug BDS beyond the established requirements.
            Reprocessing associated with BDS having a FDA submission requires
            Regulatory Affairs review.

      Rework

            Any additional steps taken to process a batch (other than
            re-inspection) to bring it into conformance with the specifications
            and which will not alter the safety, identity, strength, quality, or
            purity of the BDS beyond the established requirements. All rework
            must be documented per approved rework documentation requirements
            and appended to a deviation.

      Standard Quality Agreement

            Standard Quality Agreement means this referred to in the Commercial
            Supply Agreement as the Quality Agreement.


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4.    Documents:

      4.1   BDS Specifications

            A summary of the information that identifies, when applicable,
            master batch records, labeling, stencil copy, documentation and
            specifications pertinent to the manufacturing, testing, release, and
            acceptance of BDS being manufactured by AVID. This specification
            also establishes procedures to assure mutual consent for any
            specification changes.

      4.2   Standard Test Method

            Describes uniform chemical testing procedures and equipment within
            the laboratories.

5.    Change Control

            AVID will utilize a documented system of procedures for the control
            of changes to raw materials, packaging materials, equipment,
            manufacturing methods, BDS and material specifications and
            requirements, sampling, test methods, and release requirements. Any
            change (e.g., change in filter size, raw material grade, source of
            vendor of raw materials, components or excipients or processing aids
            changes that can affect the validated or regulatory status of the
            BDS) shall be reviewed and approved in writing by HALOZYME prior to
            implementation. HALOZYME shall be notified in writing or email or
            fax, and HALOZYME will provide written approval to AVID to proceed.
            If AVID is unable to contact HALOZYME after using its best efforts,
            and the need for change is immediately required, AVID will proceed
            per AVID's QA recommendation and AVID will follow-up with HALOZYME
            in writing or e-mail or fax to HALOZYME for notification and
            assessment of the change.

      5.1   Production Specifications

            The production specifications are documents, which specify the
            manufacturing and finishing instructions, and related bill of
            materials used in the production process. These production
            specifications are developed and approved in writing by AVID and
            HALOZYME, incorporated into the AVID BDS Specification Summary.

      5.2   Testing and Sampling Specifications

            The "testing and sampling" specifications are the documents, which
            specify the testing procedures and the sampling instructions
            necessary to evaluate a commodity, material or BDS against
            applicable acceptance and release requirements within AVID testing
            facilities and laboratories. These testing and sampling
            specifications are developed and approved in writing by AVID and


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            HALOZYME. This information will be incorporated into the AVID BDS
            Specification Summary.

      5.3   Packaging and Labeling Specifications

            The packaging and labeling specifications are documents that
            describe the labeling, artwork, commodity specifications, and
            drawings used in the finishing of BDS. These packaging and labeling
            specifications are developed by HALOZYME and approved by AVID. This
            information will be incorporated into the AVID BDS Specification
            Summary.

      5.4   Batch History Records

            Original Executed Batch History Records with lot numbers issued by
            AVID will be maintained on-site or an appropriately controlled and
            monitored off-site facility by AVID' Quality Assurance Department
            Document Control, and are available for inspection and review by
            HALOZYME and its agents. Copies of Executed Batch History Records
            will be sent to HALOZYME, upon approval and release to HALOZYME by
            AVID. Provided nothing else is agreed to, AVID pledges to retain the
            batch documentation for at least one (1) year following the
            expiration date or five (5) years from the date of manufacture if
            there is no expiration date.

      5.5   Specification Approval

            Specification initiation or revision requires approval before
            proposed changes are implemented. This applies to manufacturing,
            finishing, testing, storage, and labeling of BDS. Those documents
            and activities related to BDS manufacturing and testing requiring
            HALOZYME's prior written approval are as follows:

                  -     Raw Material Specifications

                  -     Raw Material source or grade changes

                  -     Manufacturing Processing material specifications

                  -     Manufacturing Processing material source or grade
                        changes

                  -     Changes in beginning, intermediate or final processing
                        steps, timing of processing steps, or beginning,
                        intermediate or final sampling protocols

                  -     Changes in analytical methods or instrumentation

                  -     Changes in component, BDS or product retention sampling
                        protocols, methods, state of storage or location of
                        storage.

                  -     Changes in stability protocols, to include location and
                        conditions of storage, storage environment monitoring
                        and recording methods, assay and assessment methods,
                        frequencies of assay's and assessments or service
                        providers of assay and assessments.

                  -     Any changes to the material specifications for component
                        and finished BDS.


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            Editorial or format changes to applicable specifications, not
            affecting the scientific or technical content or intent of the
            specification, will not require approval by HALOZYME. Those
            documents requiring HALOZYME's written approval are as follows;

                  -     BDS Specifications and Testing

                  -     Raw Material Specifications and Testing

                  -     BDS Specification Summary

                  -     Standard Test Method

            Specification Change Requests (SCRs) will be forwarded to HALOZYME
            via e-mail, express mail, or facsimile.

            The following documents and activities related to BDS manufacturing
            and testing will be approved by AVID and notification of
            implementation will be forwarded to HALOZYME.

                  -     Changes in frequency of re-validation of manufacturing
                        programs

                  -     Changes in chemical or biological monitoring activities
                        of facilities or equipment

                  -     Changes in preventative maintenance schedules for
                        manufacturing equipment

                  -     Changes in equipment or facilities cleaning and
                        manufacturing preparatory activities

            When HALOZYME initiates a change request on all applicable
            specifications, the appropriate AVID department shall be provided
            the proposed specification and appropriate documentation, which
            summarizes and justifies each change. AVID will promptly implement
            changes in specifications, providing these changes, in AVID's good
            faith, reasonable opinion, do not significantly impact previously
            developed manufacturing processes or test methods.

            Changes to raw materials used in manufacturing the product, such as
            a new supplier, shall be approved in writing or e-mail or fax by
            HALOZYME.

      5.6   Documentation Distribution

            HALOZYME shall be on the distribution list for AVID's BDS
            Specification Summary. Likewise, AVID will receive copies of BDS
            release and stability specifications to maintain consistency in the
            documentation.

      5.7   Compendial Compliance

            Compliance to compendial requirements is the responsibility of both
            HALOZYME and AVID.


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      5.8   Regulatory Filing Requirements

            HALOZYME is the owner of BDS and is responsible for submitting the
            annual reports and any other regulatory filings. During the
            Pre-Approval Inspection (PAI), representatives from both HALOZYME
            and AVID shall be present.

      5.9   Annual Update Requirements

            AVID shall, upon request, provide HALOZYME with BDS related
            documentation for the purpose of updating regulatory information.

6.    Materials

            AVID agrees to sample and retain sufficient amounts of all materials
            (subject to an additional fee to be mutually agreed upon in writing
            between the parties in good faith), except water, compressed gasses
            and any highly volatile compounds and those that are not stable. The
            amount of retained samples is specified in AVID' BDS Specification
            Summary.

            All materials supplied by HALOZYME for use in the BDS will be
            purchased, received, inspected, tested, stored, and handled as
            appropriate. HALOZYME will maintain file samples of raw materials or
            request that AVID maintain file samples of raw materials. Finished
            BDS file samples will be maintained by HALOZYMEs or HALOZYME's
            contract finished product provider.

            Under no circumstances shall AVID store any materials, which may
            present a potential hazard to the raw materials utilized in
            HALOZYME's BDS, in proximity to the area utilized for HALOZYME's
            materials unless industry standard segregation is utilized. Examples
            include: Beta-lactam and cephalosporin antibiotics, certain potent
            hormones, cytotoxic compounds, highly potent drugs, biological
            preparations or non-pharmaceutical chemicals. If such materials are
            stored in the same facility, HALOZYME and AVID must agree to their
            separation and segregation.

            AVID shall maintain an approved supplier's list for components,
            excipients, raw materials, processing materials, packaging materials
            and service providers, for the BDS. The approved supplier list
            requires written approval by HALOZYME. The approved supplier list
            will be maintained on file at AVID and HALOZYME. Prior written
            approval by HALOZYME for changes in source, grade, specifications,
            sampling protocols, and storage or use conditions is required. The
            AVID approved supplier list will include the Material Name, the AVID
            part number designation, Supplier Name, Manufacturing Location, and
            Product Specifications and Test Methods, Most recent date of AVID
            Vendor certification to cGMP's.


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      6.1   Third Party Controlled Material (if applicable)


            HALOZYME shall provide AVID certification indicating an acceptable
            supplier evaluation has been completed, which includes the
            information required in the AVID approved supplier list. This
            certification for the vendor must be reviewed and approved by AVID
            prior to incorporation into the approved supplier list.

      6.2   Printed Material (if applicable)

            HALOZYME shall be responsible for, and provide AVID all copy
            content, artwork, and mechanicals for all printed materials
            associated with BDS. This includes, but is not limited to, container
            labels, containers, cartons, package inserts, and promotional
            material. HALOZYME and AVID will work together to develop a list
            that states specifically what is applicable under this section.
            HALOZYME shall be responsible for compliance with all federal,
            state, and local regulations concerning such packaging and labeling
            materials, and for obtaining any necessary regulatory approvals of
            printed materials, artwork, and copy.

            HALOZYME will provide the label copy text to AVID for generation of
            a label proof. Label proofs shall be reviewed by HALOZYME and
            approved by both HALOZYME and AVID prior to generation of labels.

7.    BDS Specifications

            The referenced BDS must be manufactured, packaged, labeled, and
            handled according to the written specifications and procedures
            provided by HALOZYME, or as mutually agreed upon between HALOZYME
            and AVID. HALOZYME shall supply AVID with all in-process and final
            BDS release specifications, including acceptance limits for each
            required test and any appropriate test methods and supporting test
            method validation. This information will be incorporated into the
            AVID BDS Specification Summary.

            HALOZYME and AVID will mutually determine and document in writing
            the scope of test methodology validation required, in accordance
            with applicable regulatory guidelines. For those procedures which
            appear in the current USP/NF or other recognized standard
            references, a statement indicating the reference shall suffice. For
            those test methods developed by AVID (and that are not specific to
            the BDS), documentation supporting the test method shall be
            supplied, upon request, to HALOZYME. For test methods developed by
            HALOZYME, HALOZYME shall supply AVID with the supporting
            documentation. The rights of the parties with respect to any
            intellectual property developed under the Commercial Supply
            Agreement shall be determined in accordance with the terms and
            conditions set forth in the Commercial Supply Agreement. Upon review
            of AVID's data, HALOZYME will provide AVID with written
            authorization verifying AVID' ability to perform such tests.


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            HALOZYME WILL PROVIDE THE LABEL COPY TEXT TO AVID FOR GENERATION OF
            a label proof. Label proofs shall be reviewed by HALOZYME and
            approved by both HALOZYME and AVID prior to generation of labels.

            HALOZYME and AVID will mutually determine the scope of test
            methodology, validations required, sampling protocols, inspection
            methods, and specifications for each lot of BDS. A Certificate of
            Analysis (COA) and Certificate of Compliance (COC) shall be provided
            to HALOZYME by AVID. The COA and COC will be generated upon
            completion of all testing requirements; it will contain the items
            tested, corresponding acceptance criteria, test results and raw test
            data. AVID will issue a COA and COC and release BDS to HALOZYME.
            HALOZYME is responsible for the approval and release of all bulk or
            packaged BDS after review of AVID' COA, COC and copies executed of
            batch records.

8.    Manufacturing and Packaging of BDS

              The manufacturing and packaging of BDS will be done according to
              the specific procedures and instructions mutually agreed by
              HALOZYME and AVID, and documented in the AVID BDS Specification
              Summary.

              The manufacturing and packaging of HALOZYME's BDS by AVID must
              comply with the specifications (provided that these do not
              significantly and adversely impact other processes at AVID)
              supplied by HALOZYME, with cGMPs, and with any other applicable
              regulatory requirements. AVID will prepare documentation for each
              batch of BDS manufactured, as agreed upon between HALOZYME and
              AVID. This complete documentation must be readily accessible for
              review and inspection by HALOZYME and regulatory authorities upon
              request.

              AVID will keep all in-process and finished BDS products,
              physically (and logically in the case of computer records and with
              appropriate segregation for all records related to the work)
              segregated (using AVID's warehouse shelf location procedures where
              each lot of material is appropriately labeled or tagged in the
              case of equipment) from all other materials not related to
              HALOZYME manufacturing. AVID must have line clearance procedures
              and appropriate changeover procedures that are implemented before
              and after manufacturing of BDS. Manufacturing equipment owned by
              HALOZYME Therapeutics must be clearly tagged as such and used only
              for the manufacturing of BDS.

              AVID will maintain the operation of the manufacturing facility in
              full compliance with all applicable cGMP, QSR, environmental,
              safety, health, fire, and similar regulations.

              All AVID personnel engaged in the manufacturing of BDS will have
              the education, training, and experience necessary to perform tasks
              related to the Commercial Supply Agreement in a professional and
              workmanlike manner.


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9.    Inspection and Testing of BDS

              The inspection and testing of the BDS is carried out by AVID, or
              previously agreed to third parties and will be appropriately
              documented.

              AVID will provide to HALOZYME a COA, COC and copy of executed
              Batch History Record and any other associated inspection and
              testing documentation for each batch of BDS manufactured.

10.   Notification and Approval of Deviations and Non-Conformance

      10.1  Deviations

            AVID must notify HALOZYME within three (3) working days from the
            observation of a deviation from stated procedures or stated
            specifications. A deviation is defined as any out-of-specification
            result or any manufacturing, packaging, labeling or testing
            deviation that may affect the quality, safety or efficacy of BDS. If
            reprocessing, salvage, or rework is necessitated, prior written
            approval for initiating an NCMR must be obtained from HALOZYME. All
            deviations will be investigated and documented by AVID . This
            documentation will be retained as part of the batch documentation
            for the batch affected. When deemed necessary by HALOZYME, HALOZYME
            reserves the right to request additional or more in-depth
            investigation of the deviation by AVID. HALOZYME approval shall be
            obtained in writing (fax confirmation is acceptable) for any
            deviation impacting compendial status or regulatory filing.

      10.2  Non-Conformance

            AVID will notify HALOZYME within three (3) working day of materials,
            components, or products that do not meet specifications. Material or
            BDS not meeting established specifications are to be handled as
            non-conformances and documented as such, based on AVID' standard
            procedures. Actions taken to investigate the nonconformance and to
            justify the release of the lot of material must be documented.
            HALOZYME recognizes that a non-conformance in a raw material can
            result in an unplanned delay to the manufacturing schedule and that
            AVID will work to re-schedule into the first available manufacturing
            slot.

            The nonconformance document (i.e., NCMR) will be approved by both
            AVID and HALOZYME as, stated below. Any resulting corrective actions
            shall be followed through timely closure. Approval by the
            appropriate Quality Assurance functions are solicited and obtained
            via facsimile copy.

            Nonconformance                                Approval Requirements
            --------------                                ---------------------
            Finished BDS                                  HALOZYME and AVID
            Raw Materials sourced and used by AVID        AVID and HALOZYME
            Drug Substance and Raw Materials sourced by   HALOZYME and AVID (raw
            HALOZYME                                      materials)


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            AVID will promptly initiate Corrective and Preventive Action
            programs to remedy deficiencies that caused the non-conformance, to
            the extent possible.

11.   Release and Shipment of BDS

      The final release of the BDS is the responsibility of HALOZYME. AVID has
      the responsibility to release the BDS to HALOZYME. AVID will not ship any
      of HALOZYME's BDS to any destination until the final release, [e.g.,
      issuance of a Certificate of Release (COR) provided by HALOZYME, which
      must be preceeded by the issuance of a Certificate of Analysis (COA) and
      Certificate of Compliance (COC) by AVID], unless prior approval in writing
      has been received from HALOZYME to perform such shipments and such
      requests do not conflict with any regulatory requirements imposed on AVID.

12.   Retained Samples of BDS

      AVID agrees to store retained samples under appropriate BDS label storage
      conditions and in a secure area for a period of time as defined by
      HALOZYME, but not to exceed 1 year after expiration, or 5 years after the
      manufacturing date if there is no expiration date. This information will
      be incorporated into the AVID BDS Specification Summary.

13.   Storage of BDS, Environmental Monitoring

      AVID agrees to store HALOZYME's BDS under appropriate BDS label storage
      conditions and in a secure area, to insure they comply with all the
      quality specifications and attributes. If special storage conditions are
      necessary, they will be noted and supplied by HALOZYME to AVID. AVID will
      review any special storage condition requests, and if AVID agrees to these
      special storage conditions, it will so acknowledge in writing to HALOZYME.

      AVID has an established environmental monitoring program to monitor
      particulate and microbial levels in cleanrooms to ensure controls are
      adequate for the manufacturing of BDS. The AVID facilities used during the
      manufacturing and packaging process of BDS shall be monitored for these
      factors. AVID will be responsible for maintaining this monitoring program
      to assure that BDS will be manufactured with established limits for
      particulate and microbial levels, and shall provide HALOZYME with access
      to the records obtained from this monitoring program.

14.   Stability Activities

      The responsibility for stability testing, data interpretation, and
      reporting shall belong to AVID, providing HALOZYME has agreed to and
      signed off on the stability protocol and project authorization form. AVID
      shall supply stability reports to HALOZYME within four (4) weeks of the
      completion of all testing at each stability time point. The


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      updating of stability information to regulatory documents for the BDS is
      the responsibility of HALOZYME. All stability related activities under the
      responsibility of AVID shall be completed in a timely manner.

15.   Process Validation and Qualification of the BDS

      In accordance with mutual agreement of HALOZYME and AVID, the equipment,
      process, manufacturing, analytical, and control procedures (including
      cleaning procedures, where applicable) shall be qualified and/or validated
      as appropriate by AVID in the facility they intend to use for manufacture
      of HALOZYME's BDS using equipment and personnel AVID intends to employ to
      make HALOZYME's BDS.

      AVID is responsible for calibration and maintenance of equipment,
      processes, automated systems, and facilities.

      All related validation and qualification documents will be assembled in a
      validation summary report and provided to HALOZYME for review and
      approval. HALOZYME will retain a copy of the approved protocol and final
      report.

16.   Annual Product Review (APR)

      The Annual Product Review (APR) including all documents (SOPs, BPRs,
      Forms, etc.) will be prepared and reviewed according to AVID' policies and
      procedures for third party BDS. All APR activities, which are the
      responsibility of AVID, will be completed and documented as per a mutually
      agreed timeframe. The APR documentation completed by AVID will be provided
      to HALOZYME to review.

      HALOZYME and AVID will meet periodically to review quality issues related
      to the obligations and responsibilities as described in this SQA. During
      this periodic review, quality issues related to the past production by
      AVID will be reviewed. The information presented and discussed during this
      review meeting will be documented by AVID and approved by HALOZYME.

17.   Products Complaints

      HALOZYME will typically receive, communicate with the customers, and close
      all complaints related to the referenced products. AVID will provide any
      complaint information received (from customers in the marketplace or
      regulatory authorities) to HALOZYME within seven business (7) days unless
      a more urgent need is recognized, such as cases involving potential BDS
      tampering, or an adverse medical event. Upon the request by HALOZYME, AVID
      will investigate complaints, providing the complaints fall within areas of
      manufacturing conducted at AVID. AVID shall provide a written report on
      the results of the investigation to HALOZYME within thirty (30) working
      days, or sooner if agreed to by the parties. Depending on the complexity
      of the investigation, an extended investigation could result in additional
      time being required but AVID agrees to provide an interim report within
      said timeframe. HALOZYME will


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      communicate with the customers or regulatory authorities the results of
      the complaint investigation, if necessary.

      HALOZYME shall provide complaint files to AVID onsite, or electronically
      within one (1) business day, if they are required during a FDA inspection.

18.   Returned Goods

      The handling of returned goods, if required, is the responsibility of
      HALOZYME.

19.   Recall of Marketed BDS Containing products

      In the event of recall, withdrawal, or field correction of a HALOZYME
      finished product for which the BDS is an active ingredient, or if any such
      product violates applicable laws, regulations, agreed upon specifications,
      or are deemed unacceptable for some other reason, whether or not such
      action is requested by any governmental agency, AVID shall cooperate with
      HALOZYME in conducting the necessary investigational activities only as
      they relate to manufacturing at AVID. AVID shall promptly notify HALOZYME
      if it becomes aware of any such recall, withdrawal, field correction,
      violation or other reason. If HALOZYME requests a complaint to be
      investigate by AVID and the results of that investigate indicate that the
      complaint is not related to any manufacturing issues at AVID, HALOZYME we
      reimburse AVID for all cost associated with the complaint investigation.

      If AVID is notified or becomes aware of a withdrawal of product or the
      initiation of a recall by one of AVID clients for whom AVID provides
      products or materials AVID will review whether any of the products or raw
      materials were used in the manufacturing of BDS and if found to have a
      common use, AVID will notify HALOZYME in writing immediately. HALOZYME
      will, with AVID cooperation, investigate the potential for impact on BDS
      and all products that used the affected batch(es) of BDS products.

20.   Audits and Inspections of Facilities and BDS

      AVID will notify HALOZYME of any inspections or actions by regulatory
      agencies or other enforcement bodies, which could potentially impact
      HALOZYME's BDS. AVID will provide HALOZYME with the results of all such
      regulatory audits in NMT seven (7) business days.

      HALOZYME reserves the right to audit AVID' facilities and systems, as they
      relate to the manufacture and control of HALOZYME BDS, with the exception
      of information and operations which constitute AVID' or other client trade
      secrets. These audits may be performed twice (2) per year as long as AVID
      is currently manufacturing for HALOZYME. These audits can be arranged with
      AVID's Quality Assurance department at mutually convenient times. Each
      audit visit will be limited to two (2) auditors from HALOZYME. After
      successful completion of a United States Food and Drug Administration
      Pre-Approval Inspection for EnhanzeSC(TM) and the successful completion of
      a United States or California Food and Drug Administration or a Notified


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      Body Inspection for Quality System Requirements or International Standards
      Organization requirements for Cumulase(TM), HALOZYME audits may not be
      performed more than once per year. The number of auditors from HALOZYME
      will be limited to two (2) per audit.

      NOTE: The once per year limitation will be waived if the audit to be
      performed is "for cause". "For cause" is limited to review of adverse
      regulatory agency observations or re-call of BDS due to manufacturing
      issues at AVID.

      The right to audit will also cover any subcontractors utilized by AVID.
      HALOZYME reserves the right to be on-site as a non-contributing
      participant at AVID during the manufacture of HALOZYME's BDS, and during
      the inspection of HALOZYME's BDS by any regulatory agencies. It is
      understood by HALOZYME, that the presence of any HALOZYME employees during
      any regulatory inspections by the FDA, California FDA or EMEA are
      non-participants and must not contribute in any way during the course of
      the inspection or AVID reserves the right to excuse them from the audit.
      AVID shall respond to, and forward all responses to observations,
      generated during HALOZYME's audit, within thirty (30) business days from
      their issuance. AVID shall comply with all applicable Federal, State, and
      Local laws and regulations.

      AVID warrants that it will not employ persons debarred pursuant to
      sections 306(a) and (b) of the Federal Food, Drug, and Cosmetic Act 21
      U.S.C. 335(a) and (b).

21.   Re-inspection

      A re-inspection is performed under conditions where rHuPH20 API quality
      requires re-verification. The re-inspection work shall be approved and
      performed by AVID, according to established procedures. The re-inspection
      work must be documented to state reasons, justification, directions for,
      and results of re-inspection.

22.   Reprocessing and Rework

      Reprocessing and rework activity can only be performed per mutual written
      agreement by AVID and HALOZYME. Reprocessing and rework directions must be
      established to define the process. If BDS has been filed as a drug
      substance in an NDA or equivalent, reprocessing parameters must be
      developed and submitted to the HALOZYME for regulatory submission, prior
      to approval. Reprocessing or rework of material or BDS must be documented
      to state reason and justification for reprocessing.

23.   Shipping Instructions

      AVID will control and coordinate all shipping activity as specified by
      HALOZYME. HALOZYME is responsible for ensuring that all packaging, storage
      conditions and that the freight or shipping company conforms to their
      requirements.

ACCEPTED BY AVID:  William J. Treat                       DATE:   2/15/05
                  -------------------------------------        -----------------


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ACCEPTED BY HALOZYME: Jonathan Lim                        DATE: 2/15/05
                     ----------------------------------        -----------------


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                                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.


                EXHIBIT E: SPECIFICATIONS (COMMERCIAL AGREEMENT)


1.0   DESCRIPTION

      rHuPH20 is a recombinant enzyme manufactured at AVID and designated the
      product code ***. This specification describes sampling and testing
      requirements for the in-process material at selected process steps and for
      the active pharmaceutical ingredient (API).

2.0   MARKING REQUIREMENTS

      All storage/sample containers must be clearly labeled with Sample ID, Lot
      #, BPR, Step (if applicable), Test Name, and Storage Conditions. Filled
      API vials will be labeled with Client/QA approved labels.

3.0   SPECIAL INSTRUCTIONS

3.1   Harvest samples must be aliquoted and stored as quickly as possible.

3.2   Retention and unused test samples will be stored under the specified
      conditions until such time as the lot is dispositioned by Halozyme, when
      they will be either transferred to the client or disposed of (with the
      exception of stability samples).

4.0   TESTING AND SAMPLING REQUIREMENTS

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