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<SEC-DOCUMENT>0000950123-09-031517.txt : 20090807
<SEC-HEADER>0000950123-09-031517.hdr.sgml : 20090807
<ACCEPTANCE-DATETIME>20090807060734
ACCESSION NUMBER:		0000950123-09-031517
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		8
CONFORMED PERIOD OF REPORT:	20090630
FILED AS OF DATE:		20090807
DATE AS OF CHANGE:		20090807

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			HALOZYME THERAPEUTICS INC
		CENTRAL INDEX KEY:			0001159036
		STANDARD INDUSTRIAL CLASSIFICATION:	BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836]
		IRS NUMBER:				880488686
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-32335
		FILM NUMBER:		09993455

	BUSINESS ADDRESS:	
		STREET 1:		11388 SORRENTO VALLEY ROAD
		CITY:			SAN DIEGO
		STATE:			CA
		ZIP:			92121-1345
		BUSINESS PHONE:		(858) 794-8889

	MAIL ADDRESS:	
		STREET 1:		11388 SORRENTO VALLEY ROAD
		CITY:			SAN DIEGO
		STATE:			CA
		ZIP:			92121-1345

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	GLOBAL YACHT SERVICES INC
		DATE OF NAME CHANGE:	20010912
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>a53275e10vq.htm
<DESCRIPTION>FORM 10-Q
<TEXT>
<HTML>
<HEAD>
<TITLE>e10vq</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 1pt solid black; font-size: 1pt">&nbsp;</DIV>




<DIV align="center" style="font-size: 14pt; margin-top: 12pt"><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION</B>
</DIV>

<DIV align="center" style="font-size: 12pt"><B>Washington, D.C. 20549</B>
</DIV>

<DIV align="center" style="font-size: 18pt; margin-top: 12pt"><B>FORM 10-Q</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(Mark One)
</DIV>


<DIV align="center">
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%" style="font-size: 12pt">
<TR style="font-size: 6pt">
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD align="center"><FONT face="Wingdings">&#254;</FONT> </TD>
    <TD>&nbsp;</TD>
    <TD><B>QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</B></TD>
</TR>
</TABLE>
</DIV>


<!-- xbrl,dc -->
<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 12%"><B>For the quarterly period ended June&nbsp;30, 2009</B></DIV>
<!-- /xbrl,dc -->

<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>OR</B></DIV>


<DIV align="center">
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%" style="font-size: 12pt">
<TR style="font-size: 6pt">
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD align="center"><FONT face="Wingdings">&#111;</FONT> </TD>
    <TD>&nbsp;</TD>
    <TD><B>TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</B></TD>
</TR>
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 12%"><B>For the transition period from <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>to<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>.</B></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>
Commission File Number 001-32335</B>
</DIV>

<DIV align="center" style="font-size: 24pt; margin-top: 12pt"><B>HALOZYME THERAPEUTICS, INC.</B>
</DIV>

<DIV align="center" style="font-size: 10pt">
(Exact name of registrant as specified in its charter)</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="47%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="47%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top"><B>Delaware</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>88-0488686</B></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">(State or other jurisdiction of
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(I.R.S. Employer</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">incorporation or organization)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Identification No.)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><B>11388 Sorrento Valley Road, San Diego, CA</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>92121</B></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">(Address of principal executive offices)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(Zip Code)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>(858)&nbsp;794-8889</B><BR>
(Registrant&#146;s telephone number, including area code)</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Indicate by check mark whether the registrant: (1)&nbsp;has filed all reports required to be filed by Section&nbsp;13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12&nbsp;months (or for such shorter period that the registrant
was required to file such reports), and (2)&nbsp;has been subject to such filing requirements for the past 90&nbsp;days. Yes
<FONT face="Wingdings">&#254;</FONT> No <FONT face="Wingdings">&#111;</FONT>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if
any, every Interactive Data File required to be submitted and posted pursuant to Rule&nbsp;405 of Regulation&nbsp;S-T (&#167;232.405
of this chapter) during the preceding 12&nbsp;months (or for such shorter period that the registrant was required to
submit and post such files). Yes <FONT face="Wingdings">&#111;</FONT> No <FONT face="Wingdings">&#111;</FONT>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer or a smaller reporting company. See the definitions of &#147;large accelerated filer<B>,&#148; </B>&#147;accelerated filer&#148; and
&#147;smaller reporting company<B>&#148; </B>in Rule&nbsp;12b-2 of the Exchange Act. (Check one):
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="22%"></TD>
    <TD width="3%"></TD>
    <TD width="22%"></TD>
    <TD width="3%"></TD>
    <TD width="22%"></TD>
    <TD width="3%"></TD>
    <TD width="22%"></TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top" nowrap>Large accelerated filer <FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" nowrap>Accelerated filer <FONT face="Wingdings">&#254;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" nowrap>Non-accelerated filer <FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top" nowrap>Smaller reporting company <FONT face="Wingdings">&#111;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" nowrap>(Do not check if a smaller reporting company)</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Indicate by check mark whether the registrant is a shell company (as defined in Rule&nbsp;12b-2 of the Exchange Act).
Yes <FONT face="Wingdings">&#111;</FONT> No <FONT face="Wingdings">&#254;</FONT>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The number of outstanding shares of the registrant&#146;s common stock, par value $0.001 per share, was 89,723,189 as of
August&nbsp;3, 2009.
</DIV>


<DIV style="width: 100%; border-bottom: 1pt solid black; margin-top: 10pt; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>





<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">













<DIV align="left">
<!-- TOC -->
</DIV>
<DIV align="left">
<A name="tocpage"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>HALOZYME THERAPEUTICS, INC.</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>INDEX</B>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Page</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center"><DIV style="margin-left:15px; text-indent:-15px"><A href="#101"><B>PART I &#151; FINANCIAL INFORMATION</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#102">Item&nbsp;1. Financial Statements</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#103">Condensed Consolidated Balance Sheets &#151; June&nbsp;30, 2009 (Unaudited) and December&nbsp;31, 2008</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#104">Condensed Consolidated Statements of Operations (Unaudited) &#151; Three and Six Months
Ended June&nbsp;30, 2009 and 2008</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#105">Condensed Consolidated Statements of Cash Flows (Unaudited) &#151; Six Months Ended June&nbsp;30,
2009 and 2008</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#106">Notes to Condensed Consolidated Financial Statements (Unaudited)</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#107">Item&nbsp;2. Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#108">Item&nbsp;3. Quantitative and Qualitative Disclosures About Market Risk</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#109">Item&nbsp;4. Controls and Procedures</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center"><DIV style="margin-left:15px; text-indent:-15px"><A href="#110"><B>PART II </B>&#151; <B>OTHER INFORMATION</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#111">Item&nbsp;1. Legal Proceedings</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#112">Item&nbsp;1A. Risk Factors</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#113">Item&nbsp;2. Unregistered Sales of Equity Securities and Use of Proceeds</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#114">Item&nbsp;3. Defaults Upon Senior Securities</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#115">Item&nbsp;4. Submission of Matters to a Vote of Security Holders</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#116">Item&nbsp;5. Other Information</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#117">Item&nbsp;6. Exhibits</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#118">SIGNATURES</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="a53275exv10w17.htm">EXHIBIT 10.17</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="a53275exv10w18.htm">EXHIBIT 10.18</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="a53275exv10w20.htm">EXHIBIT 10.20</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="a53275exv31w1.htm">EX-31.1</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="a53275exv31w2.htm">EX-31.2</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="a53275exv32.htm">EX-32</A></FONT></TD></TR>
</TABLE>
</DIV>

<DIV align="left">
<!-- /TOC -->
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->2<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="101"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PART I &#151; FINANCIAL INFORMATION</B>
</DIV>

<DIV align="left">
<A name="102"></A>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>Item&nbsp;1.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>Financial Statements</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>HALOZYME
THERAPEUTICS, INC.</B></DIV>
<DIV align="left">
<A name="103"></A>
</DIV>
<DIV align="center" style="font-size: 10pt; margin-top: 0pt">
<!-- xbrl,bs -->
<B>CONDENSED CONSOLIDATED BALANCE SHEETS</B>
<!-- xbrl,body -->
</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>June 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">(Unaudited)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">(Note)</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD align="center"><DIV style="margin-left:15px; text-indent:-15px"><B>Assets</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current assets:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">89,240,763</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">63,715,906</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">893,093</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,264,410</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Inventory</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">803,534</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">441,323</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Prepaid expenses and other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,711,585</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,591,149</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">93,648,975</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74,012,788</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Property and equipment, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,646,666</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,549,925</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total Assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">96,295,641</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">76,562,713</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center"><DIV style="margin-left:15px; text-indent:-15px"><B>Liabilities and Stockholders&#146; Equity</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current liabilities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">5,430,644</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6,668,791</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accrued expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,721,593</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,995,897</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deferred revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,016,178</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,553,730</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,168,415</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,218,418</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred revenue, net of current portion</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53,667,269</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,894,726</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred rent, net of current portion</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,025,399</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,069,573</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Commitments and contingencies (Note 11)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stockholders&#146; equity:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Preferred stock &#151; $0.001 par value; 20,000,000 shares
authorized;
no shares issued and outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Common stock &#151; $0.001 par value; 150,000,000 shares
authorized;
89,656,578 and 81,553,654 shares issued and
outstanding at
June&nbsp;30, 2009 and December&nbsp;31, 2008, respectively</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">89,657</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">81,554</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Additional paid-in capital</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">171,779,912</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">128,948,064</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accumulated deficit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(145,435,011</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(113,649,622</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total stockholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,434,558</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,379,996</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total Liabilities and Stockholders&#146; Equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">96,295,641</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">76,562,713</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<!-- /xbrl,bs -->


<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">Note:</TD>
    <TD>&nbsp;</TD>
    <TD>The balance sheet at December&nbsp;31, 2008 has been derived from audited financial statements
at that date. It does not include, however, all of the information and notes required by US
generally accepted accounting principles for complete financial statements.</TD>
</TR>
</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt">See accompanying notes to condensed consolidated financial statements.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->3<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>HALOZYME
THERAPEUTICS, INC.</B></DIV>

<DIV align="left">
<A name="104"></A>
</DIV>
<DIV align="center" style="font-size: 10pt; margin-top: 0pt">
<!-- xbrl,op -->
<B> CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS<BR>
<!-- xbrl,body -->
(UNAUDITED)</B>
</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>Three Months Ended</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>Six Months Ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 0px solid #000000"><B>June 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 0px solid #000000"><B>June 30,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Revenues:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Revenues under collaboration agreements</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,246,205</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,351,492</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,940,369</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,015,572</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Product sales</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">179,951</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">82,727</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">258,158</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">224,165</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,426,156</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,434,219</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,198,527</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,239,737</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating expenses:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cost of product sales</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,097</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37,126</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49,301</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74,316</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Research and development</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,561,137</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,925,488</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,601,224</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,369,679</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Selling, general and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,903,642</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,846,175</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,390,464</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,003,778</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,509,876</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,808,789</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,040,989</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,447,773</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<tr style="font-size:10pt"><td>&nbsp;</td></tr>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(17,083,720</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11,374,570</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(31,842,462</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(22,208,036</TD>
    <TD nowrap>)</TD>
</TR>
<tr style="font-size:10pt"><td>&nbsp;</td></tr>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,695</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">372,180</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57,073</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,251,649</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(17,060,025</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(11,002,390</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(31,785,389</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(20,956,387</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Basic and diluted net loss per share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.21</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.14</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.38</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.27</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shares used in computing basic and diluted
net loss per share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">82,990,107</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">79,454,496</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">82,807,253</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">78,923,520</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="center" style="font-size: 10pt; margin-top: 18pt">See accompanying notes to condensed consolidated financial statements.
</DIV>
<!-- /xbrl,op -->


<P align="center" style="font-size: 10pt"><!-- Folio -->4<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>HALOZYME
THERAPEUTICS, INC.</B> </DIV>


<DIV align="left">
<A name="105"></A>
</DIV>
<DIV align="center" style="font-size: 10pt; margin-top: 0pt">
<!-- xbrl,cf -->
<B> CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS<BR>
<!-- xbrl,body -->
(UNAUDITED)</B>
</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>Six Months Ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 0px solid #000000"><B>June 30,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating activities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(31,785,389</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(20,956,387</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Adjustments to reconcile net loss to net cash used in operating activities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Share-based compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,870,766</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,929,793</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">680,071</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">476,585</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Loss on disposal of equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,685</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,029</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Changes in operating assets and liabilities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Accounts receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,371,317</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(381,165</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Inventory</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(362,211</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">54,214</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Prepaid expenses and other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(120,436</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">118,860</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Accounts payable and accrued expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(616,029</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">366,311</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Deferred rent</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,616</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">310,990</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Deferred revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,234,991</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,362,140</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash used in operating activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(14,697,619</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(15,709,630</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<tr style="font-size:10pt"><td>&nbsp;</td></tr>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Investing activities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Purchases of property and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(746,709</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(472,023</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash used in investing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(746,709</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(472,023</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<tr style="font-size:10pt"><td>&nbsp;</td></tr>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Financing activities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from issuance of common stock, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,174,371</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from exercise of warrants, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,213,515</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">247,482</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from exercise of stock options, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">581,299</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">665,225</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash provided by financing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,969,185</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">912,707</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<tr style="font-size:10pt"><td>&nbsp;</td></tr>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net increase (decrease)&nbsp;in cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,524,857</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(15,268,946</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and cash equivalents at beginning of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">63,715,906</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">97,679,085</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and cash equivalents at end of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">89,240,763</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">82,410,139</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Supplemental disclosure of non-cash investing and financing activities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts payable for purchases of property and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">32,788</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">170,040</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="center" style="font-size: 10pt; margin-top: 18pt">See accompanying notes to condensed consolidated financial statements.
</DIV>
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<P align="center" style="font-size: 10pt"><!-- Folio -->5<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>HALOZYME THERAPEUTICS, INC.</B>
</DIV>

<DIV align="left">
<A name="106"></A>
</DIV>

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<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS<BR>

(UNAUDITED)</B>
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>1. Organization and Business</B>
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Halozyme Therapeutics, Inc. (&#147;Halozyme&#148; or the &#147;Company&#148;) is a biopharmaceutical company
dedicated to the development and commercialization of products targeting the extracellular matrix
for the endocrinology, oncology, dermatology and drug delivery markets. The Company&#146;s existing
products and products under development are primarily based on intellectual property covering the
family of human enzymes known as hyaluronidases.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s operations to date have involved organizing and staffing the Company, acquiring,
developing and securing its technology and undertaking product development for its existing
products and a limited number of product candidates. The Company currently has four proprietary
programs in various stages of research and development, including three programs in clinical
development. The Company also has three partnered programs. The Company&#146;s key partnerships are with
F. Hoffmann-La Roche, Ltd and Hoffmann-La Roche, Inc. (&#147;Roche&#148;) to apply Enhanze<SUP style="font-size: 85%; vertical-align: text-top"><FONT style="font-family: Symbol">&#212;</FONT></SUP>
Technology to Roche&#146;s biological therapeutic compounds for up to 13 targets and with Baxter
Healthcare Corporation (&#147;Baxter&#148;) to apply Enhanze Technology to Baxter&#146;s biological therapeutic
compound, GAMMAGARD LIQUID<SUP style="font-size: 85%; vertical-align: text-top"><FONT style="font-family: Symbol">&#212;</FONT> </SUP>and to develop and supply active pharmaceutical
ingredient (&#147;API&#148;) for HYLENEX, a registered trademark of Baxter International, Inc. There are two
marketed products that utilize the Company&#146;s technology: HYLENEX, a product used as an adjuvant to
increase the dispersion and absorption of other injected drugs and fluids, and
Cumulase<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>, a product used for <I>in vitro </I>fertilization. Currently, the Company receives
only limited revenue from the sales of HYLENEX and from the sales of bulk materials to the third
party that produces Cumulase, in addition to revenues from its partnerships with Baxter and Roche.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>2. Basis of Presentation</B>
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The accompanying interim unaudited condensed consolidated financial statements have been
prepared in accordance with United States generally accepted accounting principles (&#147;U.S. GAAP&#148;)
and with the rules and regulations of the U.S. Securities and Exchange Commission (&#147;SEC&#148;) related
to a quarterly report on Form 10-Q. Accordingly, they do not include all of the information and
disclosures required by U.S. GAAP for a complete set of financial statements. These interim
unaudited condensed consolidated financial statements and notes thereto should be read in
conjunction with the audited consolidated financial statements and notes thereto included in the
Company&#146;s Annual Report on Form 10-K for the year ended December&nbsp;31, 2008. The unaudited
consolidated financial information for the interim periods presented herein reflects all
adjustments which, in the opinion of management, are necessary for a fair presentation of the
financial condition and results of operations for the periods presented, with such adjustments
consisting only of normal recurring adjustments. Operating results for interim periods are not
necessarily indicative of the operating results for an entire fiscal year. Further, in connection
with the preparation of the interim unaudited condensed financial statements and in accordance with
the recently issued Statement of Financial Accounting Standards (&#147;SFAS&#148;) No.&nbsp;165, <I>Subsequent
Events</I>, the Company evaluated subsequent events after the balance sheet date of June&nbsp;30, 2009
through August&nbsp;7, 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The consolidated financial statements include the accounts of Halozyme and its wholly owned
subsidiary, Halozyme, Inc. All intercompany accounts and transactions have been eliminated in the
consolidated financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The preparation of financial statements in conformity with U.S. GAAP requires management to
make estimates and assumptions that affect the reported amounts, as well as disclosures of
commitments and contingencies in the financial statements and accompanying notes. Actual results
could differ from those estimates.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->6<!-- /Folio -->
</DIV>

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<!-- xbrl -->

<DIV style="font-family: 'Times New Roman',Times,serif">

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<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>3. Accounting Pronouncements</B>
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Adoption of Recent Accounting Pronouncements</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effective April&nbsp;1, 2009, the Company adopted SFAS No.&nbsp;165, <I>Subsequent Events</I>. SFAS No.&nbsp;165
establishes general standards of accounting for and disclosure of events that occur after the
balance sheet date but before financial statements are issued or are available to be issued. The
adoption of SFAS No.&nbsp;165 did not have a material impact on the Company&#146;s consolidated financial
position or results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effective January&nbsp;1, 2009, the Company adopted Emerging Issues Task Force (&#147;EITF&#148;) Issue No.
07-01, <I>Accounting for Collaboration Arrangements. </I>Issue No.&nbsp;07-1 focuses on how the parties to a
collaborative agreement should account for costs incurred and revenue generated on sales to third
parties, how sharing payments pursuant to a collaboration agreement should be presented in the
statement of operations and certain related disclosure questions. The adoption of Issue No.&nbsp;07-01
did not have a material impact on the Company&#146;s consolidated financial position or results of
operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effective January&nbsp;1, 2009, the Company adopted SFAS No.&nbsp;141 (revised 2007), <I>Business
Combinations </I>(&#147;SFAS No.&nbsp;141(R)&#148;). SFAS No.&nbsp;141(R) establishes principles and requirements for how
an acquirer recognizes and measures in its financial statements the identifiable assets acquired,
the liabilities assumed, any noncontrolling interest in the acquiree and the goodwill acquired in
connection with business combinations. SFAS No.&nbsp;141(R) also establishes disclosure requirements to
enable the evaluation of the nature and financial effects of the business combination. The adoption
of SFAS No.&nbsp;141(R) did not have a material effect on the Company&#146;s consolidated financial condition
and results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effective January&nbsp;1, 2009 the Company adopted the FASB Staff Position (&#147;FSP&#148;) No.&nbsp;EITF 03-6-1,
<I>Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating
Securities</I>. FSP No.&nbsp;EITF 03-6-1 clarified that all outstanding unvested share-based payment awards
that contain rights to nonforfeitable dividends participate in undistributed earnings with common
shareholders. Awards of this nature are considered participating securities and the two-class
method of computing basic and diluted earnings per share must be applied. The adoption of FSP EITF
03-6-1 did not have a material impact on the Company&#146;s consolidated financial position or results
of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effective January&nbsp;1, 2009, the Company adopted EITF Issue No.&nbsp;07-5, <I>Determining Whether an
Instrument (or an Embedded Feature) Is Indexed to an Entity&#146;s Own Stock</I>. EITF Issue No.&nbsp;07-5
provides that an entity should use a two-step approach to evaluate whether an equity-linked
financial instrument (or embedded feature) is indexed to its own stock, including evaluating the
instrument&#146;s contingent exercise and settlement provisions. It also clarifies the impact of foreign
currency denominated strike prices and market-based employee stock option valuation instruments on
the evaluation. The adoption of EITF Issue No.&nbsp;07-5 did not have a material impact on the Company&#146;s
consolidated financial position or results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Pending Adoption of Recent Accounting Pronouncement</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In June&nbsp;2009, the Financial Accounting Standards Board (&#147;FASB&#148;) issued an Accounting Standards
Update (&#147;ASU&#148;) No.&nbsp;2009-01, which amends the FASB Accounting Standards Codification for the
issuance of SFAS No.&nbsp;168, <I>The FASB Accounting Standards Codification and the Hierarchy of Generally
Accepted Accounting Principles</I>. ASU No.&nbsp;2009-01 includes SFAS No.&nbsp;168 in its entirety. SFAS No.&nbsp;168
identifies the sources of accounting principles and the framework for selecting the principles used
in the preparation of financial statements of nongovernmental entities that are presented in
conformity with generally accepted accounting principles in the United States. SFAS No.&nbsp;168
replaces SFAS No.&nbsp;162, <I>Hierarchy of Generally Accepted Accounting Principles. </I>ASU No.&nbsp;2009-01 will
be effective for financial statements issued for interim and annual periods ending after September
15, 2009. The Company does not expect the adoption of ASU No.&nbsp;2009-01 to have a material impact on
its consolidated financial position or results of operations.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->7<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

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<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>4. Summary of Significant Accounting Policies</B>
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Fair Value Measurements</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company determines fair value measurements in accordance with SFAS No.&nbsp;157, <I>Fair Value
Measurements</I>, and FSP No.&nbsp;FAS 157-3, <I>Determining the Fair Value of a Financial Asset When the
Market for That Asset is Not Active</I>. SFAS No.&nbsp;157 defines fair value, establishes a framework for
measuring fair value under U.S. GAAP and enhances disclosures about fair value measurements. FSP
No.&nbsp;FAS 157-3 clarifies the application of SFAS No.&nbsp;157 in a market that is not active and provides
an example to illustrate key considerations in determining the fair value of a financial asset when
the market for that financial asset is not active.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SFAS No.&nbsp;157 prioritizes the inputs used in measuring fair value into the following hierarchy:
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Level 1</TD>
    <TD>&nbsp;</TD>
    <TD>Quoted prices (unadjusted)&nbsp;in active markets for identical assets or liabilities;</TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Level 2</TD>
    <TD>&nbsp;</TD>
    <TD>Inputs other than quoted prices included within Level 1 that are either directly
or indirectly observable; and</TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Level 3</TD>
    <TD>&nbsp;</TD>
    <TD>Unobservable inputs in which little or no market activity exists, therefore
requiring an entity to develop its own assumptions about the assumptions that
market participants would use in pricing.</TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents of approximately $89.2&nbsp;million at June&nbsp;30, 2009 are carried at fair
value based on quoted market prices for identical securities (Level 1 inputs).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Revenue Recognition</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company generates revenues from product sales and collaborative agreements. Payments
received under collaborative agreements may include nonrefundable fees at the inception of the
agreements, license fees, milestone payments for specific achievements designated in the
collaborative agreements, reimbursements of research and development services and/or royalties on
sales of products resulting from collaborative agreements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company recognizes revenues in accordance with SEC Staff Accounting Bulletin (&#147;SAB&#148;) No.
104, <I>Revenue Recognition, </I>and EITF Issue No.&nbsp;00-21, <I>Revenue Arrangements with Multiple
Deliverables</I>. The Company recognizes revenue when all of the following criteria are met: (1)
persuasive evidence of an arrangement exists; (2)&nbsp;delivery has occurred or services have been
rendered; (3)&nbsp;the seller&#146;s price to the buyer is fixed and determinable; and (4)&nbsp;collectibility is
reasonably assured.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Product Sales </I></B><I>&#151; </I>Revenues from the sales of Cumulase are recognized when the transfer of
ownership occurs, which is upon shipment to the Company&#146;s distributor. The Company is obligated to
accept returns for product that does not meet product specifications. Historically, the Company has
not had any product returns as a result of not meeting product specifications.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In accordance with the Amended and Restated Development and Supply Agreement (the &#147;HYLENEX
Partnership&#148;) with Baxter, the Company supplies Baxter with API for HYLENEX at its fully burdened
cost plus a margin. Baxter fills and finishes HYLENEX and holds it for subsequent distribution, at
which time the Company ensures it meets product specifications and releases it as available for
sale. Because of the Company&#146;s continued involvement in the development and production process of
HYLENEX, the earnings process is not considered to be complete. Accordingly, the Company defers the
revenue and related product costs on the API for HYLENEX until the product is filled, finished,
packaged and released. Baxter may only return the API for HYLENEX to the Company if it does not
conform to the specified criteria set forth in the HYLENEX Partnership or upon termination of such
agreement. The Company has historically demonstrated that the API shipped to Baxter has
consistently met the specified criteria, therefore, no allowance for product returns has been
established. In addition, the Company receives product-based payments upon the sale of HYLENEX by
Baxter, in accordance with the terms of the HYLENEX Partnership. Product sales revenues are
recognized as the Company earns such revenues based on Baxter&#146;s shipments of HYLENEX to its
distributors when such amounts can be reasonably estimated.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Collaborative Agreements </I></B><I>&#151; </I>The Company analyzes each element of its collaborative agreements
to determine the appropriate revenue recognition. The Company recognizes revenue on nonrefundable
upfront payments and license fees in which it has an ongoing involvement or performance obligation
over the period of significant involvement under the related agreements. The Company recognizes
milestone payments upon the achievement of specified milestones if: (1)&nbsp;the milestone is
substantive in nature and the achievement of the milestone was not reasonably assured at the
inception of the agreement, (2)&nbsp;the fees are nonrefundable and (3)&nbsp;our performance obligations
after the milestone achievement will continue to be funded by our collaborator at a level
comparable to the level before the milestone achievement. Any milestone payments received prior to
satisfying these revenue recognition criteria are recorded as deferred revenue. Reimbursements of
research and development services are recognized as revenue during the period in which the services
are performed. Royalties to be received based on sales of licensed products by the Company&#146;s
collaborators incorporating the Company&#146;s products will be recognized as earned.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Cost of Product Sales</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cost of product sales consists primarily of raw materials, third-party manufacturing costs,
fill and finish costs and freight costs associated with the sales of Cumulase, and the API for
HYLENEX.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Research and Development Expenses</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Research and development expenses include salaries and benefits, facilities and other overhead
expenses, external clinical trials, research-related manufacturing services, contract services and
other outside expenses. Research and development expenses are charged to operations as incurred
when these expenditures relate to the Company&#146;s research and development efforts and have no
alternative future uses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Advance payments, including nonrefundable amounts, for goods or services that will be used or
rendered for future research and development activities are deferred and capitalized. Such amounts
will be recognized as an expense as the related goods are delivered or the related services are
performed or such time when the Company does not expect the goods to be delivered or services to be
performed.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Milestone payments that the Company makes in connection with in-licensed technology or product
candidates are expensed as incurred when there is uncertainty in receiving future economic benefits
from the licensed technology or product candidates. The Company considers the future economic
benefits from the licensed technology or product candidates to be uncertain until such licensed
technology or product candidates are approved for marketing by the U.S. Food and Drug
Administration or when other significant risk factors are abated. For expense accounting purposes,
management has viewed future economic benefits for all of our licensed technology or product
candidates to be uncertain.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Clinical Trial Expenses</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Expenses related to clinical trials are accrued based on the Company&#146;s estimates and/or
representations from service providers regarding work performed, including actual level of patient
enrollment, completion of patient studies and clinical trials progress. Other incidental costs
related to patient enrollment or treatment are accrued when reasonably certain. If the contracted
amounts are modified (for instance, as a result of changes in the clinical trial protocol or scope
of work to be performed), the Company modifies its accruals accordingly on a prospective basis.
Revisions in the scope of a contract are charged to expense in the period in which the facts that
give rise to the revision become reasonably certain. Historically, the Company has had no material
changes in its clinical trial expense accruals that would have had a material impact on its
consolidated results of operations or financial position.
</DIV>

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</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<!-- xbrl -->

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Share-Based Compensation</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company accounts for share-based awards exchanged for employee services in accordance with
SFAS No.&nbsp;123(R), <I>Share-Based Payment</I>. Under SFAS No.&nbsp;123(R), share-based compensation expense is
measured at the grant date, based on the estimated fair value of the award, and is recognized as
expense, net of estimated forfeitures, over the employee&#146;s requisite service period. Total
share-based compensation expense related to all of the Company&#146;s share-based awards was allocated
as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>Three Months Ended</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>Six Months Ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 0px solid #000000"><B>June 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 0px solid #000000"><B>June 30,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Research and development</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">506,762</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">347,123</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">968,008</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">610,769</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Selling, general and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">542,048</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">719,154</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">902,758</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,319,024</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Share-based compensation expense
before tax</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,048,810</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,066,277</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,870,766</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,929,793</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Related income tax benefit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Share-based compensation expense,
net of tax</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,048,810</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,066,277</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,870,766</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,929,793</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<tr style="font-size:10pt"><td>&nbsp;</td></tr>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net share-based compensation expense
per basic and diluted share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.02</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.02</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Share-based compensation expense from:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock options</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">737,474</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">725,615</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,418,465</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,345,478</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Restricted stock awards</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">311,336</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">340,662</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">452,301</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">584,315</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,048,810</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,066,277</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,870,766</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,929,793</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since the Company has a net operating loss carryforward as of June&nbsp;30, 2009, no excess tax
benefits for the tax deductions related to share-based awards were recognized in the interim
unaudited condensed consolidated statement of operations. For the three months ended June&nbsp;30, 2009
and 2008, employees exercised stock options to purchase 320,313 and 75,379 shares of common stock,
respectively, for aggregate proceeds of approximately $347,000 and $71,000, respectively. For the
six months ended June&nbsp;30, 2009 and 2008, employees exercised stock options to purchase 448,430 and
1,708,032 shares of common stock, respectively, for aggregate proceeds of approximately $581,000
and $665,000, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of June&nbsp;30, 2009, total unrecognized estimated compensation cost related to non-vested
stock options and non-vested restricted stock awards granted prior to that date was approximately
$7.9&nbsp;million and $673,000, respectively, which is expected to be recognized over a weighted-average
period of 2.9&nbsp;years and 7&nbsp;months, respectively.
</DIV>

<!-- xbrl,n -->
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>5. Inventory</B>
</DIV>

<!-- xbrl,body -->
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventory is stated at the lower of cost or market and consists of the following:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>June 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Raw materials</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">745,347</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">435,386</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Work in process</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48,088</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Finished goods</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,099</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,937</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">803,534</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">441,323</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->10<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<!-- xbrl -->

<DIV style="font-family: 'Times New Roman',Times,serif">

<!-- xbrl,n -->
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>6. Property and Equipment</B>
</DIV>

<!-- xbrl,body -->
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Property and equipment, net consists of the following:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>June 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Research equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,233,925</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,699,706</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Computer and office equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,164,414</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,079,034</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Leasehold improvements</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">930,738</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">814,067</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,329,077</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,592,807</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accumulated depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,682,411</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,042,882</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,646,666</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,549,925</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization expense totaled approximately $351,000 and $248,000 for the
three months ended June&nbsp;30, 2009 and 2008, respectively, and $680,000 and $477,000 for the six
months ended June&nbsp;30, 2009 and 2008, respectively.
</DIV>

<!-- xbrl,n -->
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>7. Accrued Expenses</B>
</DIV>

<!-- xbrl,body -->
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued expenses consist of the following:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>June 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accrued compensation and payroll taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,103,110</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,060,866</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accrued research and development expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,057,646</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,543,321</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accrued expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">560,837</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">391,710</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,721,593</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,995,897</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<!-- xbrl,n -->
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>8. Deferred Revenue</B>
</DIV>

<!-- xbrl,body -->
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred revenue consists of the following:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>June 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Collaborative agreements</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">48,443,427</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">44,905,031</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Product sales</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,240,020</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,543,425</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total deferred revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">58,683,447</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49,448,456</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less current portion</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,016,178</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,553,730</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deferred revenue, net of current portion</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">53,667,269</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">45,894,726</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Roche
Partnership </I></B><B>&#151; </B>In December&nbsp;2006, the Company and Roche entered into a license and
collaborative agreement for Enhanze Technology (the &#147;Roche Partnership&#148;). Under the
terms of the Roche Partnership, Roche obtained a worldwide, exclusive license to develop and
commercialize product combinations of rHuPH20, the Company&#146;s proprietary recombinant human
hyaluronidase, with up to thirteen Roche target compounds resulting from the collaboration. Roche
paid $20.0&nbsp;million to the Company in December&nbsp;2006 as an initial upfront payment for the
application of rHuPH20 to three pre-defined Roche biologic targets. In addition, through June&nbsp;30,
2009 Roche paid an aggregate of approximately $13.5&nbsp;million in connection with Roche&#146;s election of
the fourth and fifth exclusive target and annual designation maintenance fees for the remaining
eight Roche targets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Due to the Company&#146;s continuing involvement obligations, revenues from the upfront payment,
exclusive designation fees and annual designation maintenance fees were deferred and are being
recognized over the term of the Roche Partnership. The Company recognized revenue from the upfront
payment, exclusive designation fees and annual maintenance designation fees under the Roche
Partnership in the amounts of approximately $458,000 and $290,000 for the three months ended June
30, 2009 and 2008, respectively, and $900,000 and $580,000 for the six months ended June&nbsp;30, 2009
and 2008, respectively.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->11<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<!-- xbrl -->

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Baxter
Partnerships </I></B>&#151; In September&nbsp;2007, the Company and Baxter entered into an Enhanze
Technology License and Collaboration Agreement (the &#147;Gammagard Partnership&#148;). Under the terms of
the Gammagard Partnership, Baxter paid the Company a nonrefundable upfront payment of $10.0
million. Due to the Company&#146;s continuing involvement obligations, the $10.0&nbsp;million upfront payment
was deferred and is being recognized over the term of the Gammagard Partnership. The Company
recognized revenue from the upfront payment under the Gammagard Partnership in the amount of
approximately $152,000 for the three months ended June&nbsp;30, 2009 and 2008 and $303,000 for the six
months ended June&nbsp;30, 2009 and 2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In February&nbsp;2007, the Company and Baxter amended certain existing agreements for HYLENEX and
entered into a new agreement for kits and formulations with rHuPH20 (the &#147;HYLENEX Partnership&#148;).
Under the terms of the HYLENEX Partnership, Baxter paid the Company a nonrefundable upfront payment
of $10.0&nbsp;million. Due to the Company&#146;s continuing involvement obligations, the $10.0&nbsp;million
upfront payment was deferred and is being recognized over the term of the HYLENEX Partnership. The
Company recognized revenue from the upfront payment under the HYLENEX Partnership in the amount of
approximately $147,000 for the three months ended June&nbsp;30, 2009 and 2008 and $293,000 for the six
months ended June&nbsp;30, 2009 and 2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, Baxter will make payments to the Company based on sales of the products covered
under the HYLENEX Partnership. Baxter has prepaid $10.0&nbsp;million of such product-based payments. The
prepaid product-based payments are deferred and are being recognized as product sales revenues as
the Company earns such revenues from the sales of HYLENEX by Baxter.
</DIV>

<!-- xbrl,n -->
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>9. Net Loss Per Share</B>
</DIV>

<!-- xbrl,body -->
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company calculates basic and diluted net loss per common share in accordance with SFAS No.
128, <I>Earnings Per Share</I>, and SAB No.&nbsp;98. Basic net loss per common share is computed by dividing
net loss for the period by the weighted average number of common shares outstanding during the
period, without consideration for common stock equivalents. Stock options, unvested stock awards
and warrants are considered to be common equivalents and are only included in the calculation of
diluted earnings per common share when their effect is dilutive. Because of the Company&#146;s net loss,
all outstanding stock options, unvested stock awards and warrants were excluded from the
calculation. The Company has excluded the following stock options, unvested stock awards and
warrants from the calculation of diluted net loss per common share because their effect is
anti-dilutive:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 0px solid #000000"><B>As of June 30,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stock options and awards</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,010,845</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,875,569</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Warrants</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,756,286</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,536,242</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,767,131</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,411,811</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<!-- xbrl,n -->
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>10. Stockholders&#146; Equity</B>
</DIV>

<!-- xbrl,body -->
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In June&nbsp;2009, the Company issued 6,150,000 shares of common stock in a public offering at a
price of $6.50 per share, generating approximately $38.2&nbsp;million in net proceeds.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the six months ended June&nbsp;30, 2009 and 2008, holders of the Company&#146;s outstanding
options exercised rights to purchase approximately 448,000 and 1.7&nbsp;million common shares,
respectively, at weighted exercise prices of $1.30 and $0.49 per share, respectively, for net
proceeds of approximately $581,000 and $665,000, respectively. Options to purchase approximately
7.8&nbsp;million and 7.3&nbsp;million shares of the Company&#146;s common stock were outstanding as of June&nbsp;30,
2009 and December&nbsp;31, 2008, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the six months ended June&nbsp;30, 2009 and 2008, holders of the Company&#146;s outstanding
warrants exercised to purchase approximately 1.4&nbsp;million and 323,000 shares of common stock,
respectively, at weighted exercise prices of $1.81 and $0.77 per share, respectively, for net
proceeds of approximately $2.2&nbsp;million and $247,000, respectively. Warrants to purchase
approximately 1.8&nbsp;million and 3.2&nbsp;million shares of the Company&#146;s common stock at weighted exercise
prices of $2.25 and $2.05 per share, respectively, were outstanding as of June&nbsp;30, 2009 and
December&nbsp;31, 2008, respectively.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->12<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<!-- xbrl -->

<DIV style="font-family: 'Times New Roman',Times,serif">

<!-- xbrl,n -->
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>11. Commitments and Contingencies</B>
</DIV>

<!-- xbrl,body -->
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From time to time the Company is involved in legal actions arising in the normal course of its
business. The Company is not presently subject to any material litigation nor, to management&#146;s
knowledge, is any litigation threatened against the Company that collectively is expected to have a
material adverse effect on the Company&#146;s consolidated cash flows, financial condition or results of
operations.
</DIV>
<!-- /xbrl,ns -->


<P align="center" style="font-size: 10pt"><!-- Folio -->13<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="107"></A>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>Item&nbsp;2.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>As used in this report, unless the context suggests otherwise, the terms &#147;we,&#148; &#147;our,&#148; &#147;ours,&#148;
and &#147;us&#148; refer to Halozyme Therapeutics, Inc., and its wholly owned subsidiary, Halozyme, Inc.,
which are sometimes collectively referred to herein as &#147;the Company.&#148;</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>The following information should be read in conjunction with the unaudited condensed
consolidated financial statements and notes thereto included in Item&nbsp;1 of this Quarterly Report on
Form&nbsp;10-Q. Past financial or operating performance is not necessarily a reliable indicator of
future performance, and our historical performance should not be used to anticipate results or
future period trends.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Except for the historical information contained herein, this report contains &#147;forward-looking
statements&#148; within the meaning of the Private Securities Litigation Reform Act of 1995. Such
statements reflect management&#146;s current forecast of certain aspects of our future. Words such as
&#147;expect,&#148; &#147;anticipate,&#148; &#147;intend,&#148; &#147;plan,&#148; &#147;believe,&#148; &#147;seek,&#148; &#147;estimate,&#148; &#147;think,&#148; &#147;may,&#148; &#147;could,&#148;
&#147;will,&#148; &#147;would,&#148; &#147;should,&#148; &#147;continue,&#148; &#147;potential,&#148; &#147;likely,&#148; &#147;opportunity&#148; and similar expressions
or variations of such words are intended to identify forward-looking statements, but are not the
exclusive means of indentifying forward-looking statements in this report. Additionally, statements
concerning future matters such as the development or regulatory approval of new products,
enhancements of existing products or technologies, third party performance under key collaboration
agreements, revenue and expense levels and other statements regarding matters that are not
historical are forward-looking statements. Such statements are based on currently available
operating, financial and competitive information and are subject to various risks, uncertainties
and assumptions that could cause actual results to differ materially from those anticipated or
implied in our forward-looking statements due to a number of factors including, but not limited to,
those set forth below under the section entitled &#147;Risks Factors&#148; and elsewhere in this Quarterly
Report on </I><I>Form 10-Q</I><I>.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Overview</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are a biopharmaceutical company dedicated to the development and commercialization of
products targeting the extracellular matrix for the endocrinology, oncology, dermatology and drug
delivery markets. Our existing products and our products under development are primarily based on
intellectual property covering the family of human enzymes known as hyaluronidases. Hyaluronidases
are enzymes (proteins)&nbsp;that break down hyaluronan, or HA, which is a naturally occurring
space-filling, gel-like substance that is a major component of tissues throughout the body, such as
skin and cartilage. Our primary technology is based on our proprietary recombinant human
PH20 enzyme, or rHuPH20, a human synthetic version of hyaluronidase. The rHuPH20 enzyme is a
naturally occurring enzyme that digests HA to temporarily break down the gel, thereby facilitating
the penetration and diffusion of other drugs and fluids that are injected under the skin or in the
muscle. Our proprietary rHuPH20 technology is applicable to multiple therapeutic areas and may be
used to both expand existing markets and create new ones for the development of our own proprietary
products. The rHuPH20 technology may also be applied to existing and developmental products of
third parties through key partnerships.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our operations to date have involved organizing and staffing our operating subsidiary,
Halozyme, Inc., acquiring, developing and securing our technology and undertaking product
development for our existing products and a limited number of product candidates. We continue to
increase our focus on our proprietary product pipeline and have expanded investments in our
proprietary product candidates. We currently have four proprietary programs in various stages of
research and development, including three programs in clinical development. We also have three
partnered programs. Our key partnerships are with F. Hoffmann-La Roche, Ltd and Hoffmann-La Roche,
Inc., or Roche, to apply Enhanze<SUP style="font-size: 85%; vertical-align: text-top"><FONT style="font-family: Symbol">&#212;</FONT></SUP> Technology to Roche&#146;s biological therapeutic
compounds for up to 13 targets and with Baxter Healthcare Corporation, or Baxter, to apply Enhanze
Technology to Baxter&#146;s biological therapeutic compound, GAMMAGARD LIQUID<SUP style="font-size: 85%; vertical-align: text-top"><FONT style="font-family: Symbol">&#212;</FONT> </SUP>and to
develop and supply active pharmaceutical ingredient, or API, for HYLENEX, a registered trademark of
Baxter International, Inc. There are two marketed products that utilize our technology: HYLENEX, a
product used as an adjuvant to increase the dispersion and absorption of other injected drugs and
fluids, and Cumulase<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>, a product used for <I>in vitro </I>fertilization, or IVF. Currently, we
receive only limited revenue from the sales of HYLENEX and from the sales of bulk materials to the
third party that produces Cumulase, in addition to revenues from our partnerships with Baxter and
Roche.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have product candidates in the research, preclinical and clinical stages, but future
revenues from the sales of these product candidates will depend on our ability to develop,
manufacture, obtain regulatory approvals for and successfully commercialize product candidates. It
may be years, if ever, before we are able to obtain regulatory approvals for these product
candidates. We have incurred net operating losses each year since inception, with an accumulated
deficit of approximately $145.4&nbsp;million as of June&nbsp;30, 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In November&nbsp;2008, we filed a shelf registration statement on Form S-3 (Registration No.
333-155787) which allowed us, from time to time, to offer and sell up to $50.0&nbsp;million of equity or
debt securities. In June&nbsp;2009, we sold approximately $40.0&nbsp;million of our common stock in a public
offering at a price of $6.50 per share. We may utilize this universal shelf in the future to raise
capital to fund the continued development of our product candidates, the commercialization of our
products or for other general corporate purposes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Our Current Products and Product Candidates</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have two marketed products and multiple product candidates targeting several indications in
various stages of development. The following table summarizes our proprietary product and product
candidates as well as our partnered product and product candidates:
</DIV>


<DIV align="CENTER" style="font-size: 10pt; margin-top: 18pt"><IMG src="a53275a5327501.gif" alt="(PRODUCTS AND PRODUCT CANDIDATES DAIGRAM)">
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Insulin-PH20</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our lead proprietary program focuses on the formulation of rHuPH20 with insulin for the
treatment of diabetes mellitus. Diabetes mellitus is an increasingly prevalent, costly condition
associated with substantial morbidity and mortality. Attaining and maintaining normal blood sugar
levels to minimize the long-term clinical risks is a key treatment goal for diabetic patients.
Combining rHuPH20 with either regular or analog insulin may facilitate faster insulin dispersion
and absorption from the subcutaneous space into the vascular compartment leading to faster insulin
response and improved glycemic control, potentially resulting in fewer hypoglycemic episodes. By
making mealtime insulin onset faster, i.e., providing earlier insulin to the blood and thus earlier
glucose
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">lowering activity, a combination of insulin with rHuPH20 may yield a better profile of
insulin effect, more like that found in healthy, non-diabetic people.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have initiated multiple clinical trials in connection with our
Insulin-PH20 program and we plan on initiating additional trials. Our
strategy is to develop a best in class insulin product with demonstrated clinical benefits for type
1 and 2 diabetes mellitus patients. The status and/or results from some of these trials are
summarized below:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In July&nbsp;2009, we initiated a Phase 2 clinical study in patients with type 2 diabetes
mellitus. This randomized cross-over design study is designed to compare the
postprandial glycemic excursions following a standardized test meal for three treatment
regimens: insulin lispro (Humalog<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>, a mealtime insulin analog) with rHuPH20,
regular insulin (Humulin<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> R, a non-analog insulin) with rHuPH20 and lispro
alone. This Phase 2 study will also investigate the pharmacokinetics and glucodynamics
of each treatment.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In June&nbsp;2009, we announced preliminary results from our Phase 2 clinical trial in
type 1 diabetic patients comparing Humalog with and without rHuPH20. These results
demonstrated faster insulin absorption and increased peak insulin concentrations after
co-administration of rHuPH20 with Humalog. Study results also showed a significant
reduction in postprandial blood glucose levels following administration of a
standardized test meal, with improvements in both peak glycemic response and total
hyperglycemic exposure compared to Humalog alone. Mean glucose levels after the meal
challenge remained within current treatment targets throughout the eight hour post meal
observation period. We presented these results at the American Diabetes Association
(ADA)&nbsp;69th Scientific Sessions in New Orleans.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In May&nbsp;2009, we initiated a Phase 2 clinical trial to compare regular insulin with
rHuPH20 to lispro alone. After a one-month observation period that includes dose
optimization, patients will be randomized to regular insulin with rHuPH20 or lispro and
treated for three months. At the end of three months, patients will crossover to the
other study treatment for another three months. The study will evaluate safety and
efficacy.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>PEGPH20</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are investigating PEGylated-rHuPH20, or PEGPH20, a new molecular entity, as a candidate for
the systemic treatment of tumors rich in HA. PEGylation refers to the attachment of polyethylene
glycol to our rHuPH20 enzyme, which extends its half life in the blood from less than 30 seconds to
more than 24 hours. An estimated 20% to 40% of solid tumors including prostate, breast, pancreas
and colon may produce significant amounts of HA that forms a halo-like coating over the surface of
the tumor cell. The quantity of HA produced by the tumor cells correlates with increased tumor
growth and metastasis and has been linked with tumor progression in some studies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In preclinical studies, PEGPH20 has been shown to remove the HA coating surrounding several
tumor cell lines. Treatment of PC3 (a prostate cancer cell line that produces HA) tumor-bearing
mice with PEGPH20 as a single agent demonstrated a slowing of tumor growth relative to controls.
Repeat dosing with PEGPH20 produced a sustained depletion of HA in the tumor microenvironment. For
tumor models that did not produce HA, the presence of PEGPH20 had no effect. Administration of the
combination of PEGPH20 with docetaxel or with liposomal doxorubicin in HA producing animal tumor
models produced a significant survival advantage for the combination relative to either
chemotherapeutic agent alone.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additional studies have demonstrated that PEGPH20 can significantly reduce tumor interstitial
fluid pressure (IFP)&nbsp;in an animal cancer model in a dose dependent fashion, achieving more than 85%
reduction in IFP following IV administration. Elevated tumor IFP has been associated with poor
patient prognosis and resistance to chemotherapeutic regimens. Therefore, based on these animal
studies and other tests conducted by Halozyme, PEGPH20 may represent a potentially innovative
treatment approach against tumors that produce HA.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the first quarter of 2009, we initiated a Phase 1 clinical trial for our PEGPH20 program.
This first in human trial with PEGPH20 is a dose-evaluating, multicenter, pharmacokinetic and
pharmacodynamic, safety study, in which patients with advanced solid tumors will receive
intravenous administration of PEGPH20 as a single agent.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Based on initial data from this trial, and
after consultation with the FDA, we have revised the original trial design to allow for lower doses
of PEGPH20 to be administered with the same frequency. We do not expect this revision of the trial
design to delay the completion of this trial.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Chemophase</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Chemophase is an investigative drug being developed for potential use in the treatment of
patients with superficial bladder cancer. Our Chemophase program combines our rHuPH20 enzyme with
mitomycin C, a cytotoxic drug, for direct administration into the bladder immediately after
transurethral resection of bladder tumors, a standard surgical treatment for the disease. Many
bladder tumor cells produce high quantities of HA and thus treatment to remove the HA coating could
increase their exposure to mitomycin C. This may lead to a lower recurrence of the cancer and a
better prognosis for patients.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the first quarter of 2009, we decided to reallocate certain resources previously
budgeted for Chemophase to other higher priority programs, such as our Insulin-PH20 and PEGPH20
programs. We are currently exploring strategic alternatives that will allow the Chemophase program
to continue its clinical development.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Enhanze Technology</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Enhanze Technology, a proprietary drug enhancement approach using rHuPH20, is a broad
technology that we have licensed to other pharmaceutical companies. When formulated with other
injectable drugs, Enhanze Technology can facilitate the subcutaneous dispersion and absorption of
these drugs by temporarily opening flow channels under the skin. Molecules as large as 200
nanometers may pass freely through the extracellular matrix, which recovers its normal density
within approximately 24 hours, leading to a drug delivery platform which does not permanently alter
the architecture of the skin. The principal focus of our Enhanze Technology platform is the use of
rHuPH20 to facilitate subcutaneous route of administration for large molecule biological
therapeutics. Potential benefits of subcutaneous administration of these biologics include life
cycle management, patient convenience and benefits to payors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We currently have Enhanze Technology partnerships with Roche and Baxter and we are currently
pursuing additional partnerships with pharmaceutical companies that market or develop drugs that
could benefit from injection via the subcutaneous route of administration.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Roche Partnership</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December&nbsp;2006, Halozyme and Roche entered into an Enhanze Technology partnership, or the
Roche Partnership. Under the terms of the Roche Partnership, Roche obtained a worldwide, exclusive
license to develop and commercialize product combinations of rHuPH20 with up to thirteen Roche
target compounds resulting from the collaboration. Roche initially had the exclusive right to apply
rHuPH20 to only three pre-defined Roche biologic targets with the option to exclusively develop and
commercialize rHuPH20 with an additional ten targets. In December&nbsp;2008, we announced that Roche
elected to add a fourth exclusive target to the three original exclusive targets, and in June&nbsp;2009
we announced that Roche elected to add a fifth exclusive target. We also previously announced the
commencement of Phase 1 clinical trials for products directed at two of the exclusive targets.
Roche retains the option to exclusively develop and commercialize rHuPH20 with an additional eight
targets through the payment of annual license maintenance fees. Pending the successful completion
of various clinical, regulatory and sales events, Roche will be obligated to make milestone
payments to us as well as royalty payments on the sales of products that result from the
partnership.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Baxter Gammagard Partnership</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;GAMMAGARD LIQUID is a current Baxter product that is indicated for the treatment of primary
immunodeficiency disorders associated with defects in the immune system. In September&nbsp;2007,
Halozyme and Baxter entered into an Enhanze Technology partnership, or the Gammagard Partnership.
Under the terms of this partnership, Baxter obtained a worldwide, exclusive license to develop and
commercialize product combinations of rHuPH20 with GAMMAGARD LIQUID. Pending the successful
completion of various regulatory and sales milestones, Baxter will be obligated to make milestone
payments to us as well as royalty payments on the sales of products that result from the
partnership. Baxter is responsible for all development, manufacturing, clinical,
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">regulatory, sales
and marketing costs under the Gammagard Partnership, while we will be responsible for the supply of
the rHuPH20 enzyme. In addition, Baxter has certain product development and commercialization
obligations in major markets identified in the Gammagard License. In January of 2009, we announced
the commencement of a Phase 3 clinical trial for GAMMAGARD LIQUID with rHuPH20, and in July&nbsp;2009,
we announced the completion of enrollment for this study.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>HYLENEX Partnership</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;HYLENEX is a formulation of rHuPH20 that, when injected under the skin, facilitates the
dispersion and absorption of other injected drugs or fluids. In February&nbsp;2007, Halozyme and Baxter
amended certain existing agreements relating to HYLENEX and entered into a new agreement for kits
and formulations with rHuPH20, or the HYLENEX Partnership. Pending the successful completion of a
series of regulatory and sales events, Baxter will be obligated to make milestone payments to us as
well as royalty payments on the sales of products that result from the partnership. Baxter is
responsible for development, manufacturing, clinical, regulatory, sales and marketing costs of the
products covered by the HYLENEX Partnership. We will continue to supply Baxter with API for
HYLENEX, and Baxter will prepare, fill, finish and package HYLENEX and hold it for subsequent
distribution. Baxter has indicated that the HYLENEX product launch will occur in the fourth quarter
of 2009. In addition, under the HYLENEX Partnership, Baxter has a worldwide, exclusive license to
develop and commercialize product combinations of rHuPH20 with Baxter hydration fluids and generic
small molecule drugs, with the exception of combinations with (i)&nbsp;bisphosphonates, as well as (ii)
cytostatic and cytotoxic chemotherapeutic agents, the rights to which have been retained by
Halozyme.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Cumulase</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cumulase is an <I>ex vivo </I>(used outside of the body) formulation of rHuPH20 to replace the bovine
(bull)&nbsp;enzyme currently used for the preparation of oocytes (eggs)&nbsp;prior to IVF during the process
of intracytoplasmic sperm injection (ICSI), in which the enzyme is an essential component. Cumulase
strips away the HA that surrounds the oocyte, allowing the clinician to then perform the ICSI
procedure.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Revenues</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revenues from product sales depend on our ability to develop, manufacture, obtain regulatory
approvals for and successfully commercialize our products and product candidates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revenues from license and collaboration agreements are recognized based on the performance
requirements of the underlying agreements. Revenue is deferred for fees received before they are
earned. Nonrefundable upfront payment and license fees, where we have an ongoing involvement or
performance obligation, are recorded as deferred revenue and recognized as revenue over the
contract or development period. Milestone payments are generally recognized as revenue upon the
achievement of the milestones as specified in the underlying agreement, assuming we meet certain
criteria. Royalty revenues from the sale of licensed products are recognized upon the sale of such
products.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During 2006 and 2007, we entered into the Roche Partnership, the HYLENEX Partnership and the
Gammagard Partnership. Elements of these partnerships include nonrefundable license fees,
reimbursements of research and development services, various clinical, development, regulatory or
sales milestones and future product-based or royalty payments, as applicable. Due to our ongoing
involvement obligations under these partnerships, we recorded the nonrefundable license fees and
annual designation maintenance fees as deferred revenues. Such revenues are being recognized over
the terms of the underlying agreements that define the terms of the partnerships.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Costs and Expenses</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Cost of Sales. </I>Cost of sales consists primarily of raw materials, third-party manufacturing
costs, fill and finish costs, and freight costs associated with the sales of Cumulase, and the API
for HYLENEX.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Research and Development. </I>Our research and development expenses consist primarily of costs
associated with the development and manufacturing of our product candidates, compensation and other
expenses for research and development personnel, supplies and materials, costs for consultants and
related contract research, clinical trials,
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">facility costs and depreciation. We charge all research
and development expenses to operations as they are incurred. Our research and development
activities are primarily focused on the development of our various product candidates.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since our inception in 1998 through June&nbsp;30, 2009, we have incurred research and development
expenses of $121.7&nbsp;million. From January&nbsp;1, 2006 through June&nbsp;30, 2009, approximately 9% of our
research and development
expenses were associated with the research and development of our rHuPH20 enzyme used in our
HYLENEX product, and approximately 14% and 13% of our research and development expenses were
associated with the development of our PEGPH20 and Insulin-PH20 product candidates, respectively.
Due to the uncertainty in obtaining the U.S. Food and Drug Administration, or FDA, approval, our
reliance on third parties and competitive pressures, we are unable to estimate with any certainty
the additional costs we will incur in the continued development of our proprietary product
candidates for commercialization. However, we expect our research and development expenses to
increase substantially if we are able to advance our product candidates into later stages of
clinical development.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Clinical development timelines, likelihood of success and total costs vary widely. We
anticipate that we will make ongoing determinations as to which research and development projects
to pursue and how much funding to direct to each project on an ongoing basis in response to the
scientific and clinical progress of each product candidate and other market and regulatory
developments. We plan on focusing our resources on those proprietary and partnered product
candidates that represent the most valuable economic and strategic opportunities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Product candidate completion dates and costs vary significantly for each product candidate and
are difficult to estimate. The lengthy process of seeking regulatory approvals and the subsequent
compliance with applicable regulations require the expenditure of substantial resources. Any
failure by us to obtain, or any delay in obtaining, regulatory approvals could cause our research
and development expenditures to increase and, in turn, have a material adverse effect on our
results of operations. We cannot be certain when, or if, our product candidates will receive
regulatory approval or whether any net cash inflow from our other product candidates, or
development projects, will commence.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Selling, General and Administrative. </I>Selling, general and administrative, or SG&#038;A, expenses
consist primarily of compensation and other expenses related to our corporate operations and
administrative employees, accounting and legal fees, other professional services expenses,
marketing expenses, as well as other expenses associated with operating as a publicly traded
company. We anticipate continued increases in SG&#038;A expenses as our operations continue to expand.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Critical Accounting Policies and Estimates</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our discussion and analysis of our financial position and results of operations are based on
our consolidated financial statements, which have been prepared in accordance with U.S. generally
accepted accounting principles, or U.S. GAAP. The preparation of our consolidated financial
statements requires us to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. We
review our estimates on an ongoing basis. We base our estimates on historical experience and on
various other assumptions that we believe to be reasonable under the circumstances, the results of
which form the basis for making judgments about the carrying values of assets and liabilities.
Actual results may differ from these estimates under different assumptions or conditions. We
believe the following accounting policies to be critical to the judgments and estimates used in the
preparation of our consolidated financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revenue Recognition</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We generate revenues from product sales and collaborative agreements. Payments received under
collaborative agreements may include nonrefundable fees at the inception of the agreements, license
fees, milestone payments for specific achievements designated in the collaborative agreements,
reimbursements of research and development services and/or royalties on sales of products resulting
from collaborative arrangements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We recognize revenue in accordance with SEC Staff Accounting Bulletin, or SAB, No.&nbsp;104,
<I>Revenue Recognition, </I>and Emerging Issues Task Force, or EITF, Issue No.&nbsp;00-21, <I>Revenue Arrangements
with Multiple Deliverables</I>. Revenue is recognized when all of the following criteria are met: (1)
persuasive evidence of an
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">arrangement exists; (2)&nbsp;delivery has occurred or services have been rendered; (3)&nbsp;the seller&#146;s
price to the buyer is fixed and determinable; and (4)&nbsp;collectibility is reasonably assured.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Product Sales</I></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revenues from the sale of Cumulase are recognized when the transfer of ownership occurs, which
is upon shipment to our distributor. We are obligated to accept returns for product that does not
meet product specifications. Historically, we have not had any product returns as a result of not
meeting product specifications.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the terms of the HYLENEX Partnership, we supply Baxter the API for HYLENEX at our fully
burdened cost plus a margin. Baxter fills and finishes HYLENEX and holds it for subsequent
distribution, at which time we ensure it meets product specifications and release it as available
for sale. Because of our continued involvement in the development and production process of
HYLENEX, the earnings process is not considered to be complete. Accordingly, we defer the revenue
and related product costs on the API for HYLENEX until the product is filled, finished, packaged
and released. Baxter may only return the API for HYLENEX to us if it does not conform to certain
specified criteria set forth in the HYLENEX Partnership or upon termination of such agreement. We
have historically demonstrated that the API shipped to Baxter has consistently met the specified
criteria; therefore, no allowance for product returns has been established. In addition, we receive
product-based payments upon the sale of HYLENEX by Baxter, in accordance with the terms of the
HYLENEX Partnership. Product sales revenues are recognized as we earn such revenues based on
Baxter&#146;s shipments of HYLENEX to its distributors when such amounts can be reasonably estimated.
Baxter has prepaid $10.0&nbsp;million of product-based payments. The prepaid product-based payments were
initially deferred and are being recognized as product sales revenue as the Company earns such
revenue from the sales of HYLENEX by Baxter.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revenues under Collaborative Agreements</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revenues from collaborative and licensing agreements are recognized based on the performance
requirements of the underlying agreements. Revenue is deferred for fees received before they are
earned. Nonrefundable upfront payments and license fees, in which we have an ongoing involvement or
performance obligation, are recorded as deferred revenue and recognized as revenue over the
contract or development period. We recognize milestone payments upon the achievement of specified
milestones if: (1)&nbsp;the milestone is substantive in nature and the achievement of the milestone was
not reasonably assured at the inception of the agreement, (2)&nbsp;the fees are nonrefundable and (3)
our performance obligations after the milestone achievement will continue to be funded by our
collaborator at a level comparable to the level before the milestone achievement. Any milestone
payments received prior to satisfying these revenue recognition criteria are recorded as deferred
revenue. Reimbursements of research and development services are recognized as revenue during the
period in which the services are performed. Royalties to be received based on sales of licensed
products by our collaborators incorporating our products are recognized as earned in accordance
with the terms of the underlying agreements.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Share-Based Payments</I></B></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We account for share-based awards exchanged for employee services in accordance with Statement
of Financial Accounting Standards, or SFAS, No.&nbsp;123(R), <I>Share-Based Payment</I>, which we adopted
effective January&nbsp;1, 2006, including the provisions of the SAB No.&nbsp;107 and 110. We use the fair
value method to account for share-based payments with a modified prospective application which
provides for certain changes to the method for valuing share-based compensation. The valuation
provisions of SFAS No.&nbsp;123(R) apply to new awards and awards that are outstanding on the effective
date and subsequently modified or cancelled. Under the modified prospective application, prior
periods were not revised for comparative purposes.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The fair value of each option award is estimated on the date of grant using a
Black-Scholes-Merton option pricing model, or Black-Scholes model, that uses assumptions regarding
a number of complex and subjective variables. These variables include, but are not limited to, our
expected stock price volatility, actual and projected employee stock option exercise behaviors,
risk-free interest rate and expected dividends. Expected volatilities are based on the historical
volatility of our common stock and our peer group. The expected term of options granted is based on
analyses of historical employee termination rates and option exercises. The risk-free
interest rates are based on the U.S. Treasury yield in effect at the time of the grant. Since we do
not expect to pay dividends on our common</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">stock in the foreseeable future, we estimated the
dividend yield to be 0%. SFAS No.&nbsp;123(R) requires forfeitures to be estimated at the time of grant
and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.
We estimate pre-vesting forfeitures based on our historical experience and those of our peer group.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If factors change and we employ different assumptions in the application of SFAS No.&nbsp;123(R) in
future periods, the share-based compensation expense that we record under SFAS No.&nbsp;123(R) may
differ significantly from what we have recorded in the current period. There is a high degree of
subjectivity involved when using option pricing models to estimate share-based compensation under
SFAS No.&nbsp;123(R). Certain share-based payments, such as employee stock options, may expire worthless
or otherwise result in zero intrinsic value as compared to the fair values originally estimated on
the grant date and reported in our consolidated financial statements. Alternatively, values may be
realized from these instruments that are significantly in excess of the fair values originally
estimated on the grant date and reported in our consolidated financial statements. There is
currently no market-based mechanism or other practical application to verify the reliability and
accuracy of the estimates stemming from these valuation models, nor is there a means to compare and
adjust the estimates to actual values. Although the fair value of employee share-based awards is
determined in accordance with SFAS No.&nbsp;123(R) and SAB No.&nbsp;107 and 110 using an option-pricing
model, that value may not be indicative of the fair value observed in a willing buyer/willing
seller market transaction.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Research and Development Expenses</I></B></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Research and development expenses include salaries and benefits, facilities and other overhead
expenses, clinical trials, research-related manufacturing services, contract services and other
outside expenses. Research and development expenses are charged to operations as they are incurred.
Advance payments, including nonrefundable amounts, for goods or services that will be used or
rendered for future research and development activities are deferred and capitalized. Such amounts
will be recognized as an expense as the related goods are delivered or the related services are
performed or such time that the Company does not expect the goods to be delivered or services to be
rendered.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Milestone payments that we make in connection with in-licensed technology or product
candidates are expensed as incurred when there is uncertainty in receiving future economic benefits
from the licensed technology or product candidates. We consider the future economic benefits from
the licensed technology or product candidates to be uncertain until such licensed technology or
product candidates are approved for marketing by the FDA or when other significant risk factors are
abated. For expense accounting purposes, management has viewed future economic benefits for all of
our licensed technology or product candidates to be uncertain.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payments in connection with our clinical trials are often made under contracts with multiple
contract research organizations that conduct and manage clinical trials on our behalf. The
financial terms of these agreements are subject to negotiation and vary from contract to contract
and may result in uneven payment flows. Generally, these agreements set forth the scope of work to
be performed at a fixed fee, unit price or on a time-and-material basis. Payments under these
contracts depend on factors such as the successful enrollment or treatment of patients or the
completion of other clinical trial milestones. Expenses related to clinical trials are accrued
based on our estimates and/or representations from service providers regarding work performed,
including actual level of patient enrollment, completion of patient studies and clinical trials
progress. Other incidental costs related to patient enrollment or treatment are accrued when
reasonably certain. If the contracted amounts are modified (for instance, as a result of changes in
the clinical trial protocol or scope of work to be performed), we modify our accruals accordingly
on a prospective basis. Revisions in scope of contract are charged to expense in the period in
which the facts that give rise to the revision become reasonably certain. Because of the
uncertainty of possible future changes to the scope of work in clinical trials contracts, we are
unable to quantify an estimate of the reasonably likely effect of any such changes on our
consolidated results of operations or financial position. Historically, we have had no material
changes in our clinical trial expense accruals that would have had a material impact on our
consolidated results of operations or financial position.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Inventory</I></B></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventory consists of API for our Cumulase and HYLENEX products. Inventory primarily
represents raw materials used in production, work in process and finished goods inventory on hand,
valued at actual cost. Inventory is reviewed periodically for slow-moving or obsolete items. If a
launch of a new product is delayed, inventory may</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">not be fully utilized and could be subject to
impairment, at which point we would record a reserve to adjust inventory to its net realizable
value.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Fair Value Measurements</I></B></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We determine fair value measurements in accordance with SFAS No.&nbsp;157, <I>Fair Value Measurements</I>,
and FASB Staff Position, or FSP, No.&nbsp;FAS 157-3, <I>Determining the Fair Value of a Financial Asset
When the Market for That Asset is Not Active</I>. SFAS No.&nbsp;157 defines fair value, establishes a
framework for measuring fair value under U.S. GAAP and enhances disclosures about fair value
measurements. FSP No.&nbsp;FAS 157-3 clarifies the application of SFAS No.&nbsp;157 in a market that is not
active and provides an example to illustrate key considerations in determining the fair value of a
financial asset when the market for that financial asset is not active.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SFAS No.&nbsp;157 prioritizes the inputs used in measuring fair value into the following hierarchy:</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="87%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>Level 1
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Quoted prices (unadjusted)&nbsp;in active markets for identical assets or liabilities;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Level 2
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Inputs other than quoted prices included within Level 1 that are either directly
or indirectly observable; and</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Level 3
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Unobservable inputs in which little or no market activity exists, therefore
requiring an entity to develop its own assumptions about the assumptions that
market participants would use in pricing.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents of approximately $89.2&nbsp;million at June&nbsp;30, 2009 are carried at fair
value based on quoted market prices for identical securities (Level 1 inputs).</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The above listing is not intended to be a comprehensive list of all of our accounting
policies. In many cases, the accounting treatment of a particular transaction is specifically
dictated by U.S. GAAP. There are also areas in which our management&#146;s judgment in selecting any
available alternative would not produce a materially different result. Refer to our audited
consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for
the year ended December&nbsp;31, 2008, which contain accounting policies and other disclosures required
by U.S. GAAP.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Results of Operations</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Three Months Ended June&nbsp;30, 2009 Compared to Three Months Ended June&nbsp;30, 2008</I></B>

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Revenues Under Collaborative Agreements </I><B>&#151; </B>Revenues under collaborative agreements were
approximately $1.2&nbsp;million for the three months ended June&nbsp;30, 2009 compared to $1.4&nbsp;million for
the three months ended June&nbsp;30, 2008. Revenues under collaborative agreements primarily consisted
of the amortization of license fees received from Baxter and Roche of approximately $756,000 and
$588,000 for the three months ended June&nbsp;30, 2009 and 2008, respectively. Revenues under
collaborative agreements also included reimbursements for research and development services from
Baxter of $276,000 and $554,000 and Roche of $214,000 and $210,000 for the three months ended June
30, 2009 and 2008, respectively. Such reimbursements are for research and development
services rendered by us at the request of Baxter and Roche and the amount of future revenues
related to reimbursable research and development services is uncertain. We expect the
non-reimbursement revenues under our collaborative agreements to continue to increase in future
periods provided that we meet various clinical and regulatory milestones set forth in such
agreements.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Product Sales </I><B>&#151; </B>Product sales were $180,000 for the three months ended June&nbsp;30, 2009 compared
to $83,000 for the three months ended June&nbsp;30, 2008. The increase of $97,000 was primarily due to
the increase in sales of Cumulase and API for HYLENEX. Based upon
representations made to us by Baxter regarding the resources to be
allocated to the launch of HYLENEX
in the fourth quarter of 2009, we expect product sales to increase in future periods due to
increased HYLENEX sales.</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Cost of Sales </I><B>&#151; </B>Cost of sales were $45,000 for the three months ended June&nbsp;30, 2009 compared
to $37,000 for the three months ended June&nbsp;30, 2008.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Research and Development </I><B>&#151; </B>Research and development expenses were $14.6&nbsp;million for the three
months ended June&nbsp;30, 2009 compared to $8.9&nbsp;million for the three months ended June&nbsp;30, 2008. The
increase of $5.7&nbsp;million, or 64%, was primarily due to the increase in clinical trial expenses of
$2.0&nbsp;million, outsourced research and development costs of $1.9&nbsp;million related to our various
preclinical programs and the manufacturing scale-up of our rHuPH20 enzyme, and increased
compensation costs of $1.5&nbsp;million, of which $160,000 related to increased share-based
compensation, primarily due to the increase in our research and development headcount. At June&nbsp;30,
2009, our headcount for research and development functions totaled 98 employees, compared with 83
employees at June&nbsp;30, 2008. We expect certain research and development costs to increase in future
periods as we increase our research efforts, expand our clinical trials and continue to develop and
manufacture our product candidates.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Selling, General and Administrative </I><B>&#151; </B>SG&#038;A expenses were $3.9&nbsp;million for the three months
ended June&nbsp;30, 2009 compared to $3.8&nbsp;million for the three months ended June&nbsp;30, 2008. We expect
SG&#038;A expenses to increase in future periods as we continue to expand our operations.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Interest Income </I><B>&#151; </B>Interest income was $24,000 for the three months ended June&nbsp;30, 2009
compared to $372,000 for the three months ended June&nbsp;30, 2008. The decrease in interest income was
primarily due to lower interest rates and lower average cash and cash equivalent balances in 2009
as compared to the same period in 2008.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Net Loss </I><B>&#151; </B>Net loss was $17.1&nbsp;million, or $0.21 per common share, for the three months ended
June&nbsp;30, 2009 compared to $11.0&nbsp;million, or $0.14 per common share for the three months ended June
30, 2008. The increase in net loss was primarily due to an increase in operating expenses.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Six Months Ended June&nbsp;30, 2009 Compared to Six Months Ended June&nbsp;30, 2008</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Revenues Under Collaborative Agreements </I><B>&#151; </B>Revenues under collaborative agreements were
approximately $3.9&nbsp;million for the six months ended June&nbsp;30, 2009 compared to $3.0&nbsp;million for the
six months ended June&nbsp;30, 2008. Revenues under collaborative agreements primarily consisted of the
amortization of license fees and milestone payments received from Baxter and Roche of approximately
$2.5&nbsp;million and $1.2&nbsp;million for the six months ended June&nbsp;30, 2009 and 2008, respectively.
Revenues under collaborative agreements also included reimbursements for research and development
services from Baxter of $700,000 and $1.0&nbsp;million and Roche of $744,000 and $834,000 for the six
months ended June&nbsp;30, 2009 and 2008, respectively. Such reimbursements are for research
and development services rendered by us at the request of Baxter and Roche and the amount of future
revenues related to reimbursable research and development services is uncertain. We expect the
non-reimbursement revenues under our collaborative agreements to continue to increase in future
periods provided that we meet various clinical and regulatory milestones set forth in such
agreements.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Product Sales </I><B>&#151; </B>Product sales were $258,000 for the six months ended June&nbsp;30, 2009 compared
to $224,000 for the six months ended June&nbsp;30, 2008. The increase of $34,000 was primarily due to an
increase in the sales of HYLENEX API. Based upon representations made to us by Baxter regarding the resources to be
allocated to the launch of HYLENEX in the fourth
quarter of 2009, we expect product sales to increase in future periods due to increased HYLENEX
sales.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Cost of Sales </I><B>&#151; </B>Cost of sales were $49,000 for the six months ended June&nbsp;30, 2009 compared to
$74,000 for the six months ended June&nbsp;30, 2008.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Research and Development </I><B>&#151; </B>Research and development expenses were $28.6&nbsp;million for the six
months ended June&nbsp;30, 2009 compared to $17.4&nbsp;million for the six months ended June&nbsp;30, 2008. The
increase of $11.2&nbsp;million, or 64%, was primarily due to the increase in outsourced research and development
costs of $4.5&nbsp;million related to our various preclinical programs and the manufacturing scale-up of
our rHuPH20 enzyme, and increased compensation costs of $3.2&nbsp;million, of which $357,000 related to
increased share-based compensation, primarily due to the increase in our research and development
headcount. At June&nbsp;30, 2009, our headcount for research and development functions totaled 98
employees, compared with 83 employees at June&nbsp;30, 2008. Additionally, our clinical trial expenses
increased by $2.7&nbsp;million for the six months ended June&nbsp;30, 2009. We expect certain research and
development costs to increase in future periods as we increase our research efforts, expand our
clinical trials and continue to develop and manufacture our product candidates.</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Selling, General and Administrative </I><B>&#151; </B>SG&#038;A expenses were $7.4&nbsp;million for the six months
ended June&nbsp;30, 2009 compared to $8.0&nbsp;million for the six months ended June&nbsp;30, 2008. The decrease
of approximately $613,000, or 8%, was primarily due to the decrease in corporate legal expenses of
$1.2&nbsp;million. Legal expenses for the six months ended June&nbsp;30, 2008 included $635,000 related to
the settlement of an arbitration matter. The decrease was also due to a $416,000 decrease in
share-based compensation. The decrease was partially offset by a $848,000 increase in compensation
costs, excluding share-based compensation. We expect SG&#038;A expenses to increase in future periods as
we continue to expand our operations.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Interest Income </I><B>&#151; </B>Interest income was $57,000 for the six months ended June&nbsp;30, 2009 compared
to $1.3&nbsp;million for the six months ended June&nbsp;30, 2008. The decrease in interest income was
primarily due to lower interest rates and lower average cash and cash equivalent balances in 2009
as compared to the same period in 2008.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Net Loss </I><B>&#151; </B>Net loss was $31.8&nbsp;million, or $0.38 per common share, for the six months ended
June&nbsp;30, 2009 compared to $21.0&nbsp;million, or $0.27 per common share for the six months ended June
30, 2008. The increase in net loss was primarily due to an increase in operating expenses and a
decrease in interest income, partially offset by increases in revenues.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Liquidity and Capital Resources</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Overview</I></B>

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our principal sources of liquidity are our existing cash and cash equivalents. As of June&nbsp;30,
2009, we had cash and cash equivalents of approximately $89.2&nbsp;million. We expect our cash
requirements to increase as we continue to increase our research and development for, seek
regulatory approvals of, and develop and manufacture our current product candidates. As we expand
our research and development efforts and pursue additional product opportunities, we anticipate
additional cash requirements for hiring of personnel, capital expenditures and investment in
additional internal systems and infrastructure. The amount and timing of cash requirements will
depend on the research, development, manufacture, regulatory and market acceptance of our product
candidates, if any, and the resources we devote to researching, developing, manufacturing,
commercializing and supporting our product candidates.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe that our current cash and cash equivalents will be sufficient to fund our
operations for at least the next twelve months. Currently, we anticipate total net cash burn of
approximately $30.0 to $35.0&nbsp;million for the year ending December&nbsp;31, 2009, depending on the
progress of various preclinical and clinical programs, the timing of our manufacturing scale up and
the achievement of various milestones under our existing collaborative agreements. We do not expect
our revenues to be sufficient to fund operations for several years. We expect to fund our
operations going forward with existing cash resources, anticipated revenues from our existing
collaborations and cash that we will raise through future transactions. We may finance future cash
needs through any one of the following financing vehicles: (i)&nbsp;the public offering of securities;
(ii)&nbsp;new collaborative agreements; (iii)&nbsp;expansions or revisions to existing collaborative
relationships; (iv)&nbsp;private financings and/or (v)&nbsp;other equity or debt financings.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In November&nbsp;2008, we filed a shelf registration statement on Form S-3 (Registration No.
333-155787) which allowed us, from time to time, to offer and sell up to $50.0&nbsp;million of equity or
debt securities. In June&nbsp;2009, we sold approximately $40.0&nbsp;million of our common stock in a public
offering at a price of $6.50 per share. We cannot be certain that our existing cash and cash
equivalents will be adequate for our anticipated needs or that
additional financing will be available when needed or that, if available, financing will be
obtained on terms favorable to us or our stockholders. Having insufficient funds will require us to
delay, scale back or eliminate some or all of our research and development programs or delay the
launch of our product candidates. If we raise additional funds by issuing equity securities,
substantial dilution to existing stockholders could result. If we raise additional funds by
incurring debt financing, the terms of the debt may involve significant cash payment obligations as
well as covenants and specific financial ratios that may restrict our ability to operate our
business.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Cash Flows</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in operations was $14.7&nbsp;million for the six months ended June&nbsp;30, 2009 compared
to $15.7&nbsp;million of net cash used in operations for the six months ended June&nbsp;30, 2008.</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in investing activities was $747,000 for the six months ended June&nbsp;30, 2009
compared to $472,000 for the six months ended June&nbsp;30, 2008. This was primarily due to an increase
in purchases of property and equipment during 2009.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by financing activities was $41.0&nbsp;million for the six months ended June&nbsp;30,
2009 compared to $913,000 for the six months ended June&nbsp;30, 2008. Net cash provided by financing
activities primarily consisted of net proceeds of $38.2&nbsp;million from the sale of our common stock
in June&nbsp;2009 and $2.8&nbsp;million from warrant and stock option exercises.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Off-Balance Sheet Arrangements</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of June&nbsp;30, 2009, we did not have any relationships with unconsolidated entities or
financial partnerships, such as entities often referred to as structured finance or special purpose
entities, which would have been established for the purpose of facilitating off-balance sheet
arrangements or other contractually narrow or limited purposes. In addition, we did not engage in
trading activities involving non-exchange traded contracts. As such, we are not materially exposed
to any financing, liquidity, market or credit risk that could arise if we had engaged in these
relationships.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Recent Accounting Pronouncements</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See Note 3, <I>Accounting Pronouncements</I>, in the Notes to Condensed
Consolidated Financial Statements for discussions of new accounting pronouncements and their
effect, if any on us.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Risk Factors</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>The following information sets forth factors that could cause our actual results to differ
materially from those contained in forward-looking statements we have made in this Quarterly Report
on Form 10-Q and those we may make from time to time. In addition to the risk factors discussed
below, we are also subject to additional risks and uncertainties not presently known to us or that
we currently deem immaterial. If any of these known or unknown risks or uncertainties actually
occurs, our business, financial position and results of operations could be materially and
adversely affected and the value of our securities could decline significantly.</I></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Risks Related To Our Business</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>We have generated only minimal revenue from product sales to date; we have a history of net losses
and negative cash flow, and we may never achieve or maintain profitability.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have generated only minimal revenue from product sales, licensing fees and milestone
payments to date and may never generate significant revenues from future product sales, licensing
fees and milestone payments. Even if we do achieve significant revenues from product sales,
licensing fees and/or milestone payments, we expect to incur significant operating losses over the next few years. We have never been profitable,
and we may never become profitable. Through June&nbsp;30, 2009, we have incurred aggregate net losses of
approximately $145.4&nbsp;million.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>If our contract manufacturers are unable to manufacture significant amounts of the API used in our
products and product candidates, our product development and commercialization efforts could be
delayed or stopped and our collaborative partnerships could be damaged.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have existing supply agreements with contract manufacturing organizations Avid Bioservices,
Inc., or Avid, and Cook Pharmica LLC, or Cook, to produce bulk API. These manufacturers each
produce API under current Good Manufacturing Practices, or cGMP, for clinical uses. In addition,
Avid currently produces API for commercialized products. Avid and Cook will also provide support
for the chemistry, manufacturing and controls sections for FDA regulatory filings. We rely on their
ability to successfully manufacture these batches according to product specifications and Cook has
relatively limited experience manufacturing our API. In addition, as a result of our contractual
obligations to Roche, we will be required to significantly scale up our commercial API production
at Cook during the next few years. If Cook is unable to obtain status as an FDA-approved
manufacturing facility, or if either Avid or Cook: (i)&nbsp;are unable to retain status as FDA-approved
manufacturing facilities; (ii)&nbsp;are unable to otherwise successfully scale up our API production; or
(iii)&nbsp;fail to manufacture the API required by our proprietary and partnered products and product
candidates for any other reason, our business will be adversely affected. We</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">have not yet established, and may not be able to establish, favorable arrangements with additional API
manufacturers and suppliers of the ingredients necessary to manufacture the API should the existing
manufacturers and suppliers become unavailable or in the event that our existing manufacturers and
suppliers are unable to adequately perform their responsibilities. Any delays, interruptions or
other problems regarding the ability of Avid and/or Cook to supply API on a timely basis could: (i)
cause the delay of clinical trials or otherwise delay or prevent the regulatory approval of
proprietary or partnered product candidates; and (ii)&nbsp;delay or prevent the effective
commercialization of proprietary or partnered products. Such delays would likely damage our
relationship with our partners under our key collaboration agreements and they would have a
material adverse effect on our business and financial condition.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>If any party to a key collaboration agreement, including us, fails to perform material obligations
under such agreement, or if a key collaboration agreement is terminated for any reason, our
business would significantly suffer.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have entered into key collaboration agreements under which we may receive significant
future payments in the form of maintenance fees, milestone payments and royalties. In the event
that a party fails to perform under a key collaboration agreement, or if a key collaboration
agreement is terminated, the reduction in anticipated revenues could delay or suspend our product
development activities for some of our product candidates as well as our commercialization efforts
for some or all of our products. In addition, the termination of a key collaboration agreement by
one of our partners could materially impact our ability to enter into additional collaboration
agreements with new partners on favorable terms, if at all. In certain circumstances, the
termination of a key collaboration agreement would require us to revise our corporate strategy
going forward and reevaluate the applications and value of our technology.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>If we are unable to sufficiently develop our sales, marketing and distribution capabilities or
enter into successful agreements with third parties to perform these functions, we will not be able
to fully commercialize our products.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may not be successful in marketing and promoting our existing product candidates or any
other products we develop or acquire in the future. We are currently in the process of developing
our sales, marketing and distribution capabilities. However, our current capabilities in these
areas are very limited. In order to commercialize any products successfully, we must internally
develop substantial sales, marketing and distribution capabilities or establish collaborations or
other arrangements with third parties to perform these services. We do not have extensive
experience in these areas, and we may not be able to establish adequate in-house sales, marketing
and distribution capabilities or engage and effectively manage relationships with third parties to
perform any or all of such services. To the extent that we enter into co-promotion or other
licensing arrangements, our product revenues are likely to be lower than if we directly marketed and sold our products, and any revenues we receive will
depend upon the efforts of third parties, whose efforts may not meet our expectations or be
successful.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We depend upon the efforts of third parties, such as Baxter for HYLENEX, to promote and sell
our current products, but there can be no assurance that the efforts of these third parties will
meet our expectations or result in any significant product sales. While these third parties are
largely responsible for the speed and scope of sales and marketing efforts, they may not dedicate
the resources necessary to maximize product opportunities and our ability to cause these third
parties to increase the speed and scope of their efforts may be limited. In addition, sales and
marketing efforts could be negatively impacted by the delay or failure to obtain additional
supportive clinical trial data for our products. In some cases, third party partners are
responsible for conducting these additional clinical trials and our ability to increase the efforts
and resources allocated to these trials may be limited.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>If we have problems with third parties that prepare, fill, finish and package our products and
product candidates for distribution, our product commercialization and development efforts for
these products and product candidates could be delayed or stopped.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We rely on third parties to prepare, fill, finish and package our products and product
candidates prior to their distribution. If we are unable to locate third parties to perform these
functions on terms that are economically acceptable to us, the progress of clinical trials could be
delayed or even suspended and the commercialization of approved product candidates could be delayed
or prevented. We currently utilize a subsidiary of Baxter to prepare, fill, finish and package
HYLENEX under a development and supply agreement. Baxter has limited experience</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">manufacturing HYLENEX batches, and we rely on its ability to successfully manufacture HYLENEX batches according
to product specifications. Any delays or interruptions in Baxter&#146;s ability to manufacture HYLENEX
batches in amounts necessary to meet product demand could have a material adverse impact on our
business and financial condition.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Most of our current proprietary and partnered products and product candidates rely on the rHuPH20
enzyme.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The rHuPH20 enzyme is a key technological component of Enhanze Technology, our insulin
program, HYLENEX and other proprietary and partnered products and product candidates. An adverse
development for rHuPH20 (e.g., we are unable to obtain sufficient quantities of rHuPH20, we are
unable to obtain or maintain material proprietary rights to rHuPH20, or we discover negative
characteristics of rHuPH20) would substantially impact multiple areas of our business, including
current and potential partnerships as well as proprietary programs.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>If our proprietary and partnered product candidates do not receive and maintain regulatory
approvals, they will not be commercialized, and this failure would substantially impair our ability
to generate revenues.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Approval from the FDA is necessary to manufacture and market pharmaceutical products in the
United States. Most other countries in which we may do business have similar requirements. To date,
two of our product candidates have received regulatory approval from the FDA.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The process for obtaining FDA approval is extensive, time-consuming and costly, and there is
no guarantee that the FDA will approve any new drug applications, or NDAs, that may be filed with
respect to any of our proprietary or partnered product candidates, or that the timing of any such
approval will be appropriate for our desired product launch schedule and other business priorities,
which are subject to change. There are no proprietary or partnered product candidates currently in
the NDA approval process, and we and our partners may not be successful in obtaining such approvals
for any potential products.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Our proprietary and partnered product candidates may not receive regulatory approvals for a variety
of reasons, including unsuccessful clinical trials.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Clinical testing of pharmaceutical products is a long, expensive and uncertain process and the
failure of a clinical trial can occur at any stage. Even if initial results of preclinical studies
or clinical trial results are promising, we or our partners may obtain different results that fail to show the desired levels of safety
and efficacy, or we may not, or our partners may not, obtain FDA approval for a variety of other
reasons. Clinical trials for any of our proprietary or partnered product candidates could be
unsuccessful, which would delay or prohibit regulatory approval and commercialization of the
product candidates. FDA approval can be delayed, limited or not granted for many reasons,
including, among others:</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>FDA review may not find a product candidate safe or effective enough
to merit either continued testing or final approval;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>FDA review may not find that the data from preclinical testing and
clinical trials justifies approval, or they may require additional
studies that would make it commercially unattractive to continue
pursuit of approval;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the FDA may reject our trial data or disagree with our interpretations
of either clinical trial data or applicable regulations;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the cost of a clinical trial may be greater than what we originally
anticipate, and we may decide to not pursue FDA approval for such a
trial;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the FDA may not approve our manufacturing processes or facilities, or
the processes or facilities of our contract manufacturers or raw
material suppliers;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the FDA may change its formal or informal approval requirements and
policies, act contrary to previous guidance, or adopt new regulations;
or</TD>
</TR>


</TABLE>
</DIV>
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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the FDA may approve a product candidate for indications that are
narrow or under conditions that place the product at a competitive
disadvantage, which may limit our sales and marketing activities or
otherwise adversely impact the commercial potential of a product.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If the FDA does not approve a proprietary or partnered product candidate in a timely fashion
on commercially viable terms, or if development of any product candidate is terminated due to
difficulties or delays encountered in the regulatory approval process, it could have a material
adverse impact on our business and we will become more dependent on the development of other
proprietary or partnered product candidates and/or our ability to successfully acquire other
products and technologies. There can be no assurances that any proprietary or partnered product
candidate will receive regulatory approval in a timely manner, or at all.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We anticipate that certain proprietary and partnered products will be marketed, and perhaps
manufactured, in foreign countries. The process of obtaining regulatory approvals in foreign
countries is subject to delay and failure for many of the same reasons set forth above as well as
for reasons that vary from jurisdiction to jurisdiction. The approval process varies among
countries and jurisdictions and can involve additional testing. The time required to obtain
approval may differ from that required to obtain FDA approval. Foreign regulatory agencies may not
provide approvals on a timely basis, if at all. Approval by the FDA does not ensure approval by
regulatory authorities in other countries or jurisdictions, and approval by one foreign regulatory
authority does not ensure approval by regulatory authorities in other foreign countries or
jurisdictions or by the FDA.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>If we or our partners fail to comply with regulatory requirements, regulatory agencies may take
action against us or them, which could significantly harm our business.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any approved products, along with the manufacturing processes, post-approval clinical data,
labeling, advertising and promotional activities for these products, are subject to continual
requirements and review by the FDA and other regulatory bodies. Regulatory authorities subject a
marketed product, its manufacturer and the manufacturing facilities to continual review and
periodic inspections. We will be subject to ongoing FDA requirements, including required
submissions of safety and other post-market information and reports, registration requirements,
cGMP regulations, requirements regarding the distribution of samples to physicians and
recordkeeping requirements. The cGMP regulations include requirements relating to quality control
and quality assurance, as well as the corresponding maintenance of records and documentation. We
rely on the compliance by our contract manufacturers with cGMP regulations and other regulatory requirements relating to
the manufacture of our products. We and our partners are also subject to state laws and
registration requirements covering the distribution of our products. Regulatory agencies may change
existing requirements or adopt new requirements or policies. We or our partners may be slow to
adapt or may not be able to adapt to these changes or new requirements.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Regulatory requirements applicable to pharmaceutical products make the substitution of
suppliers and manufacturers costly and time consuming. We have minimal internal manufacturing
capabilities and are, and expect to be in the future, entirely dependent on contract manufacturers
and suppliers for the manufacture of our products and for their active and other ingredients. The
disqualification of these manufacturers and suppliers through their failure to comply with
regulatory requirements could negatively impact our business because the delays and costs in
obtaining and qualifying alternate suppliers (if such alternative suppliers are available, which we
cannot assure) could delay clinical trials or otherwise inhibit our ability to bring approved
products to market, which would have a material adverse effect on our business and financial
condition.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Later discovery of previously unknown problems with our proprietary or partnered products,
manufacturing processes or failure to comply with regulatory requirements, may result in any of the
following:</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>restrictions on our products or manufacturing processes;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>warning letters;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>withdrawal of the products from the market;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>voluntary or mandatory recall;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>fines;</TD>
</TR>


</TABLE>
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>suspension or withdrawal of regulatory approvals;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>suspension or termination of any of our ongoing clinical trials;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>refusal to permit the import or export of our products;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>refusal to approve pending applications or supplements to approved applications that we submit;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>product seizure; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>injunctions or the imposition of civil or criminal penalties.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>We may wish to raise funds in the next twelve months, and there can be no assurance that such funds
will be available.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the next twelve months, we may wish to raise additional capital to continue the
development of our product candidates or for other corporate purposes. Our current cash position
and expected revenues during the next few years will not constitute the amount of capital necessary
for us to continue the development of our proprietary product candidates and to fund general
operations. In addition, if we engage in acquisitions of companies, products or technology in order
to execute our business strategy, we may need to raise additional capital. We expect to raise
additional capital in the future through one or more financing vehicles that may be available to
us. These financing vehicles currently include: (i)&nbsp;the public offering of securities; (ii)&nbsp;new
collaborative agreements; (iii)&nbsp;expansions or revisions to existing collaborative relationships;
(iv)&nbsp;private financings and/or (v)&nbsp;other equity or debt financings.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Currently, warrants to purchase approximately 1.8&nbsp;million shares of our common stock at an
exercise price of $2.25 per share are outstanding and this amount of outstanding warrants may make
us a less desirable candidate for investment for some potential investors. Considering our stage of development, the nature
of our capital structure and general market conditions, if we are required to raise additional
capital in the future, the additional financing may not be available on favorable terms, or at all.
If we are successful in raising additional capital, a substantial number of additional shares may
be issued and these shares will dilute the ownership interest of our current investors.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>If proprietary or partnered product candidates are approved by the FDA but do not gain market
acceptance, our business may suffer and we may not be able to fund future operations.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Assuming that our proprietary or partnered product candidates obtain the necessary regulatory
approvals, a number of factors may affect the market acceptance of these existing product
candidates or any other products which are developed or acquired in the future, including, among
others:</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the price of products relative to other therapies for the same or similar treatments;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the perception by patients, physicians and other members of the health care community of the
effectiveness and safety of these products for their prescribed treatments;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our ability to fund our sales and marketing efforts and the ability and willingness of our partners
to fund sales and marketing efforts;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the degree to which the use of these products is restricted by the product label approved by the FDA;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the effectiveness of our sales and marketing efforts and the effectiveness of the sales and
marketing efforts of our partners; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the introduction of generic competitors.</TD>
</TR>

</TABLE>
</DIV>
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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If these products do not gain market acceptance, we may not be able to fund future operations,
including the development or acquisition of new product candidates and/or our sales and marketing
efforts for our approved products, which would cause our business to suffer.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, our proprietary and partnered product candidates will be restricted to the labels
approved by the FDA and these restrictions may limit the marketing and promotion of the ultimate
products. If the approved labels are restrictive, the sales and marketing efforts for these
products may be negatively affected.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Developing and marketing pharmaceutical products for human use involves product liability risks,
for which we currently have limited insurance coverage.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The testing, marketing and sale of pharmaceutical products involves the risk of product
liability claims by consumers and other third parties. Although we maintain product liability
insurance coverage, product liability claims can be high in the pharmaceutical industry and our
insurance may not sufficiently cover our actual liabilities. If product liability claims were to be
made against us, it is possible that our insurance carriers may deny, or attempt to deny, coverage
in certain instances. If a lawsuit against us is successful, then the lack or insufficiency of
insurance coverage could materially and adversely affect our business and financial condition.
Furthermore, various distributors of pharmaceutical products require minimum product liability
insurance coverage before purchase or acceptance of products for distribution. Failure to satisfy
these insurance requirements could impede our ability to achieve broad distribution of our proposed
products and the imposition of higher insurance requirements could impose additional costs on us.
In addition, since many of our partnered product candidates include the pharmaceutical products of
a third party, we run the risk that problems with the third party pharmaceutical product will give
rise to liability claims against us.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Our inability to attract, hire and retain key management and scientific personnel could negatively
affect our business.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our success depends on the performance of key management and scientific employees with
biotechnology experience. Given our relatively small staff size relative to the number of programs
currently under development, we depend substantially on our ability to hire, train, motivate and
retain high quality personnel, especially our scientists and management team. If we are unable to
retain existing personnel or identify or hire additional personnel, we may not be able to research,
develop, commercialize or market our product candidates as expected or on a timely basis and we may
not be able to adequately support current and future alliances with strategic partners.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Furthermore, if we were to lose key management personnel, particularly Jonathan Lim, M.D., our
President and Chief Executive Officer, or Gregory Frost, Ph.D., our Chief Scientific Officer, then
we would likely lose some portion of our institutional knowledge and technical know-how,
potentially causing a substantial delay in one or more of our development programs until adequate
replacement personnel could be hired and trained. For example, Dr.&nbsp;Frost has been with us from soon
after our inception, and he possesses a substantial amount of knowledge about our development
efforts. If we were to lose his services, we would experience delays in meeting our product
development schedules. In 2008, we adopted a severance policy applicable to all employees and a
change in control policy applicable to senior executives. We have not adopted any other policies or
entered into any other agreements specifically designed to motivate officers or other employees to
remain with us.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We do not have key man life insurance policies on the lives of any of our employees, including
Dr.&nbsp;Lim and Dr.&nbsp;Frost.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>If we or our partners do not achieve projected development goals in the timeframes we publicly
announce or otherwise expect, the commercialization of our products and the development of our
product candidates may be delayed and, as a result, our stock price may decline.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We publicly articulate the estimated timing for the accomplishment of certain scientific,
clinical, regulatory and other product development goals. The accomplishment of any goal is
typically based on numerous assumptions and the achievement of a particular goal may be delayed for
any number of reasons both within and outside of our control. If scientific, regulatory, strategic
or other factors cause us to not meet a goal, regardless of whether that goal has been publicly
articulated or not, the commercialization of our products and the development of our proprietary</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->30<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">and partnered product candidates may be delayed. In addition, the consistent failure to meet
publicly announced milestones may erode the credibility of our management team with respect to
future milestone estimates.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Future acquisitions could disrupt our business and harm our financial condition.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order to augment our product pipeline or otherwise strengthen our business, we may decide
to acquire additional businesses, products and technologies. As we have limited experience in
evaluating and completing acquisitions, our ability as an organization to make such acquisitions is
unproven. Acquisitions could require significant capital infusions and could involve many risks,
including, but not limited to, the following:</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>we may have to issue convertible debt or equity securities to complete
an acquisition, which would dilute our stockholders and could
adversely affect the market price of our common stock;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>an acquisition may negatively impact our results of operations because
it may require us to amortize or write down amounts related to
goodwill and other intangible assets, or incur or assume substantial
debt or liabilities, or it may cause adverse tax consequences,
substantial depreciation or deferred compensation charges;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>we may encounter difficulties in assimilating and integrating the
business, products, technologies, personnel or operations of companies
that we acquire;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>certain acquisitions may impact our relationship with existing or
potential partners who are competitive with the acquired business,
products or technologies;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>acquisitions may require significant capital infusions and the
acquired businesses, products or technologies may not generate
sufficient value to justify acquisition costs;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>an acquisition may disrupt our ongoing business, divert resources,
increase our expenses and distract our management;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>acquisitions may involve the entry into a geographic or business
market in which we have little or no prior experience; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>key personnel of an acquired company may decide not to work for us.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If any of these risks occurred, it could adversely affect our business, financial condition
and operating results. We cannot assure you that we will be able to identify or consummate any
future acquisitions on acceptable terms, or at all. If we do pursue any acquisitions, it is
possible that we may not realize the anticipated benefits from such acquisitions or that the market
will not view such acquisitions positively.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Risks Related To Ownership of Our Common Stock</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Our stock price is subject to significant volatility.</B>

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We participate in a highly dynamic industry which often results in significant volatility in
the market price of common stock irrespective of company performance. As a result, our high and low
sales prices of our common stock during the twelve months ended June&nbsp;30, 2009 were $8.26 and $2.60,
respectively. We expect our stock price to continue to be subject to significant volatility and, in
addition to the other risks and uncertainties described elsewhere in this Quarterly Report on Form
10-Q and all other risks and uncertainties that are either not known to us at this time or which we
deem to be immaterial, any of the following factors may lead to a significant drop in our stock
price:</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a dispute regarding our failure, or the failure of one of our third party partners, to
comply with the terms of a collaboration agreement;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the termination, for any reason, of any of our collaboration agreements;</TD>
</TR>



</TABLE>
</DIV>
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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the sale of common stock by any significant stockholder, including, but not limited to,
direct or indirect sales by members of management or our Board of Directors;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the resignation, or other departure, of members of management or our Board of Directors;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>general negative conditions in the healthcare industry;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>general negative conditions in the financial markets;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the failure, for any reason, to obtain FDA approval for any of our proprietary or
partnered product candidates;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the failure, for any reason, to secure or defend our intellectual property position;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>for those products that are approved by the FDA, the failure of the FDA to approve such
products in a timely manner consistent with the FDA&#146;s historical approval process;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the suspension of any clinical trial due to safety or patient tolerability issues;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the suspension of any clinical trial due to market and/or competitive conditions;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our failure, or the failure of our third party partners, to successfully commercialize
products approved by the FDA;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our failure, or the failure of our third party partners, to generate product revenues
anticipated by investors;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>problems with an API contract manufacturer or a fill and finish manufacturer for any
product or product candidate; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the sale of additional debt and/or equity securities by us.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Trading in our stock has historically been limited, so investors may not be able to sell as much
stock as they want to at prevailing market prices.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our stock has historically traded at a low daily trading volume. If low trading volume
continues, it may be difficult for stockholders to sell their shares in the public market at any
given time at prevailing prices.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>The exercise of outstanding warrants may drive down the market price of our stock.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Outstanding warrants that may be exercised for approximately 1.8&nbsp;million shares of common
stock at an exercise price of $2.25 per share will expire per their terms on October&nbsp;12, 2009. Some
exercising warrant holders may choose to sell outstanding shares of common stock in order to
finance the exercise of their warrants, or they may choose to sell the shares that they receive
upon exercise of the warrants. This pattern of selling may result in a reduction of our common
stock&#146;s market price.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Future sales of shares of our common stock pursuant to our universal shelf registration statement
may negatively affect our stock price.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We currently have the ability to offer and sell up to $10.0&nbsp;million of additional equity or
debt securities under a currently effective universal shelf registration statement. Sales of
substantial amounts of shares of our common stock or other securities under our universal shelf
registration statement could lower the market price of our common stock and impair our ability to
raise capital through the sale of equity securities. In the future, we may issue additional
options, warrants or other derivative securities convertible into our common stock.</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Risks Related To Our Industry</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Compliance with the extensive government regulations to which we are subject is expensive and time
consuming and may result in the delay or cancellation of product sales, introductions or
modifications.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Extensive industry regulation has had, and will continue to have, a significant impact on our
business. All pharmaceutical companies, including ours, are subject to extensive, complex, costly
and evolving regulation by the federal government, principally the FDA and, to a lesser extent, the
U.S. Drug Enforcement Administration, or DEA, and foreign and state government agencies. The
Federal Food, Drug and Cosmetic Act, the Controlled Substances Act and other domestic and foreign
statutes and regulations govern or influence the testing, manufacturing, packaging, labeling,
storing, recordkeeping, safety, approval, advertising, promotion, sale and distribution of our
products. Under certain of these regulations, we and our contract suppliers and manufacturers are
subject to periodic inspection of our or their respective facilities, procedures and operations
and/or the testing of products by the FDA, the DEA and other authorities, which conduct periodic
inspections to confirm that we and our contract suppliers and manufacturers are in compliance with
all applicable regulations. The FDA also conducts pre-approval and post-approval reviews and plant
inspections to determine whether our systems, or our contract suppliers&#146; and manufacturers&#146;
processes, are in compliance with cGMP and other FDA regulations. If we, or our contract supplier,
fail these inspections, we may not be able to commercialize our product in a timely manner without
incurring significant additional costs, or at all.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, the FDA imposes a number of complex regulatory requirements on entities that
advertise and promote pharmaceuticals including, but not limited to, standards and regulations for
direct-to-consumer advertising, off-label promotion, industry-sponsored scientific and educational
activities, and promotional activities involving the internet.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are dependent on receiving FDA and other governmental approvals prior to manufacturing,
marketing and shipping our products. Consequently, there is always a risk that the FDA or other
applicable governmental authorities will not approve our products, or will take post-approval
action limiting or revoking our ability to sell our products, or that the rate, timing and cost of
such approvals will adversely affect our product introduction plans or results of operations.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>We may be required to initiate or defend against legal proceedings related to intellectual property
rights, which may result in substantial expense, delay and/or cessation of the development and
commercialization of our products.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We primarily rely on patents to protect our intellectual property rights. The strength of this
protection, however, is uncertain. For example, it is not certain that:</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our patents and pending patent applications cover products and/or technology that we invented first;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>we were the first to file patent applications for these inventions;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>others will not independently develop similar or alternative technologies or duplicate our technologies;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any of our pending patent applications will result in issued patents; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any of our issued patents, or patent pending applications that result in issued patents, will be held
valid and infringed in the event the patents are asserted against others.</TD>
</TR>

</TABLE>
</DIV>
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<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We currently own or license several U.S. patents and also have pending patent applications
applicable to rHuPh20 and other proprietary materials. There can be no assurance that our existing
patents, or any patents issued to us as a result of our pending patent applications, will provide a
basis for commercially viable products, will provide us with any competitive advantages, or will
not face third party challenges or be the subject of further proceedings limiting their scope or
enforceability. Such limitations in our patent portfolio could have a material adverse effect on
our business and financial condition. In addition, if any of our pending patent applications do not
result in issued patents, or result in issued patents with narrow or limited claims, this could
have a material adverse effect on our business and financial condition.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may become involved in interference proceedings in the U.S. Patent and Trademark Office to
determine the priority of our inventions. In addition, costly litigation could be necessary to
protect our patent position. We also rely on trademarks to protect the names of our products. These
trademarks may not be acceptable to regulatory agencies. In addition, these trademarks may be
challenged by others. If we enforce our trademarks against third parties, such enforcement
proceedings may be expensive. We also rely on trade secrets, unpatented proprietary know-how and
continuing technological innovation that we seek to protect with confidentiality agreements with
employees, consultants and others with whom we discuss our business. Disputes may arise concerning
the ownership of intellectual property or the applicability or enforceability of these agreements,
and we might not be able to resolve these disputes in our favor.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to protecting our own intellectual property rights, third parties may assert
patent, trademark or copyright infringement or other intellectual property claims against us based
on what they believe are their own intellectual property rights. If we become involved in any
intellectual property litigation, we may be required to pay substantial damages, including but not
limited to treble damages, for past infringement if it is ultimately determined that our products
infringe a third party&#146;s intellectual property rights. Even if infringement claims against us are
without merit, defending a lawsuit takes significant time, may be expensive and may divert
management&#146;s attention from other business concerns. Further, we may be stopped from developing,
manufacturing or selling our products until we obtain a license from the owner of the relevant
technology or other intellectual property rights. If such a license is available at all, it may
require us to pay substantial royalties or other fees.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Patent protection for protein-based therapeutic products and other biotechnology inventions is
subject to a great deal of uncertainty, and if patent laws or the interpretation of patent laws
change, our competitors may be able to develop and commercialize products based on our discoveries.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Patent protection for protein-based therapeutic products is highly uncertain and involves
complex legal and factual questions. In recent years, there have been significant changes in patent
law, including the legal standards that govern the scope of protein and biotechnology patents.
Standards for patentability of full-length and partial genes, and their corresponding proteins, are
changing. Recent court decisions have made it more difficult to obtain patents, by making it more
difficult to satisfy the requirement of non-obviousness, have decreased the availability of
injunctions against infringers, and have increased the likelihood of challenging the validity of a
patent through a declaratory judgment action. Taken together, these decisions could make it more
difficult and costly for us to obtain, license and enforce our patents. In addition, in recent
years, several members of the United States Congress have made numerous proposals to change the
patent statute. These proposals include measures that, among other things, would expand the ability
of third parties to oppose United States patents, introduce the &#147;first to file&#148; standard to the
United States patent system, and limit damages an infringer is required to pay. If the patent
statute is changed, the scope, validity and enforceability of our patents may be significantly
decreased.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There also have been, and continue to be, policy discussions concerning the scope of patent
protection awarded to biotechnology inventions. Social and political opposition to biotechnology
patents may lead to narrower patent protection within the biotechnology industry. Social and
political opposition to patents on genes and proteins may lead to narrower patent protection, or
narrower claim interpretation, for genes, their corresponding proteins and inventions related to their use, formulation and manufacture. Patent protection relating to
biotechnology products is also subject to a great deal of uncertainty outside the United States,
and patent laws are evolving and undergoing revision in many countries. Changes in, or different
interpretations of, patent laws worldwide may result in our inability to obtain or enforce patents,
and may allow others to use our discoveries to develop and commercialize competitive products,
which would impair our business.</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>If third party reimbursement and customer contracts are not available, our products may not be
accepted in the market.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our ability to earn sufficient returns on our products will depend in part on the extent to
which reimbursement for our products and related treatments will be available from government
health administration authorities, private health insurers, managed care organizations and other
healthcare providers.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Third-party payors are increasingly attempting to limit both the coverage and the level of
reimbursement of new drug products to contain costs. Consequently, significant uncertainty exists
as to the reimbursement status of newly approved healthcare products. Third party payors may not
establish adequate levels of reimbursement for the products that we commercialize, which could
limit their market acceptance and result in a material adverse effect on our financial condition.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Customer contracts, such as with group purchasing organizations and hospital formularies, will
often not offer contract or formulary status without either the lowest price or substantial proven
clinical differentiation. If our products are compared to animal-derived hyaluronidases by these
entities, it is possible that neither of these conditions will be met, which could limit market
acceptance and result in a material adverse effect on our financial condition.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>The rising cost of healthcare and related pharmaceutical product pricing has led to cost
containment pressures that could cause us to sell our products at lower prices, resulting in less
revenue to us.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any of the proprietary or partnered products that have been, or in the future are, approved by
the FDA may be purchased or reimbursed by state and federal government authorities, private health
insurers and other organizations, such as health maintenance organizations and managed care
organizations. Such third party payors increasingly challenge pharmaceutical product pricing. The
trend toward managed healthcare in the United States, the growth of such organizations, and various
legislative proposals and enactments to reform healthcare and government insurance programs,
including the Medicare Prescription Drug Modernization Act of 2003, could significantly influence
the manner in which pharmaceutical products are prescribed and purchased, resulting in lower prices
and/or a reduction in demand. Such cost containment measures and healthcare reforms could adversely
affect our ability to sell our products. Furthermore, individual states have become increasingly
aggressive in passing legislation and implementing regulations designed to control pharmaceutical
product pricing, including price or patient reimbursement constraints, discounts, restrictions on
certain product access, importation from other countries and bulk purchasing. Legally mandated
price controls on payment amounts by third party payors or other restrictions could negatively and
materially impact our revenues and financial condition. We anticipate that we will encounter
similar regulatory and legislative issues in most other countries outside the United States.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>We face intense competition and rapid technological change that could result in the development of
products by others that are superior to our proprietary and partnered products under development.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our proprietary and partnered products have numerous competitors in the United States and
abroad including, among others, major pharmaceutical and specialized biotechnology firms,
universities and other research institutions that have developed competing products. For example,
for HYLENEX, such competitors include, but are not limited to, Sigma-Aldrich Corporation, ISTA
Pharmaceuticals, Inc., Amphastar Pharmaceuticals, Inc. and Primapharm, Inc. among others. For our
Insulin-PH20 product candidate, such competitors may include Biodel Inc. and Mannkind Corporation.
These competitors may develop technologies and products that are more effective, safer, or less
costly than our current or future proprietary and partnered product candidates or that could render
our technologies and product candidates obsolete or noncompetitive. Many of these competitors have
substantially more resources and product development, manufacturing and marketing experience and capabilities
than we do. In addition, many of our competitors have significantly greater experience than we do
in undertaking preclinical testing and clinical trials of pharmaceutical product candidates and
obtaining FDA and other regulatory approvals of products and therapies for use in healthcare.</DIV>

<DIV align="left">
<A name="108"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;3. Quantitative and Qualitative Disclosures About Market Risk</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our primary exposure to market risk is interest income sensitivity, which is affected by
changes in the general level of U.S. interest rates, particularly because the majority of our
investments are in short-term marketable</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">securities. The primary objective of our investment activities is to preserve principal while at the same time maximizing the income we receive from
our investments without significantly increasing risk. Some of the securities that we invest in may
be subject to market risk. This means that a change in prevailing interest rates may cause the
value of the investment to fluctuate. For example, if we purchase a security that was issued with a
fixed interest rate and the prevailing interest rate later rises, the value of our investment will
probably decline. To minimize this risk, we intend to continue to maintain our portfolio of cash
equivalents and short-term investments in a variety of securities including commercial paper, money
market funds and government and non-government debt securities. In general, money market funds are
not subject to market risk because the interest paid on such funds fluctuates with the prevailing
interest rate. As of June&nbsp;30, 2009, we did not have any holdings of derivative financial or
commodity instruments, or any foreign currency denominated transactions, and all of our cash and
cash equivalents were in money market mutual funds and other investments that we believe to be
highly liquid.
</DIV>

<DIV align="left">
<A name="109"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;4. Controls and Procedures</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Evaluation of Disclosure Controls and Procedures</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We maintain disclosure controls and procedures that are designed to ensure that information
required to be disclosed in our Exchange Act reports is recorded, processed, summarized and
reported within the timelines specified in the Securities and Exchange Commission&#146;s rules and
forms, and that such information is accumulated and communicated to our management, including our
Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decision
regarding required disclosure. In designing and evaluating the disclosure controls and procedures,
management recognized that any controls and procedures, no matter how well designed and operated,
can only provide reasonable assurance of achieving the desired control objectives, and in reaching
a reasonable level of assurance, management necessarily was required to apply its judgment in
evaluating the cost-benefit relationship of possible controls and procedures.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the supervision and with the participation of our management, including our principal
executive officer and principal financial officer, we conducted an evaluation of our disclosure
controls and procedures, as such term is defined under Rule&nbsp;13a-15(e) promulgated under the
Securities Exchange Act of 1934, as amended. Based on this evaluation, our principal executive
officer and our principal financial officer concluded that our disclosure controls and procedures
were effective as of the end of the period covered by this Quarterly Report on Form <font style="white-space: nowrap">10-Q.</font></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Changes in Internal Control Over Financial Reporting</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There have been no significant changes in our internal control over financial reporting that
occurred during the quarter ended June&nbsp;30, 2009, that have materially affected, or are reasonably
likely to materially affect our internal control over financial reporting.</DIV>

<DIV align="left">
<A name="110"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PART II &#151; OTHER INFORMATION</B>
</DIV>

<DIV align="left">
<A name="111"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;1. Legal Proceedings</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From time to time, we may be involved in litigation relating to claims arising out of
operations in the normal course of our business. Any of these claims could subject us to costly
litigation and, while we generally believe that we have adequate insurance to cover many different
types of liabilities, our insurance carriers may deny coverage or our policy limits may be
inadequate to fully satisfy any damage awards or settlements. If this were to happen, the payment
of any such awards could have a material adverse effect on our consolidated results of operations
and financial position. Additionally, any such claims, whether or not successful, could damage our
reputation and business. We currently are not a party to any legal proceedings, the adverse outcome
of which, in management&#146;s opinion, individually or in the aggregate, would have a material adverse
effect on our consolidated results of operations or financial position.</DIV>

<DIV align="left">
<A name="112"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;1A. Risk Factors</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have provided updated Risk Factors in the section labeled &#147;Risk Factors&#148; in Part&nbsp;I, Item&nbsp;2,
&#147;Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations&#148;. The &#147;Risk
Factors&#148;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">section provides updated information in certain areas and we added a risk factor that
specifically addresses the importance of rHuPH20 for many products and product candidates, but we
do not believe those updates have materially changed the type or magnitude of the risks we face in
comparison to the disclosure provided in our most recent Annual Report on Form 10-K.
</DIV>

<DIV align="left">
<A name="113"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;2. Unregistered Sales of Equity Securities and Use of Proceeds</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the three months ended June&nbsp;30, 2009, we issued 119,628 shares of common stock in
connection with the cashless exercise of an outstanding warrant. We did not receive any cash
proceeds from this cashless exercise. The shares and underlying warrants were purchased for
investment in a private placement exempt from the registration requirements of the Securities Act
pursuant to Section 3(a) (9)&nbsp;thereof.</DIV>

<DIV align="left">
<A name="114"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;3. Defaults Upon Senior Securities</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.</DIV>

<DIV align="left">
<A name="115"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;4. Submission of Matters to a Vote of Security Holders</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Annual Meeting of Stockholders was held on May&nbsp;7, 2009. At the Annual Meeting, our
stockholders voted on the following two proposals:</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Proposal No.&nbsp;1:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To elect two Class&nbsp;II directors to hold office for a three-year term and until their
respective successors are elected and qualified. The voting results were as follows:</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Nominees</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Votes For</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Votes Against</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Randal J. Kirk</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">58,727,632</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">241,691</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">John S. Patton</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">51,363,127</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,606,196</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We also have: (i)&nbsp;three Class&nbsp;III directors, Robert L. Engler, M.D., Gregory I. Frost, Ph.D.
and Connie L. Matsui, whose terms do not expire until our Annual Meeting of Stockholders in 2010,
and (ii)&nbsp;three Class&nbsp;I directors, Kathryn E. Falberg, Kenneth J. Kelley and Jonathan E. Lim, M.D.,
whose terms do not expire until our Annual Meeting of Stockholders in 2011. Both nominees were
elected to the board of directors.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Proposal No.&nbsp;2:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To ratify the selection of Ernst &#038; Young LLP as our independent registered public accounting
firm for the fiscal year ending December&nbsp;31, 2009. The voting results were as follows:</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">For: 58,911,563
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Against: 32,703
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Abstained: 25,057</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The foregoing proposal was approved.</DIV>

<DIV align="left">
<A name="116"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;5. Other Information</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.</DIV>

<DIV align="left">
<A name="117"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;6. Exhibits</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="4%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="92%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Exhibit</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Title</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">2.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Agreement and Plan of Merger, dated November&nbsp;14, 2007, by and between the Registrant and the
Registrant&#146;s predecessor Nevada corporation (1)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">3.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amended and Restated Certificate of Incorporation, as filed with the Delaware Secretary of
State on October&nbsp;7, 2007 (2)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">3.2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certificate of Designation, Preferences and Rights of the terms of the Series&nbsp;A Preferred
Stock (1)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">3.3
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Bylaws (2)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->37<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="4%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="92%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Exhibit</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Title</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amended Rights Agreement between Corporate Stock Transfer, as rights agent, and Registrant,
dated November&nbsp;12, 2007 (19)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">License Agreement between University of Connecticut and Registrant, dated November&nbsp;15, 2002
(3)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">First Amendment to the License Agreement between University of Connecticut and Registrant,
dated January&nbsp;9, 2006 (9)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.3*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Commercial Supply Agreement with Avid Bioservices, Inc. and Registrant, dated February&nbsp;16,
2005 (7)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.4*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">First Amendment to the Commercial Supply Agreement between Avid Bioservices, Inc. and
Registrant, dated December&nbsp;15, 2006 (14)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.5*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Clinical Supply Agreement between Cook Pharmica, LLC and Registrant, dated August&nbsp;15, 2008
(23)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.6
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Common Stock Purchase Warrant (5)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.7#
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">DeliaTroph Pharmaceuticals, Inc. 2001 Amended and Restated Stock Plan and form of Stock
Option Agreements for options assumed thereunder (6)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.8
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Nonstatutory Stock Option Agreement with Andrew Kim (6)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.9#
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">2004 Stock Plan and Form of Option Agreement thereunder (4)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.10#
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Halozyme Therapeutics, Inc. 2005 Outside Directors&#146; Stock Plan (8)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.11#
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Stock Option Agreement (2005 Outside Directors&#146; Stock Plan) (12)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.12#
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Restricted Stock Agreement (2005 Outside Directors&#146; Stock Plan) (12)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.13#
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Halozyme Therapeutics, Inc. 2006 Stock Plan (11)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.14#
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Stock Option Agreement (2006 Stock Plan) (12)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.15#
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Restricted Stock Agreement (2006 Stock Plan) (12)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.16#
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Halozyme Therapeutics, Inc. 2008 Stock Plan (20)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.17#
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Stock Option Agreement (2008 Stock Plan)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.18#
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Restricted Stock Agreement (2008 Stock Plan)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.19#
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Halozyme Therapeutics, Inc. 2008 Outside Directors&#146; Stock Plan (20)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.20#
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Restricted Stock Agreement (2008 Outside Directors&#146; Stock Plan)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.21#
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Indemnity Agreement for Directors and Executive Officers (18)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.22#
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Outside Director Compensation Plan (22)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.23#
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">2007 Senior Executive Incentive Plan (22)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.24#
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">2008 Senior Executive Incentive Structure (21)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.25#
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">2009 Senior Executive Incentive Plan (24)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.26#
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Change in Control Policy (21)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.27#
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Severance Policy (22)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.28*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amended and Restated Exclusive Distribution Agreement between Baxter Healthcare Corporation,
Baxter Healthcare S.A. and Registrant, dated February&nbsp;14, 2007 (15)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.29*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amended and Restated Development and Supply Agreement between Baxter Healthcare Corporation,
Baxter Healthcare S.A. and Registrant, dated February&nbsp;14, 2007 (15)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.30*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">License and Collaboration Agreement between Baxter Healthcare Corporation, Baxter Healthcare
S.A. and Registrant, dated February&nbsp;14, 2007 (15)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.31*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Enhanze Technology License and Collaboration Agreement between Baxter Healthcare
Corporation, Baxter Healthcare S.A. and Registrant, dated September&nbsp;7, 2007 (17)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.32*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">License and Collaboration Agreement between F. Hoffmann-La Roche Ltd, Hoffmann-La Roche Inc.
and Registrant dated December&nbsp;5, 2006 (13)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.33
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Sublease Agreement (11404 Sorrento Valley Road), effective as of July&nbsp;2, 2007 (16)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.34
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Sublease Agreement (11388 Sorrento Valley Road), effective as of July&nbsp;2, 2007 (16)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.35
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Standard Industrial Net Lease (11388 Sorrento Valley Road), effective as of July&nbsp;26, 2007 (16)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.36
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Underwriting Agreement, dated June&nbsp;23, 2009, between Halozyme Therapeutics, Inc. and
Jefferies &#038; Company, Inc., dated June&nbsp;23, 2009 (25)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">21.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Subsidiaries of Registrant (10)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">31.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification of Chief Executive Officer pursuant to Rule&nbsp;13a-14(a) and 15d-14(a) of the
Securities Exchange Act of 1934, as amended</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">31.2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification of Chief Financial Officer pursuant to Rule&nbsp;13a-14(a) and 15d-14(a) of the
Securities Exchange Act of 1934, as amended</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">32
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C.
1350, as adopted pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act of 2002</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->38<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Incorporated by reference to the Registrant&#146;s Current Report on Form 8-K, filed November&nbsp;20,
2007.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Incorporated by reference to the Registrant&#146;s definitive proxy statement filed with the SEC
on Form&nbsp;DEF14A on October&nbsp;11, 2007.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>Incorporated by reference to the Registrant&#146;s Registration Statement on Form SB-2 filed with
the Commission on April&nbsp;23, 2004.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(4)</TD>
    <TD>&nbsp;</TD>
    <TD>Incorporated by reference to the Registrant&#146;s amendment number two to the Registration
Statement on Form SB-2 filed with the Commission on July&nbsp;23, 2004.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(5)</TD>
    <TD>&nbsp;</TD>
    <TD>Incorporated by reference to the Registrant&#146;s Current Report on Form 8-K, filed October&nbsp;15,
2004.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(6)</TD>
    <TD>&nbsp;</TD>
    <TD>Incorporated by reference to the Registrant&#146;s Registration Statement on Form S-8 filed with
the Commission on October&nbsp;26, 2004.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(7)</TD>
    <TD>&nbsp;</TD>
    <TD>Incorporated by reference to the Registrant&#146;s Current Report on Form 8-K, filed February&nbsp;22,
2005.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(8)</TD>
    <TD>&nbsp;</TD>
    <TD>Incorporated by reference to the Registrant&#146;s Current Report on Form 8-K, filed July&nbsp;6, 2005.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(9)</TD>
    <TD>&nbsp;</TD>
    <TD>Incorporated by reference to the Registrant&#146;s Current Report on Form 8-K, filed January&nbsp;12,
2006.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(10)</TD>
    <TD>&nbsp;</TD>
    <TD>Incorporated by reference to the Registrant&#146;s Annual Report on Form 10-KSB/A, filed March&nbsp;29,
2005.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(11)</TD>
    <TD>&nbsp;</TD>
    <TD>Incorporated by reference to the Registrant&#146;s Current Report on Form 8-K, filed March&nbsp;24,
2006.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(12)</TD>
    <TD>&nbsp;</TD>
    <TD>Incorporated by reference to the Registrant&#146;s Quarterly Report on Form 10-Q, filed August&nbsp;8,
2006.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(13)</TD>
    <TD>&nbsp;</TD>
    <TD>Incorporated by reference to the Registrant&#146;s Current Report on Form 8-K/A, filed December
15, 2006.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(14)</TD>
    <TD>&nbsp;</TD>
    <TD>Incorporated by reference to the Registrant&#146;s Current Report on Form 8-K, filed December&nbsp;21,
2006.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(15)</TD>
    <TD>&nbsp;</TD>
    <TD>Incorporated by reference to the Registrant&#146;s Current Report on Form 8-K/A, filed February
20, 2007.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(16)</TD>
    <TD>&nbsp;</TD>
    <TD>Incorporated by reference to the Registrant&#146;s Current Report on Form 8-K, filed July&nbsp;31,
2007.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(17)</TD>
    <TD>&nbsp;</TD>
    <TD>Incorporated by reference to the Registrant&#146;s Current Report on Form 8-K, filed September&nbsp;12,
2007.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(18)</TD>
    <TD>&nbsp;</TD>
    <TD>Incorporated by reference to the Registrant&#146;s Current Report on Form 8-K, filed December&nbsp;20,
2007.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(19)</TD>
    <TD>&nbsp;</TD>
    <TD>Incorporated by reference to the Registrant&#146;s Annual Report on Form 10-K, filed March&nbsp;14,
2008.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(20)</TD>
    <TD>&nbsp;</TD>
    <TD>Incorporated by reference to the Registrant&#146;s Current Report on Form 8-K, filed March&nbsp;19,
2008.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(21)</TD>
    <TD>&nbsp;</TD>
    <TD>Incorporated by reference to the Registrant&#146;s Current Report on Form 8-K, filed April&nbsp;21,
2008.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(22)</TD>
    <TD>&nbsp;</TD>
    <TD>Incorporated by reference to the Registrant&#146;s Quarterly Report on Form 10-Q, filed May&nbsp;9,
2008.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(23)</TD>
    <TD>&nbsp;</TD>
    <TD>Incorporated by reference to the Registrant&#146;s Quarterly Report on Form 10-Q, filed November
7, 2008.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(24)</TD>
    <TD>&nbsp;</TD>
    <TD>Incorporated by reference to the Registrant&#146;s Current Report on Form 8-K, filed February&nbsp;9,
2009.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(25)</TD>
    <TD>&nbsp;</TD>
    <TD>Incorporated by reference to the Registrant&#146;s Current Report on Form 8-K, filed June&nbsp;23,
2009.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Confidential treatment has been requested for certain portions of this exhibit. These
portions have been omitted from this agreement and have been filed separately with the
Securities and Exchange Commission.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">#</TD>
    <TD>&nbsp;</TD>
    <TD>Indicates management contract or compensatory plan or arrangement.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->39<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">





<DIV align="left">
<A name="118"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SIGNATURES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto duly authorized.
</DIV>


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Halozyme Therapeutics, Inc.,<BR>
a Delaware corporation<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">Dated:  August 7, 2009&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">/s/ Jonathan E. Lim
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Jonathan E. Lim, MD&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">President and Chief Executive Officer<br>
(Principal Executive Officer)&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">Dated:  August 7, 2009&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">/s/ Kurt A. Gustafson
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Kurt A. Gustafson&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Vice President and Chief Financial Officer<br>
(Principal Financial and Accounting Officer)&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><!-- Folio -->40<!-- /Folio -->
</DIV>

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</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.17
<SEQUENCE>2
<FILENAME>a53275exv10w17.htm
<DESCRIPTION>EXHIBIT 10.17
<TEXT>
<HTML>
<HEAD>
<TITLE>exv10w17</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>Exhibit&nbsp;10.17</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>HALOZYME THERAPEUTICS, INC.<BR>
STOCK OPTION AGREEMENT</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Halozyme Therapeutics, Inc. has granted to the Participant named in the <I>Notice of Grant of
Stock Option </I>(the &#147;<B><I>Grant Notice</I></B>&#148;) to which this Stock Option Agreement (the &#147;<B><I>Option Agreement</I></B>&#148;) is
attached an option (the &#147;<B><I>Option</I></B>&#148;) to purchase certain shares of Stock upon the terms and conditions
set forth in the Grant Notice and this Option Agreement. The Option has been granted pursuant to
and shall in all respects be subject to the terms and conditions of the Halozyme Therapeutics, Inc.
2008 Stock Plan (the &#147;<B><I>Plan</I></B>&#148;), as amended to the Date of Grant, the provisions of which are
incorporated herein by reference. By signing the Grant Notice, the Participant: (a)&nbsp;acknowledges
receipt of and represents that the Participant has read and is familiar with the Grant Notice, this
Option Agreement, the Plan and a prospectus for the Plan in the form most recently registered with
the Securities and Exchange Commission (the &#147;<B><I>Plan Prospectus</I></B>&#148;), (b)&nbsp;accepts the Option subject to
all of the terms and conditions of the Grant Notice, this Option Agreement and the Plan and (c)
agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee
upon any questions arising under the Grant Notice, this Option Agreement or the Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT style="font-variant: SMALL-CAPS">1.</FONT> <FONT style="font-variant: SMALL-CAPS"><U><B>Definitions and Construction</B></U><B>.</B></FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1 <B>Definitions</B><B><I>. </I></B>Unless otherwise defined herein, capitalized terms shall have the meanings
assigned to such terms in the Grant Notice or the Plan.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2 <B>Construction</B><B><I>. </I></B>Captions and titles contained herein are for convenience only and shall not
affect the meaning or interpretation of any provision of this Option Agreement. Except when
otherwise indicated by the context, the singular shall include the plural and the plural shall
include the singular. Use of the term &#147;or&#148; is not intended to be exclusive, unless the context
clearly requires otherwise.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT style="font-variant: SMALL-CAPS">2.</FONT> <FONT style="font-variant: SMALL-CAPS"><U><B>Tax Consequences</B></U><B>.</B></FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1 <B>Tax Status of Option</B><B><I>. </I></B>This Option is intended to have the tax status designated in the
Grant Notice.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;<B><I>Incentive Stock Option</I></B><B>. </B>If the Grant Notice so designates, this Option is intended to be
an Incentive Stock Option within the meaning of Section 422(b) of the Code, but the Company does
not represent or warrant that this Option qualifies as such. The Participant should consult with
the Participant&#146;s own tax advisor regarding the tax effects of this Option and the requirements
necessary to obtain favorable income tax treatment under Section&nbsp;422 of the Code, including, but
not limited to, holding period requirements. (NOTE TO PARTICIPANT: If the Option is exercised more
than three (3)&nbsp;months after the date on which you cease to be an Employee (other than by reason of
your death or permanent and total disability as defined in Section&nbsp;22(e)(3) of the Code), the
Option will be treated as a Nonstatutory Stock Option and not as an Incentive Stock Option to the
extent required by Section&nbsp;422 of the Code.)
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;<B><I>Nonstatutory Stock Option. </I></B>If the Grant Notice so designates, this Option is intended to
be a Nonstatutory Stock Option and shall not be treated as an Incentive Stock Option within the
meaning of Section 422(b) of the Code.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2 <B>ISO Fair Market Value Limitation. </B><I>If the Grant Notice designates this Option as an
Incentive Stock Option, </I>then to the extent that the Option (together with all Incentive Stock
Options granted to the Participant under all stock option plans of the Participating Company Group,
including the Plan) becomes exercisable for the first time during any calendar year for shares
having a Fair Market Value greater than One Hundred Thousand Dollars ($100,000), the portion of
such Options which exceeds such amount will be treated as Nonstatutory Stock Options. For purposes
of this Section&nbsp;2.2, Options designated as Incentive Stock Options are taken into account in the
order in which they were granted, and the Fair Market Value of Stock is determined as of the time
the Option with respect to such Stock is granted. If the Code is amended to provide for a
different limitation from that set forth in this Section&nbsp;2.2, such different limitation shall be
deemed incorporated herein effective as of the date required or permitted by such amendment to the
Code. If the Option is treated as an Incentive Stock Option in part and as a Nonstatutory Stock
Option in part by reason of the limitation set forth in this Section&nbsp;2.2, the Participant may
designate which portion of such Option the Participant is exercising. In the absence of such
designation, the Participant shall be deemed to have exercised the Incentive Stock Option portion
of the Option first. Separate certificates representing each such portion shall be issued upon the
exercise of the Option. (NOTE TO PARTICIPANT: If the aggregate Exercise Price of the Option (that
is, the Exercise Price multiplied by the Number of Option Shares) plus the aggregate exercise price
of any other Incentive Stock Options you hold (whether granted pursuant to the Plan or any other
stock option plan of the Participating Company Group) is greater than One Hundred Thousand Dollars
($100,000), you should contact the Chief Financial Officer of the Company to ascertain whether the
entire Option qualifies as an Incentive Stock Option.)
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT style="font-variant: SMALL-CAPS">3.</FONT> <FONT style="font-variant: SMALL-CAPS"><U><B>Administration</B></U><B>.</B></FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All questions of interpretation concerning this Option Agreement shall be determined by the
Committee. All determinations by the Committee shall be final and binding upon all persons having
an interest in the Option. Any Officer shall have the authority to act on behalf of the Company
with respect to any matter, right, obligation, or election which is the responsibility of or which
is allocated to the Company herein, provided the Officer has been delegated such authority by the
Committee with respect to such matter, right, obligation, or election.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT style="font-variant: SMALL-CAPS">4.</FONT> <FONT style="font-variant: SMALL-CAPS"><U><B>Exercise of the Option</B></U><B>.</B></FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1 <B>Right to Exercise</B><B><I>. </I></B>Except as otherwise provided herein, the Option shall be exercisable
on and after the Initial Vesting Date and prior to the termination of the Option (as provided in
Section&nbsp;6) in an amount not to exceed the number of Vested Shares less the number of shares
previously acquired upon exercise of the Option. In no event shall the Option be exercisable for
more shares than the Number of Option Shares, as adjusted pursuant to Section&nbsp;9.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->2<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2 <B>Method of Exercise</B><B><I>. </I></B>Exercise of the Option shall be by means of electronic or written
notice (the &#147;<B><I>Exercise Notice</I></B>&#148;) in a form authorized by the Company. An electronic Exercise Notice
must be digitally signed or authenticated by the Participant in such manner as required by the
notice and transmitted to the Company or an authorized representative of the Company (including a
third-party administrator designated by the Company). In the event that the Participant is not
authorized or is unable to provide an electronic Exercise Notice, the Option shall be exercised by
a written Exercise Notice addressed to the Company, which shall be signed by the Participant and
delivered in person, by certified or registered mail, return receipt requested, by confirmed
facsimile transmission, or by such other means as the Company may permit, to the Company, or an
authorized representative of the Company (including a third-party administrator designated by the
Company). Each Exercise Notice, whether electronic or written, must state the Participant&#146;s
election to exercise the Option, the number of whole shares of Stock for which the Option is being
exercised and such other representations and agreements as to the Participant&#146;s investment intent
with respect to such shares as may be required pursuant to the provisions of this Option Agreement.
Further, each Exercise Notice must be received by the Company prior to the termination of the
Option as set forth in Section&nbsp;6 and must be accompanied by full payment of the aggregate Exercise
Price for the number of shares of Stock being purchased. The Option shall be deemed to be
exercised upon receipt by the Company of such electronic or written Exercise Notice and the
aggregate Exercise Price.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.3 <B>Payment of Exercise Price.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;<B><I>Forms of Consideration Authorized</I></B><B>. </B>Except as otherwise provided below, payment of the
aggregate Exercise Price for the number of shares of Stock for which the Option is being exercised
shall be made (i)&nbsp;in cash or by check or cash equivalent, (ii)&nbsp;if permitted by the Company, by
tender to the Company, or attestation to the ownership, of whole shares of Stock owned by the
Participant having a Fair Market Value not less than the aggregate Exercise Price, (iii)&nbsp;by means
of a Cashless Exercise, as defined in Section&nbsp;4.3(b), or (iv)&nbsp;by any combination of the foregoing.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;<B><I>Limitations on Forms of Consideration.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;<B>Tender of Stock. </B>Notwithstanding the foregoing, the Option may not be exercised by tender
to the Company, or attestation to the ownership, of shares of Stock to the extent such tender or
attestation would constitute a violation of the provisions of any law, regulation or agreement
restricting the redemption of the Company&#146;s Stock. If required by the Company, the Option may not
be exercised by tender to the Company, or attestation to the ownership, of shares of Stock unless
such shares either have been owned by the Participant for more than six (6)&nbsp;months or such other
period, if any, required by the Company (and not used for another Option exercise by attestation
during such period) or were not acquired, directly or indirectly, from the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;<B>Cashless Exercise. </B>A &#147;<B><I>Cashless Exercise</I></B><I>&#148; </I>means the delivery of a properly executed
notice together with irrevocable instructions to a broker in a form acceptable to the Company
providing for the assignment to the Company of the proceeds of a sale or loan with respect to some
or all of the shares of Stock acquired upon the exercise of the Option pursuant to a program or
procedure approved by the Company (including, without
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">limitation, through an exercise complying with the provisions of Regulation&nbsp;T as promulgated
from time to time by the Board of Governors of the Federal Reserve System). The Company reserves,
at any and all times, the right, in the Company&#146;s sole and absolute discretion, to establish,
decline to approve or terminate any such program or procedure, including with respect to the
Participant notwithstanding that such program or procedures may be available to others.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.4 <B>Tax Withholding</B><B><I>. </I></B>At the time the Option is exercised, in whole or in part, or at any time
thereafter as requested by the Company, the Participant hereby authorizes withholding from payroll
and any other amounts payable to the Participant, and otherwise agrees to make adequate provision
for (including by means of a Cashless Exercise to the extent permitted by the Company), any sums
required to satisfy the federal, state, local and foreign tax withholding obligations of the
Participating Company Group, if any, which arise in connection with the Option. The Company shall
have no obligation to deliver shares of Stock until the tax withholding obligations of the
Participating Company Group have been satisfied by the Participant.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.5 <B>Beneficial Ownership of Shares; Certificate Registration</B><B><I>. </I></B>The Participant hereby
authorizes the Company, in its sole discretion, to deposit for the benefit of the Participant with
any broker with which the Participant has an account relationship of which the Company has notice
any or all shares acquired by the Participant pursuant to the exercise of the Option. Except as
provided by the preceding sentence, a certificate for the shares as to which the Option is
exercised shall be registered in the name of the Participant, or, if applicable, in the names of
the heirs of the Participant.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.6 <B>Restrictions on Grant of the Option and Issuance of Shares</B><B><I>. </I></B>The grant of the Option and
the issuance of shares of Stock upon exercise of the Option shall be subject to compliance with all
applicable requirements of federal, state or foreign law with respect to such securities. The
Option may not be exercised if the issuance of shares of Stock upon exercise would constitute a
violation of any applicable federal, state or foreign securities laws or other law or regulations
or the requirements of any stock exchange or market system upon which the Stock may then be listed.
In addition, the Option may not be exercised unless (i)&nbsp;a registration statement under the
Securities Act shall at the time of exercise of the Option be in effect with respect to the shares
issuable upon exercise of the Option or (ii)&nbsp;in the opinion of legal counsel to the Company, the
shares issuable upon exercise of the Option may be issued in accordance with the terms of an
applicable exemption from the registration requirements of the Securities Act. THE PARTICIPANT IS
CAUTIONED THAT THE OPTION MAY NOT BE EXERCISED UNLESS THE FOREGOING CONDITIONS ARE SATISFIED.
ACCORDINGLY, THE PARTICIPANT MAY NOT BE ABLE TO EXERCISE THE OPTION WHEN DESIRED EVEN THOUGH THE
OPTION IS VESTED. The inability of the Company to obtain from any regulatory body having
jurisdiction the authority, if any, deemed by the Company&#146;s legal counsel to be necessary to the
lawful issuance and sale of any shares subject to the Option shall relieve the Company of any
liability in respect of the failure to issue or sell such shares as to which such requisite
authority shall not have been obtained. As a condition to the exercise of the Option, the Company
may require the Participant to satisfy any qualifications that may be necessary or appropriate, to
evidence compliance with any applicable law or regulation and to make any representation or
warranty with respect thereto as may be requested by the Company.
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.7 <B>Fractional Shares</B><B><I>. </I></B>The Company shall not be required to issue fractional shares upon the
exercise of the Option.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT style="font-variant: SMALL-CAPS">5.</FONT> <FONT style="font-variant: SMALL-CAPS"><U><B>Nontransferability of the Option</B></U><B>.</B></FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the lifetime of the Participant, the Option shall be exercisable only by the
Participant or the Participant&#146;s guardian or legal representative. The Option shall not be subject
in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge,
encumbrance, or garnishment by creditors of the Participant or the Participant&#146;s beneficiary,
except transfer by will or by the laws of descent and distribution. Following the death of the
Participant, the Option, to the extent provided in Section&nbsp;7, may be exercised by the Participant&#146;s
legal representative or by any person empowered to do so under the deceased Participant&#146;s will or
under the then applicable laws of descent and distribution.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT style="font-variant: SMALL-CAPS">6.</FONT> <FONT style="font-variant: SMALL-CAPS"><U><B>Termination of the Option</B></U><B>.</B></FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Option shall terminate and may no longer be exercised after the first to occur of (a)&nbsp;the
close of business on the Option Expiration Date, (b)&nbsp;the close of business on the last date for
exercising the Option following termination of the Participant&#146;s Service as described in Section&nbsp;7,
or (c)&nbsp;a Change in Control to the extent provided in Section&nbsp;8.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT style="font-variant: SMALL-CAPS">7.</FONT> <FONT style="font-variant: SMALL-CAPS"><U><B>Effect of Termination of Service</B></U><B>.</B></FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1 <B>Option Exercisability. </B>The Option shall terminate immediately upon the Participant&#146;s
termination of Service to the extent that it is then unvested and shall be exercisable after the
Participant&#146;s termination of Service to the extent it is then vested only during the applicable
time period as determined below and thereafter shall terminate.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;<B><I>Disability</I></B><B>. </B>If the Participant&#146;s Service terminates because of the Disability of the
Participant, the Option, to the extent unexercised and exercisable for Vested Shares on the date on
which the Participant&#146;s Service terminated, may be exercised by the Participant (or the
Participant&#146;s guardian or legal representative) at any time prior to the expiration of twelve (12)
months after the date on which the Participant&#146;s Service terminated, but in any event no later than
the Option Expiration Date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;<B><I>Death</I></B><B>. </B>If the Participant&#146;s Service terminates because of the death of the Participant,
the Option, to the extent unexercised and exercisable for Vested Shares on the date on which the
Participant&#146;s Service terminated, may be exercised by the Participant&#146;s legal representative or
other person who acquired the right to exercise the Option by reason of the Participant&#146;s death at
any time prior to the expiration of twelve (12)&nbsp;months after the date on which the Participant&#146;s
Service terminated, but in any event no later than the Option Expiration Date. The Participant&#146;s
Service shall be deemed to have terminated on account of death if the Participant dies within three
(3)&nbsp;months after the Participant&#146;s termination of Service.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;<B><I>Other Termination of Service</I></B><B>. </B>If the Participant&#146;s Service terminates for any reason,
except Disability or death, the Option, to the extent unexercised and exercisable for Vested Shares
by the Participant on the date on which the Participant&#146;s Service terminated, may be exercised by
the Participant at any time prior to the expiration of three (3)
months after the date on which the Participant&#146;s Service terminated, but in any event no later
than the Option Expiration Date.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.2 <B>Extension if Exercise Prevented by Law</B><B><I>. </I></B>Notwithstanding the foregoing, if the exercise of
the Option within the applicable time periods set forth in Section&nbsp;7.1 is prevented by the
provisions of Section&nbsp;4.6, the Option shall remain exercisable until three (3)&nbsp;months after the
date the Participant is notified by the Company that the Option is exercisable, but in any event no
later than the Option Expiration Date.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT style="font-variant: SMALL-CAPS">8.</FONT> <FONT style="font-variant: SMALL-CAPS"><U><B>Effect of Change in Control</B></U><B>.</B></FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event of a Change in Control, the surviving, continuing, successor, or purchasing
entity or parent thereof, as the case may be (the &#147;<B><I>Acquiror</I></B>&#148;), may, without the consent of the
Participant, assume or continue in full force and effect the Company&#146;s rights and obligations under
the Option or substitute for the Option a substantially equivalent option for the Acquiror&#146;s stock.
For purposes of this Section, the Option shall be deemed assumed if, following the Change in
Control, the Option confers the right to receive, subject to the terms and conditions of the Plan
and this Option Agreement, for each share of Stock subject to the Option immediately prior to the
Change in Control, the consideration (whether stock, cash, other securities or property or a
combination thereof) to which a holder of a share of Stock on the effective date of the Change in
Control was entitled; provided, however, that if such consideration is not solely common stock of
the Acquiror, the Committee may, with the consent of the Acquiror, provide for the consideration to
be received upon the exercise of the Option, for each share of Stock subject to the Option, to
consist solely of common stock of the Acquiror equal in Fair Market Value to the per share
consideration received by holders of Stock pursuant to the Change in Control. In the event that
the Acquiring Corporation elects not to assume or substitute for the Option in connection with a
Change in Control, the exercisability and vesting of the Option (if the Participant&#146;s Service has
not terminated prior to such date) shall be accelerated, effective immediately before the date of
the Change in Control, contingent upon the consummation of the Change in Control. The Option shall
terminate and cease to be outstanding effective as of the time of consummation of the Change in
Control to the extent that the Option is neither assumed nor continued by the Acquiror in
connection with the Change in Control nor exercised as of the date of the Change in Control.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT style="font-variant: SMALL-CAPS">9.</FONT> <FONT style="font-variant: SMALL-CAPS"><U><B>Adjustments for Changes in Capital Structure</B></U><B>.</B></FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to any required action by the stockholders of the Company, in the event of any change
in the Stock effected without receipt of consideration by the Company, whether through merger,
consolidation, reorganization, reincorporation, recapitalization, reclassification, stock dividend,
stock split, reverse stock split, split-up, split-off, spin-off, combination of shares, exchange of
shares, or similar change in the capital structure of the Company, or in the event of payment of a
dividend or distribution to the stockholders of the Company in a form other than Stock (excepting
normal cash dividends) that has a material effect on the Fair Market Value of shares of Stock,
appropriate adjustments shall be made in the number, Exercise Price and kind of shares subject to
the Option, in order to prevent dilution or enlargement of the Participant&#146;s rights under the
Option. For purposes of the foregoing, conversion of any convertible securities of the Company
shall not be treated as &#147;effected without receipt of consideration by the
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Company.&#148; If a majority of the shares which are of the same class as the shares that are
subject to the Option are exchanged for, converted into, or otherwise become (whether or not
pursuant to an Ownership Change Event) shares of another corporation (the &#147;<B><I>New Shares</i></B>&#148;), the
Committee may unilaterally amend the Option to provide that such Option is exercisable for New
Shares. In the event of any such amendment, the number of shares subject to, and the exercise
price per share of, the Option shall be adjusted in a fair and equitable manner as determined by
the Committee, in its discretion. Any fractional share resulting from an adjustment pursuant to
this Section shall be rounded down to the nearest whole number, and in no event may the Exercise
Price be decreased to an amount less than the par value, if any, of the Stock subject to the
Option. The Committee in its sole discretion, may also make such adjustments in the terms of the
Option to reflect, or related to, such changes in the capital structure of the Company or
distributions as it deems appropriate. The adjustments determined by the Committee pursuant to
this Section shall be final, binding and conclusive.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT style="font-variant: SMALL-CAPS">10.</FONT> <FONT style="font-variant: SMALL-CAPS"><U><B>Rights as a Stockholder, Director, Employee or Consultant</B></U><B>.</B></FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Participant shall have no rights as a stockholder with respect to any shares covered by
the Option until the date of the issuance of the shares for which the Option has been exercised (as
evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company). No adjustment shall be made for dividends, distributions or other rights
for which the record date is prior to the date the shares are issued, except as provided in Section
9. If the Participant is an Employee, the Participant understands and acknowledges that, except as
otherwise provided in a separate, written employment agreement between a Participating Company and
the Participant, the Participant&#146;s employment is &#147;at will&#148; and is for no specified term. Nothing
in this Option Agreement shall confer upon the Participant any right to continue in the Service of
a Participating Company or interfere in any way with any right of the Participating Company Group
to terminate the Participant&#146;s Service as a Director, an Employee or Consultant, as the case may
be, at any time.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT style="font-variant: SMALL-CAPS">11.</FONT> <FONT style="font-variant: SMALL-CAPS"><U><B>Notice of Sales Upon Disqualifying Disposition</B></U><B>.</B></FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Participant shall dispose of the shares acquired pursuant to the Option only in accordance
with the provisions of this Option Agreement. In addition, <I>if the Grant Notice designates this
Option as an Incentive Stock Option, </I>the Participant shall (a)&nbsp;promptly notify the Chief Financial
Officer of the Company if the Participant disposes of any of the shares acquired pursuant to the
Option within one (1)&nbsp;year after the date the Participant exercises all or part of the Option or
within two (2)&nbsp;years after the Date of Grant and (b)&nbsp;provide the Company with a description of the
circumstances of such disposition. Until such time as the Participant disposes of such shares in a
manner consistent with the provisions of this Option Agreement, unless otherwise expressly
authorized by the Company, the Participant shall hold all shares acquired pursuant to the Option in
the Participant&#146;s name (and not in the name of any nominee) for the one-year period immediately
after the exercise of the Option and the two-year period immediately after Date of Grant. At any
time during the one-year or two-year periods set forth above, the Company may place a legend on any
certificate representing shares acquired pursuant to the Option requesting the transfer agent for
the Company&#146;s Stock to notify the Company of any such transfers. The obligation of the Participant
to notify the Company of any such transfer
shall continue notwithstanding that a legend has been placed on the certificate pursuant to
the preceding sentence.
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT style="font-variant: SMALL-CAPS">12.</FONT> <FONT style="font-variant: SMALL-CAPS"><U><B>Legends</B></U><B>.</B></FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company may at any time place legends referencing any applicable federal, state or foreign
securities law restrictions on all certificates representing shares of Stock subject to the
provisions of this Option Agreement. The Participant shall, at the request of the Company,
promptly present to the Company any and all certificates representing shares acquired pursuant to
the Option in the possession of the Participant in order to carry out the provisions of this
Section. Unless otherwise specified by the Company, legends placed on such certificates may
include, but shall not be limited to, the following:
</DIV>


<DIV align="left" style="margin-top: 6pt; margin-left: 4%; margin-right:4%; font-size: 10pt">&#147;THE SHARES EVIDENCED BY THIS CERTIFICATE WERE ISSUED BY THE CORPORATION TO THE
REGISTERED HOLDER UPON EXERCISE OF AN INCENTIVE STOCK OPTION AS DEFINED IN SECTION
422 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (&#147;ISO&#148;). IN ORDER TO OBTAIN
THE PREFERENTIAL TAX TREATMENT AFFORDED TO ISOs, THE SHARES SHOULD NOT BE
TRANSFERRED PRIOR TO &#091;<I>INSERT DISQUALIFYING DISPOSITION DATE HERE</I>&#093;. SHOULD THE
REGISTERED HOLDER ELECT TO TRANSFER ANY OF THE SHARES PRIOR TO THIS DATE AND FOREGO
ISO TAX TREATMENT, THE TRANSFER AGENT FOR THE SHARES SHALL NOTIFY THE CORPORATION
IMMEDIATELY. THE REGISTERED HOLDER SHALL HOLD ALL SHARES PURCHASED UNDER THE
INCENTIVE STOCK OPTION IN THE REGISTERED HOLDER&#146;S NAME (AND NOT IN THE NAME OF ANY
NOMINEE) PRIOR TO THIS DATE OR UNTIL TRANSFERRED AS DESCRIBED ABOVE.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT style="font-variant: SMALL-CAPS">13.</FONT> <FONT style="font-variant: SMALL-CAPS"><U><B>Miscellaneous Provisions</B></U><B>.</B></FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.1 <B>Termination or Amendment. </B>The Committee may terminate or amend the Plan or the Option at
any time; provided, however, that except as provided in Section&nbsp;8 in connection with a Change in
Control, no such termination or amendment may adversely affect the Option or any unexercised
portion hereof without the consent of the Participant unless such termination or amendment is
necessary to comply with any applicable law or government regulation. No amendment or addition to
this Option Agreement shall be effective unless in writing.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.2 <B>Further Instruments. </B>The parties hereto agree to execute such further instruments and to
take such further action as may reasonably be necessary to carry out the intent of this Option
Agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.3 <B>Binding Effect. </B>Subject to the restrictions on transfer set forth herein, this Option
Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective
heirs, executors, administrators, successors and assigns.
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.4 <B>Delivery of Documents and Notices. </B>Any document relating to participation in the Plan or
any notice required or permitted hereunder shall be given in writing and shall be deemed
effectively given (except to the extent that this Option Agreement provides for effectiveness only
upon actual receipt of such notice) upon personal delivery, electronic delivery at the e-mail
address, if any, provided for the Participant by a Participating Company, or upon deposit in the
U.S. Post Office or foreign postal service, by registered or certified mail, or with a nationally
recognized overnight courier service, with postage and fees prepaid, addressed to the other party
at the address of such party set forth in the Grant Notice or at such other address as such party
may designate in writing from time to time to the other party.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;<B>Description of Electronic Delivery</B><B><I>. </I></B>The Plan documents, which may include but do not
necessarily include: the Plan, the Grant Notice, this Option Agreement, the Plan Prospectus, and
any reports of the Company provided generally to the Company&#146;s stockholders, may be delivered to
the Participant electronically. In addition, the Participant may deliver electronically the Grant
Notice and Exercise Notice called for by Section&nbsp;4.2 to the Company or to such third party involved
in administering the Plan as the Company may designate from time to time. Such means of electronic
delivery may include but do not necessarily include the delivery of a link to a Company intranet or
the internet site of a third party involved in administering the Plan, the delivery of the document
via e-mail or such other means of electronic delivery specified by the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;<B>Consent to Electronic Delivery. </B>The Participant acknowledges that the Participant has
read Section&nbsp;13.4(a) of this Option Agreement and consents to the electronic delivery of the Plan
documents and the delivery of the Grant Notice and Exercise Notice, as described in Section
13.4(a). The Participant acknowledges that he or she may receive from the Company a paper copy of
any documents delivered electronically at no cost to the Participant by contacting the Company by
telephone or in writing. The Participant further acknowledges that the Participant will be
provided with a paper copy of any documents if the attempted electronic delivery of such documents
fails. Similarly, the Participant understands that the Participant must provide the Company or any
designated third-party administrator with a paper copy of any documents if the attempted electronic
delivery of such documents fails. The Participant may revoke his or her consent to the electronic
delivery of documents described in Section&nbsp;13.4(a) or may change the electronic mail address to
which such documents are to be delivered (if Participant has provided an electronic mail address)
at any time by notifying the Company of such revoked consent or revised e-mail address by
telephone, postal service or electronic mail. Finally, the Participant understands that he or she
is not required to consent to electronic delivery of documents described in Section&nbsp;13.4(a).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.5 <B>Integrated Agreement. </B>The Grant Notice, this Option Agreement and the Plan shall
constitute the entire understanding and agreement of the Participant and the Participating Company
Group with respect to the subject matter contained herein and supersede any prior agreements,
understandings, restrictions, representations, or warranties among the Participant and the
Participating Company Group with respect to such subject matter. To the extent contemplated
herein, the provisions of the Grant Notice, the Option Agreement and the Plan shall survive any
exercise of the Option and shall remain in full force and effect.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->9<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.6 <B>Applicable Law. </B>This Option Agreement shall be governed by the laws of the State of
California as such laws are applied to agreements between California residents entered into and to
be performed entirely within the State of California.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.7 <B>Counterparts. </B>The Grant Notice may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same instrument.
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->10<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="60%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="18%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&#153; Incentive Stock Option
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Participant:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&#153; Nonstatutory Stock Option</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Date:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STOCK OPTION EXERCISE NOTICE</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Halozyme Therapeutics, Inc.<BR>
Attention: Stock Administration<BR>
11388 Sorrento Valley Road<BR>
San Diego, CA 92121

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ladies and Gentlemen:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;<U><B>Option</B></U><B>. </B>I was granted an option (the &#147;<B><I>Option</I></B>&#148;) to purchase shares of the common
stock (the &#147;<B><I>Shares</I></B>&#148;) of Halozyme Therapeutics, Inc. (the &#147;<B><I>Company</I></B>&#148;) pursuant to the Company&#146;s 2008
Stock Plan (the &#147;<B><I>Plan</I></B>&#148;), my Notice of Grant of Stock Option (the &#147;<B><I>Grant Notice</I></B>&#148;) and my Stock
Option Agreement (the &#147;<B><I>Option Agreement</I></B>&#148;) as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="80%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Date of Grant:
</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Number of Option Shares:
</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Exercise Price per Share:
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">$ <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;<U><B>Exercise of Option</B></U><B>. </B>I hereby elect to exercise the Option to purchase the
following number of Shares, all of which are Vested Shares in accordance with the Grant Notice and
the Option Agreement:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="80%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Total Shares Purchased:
</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></TD>
</TR><tr>
<td>&nbsp;</td>
</tr>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Total Exercise Price (Total Shares X Price per Share)
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">$ <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;<U><B>Payments</B></U><B>. </B>I enclose payment in full of the total exercise price for the Shares in
the following form(s), as authorized by my Option Agreement:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="80%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#153; Cash:
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">$<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#153; Check:
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">$<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#153; Tender of Company Stock:
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">Contact Plan Administrator</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#153; Cashless Exercise (same-day sale):
</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT style="white-space: nowrap">Contact Plan Administrator</FONT></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio --><!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;<U><B>Tax Withholding</B></U><B>. </B>I authorize payroll withholding and otherwise will make adequate
provision for the federal, state, local and foreign tax withholding obligations of the Company, if
any, in connection with the Option. If I am exercising a Nonstatutory Stock Option, I enclose
payment in full of my withholding taxes, if any, as follows:
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>(Contact Plan Administrator for amount of tax due.)</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="80%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#153; Cash:
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">$<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#153; Check:
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">$<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#153; Tender of Company Stock:
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">Contact Plan Administrator</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#153; Cashless Exercise (same-day sale):
</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT style="white-space: nowrap">Contact Plan Administrator</FONT></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;<U><B>Participant Information</B></U><B>.</B>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="75%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">My address is:</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<tr style="font-size:3pt"><td>&nbsp;</td></tr>
<TR style="font-size: 1px">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left"><FONT style="white-space: nowrap">My Social Security Number is:</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;<U><B>Notice of Disqualifying Disposition</B></U><B>. </B>If the Option is an Incentive Stock Option, I
agree that I will promptly notify the Chief Financial Officer of the Company if I transfer any of
the Shares within one (1)&nbsp;year from the date I exercise all or part of the Option or within two (2)
years of the Date of Grant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.&nbsp;<U><B>Binding Effect</B></U><B>. </B>I agree that the Shares are being acquired in accordance with and
subject to the terms, provisions and conditions of the Grant Notice, the Option Agreement and the
Plan, to all of which I hereby expressly assent. This Agreement shall inure to the benefit of and
be binding upon my heirs, executors, administrators, successors and assigns.
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Very truly yours,<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">(Signature)&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Receipt of the above is hereby acknowledged.

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">HALOZYME THERAPEUTICS, INC.

</DIV>
<DIV align="center">
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    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">By:</DIV></TD>
    <TD>&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
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</DIV></TD>
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    <TD>&nbsp;</TD>
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    <TD align="left" valign="top">&nbsp;</TD>
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    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Title:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
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</DIV></TD>
    <TD>&nbsp;</TD>
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    <TD>&nbsp;</TD>
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    <TD align="left" valign="top">&nbsp;</TD>
</TR>
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    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Dated:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
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<DOCUMENT>
<TYPE>EX-10.18
<SEQUENCE>3
<FILENAME>a53275exv10w18.htm
<DESCRIPTION>EXHIBIT 10.18
<TEXT>
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<TITLE>exv10w18</TITLE>
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<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>Exhibit&nbsp;10.18</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>HALOZYME THERAPEUTICS, INC.<BR>
RESTRICTED STOCK AGREEMENT</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Halozyme Therapeutics, Inc. has granted to the Participant named in the <I>Notice of Grant of
Restricted Stock </I>(the &#147;<B><I>Grant Notice</I></B>&#148;) to which this Restricted Stock Agreement (the &#147;<B><I>Agreement</I></B>&#148;) is
attached an Award consisting of Shares subject to the terms and conditions set forth in the Grant
Notice and this Agreement. The Award has been granted pursuant to the Halozyme Therapeutics, Inc.
2008 Stock Plan (the &#147;<B><I>Plan</I></B>&#148;), as amended to the Date of Grant, the provisions of which are
incorporated herein by reference. By signing the Grant Notice, the Participant: (a)&nbsp;acknowledges
receipt of and represents that the Participant has read and is familiar with the Grant Notice, this
Agreement, the Plan and a Plan prospectus for the Shares in the form most recently registered with
the Securities and Exchange Commission (the &#147;<B><I>Plan Prospectus</I></B>&#148;), (b)&nbsp;accepts the Award subject to
all of the terms and conditions of the Grant Notice, this Agreement and the Plan and (c)&nbsp;agrees to
accept as binding, conclusive and final all decisions or interpretations of the Committee upon any
questions arising under the Grant Notice, this Agreement or the Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT style="font-variant: SMALL-CAPS">1.</FONT> <FONT style="font-variant: SMALL-CAPS"><U><B>Definitions and Construction</B></U><B>.</B></FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1 <B>Definitions. </B>Unless otherwise defined herein, capitalized terms shall have the meanings
assigned to such terms in the Grant Notice or the Plan.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2 <B>Construction. </B>Captions and titles contained herein are for convenience only and shall not
affect the meaning or interpretation of any provision of this Agreement. Except when otherwise
indicated by the context, the singular shall include the plural and the plural shall include the
singular. Use of the term &#147;or&#148; is not intended to be exclusive, unless the context clearly
requires otherwise.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT style="font-variant: SMALL-CAPS">2.</FONT> <FONT style="font-variant: SMALL-CAPS"><U><B>Administration</B></U><B>.</B></FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All questions of interpretation concerning the Grant Notice and this Agreement shall be
determined by the Committee. All determinations by the Committee shall be final and binding upon
all persons having an interest in the Award. Any Officer of a Participating Company shall have the
authority to act on behalf of the Company with respect to any matter, right, obligation, or
election which is the responsibility of or which is allocated to the Company herein, provided the
Officer has been delegated such authority by the Committee with respect to such matter, right,
obligation, or election.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT style="font-variant: SMALL-CAPS">3.</FONT> <FONT style="font-variant: SMALL-CAPS"><U><B>The Award</B></U><B>.</B></FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1 <B>Grant and Issuance of Shares. </B>On the Date of Grant, the Participant shall acquire and the
Company shall issue, subject to the provisions of this Agreement, a number of Shares equal to the
Total Number of Shares set forth in the Grant Notice. As a condition to the issuance of the
Shares, the Participant shall execute and deliver to the Company along with the Grant Notice the
Assignment Separate from Certificate duly endorsed (with date and number of Shares blank) in the
form attached to the Grant Notice.
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2 <B>No Monetary Payment Required. </B>The Participant is not required to make any monetary
payment (other than applicable tax withholding, if any) as a condition to receiving the Shares, the
consideration for which shall be past services actually rendered and/or future services to be
rendered to a Participating Company or for its benefit. Notwithstanding the foregoing, if required
by applicable state corporate law, the Participant shall furnish consideration in the form of cash
or past services rendered to a Participating Company or for its benefit having a value not less
than the par value of the Shares issued pursuant to the Award.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.3 <B>Beneficial Ownership of Shares; Certificate Registration. </B>The Participant hereby
authorizes the Company, in its sole discretion, to deposit the Shares with the Company&#146;s transfer
agent, including any successor transfer agent, to be held in book entry form during the term of the
Escrow pursuant to Section&nbsp;6. Furthermore, the Participant hereby authorizes the Company, in its
sole discretion, to deposit, following the term of such Escrow, for the benefit of the Participant
with any broker with which the Participant has an account relationship of which the Company has
notice any or all Shares which are no longer subject to such Escrow. Except as provided by the
foregoing, a certificate for the Shares shall be registered in the name of the Participant, or, if
applicable, in the names of the heirs of the Participant.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.4 <B>Issuance of Shares in Compliance with Law. </B>The issuance of the Shares shall be subject to
compliance with all applicable requirements of federal, state or foreign law with respect to such
securities. No Shares shall be issued hereunder if their issuance would constitute a violation of
any applicable federal, state or foreign securities laws or other law or regulations or the
requirements of any stock exchange or market system upon which the Stock may then be listed. The
inability of the Company to obtain from any regulatory body having jurisdiction the authority, if
any, deemed by the Company&#146;s legal counsel to be necessary to the lawful issuance of any Shares
shall relieve the Company of any liability in respect of the failure to issue such Shares as to
which such requisite authority shall not have been obtained. As a condition to the issuance of the
Shares, the Company may require the Participant to satisfy any qualifications that may be necessary
or appropriate, to evidence compliance with any applicable law or regulation and to make any
representation or warranty with respect thereto as may be requested by the Company.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT style="font-variant: SMALL-CAPS">4.</FONT> <FONT style="font-variant: SMALL-CAPS"><U><B>Vesting of Shares</B></U><B>.</B></FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Shares shall vest and become Vested Shares as provided in the Grant Notice. For purposes
of determining the number of Vested Shares following an Ownership Change Event, credited Service
shall include all Service with any corporation which is a Participating Company at the time the
Service is rendered, whether or not such corporation is a Participating Company both before and
after the Ownership Change Event.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT style="font-variant: SMALL-CAPS">5.</FONT> <FONT style="font-variant: SMALL-CAPS"><U><B>Company Reacquisition Right</B></U><B>.</B></FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1 <B>Grant of Company Reacquisition Right. </B>In the event that (a)&nbsp;the Participant&#146;s Service
terminates for any reason or no reason, with or without cause, or (b)&nbsp;the Participant, the
Participant&#146;s legal representative, or other holder of the Shares, attempts to sell, exchange,
transfer, pledge, or otherwise dispose of (other than pursuant to an Ownership Change Event),
including, without limitation, any transfer to a nominee or agent of the Participant, any
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Shares which are not Vested Shares (&#147;<B><I>Unvested Shares</I></B>&#148;), the Company shall automatically
reacquire the Unvested Shares, and the Participant shall not be entitled to any payment therefor
(the &#147;<B><I>Company Reacquisition Right</I></B>&#148;).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2 <B>Ownership Change Event. </B>Upon the occurrence of an Ownership Change Event, any and all
new, substituted or additional securities or other property to which the Participant is entitled by
reason of the Participant&#146;s ownership of Unvested Shares shall be immediately subject to the
Company Reacquisition Right and included in the terms &#147;Shares,&#148; &#147;Stock&#148; and &#147;Unvested Shares&#148; for
all purposes of the Company Reacquisition Right with the same force and effect as the Unvested
Shares immediately prior to the Ownership Change Event. For purposes of determining the number of
Vested Shares following an Ownership Change Event, credited Service shall include all Service with
any corporation which is a Participating Company at the time the Service is rendered, whether or
not such corporation is a Participating Company both before and after the Ownership Change Event.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT style="font-variant: SMALL-CAPS">6.</FONT> <FONT style="font-variant: SMALL-CAPS"><U><B>Escrow</B></U><B>.</B></FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1 <B>Appointment of Agent. </B>To ensure that Shares subject to the Company Reacquisition Right
will be available for reacquisition, the Participant and the Company hereby appoint the Secretary
of the Company, or any other person designated by the Company, as their agent and as
attorney-in-fact for the Participant (the &#147;<B><I>Agent</I></B>&#148;) to hold any and all Unvested Shares and to sell,
assign and transfer to the Company any such Unvested Shares reacquired by the Company pursuant to
the Company Reacquisition Right. The Participant understands that appointment of the Agent is a
material inducement to make this Agreement and that such appointment is coupled with an interest
and is irrevocable. The Agent shall not be personally liable for any act the Agent may do or omit
to do hereunder as escrow agent, agent for the Company, or attorney-in-fact for the Participant
while acting in good faith and in the exercise of the Agent&#146;s own good judgment, and any act done
or omitted by the Agent pursuant to the advice of the Agent&#146;s own attorneys shall be conclusive
evidence of such good faith. The Agent may rely upon any letter, notice or other document executed
by any signature purporting to be genuine and may resign at any time.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2 <B>Establishment of Escrow. </B>The Participant authorizes the Company to deposit the Unvested
Shares with the Company&#146;s transfer agent to be held in book entry form, as provided in Section&nbsp;3.3,
and the Participant agrees to deliver to and deposit with the Agent each certificate, if any,
evidencing the Shares and an Assignment Separate from Certificate with respect to such book entry
shares and each such certificate duly endorsed (with date and number of Shares blank) in the form
attached to the Grant Notice, to be held by the Agent under the terms and conditions of this
Section&nbsp;6 (the &#147;<B><I>Escrow</I></B>&#148;). Upon the occurrence of an Ownership Change Event or a change, as
described in Section&nbsp;8, in the character or amount of any outstanding stock of the corporation the
stock of which is subject to the provisions of this Agreement, any and all new, substituted or
additional securities or other property to which the Participant is entitled by reason of his or
her ownership of the Shares that remain, following such Ownership Change Event or change described
in Section&nbsp;8, subject to the Company Reacquisition Right shall be immediately subject to the Escrow
to the same extent as the Shares immediately before such event. The Company shall bear the
expenses of the Escrow.
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3 <B>Delivery of Shares to Participant. </B>The Escrow shall continue with respect to any Shares
for so long as such Shares remain subject to the Company Reacquisition Right. Upon termination of
the Reacquisition Right with respect to Shares, the Company shall so notify the Agent and direct
the Agent to deliver such number of Shares to the Participant. As soon as practicable after
receipt of such notice, the Agent shall cause to be delivered to the Participant the Shares
specified by such notice, and the Escrow shall terminate with respect to such Shares.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT style="font-variant: SMALL-CAPS">7.</FONT> <FONT style="font-variant: SMALL-CAPS"><U><B>Tax Matters</B></U><B>.</B></FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1 <B>Tax Withholding.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;<B>In General. </B>At the time the Grant Notice is executed, or at any time thereafter as
requested by a Participating Company, the Participant hereby authorizes withholding from payroll
and any other amounts payable to the Participant, and otherwise agrees to make adequate provision
for, any sums required to satisfy the federal, state, local and foreign tax withholding obligations
of the Participating Company, if any, which arise in connection with the Award, including, without
limitation, obligations arising upon (a)&nbsp;the transfer of Shares to the Participant, (b)&nbsp;the lapsing
of any restriction with respect to any Shares, (c)&nbsp;the filing of an election to recognize tax
liability, or (d)&nbsp;the transfer by the Participant of any Shares. The Company shall have no
obligation to deliver the Shares or to release any Shares from the Escrow established pursuant to
Section&nbsp;6 until the tax withholding obligations of the Participating Company have been satisfied by
the Participant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;<B>Assignment of Sale Proceeds; Payment of Tax Withholding by Check. </B>Subject to compliance
with applicable law and the Company&#146;s Insider Trading Policy, the Participant shall satisfy the
Participating Company&#146;s tax withholding obligations in accordance with procedures established by
the Company providing for delivery by the Participant to the Company or a broker approved by the
Company of properly executed instructions, in a form approved by the Company, providing for the
assignment to the Company of the proceeds of a sale with respect to some or all of the Shares
becoming Vested Shares on a Vesting Date as provided in the Grant Notice. Notwithstanding the
foregoing, the Participant may elect to pay by check the amount of the Participating Company&#146;s tax
withholding obligations arising on any Vesting Date by delivering written notice of such election
to the Company on a form specified by the Company for this purpose at least thirty (30)&nbsp;days (or
such other period established by the Company) prior to such Vesting Date. By making such election,
the Participant agrees to deliver a check for the full amount of the required tax withholding to
the applicable Participating Company on or before the third business day following the Vesting
Date. If the Participant elects to pay the required tax withholding by check but fails to make
such payment as required by the preceding sentence, the Company is hereby authorized at its
discretion, to satisfy the tax withholding obligations through any other means authorized by this
Section&nbsp;7, including by effecting a sale of some or all of the Shares becoming Vested Shares on the
Vesting Date, withholding from payroll and any other amounts payable to the Participant or by
withholding Shares in accordance with Section&nbsp;7.1(c).
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;<B>Withholding in Shares. </B>The Company may, in its discretion, permit or require the
Participant to satisfy all or any portion of a Participating Company&#146;s tax
withholding obligations by deducting a number of whole, Vested Shares otherwise deliverable to
the Participant or by the Participant&#146;s tender to the Company of a number of whole, Vested Shares
or vested shares acquired otherwise than pursuant to the Award having, in any such case, a fair
market value, as determined by the Company as of the date on which the tax withholding obligations
arise, not in excess of the amount of such tax withholding obligations determined by the applicable
minimum statutory withholding rates. Any adverse consequences to the Participant resulting from
the procedure permitted under this Section, including, without limitation, tax consequences, shall
be the sole responsibility of the Participant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.2 <B>Election Under Section 83(b) of the Code.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;The Participant understands that Section&nbsp;83 of the Code taxes as ordinary income the
difference between the amount paid for the Shares, if anything, and the Fair Market Value of the
Shares as of the date on which the Shares are &#147;substantially vested,&#148; within the meaning of Section
83 of the Code. In this context, &#147;substantially vested&#148; means that the right of the Company to
reacquire the Shares pursuant to the Company Reacquisition Right has lapsed. The Participant
understands that he or she may elect to have his or her taxable income determined at the time he or
she acquires the Shares rather than when and as the Company Reacquisition Right lapses by filing an
election under Section 83(b) of the Code with the Internal Revenue Service no later than thirty
(30)&nbsp;days after the date of acquisition of the Shares. The Participant understands that failure to
make a timely filing under Section 83(b) of the Code will result in his or her recognition of
ordinary income, as the Company Reacquisition Right lapses, on the difference between the purchase
price, if anything, and the Fair Market Value of the Shares at the time such restrictions lapse.
The Participant further understands, however, that if Shares with respect to which an election
under Section 83(b) of the Code has been made are forfeited to the Company pursuant to its Company
Reacquisition Right, such forfeiture will be treated as a sale on which there is realized a loss
equal to the excess (if any) of the amount paid (if any) by the Participant for the forfeited
Shares over the amount realized (if any) upon their forfeiture. If the Participant has paid
nothing for the forfeited Shares and has received no payment upon their forfeiture, the Participant
understands that he or she will be unable to recognize any loss on the forfeiture of the Shares
even though the Participant incurred a tax liability by making an election under Section 83(b) of
the Code.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;The Participant understands that he or she should consult with his or her tax advisor
regarding the advisability of filing with the Internal Revenue Service an election under Section
83(b) of the Code, which must be filed no later than thirty (30)&nbsp;days after the date of the
acquisition of the Shares pursuant to this Agreement. Failure to file an election under Section
83(b) of the Code, if appropriate, may result in adverse tax consequences to the Participant. The
Participant acknowledges that he or she has been advised to consult with a tax advisor regarding
the tax consequences to the Participant of the acquisition of Shares hereunder. ANY ELECTION UNDER
SECTION 83(b) OF THE CODE THE PARTICIPANT WISHES TO MAKE MUST BE FILED NO LATER THAN 30 DAYS AFTER
THE DATE ON WHICH THE PARTICIPANT ACQUIRES THE SHARES. THIS TIME PERIOD CANNOT BE EXTENDED. THE
PARTICIPANT ACKNOWLEDGES THAT TIMELY FILING OF A SECTION 83(b) ELECTION IS THE PARTICIPANT&#146;S SOLE
RESPONSIBILITY, EVEN IF THE PARTICIPANT REQUESTS THE COMPANY OR ITS REPRESENTATIVE TO FILE SUCH
ELECTION ON HIS OR HER BEHALF.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;The Participant will notify the Company in writing if the Participant files an election
pursuant to Section 83(b) of the Code. The Company intends, in the event it does not receive from
the Participant evidence of such filing, to claim a tax deduction for any amount which would
otherwise be taxable to the Participant in the absence of such an election.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT style="font-variant: SMALL-CAPS">8.</FONT> <FONT style="font-variant: SMALL-CAPS"><U><B>Adjustments for Changes in Capital Structure</B></U><B>.</B></FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to any required action by the stockholders of the Company, in the event of any change
in the Stock effected without receipt of consideration by the Company, whether through merger,
consolidation, reorganization, reincorporation, recapitalization, reclassification, stock dividend,
stock split, reverse stock split, split-up, split-off, spin-off, combination of shares, exchange of
shares, or similar change in the capital structure of the Company, or in the event of payment of a
dividend or distribution to the stockholders of the Company in a form other than Stock (excepting
normal cash dividends) that has a material effect on the Fair Market Value of Shares of Stock,
appropriate adjustments shall be made in the number and kind of shares subject to the Award, in
order to prevent dilution or enlargement of the Participant&#146;s rights under the Award. For purposes
of the foregoing, conversion of any convertible securities of the Company shall not be treated as
&#147;effected without receipt of consideration by the Company.&#148; Any fractional share resulting from an
adjustment pursuant to this Section shall be rounded down to the nearest whole number. Such
adjustments shall be determined by the Committee, and its determination shall be final, binding and
conclusive.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT style="font-variant: SMALL-CAPS">9.</FONT> <FONT style="font-variant: SMALL-CAPS"><U><B>Rights as a Stockholder, Director, Employee or Consultant</B></U><B>.</B></FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Participant shall have no rights as a stockholder with respect to any Shares subject to
the Award until the date of the issuance of the Shares (as evidenced by the appropriate entry on
the books of the Company or of a duly authorized transfer agent of the Company). No adjustment
shall be made for dividends, distributions or other rights for which the record date is prior to
the date the Shares are issued, except as provided in Section&nbsp;8. Subject the provisions of this
Agreement, the Participant shall exercise all rights and privileges of a stockholder of the Company
with respect to Shares deposited in the Escrow pursuant to Section&nbsp;6. If the Participant is an
Employee, the Participant understands and acknowledges that, except as otherwise provided in a
separate, written employment agreement between a Participating Company and the Participant, the
Participant&#146;s employment is &#147;at will&#148; and is for no specified term. Nothing in this Agreement
shall confer upon the Participant any right to continue in the Service of a Participating Company
or interfere in any way with any right of the Participating Company Group to terminate the
Participant&#146;s Service at any time.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT style="font-variant: SMALL-CAPS">10.</FONT> <FONT style="font-variant: SMALL-CAPS"><U><B>Legends</B></U><B>.</B></FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company may at any time place legends referencing the Company Reacquisition Right and any
applicable federal, state or foreign securities law restrictions on all certificates representing
the Shares. The Participant shall, at the request of the Company, promptly present to the Company
any and all certificates representing the Shares in the possession of the Participant in order to
carry out the provisions of this Section. Unless
otherwise specified by the Company, legends placed on such certificates may include, but shall
not be limited to, the following:
</DIV>


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<DIV align="left" style="margin-top: 6pt; margin-left: 2%; margin-right:2%; font-size: 10pt">&#147;THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS SET FORTH IN AN
AGREEMENT BETWEEN THIS CORPORATION AND THE REGISTERED HOLDER, OR HIS PREDECESSOR IN
INTEREST, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THIS CORPORATION.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT style="font-variant: SMALL-CAPS">11.</FONT> <FONT style="font-variant: SMALL-CAPS"><U><B>Transfers in Violation of Agreement</B></U><B>.</B></FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No Shares may be sold, exchanged, transferred, assigned, pledged, hypothecated or otherwise
disposed of, including by operation of law, in any manner which violates any of the provisions of
this Agreement and, except pursuant to an Ownership Change Event, until the date on which such
Shares become Vested Shares, and any such attempted disposition shall be void. The Company shall
not be required (a)&nbsp;to transfer on its books any Shares which will have been transferred in
violation of any of the provisions set forth in this Agreement or (b)&nbsp;to treat as owner of such
Shares or to accord the right to vote as such owner or to pay dividends to any transferee to whom
such Shares will have been so transferred. In order to enforce its rights under this Section, the
Company shall be authorized to give a stop transfer instruction with respect to the Shares to the
Company&#146;s transfer agent.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT style="font-variant: SMALL-CAPS">12.</FONT> <FONT style="font-variant: SMALL-CAPS"><U><B>Miscellaneous Provisions</B></U><B>.</B></FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.1 <B>Termination or Amendment. </B>The Committee may terminate or amend the Plan or this
Agreement at any time; provided, however, that no such termination or amendment may adversely
affect the Participant&#146;s rights under this Agreement without the consent of the Participant unless
such termination or amendment is necessary to comply with applicable law or government regulation.
No amendment or addition to this Agreement shall be effective unless in writing.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.2 <B>Nontransferability of the Award. </B>The right to acquire Shares pursuant to the Award shall
not be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment,
pledge, encumbrance, or garnishment by creditors of the Participant or the Participant&#146;s
beneficiary, except transfer by will or by the laws of descent and distribution. All rights with
respect to the Award shall be exercisable during the Participant&#146;s lifetime only by the Participant
or the Participant&#146;s guardian or legal representative.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.3 <B>Further Instruments. </B>The parties hereto agree to execute such further instruments and to
take such further action as may reasonably be necessary to carry out the intent of this Agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.4 <B>Binding Effect. </B>This Agreement shall inure to the benefit of the successors and assigns
of the Company and, subject to the restrictions on transfer set forth herein, be binding upon the
Participant and the Participant&#146;s heirs, executors, administrators, successors and assigns.
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.5 <B>Delivery of Documents and Notices. </B>Any document relating to participation in the Plan or
any notice required or permitted hereunder shall be given in writing and shall be deemed
effectively given (except to the extent that this Agreement provides for effectiveness only upon
actual receipt of such notice) upon personal delivery, electronic delivery at the e-mail address,
if any, provided for the Participant by a Participating Company, or upon deposit in the U.S. Post
Office or foreign postal service, by registered or certified mail, or with a nationally recognized
overnight courier service, with postage and fees prepaid, addressed to the other party at the
address shown below that party&#146;s signature to the Grant Notice or at such other address as such
party may designate in writing from time to time to the other party.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;<B>Description of Electronic Delivery. </B>The Plan documents, which may include but do not
necessarily include: the Plan, the Grant Notice, this Agreement, the Plan Prospectus, and any
reports of the Company provided generally to the Company&#146;s stockholders, may be delivered to the
Participant electronically. In addition, the parties may deliver electronically any notices called
for in connection with the Escrow and the Participant may deliver electronically the Grant Notice
to the Company or to such third party involved in administering the Plan as the Company may
designate from time to time. Such means of electronic delivery may include but do not necessarily
include the delivery of a link to a Company intranet or the internet site of a third party involved
in administering the Plan, the delivery of the document via e-mail or such other means of
electronic delivery specified by the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;<B>Consent to Electronic Delivery. </B>The Participant acknowledges that the Participant has
read Section&nbsp;12.5(a) of this Agreement and consents to the electronic delivery of the Plan
documents, the Grant Notice and notices in connection with the Escrow, as described in Section
12.5(a). The Participant acknowledges that he or she may receive from the Company a paper copy of
any documents delivered electronically at no cost to the Participant by contacting the Company by
telephone or in writing. The Participant further acknowledges that the Participant will be
provided with a paper copy of any documents if the attempted electronic delivery of such documents
fails. Similarly, the Participant understands that the Participant must provide the Company or any
designated third-party administrator with a paper copy of any documents if the attempted electronic
delivery of such documents fails. The Participant may revoke his or her consent to the electronic
delivery of documents described in Section&nbsp;12.5(a) or may change the electronic mail address to
which such documents are to be delivered (if Participant has provided an electronic mail address)
at any time by notifying the Company of such revoked consent or revised e-mail address by
telephone, postal service or electronic mail. Finally, the Participant understands that he or she
is not required to consent to electronic delivery of documents described in Section&nbsp;12.5(a).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.6 <B>Integrated Agreement. </B>The Grant Notice, this Agreement and the Plan together with any
employment, service or other agreement between the Participant and the Participating Company Group
referring to the Award shall constitute the entire understanding and agreement of the Participant
and the Participating Company Group with respect to the subject matter contained herein or therein
and supersedes any prior agreements, understandings, restrictions, representations, or warranties
among the Participant and the Participating Company Group with respect to such subject matter other
than those as set forth or provided for herein or
therein. To the extent contemplated herein or therein, the provisions of the Grant Notice and
the Agreement shall survive any settlement of the Award and shall remain in full force and effect.
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.7 <B>Applicable Law. </B>This Agreement shall be governed by the laws of the State of California
as such laws are applied to agreements between California residents entered into and to be
performed entirely within the State of California.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.8 <B>Counterparts. </B>The Grant Notice may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same instrument.
</DIV>



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<DIV align="center" style="font-size: 10pt; margin-top: 18pt">ASSIGNMENT SEPARATE FROM CERTIFICATE
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">FOR VALUE RECEIVED the undersigned does hereby sell, assign and transfer unto
<font style="width: 40%; border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</font>&nbsp;<font style="width: 100%; border-bottom: 1px solid #000000; font-size: 10px">&nbsp;</font>
(<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>) shares of the Capital Stock of HALOZYME THERAPEUTICS,
INC. standing in the undersigned&#146;s name on the books of said corporation represented by Certificate
No. <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> herewith and does hereby irrevocably constitute and appoint
<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> Attorney to transfer the said stock on the books of said corporation with
full power of substitution in the premises.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Dated: <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
</DIV>


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    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Signature&nbsp;</TD>
    <TD>&nbsp;</TD>
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<tr style="font-size:3pt"><td>&nbsp;</td></tr>
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    <TD align="left">&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Print Name&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
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    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Instructions</U>: Please do not fill in any blanks other than the signature line. The purpose
of this assignment is to enable the Company to exercise its Company Reacquisition Right set forth
in the Restricted Stock Agreement without requiring additional signatures on the part of the
Participant.
</DIV>


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<TYPE>EX-10.20
<SEQUENCE>4
<FILENAME>a53275exv10w20.htm
<DESCRIPTION>EXHIBIT 10.20
<TEXT>
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<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>Exhibit&nbsp;10.20</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>HALOZYME THERAPEUTICS, INC.<BR>
RESTRICTED STOCK AGREEMENT</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Halozyme Therapeutics, Inc. has granted to the Participant named in the <I>Notice of Grant of
Restricted Stock </I>(the &#147;<B><I>Grant Notice</I></B>&#148;) to which this Restricted Stock Agreement (the &#147;<B><I>Agreement</I></B>&#148;) is
attached an Award consisting of Shares subject to the terms and conditions set forth in the Grant
Notice and this Agreement. The Award has been granted pursuant to and shall in all respects be
subject to the terms and conditions of the Halozyme Therapeutics, Inc. 2008 Outside Directors&#146;
Stock Plan (the &#147;<B><I>Plan</I></B>&#148;), as amended to the Date of Grant, the provisions of which are incorporated
herein by reference. By signing the Grant Notice, the Participant: (a)&nbsp;acknowledges receipt of and
represents that the Participant has read and is familiar with the Grant Notice, this Agreement, the
Plan and a prospectus for the Plan in the form most recently registered with the Securities and
Exchange Commission (the &#147;<B><I>Plan Prospectus</I></B>&#148;), (b)&nbsp;accepts the Award subject to all of the terms and
conditions of the Grant Notice, this Agreement and the Plan and (c)&nbsp;agrees to accept as binding,
conclusive and final all decisions or interpretations of the Board upon any questions arising under
the Grant Notice, this Agreement or the Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT style="font-variant: SMALL-CAPS">1.</FONT> <FONT style="font-variant: SMALL-CAPS"><U><B>Definitions and Construction</B></U><B>.</B></FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1 <B>Definitions</B>. Unless otherwise defined herein, capitalized terms shall have the meanings
assigned to such terms in the Grant Notice or the Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2 <B>Construction. </B>Captions and titles contained herein are for convenience only and shall not
affect the meaning or interpretation of any provision of this Agreement. Except when otherwise
indicated by the context, the singular shall include the plural and the plural shall include the
singular. Use of the term &#147;or&#148; is not intended to be exclusive, unless the context clearly
requires otherwise.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT style="font-variant: SMALL-CAPS">2.</FONT> <FONT style="font-variant: SMALL-CAPS"><U><B>Administration</B></U><B>.</B></FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All questions of interpretation concerning the Grant Notice and this Agreement shall be
determined by the Board. All determinations by the Board shall be final and binding upon all
persons having an interest in the Award. Any Officer shall have the authority to act on behalf of
the Company with respect to any matter, right, obligation, or election which is the responsibility
of or which is allocated to the Company herein, provided the Officer has been delegated such
authority by the Board with respect to such matter, right, obligation, or election.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT style="font-variant: SMALL-CAPS">3.</FONT> <FONT style="font-variant: SMALL-CAPS"><U><B>The Award</B></U><B>.</B></FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1 <B>Grant and Issuance of Shares. </B>On the Date of Grant, the Participant shall acquire and the
Company shall issue, subject to the provisions of this Agreement, a number of Shares equal to the
Total Number of Shares set forth in the Grant Notice. As a condition to the issuance of the
Shares, the Participant shall execute and deliver to the Company along with the Grant Notice (a)&nbsp;if
requested by the Company, Joint Escrow Instructions in a form provided by the Company and (b)&nbsp;if
requested by the Company, the Assignment Separate from Certificate duly endorsed (with date and
number of Shares blank) in the form attached to the Grant Notice.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2 <B>No Monetary Payment Required. </B>The Participant is not required to make any monetary
payment as a condition to receiving the Shares, the consideration for which shall be past services
actually rendered and/or future services to be rendered to a Participating Company or for its
benefit. Notwithstanding the foregoing, if required by applicable state corporate law, the
Participant shall furnish consideration in the form of cash or past services rendered to a
Participating Company or for its benefit having a value not less than the par value of the Shares
issued pursuant to the Award.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.3 <B>Beneficial Ownership of Shares; Certificate Registration. </B>The Participant hereby
authorizes the Company, in its sole discretion, to deposit the Shares with the Company&#146;s transfer
agent, including any successor transfer agent, to be held in book entry form during the term of the
Escrow pursuant to Section&nbsp;6. Furthermore, the Participant hereby authorizes the Company, in its
sole discretion, to deposit, following the term of such Escrow, for the benefit of the Participant
with any broker with which the Participant has an account relationship of which the Company has
notice any or all Shares which are no longer subject to such Escrow. Except as provided by the
foregoing, a certificate for the Shares shall be registered in the name of the Participant, or, if
applicable, in the names of the heirs of the Participant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.4 <B>Issuance of Shares in Compliance with Law. </B>The issuance of the Shares shall be subject to
compliance with all applicable requirements of federal, state or foreign law with respect to such
securities. No Shares shall be issued hereunder if their issuance would constitute a violation of
any applicable federal, state or foreign securities laws or other law or regulations or the
requirements of any stock exchange or market system upon which the Stock may then be listed. The
inability of the Company to obtain from any regulatory body having jurisdiction the authority, if
any, deemed by the Company&#146;s legal counsel to be necessary to the lawful issuance of any Shares
shall relieve the Company of any liability in respect of the failure to issue such Shares as to
which such requisite authority shall not have been obtained. As a condition to the issuance of the
Shares, the Company may require the Participant to satisfy any qualifications that may be necessary
or appropriate, to evidence compliance with any applicable law or regulation and to make any
representation or warranty with respect thereto as may be requested by the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT style="font-variant: SMALL-CAPS">4.</FONT> <FONT style="font-variant: SMALL-CAPS"><U><B>Vesting of Shares</B></U>.</FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1 <B>Normal Vesting. </B>Except as provided in Section&nbsp;4.2, the Shares shall vest and become
Vested Shares as provided in the Grant Notice.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2 <B>Acceleration of Vesting Upon a Change in Control</B>. In the event of a Change in Control,
the vesting of the Shares shall be accelerated in full and the Total Number of Shares shall be
deemed Vested Shares effective as of the date of the Change in Control, provided that the
Participant&#146;s Service has not terminated prior to such date.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.3 <B>Federal Excise Tax Under Section&nbsp;4999 of the Code.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;<B>Excess Parachute Payment. </B>In the event that any acceleration of vesting pursuant to this
Agreement and any other payment or benefit received or to be received by the Participant would
subject the Participant to any excise tax pursuant to Section&nbsp;4999 of the
Code due to the characterization of such acceleration of vesting, payment or benefit as an
excess parachute payment under Section&nbsp;280G of the Code, the Participant may elect, in his or her
sole discretion, to reduce the amount of any acceleration of vesting called for under this
Agreement in order to avoid such characterization.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;<B>Determination by Independent Accountants. </B>To aid the Participant in making any election
called for under Section&nbsp;4.3(a), upon the occurrence of any event that might reasonably be
anticipated to give rise to the acceleration of vesting under Section&nbsp;4.2 (an &#147;<B><I>Event</I></B>&#148;), the Company
shall promptly request a determination in writing by independent public accountants selected by the
Company (the &#147;<B><I>Accountants</I></B>&#148;). Unless the Company and the Participant otherwise agree in writing,
the Accountants shall determine and report to the Company and the Participant within twenty (20)
days of the date of the Event the amount of such acceleration of vesting, payments and benefits
which would produce the greatest after-tax benefit to the Participant. For the purposes of such
determination, the Accountants may rely on reasonable, good faith interpretations concerning the
application of Sections&nbsp;280G and 4999 of the Code. The Company and the Participant shall furnish
to the Accountants such information and documents as the Accountants may reasonably request in
order to make their required determination. The Company shall bear all fees and expenses the
Accountants may reasonably charge in connection with their services contemplated by this Section.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT style="font-variant: SMALL-CAPS">5.</FONT> <FONT style="font-variant: SMALL-CAPS"><U><B>Company Reacquisition Right</B></U><B>.</B></FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1 <B>Grant of Company Reacquisition Right. </B>Except to the extent otherwise provided in an
agreement between a Participating Company and the Participant which refers to this Award, in the
event that (a)&nbsp;the Participant&#146;s Service terminates for any reason or no reason, with or without
cause, or (b)&nbsp;the Participant, the Participant&#146;s legal representative, or other holder of the
Shares, attempts to sell, exchange, transfer, pledge, or otherwise dispose of (other than pursuant
to an Ownership Change Event), including, without limitation, any transfer to a nominee or agent of
the Participant, any Shares which are not Vested Shares (&#147;<B><I>Unvested Shares</I></B>&#148;), the Company shall
automatically reacquire the Unvested Shares, and the Participant shall not be entitled to any
payment therefor (the &#147;<B><I>Company Reacquisition Right</I></B>&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2 <B>Ownership Change Event. </B>Upon the occurrence of an Ownership Change Event, any and all
new, substituted or additional securities or other property to which the Participant is entitled by
reason of the Participant&#146;s ownership of Unvested Shares shall be immediately subject to the
Company Reacquisition Right and included in the terms &#147;Shares,&#148; &#147;Stock&#148; and &#147;Unvested Shares&#148; for
all purposes of the Company Reacquisition Right with the same force and effect as the Unvested
Shares immediately prior to the Ownership Change Event. For purposes of determining the number of
Vested Shares following an Ownership Change Event, credited Service shall include all Service with
any corporation which is a Participating Company at the time the Service is rendered, whether or
not such corporation is a Participating Company both before and after the Ownership Change Event.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT style="font-variant: SMALL-CAPS">6.</FONT> <FONT style="font-variant: SMALL-CAPS"><U><B>Escrow</B></U><B>.</B></FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1 <B>Establishment of Escrow. </B>To ensure that Shares subject to the Company Reacquisition Right
will be available for reacquisition, the Participant agrees, if
requested by the Company, to deliver to and deposit with an escrow agent designated by the
Company: (i)&nbsp;the certificate evidencing the Shares and (ii)&nbsp;an Assignment Separate from Certificate
with respect to such certificate duly endorsed (with date and number of Shares blank) in the form
attached to the Grant Notice, to be held by the agent under the terms and conditions of the Joint
Escrow Instructions in the form attached to the Grant Notice (the &#147;<B><I>Escrow</I></B>&#148;). Upon the occurrence
of an Ownership Change Event or a change, as described in Section&nbsp;8, in the character or amount of
any outstanding stock of the corporation the stock of which is subject to the provisions of this
Agreement, any and all new, substituted or additional securities or other property to which the
Participant is entitled by reason of his or her ownership of the Shares that remain, following such
Ownership Change Event or change described in Section&nbsp;8, subject to the Company Reacquisition Right
and shall be immediately subject to the Escrow to the same extent as the Shares immediately before
such event. The Company shall bear the expenses of the escrow.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2 <B>Delivery of Shares to Participant. </B>Whenever the Participant or the Participant&#146;s legal
representative proposes to sell, exchange, transfer, pledge or otherwise dispose of (other than
pursuant to an Ownership Change Event) any Shares subject to the Escrow, the Participant shall so
notify the Company. As soon as practicable thereafter, the Company shall determine, in its sole
discretion, whether such proposed disposition would not cause the Company to automatically
reacquire such Shares pursuant to the Company Reacquisition Right. If the condition set forth in
the preceding sentence is satisfied, the Company shall, as soon as practicable, so notify the
Participant and give to the escrow agent a written notice directing the escrow agent to deliver
such Shares to the Participant. As soon as practicable after receipt of such notice, the escrow
agent shall deliver to the Participant the Shares specified in such notice, and the Escrow shall
terminate with respect to such Shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT style="font-variant: SMALL-CAPS">7.</FONT> <FONT style="font-variant: SMALL-CAPS"><U><B>Election Under Section&nbsp;83(</B></u></FONT><u><B>b</B></u><FONT style="font-variant: SMALL-CAPS"><u><B>) of the Code</B></U><B>.</B></FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1 <B>Tax Consequences. </B>The Participant understands that Section&nbsp;83 of the Code taxes as
ordinary income the difference between the amount paid for the Shares, if anything, and the Fair
Market Value of the Shares as of the date on which the Shares are &#147;substantially vested,&#148; within
the meaning of Section&nbsp;83 of the Code. In this context, &#147;substantially vested&#148; means that the
right of the Company to reacquire the Shares pursuant to the Company Reacquisition Right has
lapsed. The Participant understands that he or she may elect to have his or her taxable income
determined at the time he or she acquires the Shares rather than when and as the Company
Reacquisition Right lapses by filing an election under Section 83(b) of the Code with the Internal
Revenue Service no later than thirty (30)&nbsp;days after the date of acquisition of the Shares. The
Participant understands that failure to make a timely filing under Section 83(b) of the Code will
result in his or her recognition of ordinary income, as the Company Reacquisition Right lapses, on
the difference between the purchase price, if anything, and the Fair Market Value of the Shares at
the time such restrictions lapse. The Participant further understands, however, that if Shares
with respect to which an election under Section 83(b) of the Code has been made are forfeited to
the Company pursuant to its Company
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Reacquisition Right, such forfeiture will be treated as a sale
on which there is realized a loss equal to the excess (if any) of the amount paid (if any) by the
Participant for the forfeited Shares over the amount realized (if any) upon their forfeiture. If
the Participant has paid nothing for the forfeited Shares and has received no payment upon their
forfeiture, the Participant understands
that he or she will be unable to recognize any loss on the forfeiture of the Shares even
though the Participant incurred a tax liability by making an election under Section 83(b) of the
Code.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.2 <B>Timing of Election. </B>The Participant understands that he or she should consult with his or
her tax advisor regarding the advisability of filing with the Internal Revenue Service an election
under Section 83(b) of the Code, which must be filed no later than thirty (30)&nbsp;days after the date
of the acquisition of the Shares pursuant to this Agreement. Failure to file an election under
Section 83(b) of the Code, if appropriate, may result in adverse tax consequences to the
Participant. The Participant acknowledges that he or she has been advised to consult with a tax
advisor regarding the tax consequences to the Participant of the acquisition of Shares hereunder.
ANY ELECTION UNDER SECTION 83(b) OF THE CODE THE PARTICIPANT WISHES TO MAKE MUST BE FILED NO LATER
THAN 30 DAYS AFTER THE DATE ON WHICH THE PARTICIPANT ACQUIRES THE SHARES. THIS TIME PERIOD CANNOT
BE EXTENDED. THE PARTICIPANT ACKNOWLEDGES THAT TIMELY FILING OF A SECTION 83(b) ELECTION IS THE
PARTICIPANT&#146;S SOLE RESPONSIBILITY, EVEN IF THE PARTICIPANT REQUESTS THE COMPANY OR ITS
REPRESENTATIVE TO FILE SUCH ELECTION ON HIS OR HER BEHALF.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.3 <B>Notice of Election. </B>The Participant will notify the Company in writing if the Participant
files an election pursuant to Section 83(b) of the Code. The Company intends, in the event it does
not receive from the Participant evidence of such filing, to claim a tax deduction for any amount
which would otherwise be taxable to the Participant in the absence of such an election.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT style="font-variant: SMALL-CAPS">8.</FONT> <FONT style="font-variant: SMALL-CAPS"><U><B>Adjustments for Changes in Capital Structure</B></U><B>.</B></FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to any required action by the stockholders of the Company, in the event of any change
in the Stock effected without receipt of consideration by the Company, whether through merger,
consolidation, reorganization, reincorporation, recapitalization, reclassification, stock dividend,
stock split, reverse stock split, split-up, split-off, spin-off, combination of shares, exchange of
shares, or similar change in the capital structure of the Company, or in the event of payment of a
dividend or distribution to the stockholders of the Company in a form other than Stock (excepting
normal cash dividends) that has a material effect on the Fair Market Value of Shares, appropriate
adjustments shall be made in the number and kind of Shares subject to the Award, in order to
prevent dilution or enlargement of the Participant&#146;s rights under the Award. For purposes of the
foregoing, conversion of any convertible securities of the Company shall not be treated as
&#147;effected without receipt of consideration by the Company.&#148; Any fractional Share resulting from an
adjustment pursuant to this Section shall be rounded down to the nearest whole number. Such
adjustments shall be determined by the Board, and its determination shall be final, binding and
conclusive.
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT style="font-variant: SMALL-CAPS">9.</FONT> <FONT style="font-variant: SMALL-CAPS"><U><B>Rights as a Stockholder, Director, or Consultant</B></U><B>.</B></FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Participant shall have no rights as a stockholder with respect to any Shares subject to
the Award until the date of the issuance of a certificate for such Shares (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer agent of the
Company). No adjustment shall be made for dividends, distributions or other rights for
which the record date is prior to the date such certificate is issued, except as provided in
Section&nbsp;8. Subject the provisions of this Agreement, the Participant shall exercise all rights and
privileges of a stockholder of the Company with respect to Shares deposited in the Escrow pursuant
to Section&nbsp;6. Nothing in this Agreement shall (a)&nbsp;confer upon the Participant any right to
continue in the Service of a Participating Company in any capacity for any period of time or at a
particular retainer or other rate of compensation, (b)&nbsp;interfere with or limit in any way any right
of the Participating Company Group to terminate the Participant&#146;s Service at any time, or (c)
limit, interfere with, or otherwise affect the provisions of the Company&#146;s charter, bylaws or the
Delaware General Corporation Law relating to the removal of Directors.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT style="font-variant: SMALL-CAPS">10.</FONT> <FONT style="font-variant: SMALL-CAPS"><U><B>Legends</B></U><B>.</B></FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company may at any time place legends referencing the Company Reacquisition Right and any
applicable federal, state or foreign securities law restrictions on all certificates representing
the Shares. The Participant shall, at the request of the Company, promptly present to the Company
any and all certificates representing the Shares in the possession of the Participant in order to
carry out the provisions of this Section. Unless otherwise specified by the Company, legends
placed on such certificates may include, but shall not be limited to, the following:
</DIV>


<DIV align="left" style="margin-top: 6pt; margin-left: 2%; margin-right:2%; font-size: 10pt">&#147;THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO TRANSFER RESTRICTIONS SET
FORTH IN AN AGREEMENT BETWEEN THIS CORPORATION AND THE REGISTERED HOLDER, OR HIS PREDECESSOR
IN INTEREST, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THIS CORPORATION.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT style="font-variant: SMALL-CAPS">11.</FONT> <FONT style="font-variant: SMALL-CAPS"><U><B>Transfers in Violation of Agreement</B></U><B>.</B></FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No Shares may be sold, exchanged, transferred, assigned, pledged, hypothecated or otherwise
disposed of, including by operation of law, in any manner which violates any of the provisions of
this Agreement and, except pursuant to an Ownership Change Event, until the date on which such
Shares become Vested Shares, and any such attempted disposition shall be void. The Company shall
not be required (a)&nbsp;to transfer on its books any Shares which will have been transferred in
violation of any of the provisions set forth in this Agreement or (b)&nbsp;to treat as owner of such
Shares or to accord the right to vote as such owner or to pay dividends to any transferee to whom
such Shares will have been so transferred. In order to enforce its rights under this Section, the
Company shall be authorized to give a stop transfer instruction with respect to the Shares to the
Company&#146;s transfer agent.
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT style="font-variant: SMALL-CAPS">12.</FONT> <FONT style="font-variant: SMALL-CAPS"><U><B>Miscellaneous Provisions</B></U><B>.</B></FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.1 <B>Termination or Amendment. </B>The Board may terminate or amend the Plan or this Agreement at
any time; provided, however, that no such termination or amendment may adversely affect the
Participant&#146;s rights under this Agreement without the consent of the Participant unless such
termination or amendment is necessary to comply with applicable law or government regulation. No
amendment or addition to this Agreement shall be effective unless in writing.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.2 <B>Nontransferability of the Award. </B>The right to acquire Shares pursuant to the Award shall
not be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment,
pledge, encumbrance, or garnishment by creditors of the Participant or the Participant&#146;s
beneficiary, except transfer by will or by the laws of descent and distribution. All rights with
respect to the Award shall be exercisable during the Participant&#146;s lifetime only by the Participant
or the Participant&#146;s guardian or legal representative.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.3 <B>Further Instruments. </B>The parties hereto agree to execute such further instruments and to
take such further action as may reasonably be necessary to carry out the intent of this Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.4 <B>Binding Effect. </B>This Agreement shall inure to the benefit of the successors and assigns
of the Company and, subject to the restrictions on transfer set forth herein, be binding upon the
Participant and the Participant&#146;s heirs, executors, administrators, successors and assigns.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.5 <B>Delivery of Documents and Notices. </B>Any document relating to participation in the Plan or
any notice required or permitted hereunder shall be given in writing and shall be deemed
effectively given (except to the extent that this Agreement provides for effectiveness only upon
actual receipt of such notice) upon personal delivery, electronic delivery at the e-mail address,
if any, provided for the Participant by a Participating Company, or upon deposit in the U.S. Post
Office or foreign postal service, by registered or certified mail, or with a nationally recognized
overnight courier service, with postage and fees prepaid, addressed to the other party at the
address shown below that party&#146;s signature to the Grant Notice or at such other address as such
party may designate in writing from time to time to the other party.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;<B>Description of Electronic Delivery. </B>The Plan documents, which may include but do not
necessarily include: the Plan, the Grant Notice, this Agreement, the Plan Prospectus, and any
reports of the Company provided generally to the Company&#146;s stockholders, may be delivered to the
Participant electronically. In addition, the parties may deliver electronically any notices called
for in connection with the Escrow and the Participant may deliver electronically the Grant Notice
to the Company or to such third party involved in administering the Plan as the Company may
designate from time to time. Such means of electronic delivery may include but do not necessarily
include the delivery of a link to a Company intranet or the internet site of a third party involved
in administering the Plan, the delivery of the document via e-mail or such other means of
electronic delivery specified by the Company.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;<B>Consent to Electronic Delivery. </B>The Participant acknowledges that the Participant has
read Section&nbsp;12.5(a) of this Agreement and consents to the electronic delivery of the Plan
documents, the Grant Notice and notices in connection with the Escrow, as described in Section
12.5(a). The Participant acknowledges that he or she may receive from the Company a paper copy of
any documents delivered electronically at no cost to the Participant by contacting the Company by
telephone or in writing. The Participant further acknowledges that the Participant will be
provided with a paper copy of any documents if the attempted electronic delivery of such documents
fails. Similarly, the Participant understands that the Participant must provide the Company or any
designated third-party administrator with a paper copy of any
documents if the attempted electronic delivery of such documents fails. The Participant may
revoke his or her consent to the electronic delivery of documents described in Section&nbsp;12.5(a) or
may change the electronic mail address to which such documents are to be delivered (if Participant
has provided an electronic mail address) at any time by notifying the Company of such revoked
consent or revised e-mail address by telephone, postal service or electronic mail. Finally, the
Participant understands that he or she is not required to consent to electronic delivery of
documents described in Section&nbsp;12.5(a).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.6 <B>Integrated Agreement. </B>The Grant Notice, this Agreement and the Plan together with any
service or other agreement between the Participant and a Participating Company referring to the
Award shall constitute the entire understanding and agreement of the Participant and the
Participating Company Group with respect to the subject matter contained herein or therein and
supersedes any prior agreements, understandings, restrictions, representations, or warranties among
the Participant and the Participating Company Group with respect to such subject matter other than
those as set forth or provided for herein or therein. To the extent contemplated herein or
therein, the provisions of the Grant Notice and the Agreement shall survive any settlement of the
Award and shall remain in full force and effect.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.7 <B>Applicable Law. </B>This Agreement shall be governed by the laws of the State of California
as such laws are applied to agreements between California residents entered into and to be
performed entirely within the State of California.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.8 <B>Counterparts. </B>The Grant Notice may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same instrument.
</DIV>


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<DIV align="right" style="font-size: 10pt; margin-top: 12pt">EXHIBIT 31.1
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CERTIFICATION OF CHIEF EXECUTIVE OFFICER<BR>
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">I, Jonathan E. Lim, President and Chief Executive Officer of Halozyme Therapeutics, Inc. (the
&#147;Registrant&#148;), certify that:
</DIV>


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    <TD width="3%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>I have reviewed this quarterly report on Form 10-Q of Halozyme Therapeutics, Inc.;</TD>
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    <TD width="3%" nowrap align="left">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Based on my knowledge, this report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period
covered by this report;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Based on my knowledge, the financial statements, and other financial information included in
this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the Registrant as of, and for, the periods presented in this
report;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Registrant&#146;s other certifying officer and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules&nbsp;13a-15(e) and
15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the Registrant and have:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that material
information relating to the Registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during the period in
which this report is being prepared;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally
accepted accounting principles;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>evaluated the effectiveness of the Registrant&#146;s disclosure controls and
procedures and presented in this report our conclusion about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this report
based on such evaluation; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>disclosed in this report any change in the Registrant&#146;s internal control over
financial reporting that occurred during the Registrant&#146;s most recent fiscal quarter
(the Registrant&#146;s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the Registrant&#146;s
internal control over financial reporting; and</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Registrant&#146;s other certifying officer and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the Registrant&#146;s auditors and the
audit committee of Registrant&#146;s board of directors (or persons performing the equivalent
functions):</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>all significant deficiencies and material weaknesses in the design or operation
of internal control over financial reporting which are reasonably likely to adversely
affect the Registrant&#146;s ability to record, process, summarize and report financial
information; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any fraud, whether or not material, that involves management or other employees
who have a significant role in the Registrant&#146;s internal control over financial
reporting.</TD>
</TR>

</TABLE>
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">Dated:  August 7, 2009&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">/s/ Jonathan E. Lim
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Jonathan E. Lim, MD      &nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">President and Chief Executive Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>6
<FILENAME>a53275exv31w2.htm
<DESCRIPTION>EX-31.2
<TEXT>
<HTML>
<HEAD>
<TITLE>exv31w2</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->

<DIV style="font-family: 'Times New Roman',Times,serif">


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>

</TABLE>

<DIV align="right" style="font-size: 10pt; margin-top: 12pt">EXHIBIT 31.2
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CERTIFICATION OF CHIEF FINANCIAL OFFICER<BR>
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">I, Kurt A. Gustafson, Vice President and Chief Financial Officer of Halozyme Therapeutics, Inc.
(the &#147;Registrant&#148;), certify that:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>I have reviewed this quarterly report on Form 10-Q of Halozyme Therapeutics, Inc.;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Based on my knowledge, this report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period
covered by this report;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Based on my knowledge, the financial statements, and other financial information included in
this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the Registrant as of, and for, the periods presented in this
report;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Registrant&#146;s other certifying officer and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules&nbsp;13a-15(e) and
15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the Registrant and have:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that material
information relating to the Registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during the period in
which this report is being prepared;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally
accepted accounting principles;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>evaluated the effectiveness of the Registrant&#146;s disclosure controls and
procedures and presented in this report our conclusion about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this report
based on such evaluation; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>disclosed in this report any change in the Registrant&#146;s internal control over
financial reporting that occurred during the Registrant&#146;s most recent fiscal quarter
(the Registrant&#146;s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the Registrant&#146;s
internal control over financial reporting; and</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Registrant&#146;s other certifying officer and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the Registrant&#146;s auditors and the
audit committee of Registrant&#146;s board of directors (or persons performing the equivalent
functions):</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>all significant deficiencies and material weaknesses in the design or operation
of internal control over financial reporting which are reasonably likely to adversely
affect the Registrant&#146;s ability to record, process, summarize and report financial
information; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any fraud, whether or not material, that involves management or other employees
who have a significant role in the Registrant&#146;s internal control over financial
reporting.</TD>
</TR>

</TABLE>
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">Dated:  August 7, 2009&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">/s/ Kurt A. Gustafson
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Kurt A. Gustafson&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Vice President and Chief Financial Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32
<SEQUENCE>7
<FILENAME>a53275exv32.htm
<DESCRIPTION>EX-32
<TEXT>
<HTML>
<HEAD>
<TITLE>exv32</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->

<DIV style="font-family: 'Times New Roman',Times,serif">


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>

</TABLE>

<DIV align="right" style="font-size: 10pt; margin-top: 12pt">EXHIBIT 32
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CERTIFICATION OF<BR>
CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER<BR>
PURSUANT TO 18 U.S.C. SECTION 1350,<BR>
AS ADOPTED PURSUANT TO<BR>
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In connection with the Quarterly Report of Halozyme Therapeutics, Inc. (the &#147;Registrant&#148;) on Form
10-Q for the quarter ended June&nbsp;30, 2009, as filed with the Securities and Exchange Commission on
the date hereof (the &#147;Report&#148;), I, Jonathan E. Lim, MD, Chief Executive Officer of the Registrant,
certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act
of 2002, that, to the best of my knowledge:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Report fully complies with the requirements of Section 13(a) of the Securities
Exchange Act of 1934 (15 U.S.C. 78m); and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The information contained in the Report fairly presents, in all material respects, the
financial condition and results of operations of the Registrant.</TD>
</TR>

</TABLE>
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">Dated:  August 7, 2009&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">/s/ Jonathan E. Lim
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Jonathan E. Lim, MD&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">President and Chief Executive Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In connection with the Quarterly Report of Halozyme Therapeutics, Inc. (the &#147;Registrant&#148;) on Form
10-Q for the quarter ended June&nbsp;30, 2009, as filed with the Securities and Exchange Commission on
the date hereof (the &#147;Report&#148;), I, Kurt A. Gustafson, Chief Financial Officer of the Registrant,
certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act
of 2002, that, to the best of my knowledge:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Report fully complies with the requirements of Section 13(a) of the Securities
Exchange Act of 1934 (15 U.S.C. 78m); and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The information contained in the Report fairly presents, in all material respects, the
financial condition and results of operations of the Registrant.</TD>
</TR>

</TABLE>
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">Dated:  August 7, 2009&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">/s/ Kurt A. Gustafson
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Kurt A. Gustafson&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Vice President and Chief Financial Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>



</BODY>
</HTML>
</TEXT>
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<SEQUENCE>8
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end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
