Exhibit 10.1

NOVACAL PHARMACEUTICALS, INC.

2002 STOCK OPTION PLAN

1. PURPOSE . This 2002 Stock Option Plan ¹ (“Plan”) is established as a compensatory plan to attract, retain and provide equity incentives to selected persons to promote the financial success of Novacal Pharmaceuticals, Inc., a California corporation (the “Company”). Capitalized terms not previously defined herein are defined in Section 17 of this Plan.

2. TYPES OF OPTIONS AND SHARES . Options granted under this Plan (the “Options”) may be either (a) incentive stock options (“ISOs”) within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), or (b) nonqualified stock options (“NQSOs”), as designated at the time of grant. The shares of stock that may be purchased upon exercise of Options granted under this Plan (the “Shares”) are shares of the common stock of the Company.

3. NUMBER OF SHARES . The aggregate number of Shares that may be issued pursuant to Options granted under this Plan is 2,500,000 Common Shares, subject to adjustment as provided in this Plan. If any Option expires or is terminated without being exercised in whole or in part, the unexercised or released Shares from such Option shall be available for future grant and purchase under this Plan. At all times during the term of this Plan, the Company shall reserve and keep available such number of Shares as shall be required to satisfy the requirements of outstanding Options under this Plan.

4. ELIGIBILITY .

(a) General Rules of Eligibility . Options may be granted to employees, officers, directors, consultants, independent contractors and advisors (provided such consultants, contractors and advisors render bona fide services not in connection with the offer and sale of securities in a capital-raising transaction) of the Company or any Parent, Subsidiary or Affiliate of the Company. ISOs may be granted only to employees (including officers and directors who are also employees) of the Company or a Parent or Subsidiary of the Company. The Committee (as defined in Section 14) in its sole discretion shall select the recipients of Options (“Optionees”). An Optionee may be granted more than one Option under this Plan.

Approved by the Company shareholders on                      , 2002.

(b) Company Assumption of Options . The Company may also, from time to time, assume outstanding options granted by another company, whether in connection with an acquisition of such other company or otherwise, by either (i) granting an Option under this Plan in replacement of the option assumed by the Company, or (ii) treating the assumed option as if it had been granted under this Plan if the terms of such assumed option could be applied to an option granted under this Plan. Such assumption shall be permissible if the holder of the assumed option would have been eligible to be granted an option hereunder if the other company had applied the rules of this Plan to such grant.

5. TERMS AND CONDITIONS OF OPTIONS . The Committee shall determine whether each Option is to be an ISO or an NQSO, the number of Shares subject to the Option, the exercise price of the Option, the period during which the Option may be exercised, and all other terms and conditions of the Option, subject to the following:

(a) Form of Option Grant . Each Option granted under this Plan shall be evidenced by a written Stock Option Grant (the “Grant”) in substantially the form attached hereto as Exhibit A or such other form as shall be approved by the Committee.

(b) Date of Grant . The date of grant of an Option shall be the date on which the Committee makes the determination to grant such Option unless otherwise specified by the Committee and subject to applicable provisions of the Code. The Grant representing the Option will be delivered to the Optionee with a copy of this Plan within a reasonable time after the date of grant; provided, however that if, for any reason, including a unilateral decision by the Company not to execute an agreement evidencing such option, a written Grant is not executed within sixty (60) days after the date of grant, such option shall be deemed null and void. No Option shall be exercisable until such Grant is executed by the Company and the Optionee.

(c) Exercise Price . The exercise price of an NQSO shall be not less than eighty-five percent (85%) of the Fair Market Value of the Shares on the date the Option is granted. The exercise price of an ISO shall be not less than one hundred percent (100%) of the Fair Market Value of the Shares on the date the Option is granted. The exercise price of any Option granted to a person owning more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary of the Company (“Ten Percent Shareholders”) shall not be less than one hundred and ten percent (110%) of the Fair Market Value of the Shares on the date the Option is granted.

(d) Exercise Period and Early Exercise . Options shall be exercisable within the times or upon the events determined by the Committee as set forth in the Grant; provided, however that each Option must become exercisable at a rate of at least twenty percent (20%) per year over five (5) years from the date the Option is granted; except, in the case of an option granted to officers, directors, or consultants of Company, or the issuer of the option’s underlying security or any of its Affiliates, the option may become fully exercisable, subject to reasonable

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conditions such as continued employment, at any time or during any period established by Company, or the issuer of the underlying security or any of its Affiliates; and provided, however, that no Option shall be exercisable after the expiration of ten (10) years from the date the Option is granted, and provided further that no ISO granted to a Ten Percent Shareholder shall be exercisable after the expiration of five (5) years from the date the Option is granted. The grant may, but need not, include a provision whereby the Optionee may elect at any time while an employee, officer, director, consultant, independent contractor or advisor to exercise all or any part of the Option prior to the time and/or events when the Option becomes exercisable. Any Shares received pursuant to any exercise, as provided in Section 7 below, at the discretion of the Committee, may be subject to a repurchase right in favor of Company (and/or any of its Affiliates) or to any other restriction determined, in its discretion, by the Committee.

(e) Limitations .

(i) ISO Limitations . The aggregate Fair Market Value (determined as of the time an Option is granted) of stock with respect to which ISOs are exercisable for the first time by an Optionee during any calendar year (under this Plan or under any other incentive stock option plan of the Company or any Parent or Subsidiary of the Company) shall not exceed one hundred thousand dollars ($100,000). If the Fair Market Value of stock with respect to which ISOs are exercisable for the first time by an Optionee during any calendar year exceeds $100,000, the Options for the amount in excess of $100,000 shall be treated as not being ISOs and shall be NQSOs. The foregoing shall be applied by taking Options into account in the order in which they were granted. In the event that the Code or the regulations promulgated thereunder are amended after the effective date of this Plan to provide for a different limit on the Fair Market Value of Shares permitted to be subject to ISOs, such different limit shall be incorporated herein and shall apply to any Options granted after the effective date of such amendment.

(ii) Limitations on Grants . The foregoing provisions of this Plan notwithstanding, no Optionee shall be granted Options under this Plan in any one fiscal year which in the aggregate shall permit the Optionee to purchase more than 400,000 shares of Common Stock. To the extent the Board of Directors of the Company determines that the limitations such as the provisions of this Section 5(e)(ii) are no longer required to preserve the deductibility for the Company of option-related compensation under Section 162(m) of the Code, the Board of Directors may modify or eliminate the limitations contained in this Section 5(e)(ii).

(f) Options Non-Transferable . Options granted under this Plan, and any interest therein, shall not be transferable or assignable by the Optionee, and may not be made

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subject to execution, attachment or similar process, otherwise than by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Optionee only by the Optionee or any permitted transferee.

(g) Assumed Options . In the event the Company assumes an option granted by another company in accordance with Section 4(b) above, the terms and conditions of such option shall remain unchanged (except the exercise price and the number and nature of shares issuable upon exercise, which will be adjusted appropriately pursuant to Section 424 of the Code and the Treasury Regulations applicable thereto). In the event the Company elects to grant a new option rather than assuming an existing option (as specified in Section 4), such new option need not be granted at Fair Market Value on the date of grant and may instead be granted with a similarly adjusted exercise price.

(h) Termination of Options . Except as otherwise provided in an Optionee’s grant, options granted under the Plan shall terminate and may not be exercised if the Optionee ceases to be employed by, or provide services to, the Company or any Parent or Subsidiary of the Company (or, in the case of a NQSO, by or to any Affiliate of the Company). An Optionee shall be considered to be employed by the Company for all purposes under this Section 5(h) if the Optionee is an officer, director or full-time employee of the Company or any Parent, Subsidiary or Affiliate of the Company or if the Committee determines that the Optionee is rendering substantial services as a part-time employee, consultant, contractor or advisor to the Company or any Parent, Subsidiary or Affiliate of the Company. The Committee shall have discretion to determine whether an Optionee has ceased to be employed by the Company or any Parent, Subsidiary or Affiliate of the Company and the effective date on which such employment terminated (the “Termination Date”).

(i) Termination Generally . If an Optionee ceases to be employed by the Company and all Parents, Subsidiaries or Affiliates of the Company for any reason except death or disability, the Options which are vested (the “Vested Options”), to the extent (and only to the extent) exercisable by the Optionee on the Termination Date, may be exercised by the Optionee, but only within three months after the Termination Date or such shorter period of time as provided in the Grant, but in no event less than thirty (30) days; provided that the Option may not be exercised in any event after the expiration date for the Option.

(ii) Death or Disability . If an Optionee’s employment with the Company and all Parents, Subsidiaries and Affiliates of the Company is terminated because of the death of the Optionee or the permanent and total disability of the Optionee within the meaning of Section 22(e)(3) of the Code, the Vested Options, to the extent (and only to the extent) exercisable by the Optionee on the Termination Date, may be exercised by the Optionee (or the Optionee’s legal representative), but only within twelve (12) months after the Termination

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Date; and provided further that the Option may not be exercised in any event later than the Expiration Date. If an Optionee’s employment with the Company and all Parents, Subsidiaries and Affiliates of the Company is terminated because of a disability of the Optionee which is not permanent and total within the meaning of Section 22(e)(3) of the Code, the Vested Options, to the extent (and only to the extent) exercisable by the Optionee on the Termination Date, may be exercised by the Optionee or the Optionee’s legal representative, but only within six (6) months after the Termination Date; and provided further that the Option may not be exercised in any event later than the expiration date for the Option.

6. EXERCISE OF OPTIONS .

(a) Notices . Options may be exercised only by delivery to the Company of a written exercise agreement in a form approved by the Committee (which need not be the same for each Optionee), stating the number of Shares being purchased, the restrictions imposed on the Shares, if any, and such representations and agreements regarding the Optionee’s investment intent and access to information, if any, as may be required by the Company to comply with applicable securities laws, together with payment in full of the exercise price for the number of Shares being purchased.

(b) Payment . Payment for the Shares may be made in cash (by check) or, where approved by the Committee in its sole discretion at the time of grant and where permitted by law: (i) by cancellation of indebtedness of the Company to the Optionee; (ii) by surrender of shares of Common Stock of the Company already owned by the Optionee, having a Fair Market Value equal to the exercise price of the Option; (iii) by waiver of compensation due or accrued to Optionee for services rendered; (iv) through delivery of a promissory note for the full exercise price bearing interest at such rate with the note due at such time, on a secured or unsecured basis, as determined by the Committee; (v) through a guaranty by the Company of a loan to the Optionee by a third party of all or part of the option price (but not more than the option price), and such guaranty may be on an unsecured or secured basis as the Committee shall approve (including, without limitation, by a security interest in the shares of the Company); (vi) provided that a public market for the Company’s stock exists, through a “same day sale” commitment from the Optionee and a broker-dealer that is a member of the National Association of Securities Dealers, Inc. (an “NASD Dealer”) whereby the Optionee irrevocably elects to exercise the Option and to sell a portion of the Shares so purchased to pay for the exercise price and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to forward the exercise price directly to the Company; (vii) provided that a public market for the Company’s stock exists, through a “margin” commitment from the Optionee and an NASD Dealer whereby the Optionee irrevocably elects to exercise the Option and to pledge the Shares so purchased to the NASD Dealer in a margin account as security for a loan from the NASD Dealer in the amount of the exercise price, and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to forward the exercise price directly to the Company; or (viii) by any combination of the foregoing.

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(c) Withholding Taxes . Prior to issuance of the Shares upon exercise of an Option, at the discretion of the Committee (or, unless otherwise determined by the Committee, at the discretion of the Company’s management), the Optionee shall pay or make adequate provision for any federal or state withholding obligations of the Company, if applicable. Where approved by the Committee in its sole discretion, the Optionee may provide for payment of withholding taxes upon exercise of the Option by requesting that the Company retain Shares with a Fair Market Value equal to the minimum amount of taxes required to be withheld. In such case, the Company shall issue the net number of Shares to the Optionee by deducting the Shares retained from the Shares exercised. The Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined in accordance with Section 83 of the Code (the “Tax Date”). All elections by Optionees to have Shares withheld for this purpose shall be made in writing in a form acceptable to the Committee and shall be subject to the following restrictions:

(i) the election must be made on or prior to the applicable Tax Date;

(ii) once made, the election shall be irrevocable as to the particular Shares as to which the election is made;

(iii) all elections shall be subject to the consent or disapproval of the Committee;

(iv) if the Optionee is an officer or director of the Company or other person (in each case, an “Insider”) whose transactions in the Company’s Common Stock are subject to Section 16(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and if the Company is subject to Section 16(b) of the Exchange Act, the election must comply with Rule 16b-3 as promulgated by the Securities and Exchange Commission (“Rule 16b-3”).

(d) Limitations on Exercise . Notwithstanding anything else to the contrary in the Plan or any Grant, no Option may be exercisable later than the expiration date of the Option.

7. RESTRICTIONS ON SHARES . At the discretion of the Committee, the Company may reserve to itself and/or its assignee(s) in the Grant (a) a right of first refusal to purchase all Shares that an Optionee (or a subsequent transferee) may propose to transfer to a third party and/or (b) a right to repurchase a portion of or all Shares held by an Optionee upon the Optionee’s termination of employment or service with the Company or its Parent, Subsidiary or Affiliate of the Company for any reason (“Termination Date”), if (i) the repurchase price is not less than the fair market value of the Shares to be repurchased on the Termination Date, and the right to repurchase must be exercised for cash or cancellation of purchase money indebtedness

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for the Shares within 90 days of the Termination Date, and the right terminates when Company’s securities become publicly traded, or (ii) the repurchase price is at the original purchase price, provided the right to repurchase at the original price lapses at the rate of at least 20% of the Shares per year over five years from the date the Option is granted (without respect to the date when the Option was exercised or became exercisable) and the right to repurchase must be exercised for cash or cancellation of purchase money indebtedness for the Shares within 90 days of the Termination Date; provided, however, that in addition to the restrictions set forth in (i) and (ii) immediately above, Shares held by an officer, director or consultant of Company or any affiliate of Company may be subject to additional or greater restrictions.

8. MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS . The Committee shall have the power to modify, extend or renew outstanding Options and to authorize the grant of new Options in substitution therefor, provided that any such action may not, without the written consent of the Optionee, impair any rights under any Option previously granted. Any outstanding ISO that is modified, extended, renewed or otherwise altered shall be treated in accordance with Section 424(h) of the Code. The Committee shall have the power to reduce the exercise price of outstanding options; provided, however, that the exercise price per share may not be reduced below the minimum exercise price that would be permitted under Section 5(c) of this Plan for options granted on the date the action is taken to reduce the exercise price. Notwithstanding any other provision of this Plan, the Committee may accelerate the earliest date or dates on which outstanding Options (or any installments thereof) are exercisable.

9. PRIVILEGES OF STOCK OWNERSHIP . No Optionee shall have any of the rights of a shareholder with respect to any Shares subject to an Option until such Option is properly exercised. No adjustment shall be made for dividends or distributions or other rights for which the record date is prior to such date, except as provided in this Plan. The Company shall provide annually to each Optionee a copy of the annual financial statements of the Company.

10. NO OBLIGATION TO EMPLOY; NO RIGHT TO FUTURE GRANTS . Nothing in this Plan or any Option granted under this Plan shall confer on any Optionee any right (a) to continue in the employ of, or other relationship with, the Company or any Parent or Subsidiary of the Company or limit in any way the right of the Company or any Parent, Subsidiary or Affiliate of the Company to terminate the Optionee’s employment or other relationship at any time, with or without cause or (b) to have any Option(s) granted to such Optionee under this Plan, or any other plan, or to acquire any other securities of the Company, in the future.

11. ADJUSTMENT OF OPTION SHARES . In the event that the number of outstanding shares of Common Stock of the Company is changed by a stock dividend, stock split, reverse stock split, combination, reclassification or similar change in the capital structure of the Company without consideration, or if a substantial portion of the assets of the Company are distributed, without consideration in a spin-off or similar transaction, to the shareholders of the

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Company, the number of Shares available under this Plan and the number of Shares subject to outstanding Options and the exercise price per share of such Options shall be proportionately adjusted, subject to any required action by the Board or shareholders of the Company and compliance with applicable securities laws; provided, however, that a fractional share shall not be issued upon exercise of any Option and any fractions of a Share that would have resulted shall either be cashed out at Fair Market Value or the number of Shares issuable under the Option shall be rounded down to the nearest whole number, as determined by the Committee; and provided further that the exercise price may not be decreased to below the par value, if any, for the Shares.

12. ASSUMPTION OF OPTIONS BY SUCCESSORS .

(a) In the event of (i) a merger or consolidation in which the Company is not the surviving corporation (other than a merger or consolidation with a wholly-owned subsidiary or a Parent or where there is no substantial change in the shareholders of the corporation and the Options granted under this Plan are assumed by the successor corporation), or (ii) the sale of all or substantially all of the assets of the Company, any or all outstanding Options shall be assumed by the successor corporation, which assumption shall be binding on all Optionees, an equivalent option shall be substituted by such successor corporation or the successor corporation shall provide substantially similar consideration to Optionees as was provided to shareholders (after taking into account the existing provisions of the Optionees’ options such as the exercise price and the vesting schedule), and, in the case of outstanding shares subject to a repurchase option, issue substantially similar shares or other property subject to repurchase restrictions no less favorable to the Optionee.

(b) In the event such successor corporation, if any, refuses to assume or substitute, as provided above, pursuant to an event described in subsection (a) above, or in the event of a dissolution or liquidation of the Company, the Options shall, notwithstanding any contrary terms in the Grant, expire on a date specified in a written notice given by the Committee to the Optionees specifying the terms and conditions of such termination (which date must be at least twenty (20) days after the date the Committee gives the written notice).

13. ADOPTION AND SHAREHOLDER APPROVAL . This Plan shall become effective on the date that it is adopted by the Board of the Company (the “Board”). This Plan shall be approved by the shareholders of the Company, in any manner permitted by applicable corporate law, within twelve (12) months before or after the date this Plan is adopted by the Board.

14. ADMINISTRATION . This Plan may be administered by the Board or a Committee appointed by the Board (the “Committee”). If, at any time after the Company registers under the Exchange Act, the Board desires the Plan to be administered by a Committee, the Board shall appoint a Committee consisting of not less than two directors, each of whom is a Nonemployee Director. As used in this Plan, references to the “Committee” shall mean either

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such Committee or the Board if no committee has been established. The interpretation by the Committee of any of the provisions of this Plan or any Option granted under this Plan shall be final and binding upon the Company and all persons having an interest in any Option or any Shares purchased pursuant to an Option.

15. TERM OF PLAN . Options may be granted pursuant to this Plan from time to time on or prior to May 22, 2012, a date which is less than ten years after the earlier of the date of approval of this Plan by the Board or the shareholders of the Company pursuant to Section 13 of this Plan.

16. AMENDMENT OR TERMINATION OF PLAN . The Board of Directors or Committee may, at any time, amend, alter, suspend or discontinue the Plan, but no amendment, alteration, suspension or discontinuation shall be made which would impair the rights of any Optionee under any Option theretofore granted, without his or her consent, or which, without the approval of the shareholders of the Company would:

(a) except as provided in Section 11 of the Plan, increase the total number of Shares reserved for the purposes of the Plan;

(b) extend the duration of the Plan;

(c) extend the period during and over which Options may be exercised under the Plan.

Without limiting the foregoing, the Committee may at any time or from time to time authorize the Company, with the consent of the respective Optionees, to issue new options in exchange for the surrender and cancellation of any or all outstanding Options.

17. CERTAIN DEFINITIONS . As used in this Plan, the following terms shall have the following meanings:

(a) “ Affiliate ” means any corporation that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, another corporation, where “control” (including the terms “controlled by” and “under common control with”) means the possession, direct or indirect, of the power to cause the direction of the management and policies of the corporation, whether through the ownership of voting securities, by contract or otherwise.

(b) “ Fair Market Value ” shall mean the fair market value of the Shares as determined by the Committee from time to time in good faith. If a public market exists for the

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Shares, the Fair Market Value shall be the average of the last reported bid and asked prices for Common Stock of the Company on the last trading day prior to the date of determination or, in the event the Common Stock of the Company is listed on a stock exchange or is a Nasdaq National Market security, the Fair Market Value shall be the closing price on such exchange or system on the last trading day prior to the date of determination.

(c) “ Nonemployee Director ” shall have the meaning set forth in Rule 16b-3(b)(3) as promulgated by the Securities and Exchange Commission under Section 16(b) of the Exchange Act, as such rule is amended from time to time and as interpreted by the Securities and Exchange Commission.

(d) “ Parent ” means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company if, at the time of the granting of the Option, each of the corporations other than the Company owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

(e) “ Subsidiary ” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if, at the time of the granting of the Option, each of the corporations other than the last corporation in the unbroken chain owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

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EXHIBIT A

STOCK OPTION GRANT

Optionee:_____________________________________________________________________________________

Address:______________________________________________________________________________________

_____________________________________________________________________________________________

Total Shares Subject to Option:_____________________________________________________________________

Exercise Price Per Share:_________________________________________________________________________

Date of Grant:__________________________________________________________________________________

Expiration Date of Option:_________________________________________________________________________

Type of Stock Option:             Incentive: ¨

                                                  Nonqualified: ¨

1. Grant of Option . Novacal Pharmaceuticals, Inc., a California corporation (the “Company”), hereby grants to the optionee named above (“Optionee”) an option (this “Option”) to purchase the total number of shares of Common Stock of the Company set forth above (the “Shares”) at the exercise price per share set forth above (the “Exercise Price”), subject to all of the terms and conditions of this Grant and the Company’s 2002 Stock Option Plan, as amended to the date hereof (the “Plan”). If designated as an Incentive Stock Option above, this Option is intended to qualify as an “incentive stock option” (“ISO”) within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”). Unless otherwise defined herein, capitalized terms used herein shall have the meanings ascribed to them in the Plan.

2. Exercise Period of Option . The option rights granted hereunder are exercisable during the time period or periods, and as to the number of shares exercisable during each time period, as follows:

(a)                      shares, or any part thereof, may be exercised at any time or times, from and including                      to and including                      ;

(b) an additional                      shares, or any part thereof, may be exercised at any time or times, from and including                      to and including                      ;

(c) an additional                      shares, or any part thereof, may be exercised at any time or times, from and including                      to and including                      ;

(d) an additional                      shares, or any part thereof, may be exercised at any time or times, from and including                      to and including                      ;

(e) and the remaining                      shares, or any part thereof, may be exercised at any time or times, from and including                      to and including                      .

Notwithstanding the above, (i) the Committee or to the extent a Committee has not been appointed, the Board of Directors (it being understood in such event reference herein to the Committee shall mean the Board of Directors), in its sole discretion, may, upon written notice to the Optionee, accelerate the earliest date or dates on which any of the Option rights granted hereunder are exercisable, and (ii) the minimum number of Shares that may be purchased upon any partial exercise of the Option is               (              ) shares, and (iii) this Option shall expire on the Expiration Date set forth above and must be exercised, if at all, on or before the Expiration Date. The portion of Shares as to which an Option is exercisable in accordance with the above schedule as of the applicable dates shall be deemed “Vested Options.”

3. Early Exercise and Repurchase Rights . Notwithstanding the condition precedent exercise periods and/or events set forth in Section 2 above, after the date of this Grant and prior to said exercise periods and/or events, Optionee, at any time, or from time to time, may exercise (“early exercise”) any or all of the option rights granted hereunder, after the date of this Grant and prior to said Section 2 exercise periods and/or events, provided, however, if, and to the extent, that the Shares purchased pursuant to such exercise are not Vested Shares (as defined in Section 2 above), Company shall have the right and option to repurchase any or all of said Shares (as are not Vested Shares) at the per share original exercise price set forth herein, equitably and proportionately adjusted or otherwise relevantly changed to reflect any Company Common Stock dividends, stock splits, reverse stock splits, other similar stock combinations or divisions, or stock reclassifications, occurring after the date hereof. Said repurchase right shall be exercisable as of, when, and to such extent, and shall terminate as of such date(s), as set forth in and provided by those certain “Repurchase Terms” provided in Section 10 in the Stock Option Exercise Agreement, attached as Exhibit 1 hereto. It is understood, however, that, after the Termination Date, as defined in Section 5 below, or after any other termination of the option rights herein, no exercise may be made of any rights to Shares under the exercise provisions

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(early exercise) in this Section 3. As to any Shares purchased upon an exercise hereunder as are not Vested Shares, as a condition of and requirement for said exercise and purchase, (i) the certificate(s), representing said Shares, shall be retained and held by Company in its possession for purposes of its repurchase rights, and (ii) Optionee shall have delivered to Company an Assignment Separate from Certificate (“Stock Power”), as signed by Optionee, but with the number of shares to be transferred and transferee unspecified (and Optionee hereby irrevocably designates and authorizes Company, and its successors and assigns, as agent for Optionee to date, complete and otherwise use said Stock Power to effectuate and implement Company’s repurchase rights herein; said designation and authority being deemed coupled with an interest and being irrevocable). For purposes of protecting and securing Company’s repurchase rights to said Shares, Optionee hereby grants to Company a security interest in said Shares and agrees, unless Company otherwise consents in writing, not to sell, transfer or offer to sell or transfer any of said Shares as are and remain subject to Company’s repurchase rights. Upon completion of the transfer of the Shares (or appropriate portion thereof) to Company relative to its repurchase rights and/or upon the termination of said rights, as the case may be, all remaining Shares not repurchased by and transferred to Company shall be transferred and/or returned to Optionee. All of the terms herein are fully binding and enforceable upon Optionee and Optionee’s heirs, representatives, successors and assigns. All certificate(s) representing the Shares of Company to be retained and held by Company shall, until released to Optionee free of Company’s repurchase rights, may bear, at Company’s discretion, in addition to each of the legend(s) as otherwise herein prescribed, the following legend (with the appropriate date filled in):

THESE SHARES ARE SUBJECT TO A REPURCAHSE OPTION OF THE CORPORATION AND TO VARIOUS TRANSFER AND OTHER RESTRICTIONS AS SET FORTH IN THAT CERTAIN STOCK OPTION GRANT, DATED                  , 20          , A COPY OF WHICH IS ON FILE WITH THE CORPORATION.

It is understood that Optionee may accompany the exercise of the option rights herein with the filing with the Internal Revenue Service of an election to include income in the year of the exercise pursuant to Section 83(b) of the Internal Revenue Code (and with such state agencies and under such state laws as applicable). OPTIONEE SHOULD CONSULT A TAX ADVISOR BEFORE EXERCISING THE OPTION OR MAKING SUCH FILING TO VERIFY AND CONFIRM THAT SUCH ACTIONS ARE APPROPRIATE WITH RESPECT TO OPTIONEE’S TAX CIRCUMSTANCES.

4. Restriction on Exercise . This Option may not be exercised unless such exercise is in compliance with the Securities Act of 1933, as amended, and all applicable state securities laws, as they are in effect on the date of exercise, and the requirements of any stock exchange or over-the-counter market on which the Company’s Common Stock may be listed or quoted at the time of exercise. Optionee understands that the Company is under no obligation to register, qualify or list the Shares with the Securities and Exchange Commission, any state securities commission or any stock exchange to effect such compliance.

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5. Termination of Option . Except as provided below in this Section 4, this Option shall terminate and may not be exercised if Optionee ceases to be employed by, or provide services to, the Company or by any Parent or Subsidiary of the Company (or, in the case of a nonqualified stock option, by or to any Affiliate of the Company). Optionee shall be considered to be employed by the Company for all purposes under this Section 4 if Optionee is an officer, director or full-time employee of the Company or any Parent, Subsidiary or Affiliate of the Company or if the Committee determines that Optionee is rendering substantial services as a part-time employee, consultant, contractor or advisor to the Company or any Parent, Subsidiary or Affiliate of the Company. The Committee shall have discretion to determine whether Optionee has ceased to be employed by the Company or any Parent, Subsidiary or Affiliate of the Company and the effective date on which such employment terminated (the “Termination Date”).

(a) Termination Generally . If Optionee ceases to be employed by the Company and all Parents, Subsidiaries or Affiliates of the Company for any reason except death or disability, the Vested Options, to the extent (and only to the extent) exercisable by Optionee on the Termination Date, may be exercised by Optionee, but only within three months after the Termination Date; provided that this Option may not be exercised in any event after the Expiration Date.

(b) Death or Disability . If Optionee’s employment with the Company and all Parents, Subsidiaries and Affiliates of the Company is terminated because of the death of Optionee or the permanent and total disability of Optionee within the meaning of Section 22(e)(3) of the Code, the Vested Options, to the extent (and only to the extent) exercisable by Optionee on the Termination Date, may be exercised by Optionee (or Optionee’s legal representative), but only within twelve (12) months after the Termination Date; and provided further that this Option may not be exercised in any event later than the Expiration Date. If Optionee’s employment with the Company and all Parents, Subsidiaries and Affiliates of the Company is terminated because of a disability of Optionee which is not permanent and total within the meaning of Section 221(e)(3) of the Code, the Vested Options, to the extent (and only to the extent) exercisable by Optionee on the Termination Date, may be exercised by Optionee or Optionee’s legal representative, but only within six (6) months after the Termination Date; and provided further that the Option may not be exercised in any event later than the Expiration Date. Optionee understands that if the Option is an ISO and if it is exercised after three months in the event of a disability which is not permanent and total, the Option will be treated as a nonqualified stock option for tax purposes.

(c) No Right to Employment . Nothing in the Plan or this Grant shall confer on Optionee any right to continue in the employ of, or other relationship with, the Company or any Parent, Subsidiary or Affiliate of the Company or limit in any way the right of the Company or any Parent, Subsidiary or Affiliate of the Company to terminate Optionee’s employment or other relationship at any time, with or without cause.

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6. Manner of Exercise .

(a) Exercise Agreement . This Option shall be exercisable by delivery to the Company of an executed written Stock Option Exercise Agreement in the form attached hereto as Exhibit 1, or in such other form as may be approved by the Company, which shall set forth Optionee’s election to exercise some or all of this Option, the number of Shares being purchased, any restrictions imposed on the Shares and such other representations and agreements as may be required by the Company to comply with applicable securities laws.

(b) Exercise Price . The Stock Option Exercise Agreement shall be accompanied by full payment of the Exercise Price for the Shares being purchased. Payment for the Shares may be made in cash (by check), or, where permitted by law, by any of the following methods approved by the Committee at the date of grant of this Option, or any combinations thereof:

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(c) Withholding Taxes . Prior to the issuance of the Shares upon exercise of this Option, if so required by Company, Optionee must pay or make adequate provision for any applicable federal or state withholding obligations of the Company. The Optionee may provide for payment of Optionee’s minimum statutory withholding taxes upon exercise of the Option by requesting that the Company retain Shares with a Fair Market Value equal to the minimum amount of taxes required to be withheld, all as set forth in Section 6(c) of the Plan. In such case, the Company shall issue the net number of Shares to the Optionee by deducting the Shares retained from the Shares exercised.

(d) Issuance of Shares . Provided that such notice and payment are in form and substance satisfactory to counsel for the Company, the Company shall cause the Shares to be issued in the name of Optionee or Optionee’s legal representative.

7. Notice of Disqualifying Disposition of ISO Shares . If the Option granted to Optionee herein is an ISO, and if Optionee sells or otherwise disposes of any of the Shares acquired pursuant to the ISO on or before the later of (1) the date two years after the Date of Grant, or (2) the date one year after exercise of the ISO with respect to the Shares to be sold or disposed of, the Optionee shall immediately notify the Company in writing of such disposition. Optionee acknowledges and agrees that Optionee may be subject to income tax withholding by the Company on the compensation income recognized by the Optionee from any such early disposition by payment in cash or out of the current wages or other earnings payable to the Optionee.

8. Nontransferability of Option . This Option may not be transferred in any manner other than by will or by the law of descent and distribution and may be exercised during the lifetime of Optionee only by Optionee or other permitted transferee. The terms of this Option shall be binding upon the executors, administrators, successors and assigns of the Optionee.

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9. Federal Tax Consequences . Set forth below is a brief summary as of the date this form of Option Grant was adopted of some of the federal tax consequences of exercise of this Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

(a) Exercise of ISO . If this Option qualifies as an ISO, there will be no regular federal income tax liability upon the exercise of this Option, although the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price will be treated as an adjustment to alternative minimum taxable income for federal income tax purposes and may subject the Optionee to an alternative minimum tax liability in the year of exercise.

(b) Exercise of Nonqualified Stock Option . If this Option does not qualify as an ISO, there may be a regular federal income tax liability upon the exercise of the Option. The Optionee will be treated as having received compensation income (taxable at ordinary income tax rates) equal to the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price. The Company will be required to withhold from Optionee’s compensation or collect from Optionee and pay to the applicable taxing authorities an amount equal to a percentage of this compensation income at the time of exercise.

(c) Disposition of Shares . In the case of a nonqualified stock option, if Shares are held for at least one year before disposition, any gain on disposition of the Shares will be treated as long-term capital gain for federal and California income tax purposes. In the case of an ISO, if Shares are held for at least one year after the date of exercise and at least two years after the Date of Grant, any gain on disposition of the Shares will be treated as long-term capital gain for federal and California income tax purposes. If Shares acquired pursuant to an ISO are disposed of within such one-year or two-year periods (a “disqualifying disposition”), gain on such disqualifying disposition will be treated as compensation income (taxable at ordinary income rates) to the extent of the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price (the “Spread”). Any gain in excess of the Spread shall be treated as capital gain.

10. Interpretation . Any dispute regarding the interpretation of this Grant shall be submitted by Optionee or the Company to the Company’s Board of Directors or the Committee, which shall review such dispute at its next regular meeting. The resolution of such a dispute by the Board or Committee shall be final and binding on the Company and Optionee.

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11. Entire Agreement . The Plan and the Stock Option Exercise Agreement attached hereto as Exhibit 1 are incorporated herein by this reference. This Grant, the Plan and the Stock Option Exercise Agreement constitute the entire agreement of the parties hereto and supersede all prior undertakings and agreements with respect to the subject matter hereof.

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ACCEPTANCE

Optionee hereby acknowledges receipt of a copy of the Plan, represents that Optionee has read and understands the terms and provisions thereof, and accepts this Option subject to all the terms and conditions of the Plan and this Stock Option Grant. Optionee acknowledges that there may be adverse tax consequences upon exercise of this Option or disposition of the Shares and that Optionee should consult a tax adviser prior to such exercise or disposition.

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EXHIBIT 1

TO STOCK OPTION GRANT

STOCK OPTION EXERCISE AGREEMENT

This Agreement is made this              day of              , 20              between Novacal Pharmaceuticals, Inc., a California corporation (the “Company”), and the optionee named below (“Optionee”).

Optionee: _________________________________________________________________________

Social Security Number:______________________________________________________________

Address:__________________________________________________________________________

_________________________________________________________________________________

Number of Shares Purchased:__________________________________________________________

Price Per Share:_____________________________________________________________________

Aggregate Purchase Price:_____________________________________________________________

Date of Option Grant:_________________________________________________________________

Type of Stock Option:         Incentive: ___________________

                 Nonqualified: _________________

Optionee hereby delivers to the Company the Aggregate Purchase Price, to the extent permitted in the Option Grant, as follows [Company to check applicable box(es) and complete ]:

The Company and Optionee hereby agree as follows:

1. Purchase of Shares . On this date and subject to the terms and conditions of this Agreement, Optionee hereby exercises the Stock Option Grant between the Company and Optionee dated as of the Date of Option Grant set forth above (the “Grant”), with respect to the Number of Shares Purchased set forth above of the Company’s Common Stock (the “Shares”) at an aggregate purchase price equal to the Aggregate Purchase Price set forth above (the “Purchase Price”) and the Price per Share set forth above (the “Purchase Price Per Share”). The term “Shares” refers to the Shares purchased under this Agreement and includes all securities received (a) in replacement of the Shares, and (b) as a result of stock dividends or stock splits in respect of the Shares. Capitalized terms used herein that are not defined herein have the definitions ascribed to them in the Plan or the Grant.

2. Representations of Purchaser . Optionee represents and warrants to the Company that:

(a) Optionee has received, read and understood the Plan and the Grant and agrees to abide by and be bound by their terms and conditions.

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(b) Optionee is capable of evaluating the merits and risks of this investment, has the ability to protect Optionee’s own interests in this transaction and is financially capable of bearing a total loss of this investment.

(c) Optionee is fully aware of (i) the highly speculative nature of the investment in the Shares; (ii) the financial hazards involved; and (iii) the lack of liquidity of the Shares.

(d) Optionee is purchasing the Shares for Optionee’s own account for investment purposes only and not with a view to, or for sale in connection with, a distribution of the Shares within the meaning of the Securities Act of 1933, as amended (the “1933 Act”).

(e) Optionee has no present intention of selling or otherwise disposing of all or any portion of the Shares.

(f) Optionee shall agree, to the extent requested by Company and an underwriter of Company’s Common Stock, not to sell or otherwise transfer or dispose of any securities of Company, whether or not acquired hereunder, during a reasonable period of time not to exceed 180 days, as agreed to by Company and said underwriter, following the effective date of a registration statement under the Securities Act of 1933 with respect to any public offering of Company’s securities.

3. Compliance with Securities Laws . Optionee understands and acknowledges that the Shares have not been registered under the 1933 Act and that, notwithstanding any other provision of the Grant to the contrary, the exercise of any rights to purchase any Shares is expressly conditioned upon compliance with the 1933 Act and all applicable state securities laws. Optionee agrees to cooperate with the Company to ensure compliance with such laws. The Shares are being issued under the 1933 Act pursuant to [the Company will check the applicable box] :

If privately held:

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4. Federal Restrictions on Transfer . Optionee understands that the Shares must be held indefinitely unless they are registered under the 1933 Act or unless an exemption from such registration is available and that the certificate(s) representing the Shares will bear a legend to that effect. Optionee understands that the Company is under no obligation to register the Shares, and that an exemption may not be available or may not permit Optionee to transfer Shares in the amounts or at the times proposed by Optionee.

(a) Rule 144 . Optionee has been advised that Rule 144 promulgated under the 1933 Act, which permits certain resales of unregistered securities, is not presently available with respect to the Shares and, in any event, requires that a minimum of one (1) year elapses between the date of acquisition of Shares from the Company or an affiliate of the Company and any resale under Rule 144. Prior to an initial public offering of the Company’s stock, “nonaffiliates” (i.e. persons other than officers, directors and major shareholders of the Company) may resell only under Rule 144(k), which requires that a minimum of three (3) years elapse between the date of acquisition of Shares from the Company or an affiliate of the Company and any resale under Rule 144(k). Rule 144(k) is not available to affiliates.

(b) Rule 701 . If the exemption relied upon for exercise of the Shares is Rule 701, the Shares will become freely transferable, subject to limited conditions regarding the method of sale, by nonaffiliates ninety (90) days after the first sale of Common Stock of the Company to the general public pursuant to a registration statement filed with and declared effective by the Securities and Exchange Commission (the “SEC”), subject to any lengthier market standoff agreement contained in this Agreement or entered into by Optionee. Affiliates must comply with the provisions (other than the holding period requirements) of Rule 144.

5. State Law Restrictions on Transfer . Optionee understands that transfer of the Shares may be restricted by applicable state securities laws, and that the certificate(s) representing the Shares may bear a legend or legends to that effect.

6. Market Standoff Agreement . Optionee agrees in connection with any registration of the Company’s securities that, upon the request of the Company or the underwriters managing any public offering of the Company’s securities, Optionee will not sell or otherwise dispose of any Shares without the prior written consent of the Company or such underwriters, as the case may be, for a period of time (not to exceed one hundred eighty (180) days) from the effective date of such registration as the Company or the underwriters may specify for employee shareholders generally.

7. Legends . Optionee understands and agrees that the certificate(s) representing the Shares will bear a legend in substantially the following form, in addition to any other legends required by applicable law:

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“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE ‘SECURITIES ACT’), AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE SECURITIES ACT OR, IN THE OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.”

8. Stop-Transfer Notices . Optionee understands and agrees that, in order or ensure compliance with the restrictions referred to herein, the Company may issue appropriate “stop-transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.

9. Tax Consequences . OPTIONEE UNDERSTANDS THAT OPTIONEE MAY SUFFER ADVERSE TAX CONSEQUENCES AS A RESULT OF OPTIONEE’S PURCHASE OR DISPOSITION OF THE SHARES. OPTIONEE REPRESENTS THAT OPTIONEE HAS CONSULTED WITH ANY TAX CONSULTANT(S) OPTIONEE DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE OR DISPOSITION OF THE SHARES AND THAT OPTIONEE IS NOT RELYING ON THE COMPANY FOR ANY TAX ADVICE.

10. Repurchase Options . In addition to such other buy-sell terms, rights of first refusal, repurchase rights and/or similar provisions as are included herewith as determined by Company, the following terms and conditions apply to Company’s rights to repurchase Shares under the provisions of Section 3 in the Stock Option Grant:

Repurchase Terms

(a) Early Exercise . Company’s repurchase right hereunder applies to any Shares which are not Vested Shares and as purchased by Optionee by an exercise (or “early exercise”) of the Stock Option grant, as permitted in Section 3 thereof.

(b) Repurchase Right . If Optionee ceases to be employed by, or provide service to, the Company, or any Parent or Subsidiary of the Company, or, in the case of a nonqualified option, by or to any Affiliate of the Company (said date of cessation referred to as “Termination Date”), Company shall have the right and option to repurchase (at the price and for the payment in (c) immediately below) such number of Shares as is equal to, and to the extent that, the underlying option rights to said Shares, under the terms of Section 2 of the Stock Option Grant, would not have become exercisable on or prior to the Termination Date. Or stated otherwise, absent Optionee’s purchase of said Shares, said Shares (as repurchasable by Company) would not have become “Vested Shares”

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under Section 2 of the Stock Option Grant on or prior to the Termination Date. Company’s rights to so repurchase said Shares may be exercised by a written notice given to Optionee, together with full payment of the purchase price of said repurchased Shares, within a period of 90 days after the Termination Date.

As an example of the foregoing, assume that an Optionee is granted option rights under an Option Grant, dated June 1, 2002, for a total of 4,800 Shares, exercisable, under Section 2 of the Stock Option Grant, as to 1,200 shares, on June 1, 2002, and, as to 100 Shares, on the first day of each of 36 successive calendar months, beginning July 1, 2002. If Optionee exercised option rights (under an “early exercise”) and purchased 2,000 shares on May 1, 2002, and Optionee’s employment (or services) terminated on June 15, 2002, Company would have the right to repurchase 800 Shares (inasmuch as, of the 2,000 Shares purchased, 1,200 Shares would have been exercisable, under Section 2, prior to June 15, 2002, the Termination Date).

(c) Repurchase Price, Exercise and Payment . The foregoing Company option and right to repurchase Shares shall be exercised at a price equal to the original option exercise price per share and shall be paid in cash (or Company check) and/or by cancellation of all or any portion of Optionee’s purchase money indebtedness, if any, for the Shares.

(d) Assignment and Delegation . Notwithstanding any contrary provision herein, Company reserves and has the right to assign and/or delegate any or all of its repurchase rights and obligations herein to such other party or parties as may be selected by it.

(e) Antidilution Provision . In the event of a stock dividend, stock split, reverse stock split, other stock division or combination, recapitalization or reclassification involving Company’s Common Shares, an equitable and proportionate adjustment or other relevant change shall be deemed to have been made to all of the referenced shares and/or prices referenced herein in order fully to effectuate the purposes hereof, and all resulting additional (or reduced number of) shares thereafter shall be subject to the terms herein.

(f) Notice and Payments . All notices and payments to be made hereunder may be given and made by Company or Optionee to one another, either personally or by United States mail, postage prepaid, by Priority Mail, by Federal Express or by any other similar means, if to Company, addressed at its then principal place of business (currently at 37 Commercial Boulevard, Suite 100, Novato California 94949), or, if to Optionee, addressed to Optionee at Optionee’s last address appearing on Company’s records, or at such other address as either Company or Optionee may designate by written notice to each other. In the event of the death or disability of Optionee, and such occurrence is known by Company, then said notice shall be given in the name of Optionee at the address and in the manner as above provided and also shall be given to Optionee’s known representative(s) or successor(s), at such address(es) as designated in writing to Company by said representative(s) or successor(s), or, absent such designation, to such known

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representative(s) or successor(s) at Optionee’s above referenced address. Any such notice and payment shall be deemed given as of the time and date when personally delivered or when otherwise sent.

11. Entire Agreement . The Plan and Grant are incorporated herein by reference. This Agreement, the Plan and the Grant constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and are governed by California law except for that body of law pertaining to conflict of laws.

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Exhibit 10.2

NOVACAL PHARMACEUTICALS, INC.

2005 STOCK OPTION PLAN

1. PURPOSE . This 2005 Stock Option Plan ¹ (“Plan”) is established as a compensatory plan to attract, retain and provide equity incentives to selected persons to promote the financial success of NOVACAL PHARMACEUTICALS, INC., a California corporation (the “Company”). Capitalized terms not previously defined herein are defined in Section 17 of this Plan.

2. TYPES OF OPTIONS AND SHARES . Options granted under this Plan (the “Options”) may be either (a) incentive stock options (“ISOs”) within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), or (b) nonqualified stock options (“NQSOs”), as designated at the time of grant. The shares of stock that may be purchased upon exercise of Options granted under this Plan (the “Shares”) are shares of the common stock of the Company.

3. NUMBER OF SHARES . The aggregate number of Shares that may be issued pursuant to Options granted under this Plan is 2,470,000 Common Shares, subject to adjustment as provided in this Plan. If any Option expires or is terminated without being exercised in whole or in part, the unexercised or released Shares from such Option shall be available for future grant and purchase under this Plan. At all times during the term of this Plan, the Company shall reserve and keep available such number of Shares as shall be required to satisfy the requirements of outstanding Options under this Plan.

4. ELIGIBILITY .

(a) General Rules of Eligibility . Options may be granted to employees, officers, directors, consultants, independent contractors and advisors (provided such consultants, contractors and advisors render bona fide services not in connection with the offer and sale of securities in a capital-raising transaction) of the Company or any Parent, Subsidiary or Affiliate of the Company. ISOs may be granted only to employees (including officers and directors who are also employees) of the Company or a Parent or Subsidiary of the Company. The Committee (as defined in Section 14) in its sole discretion shall select the recipients of Options (“Optionees”). An Optionee may be granted more than one Option under this Plan.

Approved by the Company shareholders on May 12, 2005.

(b) Company Assumption of Options . The Company may also, from time to time, assume outstanding options granted by another company, whether in connection with an acquisition of such other company or otherwise, by either (i) granting an Option under this Plan in replacement of the option assumed by the Company, or (ii) treating the assumed option as if it had been granted under this Plan if the terms of such assumed option could be applied to an option granted under this Plan. Such assumption shall be permissible if the holder of the assumed option would have been eligible to be granted an option hereunder if the other company had applied the rules of this Plan to such grant.

5. TERMS AND CONDITIONS OF OPTIONS . The Committee shall determine whether each Option is to be an ISO or an NQSO, the number of Shares subject to the Option, the exercise price of the Option, the period during which the Option may be exercised, and all other terms and conditions of the Option, subject to the following:

(a) Form of Option Grant . Each Option granted under this Plan shall be evidenced by a written Stock Option Grant (the “Grant”) in substantially the form attached hereto as Exhibit A or such other form as shall be approved by the Committee.

(b) Date of Grant . The date of grant of an Option shall be the date on which the Committee makes the determination to grant such Option unless otherwise specified by the Committee and subject to applicable provisions of the Code. The Grant representing the Option will be delivered to the Optionee with a copy of this Plan within a reasonable time after the date of grant; provided, however that if, for any reason, including a unilateral decision by the Company not to execute an agreement evidencing such option, a written Grant is not executed within sixty (60) days after the date of grant, such option shall be deemed null and void. No Option shall be exercisable until such Grant is executed by the Company and the Optionee.

(c) Exercise Price . The exercise price of an NQSO shall be not less than eighty-five percent (85%) of the Fair Market Value of the Shares on the date the Option is granted. The exercise price of an ISO shall be not less than one hundred percent (100%) of the Fair Market Value of the Shares on the date the Option is granted. The exercise price of any Option granted to a person owning more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary of the Company (“Ten Percent Shareholders”) shall not be less than one hundred and ten percent (110%) of the Fair Market Value of the Shares on the date the Option is granted.

(d) Exercise Period and Early Exercise . Options shall be exercisable within the times or upon the events determined by the Committee as set forth in the Grant; provided, however that each Option must become exercisable at a rate of at least twenty percent (20%) per year over five (5) years from the date the Option is granted; except, in the case of an option granted to officers, directors, or consultants of Company, the option may become fully exercisable, subject to reasonable conditions such as continued employment, at any time or

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during any period established by Company, or the issuer of the underlying security or any of its Affiliates; and provided, however, that no Option shall be exercisable after the expiration of ten (10) years from the date the Option is granted, and provided further that no ISO granted to a Ten Percent Shareholder shall be exercisable after the expiration of five (5) years from the date the Option is granted. The grant may, but need not, include a provision whereby the Optionee may elect at any time while an employee, officer, director, consultant, independent contractor or advisor to exercise all or any part of the Option prior to the time and/or events when the Option becomes exercisable. Any Shares received pursuant to any exercise, as provided in Section 7 below, at the discretion of the Committee, may be subject to a repurchase right in favor of Company (and/or any of its Affiliates) or to any other restriction determined, in its discretion, by the Committee.

(e) Limitations .

(i) ISO Limitations . The aggregate Fair Market Value (determined as of the time an Option is granted) of stock with respect to which ISOs are exercisable for the first time (including option rights becoming exercisable due to a condition satisfaction or by an acceleration) by an Optionee during any calendar year (under this Plan or under any other incentive stock option plan of the Company or any Parent or Subsidiary of the Company) shall not exceed one hundred thousand dollars ($100,000). If an Option is not canceled, modified, or transferred prior to the year in which, and to the extent that , it would first become exercisable, it is deemed outstanding until the end of the year in which it first becomes so exercisable. If so canceled, modified or transferred, and ceases to be an ISO, prior to said year, it is disregarded, but a disqualifying disposition of purchased ISO stock will have no determination on whether an Option exceeds the $100,000 limitation. The foregoing $100,000 per calendar year limitation shall be applied by taking Options into account in the order in which they were granted, except that any exercised portion of an ISO takes precedence over an ISO (although prior granted), which becomes exercisable later in the same calendar year, for the first time, due to an acceleration. If the Fair Market Value of stock with respect to which an ISO is exercisable for the first time by an Optionee during any calendar year exceeds $100,000, the amount in excess of $100,000 shall be bifurcated and treated as not being an ISO (and shall be a NQSO), unless the Company designates a different proportionate allocation in its transfer records or the Plan records, or unless Company issues a separate certificate for the ISO portion of the shares. In the event that the Code or the regulations promulgated thereunder are amended after the effective date of this Plan to provide for a different limit on the Fair Market Value of Shares permitted to be subject to ISOs, or otherwise differ with the provisions herein, such different limit or provision in the Code or regulations shall be incorporated herein and shall apply to any Options granted after the effective date of such amendment.

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(ii) Limitations on Grants . The foregoing provisions of this Plan notwithstanding, no Optionee shall be granted Options under this Plan in any one fiscal year which in the aggregate shall permit the Optionee to purchase more than 750,000 shares of Common Stock. To the extent the Board of Directors of the Company determines that the limitations such as the provisions of this Section 5(e)(ii) are no longer required to preserve the deductibility for the Company of option-related compensation under Section 162(m) of the Code, the Board of Directors may modify or eliminate the limitations contained in this Section 5(e)(ii).

(f) Options Non-Transferable . Options granted under this Plan, and any interest therein, shall not be transferable or assignable by the Optionee, and may not be made subject to execution, attachment or similar process, otherwise than by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Optionee only by the Optionee or any permitted transferee.

(g) Assumed Options . In the event the Company assumes an option granted by another company in accordance with Section 4(b) above, the terms and conditions of such option shall remain unchanged (except the exercise price and the number and nature of shares issuable upon exercise, which will be adjusted appropriately pursuant to Section 424 of the Code and the Treasury Regulations applicable thereto). In the event the Company elects to grant a new option rather than assuming an existing option (as specified in Section 4), such new option need not be granted at Fair Market Value on the date of grant and may instead be granted with a similarly adjusted exercise price.

(h) Termination of Options . Except as otherwise provided in an Optionee’s grant, options granted under the Plan shall terminate and may not be exercised if the Optionee ceases to be employed by, or provide services to, the Company or any Parent or Subsidiary of the Company (or, in the case of a NQSO, by or to any Affiliate of the Company). An Optionee shall be considered to be employed by the Company for all purposes under this Section 5(h) if the Optionee is an officer, director or full-time employee of the Company or any Parent, Subsidiary or Affiliate of the Company or if the Committee determines that the Optionee is rendering substantial services as a part-time employee, consultant, contractor or advisor to the Company or any Parent, Subsidiary or Affiliate of the Company. The Committee shall have discretion to determine whether an Optionee has ceased to be employed by the Company or any Parent, Subsidiary or Affiliate of the Company and the effective date on which such employment terminated (the “Termination Date”).

(i) Termination Generally . If an Optionee ceases to be employed by the Company and all Parents, Subsidiaries or Affiliates of the Company for any reason except death or disability, the Options which are vested (the “Vested Options”), to the extent (and only to the extent) exercisable by the Optionee on the Termination Date, may be exercised by the Optionee, but only within three months after the

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Termination Date or such shorter period of time as provided in the Grant, but in no event less than thirty (30) days; provided that the Option may not be exercised in any event after the expiration date for the Option.

(ii) Death or Disability . If an Optionee’s employment with the Company and all Parents, Subsidiaries and Affiliates of the Company is terminated because of the death of the Optionee or the permanent and total disability of the Optionee within the meaning of Section 22(e)(3) of the Code, the Vested Options, to the extent (and only to the extent) exercisable by the Optionee on the Termination Date, may be exercised by the Optionee (or the Optionee’s legal representative), but only within twelve (12) months after the Termination Date; and provided further that the Option may not be exercised in any event later than the Expiration Date. If an Optionee’s employment with the Company and all Parents, Subsidiaries and Affiliates of the Company is terminated because of a disability of the Optionee which is not permanent and total within the meaning of Section 22(e)(3) of the Code, the Vested Options, to the extent (and only to the extent) exercisable by the Optionee on the Termination Date, may be exercised by the Optionee or the Optionee’s legal representative, but only within six (6) months after the Termination Date; and provided further that the Option may not be exercised in any event later than the expiration date for the Option.

6. EXERCISE OF OPTIONS .

(a) Notices . Options may be exercised only by delivery to the Company of a written exercise agreement in a form approved by the Committee (which need not be the same for each Optionee), stating the number of Shares being purchased, the restrictions imposed on the Shares, if any, and such representations and agreements regarding the Optionee’s investment intent and access to information, if any, as may be required by the Company to comply with applicable securities laws, together with payment in full of the exercise price for the number of Shares being purchased.

(b) Payment . Payment for the Shares may be made in cash (by check) or, where approved by the Committee in its sole discretion at the time of grant and where permitted by law: (i) by cancellation of indebtedness of the Company to the Optionee; (ii) by surrender of shares of Common Stock of the Company already owned by the Optionee, having a Fair Market Value equal to the exercise price of the Option; (iii) by waiver of compensation due or accrued to Optionee for services rendered; (iv) through delivery of a promissory note for the full exercise price bearing interest at such rate with the note due at such time, on a secured or unsecured basis, as determined by the Committee; (v) through delivery of all of the proceeds of a loan from a third party in the amount of the option price (but not more than the option price), which loan is guaranteed by the Company, and such guaranty may be on an unsecured or secured basis as the

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Committee shall approve (including, without limitation, by a security interest in the shares of the Company); (vi) provided that a public market for the Company’s stock exists, through a “same day sale” commitment from the Optionee and a broker-dealer that is a member of the National Association of Securities Dealers, Inc. (an “NASD Dealer”) whereby the Optionee irrevocably elects to exercise the Option and to sell a portion of the Shares so purchased to pay for the exercise price and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to forward the exercise price directly to the Company; (vii) provided that a public market for the Company’s stock exists, through a “margin” commitment from the Optionee and an NASD Dealer whereby the Optionee irrevocably elects to exercise the Option and to pledge the Shares so purchased to the NASD Dealer in a margin account as security for a loan from the NASD Dealer in the amount of the exercise price, and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to forward the exercise price directly to the Company; or (viii) by any combination of the foregoing. Notwithstanding the foregoing, the Committee (and Company) specifically reserves the right, in its discretion, to pay a bonus and/or to make a loan available to Optionee at the time of the Option exercise or to allow Optionee the right to tender previously owned Company shares in exchange for the stock purchasable under the Option.

(c) Withholding Taxes . Prior to issuance of the Shares upon exercise of an Option, at the discretion of the Committee (or, unless otherwise determined by the Committee, at the discretion of the Company’s management), the Optionee shall pay or make adequate provision for any federal or state withholding obligations of the Company, if applicable. Where approved by the Committee in its sole discretion, the Optionee may provide for payment of withholding taxes upon exercise of the Option by requesting that the Company retain Shares with a Fair Market Value equal to the minimum amount of taxes required to be withheld. In such case, the Company shall issue the net number of Shares to the Optionee by deducting the Shares retained from the Shares exercised. The Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined in accordance with Section 83 of the Code (the “Tax Date”). All elections by Optionees to have Shares withheld for this purpose shall be made in writing in a form acceptable to the Committee and shall be subject to the following restrictions:

(i) the election must be made on or prior to the applicable Tax Date;

(ii) once made, the election shall be irrevocable as to the particular Shares as to which the election is made;

(iii) all elections shall be subject to the consent or disapproval of the Committee;

(iv) if the Optionee is an officer or director of the Company or other person (in each case, an “Insider”) whose transactions in the Company’s Common Stock are subject to Section 16(b) of the Securities Exchange Act of 1934, as

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amended (the “Exchange Act”) and if the Company is subject to Section 16(b) of the Exchange Act, the election must comply with Rule 16b-3 as promulgated by the Securities and Exchange Commission (“Rule 16b-3”).

(d) Limitations on Exercise . Notwithstanding anything else to the contrary in the Plan or any Grant, no Option may be exercisable later than the expiration date of the Option.

7. RESTRICTIONS ON SHARES . At the discretion of the Committee, the Company may reserve to itself and/or its assignee(s) in the Grant (a) a right of first refusal to purchase all Shares that an Optionee (or a subsequent transferee) may propose to transfer to a third party and/or (b) a right to repurchase a portion of or all Shares held by an Optionee upon the Optinee’s termination of employment or service with the Company or its Parent, Subsidiary or Affiliate of the Company for any reason (“Termination Date”), if (i) the repurchase price is not less than the fair market value of the Shares to be repurchased on the Termination Date, and the right to repurchase must be exercised for cash or cancellation of purchase money indebtedness for the Shares within 90 days of the Termination Date, and the right terminates when Company’s securities become publicly traded, or (ii) the repurchase price is at the lower of (A) the original purchase price or (B) the fair market value of the Shares on the date of repurchase, provided the right to repurchase at the original price lapses at the rate of at least 20% of the Shares per year over five years from the date the Option is granted (without respect to the date when the Option was exercised or became exercisable) and the right to repurchase must be exercised for cash or cancellation of purchase money indebtedness for the Shares within 90 days of the Termination Date; provided, however, that in addition to the restrictions set forth in (i) and (ii) immediately above, Shares held by an officer, director or consultant of Company or any affiliate of Company may be subject to additional or greater restrictions. Notwithstanding the foregoing, to the extent required by Section 260.140.41 and Section 260.140.42 of the California Code of Regulations at the time a right of repurchase is instituted, any right of repurchase must be at a repurchase price of not less than the original purchase price of the Shares.

8. MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS . The Committee shall have the power to modify, extend or renew outstanding Options and to authorize the grant of new Options in substitution therefor, provided that any such action may not, without the written consent of the Optionee, impair any rights under any Option previously granted. Any outstanding ISO that is modified, extended, renewed or otherwise altered shall be treated in accordance with Section 424(h) of the Code. In the event that an Optionee is offered a change in the terms of an Option and such offer remains outstanding without acceptance for a period of 29 days, then upon the termination of said 29 day period, such offer shall be deemed terminated and of no further force or effect. Any inadvertent change in the terms of an Option (or change in the terms of the Plan) that is treated as a modification for purposes of Section 424 of the Code will not be considered a modification to the extent that the change in the terms of the Option is removed by the earlier of the date the Option is exercised or the last day of the calendar year during which such change occurred. The Committee shall have the power to reduce the

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exercise price of outstanding options; provided, however, that the exercise price per share may not be reduced below the minimum exercise price that would be permitted under Section 5(c) of this Plan for options granted on the date the action is taken to reduce the exercise price. Notwithstanding any other provision of this Plan, the Committee may accelerate the earliest date or dates on which outstanding Options (or any installments thereof) are exercisable.

9. PRIVILEGES OF STOCK OWNERSHIP . No Optionee shall have any of the rights of a shareholder with respect to any Shares subject to an Option until such Option is properly exercised. No adjustment shall be made for dividends or distributions or other rights for which the record date is prior to such date, except as provided in this Plan. To the extent required by Section 260.140.46 of Title 10 of the California Code of Regulations, the Company shall provide annually to each Optionee a copy of the annual financial statements of the Company. This Section 9 shall not apply to key Employees whose duties in connection with the Company assure them access to equivalent information.

10. NO OBLIGATION TO EMPLOY; NO RIGHT TO FUTURE GRANTS . Nothing in this Plan or any Option granted under this Plan shall confer on any Optionee any right (a) to continue in the employ of, or other relationship with, the Company or any Parent or Subsidiary of the Company or limit in any way the right of the Company or any Parent, Subsidiary or Affiliate of the Company to terminate the Optionee’s employment or other relationship at any time, with or without cause or (b) to have any Option(s) granted to such Optionee under this Plan, or any other plan, or to acquire any other securities of the Company, in the future.

11. ADJUSTMENT OF OPTION SHARES . In the event that the number of outstanding shares of Common Stock of the Company is changed by a stock dividend, stock split, reverse stock split, combination, reclassification or similar change in the capital structure of the Company without consideration, or if a substantial portion of the assets of the Company are distributed, without consideration in a spin-off or similar transaction, to the shareholders of the Company, the number of Shares available under this Plan and the number of Shares subject to outstanding Options and the exercise price per share of such Options shall be proportionately adjusted, subject to any required action by the Board or shareholders of the Company and compliance with applicable securities laws; provided, however, that a fractional share shall not be issued upon exercise of any Option and any fractions of a Share that would have resulted shall either be cashed out at Fair Market Value or the number of Shares issuable under the Option shall be rounded down to the nearest whole number, as determined by the Committee; and provided further that the exercise price may not be decreased to below the par value, if any, for the Shares.

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12. ASSUMPTION OF OPTIONS BY SUCCESSORS .

(a) In the event of (i) a merger or consolidation in which the Company is not the surviving corporation (other than a merger or consolidation with a wholly-owned subsidiary or a Parent or where there is no substantial change in the shareholders of the corporation and the Options granted under this Plan are assumed by the successor corporation), or (ii) the sale of all or substantially all of the assets of the Company, any or all outstanding Options shall be assumed by the successor corporation, which assumption shall be binding on all Optionees, an equivalent option shall be substituted by such successor corporation or the successor corporation shall provide substantially similar consideration to Optionees as was provided to shareholders (after taking into account the existing provisions of the Optionees’ options such as the exercise price and the vesting schedule), and, in the case of outstanding shares subject to a repurchase option, issue substantially similar shares or other property subject to repurchase restrictions no less favorable to the Optionee.

(b) In the event such successor corporation, if any, refuses to assume or substitute, as provided above, pursuant to an event described in subsection (a) above, or in the event of a dissolution or liquidation of the Company, the Options shall, notwithstanding any contrary terms in the Grant, expire on a date specified in a written notice given by the Committee to the Optionees specifying the terms and conditions of such termination (which date must be at least twenty (20) days after the date the Committee gives the written notice).

13. ADOPTION AND SHAREHOLDER APPROVAL . This Plan shall become effective on the date that it is adopted by the Board of the Company (the “Board”). This Plan shall be approved by the shareholders of the Company, in any manner permitted by applicable corporate law, within twelve (12) months before or after the date this Plan is adopted by the Board.

14. ADMINISTRATION . This Plan may be administered by the Board or a Committee appointed by the Board (the “Committee”). If, at any time after the Company registers under the Exchange Act, the Board desires the Plan to be administered by a Committee, the Board shall appoint a Committee consisting of not less than two directors, each of whom is a Nonemployee Director. As used in this Plan, references to the “Committee” shall mean either such Committee or the Board if no committee has been established. The interpretation by the Committee of any of the provisions of this Plan or any Option granted under this Plan shall be final and binding upon the Company and all persons having an interest in any Option or any Shares purchased pursuant to an Option.

15. TERM OF PLAN . Options may be granted pursuant to this Plan from time to time on or prior to May 11, 2015, a date which is less than ten years after the earlier of the date of

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approval of this Plan by the Board or the shareholders of the Company pursuant to Section 13 of this Plan.

16. AMENDMENT OR TERMINATION OF PLAN . The Board of Directors or Committee may, at any time, amend, alter, suspend or discontinue the Plan, but no amendment, alteration, suspension or discontinuation shall be made which would impair the rights of any Optionee under any Option theretofore granted, without his or her consent, or which, without the approval of the shareholders of the Company would:

(a) except as provided in Section 11 of the Plan, increase the total number of Shares reserved for the purposes of the Plan;

(b) change the corporation granting the ISOs;

(c) change the stock available for purchase under the Plan;

(d) change the designation of employees, or class or classes of employees, eligible to receive options under the Plan;

(e) extend the duration of the Plan; or

(f) extend the period during and over which Options may be exercised under the Plan.

Without limiting the foregoing, the Committee may at any time or from time to time authorize the Company, with the consent of the respective Optionees, to issue new options in exchange for the surrender and cancellation of any or all outstanding Options.

17. CERTAIN DEFINITIONS . As used in this Plan, the following terms shall have the following meanings:

(a) “Affiliate” means any corporation that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, another corporation, where “control” (including the terms “controlled by” and “under common control with”) means the possession, direct or indirect, of the power to cause the direction of the management and policies of the corporation, whether through the ownership of voting securities, by contract or otherwise.

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(b) “Fair Market Value” shall mean the fair market value of the Shares as determined by the Committee from time to time in good faith. If a public market exists for the Shares, the Fair Market Value shall be the average of the last reported bid and asked prices for Common Stock of the Company on the last trading day prior to the date of determination or, in the event the Common Stock of the Company is listed on a stock exchange or is a Nasdaq National Market security, the Fair Market Value shall be the closing price on such exchange or system on the last trading day prior to the date of determination.

(c) “Nonemployee Director” shall have the meaning set forth in Rule 16b-3(b)(3) as promulgated by the Securities and Exchange Commission under Section 16(b) of the Exchange Act, as such rule is amended from time to time and as interpreted by the Securities and Exchange Commission.

(d) “Parent” means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company if, at the time of the granting of the Option, each of the corporations other than the Company owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

(e) “Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if, at the time of the granting of the Option, each of the corporations other than the last corporation in the unbroken chain owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

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EXHIBIT A

STOCK OPTION GRANT

Optionee:_________________________________________________________________________________

Address:__________________________________________________________________________________

_________________________________________________________________________________________

Total Shares Subject to Option:_________________________________________________________________

Exercise Price Per Share:_______________________________________________________________________

Date of Grant:_______________________________________________________________________________

Expiration Date of Option:______________________________________________________________________

Type of Stock Option:             Incentive:___________________

                                                 Nonqualified:________________

1. Grant of Option . NOVACAL PHARMACEUTICALS, INC., a California corporation (the “Company”), hereby grants to the optionee named above (“Optionee”) an option (this “Option”) to purchase the total number of shares of Common Stock of the Company set forth above (the “Shares”) at the exercise price per share set forth above (the “Exercise Price”), subject to all of the terms and conditions of this Grant and the Company’s 2005 Stock Option Plan, as amended to the date hereof (the “Plan”). If designated as an Incentive Stock Option above, this Option is intended to qualify as an “incentive stock option” (“ISO”) within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”). Unless otherwise defined herein, capitalized terms used herein shall have the meanings ascribed to them in the Plan.

2. Exercise Period of Option . The option rights granted hereunder are exercisable during the time period or periods, and as to the number of shares exercisable during each time period, as follows:

(a)                      shares, or any part thereof, may be exercised at any time or times, from and including                      to and including                  ;

(b) an additional                  shares, or any part thereof, may be exercised at any time or times, from and including                  to and including                  ;

(c) an additional                  shares, or any part thereof, may be exercised at any time or times, from and including                  to and including                  ;

(d) an additional                  shares, or any part thereof, may be exercised at any time or times, from and including                  to and including                  ;

(e) and the remaining                  shares, or any part thereof, may be exercised at any time or times, from and including                  to and including                  .

Notwithstanding the above, (i) the Committee or to the extent a Committee has not been appointed, the Board of Directors (it being understood in such event reference herein to the Committee shall mean the Board of Directors), in its sole discretion, may, upon written notice to the Optionee, accelerate the earliest date or dates on which any of the Option rights granted hereunder are exercisable, and (ii) the minimum number of Shares that may be purchased upon any partial exercise of the Option is              (          ) shares, and (iii) this Option shall expire on the Expiration Date set forth above and must be exercised, if at all, on or before the Expiration Date. The portion of Shares as to which an Option is exercisable in accordance with the above schedule as of the applicable dates shall be deemed “Vested Options.”

3. Early Exercise and Repurchase Rights of Officers, Directors or Consultants . Notwithstanding the condition precedent exercise periods and/or events set forth in Section 2 above, if, but only if, Optionee is an officer, director or consultant of Company, after the date of this Grant and prior to said exercise periods and/or events, Optionee, at any time, or from time to time, may exercise (“early exercise”) any or all of the option rights granted hereunder, after the date of this Grant and prior to said Section 2 exercise periods and/or events, provided, however, if, and to the extent, that the Shares purchased pursuant to such exercise are not Vested Shares (as defined in Section 2 above), Company (or its designated purchaser or purchasers) shall have the right and option to repurchase any or all of said Shares (as are not Vested Shares) at the per share original exercise price set forth herein, equitably and proportionately adjusted or otherwise relevantly changed to reflect any Company Common Stock dividends, stock splits, reverse stock splits, other similar stock combinations or divisions, or stock reclassifications, occurring after the date hereof. Said repurchase right shall be exercisable as of, when, and to such extent, and shall terminate as of such date(s), as set forth in and provided by those certain “Repurchase Terms” provided in Section 10 in the Stock Option Exercise Agreement, attached as Exhibit 1 hereto. It is understood, however, that, after the Termination Date, as defined in Section 5 below, or after

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any other termination of the option rights herein, no exercise may be made of any rights to Shares under the exercise provisions (early exercise) in this Section 3. As to any Shares purchased upon an exercise hereunder as are not Vested Shares, as a condition of and requirement for said exercise and purchase, (i) the certificate(s), representing said Shares, shall be retained and held by Company in its possession for purposes of its repurchase rights, and (ii) Optionee shall have delivered to Company an Assignment Separate from Certificate (“Stock Power”), as signed by Optionee, but with the number of shares to be transferred and transferee unspecified (and Optionee hereby irrevocably designates and authorizes Company, and its successors and assigns, as agent for Optionee to date, complete and otherwise use said Stock Power to effectuate and implement Company’s repurchase rights herein; said designation and authority being deemed coupled with an interest and being irrevocable). For purposes of protecting and securing Company’s repurchase rights to said Shares, Optionee hereby grants to Company a security interest in said Shares and agrees, unless Company otherwise consents in writing, not to sell, transfer or offer to sell or transfer any of said Shares as are and remain subject to Company’s repurchase rights. Upon completion of the transfer of the Shares (or appropriate portion thereof) to Company relative to its repurchase rights and/or upon the termination of said rights, as the case may be, all remaining Shares not repurchased by and transferred to Company shall be transferred and/or returned to Optionee. All of the terms herein are fully binding and enforceable upon Optionee and Optionee’s heirs, representatives, successors and assigns. All certificate(s) representing the Shares of Company to be retained and held by Company shall, until released to Optionee free of Company’s repurchase rights, may bear, at Company’s discretion, in addition to each of the legend(s) as otherwise herein prescribed, the following legend (with the appropriate date filled in):

THESE SHARES ARE SUBJECT TO A REPURCAHSE OPTION OF THE CORPORATION AND TO VARIOUS TRANSFER AND OTHER RESTRICTIONS AS SET FORTH IN THAT CERTAIN STOCK OPTION GRANT, DATED              , 20__, A COPY OF WHICH IS ON FILE WITH THE CORPORATION.

It is understood that an Optionee, holding nonqualified option rights, may accompany the exercise of the option rights herein with the filing with the Internal Revenue Service of an election to include income in the year of the exercise pursuant to Section 83(b) of the Internal Revenue Code (and with such state agencies and under such state laws as applicable) and that an Optionee, holding a statutory incentive stock option may file a similar election for alternative minimum tax purposes. OPTIONEE SHOULD CONSULT A TAX ADVISOR BEFORE EXERCISING THE OPTION OR MAKING SUCH FILING TO VERIFY AND CONFIRM THAT SUCH ACTIONS ARE APPROPRIATE WITH RESPECT TO OPTIONEE’S TAX CIRCUMSTANCES.

4. Restriction on Exercise . This Option may not be exercised unless such exercise is in compliance with the Securities Act of 1933, as amended, and all applicable state securities laws, as they are in effect on the date of exercise, and the requirements of any stock exchange or over-the-counter market on which the Company’s Common Stock may be listed or quoted at the

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time of exercise. Optionee understands that the Company is under no obligation to register, qualify or list the Shares with the Securities and Exchange Commission, any state securities commission or any stock exchange to effect such compliance.

5. Termination of Option . Except as provided below in this Section 4, this Option shall terminate and may not be exercised if Optionee ceases to be employed by, or provide services to, the Company or by any Parent or Subsidiary of the Company (or, in the case of a nonqualified stock option, by or to any Affiliate of the Company). Optionee shall be considered to be employed by the Company for all purposes under this Section 4 if Optionee is an officer, director or full-time employee of the Company or any Parent, Subsidiary or Affiliate of the Company or if the Committee determines that Optionee is rendering substantial services as a part-time employee, consultant, contractor or advisor to the Company or any Parent, Subsidiary or Affiliate of the Company. The Committee shall have discretion to determine whether Optionee has ceased to be employed by the Company or any Parent, Subsidiary or Affiliate of the Company and the effective date on which such employment terminated (the “Termination Date”).

(a) Termination Generally . If Optionee ceases to be employed by the Company and all Parents, Subsidiaries or Affiliates of the Company for any reason except death or disability, the Vested Options, to the extent (and only to the extent) exercisable by Optionee on the Termination Date, may be exercised by Optionee, but only within three months after the Termination Date; provided that this Option may not be exercised in any event after the Expiration Date.

(b) Death or Disability . If Optionee’s employment with the Company and all Parents, Subsidiaries and Affiliates of the Company is terminated because of the death of Optionee or the permanent and total disability of Optionee within the meaning of Section 22(e)(3) of the Code, the Vested Options, to the extent (and only to the extent) exercisable by Optionee on the Termination Date, may be exercised by Optionee (or Optionee’s legal representative), but only within twelve (12) months after the Termination Date; and provided further that this Option may not be exercised in any event later than the Expiration Date. If Optionee’s employment with the Company and all Parents, Subsidiaries and Affiliates of the Company is terminated because of a disability of Optionee which is not permanent and total within the meaning of Section 221(e)(3) of the Code, the Vested Options, to the extent (and only to the extent) exercisable by Optionee on the Termination Date, may be exercised by Optionee or Optionee’s legal representative, but only within six (6) months after the Termination Date; and provided further that the Option may not be exercised in any event later than the Expiration Date. Optionee understands that if the Option is an ISO and if it is exercised after three months in the event of a disability which is not permanent and total, the Option will be treated as a nonqualified stock option for tax purposes.

(c) No Right to Employment . Nothing in the Plan or this Grant shall confer on Optionee any right to continue in the employ of, or other relationship with, the Company or any Parent, Subsidiary or Affiliate of the Company or limit in any way the right of the Company or any Parent, Subsidiary or Affiliate of the Company to terminate Optionee’s employment or other relationship at any time, with or without cause.

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6. Manner of Exercise .

(a) Exercise Agreement . This Option shall be exercisable by delivery to the Company of an executed written Stock Option Exercise Agreement in the form attached hereto as Exhibit 1, or in such other form as may be approved by the Company, which shall set forth Optionee’s election to exercise some or all of this Option, the number of Shares being purchased, any restrictions imposed on the Shares and such other representations and agreements as may be required by the Company to comply with applicable securities laws.

(b) Exercise Price . The Stock Option Exercise Agreement shall be accompanied by full payment of the Exercise Price for the Shares being purchased. Payment for the Shares may be made in cash (by check), or, where permitted by law, by any of the following methods approved by the Committee at the date of grant of this Option, or any combinations thereof:

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Notwithstanding any of the foregoing or any other provision herein, Company specifically reserves the right, in its discretion, to pay a bonus and/or to make a loan available to Optionee at the time of the Option exercise or to allow Optionee the right to tender previously owned Company shares in exchange for the stock purchasable under the Option.

(c) Withholding Taxes . Prior to the issuance of the Shares upon exercise of this Option, if so required by Company, Optionee must pay or make adequate provision for any applicable federal or state withholding obligations of the Company. The Optionee may provide for payment of Optionee’s minimum statutory withholding taxes upon exercise of the Option by requesting that the Company retain Shares with a Fair Market Value equal to the minimum amount of taxes required to be withheld, all as set forth in Section 6(c) of the Plan. In such case, the Company shall issue the net number of Shares to the Optionee by deducting the Shares retained from the Shares exercised.

(d) Issuance of Shares . Provided that such notice and payment are in form and substance satisfactory to counsel for the Company, the Company shall cause the Shares to be issued in the name of Optionee or Optionee’s legal representative.

7. Notice of Disqualifying Disposition of ISO Shares . If the Option granted to Optionee herein is an ISO, and if Optionee sells or otherwise disposes of any of the Shares acquired pursuant to the ISO on or before the later of (1) the date two years after the Date of Grant, or (2) the date one year after exercise of the ISO with respect to the Shares to be sold or disposed of, the Optionee shall immediately notify the Company in writing of such disposition. Optionee acknowledges and agrees that Optionee may be subject to income tax withholding by the Company on the compensation income recognized by the Optionee from any such early disposition by payment in cash or out of the current wages or other earnings payable to the Optionee.

8. Nontransferability of Option . This Option may not be transferred in any manner other than by will or by the law of descent and distribution and may be exercised during the lifetime of Optionee only by Optionee or other permitted transferee. The terms of this Option shall be binding upon the executors, administrators, successors and assigns of the Optionee.

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9. Federal Tax Consequences . Set forth below is a brief summary as of the date this form of Option Grant was adopted of some of the federal tax consequences of exercise of this Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

(a) Exercise of ISO . If this Option qualifies as an ISO, there will be no regular federal income tax liability upon the exercise of this Option, although the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price will be treated as an adjustment to alternative minimum taxable income for federal income tax purposes and may subject the Optionee to an alternative minimum tax liability in the year of exercise.

(b) Exercise of Nonqualified Stock Option . If this Option does not qualify as an ISO, there may be a regular federal income tax liability upon the exercise of the Option. The Optionee will be treated as having received compensation income (taxable at ordinary income tax rates) equal to the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price. The Company will be required to withhold from Optionee’s compensation or collect from Optionee and pay to the applicable taxing authorities an amount equal to a percentage of this compensation income at the time of exercise.

(c) Disposition of Shares . In the case of a nonqualified stock option, if Shares are held for at least one year before disposition, any gain on disposition of the Shares will be treated as long-term capital gain for federal and California income tax purposes. In the case of an ISO, if Shares are held for at least one year after the date of exercise and at least two years after the Date of Grant, any gain on disposition of the Shares will be treated as long-term capital gain for federal and California income tax purposes. If Shares acquired pursuant to an ISO are disposed of within such one-year or two-year periods (a “disqualifying disposition”), gain on such disqualifying disposition will be treated as compensation income (taxable at ordinary income rates) to the extent of the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price (the “Spread”). Any gain in excess of the Spread shall be treated as capital gain.

10. Interpretation . Any dispute regarding the interpretation of this Grant shall be submitted by Optionee or the Company to the Company’s Board of Directors or the Committee, which shall review such dispute at its next regular meeting. The resolution of such a dispute by the Board or Committee shall be final and binding on the Company and Optionee.

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11. Entire Agreement . The Plan and the Stock Option Exercise Agreement attached hereto as Exhibit 1 are incorporated herein by this reference. This Grant, the Plan and the Stock Option Exercise Agreement constitute the entire agreement of the parties hereto and supersede all prior undertakings and agreements with respect to the subject matter hereof.

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ACCEPTANCE

Optionee hereby acknowledges receipt of a copy of the Plan, represents that Optionee has read and understands the terms and provisions thereof, and accepts this Option subject to all the terms and conditions of the Plan and this Stock Option Grant. Optionee acknowledges that there may be adverse tax consequences upon exercise of this Option or disposition of the Shares and that Optionee should consult a tax adviser prior to such exercise or disposition.

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EXHIBIT 1

TO STOCK OPTION GRANT

STOCK OPTION EXERCISE AGREEMENT

This Agreement is made this                      day of                      , 20      between NOVACAL PHARMACEUTICLAS, INC., a California corporation (the “Company”), and the optionee named below (“Optionee”).

Optionee:_____________________________________________________________________________________________

Social Security Number:_________________________________________________________________________________

Address:______________________________________________________________________________________________

_____________________________________________________________________________________________________

Number of Shares Purchased:_____________________________________________________________________________

Price Per Share:________________________________________________________________________________________

Aggregate Purchase Price:_______________________________________________________________________________

Date of Option Grant:___________________________________________________________________________________

Type of Stock Option:         Incentive:____________

                 Nonqualified:___________

Optionee hereby delivers to the Company the Aggregate Purchase Price, to the extent permitted in the Option Grant, as follows [Company to check applicable box(es) and complete ]:

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Notwithstanding any of the foregoing or any other provision herein, Company specifically reserves the right, in its discretion, to pay a bonus and/or to make a loan available to Optionee at the time of the Option exercise or to allow Optionee the right to tender previously owned Company shares in exchange for the stock purchasable under the Option.

The Company and Optionee hereby agree as follows:

1. Purchase of Shares . On this date and subject to the terms and conditions of this Agreement, Optionee hereby exercises the Stock Option Grant between the Company and Optionee dated as of the Date of Option Grant set forth above (the “Grant”), with respect to the Number of Shares Purchased set forth above of the Company’s Common Stock (the “Shares”) at an aggregate purchase price equal to the Aggregate Purchase Price set forth above (the “Purchase Price”) and the Price per Share set forth above (the “Purchase Price Per Share”). The term “Shares” refers to the Shares purchased under this Agreement and includes all securities received (a) in replacement of the Shares, and (b) as a result of stock dividends or stock splits in respect of the Shares. Capitalized terms used herein that are not defined herein have the definitions ascribed to them in the Plan or the Grant.

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2. Representations of Purchaser . Optionee represents and warrants to the Company that:

(a) Optionee has received, read and understood the Plan and the Grant and agrees to abide by and be bound by their terms and conditions.

(b) Optionee is capable of evaluating the merits and risks of this investment, has the ability to protect Optionee’s own interests in this transaction and is financially capable of bearing a total loss of this investment.

(c) Optionee is fully aware of (i) the highly speculative nature of the investment in the Shares; (ii) the financial hazards involved; and (iii) the lack of liquidity of the Shares.

(d) Optionee is purchasing the Shares for Optionee’s own account for investment purposes only and not with a view to, or for sale in connection with, a distribution of the Shares within the meaning of the Securities Act of 1933, as amended (the “1933 Act”).

(e) Optionee has no present intention of selling or otherwise disposing of all or any portion of the Shares.

(f) Optionee shall agree, to the extent requested by Company and an underwriter of Company’s Common Stock, not to sell or otherwise transfer or dispose of any securities of Company, whether or not acquired hereunder, during a reasonable period of time not to exceed 180 days, as agreed to by Company and said underwriter, following the effective date of a registration statement under the Securities Act of 1933 with respect to any public offering of Company’s securities.

3. Compliance with Securities Laws . Optionee understands and acknowledges that the Shares have not been registered under the 1933 Act and that, notwithstanding any other provision of the Grant to the contrary, the exercise of any rights to purchase any Shares is expressly conditioned upon compliance with the 1933 Act and all applicable state securities laws. Optionee agrees to cooperate with the Company to ensure compliance with such laws. The Shares are being issued under the 1933 Act pursuant to [the Company will check the applicable box]:

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If privately held:

4. Federal Restrictions on Transfer . Optionee understands that the Shares must be held indefinitely unless they are registered under the 1933 Act or unless an exemption from such registration is available and that the certificate(s) representing the Shares will bear a legend to that effect. Optionee understands that the Company is under no obligation to register the Shares, and that an exemption may not be available or may not permit Optionee to transfer Shares in the amounts or at the times proposed by Optionee.

(a) Rule 144 . Optionee has been advised that Rule 144 promulgated under the 1933 Act, which permits certain resales of unregistered securities, is not presently available with respect to the Shares and, in any event, requires that a minimum of one (1) year elapses between the date of acquisition of Shares from the Company or an affiliate of the Company and any resale under Rule 144. Prior to an initial public offering of the Company’s stock, “nonaffiliates” (i.e. persons other than officers, directors and major shareholders of the Company) may resell only under Rule 144(k), which requires that a minimum of three (3) years elapse between the date of acquisition of Shares from the Company or an affiliate of the Company and any resale under Rule 144(k). Rule 144(k) is not available to affiliates.

(b) Rule 701 . If the exemption relied upon for exercise of the Shares is Rule 701, the Shares will become freely transferable, subject to limited conditions regarding the method of sale, by nonaffiliates ninety (90) days after the first sale of Common Stock of the Company to the general public pursuant to a registration statement filed with and declared effective by the Securities and Exchange Commission (the “SEC”), subject to any lengthier market standoff agreement contained in this Agreement or entered into by Optionee. Affiliates must comply with the provisions (other than the holding period requirements) of Rule 144.

5. State Law Restrictions on Transfer . Optionee understands that transfer of the Shares may be restricted by applicable state securities laws, and that the certificate(s) representing the Shares may bear a legend or legends to that effect.

6. Market Standoff Agreement . Optionee agrees in connection with any registration of the Company’s securities that, upon the request of the Company or the underwriters managing any public offering of the Company’s securities, Optionee will not sell or otherwise dispose of any Shares without the prior written consent of the Company or such underwriters, as the case may be, for a period of time (not to exceed one hundred eighty (180) days) from the effective date of such registration as the Company or the underwriters may specify for employee shareholders generally.

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7. Legends . Optionee understands and agrees that the certificate(s) representing the Shares will bear a legend in substantially the following form, in addition to any other legends required by applicable law:

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE ‘SECURITIES ACT’), AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE SECURITIES ACT OR, IN THE OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.”

8. Stop-Transfer Notices . Optionee understands and agrees that, in order or ensure compliance with the restrictions referred to herein, the Company may issue appropriate “stop-transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.

9. Tax Consequences . OPTIONEE UNDERSTANDS THAT OPTIONEE MAY SUFFER ADVERSE TAX CONSEQUENCES AS A RESULT OF OPTIONEE’S PURCHASE OR DISPOSITION OF THE SHARES. OPTIONEE REPRESENTS THAT OPTIONEE HAS CONSULTED WITH ANY TAX CONSULTANT(S) OPTIONEE DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE OR DISPOSITION OF THE SHARES AND THAT OPTIONEE IS NOT RELYING ON THE COMPANY FOR ANY TAX ADVICE.

10. Repurchase Options . In addition to such other buy-sell terms, rights of first refusal, repurchase rights and/or similar provisions as are included herewith as determined by Company, the following terms and conditions apply to Company’s rights to repurchase Shares under the provisions of Section 3 in the Stock Option Grant:

Repurchase Terms

(a) Early Exercise . Company’s repurchase right hereunder applies to any Shares which are not Vested Shares and as purchased by an Optionee, who is an officer, director or consultant of Company, by an exercise (or “early exercise”) of the Stock Option grant, as permitted in Section 3 thereof.

(b) Repurchase Right . If said Optionee ceases to be employed by, or provide service to, the Company, or any Parent or Subsidiary of the Company, or, in the case of a nonqualified option, by or to any Affiliate of the Company (said date of cessation referred to as “Termination Date”), Company shall have the right and option to repurchase (at the price and for the payment in (c) immediately below) such number of Shares as is equal to,

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and to the extent that, the underlying option rights to said Shares, under the terms of Section 2 of the Stock Option Grant, would not have become exercisable on or prior to the Termination Date. Or stated otherwise, absent Optionee’s purchase of said Shares, said Shares (as repurchasable by Company) would not have become “Vested Shares” under Section 2 of the Stock Option Grant on or prior to the Termination Date. Company’s rights to so repurchase said Shares may be exercised by a written notice given to Optionee, together with full payment of the purchase price of said repurchased Shares, within a period of 90 days after the Termination Date.

As an example of the foregoing, assume that an eligible Optionee is granted option rights under an Option Grant, dated June 1, 2005, for a total of 4,800 Shares, exercisable, under Section 2 of the Stock Option Grant, as to 1,200 shares, on June 1, 2006, and, as to 100 Shares, on the first day of each of 36 successive calendar months, beginning July 1, 2006. If Optionee exercised option rights (under an “early exercise”) and purchased 2,000 shares on May 1, 2006, and Optionee’s employment (or services) terminated on June 15, 2006, Company would have the right to repurchase 800 Shares (inasmuch as, of the 2,000 Shares purchased, 1,200 Shares would have been exercisable, under Section 2, prior to June 15, 2006, the Termination Date).

(c) Repurchase Price, Exercise and Payment . The foregoing Company option and right to repurchase Shares shall be exercised at a price equal to the original option exercise price per share and shall be paid in cash (or Company check) and/or by cancellation of all or any portion of Optionee’s purchase money indebtedness, if any, for the Shares.

(d) Assignment and Delegation . Notwithstanding any contrary provision herein, Company reserves and has the right to assign and/or delegate any or all of its repurchase rights and obligations herein to such other party or parties as may be selected by it.

(e) Antidilution Provision . In the event of a stock dividend, stock split, reverse stock split, other stock division or combination, recapitalization or reclassification involving Company’s Common Shares, an equitable and proportionate adjustment or other relevant change shall be deemed to have been made to all of the referenced shares and/or prices referenced herein in order fully to effectuate the purposes hereof, and all resulting additional (or reduced number of) shares thereafter shall be subject to the terms herein.

(f) Notice and Payments . All notices and payments to be made hereunder may be given and made by Company or Optionee to one another, either personally or by United States mail, postage prepaid, by Priority Mail, by Federal Express or by any other similar means, if to Company, addressed at its then principal place of business (currently at 5980 Horton Street, Suite 550, Emeryville, CA 94608, or, if to Optionee, addressed to Optionee at Optionee’s last address appearing on Companys records, or at such other address as either Company or Optionee may designate by written notice to each other. In the event of the death or disability of Optionee, and such occurrence is known by

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Company, then said notice shall be given in the name of Optionee at the address and in the manner as above provided and also shall be given to Optionee’s known representative(s) or successor(s), at such address(es) as designated in writing to Company by said representative(s) or successor(s), or, absent such designation, to such known representative(s) or successor(s) at Optionee’s above referenced address. Any such notice and payment shall be deemed given as of the time and date when personally delivered or when otherwise sent.

11. Entire Agreement . The Plan and Grant are incorporated herein by reference. This Agreement, the Plan and the Grant constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and are governed by California law except for that body of law pertaining to conflict of laws.

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Exhibit10.8

OP-003

STOCK OPTION GRANT

Optionee: Jack O’Reilly

Address:______________________________________________________________________________________

______________________________________________________________________________________________

Total Shares Subject to Option: 700,000

Exercise Price Per Share: Ten Cents ($0.10)

Date of Grant: May 23, 2002

Expiration Date of Option: February 21, 2012

Type of Stock Option:         Incentive: x

                                               Nonqualified: ¨

1. Grant of Option . Novacal Pharmaceuticals, Inc., a California corporation (the “Company”), hereby grants to the optionee named above (“Optionee”) an option (this “Option”) to purchase the total number of shares of Common Stock of the Company set forth above (the “Shares”) at the exercise price per share set forth above (the “Exercise Price”), subject to all of the terms and conditions of this Grant and the Company’s 2002 Stock Option Plan, as amended to the date hereof (the “Plan”). If designated as an Incentive Stock Option above, this Option is intended to qualify as an “incentive stock option” (“ISO”) within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”). Unless otherwise defined herein, capitalized terms used herein shall have the meanings ascribed to them in the Plan.

2. Exercise Period of Option . The option rights granted hereunder are exercisable during the time period or periods, and as to the number of shares exercisable during each time period, as follows:

(a) 100,000 shares, or any part thereof, may be exercised at any time or times, from and including May 23, 2002 to and including February 21, 2012;

(b) an additional 100,000 shares, or any part thereof, may be exercised when first $1,000,000 is raised in this Company’s equity financing;

(c) an additional 100,000 shares, or any part thereof, may be exercised upon the filing of an IND by this Company;

(d) an additional 100,000 shares, or any part thereof, may be exercised when next $1,000,000 is raised in this Company’s equity financing;

(e) an additional 100,000 shares, or any part thereof, may be exercised when the IND is cleared;

(f) an additional 100,000 shares, or any part thereof, may be exercised when a contract with a significant partner is signed; and

(g) an additional 100,000 shares, or any part thereof, may be exercised when Phase III is initiated.

Notwithstanding the above; (i) the option rights herein shall become fully exercisable in the event that Company is acquired by an independent entity by a merger, sale of assets or similar transaction (or series of related transactions), other than by the issuance and sale of its stock by Company for capital raising purposes, (ii) the Committee or to the extent a Committee has not been appointed, the Board of Directors (it being understood in such event reference herein to the Committee shall mean the Board of Directors), in its sole discretion, may, upon written notice to the Optionee, accelerate the earliest date or dates on which any of the Option rights granted hereunder are exercisable, and (iii) the minimum number of Shares that may be purchased upon any partial exercise of the Option is Ten Thousand (10,000) shares, and (iv) this Option shall expire on the Expiration Date set forth above and must be exercised, if at all, on or before the Expiration Date. The portion of Shares as to which an Option is exercisable in accordance with the above schedule as of the applicable dates shall be deemed “Vested Options.”

3. Early Exercise and Repurchase Rights . Notwithstanding the condition precedent exercise periods and/or events set forth in Section 2 above, after the date of this Grant and prior to said exercise periods and/or events, Optionee, at any time, or from time to time, may exercise (“early exercise”) any or all of the option rights granted hereunder, after the date of this Grant and prior to said Section 2 exercise periods and/or events, provided, however, if, and to the extent, that the Shares purchased pursuant to such exercise are not Vested Shares (as defined in Section 2 above), Company shall have the right and option to repurchase any or all of said Shares (as are not Vested Shares) at the per share original exercise price set forth herein, equitably and proportionately adjusted or otherwise relevantly changed to reflect any Company Common Stock dividends, stock splits, reverse stock splits, other similar stock combinations or divisions, or stock reclassifications, occurring after the date hereof. Said repurchase right shall be exercisable as of, when, and to such extent, and shall terminate as of such date(s), as set forth in and provided by those certain “Repurchase Terms” provided in Section 10 in the Stock Option Exercise Agreement, attached as Exhibit 1 hereto. It is understood, however, that, after the Termination Date, as defined in Section 5 below, or after any other termination of the option

rights herein, no exercise may be made of any rights to Shares under the exercise provisions (early exercise) in this Section 3. As to any Shares purchased upon an exercise hereunder as are not Vested Shares, as a condition of and requirement for said exercise and purchase, (i) the certificate(s), representing said Shares, shall be retained and held by Company in its possession for purposes of its repurchase rights, and (ii) Optionee shall have delivered to Company an Assignment Separate from Certificate (“Stock Power”), as signed by Optionee, but with the number of shares to be transferred and transferee unspecified (and Optionee hereby irrevocably designates and authorizes Company, and its successors and assigns, as agent for Optionee to date, complete and otherwise use said Stock Power to effectuate and implement Company’s repurchase rights herein; said designation and authority being deemed coupled with an interest and being irrevocable). For purposes of protecting and securing Company’s repurchase rights to said Shares, Optionee hereby grants to Company a security interest in said Shares and agrees, unless Company otherwise consents in writing, not to sell, transfer or offer to sell or transfer any of said Shares as are and remain subject to Company’s repurchase rights. Upon completion of the transfer of the Shares (or appropriate portion thereof) to Company relative to its repurchase rights and/or upon the termination of said rights, as the case may be, all remaining Shares not repurchased by and transferred to Company shall be transferred and/or returned to Optionee. All of the terms herein are fully binding and enforceable upon Optionee and Optionee’s heirs, representatives, successors and assigns. All certificate(s) representing the Shares of Company to be retained and held by Company shall, until released to Optionee free of Company’s repurchase rights, may bear, at Company’s discretion, in addition to each of the legend(s) as otherwise herein prescribed, the following legend (with the appropriate date filled in):

THESE SHARES ARE SUBJECT TO A REPURCAHSE OPTION OF THE CORPORATION AND TO VARIOUS TRANSFER AND OTHER RESTRICTIONS AS SET FORTH IN THAT CERTAIN STOCK OPTION GRANT, DATED MAY 23, 2002, A COPY OF WHICH IS ON FILE WITH THE CORPORATION.

It is understood that Optionee may accompany the exercise of the option rights herein with the filing with the Internal Revenue Service of an election to include income in the year of the exercise pursuant to Section 83(b) of the Internal Revenue Code (and with such state agencies and under such state laws as applicable). OPTIONEE SHOULD CONSULT A TAX ADVISOR BEFORE EXERCISING THE OPTION OR MAKING SUCH FILING TO VERIFY AND CONFIRM THAT SUCH ACTIONS ARE APPROPRIATE WITH RESPECT TO OPTIONEE’S TAX CIRCUMSTANCES.

4. Restriction on Exercise . This Option may not be exercised unless such exercise is in compliance with the Securities Act of 1933, as amended, and all applicable state securities laws, as they are in effect on the date of exercise, and the requirements of any stock exchange or over-the-counter market on which the Company’s Common Stock may be listed or quoted at the time of exercise. Optionee understands that the Company is under no obligation to register, qualify or list the Shares with the Securities and Exchange Commission, any state securities commission or any stock exchange to effect such compliance.

5. Termination of Option . Except as provided below in this Section 4, this Option shall terminate and may not be exercised if Optionee ceases to be employed by, or provide services to, the Company or by any Parent or Subsidiary of the Company (or, in the case of a nonqualified stock option, by or to any Affiliate of the Company). Optionee shall be considered to be employed by the Company for all purposes under this Section 4 if Optionee is an officer, director or full-time employee of the Company or any Parent, Subsidiary or Affiliate of the Company or if the Committee determines that Optionee is rendering substantial services as a part-time employee, consultant, contractor or advisor to the Company or any Parent, Subsidiary or Affiliate of the Company. The Committee shall have discretion to determine whether Optionee has ceased to be employed by the Company or any Parent, Subsidiary or Affiliate of the Company and the effective date on which such employment terminated (the “Termination Date”).

(a) Termination Generally . If Optionee ceases to be employed by the Company and all Parents, Subsidiaries or Affiliates of the Company for any reason except death or disability, the Vested Options, to the extent (and only to the extent) exercisable by Optionee on the Termination Date, may be exercised by Optionee, but only within three months after the Termination Date; provided that this Option may not be exercised in any event after the Expiration Date.

(b) Death or Disability . If Optionee’s employment with the Company and all Parents, Subsidiaries and Affiliates of the Company is terminated because of the death of Optionee or the permanent and total disability of Optionee within the meaning of Section 22(e)(3) of the Code, the Vested Options, to the extent (and only to the extent) exercisable by Optionee on the Termination Date, may be exercised by Optionee (or Optionee’s legal representative), but only within twelve (12) months after the Termination Date; and provided further that this Option may not be exercised in any event later than the Expiration Date. If Optionee’s employment with the Company and all Parents, Subsidiaries and Affiliates of the Company is terminated because of a disability of Optionee which is not permanent and total within the meaning of Section 221(e)(3) of the Code, the Vested Options, to the extent (and only to the extent) exercisable by Optionee on the Termination Date, may be exercised by Optionee or Optionee’s legal representative, but only within six (6) months after the Termination Date; and provided further that the Option may not be exercised in any event later than the Expiration Date. Optionee understands that if the Option is an ISO and if it is exercised after three months in the event of a disability which is not permanent and total, the Option will be treated as a nonqualified stock option for tax purposes.

(c) No Right to Employment . Nothing in the Plan or this Grant shall confer on Optionee any right to continue in the employ of, or other relationship with, the Company or any Parent, Subsidiary or Affiliate of the Company or limit in any way the right of the Company or any Parent, Subsidiary or Affiliate of the Company to terminate Optionee’s employment or other relationship at any time, with or without cause.

6. Manner of Exercise .

(a) Exercise Agreement . This Option shall be exercisable by delivery to the Company of an executed written Stock Option Exercise Agreement in the form attached hereto as Exhibit 1, or in such other form as may be approved by the Company, which shall set forth Optionee’s election to exercise some or all of this Option, the number of Shares being purchased, any restrictions imposed on the Shares and such other representations and agreements as may be required by the Company to comply with applicable securities laws.

(b) Exercise Price . The Stock Option Exercise Agreement shall be accompanied by full payment of the Exercise Price for the Shares being purchased. Payment for the Shares may be made in cash (by check), or, where permitted by law, by any of the following methods approved by the Committee at the date of grant of this Option, or any combinations thereof:

(c) Withholding Taxes . Prior to the issuance of the Shares upon exercise of this Option, if so required by Company, Optionee must pay or make adequate provision for any applicable federal or state withholding obligations of the Company. The Optionee may provide for payment of Optionee’s minimum statutory withholding taxes upon exercise of the Option by requesting that the Company retain Shares with a Fair Market Value equal to the minimum amount of taxes required to be withheld, all as set forth in Section 6(c) of the Plan. In such case, the Company shall issue the net number of Shares to the Optionee by deducting the Shares retained from the Shares exercised.

(d) Issuance of Shares . Provided that such notice and payment are in form and substance satisfactory to counsel for the Company, the Company shall cause the Shares to be issued in the name of Optionee or Optionee’s legal representative.

7. Notice of Disqualifying Disposition of ISO Shares . If the Option granted to Optionee herein is an ISO, and if Optionee sells or otherwise disposes of any of the Shares acquired pursuant to the ISO on or before the later of (1) the date two years after the Date of Grant, or (2) the date one year after exercise of the ISO with respect to the Shares to be sold or disposed of, the Optionee shall immediately notify the Company in writing of such disposition. Optionee acknowledges and agrees that Optionee may be subject to income tax withholding by the Company on the compensation income recognized by the Optionee from any such early disposition by payment in cash or out of the current wages or other earnings payable to the Optionee.

8. Nontransferability of Option . This Option may not be transferred in any manner other than by will or by the law of descent and distribution and may be exercised during the lifetime of Optionee only by Optionee or other permitted transferee. The terms of this Option shall be binding upon the executors, administrators, successors and assigns of the Optionee.

9. Federal Tax Consequences . Set forth below is a brief summary as of the date this form of Option Grant was adopted of some of the federal tax consequences of exercise of this Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

(a) Exercise of ISO . If this Option qualifies as an ISO, there will be no regular federal income tax liability upon the exercise of this Option, although the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price will be treated as an adjustment to alternative minimum taxable income for federal income tax purposes and may subject the Optionee to an alternative minimum tax liability in the year of exercise.

(b) Exercise of Nonqualified Stock Option . If this Option does not qualify as an ISO, there may be a regular federal income tax liability upon the exercise of the Option. The Optionee will be treated as having received compensation income (taxable at ordinary income tax rates) equal to the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price. The Company will be required to withhold from Optionee’s compensation or collect from Optionee and pay to the applicable taxing authorities an amount equal to a percentage of this compensation income at the time of exercise.

(c) Disposition of Shares . In the case of a nonqualified stock option, if Shares are held for at least one year before disposition, any gain on disposition of the Shares will be treated as long-term capital gain for federal and California income tax purposes. In the case of an ISO, if Shares are held for at least one year after the date of exercise and at least two years after the Date of Grant, any gain on disposition of the Shares will be treated as long-term capital gain for federal and California income tax purposes. If Shares acquired pursuant to an ISO are disposed of within such one-year or two-year periods (a “disqualifying disposition”), gain on such disqualifying disposition will be treated as compensation income (taxable at ordinary income rates) to the extent of the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price (the “Spread”). Any gain in excess of the Spread shall be treated as capital gain.

10. Interpretation . Any dispute regarding the interpretation of this Grant shall be submitted by Optionee or the Company to the Company’s Board of Directors or the Committee, which shall review such dispute at its next regular meeting. The resolution of such a dispute by the Board or Committee shall be final and binding on the Company and Optionee.

11. Entire Agreement . The Plan and the Stock Option Exercise Agreement attached hereto as Exhibit 1 are incorporated herein by this reference. This Grant, the Plan and the Stock Option Exercise Agreement constitute the entire agreement of the parties hereto and supersede all prior undertakings and agreements with respect to the subject matter hereof.

ACCEPTANCE

Optionee hereby acknowledges receipt of a copy of the Plan, represents that Optionee has read and understands the terms and provisions thereof, and accepts this Option subject to all the terms and conditions of the Plan and this Stock Option Grant. Optionee acknowledges that there may be adverse tax consequences upon exercise of this Option or disposition of the Shares and that Optionee should consult a tax adviser prior to such exercise or disposition.

EXHIBIT 1

TO STOCK OPTION GRANT

STOCK OPTION EXERCISE AGREEMENT

This Agreement is made this              day of              , 20              between Novacal Pharmaceuticals, Inc., a California corporation (the “Company”), and the optionee named below (“Optionee”).

Optionee:________________________________________________________________________________

Social Security Number:____________________________________________________________________

Address:_________________________________________________________________________________

________________________________________________________________________________________

Number of Shares Purchased:_________________________________________________________________

Price Per Share:_____________________________________________________________________________

Aggregate Purchase Price:_____________________________________________________________________

Date of Option Grant:_________________________________________________________________________

Type of Stock Option:         Incentive:__________________

                                               Nonqualified:_______________

Optionee hereby delivers to the Company the Aggregate Purchase Price, to the extent permitted in the Option Grant, as follows [Company to check applicable box(es) and complete ]:

The Company and Optionee hereby agree as follows:

1. Purchase of Shares . On this date and subject to the terms and conditions of this Agreement, Optionee hereby exercises the Stock Option Grant between the Company and Optionee dated as of the Date of Option Grant set forth above (the “Grant”), with respect to the Number of Shares Purchased set forth above of the Company’s Common Stock (the “Shares”) at an aggregate purchase price equal to the Aggregate Purchase Price set forth above (the “Purchase Price”) and the Price per Share set forth above (the “Purchase Price Per Share”). The term “Shares” refers to the Shares purchased under this Agreement and includes all securities received (a) in replacement of the Shares, and (b) as a result of stock dividends or stock splits in respect of the Shares. Capitalized terms used herein that are not defined herein have the definitions ascribed to them in the Plan or the Grant.

2. Representations of Purchaser . Optionee represents and warrants to the Company that:

(a) Optionee has received, read and understood the Plan and the Grant and agrees to abide by and be bound by their terms and conditions.

(b) Optionee is capable of evaluating the merits and risks of this investment, has the ability to protect Optionee’s own interests in this transaction and is financially capable of bearing a total loss of this investment.

(c) Optionee is fully aware of (i) the highly speculative nature of the investment in the Shares; (ii) the financial hazards involved; and (iii) the lack of liquidity of the Shares.

(d) Optionee is purchasing the Shares for Optionee’s own account for investment purposes only and not with a view to, or for sale in connection with, a distribution of the Shares within the meaning of the Securities Act of 1933, as amended (the “1933 Act”).

(e) Optionee has no present intention of selling or otherwise disposing of all or any portion of the Shares.

(f) Optionee shall agree, to the extent requested by Company and an underwriter of Company’s Common Stock, not to sell or otherwise transfer or dispose of any securities of Company, whether or not acquired hereunder, during a reasonable period of time not to exceed 180 days, as agreed to by Company and said underwriter, following the effective date of a registration statement under the Securities Act of 1933 with respect to any public offering of Company’s securities.

3. Compliance with Securities Laws . Optionee understands and acknowledges that the Shares have not been registered under the 1933 Act and that, notwithstanding any other provision of the Grant to the contrary, the exercise of any rights to purchase any Shares is expressly conditioned upon compliance with the 1933 Act and all applicable state securities laws. Optionee agrees to cooperate with the Company to ensure compliance with such laws. The Shares are being issued under the 1933 Act pursuant to [the Company will check the applicable box]:

If privately held:

4. Federal Restrictions on Transfer . Optionee understands that the Shares must be held indefinitely unless they are registered under the 1933 Act or unless an exemption from such registration is available and that the certificate(s) representing the Shares will bear a legend to that effect. Optionee understands that the Company is under no obligation to register the Shares,

and that an exemption may not be available or may not permit Optionee to transfer Shares in the amounts or at the times proposed by Optionee.

(a) Rule 144 . Optionee has been advised that Rule 144 promulgated under the 1933 Act, which permits certain resales of unregistered securities, is not presently available with respect to the Shares and, in any event, requires that a minimum of one (1) year elapses between the date of acquisition of Shares from the Company or an affiliate of the Company and any resale under Rule 144. Prior to an initial public offering of the Company’s stock, “nonaffiliates” (i.e. persons other than officers, directors and major shareholders of the Company) may resell only under Rule 144(k), which requires that a minimum of three (3) years elapse between the date of acquisition of Shares from the Company or an affiliate of the Company and any resale under Rule 144(k). Rule 144(k) is not available to affiliates.

(b) Rule 701 . If the exemption relied upon for exercise of the Shares is Rule 701, the Shares will become freely transferable, subject to limited conditions regarding the method of sale, by nonaffiliates ninety (90) days after the first sale of Common Stock of the Company to the general public pursuant to a registration statement filed with and declared effective by the Securities and Exchange Commission (the “SEC”), subject to any lengthier market standoff agreement contained in this Agreement or entered into by Optionee. Affiliates must comply with the provisions (other than the holding period requirements) of Rule 144.

5. State Law Restrictions on Transfer . Optionee understands that transfer of the Shares may be restricted by applicable state securities laws, and that the certificate(s) representing the Shares may bear a legend or legends to that effect.

6. Market Standoff Agreement . Optionee agrees in connection with any registration of the Company’s securities that, upon the request of the Company or the underwriters managing any public offering of the Company’s securities, Optionee will not sell or otherwise dispose of any Shares without the prior written consent of the Company or such underwriters, as the case may be, for a period of time (not to exceed one hundred eighty (180) days) from the effective date of such registration as the Company or the underwriters may specify for employee shareholders generally.

7. Legends . Optionee understands and agrees that the certificate(s) representing the Shares will bear a legend in substantially the following form, in addition to any other legends required by applicable law:

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE ‘SECURITIES ACT’), AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE SECURITIES ACT OR, IN THE OPINION OF

COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.”

8. Stop-Transfer Notices . Optionee understands and agrees that, in order or ensure compliance with the restrictions referred to herein, the Company may issue appropriate “stop-transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.

9. Tax Consequences . OPTIONEE UNDERSTANDS THAT OPTIONEE MAY SUFFER ADVERSE TAX CONSEQUENCES AS A RESULT OF OPTIONEE’S PURCHASE OR DISPOSITION OF THE SHARES. OPTIONEE REPRESENTS THAT OPTIONEE HAS CONSULTED WITH ANY TAX CONSULTANT(S) OPTIONEE DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE OR DISPOSITION OF THE SHARES AND THAT OPTIONEE IS NOT RELYING ON THE COMPANY FOR ANY TAX ADVICE.

10. Repurchase Options . In addition to such other buy-sell terms, rights of first refusal, repurchase rights and/or similar provisions as are included herewith as determined by Company, the following terms and conditions apply to Company’s rights to repurchase Shares under the provisions of Section 3 in the Stock Option Grant:

Repurchase Terms

(a) Early Exercise . Company’s repurchase right hereunder applies to any Shares which are not Vested Shares and as purchased by Optionee by an exercise (or “early exercise”) of the Stock Option grant, as permitted in Section 3 thereof.

(b) Repurchase Right . If Optionee ceases to be employed by, or provide service to, the Company, or any Parent or Subsidiary of the Company, or, in the case of a nonqualified option, by or to any Affiliate of the Company (said date of cessation referred to as “Termination Date”), Company shall have the right and option to repurchase (at the price and for the payment in (c) immediately below) such number of Shares as is equal to, and to the extent that, the underlying option rights to said Shares, under the terms of Section 2 of the Stock Option Grant, would not have become exercisable on or prior to the Termination Date. Or stated otherwise, absent Optionee’s purchase of said Shares, said Shares (as repurchasable by Company) would not have become “Vested Shares” under Section 2 of the Stock Option Grant on or prior to the Termination Date. Company’s rights to so repurchase said Shares may be exercised by a written notice given to Optionee, together with full payment of the purchase price of said repurchased Shares, within a period of 90 days after the Termination Date.

As an example of the foregoing, assume that an Optionee is granted option rights under an Option Grant, dated June 1, 2002, for a total of 4,800 Shares, exercisable, under Section 2 of the Stock Option Grant, as to 1,200 shares, on June 1, 2002, and, as to 100

Shares, on the first day of each of 36 successive calendar months, beginning July 1, 2002. If Optionee exercised option rights (under an “early exercise”) and purchased 2,000 shares on May 1, 2002, and Optionee’s employment (or services) terminated on June 15, 2002, Company would have the right to repurchase 800 Shares (inasmuch as, of the 2,000 Shares purchased, 1,200 Shares would have been exercisable, under Section 2, prior to June 15, 2002, the Termination Date).

(c) Repurchase Price, Exercise and Payment . The foregoing Company option and right to repurchase Shares shall be exercised at a price equal to the original option exercise price per share and shall be paid in cash (or Company check) and/or by cancellation of all or any portion of Optionee’s purchase money indebtedness, if any, for the Shares.

(d) Assignment and Delegation . Notwithstanding any contrary provision herein, Company reserves and has the right to assign and/or delegate any or all of its repurchase rights and obligations herein to such other party or parties as may be selected by it.

(e) Antidilution Provision . In the event of a stock dividend, stock split, reverse stock split, other stock division or combination, recapitalization or reclassification involving Company’s Common Shares, an equitable and proportionate adjustment or other relevant change shall be deemed to have been made to all of the referenced shares and/or prices referenced herein in order fully to effectuate the purposes hereof, and all resulting additional (or reduced number of) shares thereafter shall be subject to the terms herein.

(f) Notice and Payments . All notices and payments to be made hereunder may be given and made by Company or Optionee to one another, either personally or by United States mail, postage prepaid, by Priority Mail, by Federal Express or by any other similar means, if to Company, addressed at its then principal place of business (currently at 37 Commercial Boulevard, Suite 100, Novato California 94949), or, if to Optionee, addressed to Optionee at Optionee’s last address appearing on Company’s records, or at such other address as either Company or Optionee may designate by written notice to each other. In the event of the death or disability of Optionee, and such occurrence is known by Company, then said notice shall be given in the name of Optionee at the address and in the manner as above provided and also shall be given to Optionee’s known representative(s) or successor(s), at such address(es) as designated in writing to Company by said representative(s) or successor(s), or, absent such designation, to such known representative(s) or successor(s) at Optionee’s above referenced address. Any such notice and payment shall be deemed given as of the time and date when personally delivered or when otherwise sent.

11. Entire Agreement . The Plan and Grant are incorporated herein by reference. This Agreement, the Plan and the Grant constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and are governed by California law except for that body of law pertaining to conflict of laws.

Exhibit 10.9

OP-101

STOCK OPTION GRANT

Optionee: BEHZAD KHOSROVI

Address: ___________________________________________________________________________

__________________________________________________________________________________

Total Shares Subject to Option: 400,000

Exercise Price Per Share: $0.15

Date of Grant: January 30, 2004

Expiration Date of Option: January 29, 2014

1. Grant of Option . Novacal Pharmaceuticals, Inc., a California corporation (the “Company”), hereby grants to the optionee named above (“Optionee”) an option (this “Option”) to purchase the total number of shares of Common Stock of the Company set forth above (the “Shares”) at the exercise price per share set forth above (the “Exercise Price”), subject to all of the terms and conditions of this Grant and the Company’s 2002 Stock Option Plan, as amended to the date hereof (the “Plan”). If designated as an Incentive Stock Option above, this Option is intended to qualify as an “incentive stock option” (“ISO”) within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”). Unless otherwise defined herein, capitalized terms used herein shall have the meanings ascribed to them in the Plan.

2. Exercise Period of Option . The option rights granted hereunder (unless sooner terminated as otherwise herein provided by employment termination or otherwise) are exercisable during the time period or periods, and as to the number of shares exercisable during each time period, as follows:

(a) 50,000 shares, or any part thereof, may be exercised at any time or times, from and including January 30, 2004 to and including January 29, 2014;

(b) an additional 100,000 shares, or any part thereof, may be exercised at any time or times, upon the filing of the Company’s first IND (as to its NVC101 product), if filed before or on December 1, 2013;

(c) an additional 50,000 shares, or any part thereof, may be exercised at any time or times, upon completion of this Company’s Phase I/II clinical trial (as to its NVC101 product), if completed before or on December 1, 2013;

(d) and the remaining 200,000 shares, may be exercised at any time or times, to the extent of 50,000 shares, or any part thereof, as of the end of each calendar quarter (ending with the last day of March, June, September and December) commencing with the end of the calendar quarter following the quarter in which this Company’s Phase I/II clinical trail (as to its NVC101 product) is completed, if completed before or one December 1, 2013.

Notwithstanding the above: (i) all of the then Common shares as are not exercisable shall become immediately exercisable upon the consummation of either of (a) an initial public offering of its securities by this Company in a registration statement filed with the Securities and Exchange Commission (pursuant to a financing with a gross sales price of not less than $10,000,000) or (b) a transfer of control of the business of this Company to an independent party pursuant to a merger, reverse merger, sale of assets or stock, or a similar transaction (but excluding any transfer of control due to this corporation’s sale of stock for financing purposes); (ii) the Committee or to the extent a Committee has not been appointed, the Board of Directors (it being understood in such event reference herein to the Committee shall mean the Board of Directors), in its sole discretion, may, upon written notice to the Optionee, accelerate the earliest date or dates on which any of the Option rights granted hereunder are exercisable, and (iii) the minimum number of Shares that may be purchased upon any partial exercise of the Option is Ten Thousand (10,000) shares, and (iv) this Option shall expire on the Expiration Date set forth above and must be exercised, if at all, on or before the Expiration Date. The portion of Shares as to which an Option is exercisable in accordance with the above schedule as of the applicable dates shall be deemed “Vested Options.”

3. Early Exercise and Repurchase Rights . Notwithstanding the condition precedent exercise periods and/or events set forth in Section 2 above, after the date of this Grant and prior to said exercise periods and/or events, Optionee, at any time, or from time to time, may exercise (“early exercise”) any or all of the option rights granted hereunder, after the date of this Grant and prior to said Section 2 exercise periods and/or events, provided, however, if, and to the extent, that the Shares purchased pursuant to such exercise are not Vested Shares (as defined in Section 2 above), Company shall have the right and option to repurchase any or all of said Shares (as are not Vested Shares) at the per share original exercise price set forth herein, equitably and proportionately adjusted or otherwise relevantly changed to reflect any Company Common Stock dividends, stock splits, reverse stock splits, other similar stock combinations or divisions, or stock reclassifications, occurring after the date hereof. Said repurchase right shall be exercisable as of, when, and to such extent, and shall terminate as of such date(s), as set forth in and provided by those certain “Repurchase Terms” provided in Section 10 in the Stock Option Exercise Agreement, attached as Exhibit 1 hereto. It is understood, however, that, after the Termination Date, as defined in Section 5 below, or after any other termination of the option rights herein, no exercise may be made of any rights to Shares under the exercise provisions (early exercise) in this Section 3. As to any Shares purchased upon an exercise hereunder as are not Vested Shares, as a condition of and requirement for said exercise and purchase, (i) the

certificate(s), representing said Shares, shall be retained and held by Company in its possession for purposes of its repurchase rights, and (ii) Optionee shall have delivered to Company an Assignment Separate from Certificate (“Stock Power”), as signed by Optionee, but with the number of shares to be transferred and transferee unspecified (and Optionee hereby irrevocably designates and authorizes Company, and its successors and assigns, as agent for Optionee to date, complete and otherwise use said Stock Power to effectuate and implement Company’s repurchase rights herein; said designation and authority being deemed coupled with an interest and being irrevocable). For purposes of protecting and securing Company’s repurchase rights to said Shares, Optionee hereby grants to Company a security interest in said Shares and agrees, unless Company otherwise consents in writing, not to sell, transfer or offer to sell or transfer any of said Shares as are and remain subject to Company’s repurchase rights. Upon completion of the transfer of the Shares (or appropriate portion thereof) to Company relative to its repurchase rights and/or upon the termination of said rights, as the case may be, all remaining Shares not repurchased by and transferred to Company shall be transferred and/or returned to Optionee. All of the terms herein are fully binding and enforceable upon Optionee and Optionee’s heirs, representatives, successors and assigns. All certificate(s) representing the Shares of Company to be retained and held by Company shall, until released to Optionee free of Company’s repurchase rights, may bear, at Company’s discretion, in addition to each of the legend(s) as otherwise herein prescribed, the following legend (with the appropriate date filled in):

THESE SHARES ARE SUBJECT TO A REPURCHASE OPTION OF THE CORPORATION AND TO VARIOUS TRANSFER AND OTHER RESTRICTIONS AS SET FORTH IN THAT CERTAIN STOCK OPTION GRANT, DATED JANUARY 30, 2004, A COPY OF WHICH IS ON FILE WITH THE CORPORATION.

It is understood that Optionee may accompany the exercise of the option rights herein with the filing with the Internal Revenue Service of an election to include income in the year of the exercise pursuant to Section 83(b) of the Internal Revenue Code (and with such state agencies and under such state laws as applicable). OPTIONEE SHOULD CONSULT A TAX ADVISOR BEFORE EXERCISING THE OPTION OR MAKING SUCH FILING TO VERIFY AND CONFIRM THAT SUCH ACTIONS ARE APPROPRIATE WITH RESPECT TO OPTIONEE’S TAX CIRCUMSTANCES.

4. Restriction on Exercise . This Option may not be exercised unless such exercise is in compliance with the Securities Act of 1933, as amended, and all applicable state securities laws, as they are in effect on the date of exercise, and the requirements of any stock exchange or over-the-counter market on which the Company’s Common Stock may be listed or quoted at the time of exercise. Optionee understands that the Company is under no obligation to register, qualify or list the Shares with the Securities and Exchange Commission, any state securities commission or any stock exchange to effect such compliance.

5. Termination of Option . Except as provided below in this Section 4, this Option shall terminate and may not be exercised if Optionee ceases to be employed by, or provide services to, the Company or by any Parent or Subsidiary of the Company (or, in the case of a

nonqualified stock option, by or to any Affiliate of the Company). Optionee shall be considered to be employed by the Company for all purposes under this Section 4 if Optionee is an officer, director or full-time employee of the Company or any Parent, Subsidiary or Affiliate of the Company or if the Committee determines that Optionee is rendering substantial services as a part-time employee, consultant, contractor or advisor to the Company or any Parent, Subsidiary or Affiliate of the Company. The Committee shall have discretion to determine whether Optionee has ceased to be employed by the Company or any Parent, Subsidiary or Affiliate of the Company and the effective date on which such employment terminated (the “Termination Date”).

(a) Termination Generally . If Optionee ceases to be employed by the Company and all Parents, Subsidiaries or Affiliates of the Company for any reason except death or disability, the Vested Options, to the extent (and only to the extent) exercisable by Optionee on the Termination Date, may be exercised by Optionee, but only within three months after the Termination Date; provided that this Option may not be exercised in any event after the Expiration Date.

(b) Death or Disability . If Optionee’s employment with the Company and all Parents, Subsidiaries and Affiliates of the Company is terminated because of the death of Optionee or the permanent and total disability of Optionee within the meaning of Section 22(e)(3) of the Code, the Vested Options, to the extent (and only to the extent) exercisable by Optionee on the Termination Date, may be exercised by Optionee (or Optionee’s legal representative), but only within twelve (12) months after the Termination Date; and provided further that this Option may not be exercised in any event later than the Expiration Date. If Optionee’s employment with the Company and all Parents, Subsidiaries and Affiliates of the Company is terminated because of a disability of Optionee which is not permanent and total within the meaning of Section 221(e)(3) of the Code, the Vested Options, to the extent (and only to the extent) exercisable by Optionee on the Termination Date, may be exercised by Optionee or Optionee’s legal representative, but only within six (6) months after the Termination Date; and provided further that the Option may not be exercised in any event later than the Expiration Date. Optionee understands that if the Option is an ISO and if it is exercised after three months in the event of a disability which is not permanent and total, the Option will be treated as a nonqualified stock option for tax purposes.

(c) No Right to Employment . Nothing in the Plan or this Grant shall confer on Optionee any right to continue in the employ of, or other relationship with, the Company or any Parent, Subsidiary or Affiliate of the Company or limit in any way the right of the Company or any Parent, Subsidiary or Affiliate of the Company to terminate Optionee’s employment or other relationship at any time, with or without cause.

6. Manner of Exercise .

(a) Exercise Agreement . This Option shall be exercisable by delivery to the Company of an executed written Stock Option Exercise Agreement in the form attached hereto as Exhibit 1, or in such other form as may be approved by the Company, which shall set forth Optionee’s election to exercise some or all of this Option, the number of Shares being purchased, any restrictions imposed on the Shares and such other representations and agreements as may be required by the Company to comply with applicable securities laws.

(b) Exercise Price . The Stock Option Exercise Agreement shall be accompanied by full payment of the Exercise Price for the Shares being purchased. Payment for the Shares may be made in cash (by check), or, where permitted by law, by any of the following methods approved by the Committee at the date of grant of this Option, or any combinations thereof:

(c) Withholding Taxes . Prior to the issuance of the Shares upon exercise of this Option, if so required by Company, Optionee must pay or make adequate provision for any applicable federal or state withholding obligations of the Company. The Optionee may provide for payment of Optionee’s minimum statutory withholding taxes upon exercise of the Option by requesting that the Company retain Shares with a Fair Market Value equal to the minimum amount of taxes required to be withheld, all as set forth in Section 6(c) of the Plan. In such case, the Company shall issue the net number of Shares to the Optionee by deducting the Shares retained from the Shares exercised.

(d) Issuance of Shares . Provided that such notice and payment are in form and substance satisfactory to counsel for the Company, the Company shall cause the Shares to be issued in the name of Optionee or Optionee’s legal representative.

7. Notice of Disqualifying Disposition of ISO Shares . If the Option granted to Optionee herein is an ISO, and if Optionee sells or otherwise disposes of any of the Shares acquired pursuant to the ISO on or before the later of (1) the date two years after the Date of Grant, or (2) the date one year after exercise of the ISO with respect to the Shares to be sold or disposed of, the Optionee shall immediately notify the Company in writing of such disposition. Optionee acknowledges and agrees that Optionee may be subject to income tax withholding by the Company on the compensation income recognized by the Optionee from any such early disposition by payment in cash or out of the current wages or other earnings payable to the Optionee.

8. Nontransferability of Option . This Option may not be transferred in any manner other than by will or by the law of descent and distribution and may be exercised during the lifetime of Optionee only by Optionee or other permitted transferee. The terms of this Option shall be binding upon the executors, administrators, successors and assigns of the Optionee.

9. Federal Tax Consequences . Set forth below is a brief summary as of the date this form of Option Grant was adopted of some of the federal tax consequences of exercise of this Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

(a) Exercise of ISO . If this Option qualifies as an ISO, there will be no regular federal income tax liability upon the exercise of this Option, although the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price will be treated as an adjustment to alternative minimum taxable income for federal income tax purposes and may subject the Optionee to an alternative minimum tax liability in the year of exercise.

(b) Exercise of Nonqualified Stock Option . If this Option does not qualify as an ISO, there may be a regular federal income tax liability upon the exercise of the Option. The Optionee will be treated as having received compensation income (taxable at ordinary income tax rates) equal to the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price. The Company will be required to withhold from Optionee’s compensation or collect from Optionee and pay to the applicable taxing authorities an amount equal to a percentage of this compensation income at the time of exercise.

(c) Disposition of Shares . In the case of a nonqualified stock option, if Shares are held for at least one year before disposition, any gain on disposition of the Shares will be treated as long-term capital gain for federal and California income tax purposes. In the case of an ISO, if Shares are held for at least one year after the date of exercise and at least two years after the Date of Grant, any gain on disposition of the Shares will be treated as long-term capital gain for federal and California income tax purposes. If Shares acquired pursuant to an ISO are disposed of within such one-year or two-year periods (a “disqualifying disposition”), gain on such disqualifying disposition will be treated as compensation income (taxable at ordinary income rates) to the extent of the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price (the “Spread”). Any gain in excess of the Spread shall be treated as capital gain.

10. Interpretation . Any dispute regarding the interpretation of this Grant shall be submitted by Optionee or the Company to the Company’s Board of Directors or the Committee, which shall review such dispute at its next regular meeting. The resolution of such a dispute by the Board or Committee shall be final and binding on the Company and Optionee.

11. Entire Agreement . The Plan and the Stock Option Exercise Agreement attached hereto as Exhibit 1 are incorporated herein by this reference. This Grant, the Plan and the Stock Option Exercise Agreement constitute the entire agreement of the parties hereto and supersede all prior undertakings and agreements with respect to the subject matter hereof.

ACCEPTANCE

Optionee hereby acknowledges receipt of a copy of the Plan, represents that Optionee has read and understands the terms and provisions thereof, and accepts this Option subject to all the terms and conditions of the Plan and this Stock Option Grant. Optionee acknowledges that there may be adverse tax consequences upon exercise of this Option or disposition of the Shares and that Optionee should consult a tax adviser prior to such exercise or disposition.

EXHIBIT 1

TO STOCK OPTION GRANT

STOCK OPTION EXERCISE AGREEMENT

This Agreement is made this                      day of                      , 20      between Novacal Pharmaceuticals, Inc., a California corporation (the “Company”), and the optionee named below (“Optionee”).

Optionee hereby delivers to the Company the Aggregate Purchase Price, to the extent permitted in the Option Grant, as follows [Company to check applicable box(es) and complete ]:

The Company and Optionee hereby agree as follows:

1. Purchase of Shares . On this date and subject to the terms and conditions of this Agreement, Optionee hereby exercises the Stock Option Grant between the Company and Optionee dated as of the Date of Option Grant set forth above (the “Grant”), with respect to the Number of Shares Purchased set forth above of the Company’s Common Stock (the “Shares”) at an aggregate purchase price equal to the Aggregate Purchase Price set forth above (the “Purchase Price”) and the Price per Share set forth above (the “Purchase Price Per Share”). The term “Shares” refers to the Shares purchased under this Agreement and includes all securities received (a) in replacement of the Shares, and (b) as a result of stock dividends or stock splits in respect of the Shares. Capitalized terms used herein that are not defined herein have the definitions ascribed to them in the Plan or the Grant.

2. Representations of Purchaser . Optionee represents and warrants to the Company that:

(a) Optionee has received, read and understood the Plan and the Grant and agrees to abide by and be bound by their terms and conditions.

(b) Optionee is capable of evaluating the merits and risks of this investment, has the ability to protect Optionee’s own interests in this transaction and is financially capable of bearing a total loss of this investment.

(c) Optionee is fully aware of (i) the highly speculative nature of the investment in the Shares; (ii) the financial hazards involved; and (iii) the lack of liquidity of the Shares.

(d) Optionee is purchasing the Shares for Optionee’s own account for investment purposes only and not with a view to, or for sale in connection with, a distribution of the Shares within the meaning of the Securities Act of 1933, as amended (the “1933 Act”).

(e) Optionee has no present intention of selling or otherwise disposing of all or any portion of the Shares.

(f) Optionee shall agree, to the extent requested by Company and an underwriter of Company’s Common Stock, not to sell or otherwise transfer or dispose of any securities of Company, whether or not acquired hereunder, during a reasonable period of time not to exceed 180 days, as agreed to by Company and said underwriter, following the effective date of a registration statement under the Securities Act of 1933 with respect to any public offering of Company’s securities.

3. Compliance with Securities Laws . Optionee understands and acknowledges that the Shares have not been registered under the 1933 Act and that, notwithstanding any other provision of the Grant to the contrary, the exercise of any rights to purchase any Shares is expressly conditioned upon compliance with the 1933 Act and all applicable state securities laws. Optionee agrees to cooperate with the Company to ensure compliance with such laws. The Shares are being issued under the 1933 Act pursuant to [the Company will check the applicable box]:

If privately held:

4. Federal Restrictions on Transfer . Optionee understands that the Shares must be held indefinitely unless they are registered under the 1933 Act or unless an exemption from such registration is available and that the certificate(s) representing the Shares will bear a legend to that effect. Optionee understands that the Company is under no obligation to register the Shares, and that an exemption may not be available or may not permit Optionee to transfer Shares in the amounts or at the times proposed by Optionee.

(a) Rule 144 . Optionee has been advised that Rule 144 promulgated under the 1933 Act, which permits certain resales of unregistered securities, is not presently available with respect to the Shares and, in any event, requires that a minimum of one (1) year elapses between the date of acquisition of Shares from the Company or an affiliate of the Company and any resale under Rule 144. Prior to an initial public offering of the Company’s stock, “nonaffiliates” (i.e. persons other than officers, directors and major shareholders of the Company) may resell only under Rule 144(k), which requires that a minimum of three (3) years elapse between the date of acquisition of Shares from the Company or an affiliate of the Company and any resale under Rule 144(k). Rule 144(k) is not available to affiliates.

(b) Rule 701 . If the exemption relied upon for exercise of the Shares is Rule 701, the Shares will become freely transferable, subject to limited conditions regarding the method of sale, by nonaffiliates ninety (90) days after the first sale of Common Stock of the Company to the general public pursuant to a registration statement filed with and declared effective by the Securities and Exchange Commission (the “SEC”), subject to any lengthier market standoff agreement contained in this Agreement or entered into by Optionee. Affiliates must comply with the provisions (other than the holding period requirements) of Rule 144.

5. State Law Restrictions on Transfer . Optionee understands that transfer of the Shares may be restricted by applicable state securities laws, and that the certificate(s) representing the Shares may bear a legend or legends to that effect.

6. Market Standoff Agreement . Optionee agrees in connection with any registration of the Company’s securities that, upon the request of the Company or the underwriters managing any public offering of the Company’s securities, Optionee will not sell or otherwise dispose of any Shares without the prior written consent of the Company or such underwriters, as the case may be, for a period of time (not to exceed one hundred eighty (180) days) from the effective date of such registration as the Company or the underwriters may specify for employee shareholders generally.

7. Legends . Optionee understands and agrees that the certificate(s) representing the Shares will bear a legend in substantially the following form, in addition to any other legends required by applicable law:

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE ‘SECURITIES ACT’), AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE SECURITIES ACT OR, IN THE OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.”

8. Stop-Transfer Notices . Optionee understands and agrees that, in order or ensure compliance with the restrictions referred to herein, the Company may issue appropriate “stop-transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.

9. Tax Consequences . OPTIONEE UNDERSTANDS THAT OPTIONEE MAY SUFFER ADVERSE TAX CONSEQUENCES AS A RESULT OF OPTIONEE’S PURCHASE OR DISPOSITION OF THE SHARES. OPTIONEE REPRESENTS THAT OPTIONEE HAS CONSULTED WITH ANY TAX CONSULTANT(S) OPTIONEE DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE OR DISPOSITION OF THE SHARES AND THAT OPTIONEE IS NOT RELYING ON THE COMPANY FOR ANY TAX ADVICE.

10. Repurchase Options . In addition to such other buy-sell terms, rights of first refusal, repurchase rights and/or similar provisions as are included herewith as determined by Company, the following terms and conditions apply to Company’s rights to repurchase Shares under the provisions of Section 3 in the Stock Option Grant:

Repurchase Terms

(a) Early Exercise . Company’s repurchase right hereunder applies to any Shares which are not Vested Shares and as purchased by Optionee by an exercise (or “early exercise”) of the Stock Option grant, as permitted in Section 3 thereof.

(b) Repurchase Right . If Optionee ceases to be employed by, or provide service to, the Company, or any Parent or Subsidiary of the Company, or, in the case of a nonqualified option, by or to any Affiliate of the Company (said date of cessation referred to as “Termination Date”), Company shall have the right and option to repurchase (at the price and for the payment in (c) immediately below) such number of Shares as is equal to, and to the extent that, the underlying option rights to said Shares, under the terms of Section 2 of the Stock Option Grant, would not have become exercisable on or prior to the Termination Date. Or stated otherwise, absent Optionee’s purchase of said Shares, said Shares (as repurchasable by Company) would not have become “Vested Shares” under Section 2 of the Stock Option Grant on or prior to the Termination Date. Company’s rights to so repurchase said Shares may be exercised by a written notice given to Optionee, together with full payment of the purchase price of said repurchased Shares, within a period of 90 days after the Termination Date.

As an example of the foregoing, assume that an Optionee is granted option rights under an Option Grant, dated June 1, 2002, for a total of 4,800 Shares, exercisable, under Section 2 of the Stock Option Grant, as to 1,200 shares, on June 1, 2002, and, as to 100 Shares, on the first day of each of 36 successive calendar months, beginning July 1, 2002. If Optionee exercised option rights (under an “early exercise”) and purchased 2,000 shares on May 1, 2002, and Optionee’s employment (or services) terminated on June 15, 2002, Company would have the right to repurchase 800 Shares (inasmuch as, of the 2,000

Shares purchased, 1,200 Shares would have been exercisable, under Section 2, prior to June 15, 2002, the Termination Date).

(c) Repurchase Price, Exercise and Payment . The foregoing Company option and right to repurchase Shares shall be exercised at a price equal to the original option exercise price per share and shall be paid in cash (or Company check) and/or by cancellation of all or any portion of Optionee’s purchase money indebtedness, if any, for the Shares.

(d) Assignment and Delegation . Notwithstanding any contrary provision herein, Company reserves and has the right to assign and/or delegate any or all of its repurchase rights and obligations herein to such other party or parties as may be selected by it.

(e) Antidilution Provision . In the event of a stock dividend, stock split, reverse stock split, other stock division or combination, recapitalization or reclassification involving Company’s Common Shares, an equitable and proportionate adjustment or other relevant change shall be deemed to have been made to all of the referenced shares and/or prices referenced herein in order fully to effectuate the purposes hereof, and all resulting additional (or reduced number of) shares thereafter shall be subject to the terms herein.

(f) Notice and Payments . All notices and payments to be made hereunder may be given and made by Company or Optionee to one another, either personally or by United States mail, postage prepaid, by Priority Mail, by Federal Express or by any other similar means, if to Company, addressed at its then principal place of business (currently at 5980 Horton Street, Suite 550, Emeryville, California 94608), or, if to Optionee, addressed to Optionee at Optionee’s last address appearing on Company’s records, or at such other address as either Company or Optionee may designate by written notice to each other. In the event of the death or disability of Optionee, and such occurrence is known by Company, then said notice shall be given in the name of Optionee at the address and in the manner as above provided and also shall be given to Optionee’s known representative(s) or successor(s), at such address(es) as designated in writing to Company by said representative(s) or successor(s), or, absent such designation, to such known representative(s) or successor(s) at Optionee’s above referenced address. Any such notice and payment shall be deemed given as of the time and date when personally delivered or when otherwise sent.

11. Entire Agreement . The Plan and Grant are incorporated herein by reference. This Agreement, the Plan and the Grant constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and are governed by California law except for that body of law pertaining to conflict of laws.

Exhibit 10.10

OFFICE LEASE

BETWEEN

EMERY STATION ASSOCIATES II, LLC (LANDLORD)

AND

NOVACAL PHARMACEUTICALS, INC. (TENANT)

EMERYSTATION NORTH

Emeryville, California

i

ii

iii

iv

OFFICE LEASE

ARTICLE 1

BASIC LEASE PROVISIONS

1.1     BASIC LEASE PROVISIONS

In the event of any conflict between these Basic Lease Provisions and any other Lease provision, such other Lease provision shall control.

EmeryStation North

5980 Horton Street

Emeryville, California 94608

Emery Station Associates II, LLC

1120 Nye Street, Suite 400

San Rafael, California 94901

Notices to Landlord shall be addressed:

Emery Station Associates, LLC

c/o Wareham Development Corporation

1120 Nye Street, Suite 400

San Rafael, California 94901

Notices to Tenant shall be addressed:

To the Premises:

Attention: President

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(6)   PROJECTED COMMENCEMENT DATE: Upon Substantial Completion of the Tenant Improvements which is estimated to be September 1, 2004.

(7)   PROJECTED EXPIRATION DATE: The last day of the 60 ^th month after the Commencement Date

The Base Rent for the first month of the Term in the amount of $9,642.50 shall be paid on the Date of Lease.

(9)   RENTABLE AREA OF THE PREMISES: 7,103 square feet

(10) SECURITY DEPOSIT: $65,000.00

The Security Deposit shall be paid by Tenant on the Date of Lease.

Provided that an Event of Default has not occurred with respect to Tenant prior to such date, upon provision of evidence reasonably satisfactory to Landlord that Tenant has raised an additional round of financing of not less than $2,000,000.00, Landlord shall refund $32,500.00 to Tenant

(11) SUITE NUMBER OF PREMISES: Suite ___ on the 5 ^th floor

(12) TENANT’S USE OF PREMISES: General office use, administration, laboratory research, development and manufacturing and related purposes permitted by applicable law.

(13) BASE YEAR: Calendar year 2004

Tenant shall pay for (i) janitorial services to the Premises and for utility costs to the Premises commencing on the Commencement Date and (ii) Tenant’s Share of all utilities involved in shared HVAC and mechanical, electrical and plumbing systems serving their space. Except for the expenses set forth in the preceding sentence which shall be paid by Tenant starting on the Commencement Date, commencing on January 1, 2005, Tenant shall pay Tenant’s Share

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of increases in Operating Expenses and Taxes over the Operating Expenses and Taxes during the Base Year.

(14) PARKING: Up to 10 unreserved parking spaces in either the Terraces garage or the Amtrak lot

1.2     ENUMERATION OF EXHIBITS AND RIDER

The Exhibits and Rider set forth below and attached to this Lease are incorporated in this Lease by this reference:

EXHIBIT A Plan of Premises

EXHIBIT B Workletter Agreement

EXHIBIT C Rules and Regulations

RIDER 1 Commencement Date Agreement

1.3     DEFINITIONS

For purposes hereof, the following terms shall have the following meanings:

AFFILIATE: Any corporation or other business entity that is currently owned or controlled by, owns or controls, or is under common ownership or control with Tenant.

BUILDING: The building located at the address specified in Section 1.1. The Building includes office, lab, retail and other uses.

COMMENCEMENT DATE: The date specified in Section 1.1 as the Projected Commencement Date, unless changed by operation of Article Two.

COMMON AREAS: All areas of the Project made available by Landlord from time to time for the general common use or benefit of the tenants of the Building, and their employees and invitees, or the public, as such areas currently exist and as they may be changed from time to time.

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DECORATION: Tenant Alterations which do not require a building permit and which do not involve any of the structural elements of the Building, or any of the Building’s systems, including its electrical, mechanical, plumbing, security, heating, ventilating, air-conditioning, communication, and fire and life safety systems.

DEFAULT RATE: Two (2) percentage points above the rate then most recently announced by Bank of America N.T.&S.A. at its San Francisco main office as its base lending reference rate, from time to time announced, but in no event higher than the maximum rate permitted by Law.

ENVIRONMENTAL LAWS: All Laws governing the use, storage, disposal or generation of any Hazardous Material, including, without limitation, the Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended, and the Resource Conservation and Recovery Act of 1976, as amended.

EXPIRATION DATE: The date specified in Section 1.1, as determined under Article Two.

FORCE MAJEURE: Any accident, casualty, act of God, war or civil commotion, strike or labor troubles, or any cause whatsoever beyond the reasonable control of Landlord, including water shortages, energy shortages or governmental preemption in connection with an act of God, a national emergency, or by reason of Law, or by reason of the conditions of supply and demand which have been or are affected by act of God, war or other emergency.

HAZARDOUS MATERIAL: Such substances, material and wastes which are or become regulated under any Environmental Law; or which are classified as hazardous or toxic under any Environmental Law; and explosives and firearms, radioactive material, asbestos, polychlorinated biphenyls, and petroleum products.

INDEMNITEES: Collectively, Landlord, any Mortgagee or ground lessor of the Property, the property manager and the leasing manager for the Property and their respective partners, members, directors, officers, agents and employees.

LAND: The parcel(s) of real estate on which the Building and Project are located.

LANDLORD WORK: The construction or installation of improvements to the Premises, to be furnished by Landlord, as specifically described in the Workletter or exhibits attached hereto.

LAWS OR LAW: All laws, ordinances, rules, regulations, other requirements, orders, rulings or decisions adopted or made by any governmental body, agency, department or judicial authority having jurisdiction over the Property, the Premises or Tenant’s activities at the Premises and any covenants, conditions or restrictions of record which affect the Property.

LEASE: This instrument and all exhibits and riders attached hereto, as may be amended from time to time.

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LEASE YEAR: The twelve month period beginning on the Commencement Date and each subsequent twelve month, or shorter, period until the Expiration Date.

MONTHLY BASE RENT: The monthly rent specified in Section 1.1.

MORTGAGEE: Any holder of a mortgage, deed of trust or other security instrument encumbering the Property.

NATIONAL HOLIDAYS: New Year’s Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day and other holidays recognized by the Landlord and the janitorial and other unions servicing the Building in accordance with their contracts.

OPERATING EXPENSES: All costs, expenses and disbursements of every kind and nature which Landlord shall pay or become obligated to pay in connection with the ownership, management, operation, maintenance, replacement and repair of the Building and the Property (including, without limitation, property management fees [but not in excess of 3.5% of gross revenues from the Project], utilities for the Common Areas and janitorial services for the Common Areas), costs and expenses, and the amortized portion of any capital expenditure or improvement, together with interest thereon, and the costs of changing utility service providers). Operating Expenses shall not include, (i) costs of alterations of the premises of tenants of the Project, (ii) costs of capital improvements to the Project (except for amortized portion of capital improvements installed for the purpose of reducing or controlling Operating Expenses or complying with applicable Laws), (iii) depreciation charges, (iv) interest and principal payments on loans (except for loans for capital improvements which Landlord is allowed to include in Operating Expenses as provided above), (v) ground rental payments, (vi) real estate brokerage and leasing commissions, (vii) advertising and marketing expenses, (viii) costs of Landlord reimbursed by insurance proceeds, (ix) expenses incurred in negotiating leases of tenants in the Project or enforcing lease obligations of tenants in the Project, (x) maintenance of the structure of the Building (structural roof, load bearing walls and foundations) and (xi) Landlord’s general corporate overhead. If any Operating Expense, though paid in one year, relates to more than one calendar year, at the option of Landlord such expense may be proportionately allocated among such related calendar years. Operating Expenses for the Building that are not, in Landlord’s reasonable discretion, allocable solely to either the lab, office or retail portion of the Building shall be equitably allocated by Landlord between such uses.

PREMISES: The space located in the Building at the Suite Number listed in Section 1.1 and depicted on Exhibit A attached hereto.

PROJECT or PROPERTY: The Project consists of the office building with ground floor office and/or retail spaces located at the street address specified in Section 1.1 in Emeryville, California, associated surface and garage parking as designated by Landlord from time to time, landscaping and improvements, together with the Land, any associated interests in real property, and the personal property, fixtures, machinery, equipment, systems and apparatus located in or used in conjunction with any of the foregoing. The Project may also be referred to as the Property.

REAL PROPERTY: The Property excluding any personal property.

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RENT: Collectively, Monthly Base Rent, Rent Adjustments and Rent Adjustment Deposits, and all other charges, payments, late fees or other amounts required to be paid by Tenant under this Lease.

RENT ADJUSTMENT: Any amounts owed by Tenant for payment of Operating Expenses or Taxes. The Rent Adjustments shall be determined and paid as provided in Article Four.

RENT ADJUSTMENT DEPOSIT: An amount equal to Landlord’s estimate of the Rent Adjustment attributable to each month of the applicable Lease Year. On or before the beginning of each Lease Year or with Landlord’s Statement (defined in Article Four), Landlord may estimate and notify Tenant in writing of its estimate of the Operating Expenses and of Taxes for such Lease Year. Prior to the first determination by Landlord of the amount of Operating Expenses and of Taxes for the first Lease Year, Landlord may estimate such amounts in the foregoing calculation. The last estimate by Landlord shall remain in effect as the applicable Rent Adjustment Deposit unless and until Landlord notifies Tenant in writing of a change, which notice may be given by Landlord from time to time during a Lease Year.

RENTABLE AREA OF THE PREMISES: The amount of square footage set forth in Section 1.1.

SECURITY DEPOSIT: The funds specified in Section 1.1, if any, deposited by Tenant with Landlord as security for Tenant’s performance of its obligations under this Lease.

STANDARD OPERATING HOURS: Monday through Friday from 8:00 A.M. to 6:00 P.M. and Saturdays from 9:00 A.M. to 1:00 P.M., excluding National Holidays.

SUBSTANTIALLY COMPLETE or SUBSTANTIAL COMPLETION: The completion of the Landlord Work or Tenant Work, as the case may be, except for minor insubstantial details of construction, decoration or mechanical adjustments which remain to be done.

TAXES: All federal, state and local governmental taxes, assessments and charges of every kind or nature, whether general, special, ordinary or extraordinary, which Landlord shall pay or become obligated to pay because of or in connection with the ownership, leasing, management, control or operation of the Property or any of its components (including any personal property used in connection therewith), which may also include any rental or similar taxes levied in lieu of or in addition to general real and/or personal property taxes. For purposes hereof, Taxes for any year shall be Taxes which are assessed for any period of such year, whether or not such Taxes are billed and payable in a subsequent calendar year. There shall be included in Taxes for any year the amount of all fees, costs and expenses (including reasonable attorneys’ fees) paid by Landlord during such year in seeking or obtaining any refund or reduction of Taxes. Taxes for any year shall be reduced by the net amount of any tax refund received by Landlord attributable to such year. If a special assessment payable in installments is levied against any part of the Property, Taxes for any year shall include only the installment of such assessment and any interest payable or paid during such year. Taxes shall not include any federal or state inheritance, general income, gift or estate taxes, except that if a change occurs in the method of taxation resulting in whole or in part in the substitution of any such taxes, or any

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other assessment, for any Taxes as above defined, such substituted taxes or assessments shall be included in the Taxes.

TENANT ADDITIONS: Collectively, Landlord Work, Tenant Work and Tenant Alterations.

TENANT ALTERATIONS: Any alterations, improvements, additions, installations or construction in or to the Premises or any Building systems serving the Premises (excluding Landlord Work or Tenant Work); and any supplementary air-conditioning systems installed by Landlord or by Tenant at Landlord’s request pursuant to Section 6.1(b).

TENANT DELAY: Any event or occurrence that delays the completion of the Landlord Work which is caused by or is described as follows:

(i) special work, changes, alterations or additions requested or made by Tenant in the design or finish in any part of the Premises after approval of the plans and specifications (as described in the Workletter);

(ii) Tenant’s delay in submitting plans, supplying information, approving plans, specifications or estimates, giving authorizations or otherwise;

(iii) failure to approve and pay for such Tenant Work as Landlord undertakes to complete at Tenant’s expense;

(iv) the performance or completion by Tenant or any person engaged by Tenant of any work in or about the Premises; or

(v) failure to perform or comply with any obligation or condition binding upon Tenant pursuant to the Workletter, including the failure to approve and pay for such Landlord Work or other items if and to the extent the Workletter provides they are to be approved or paid by Tenant.

TENANT WORK: All work installed or furnished to the Premises by Tenant pursuant to the Workletter.

TENANT’S SHARE: The percentage that represents the ratio of the Rentable Area of the Premises to the Rentable Area of the Building, as determined by Landlord from time to time.

TERM: The term of this Lease commencing on the Commencement Date and expiring on the Expiration Date.

TERMINATION DATE: The Expiration Date or such earlier date as this Lease terminates or Tenant’s right to possession of the Premises terminates.

WORKLETTER: The Agreement regarding the manner of completion of Landlord Work and Tenant Work set forth on Exhibit B attached hereto.

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ARTICLE 2

PREMISES, TERM, FAILURE TO GIVE POSSESSION, AND PARKING

2.1     LEASE OF PREMISES

Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the Premises for the Term and upon the terms, covenants and conditions provided in this Lease. In the event Landlord delivers possession of the Premises to Tenant prior to the Commencement Date, Tenant shall be subject to all of the terms, covenants and conditions of this Lease (except with respect to the payment of Rent) as of the date of such possession.

2.2     TERM

(a) The Commencement Date shall be the date determined as follows:

(1) If the Landlord Work is Substantially Complete on or before the Projected Commencement Date, then on the date which is the earlier to occur of:

(i) the Projected Commencement Date, or

(ii) the date Tenant first occupies all or part of the Premises for the conduct of business; or

(2) If the Landlord Work is not Substantially Complete by the Projected Commencement Date, then on the date on which the Landlord Work is Substantially Complete.

(b) Within thirty (30) days following the occurrence of the Commencement Date, Landlord and Tenant shall enter into an agreement (the form of which is attached hereto as Rider 1) confirming the Commencement Date and the Expiration Date. If Tenant fails to enter into such agreement, then the Commencement Date and the Expiration Date shall be the dates designated by Landlord in such agreement.

2.3     FAILURE TO GIVE POSSESSION

If Landlord shall be unable to give possession of the Premises on the Projected Commencement Date by reason of the following: (i) the Building has not been sufficiently completed to make the Premises ready for occupancy, (ii) the Landlord Work is not Substantially Complete, (iii) the holding over or retention of possession of any tenant, tenants or occupants, or (iv) for any other reason, then Landlord shall not be subject to any liability for the failure to give possession on said date. Under such circumstances the rent reserved and covenanted to be paid herein shall not commence until the Premises are made available to Tenant by Landlord, and no such failure to give possession on the Projected Commencement Date shall affect the validity of this Lease or the obligations of the Tenant hereunder. At the option of Landlord to be exercised within thirty (30) days of the delayed delivery of possession to Tenant, the Lease shall be amended so that the Term shall be extended by the period of time possession is delayed. The said Premises shall be deemed to be ready for Tenant’s occupancy in the event Landlord’s Work is Substantially Complete, or if the delay in the availability of the Premises for occupancy shall

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be due to any Tenant Delay and/or default on the part of Tenant and/or its subtenant or subtenants. In the event of any dispute as to whether the Landlord Work is Substantially Complete, the decision of Landlord’s architect shall be final and binding on the parties.

2.4     CONDITION OF PREMISES

Tenant shall notify Landlord in writing within ninety (90) days after the later of Substantial Completion of the Landlord Work or when Tenant takes possession of the Premises of any defects in the Premises claimed by Tenant or in the materials or workmanship furnished by Landlord in completing the Landlord Work provided however that Tenant shall have one hundred eighty (180) days to notify Landlord with respect to defects in the HVAC system. Except for defects stated in such notice, Tenant shall be conclusively deemed to have accepted the Premises “AS IS” in the condition existing on the date Tenant first takes possession, and to have waived all claims relating to the condition of the Premises. Landlord shall proceed diligently to correct the defects stated in such notice unless Landlord disputes the existence of any such defects. In the event of any dispute as to the existence of any such defects, the decision of Landlord’s architect shall be final and binding on the parties. No agreement of Landlord to alter, remodel, decorate, clean or improve the Premises or the Real Property and no representation regarding the condition of the Premises or the Real Property has been made by or on behalf of Landlord to Tenant, except as may be specifically stated in this Lease or in the Workletter.

2.5     PARKING

During the Term, Tenant may use the number of spaces specified in Section 1.1 for parking. There shall be no charge for such parking during the Term. The locations and type of parking shall be designated by Landlord or Landlord’s parking operator from time to time. Tenant acknowledges and agrees that the parking spaces serving the Project may include tandem parking and a mixture of spaces for compact vehicles as well as full-size passenger automobiles, and that Tenant shall not use parking spaces for vehicles larger than the striped size of the parking spaces. All vehicles utilizing Tenant’s parking privileges shall prominently display identification stickers or other markers, and/or have passes or keycards for ingress and egress, as may be required and provided by Landlord or its parking operator from time to time. Tenant shall comply with any and all parking rules and regulations from time to time established by Landlord or Landlord’s parking operator, including a requirement that Tenant pay to Landlord or Landlord’s parking operator a charge for loss and replacement of passes, keycards, identification stickers or markers, and for any and all loss or other damage caused by persons or vehicles related to use of Tenant’s parking privileges. Tenant shall not allow any vehicles using Tenant’s parking privileges to be parked, loaded or unloaded except in accordance with this Section, including in the areas and in the manner designated by Landlord or its parking operator for such activities. If any vehicle is using the parking or loading areas contrary to any provision of this Section, Landlord or its parking operator shall have the right, in addition to all other rights and remedies of Landlord under this Lease, to remove or tow away the vehicle without prior notice to Tenant, and the cost thereof shall be paid to Landlord within ten (10) days after notice from Landlord to Tenant.

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2.6     RIGHT OF FIRST OFFER.

(a) Landlord shall provide Tenant with a notice in the event that during the Term, Available Premises (as hereinafter defined) become available to lease to third parties (the “Right of First Offer”).

(b) Available Premises shall mean lab space (not space that has previously used for office purposes) which is located on the 5th floor of the Building which becomes available for leasing to third parties. Space shall not be deemed to be Available Premises if an existing tenant in such space renews or extends its term whether pursuant to the terms of an extension right or otherwise or if Kinemed exercises its prior rights with respect to such space.

For a period of fifteen (15) business days after receipt of Landlord’s notice with respect to the Available Premises, Landlord and Tenant shall negotiate in good faith concerning the leasing of such space but neither party shall be obligated to enter into a lease of the Available Premises unless the parties mutually agree on the terms and conditions of such lease. Such lease shall be upon market terms, taking into account, among other criteria, the then creditworthiness of Tenant. Tenant acknowledges that the term for the Available Premises may be different from the Term for the Premises and that the rent and tenant improvement package for the Available Premises may be different than the rent and tenant improvement package for the Premises. During the Negotiation Period, Landlord shall not enter into negotiations with any third party concerning the Available Premises. In the event that Tenant fails to exercise its Right of First Offer with respect to a particular Available Premises, Tenant’s rights in connection with that particular Available Premises shall expire. Notwithstanding the foregoing, Tenant’s Right of First Offer shall continue to exist during the Term for other Available Premises on the 5 ^th floor which was not subject to a previous notice.

(c) Notwithstanding anything to the contrary contained, herein, all rights of Tenant pursuant to this Section 2.6 shall automatically terminate without notice and shall be of no further force and effect, whether or not Tenant has timely exercised the Right of First Offer granted herein, if a Default exists at the time of exercise of the Right of First Offer or at the time of commencement of the term, or (ii) this Lease has been assigned except to an Affiliate of Tenant.

ARTICLE 3

RENT

Tenant agrees to pay to Landlord at the first office specified in Section 1.1, or to such other persons, or at such other places designated by Landlord, without any prior demand therefor in immediately available funds and without any deduction or offset whatsoever, Rent, including Monthly Base Rent and Rent Adjustments in accordance with Article Four, during the Term. Monthly Base Rent shall be paid monthly in advance on the first day of each month of the Term, except that the first installment of Monthly Base Rent shall be paid by Tenant to Landlord concurrently with execution of this Lease. Monthly Base Rent shall be prorated for partial months within the Term. Unpaid Rent shall bear interest at the Default Rate from the date due

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until paid. Tenant’s covenant to pay Rent shall be independent of every other covenant in this Lease.

ARTICLE 4

RENT ADJUSTMENTS AND PAYMENTS

4.1     RENT ADJUSTMENTS

Except as expressly set forth in Section 1.1 (13) with respect to utilities and janitorial services, Tenant shall pay to Landlord Rent Adjustments with respect to each Lease Year after the Base Year as follows:

(i) The Rent Adjustment Deposit representing Tenant’s Share of increases in Operating Expenses for the applicable Lease Year over the Operating Expenses in the Base Year, monthly during the Term with the payment of Monthly Base Rent; and

(ii) The Rent Adjustment Deposit representing Tenant’s Share of increases in Taxes for the applicable Lease Year over the Taxes in the Base Year, monthly during the Term with the payment of Monthly Base Rent; and

(iii) Any Rent Adjustments due in excess of the Rent Adjustment Deposits in accordance with Section 4.2. Rent Adjustments due from Tenant to Landlord for any Lease Year after the Base Year shall be Tenant’s Share of Operating Expenses for such year and Tenant’s Share of Taxes for such year.

Notwithstanding the foregoing, Tenant shall pay to Landlord the Rent Adjustment Deposit for utilities and janitorial services furnished to the Premises or to the Common Areas commencing from and after the Commencement Date.

4.2     STATEMENT OF LANDLORD

As soon as feasible after the expiration of each calendar year, Landlord will furnish Tenant a statement (“Landlord’s Statement”) showing the following:

(i) Operating Expenses and Taxes for the calendar year;

(ii) The amount of Rent Adjustments due Landlord for the last calendar year, less credit for Rent Adjustment Deposits paid, if any; and

(iii) Any change in the Rent Adjustment Deposit due monthly in the current calendar year, including the amount or revised amount due for months preceding any such change pursuant to Landlord’s Statement.

Tenant shall pay to Landlord within ten (10) days after receipt of such statement any amounts for Rent Adjustments then due in accordance with Landlord’s Statement. Any amounts due from Landlord to Tenant pursuant to this Section shall be credited to the Rent Adjustment Deposit next coming due, or refunded to Tenant if the Term has already expired provided Tenant

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is not in default hereunder. No interest or penalties shall accrue on any amounts that Landlord is obligated to credit or refund to Tenant by reason of this Section 4.2. Landlord’s failure to deliver Landlord’s Statement or to compute the amount of the Rent Adjustments shall not constitute a waiver by Landlord of its right to deliver such items nor constitute a waiver or release of Tenant’s obligations to pay such amounts. The Rent Adjustment Deposit shall be credited against Rent Adjustments due for the applicable Lease Year. During the last complete Lease Year or during any partial Lease Year in which the Lease terminates, Landlord may include in the Rent Adjustment Deposit its estimate of Rent Adjustments which may not be finally determined until after the termination of this Lease. Tenant’s obligation to pay Rent Adjustments survives the expiration or termination of the Lease. Notwithstanding the foregoing, in no event shall the sum of Monthly Base Rent and the Rent Adjustments be less than the Monthly Base Rent payable.

4.3     BOOKS AND RECORDS

Landlord shall maintain books and records showing Operating Expenses and Taxes in accordance with sound accounting and management practices, consistently applied. The Tenant or its representative (which representative shall be a certified public accountant licensed to do business in the state in which the Property is located and whose primary business is certified public accounting and who shall not be paid on a contingency basis) shall have the right, for a period of sixty (60) days following the date upon which Landlord’s Statement is delivered to Tenant, to examine the Landlord’s books and records with respect to the items in the foregoing statement of Operating Expenses and Taxes during normal business hours, upon written notice, delivered at least three (3) business days in advance. If Tenant does not object in writing to Landlord’s Statement within ninety (90) days of Tenant’s receipt thereof, specifying the nature of the item in dispute and the reasons therefor, then Landlord’s Statement shall be considered final and accepted by Tenant. If Tenant does dispute any Landlord’s Statement, Tenant shall deliver a copy of any such audit to Landlord at the time of notification of the dispute. If Tenant does not provide such notice of dispute and a copy of such audit to Landlord within such ninety day (90) day period, it shall be deemed to have waived such right to dispute Landlord’s Statement. If it is determined that Landlord’s Statement overstated Operating Expenses by five percent (5%) or more, Landlord shall reimburse Tenant the reasonable third party costs incurred by Tenant with respect to such audit. Any amount due to the Landlord as shown on Landlord’s Statement, whether or not disputed by Tenant as provided herein shall be paid by Tenant when due as provided above, without prejudice to any such written exception. In no event shall Tenant be permitted to examine Landlord’s records or to dispute any statement of Expenses unless Tenant has paid and continues to pay all Rent when due. Upon resolution of any dispute with respect to Operating Expenses and Taxes, Tenant shall either pay Landlord any shortfall or Landlord shall credit Tenant with respect to any overages paid by Tenant. The records obtained by Tenant shall be treated as confidential and neither Tenant nor any of its representatives or agents shall disclose or discuss the information set forth in the audit to or with any other person or entity (“Confidentiality Requirement”). Tenant shall indemnify and hold Landlord harmless for any losses or damages arising out of the breach of the Confidentiality Requirement. In no event shall Tenant be permitted to examine Landlord’s records or to dispute any statement of Expenses unless Tenant has paid and continues to pay all Rent when due.

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4.4     PARTIAL OCCUPANCY

For purposes of determining the Base Year Operating Expenses and Rent Adjustments, if the Building and/or Project is not fully occupied during all or a portion of any year during the Term, Landlord shall make appropriate adjustments to the Operating Expenses for such year that vary with occupancy employing sound accounting and management principles consistently applied, to determine the amount of Operating Expenses that would have been paid or incurred by Landlord had the Building and/or Project been fully occupied, and the amount so determined shall be deemed to have been the amount of Operating Expenses for such year. In the event that the Real Property is not fully assessed for all or a portion of any year during the Term, then Taxes shall be adjusted to an amount which would have been payable in such year if the Real Property had been fully assessed.

4.5     TENANT OR LEASE SPECIFIC TAXES

In addition to Monthly Base Rent, Rent Adjustments, Rent Adjustment Deposits and other charges to be paid by Tenant, Tenant shall pay to Landlord, upon demand, any and all taxes payable by Landlord (other than federal or state inheritance, general income, gift or estate taxes) whether or not now customary or within the contemplation of the parties hereto: (a) upon, allocable to, or measured by the Rent payable hereunder, including any gross receipts tax or excise tax levied by any governmental or taxing body with respect to the receipt of such rent; or (b) upon or with respect to the possession, leasing, operation, management, maintenance, alteration, repair, use or occupancy by Tenant of the Premises or any portion thereof; or (c) upon the measured value of Tenant’s personal property located in the Premises or in any storeroom or any other place in the Premises or the Property, or the areas used in connection with the operation of the Property, it being the intention of Landlord and Tenant that, to the extent possible, such personal property taxes shall be billed to and paid directly by Tenant; (d) resulting from Landlord Work, Tenant Work or Tenant Alterations to the Premises, whether title thereto is in Landlord or Tenant; or (e) upon this transaction. Taxes paid by Tenant pursuant to this Section 4.5 shall not be included in any computation of Taxes payable pursuant to Sections 4.1 and 4.2.

ARTICLE 5

SECURITY DEPOSIT

Tenant concurrently with the execution of this Lease shall pay to Landlord in immediately available funds the Security Deposit. The Security Deposit may be applied by Landlord to cure, in whole or part, any default of Tenant under this Lease, and upon notice by Landlord of such application, Tenant shall replenish the Security Deposit in full by paying to Landlord within ten (10) days of demand the amount so applied. Landlord’s application of the Security Deposit shall not constitute a waiver of Tenant’s default to the extent that the Security Deposit does not fully compensate Landlord for all losses, damages, costs and expenses incurred by Landlord in connection with such default and shall not prejudice any other rights or remedies available to Landlord under this Lease or by Law. Landlord shall not pay any interest on the Security Deposit. Landlord shall not be required to keep the Security Deposit separate from its general accounts. The Security Deposit shall not be deemed an advance payment of Rent or a

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measure of damages for any default by Tenant under this Lease, nor shall it be a bar or defense of any action that Landlord may at any time commence against Tenant. In the absence of evidence satisfactory to Landlord of an assignment of the right to receive the Security Deposit or the remaining balance thereof, Landlord may return the Security Deposit to the original Tenant, regardless of one or more assignments of this Lease. Upon the transfer of Landlord’s interest under this Lease, Landlord’s obligation to Tenant with respect to the Security Deposit shall terminate upon transfer to the transferee of the Security Deposit, or any balance thereof. If Tenant shall fully and faithfully comply with all the terms, provisions, covenants, and conditions of this Lease, the Security Deposit, or any balance thereof, shall be returned to Tenant within thirty (30) days after Landlord recovers possession of the Premises or such longer time as may be permissible under Law. Tenant hereby waives any and all rights of Tenant under the provisions of Section 1950.7 of the California Civil Code or other Law regarding security deposits.

ARTICLE 6

SERVICES

6.1     LANDLORD’S GENERAL SERVICES

(a) So long as the Lease is in full force and effect, Landlord shall furnish the following services the cost of which services shall be included in Operating Expenses or paid directly by Tenant to the utility or service provider:

(1) heat, ventilation and air-conditioning (“HVAC”) in the Premises during Standard Operating Hours as necessary in Landlord’s reasonable judgment for the comfortable occupancy of the Premises under normal business office and lab operations, subject to compliance with all applicable voluntary and mandatory regulations and Laws;

(2) tempered and cold water for use in the labs and in lavatories in common with other tenants from the regular supply of the Building;

(3) customary cleaning and janitorial services in the Common Areas five (5) days per week, excluding National Holidays (Tenant shall provide its own janitorial services to the Premises);

(4) washing of the exterior of the windows in the Premises weather permitting at intervals determined by Landlord but in no event more than 2 times per calendar year; and

(5) automatic passenger and swing/freight elevator service in common with other tenants of the Building. Freight elevator service will be subject to reasonable scheduling by Landlord.

(b) If Tenant uses heat generating machines or equipment in the Premises not envisioned in the original equipment matrix provided by Tenant to Landlord, to an extent which adversely affects the temperature otherwise maintained by the air-cooling system or whenever the occupancy or electrical load adversely affects the temperature otherwise maintained by the air-cooling system, Landlord reserves the right to install or to require Tenant to install

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supplementary air-conditioning units in the Premises. Tenant shall bear all costs and expenses related to the installation, maintenance and operation of such units.

6.2     ELECTRICAL SERVICES

(a) So long as the Lease is in full force and effect and Tenant has paid all Rent then due, Landlord shall furnish to the Premises as an Operating Expense or a service which is paid directly by Tenant to the utility provider, electric current for general office use, including normal lighting, normal business office machines and customary janitorial service. Notwithstanding any provision of the Lease to the contrary, without, in each instance, the prior written approval of Landlord, in Landlord’s prudent business judgment, Tenant shall not make any alterations or additions to the electric equipment or systems. Tenant’s use of electric current shall at no time exceed the capacity of the wiring, feeders and risers providing electric current to the Premises or the Building. The consent of Landlord to the installation of electric equipment shall not relieve Tenant from the obligation to limit usage of electricity to no more than such capacity.

(b) Landlord shall install one or more meters to measure electric current furnished to the Premises.

(c) So long as the Lease is in full force and effect and Tenant has paid all Rent then due, Landlord shall furnish to the Premises replacement lamps, bulbs, ballasts and starters used in any normal Building lighting installed in the Premises, except that if the replacement or repair of such items is a result of negligence of Tenant, its employees, agents, servants, licensees, subtenants, contractors or invitees, such cost shall be paid by Tenant within ten days after notice from Landlord and shall not be included as part of Operating Expenses.

6.3     ADDITIONAL AND AFTER HOUR SERVICES

Basic hours of electricity for provision of electricity are twenty-four hours a day, seven days a week. At Tenant’s written request, Landlord shall furnish additional quantities of any of the services or utilities specified in Section 6.1, if Landlord can reasonably do so, on the terms set forth herein. For services or utilities requested by Tenant and furnished by Landlord, Tenant shall pay to Landlord as a charge therefor Landlord’s prevailing rates charged from time to time for such services and utilities. If Tenant shall fail to make any such payment, Landlord may, upon notice to Tenant and in addition to Landlord’s other remedies under this Lease, discontinue any or all of such additional services.

6.4     TELEPHONE SERVICES

All telegraph, telephone, and communication connections which Tenant may desire shall be subject to Landlord’s prior written approval, in Landlord’s reasonable discretion, and the location of all wires and the work in connection therewith shall be performed by contractors approved by Landlord and shall be subject to the direction of Landlord, except that such approval is not required as to Tenant’s telephone equipment (including cabling) within the Premises and from the Premises in a route designated by Landlord to any telephone cabinet or panel provided (as existing or as installed as part of Landlord’s Work, if any) on Tenant’s floor for Tenant’s connection to the telephone cable serving the Building so long as Tenant’s equipment does not require connections different than or additional to those to the telephone cabinet or panel

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provided. Tenant shall label cabling installed by it to avoid interfering with other Tenants. Except to the extent of such cabling within the Premises or from the Premises to such telephone cabinet or panel, Landlord reserves the right to designate and control the entity or entities providing telephone or other communication cable installation, removal, repair and maintenance in the Building and to restrict and control access to telephone cabinets or panels. In the event Landlord designates a particular vendor or vendors to provide such cable installation, removal, repair and maintenance for the Building, Tenant agrees to abide by and participate in such program. Tenant shall be responsible for and shall pay all costs incurred in connection with the installation of telephone cables and communication wiring in the Premises, including any hook-up, access and maintenance fees related to the installation of such wires and cables in the Premises and the commencement of service therein, and the maintenance thereafter of such wire and cables; and there shall be included in Operating Expenses for the Building all installation, removal, hook-up or maintenance costs incurred by Landlord in connection with telephone cables and communication wiring serving the Building which are not allocable to any individual users of such service but are allocable to the Building generally. If Tenant fails to maintain all telephone cables and communication wiring in the Premises and such failure affects or interferes with the operation or maintenance of any other telephone cables or communication wiring serving the Building, Landlord or any vendor hired by Landlord may enter into and upon the Premises forthwith and perform such repairs, restorations or alterations as Landlord deems necessary in order to eliminate any such interference (and Landlord may recover from Tenant all of Landlord’s costs in connection therewith). If required by Landlord, no later than the Termination Date Tenant shall remove all telephone cables and communication wiring installed by Tenant for and during Tenant’s occupancy. Tenant agrees that neither Landlord nor any of its agents or employees shall be liable to Tenant, or any of Tenant’s employees, agents, customers or invitees or anyone claiming through, by or under Tenant, for any damages, injuries, losses, expenses, claims or causes of action because of any interruption, diminution, delay or discontinuance at any time for any reason in the furnishing of any telephone or other communication service to the Premises and the Building.

6.5     DELAYS IN FURNISHING SERVICES

Tenant agrees that Landlord shall not be in breach of this Lease nor be liable to Tenant for damages or otherwise, for any failure to furnish, or a delay in furnishing, or a change in the quantity or character of any service when such failure, delay or change is occasioned, in whole or in part, by repairs, improvements or mechanical breakdowns by the act or default of Tenant or other parties or by an event of Force Majeure. No such failure, delay or change shall be deemed to be an eviction or disturbance of Tenant’s use and possession of the Premises, or relieve Tenant from paying Rent or from performing any other obligations of Tenant under this Lease, without any deduction or offset. Failure to any extent to make available, or any slowdown, stoppage, or interruption of, the specified utility services resulting from any cause, including changes in service provider or Landlord’s compliance with any voluntary or similar governmental or business guidelines now or hereafter published or any requirements now or hereafter established by any governmental agency, board, or bureau having jurisdiction over the operation of the Property shall not render Landlord liable in any respect for damages to either persons, property, or business, nor be construed as an eviction of Tenant or work an abatement of Rent, nor relieve Tenant of Tenant’s obligations for fulfillment of any covenant or agreement hereof. Should any equipment or machinery furnished by Landlord break down or for any cause cease to function

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properly, Landlord shall use reasonable diligence to repair same promptly, but Tenant shall have no claim for abatement of Rent or damages on account of any interruption of service occasioned thereby or resulting therefrom unless such interruption of service is the result of a breach of Landlord’s obligations under this Lease.

6.6     CHOICE OF SERVICE PROVIDER

Tenant acknowledges that Landlord may, at Landlord’s sole option, to the extent permitted by applicable law, elect to change, from time to time, the company or companies which provide utility services to the Building, the Premises and/or its occupants. Notwithstanding anything to the contrary set forth in this Lease, Tenant acknowledges that Landlord has not and does not make any representations or warranties concerning the identity or identities of the company or companies which provide services to the Building and the Premises or its occupants and Tenant acknowledges that the choice of service providers and matters concerning the engagement and termination thereof shall be solely that of Landlord. The foregoing provision is not intended to modify, amend, change or otherwise derogate any provision of this Lease concerning the nature or type of service to be provided or any specific information concerning the amount thereof to be provided. Tenant agrees to cooperate with Landlord and each of its service providers in connection with any change in service or provider.

6.7     SIGNAGE

Initial Building standard signage will be installed by Landlord in the directory in the main lobby of the Building, in the listing of tenants in the elevator lobby for the floor on which the Premises is located and at Tenant’s main entry door to the Premises at Tenant’s sole cost and expense except to the extent that funds are available out of any Tenant Improvement Allowance, if any, provided pursuant to the Workletter. Any change in such initial signage shall be only with Landlord’s prior written consent, shall conform to Building standard signage and shall be at Tenant’s sole cost and expense.

ARTICLE 7

POSSESSION, USE AND CONDITION OF PREMISES

7.1     POSSESSION AND USE OF PREMISES

(a) Tenant shall be entitled to possession of the Premises when the Landlord Work is Substantially Complete. Tenant shall have access to the Premises seven (7) days a week, twenty-four (24) hours a day. Tenant shall occupy and use the Premises only for the uses specified in Section 1.1 to conduct Tenant’s business. Tenant shall not occupy or use the Premises (or permit the use or occupancy of the Premises) for any purpose or in any manner which: (1) is unlawful or in violation of any Law or Environmental Law; (2) may be dangerous to persons or property or which may increase the cost of, or invalidate, any policy of insurance carried on the Building or covering its operations; (3) is contrary to or prohibited by the terms and conditions of this Lease or the rules of the Building set forth in Article Eighteen; or (4) would tend to create or continue a nuisance.

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(b) Landlord shall provide Tenant with Access Card Keys, the cost of which shall be deducted from the Tenant Improvement Allowance.

(c) Tenant shall comply with all Environmental Laws pertaining to Tenant’s occupancy and use of the Premises and concerning the proper storage, handling and disposal of any Hazardous Material introduced to the Premises, the Building or the Property by Tenant or other occupants of the Premises, or their employees, servants, agents, contractors, customers or invitees. Landlord shall comply with all Environmental Laws applicable to the Property other than those to be complied with by Tenant pursuant to the preceding sentence. Tenant shall not generate, store, handle or dispose of any Hazardous Material in, on, or about the Property without the prior written consent of Landlord, which may be withheld in Landlord’s sole discretion, except that such consent shall not be required to the extent of Hazardous Material packaged and contained in office products for consumer use in general business offices in quantities for ordinary day-to-day use provided such use does not give rise to, or pose a risk of, exposure to or release of Hazardous Material. In the event that Tenant is notified of any investigation or violation of any Environmental Law arising from Tenant’s activities at the Premises, Tenant shall immediately deliver to Landlord a copy of such notice. In such event or in the event Landlord reasonably believes that a violation of Environmental Law exists, Landlord may conduct such tests and studies relating to compliance by Tenant with Environmental Laws or the alleged presence of Hazardous Materials upon the Premises as Landlord deems desirable, all of which shall be completed at Tenant’s expense. Landlord’s inspection and testing rights are for Landlord’s own protection only, and Landlord has not, and shall not be deemed to have assumed any responsibility to Tenant or any other party for compliance with Environmental Laws, as a result of the exercise, or non-exercise of such rights. Tenant hereby indemnifies, and agrees to defend, protect and hold harmless, the Indemnitees from any and all loss, claim, demand, action, expense, liability and cost (including attorneys’ fees and expenses) arising out of or in any way related to the presence of any Hazardous Material introduced to the Premises during the Term by any party other than Landlord. In case of any action or proceeding brought against the Indemnitees by reason of any such claim, upon notice from Landlord, Tenant covenants to defend such action or proceeding by counsel chosen by Landlord, in Landlord’s sole discretion. Landlord reserves the right to settle, compromise or dispose of any and all actions, claims and demands related to the foregoing indemnity. If any Hazardous Material is released, discharged or disposed of on or about the Property and such release, discharge or disposal is not caused by Tenant or other occupants of the Premises, or their employees, servants, agents, contractors customers or invitees, such release, discharge or disposal shall be deemed casualty damage under Article Fourteen to the extent that the Premises are affected thereby; in such case, Landlord and Tenant shall have the obligations and rights respecting such casualty damage provided under such Article. Landlord has no actual knowledge that there are any Hazardous Materials in the Building in violation of applicable Environmental Laws. Notwithstanding the foregoing, Tenant shall have no liability for the amelioration or costs incurred by Landlord with respect to any Hazardous Materials that are not the responsibility of Tenant hereunder.

(d) Landlord and Tenant acknowledge that the Americans With Disabilities Act of 1990 (42 U.S.C. §12101 et seq.) and regulations and guidelines promulgated thereunder, as all of the same may be amended and supplemented from time to time (collectively referred to herein as the “ADA”) establish requirements for business operations, accessibility and barrier removal,

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and that such requirements may or may not apply to the Premises, the Building and the Project depending on, among other things: (1) whether Tenant’s business is deemed a “public accommodation” or “commercial facility”, (2) whether such requirements are “readily achievable”, and (3) whether a given alteration affects a “primary function area” or triggers “path of travel” requirements. The parties hereby agree that: (a) Landlord shall be responsible for ADA Title III compliance in the Common Areas, except as provided below, (b) Tenant shall be responsible for ADA Title III compliance in the Premises, including any leasehold improvements or other work to be performed in the Premises under or in connection with this Lease, (c) Landlord may perform, or require that Tenant perform, and Tenant shall be responsible for the cost of, ADA Title III “path of travel” requirements triggered by Tenant Additions in the Premises, and (d) Landlord may perform, or require Tenant to perform, and Tenant shall be responsible for the cost of, ADA Title III compliance in the Common Areas necessitated by the Building being deemed to be a “public accommodation” instead of a “commercial facility” as a result of Tenant’s use of the Premises. Tenant shall be solely responsible for requirements under Title I of the ADA relating to Tenant’s employees.

7.2     LANDLORD ACCESS TO PREMISES; APPROVALS

(a) Tenant shall permit Landlord to erect, use and maintain pipes, ducts, wiring and conduits in and through the Premises, so long as Tenant’s use, layout or design of the Premises is not materially affected or altered. Landlord or Landlord’s agents shall have the right to enter upon the Premises in the event of an emergency, or to inspect the Premises, to perform janitorial and other services, to conduct safety and other testing in the Premises and to make such repairs, alterations, improvements or additions to the Premises or the Building or other parts of the Property as Landlord may deem necessary or desirable (including all alterations, improvements and additions in connection with a change in service provider or providers). Janitorial and cleaning services shall be performed after normal business hours. Any entry or work by Landlord may be during normal business hours and Landlord may use reasonable efforts to ensure that any entry or work shall not materially interfere with Tenant’s occupancy of the Premises.

(b) If Tenant shall not be personally present to permit an entry into the Premises when for any reason an entry therein shall be necessary or permissible, Landlord (or Landlord’s agents), after attempting to notify Tenant (unless Landlord believes an emergency situation exists), may enter the Premises without rendering Landlord or its agents liable therefor, and without relieving Tenant of any obligations under this Lease.

(c) Landlord may enter the Premises for the purpose of conducting such inspections, tests and studies as Landlord may deem desirable or necessary to confirm Tenant’s compliance with all Laws and Environmental Laws or for other purposes necessary in Landlord’s reasonable judgment to ensure the sound condition of the Property and the systems serving the Property. Landlord’s rights under this Section 7.2(c) are for Landlord’s own protection only, and Landlord has not, and shall not be deemed to have assumed, any responsibility to Tenant or any other party as a result of the exercise or non-exercise of such rights, for compliance with Laws or Environmental Laws or for the accuracy or sufficiency of any item or the quality or suitability of any item for its intended use.

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