10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________ 

FORM 10-Q

 _____________________________________

(Mark One)

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2016

Or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-35676

______________________________________ 

PROTHENA CORPORATION PUBLIC LIMITED COMPANY

(Exact name of registrant as specified in its charter)

______________________________________ 

Ireland	98-1111119
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

Adelphi Plaza
Upper George's Street
Dún Laoghaire
Co. Dublin, A96 T927, Ireland

(Address of principal executive offices including Zip Code)

Registrant’s telephone number, including area code: 011-353-1-236-2500

 ______________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	ý	Accelerated filer	o
Non-accelerated filer	o(Do not check if a smaller reporting company)	Smaller reporting company	o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  ý

The number of ordinary shares outstanding as of April 22, 2016 was 34,349,208.

PROTHENA CORPORATION plc

Form 10-Q – QUARTERLY REPORT

For the Quarter Ended March 31, 2016

TABLE OF CONTENTS

	Page
PART I. FINANCIAL INFORMATION	1
Item 1. Financial Statements (unaudited)	1
Condensed Consolidated Balance Sheets as of March 31, 2016 and December 31, 2015	1
Condensed Consolidated Statements of Operations for the three months ended March 31, 2016 and 2015	2
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2016 and 2015	3
Notes to Condensed Consolidated Financial Statements	4
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3. Quantitative and Qualitative Disclosures About Market Risk	18
Item 4. Controls and Procedures	18
PART II. OTHER INFORMATION	20
Item 1. Legal Proceedings	20
Item 1A. Risk Factors	20
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 3. Defaults Upon Senior Securities	41
Item 4. Mine Safety Disclosures	41
Item 5. Other Information	41
Item 6. Exhibits	41
SIGNATURES	42
EXHIBIT INDEX	43

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Prothena Corporation plc and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

(unaudited)

	March 31,			December 31,
	2016			2015
Assets
Current assets:
Cash and cash equivalents	$	474,252		$	370,586
Receivable from Roche	1,003			509
Prepaid expenses and other current assets	6,837			6,308
Total current assets	482,092			377,403
Non-current assets:
Property and equipment, net	3,924			3,862
Deferred tax assets	3,294			2,850
Other non-current assets	1,998			1,121
Total non-current assets	9,216			7,833
Total assets	$	491,308		$	385,236
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	7,897		$	4,519
Accrued research and development	10,970			12,794
Income taxes payable	530			—
Other current liabilities	3,837			4,903
Total current liabilities	23,234			22,216
Non-current liabilities:
Income taxes payable, non-current	98			98
Deferred rent	2,070			2,127
Other liabilities	126			126
Total non-current liabilities	2,294			2,351
Total liabilities	25,528			24,567
Commitments and contingencies (Note 6)
Shareholders’ equity:
Euro deferred shares, €22 nominal value:	—			—
Authorized shares — 10,000 at March 31, 2016 and December 31, 2015
Issued and outstanding shares — none at March 31, 2016 and December 31, 2015
Ordinary shares, $0.01 par value:	343			317
Authorized shares — 100,000,000 at March 31, 2016 and December 31, 2015
Issued and outstanding shares — 34,340,208 and 31,744,102 at March 31, 2016 and December 31, 2015, respectively
Additional paid-in capital	622,061			489,455
Accumulated deficit	(156,624		)	(129,103		)
Total shareholders’ equity	465,780			360,669
Total liabilities and shareholders’ equity	$	491,308		$	385,236

See accompanying Notes to Condensed Consolidated Financial Statements.

1

Prothena Corporation plc and Subsidiaries

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

	Three Months Ended March 31,
	2016			2015
Collaboration revenue	$	265		$	593
Total revenue	265			593
Operating expenses:
Research and development	20,493			10,573
General and administrative	7,182			5,049
Total operating expenses	27,675			15,622
Loss from operations	(27,410		)	(15,029		)
Other income (expense):
Interest income	277			26
Other income (expense), net	(207		)	67
Total other income (expense)	70			93
Loss before income taxes	(27,340		)	(14,936		)
Provision for income taxes	181			266
Net loss	$	(27,521	)	$	(15,202	)
Basic and diluted net loss per share	$	(0.81	)	$	(0.55	)
Shares used to compute basic and diluted net loss per share	34,026			27,401

See accompanying Notes to Condensed Consolidated Financial Statements.

2

Prothena Corporation plc and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

	Three Months Ended March 31,
	2016			2015
Operating activities
Net loss	$	(27,521	)	$	(15,202	)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization	251			193
Share-based compensation	3,724			1,703
Excess tax benefit from share-based award exercises	(96		)	(390		)
Deferred income taxes	(445		)	(369		)
Loss on sublease	—			261
Changes in operating assets and liabilities:
Receivable from Roche	(494		)	372
Other assets	(1,181		)	933
Accounts payable, accruals and other liabilities	609			(2,221		)
Net cash used in operating activities	(25,153		)	(14,720		)
Investing activities
Purchases of property and equipment	(238		)	(28		)
Net cash used in investing activities	(238		)	(28		)
Financing activities
Proceeds from issuance of ordinary shares in public offering, net	128,785			—
Proceeds from issuance of ordinary shares upon exercise of stock options	176			636
Excess tax benefit from share-based award exercises	96			390
Net cash provided by financing activities	129,057			1,026
Net increase in cash and cash equivalents	103,666			(13,722		)
Cash and cash equivalents, beginning of the year	370,586			293,579
Cash and cash equivalents, end of the period	$	474,252		$	279,857
Supplemental disclosures of cash flow information
Cash paid for income taxes, net of refunds	$	(383	)	$	442
Supplemental disclosures of non-cash investing and financing activities
Acquisition of property and equipment included in accounts payable and accrued liabilities	$	260		$	—
Offering costs included in accounts payable and accrued liabilities	$	8		$	117
Receivable from stock option exercises	$	—		$	16

See accompanying Notes to Condensed Consolidated Financial Statements.

3

Notes to the Condensed Consolidated Financial Statements

(unaudited)

1. Organization

Description of Business

Prothena Corporation plc and its subsidiaries (“Prothena” or the “Company”) is a global, late-stage clinical biotechnology company seeking to fundamentally change the course of progressive diseases, with its clinical pipeline of novel therapeutic antibodies. The Company's clinical pipeline of antibody-based product candidates target a number of potential indications including AL amyloidosis (NEOD001), Parkinson’s disease and other related synucleinopathies (PRX002) and inflammatory diseases including psoriasis (PRX003).

The Company is a public limited company formed under the laws of Ireland. The Company separated from Elan Corporation, plc (“Elan”) on December 20, 2012. After the separation from Elan, and the related distribution of the Company's ordinary shares to Elan’s shareholders, the Company's ordinary shares commenced trading on The Nasdaq Global Market under the symbol “PRTA” on December 21, 2012 and currently trade on The Nasdaq Global Select Market.

Liquidity and Business Risks

As of March 31, 2016, the Company had an accumulated deficit of $156.6 million and cash and cash equivalents of $474.3 million.

Based on the Company's business plans, management believes that the Company's cash and cash equivalents at March 31, 2016 are sufficient to meet its obligations for at least the next twelve months. To operate beyond such period, or if the Company elects to increase its spending on development programs significantly above current long-term plans or enters into potential licenses and or other acquisitions of complementary technologies, products or companies, the Company may need additional capital. The Company expects to continue to finance future cash needs that exceed its cash from operating activities primarily through its current cash and cash equivalents, its collaboration with Roche, and to the extent necessary, through proceeds from public or private equity or debt financings, loans and other collaborative agreements with corporate partners or other arrangements.

The Company is subject to a number of risks, including but not limited to: the uncertainty of the Company's research and development (“R&D”) efforts resulting in future successful commercial products; obtaining regulatory approval for its product candidates; its ability to successfully commercialize its product candidates, if approved; significant competition from larger organizations; reliance on the proprietary technology of others; dependence on key personnel; uncertain patent protection; dependence on corporate partners and collaborators; and possible restrictions on reimbursement from governmental agencies and healthcare organizations, as well as other changes in the healthcare industry.

2. Summary of Significant Accounting Policies

Basis of Preparation and Presentation of Financial Information

These accompanying interim Condensed Consolidated Financial Statements have been prepared in accordance with the accounting principles generally accepted in the U.S. (“GAAP”) and with the instructions for Form 10-Q and Regulations S-X statements. Accordingly, they do not include all of the information and notes required for complete financial statements. These interim Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto contained in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 25, 2016 (the "2015 Form 10-K"). These Condensed Consolidated Financial Statements are presented in U.S. dollars, which is the functional currency of the Company and its consolidated subsidiaries. These unaudited condensed consolidated financial statements include the accounts of the Company and its consolidated subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Unaudited Interim Financial Information

The accompanying interim Condensed Consolidated Financial Statements and related disclosures are unaudited, have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for a fair presentation of the results of operations for the periods presented. The year-end condensed balance sheet data was derived from audited financial statements, however certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or

4

omitted. The condensed consolidated results of operations for any interim period are not necessarily indicative of the results to be expected for the full year or for any other future year or interim period.

Use of Estimates

The preparation of the Condensed Consolidated Financial Statements in conformity with GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures. On an ongoing basis, management evaluates its estimates, including critical accounting policies or estimates related to revenue recognition, share-based compensation and research and development expenses. The Company bases its estimates on historical experience and on various other market specific and other relevant assumptions that management believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Because of the uncertainties inherent in such estimates, actual results may differ materially from these estimates.

Significant Accounting Policies

There were no significant changes to the accounting policies during the three months ended March 31, 2016, from the significant accounting policies described in Note 2 of the "Notes to Consolidated Financial Statements" in the 2015 Form 10-K.

Segment and Concentration of Risks

The Company operates in one segment. The Company’s chief operating decision maker (the “CODM”), its Chief Executive Officer, manages the Company’s operations on a consolidated basis for purposes of allocating resources. When evaluating the Company’s financial performance, the CODM reviews all financial information on a consolidated basis.

Financial instruments that potentially subject the Company to concentration of credit risk consist of cash and cash equivalents and accounts receivable. The Company places its cash equivalents with high credit quality financial institutions and by policy, limits the amount of credit exposure with any one financial institution. Deposits held with banks may exceed the amount of insurance provided on such deposits. The Company has not experienced any losses on its deposits of cash and cash equivalents and its credit risk exposure is up to the extent recorded on the Company's consolidated balance sheet.

Receivable from Roche as of March 31, 2016 and December 31, 2015 are amounts due from Roche entities located in the U.S. and Switzerland under the License Agreement that became effective January 22, 2014. Revenue recorded in the Statements of Operations consists of reimbursement from Roche for research and development services. Credit risk exposure is up to the extent of amounts recorded on the Company's Consolidated Balance Sheet.

As of March 31, 2016, $3.1 million of the Company's long-lived assets were held in the U.S. and $0.8 million were held in Ireland.

The Company does not own or operate facilities for the manufacture, storage, testing or distribution of preclinical or clinical supplies of any of its drug candidates. The Company instead contracted with and relies on third-parties to manufacture, store, test and distribute all preclinical development and clinical supplies of its drug candidates, and the Company plans to continue to do so for the foreseeable future. Currently, the Company has a single source of preclinical or clinical supplies for each of its drug candidates. A delay or inability to obtain such supply could have an adverse effect on the Company's business, financial condition and results of operations.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2014-09 (ASU 2014-09), Revenue from Contracts with Customers. ASU 2014-09 supersedes the revenue recognition requirements in Revenue Recognition (Topic 605), and requires entities to recognize revenue in a way that depicts the transfer of promised goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, which for the Company is January 1, 2018. Early adoption is permitted after January 1, 2017. The standard permits the use of either retrospective or cumulative effect transition method. The Company is currently evaluating the potential impact the adoption of ASU 2014-09 will have on its consolidated financial statements. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting.

In February 2016, the FASB issued Accounting Standards Update 2016-02 (ASU 2016-02), Leases (ASC Topic 842), which will require lessees to recognize assets and liabilities for leases with lease terms of more than 12 months. Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will

5

depend on its classification as a finance or operating lease. However, unlike current GAAP, which requires only capital leases to be recognized on the balance sheet, the new guidance will require both types of leases to be recognized on the balance sheet. ASU 2016-02 is effective for annual periods beginning after December 15, 2018, and interim periods within those years. Early adoption is permitted for all entities. The standard requires that entities use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. Entities have the option to use certain relief. Full retrospective application is prohibited. The Company is evaluating the potential impact the adoption of ASU 2016-02 will have on its consolidated financial statements.

In March 2016, the FASB issued Accounting Standards Update 2016-09 (ASU 2016-09), Improvements to Employee Share-Based Payment Accounting. Under the new guidance, APIC pools will be eliminated and entities will be required to recognize the income tax effects of share-based awards in the income statement when share-based awards vest or are settled. ASU 2016-09 also changes the classification of excess tax benefits on the statement of cash flows. It also will allow an employer to repurchase more of an employee's shares than it can currently for tax withholding purposes without triggering liability accounting and to make a policy election to either account for forfeitures as they occur or to continue the current practice of estimating forfeitures at the time of grant. ASU 2016-09 is effective prospectively for fiscal years beginning after December 15, 2016, and interim periods within those years. Early adoption is permitted, but all of the guidance must be adopted in the same period. The Company is evaluating the impact the adoption of ASU 2016-09 will have on its consolidated financial statements.

3. Fair Value Measurements

The Company measures certain financial assets and liabilities at fair value on a recurring basis, including cash equivalents. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. A three-tier fair value hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value:

Level 1 —    Observable inputs such as quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 — Include other inputs that are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant inputs are observable in the market or can be derived from observable market data. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest rate curves, foreign exchange rates, and credit ratings.

Level 3 — Unobservable inputs that are supported by little or no market activities, which would require the Company to develop its own assumptions.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The carrying amounts of certain financial instruments, such as cash equivalents, accounts receivable, accounts payable and accrued liabilities, approximate fair value due to their relatively short maturities, and low market interest rates, if applicable.

Based on the fair value hierarchy, the Company classifies its cash equivalents within Level 1. This is because the Company values its cash equivalents using quoted market prices. The Company’s Level 1 securities consist of $425.6 million and $320.5 million in money market funds included in cash and cash equivalents at March 31, 2016 and December 31, 2015, respectively.

4. Composition of Certain Balance Sheet Items

Property and Equipment, net

Property and equipment, net consisted of the following (in thousands):

6

	March 31,			December 31,
	2016			2015
Machinery and equipment	$	6,311		$	6,210
Leasehold improvements	3,040			2,828
Purchased computer software	167			167
	9,518			9,205
Less: accumulated depreciation and amortization	(5,594		)	(5,343		)
Property and equipment, net	$	3,924		$	3,862

Depreciation expense was $0.3 million, and $0.2 million for the three months ended March 31,2016 and 2015, respectively.

Other Current Liabilities

Other current liabilities consisted of the following (in thousands):

	March 31,		December 31,
	2016		2015
Payroll and related expenses	$	2,083	$	3,774
Professional services	934		325
Deferred rent	304		284
Other	516		520
Other current liabilities	$	3,837	$	4,903

5. Net income (loss) Per Ordinary Share

Basic net income (loss) per ordinary share is calculated by dividing net income (loss) by the weighted-average number of ordinary shares outstanding during the period. Shares used in diluted net income per ordinary share would include the dilutive effect of ordinary shares potentially issuable upon the exercise of stock options outstanding. However, potentially issuable ordinary shares are not used in computing diluted net loss per ordinary share as their effect would be anti-dilutive due to the loss recorded during the three months endedMarch 31, 2016 and 2015, and therefore diluted net loss per share is equal to basic net loss per share.

Net income (loss) per ordinary share was determined as follows (in thousands, except per share amounts):

	Three Months Ended March 31,
	2016			2015
Numerator:
Net loss	$	(27,521	)	$	(15,202	)
Denominator:
Weighted-average ordinary shares outstanding	34,026			27,401
Net loss per share:
Basic and diluted net loss per share	$	(0.81	)	$	(0.55	)

The equivalent ordinary shares not included in diluted net income (loss) per share because their effect would be anti-dilutive are as follows (in thousands):

	Three Months Ended March 31,
	2016	2015
Stock options to purchase ordinary shares	4,097	3,312

7

6. Commitments and Contingencies

Operating Leases

The Company currently leases 50,400 square feet of office and research and development space located South San Francisco, California (the “Current Facility”), which lease expires on November 30, 2020.

In March 2016, the Company entered into a noncancelable operating sublease (the "Lease") to lease 128,751 square feet of office and laboratory space in South San Francisco, California (the “New Facility”) from Amgen Inc. (the "Landlord"). The Lease became effective on March 28, 2016. The Lease includes a free rent period and escalating rent payments and has a term that expires on December 31, 2023, unless terminated earlier. The Lease provides that the Company's obligation to pay rent shall commence on the earlier of (i) the date that certain improvements to the New Facility are completed and (ii) August 1, 2016 (the “Rent Commencement Date”). The Company is obligated to make lease payments totaling approximately $39.2 million over the lease term. The Lease further provides that the Company is obligated to pay to the Landlord certain costs, including taxes and operating expenses.

The Company will be entitled to an improvement allowance of up to $14.2 million, to be used for costs incurred by the Company to construct certain improvements to the New Facility and to prepare for the Company's occupancy of the New Facility.

The Company obtained a standby letter of credit in April 2016 in the initial amount of $4.1 million, which may be drawn down by the Landlord in the event the Company fails to fully and faithfully perform all of its obligations under the Lease and to compensate the Landlord for all losses and damages the Landlord may suffer as a result of the occurrence of any default on the part of Company not cured within the applicable cure period.

As of March 31, 2016, the lease term has not commenced as the Company did not have the right to use or control physical access to the New Facility and therefore no accounting relating to the Lease has been recorded in the Balance Sheet as of March 31, 2016. Subsequently, in April 2016, the Company took possession of the New Facility.

The operating lease for the Current Facility has an estimated annual rent payment of approximately $2.1 million. In December 2014, the Company entered into a noncancelable operating sublease (the "Sublease") with a third party to sublease a portion of its current facility to that party. This Sublease has a three-year term which commenced in January 2015 (with options to extend for another year). The Company recognized a loss of $0.4 million in the three months ended March 31, 2015 for the cash difference between the total payments associated with the Sublease, including executory costs, and the amount of Sublease rental receipts over the Sublease term. The Company expects to receive future minimum payments from this Sublease of $0.4 million and $0.3 million in 2016 and 2017, respectively, which is an offset to the lease payments below.

In August 2015, the Company entered into an agreement to lease 6,258 square feet of office space in Dublin, Ireland. This lease has a term of 10 years from commencement and provides for an option to terminate the lease at the end of the fifth year of the term. It is also subject to a rent review every five years. As a result of this noncancelable operating lease, the Company is obligated to make lease payments totaling approximately €2.0 million, or $2.3 million as converted using exchange rate as of March 31, 2016, over the term of the lease, assuming current lease payments. Of this obligation, approximately $2.2 million remain outstanding as of March 31, 2016.

Future minimum payments under noncancelable operating leases (including the Lease) and future minimum rentals to be received under the Sublease as of March 31, 2016, are as follows (in thousands):

Year Ended December 31,	Operating Lease		Sublease Rental
2016 (nine months)	$	1,633	$	(392	)
2017	5,527		(316		)
2018	7,246		—
2019	8,218		—
2020	8,271		—
Thereafter	20,147		—
Total	$	51,042	$	(708	)

The Company recognizes rent expense on a straight-line basis over the noncancelable lease term and records the difference between cash rent payments and the recognition of rent expense as a deferred rent liability. Where leases contain escalation clauses,

8

rent abatements, and/or concessions, such as rent holidays and landlord or tenant incentives or allowances, the Company applies them in the determination of straight-line rent expense over the lease term. The Company records the tenant improvement allowance as deferred rent and associated expenditures as leasehold improvements that are being amortized over the shorter of their estimated useful life or the term of the lease. The Company records payments received from the Sublease as offset against the current period rent expense.

Commitments

In the normal course of business, the Company enters into various firm purchase commitments primarily related to research and development activities. As of March 31, 2016, the Company had non-cancelable purchase commitments to suppliers for $12.7 million of which $4.0 million is included in accrued current liabilities, and contractual obligations under license agreements of $1.4 million of which $0.1 million is included in accrued current liabilities. The following is a summary of the Company's non-cancelable purchase commitments and contractual obligations as of March 31, 2016 (in thousands):

	Total		2016		2017		2018		2019		2020		Thereafter
Purchase Obligations	$	12,672	$	12,504	$	70	$	36	$	30	$	32	$	—
Contractual obligations under license agreements (1)	1,440		190		120		120		120		90		800
Total	$	14,112	$	12,694	$	190	$	156	$	150	$	122	$	800

⁽¹⁾ Excludes future obligations pursuant to the cost-sharing arrangement under the Company's License Agreement with Roche. Amounts of such obligations, if any, cannot be determined at this time.

7. Roche License Agreement

In December 2013, the Company entered into the License Agreement with Roche to develop and commercialize certain antibodies that target α-synuclein, including PRX002. The License Agreement was evaluated under ASC 605-25, "Multiple Element Arrangements". Under this agreement, the Company recognizes research reimbursement as collaboration revenue as earned. The Company recognized $0.3 million as collaboration revenue for research reimbursement from Roche for the three months ended March 31, 2016, as compared to $0.4 million for the three months ended March 31, 2015. Cost sharing payments to Roche are recorded as R&D expenses. The Company recognized $0.5 million in R&D expenses for payments made to Roche during the three months ended March 31, 2016, as compared to $0.5 million for the three months ended March 31, 2015. Reimbursement for development costs from Roche under the cost-sharing arrangement were allocated between license revenue and an offset to R&D expenses based on the relative selling price method until the full allocated consideration of $35.6 million was recognized as license revenue, after which the full reimbursement is recorded as an offset to R&D expenses. In the year ended December 31, 2015, the Company reached the full allocated consideration of $35.6 million recognized as license revenue; accordingly, future development revenue will be recorded as an offset to R&D expenses. Reimbursement for development costs from Roche during the three months ended March 31, 2016 was $1.2 million, of which $nil, was recognized as collaboration license revenue and $1.2 million, was recognized as an offset to R&D expenses. Reimbursement for development costs from Roche during the three months endedMarch 31, 2015 was $1.5 million, of which $0.2 million was recognized as collaboration license revenue and $1.3 million, respectively were recognized as an offset to R&D expenses.

The License Agreement provides that Roche would make an upfront payment to the Company of $30.0 million, which was received in February 2014, and the clinical milestone payment of $15.0 million triggered by the initiation of the Phase 1 study for PRX002 in the clinic, which was received in May 2014. The Company recognized the $30.0 million upfront payment from Roche as collaboration license revenue in 2014 and concluded that the $15.0 million clinical milestone is consistent with the definition of a substantive milestone included in ASU No. 2010-17, "Milestone Method of Revenue Recognition". Factors considered in this determination included scientific and regulatory risk that must be overcome to achieve each milestone, the level of effort and investment required to achieve the milestone, and the monetary value attributed to the milestone.

Accordingly, the Company recognized payments related to the achievement of this milestone when the milestone was achieved. The milestone payment was allocated to the units of accounting based on the relative selling price method for income statement classification purposes. The Company did not achieve any of the clinical and regulatory milestones under the License Agreement during the three months endedMarch 31, 2016 and 2015.

8. Shareholders' Equity

9

Ordinary Shares

As of March 31, 2016, the Company had 100,000,000 ordinary shares authorized for issuance with a par value of $0.01 per ordinary share and 34,340,208 ordinary shares issued and outstanding. Each ordinary share is entitled to one vote and, on a pro rata basis, to dividends when declared and the remaining assets of the Company in the event of a winding up.

Euro Deferred Shares

As of March 31, 2016, the Company had 10,000 Euro Deferred Shares authorized for issuance with a nominal value of €22 per share. No Euro Deferred Shares are outstanding at March 31, 2016. The rights and restrictions attaching to the Euro Deferred Shares rank pari passu with the ordinary shares and are treated as a single class in all respects.

January 2016 Offering

In January 2016, the Company completed an underwritten public offering of an aggregate of 2,587,500 of its ordinary shares at a public offering price of $53.00 per ordinary share. The Company received aggregate net proceeds of approximately $128.6 million, after deducting the underwriting discount and estimated offering costs.

9. Share-Based Compensation

Amended and Restated 2012 Long Term Incentive Plan (“LTIP”)

Employees and consultants of the Company, its subsidiaries and affiliates, as well as members of the Board, are eligible to receive equity awards under the LTIP. The LTIP provides for the grant of stock options, including incentive stock options and nonqualified stock options, stock appreciation rights (“SARS”), restricted shares, restricted share units ("RSUs"), cash or stock-based performance awards and other share-based awards to eligible individuals. Options under the LTIP may be granted for periods up to ten years. All options issued to date have had a ten year life.

The Company granted 1,008,475 and 785,550 share options during the three months endedMarch 31, 2016 and 2015, respectively, under the LTIP. The Company's option awards generally vest over four years. The aggregate number of ordinary shares authorized for issuance under the LTIP is 5,550,000 ordinary shares and as of March 31, 2016, 813,820 ordinary shares remain available for grant and options to purchase 4,097,233 ordinary shares granted from the LTIP were outstanding with a weighted-average exercise price of approximately $24.38 per share. In February 2016, our Board approved an increase of 1,850,000 additional ordinary shares authorized for issuance under the LTIP, subject to shareholder approval.

Share-based Compensation Expense

The Company estimates the fair value of share-based compensation on the date of grant using an option-pricing model. The Company uses the Black-Scholes model to value share-based compensation, excluding RSUs, which the Company values using the fair market value of its ordinary shares on the date of grant. The Black-Scholes option-pricing model determines the fair value of share-based payment awards based on the share price on the date of grant and is affected by assumptions regarding a number of complex and subjective variables. These variables include, but are not limited to, the Company’s share price, volatility over the expected life of the awards and actual and projected employee stock option exercise behaviors. Since the Company does not have sufficient historical employee share option exercise data, the simplified method has been used to estimate the expected life of all options. The expected volatility was based on a combination of historical volatility for the Company's stock and the historical volatilities of several of the Company's publicly traded comparable companies. Although the fair value of share options granted by the Company is estimated by the Black-Scholes model, the estimated fair value may not be indicative of the fair value observed in a willing buyer and seller market transaction.

As share-based compensation expense recognized in the Condensed Consolidated Financial Statements is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from estimates. Forfeitures were estimated based on estimated future turnover and historical experience.

Share-based compensation expense will continue to have an adverse impact on the Company’s results of operations, although it will have no impact on its overall financial position. The amount of unearned share-based compensation currently estimated to be expensed from now through the year 2019 related to unvested share-based payment awards at March 31, 2016 is $49.1 million. The weighted-average period over which the unearned share-based compensation is expected to be recognized is 2.8 years. If there are any modifications or cancellations of the underlying unvested securities, the Company may be required to accelerate and/or increase any remaining unearned share-based compensation expense. Future share-based compensation expense and unearned share-based compensation will increase to the extent that the Company grants additional equity awards.

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Share-based compensation expense recorded in these Condensed Consolidated Financial Statements for the three months endedMarch 31, 2016 and 2015 was based on awards granted under the LTIP. The following table summarizes share-based compensation expense for the periods presented (in thousands):

	Three Months Ended March 31,
	2016		2015
Research and development(1)	$	1,419	$	758
General and administrative	2,305		945
Total share-based compensation expense	$	3,724	$	1,703

_________________

⁽¹⁾  Includes $nil and $42,000 for the three months endedMarch 31, 2016 and 2015, respectively, of share-based compensation expense related to options granted to a consultant.

The fair value of the options granted to employees and non-employee directors during the three months endedMarch 31, 2016 and 2015 was estimated as of the grant date using the Black-Scholes option-pricing model assuming the weighted-average assumptions listed in the following table:

	Three Months Ended March 31,
	2016	2015
Expected volatility	74.8%	76.2%
Risk-free interest rate	1.4%	1.8%
Expected dividend yield	—%	—%
Expected life (in years)	6.0	6.0
Weighted average grant date fair value	$22.94	$18.48

The fair value of employee stock options is being amortized on a straight-line basis over the requisite service period for each award. Each of the inputs discussed above is subjective and generally requires significant management judgment to determine.

The following table summarizes the Company’s share option activity during the three months ended March 31, 2016:

	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2015	3,142,364		$	21.36	8.14	$	146,917
Granted	1,008,475		35.03
Exercised	(8,606	)	20.65
Canceled	(45,000	)	52.20
Outstanding at March 31, 2016	4,097,233		$	24.38	8.29	$	71,988
Vested and expected to vest at March 31, 2016	3,912,442		$	23.97	8.25	$	70,254
Vested at March 31, 2016	1,491,495		$	13.87	7.32	$	40,696

During the three months ended March 31, 2016 and 2015, the total intrinsic value of options exercised was $0.3 million and $2.2 million, respectively, determined as of the date of exercise.

10. Income Taxes

The major taxing jurisdictions for the Company are Ireland and the U.S. The Company's income tax provision was $181,000 and $266,000 for the three months ended March 31, 2016 and 2015, respectively. The provision for income taxes differs from the statutory tax rate of 12.5% applicable to Ireland primarily due to Irish net operating losses for which a tax provision benefit is not recognized and due to U.S. income taxed at different rates. The income tax provision reflects the estimate of the effective tax rate expected to be applicable for the full year and the Company re-evaluates this estimate each quarter based on its forecasted tax

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expense for the full year. Jurisdictions with a projected loss for the year where no tax benefit can be recognized are excluded from the estimated annual effective tax rate.

The Company's deferred tax assets are composed primarily of its Irish subsidiaries' net operating loss carryovers, state net operating loss carryforwards available to reduce future taxable income of the Company's U.S. subsidiary, federal and California research and development credit carryforward, shared-based compensation and other temporary differences. The Company maintains a valuation allowance against certain U.S. federal and state and Irish deferred tax assets. Each reporting period, the Company evaluates the need for a valuation allowance on its deferred tax assets by jurisdiction.

No provision for income tax in Ireland has been recognized on undistributed earnings of the Company's foreign subsidiaries because the Company considers such earnings to be indefinitely reinvested.

11. Subsequent Events [Placeholder only]

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Quarterly Report on Form 10-Q, including this Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These statements relate to, among other things, our strategy; the design of and enrollment in our Phase 2b PRONTO clinical trial for NEOD001 and our Phase 1 clinical trial for PRX002; our ability to rapidly assess biological activity of PRX003 in its Phase 2b clinical trial; research and development ("R&D") and general and administrative ("G&A") expenses in 2016; and the sufficiency of our cash and cash equivalents. Forward-looking statements may include words such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective” “plan,” “predict,” “potential,” “positioned,” “seek,” “should,” “target,” “will,” “would,” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology. Forward-looking statements are subject to risks and uncertainties, and actual events or results may differ materially. Factors that could cause our actual results to differ materially include, but are not limited to, the risks and uncertainties listed below as well as those discussed under “Risk Factors” in this Form 10-Q.

•our ability to obtain additional financing in future offerings;

•our operating losses;

•our ability to successfully complete research and development of our drug candidates;

•our ability to develop, manufacture and commercialize products;

•our collaboration with Roche pursuant to the License Agreement;

•our ability to protect our patents and other intellectual property;

•our ability to hire and retain key employees;

•tax treatment of our separation from Elan and subsequent distribution of our ordinary shares;

• our ability to maintain financial flexibility and sufficient cash, cash equivalents, and investments and other assets capable of being monetized to meet our liquidity requirements;

•potential disruptions in the U.S. and global capital and credit markets;

•government regulation of our industry;

•the volatility of our ordinary share price;

•business disruptions; and

•the other risks and uncertainties described in the “Risk Factors” section of this Form 10-Q.

We undertake no obligation to revise or update any forward-looking statements to reflect any event or circumstance that arises after the date of this report.

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This discussion should be read in conjunction with the Condensed Consolidated Financial Statements and Notes presented in this Quarterly Report on Form 10-Q and the Consolidated Financial Statements and Notes contained in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the "SEC") on February 25, 2016 (the "2015 Form 10-K").

Overview

Prothena Corporation plc is a global, late-stage clinical biotechnology company seeking to fundamentally change the course of progressive diseases with its clinical pipeline of novel therapeutic antibodies. Fueled by its deep scientific understanding built over decades of research in protein misfolding and cell adhesion – the root causes of many serious or currently untreatable amyloid and inflammatory diseases – Prothena has advanced several drug candidates into clinical trials while pursuing discovery of additional novel therapies.

Our clinical pipeline of antibody-based product candidates target a number of potential indications including AL amyloidosis (NEOD001), Parkinson’s disease and other related synucleinopathies (PRX002) and inflammatory diseases including psoriasis (PRX003).

We are a public limited company formed under the laws of Ireland. We separated from Elan Corporation, plc ("Elan"), on December 20, 2012. After the separation from Elan, and the related distribution of the Company's ordinary shares to Elan's shareholders, our ordinary shares began trading on The Nasdaq Global Market under the symbol “PRTA” on December 21, 2012 and currently trade on The Nasdaq Global Select Market.

Recent Developments

NEOD001 for AL Amyloidosis

NEOD001 is a monoclonal antibody that targets circulating misfolded soluble light chain and deposited insoluble amyloid for the potential treatment of AL amyloidosis. We recently initiated PRONTO, a Phase 2b registration-directed global, multi-center, randomized, double-blind, placebo-controlled clinical trial for NEOD001 in previously treated patients with AL amyloidosis and with persistent cardiac dysfunction. The PRONTO trial is designed to enroll approximately 100 patients with a primary diagnosis of AL amyloidosis and persistent cardiac dysfunction despite previous treatment with off-label, plasma cell directed therapy. Patients are randomized on a 1:1 basis to receive 24 mg/kg of NEOD001 or placebo via intravenous infusion every 28 days. The primary endpoint is cardiac best response as assessed by NT-proBNP measured over 12 months. Secondary endpoints include evaluations of Short Form 36, six-minute walk test, and renal response as assessed by proteinuria. Prothena designed the study with 80% power to detect an absolute difference of approximately 26.5% in NT-proBNP best response rate between the treatment and placebo groups with a two-sided alpha of 0.05.

PRX002 for Parkinson’s Disease and Other RelatedSynucleinopathies

PRX002 is a monoclonal antibody that targets α-synuclein, for the potential treatment of Parkinson's disease and related synucleinopathies, and is the primary focus of Prothena's worldwide collaboration with Roche. In January 2016, we announced the addition of an additional dose level cohort to the ongoing Phase 1 multiple ascending dose trial of PRX002 in patients with Parkinson’s disease. The decision to add an additional cohort of patients, dosed at 60 mg/kg, made jointly with Roche, is intended to inform the design and dosing levels of future PRX002 clinical studies, and was based in part on the observed safety and tolerability profile of PRX002 at lower dose levels. This study will remain blinded to us until completion of the study, which we expect to occur following completion of the 60 mg/kg dose cohort follow-up period. This randomized, double-blind, placebo-controlled multiple ascending dose study is expected to enroll up to 80 patients with Parkinson’s’ disease at multiple sites across the U.S. and is designed to assess PRX002 for safety, tolerability, pharmacokinetics and immunogenicity. The study will also evaluate multiple clinical and exploratory biomarker endpoints.

PRX003 for Inflammatory Diseases Including Psoriasis

PRX003 is a monoclonal antibody that targets melanoma cell adhesion molecule (MCAM) for the potential treatment of inflammatory diseases, including psoriasis. In March 2016, we presented preclinical data for PRX003 at the American Academy of Allergy, Asthma & Immunology (AAAAI) 2016 Annual Meeting regarding the ability of PRX003 to inhibit migration of disease-causing immune cells.

We recently initiated a double-blind, placebo-controlled Phase 1b multiple ascending dose study of PRX003 in patients with psoriasis. Because of the visual, defined nature of psoriasis, Prothena expects to be able to rapidly assess the biological activity of PRX003 and establish a clinical foundation to inform the strategic clinical development pathway for psoriasis and other inflammatory indications. 

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Preclinical Program in TTR Amyloidosis

In March 2016, we published in the peer-reviewed journal Amyloid, preclinical data from a series of novel, conformation-specific protein immunotherapy antibodies that selectively bind to amyloidogenic (diseased) forms of the transthyretin (ATTR) protein.

January 2016 Offering

In January 2016, we completed an underwritten public offering of an aggregate of 2,587,500 of our ordinary shares at a public offering price of $53.00 per ordinary share. The Company received aggregate net proceeds of approximately $128.6 million, after deducting the underwriting discount and estimated offering costs.

Critical Accounting Policies and Estimates

Management’s discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with the accounting principles generally accepted in the U.S. ("GAAP"). The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions for the reported amounts of assets, liabilities, revenues, expenses and related disclosures.

There were no significant changes to our critical accounting policies and estimates during the three months endedMarch 31, 2016 from the critical accounting policies and estimates disclosed in Management's Discussion and Analysis of Financial Condition and Results of Operations in our 2015 Form 10-K.

Recent Accounting Pronouncements

Except as described in Note 2 to the Condensed Consolidated Financial Statements under the heading “Recent Accounting Pronouncements”, there have been no new accounting pronouncements or changes to accounting pronouncements during the three months endedMarch 31, 2016, as compared to the recent accounting pronouncements described in our 2015 Form 10-K, that are of significance or potential significance to us.

Results of Operations

Comparison of Three Months Ended March 31, 2016 and 2015

Revenue

	Three Months Ended March 31,				Percentage Change
	2016		2015
Collaboration revenue	$	265	$	593	(55	)%
Total revenue	$	265	$	593	(55	)%

Total revenue was $0.3 million and $0.6 millionthree months ended March 31, 2016 and 2015, respectively.

Collaboration revenue includes reimbursements under our License Agreement with Roche, which became effective January 2014. The portion of the amounts recognized as collaboration revenue for the milestone and the development reimbursements were based on the relative selling price method in applying multiple element accounting. See Note 7 to the Consolidated Financial Statements “Roche License Agreement” for more information.

Collaboration revenue for the three months ended March 31, 2016 consisted of the following amounts from Roche under the License Agreement: reimbursement for development costs of $1.2 million (of which $1.2 million was recognized as a reduction in research and development expenses and $nil was recognized as collaboration license revenue) and reimbursement for research services of $0.3 million, all recognized in collaboration revenue. Conversely, collaboration revenue for the three months ended March 31, 2015 consisted of the following amounts: reimbursement for development costs of $1.5 million (of which $1.3 million was recognized as a reduction in research and development expenses and $0.2 million was recognized as collaboration license revenue) and reimbursement for research services of $0.4 million, all recognized in collaboration revenue.

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Operating Expenses

	Three Months Ended March 31,				Percentage Change
	2016		2015
	(Dollars in thousands)
Research and development	$	20,493	$	10,573	94	%
General and administrative	7,182		5,049		42	%
Total operating expenses	$	27,675	$	15,622	77	%

Total operating expenses consist of research and development ("R&D") expenses and general and administrative ("G&A") expenses. Our operating expenses for the three months ended March 31, 2016 and 2015 were $27.7 million and $15.6 million, respectively.

Our R&D expenses primarily consisted of personnel costs and related expenses, including share-based compensation, external costs associated with preclinical activities and drug development related to our drug programs, including NEOD001, PRX002, PRX003 and our discovery programs. Pursuant to our License Agreement with Roche, in 2014 we began making payments to Roche for our share of the development expenses incurred by Roche related to PRX002 program, which is included in our R&D expense. We recorded reimbursements from Roche for development and supply services based on the relative percentages as an offset to R&D expense.

Our G&A expenses primarily consist of professional service expenses and personnel costs and related expenses, including share-based compensation.

Research and Development Expenses

Our R&D expenses increased by $9.9 million, or 94%, for the three months ended March 31, 2016, compared to the same period in the prior year. The increase for the three months ended March 31, 2016 compared to the same period in the prior year was primarily due to an increase in external expenses related to clinical trial costs associated with the NEOD001 program and to a lesser extent PRX003 and PRX002 programs, higher external expenses for product manufacturing primarily related to NEOD001 and ATTR and higher personnel costs including share-based compensation expenses.

Our research activities are aimed at developing new drug products. Our development activities involve the translation of our research into potential new drugs. R&D expenses include personnel costs and related expenses, external expenses associated with preclinical and drug development, materials, equipment and facilities costs that are allocated to clearly related R&D activities.

The following table sets forth the R&D expenses for our major programs (specifically, any program with successful first dosing in a Phase 1 clinical trial, which were NEOD001, PRX002 and PRX003) and other R&D expenses for the three months ended March 31, 2016 and 2015, and the cumulative amounts to date (in thousands):

	Three Months Ended March 31,				Cumulative to Date
	2016		2015
NEOD001 (1)	$	13,236	$	4,947	$	82,547
PRX002 (2)	1,395		1,953		39,177
PRX003 (3)	2,430		1,878		36,735
Other R&D (4)	3,432		1,795
	$	20,493	$	10,573

⁽¹⁾  Cumulative R&D costs to date for NEOD001 include the costs incurred from the date when the program has been separately tracked in preclinical development. Expenditures in the early discovery stage are not tracked by program and accordingly have been excluded from this cumulative amount.

⁽²⁾  Cumulative R&D costs to date for PRX002 and related antibodies include the costs incurred from the date when the program has been separately tracked in preclinical development. Expenditures in the early discovery stage are not tracked by program and accordingly have been excluded from this cumulative amount. PRX002 cost include payments to Roche for our share of the development expenses incurred by Roche related to PRX002 programs and is net of reimbursements from Roche for development and supply services recorded as an offset to R&D expense. For the three months endedMarch 31, 2016 and 2015, $1.2 million and $1.3 million, respectively, were recorded as an offset to R&D expenses.

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⁽³⁾  Cumulative R&D costs to date for PRX003 include the costs incurred from the date when the program has been separately tracked in preclinical development. Expenditures in the early discovery stage are not tracked by program and accordingly have been excluded from this cumulative amount.

⁽⁴⁾  Other R&D is comprised of preclinical development and discovery programs that have not progressed to first patient dosing in a Phase 1 clinical trial.

We expect our R&D expenses to continue to increase in 2016 over the prior year primarily due to increased spending for the NEOD001 program in connection with the ongoing VITAL Phase 3 clinical trial and the initiation of the PRONTO Phase 2b clinical trial, and to a lesser extent increased spending for our ATTR preclinical program.

General and Administrative Expenses

Our G&A expenses increased by $2.1 million, or 42%, for the three months ended March 31, 2016, compared to the prior year, primarily due to higher personnel costs, including share-based compensation expenses.

We expect our G&A expenses to continue to increase in 2016 over the prior year in support of our anticipated R&D growth with increases in personnel, legal and other administrative expenses.

Other Income (Expense)

	Three Months Ended March 31,					Percentage Change
	2016			2015
	(Dollars in thousands)
Interest income	$	277		$	26	965	%
Other income (expense), net	(207		)	67		(409	)%
Total Other Income (Expense)	$	70		$	93	(25	)%

Interest income increased by $251,000, or 965%, for the three months ended March 31, 2016, compared to the prior year, primarily due to higher balances in our cash and money market accounts. Other income (expense), net for the three months ended March 31, 2016 were primarily due to foreign exchange losses from transactions with vendors denominated in Euros.

Provision for Income Taxes

	Three Months Ended March 31,				Percentage Change
	2016		2015
	(Dollars in thousands)
Provision for income taxes	$	181	$	266	(32	)%

The tax provisions were $181,000 and $266,000 for the three months ended March 31, 2016 and 2015. The tax provisions for all periods presented reflect U.S. federal taxes associated with recurring profits attributable to intercompany services that the Company's U.S. subsidiary performs for the Company. No tax benefit has been recorded related to tax losses recognized in Ireland and any deferred tax assets for those losses are offset by a valuation allowance.

Liquidity and Capital Resources

Overview

	March 31,		December 31,
	2016		2015
Working capital	$	458,858	$	355,187
Cash and cash equivalents	474,252		370,586
Total assets	491,308		385,236
Total liabilities	25,528		24,567
Total shareholders’ equity	465,780		360,669

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Working capital was $458.9 million as of March 31, 2016, an increase of $103.7 million from working capital of $355.2 million as of December 31, 2015. This increase in working capital during the three months ended March 31, 2016 was principally attributable to a higher net cash and cash equivalents balance resulting from the net proceeds of $128.6 million from our public offering in January 2016, partially offset by use of cash for operating expenses during the same period.

As of March 31, 2016, we had $474.3 million in cash and cash equivalents. Although we believe, based on our current business plans, that our existing cash and cash equivalents will be sufficient to meet our obligations for at least the next twelve months, we anticipate that we will require additional capital in the future in order to continue the research and development of our drug candidates. As of March 31, 2016, $33.6 million of our outstanding cash and cash equivalents related to U.S. operations that management asserts was permanently reinvested. We do not intend to repatriate these funds. However, if these funds were repatriated back to Ireland we would incur a withholding tax from the dividend distribution.

We have based this estimate on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect. Because of the numerous risks and uncertainties associated with the development and commercialization of our product candidates, we are unable to estimate the amounts of increased capital outlays and operating expenses associated with completing the development of our product candidates. Our future capital requirements will depend on numerous factors, including, without limitation, the timing of initiation, progress, results and costs of our clinical trials; the results of our research and preclinical studies; the costs of clinical manufacturing and of establishing commercial manufacturing arrangements; the costs of preparing, filing and prosecuting patent applications and maintaining, enforcing and defending intellectual property-related claims; the costs and timing of capital asset purchases; our ability to establish research collaborations, strategic collaborations, licensing or other arrangements; the costs to satisfy our obligations under current and potential future collaborations; and the timing, receipt, and amount of revenues or royalties, if any, from any approved drug candidates. Pursuant to the License Agreement with Roche, in the U.S., we and Roche share all development and commercialization costs, as well as profits, all of which will be allocated 70% to Roche and 30% to us, for PRX002 in the Parkinson’s disease indication, as well as any other Licensed Products and/or indications for which we opt in to co-develop and co-fund. In order to develop and obtain regulatory approval for our potential products we will need to raise substantial additional funds. We expect to raise any such additional funds through public or private equity or debt financings, collaborative agreements with corporate partners or other arrangements. We cannot assume that such additional financings will be available on acceptable terms, if at all, and such financings may only be available on terms dilutive to our shareholders.

Cash Flows for the Three Months Ended March 31, 2016 and 2015

The following table summarizes, for the periods indicated, selected items in our Consolidated Statements of Cash Flows (in thousands):

	Three Months Ended March 31,
	2016			2015
Net cash used in operating activities	$	(25,153	)	$	(14,720	)
Net cash used in investing activities	(238		)	(28		)
Net cash provided by financing activities	129,057			1,026
Net increase in cash and cash equivalents	$	103,666		$	(13,722	)

Cash Used in Operating Activities

Net cash used in operating activities was $25.2 million for the three months ended March 31, 2016, primarily due to use of $27.7 million for operating expenses (adjusted to exclude non-cash charges), which was partially offset by an increase in accrued liabilities.

Net cash used in operating activities was $14.7 million for the three months ended March 31, 2015, primarily due to use of $15.6 million for operating expenses (adjusted to exclude non-cash charges) and decreases in accounts payable and accrued liabilities.

Cash Used in Investing Activities

Net cash used in investing activities was $238,000 and $28,000 for the three months ended March 31, 2016 and 2015, respectively, consisting of purchases of property and equipment.

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Cash Provided by Financing Activities

Net cash provided by financing activities was $129.1 million for the three months ended March 31, 2016, primarily from the net proceeds from our January 2016 public offering.

Net cash provided by financing activities was $1.0 million for the three months ended March 31, 2015, primarily from issuance of common stock upon exercise of stock options and excess tax benefit from stock option exercises.

Off-Balance Sheet Arrangements

At March 31, 2016, we were not a party to any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources.

Contractual Obligations

Our main contractual obligations as of March 31, 2016 consist of operating leases of $51.0 million, purchase obligations of $12.7 million (of which $4.0 million is included in the accrued current liabilities) and contractual obligations under license agreements of $1.4 million. Purchase obligations represent our non-cancelable purchase commitments to suppliers. Operating leases represent our future minimum rental commitments under our non-cancelable operating leases.

The following is a summary of our contractual obligations as of March 31, 2016 (in thousands):

	Total		2016		2017		2018		2019		2020		Thereafter
Operating leases	$	51,042	$	1,633	$	5,527	$	7,246	$	8,218	$	8,271	$	20,147
Purchase obligations	12,672		12,504		70		36		30		32		—
Contractual obligations under license agreements (1)	1,440		190		120		120		120		90		800
Total	$	65,154	$	14,327	$	5,717	$	7,402	$	8,368	$	8,393	$	20,947

⁽¹⁾Excludes future obligations pursuant to the cost-sharing arrangement under our License Agreement with Roche. Amounts of such obligations, if any, cannot be determined at this time.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Currency Risk

Our business is primarily conducted in U.S. dollars except for our agreement with a contract manufacturer for clinical supplies which is denominated in Euros. We recorded a loss on foreign currency exchange rate differences of approximately $205,000 and $66,000 during the three months ended March 31, 2016 and 2015, respectively. At this time, we do not believe that our foreign exchange risk is material. However, if we continue or increase our business activities that require the use of foreign currencies, we may incur losses if the Euro and other such currencies strengthen against the U.S. dollar.

Interest Rate Risk

Our exposure to interest rate risk is limited to our cash equivalents, which consist of accounts maintained in money market funds. We have assessed that there is no material exposure to interest rate risk given the nature of money market funds. In general, money market funds are not subject to interest rate risk because the interest paid on such funds fluctuates with the prevailing interest rate. Accordingly, our interest income fluctuates with short-term market conditions.

In the future, we anticipate that our exposure to interest rate risk will primarily be related to our investment portfolio. We intend to invest any surplus funds in accordance with a policy approved by our board of directors which will specify the categories, allocations, and ratings of securities we may consider for investment. The primary objectives of our investment policy are to preserve principal and maintain proper liquidity to meet our operating requirements. Our investment policy also specifies credit quality standards for our investments and limits the amount of credit exposure to any single issue, issuer or type of investment.

Credit Risk

Our receivable from Roche as of March 31, 2016 and December 31, 2015 are amounts due from Roche entities located in the U.S. and Switzerland under the License Agreement with Roche.

Financial instruments that potentially subject us to concentration of credit risk consist of cash and cash equivalents and accounts receivable. We place our cash and cash equivalents with high credit quality financial institutions and pursuant to our investment policy, we limit the amount of credit exposure with any one financial institution. Deposits held with banks may exceed the amount of insurance provided on such deposits. We have not experienced any losses on our deposits of cash and cash equivalents.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our chief executive officer ("CEO") and chief financial officer ("CFO") evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as of the end of the period covered by this Form 10-Q.  Based on this evaluation, our CEO and CFO concluded that, as of March 31, 2016, our disclosure controls and procedures are designed and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during our fiscal quarter ended March 31, 2016 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

Internal control over financial reporting has inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements will not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures

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must reflect the fact that there are resource constraints and that management necessarily applies its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are not currently a party to any material legal proceedings. We may at times be involved in litigation and other legal claims in the ordinary course of business. When appropriate in management’s estimation, we may record reserves in our financial statements for pending litigation and other claims.

ITEM 1A. RISK FACTORS

Investing in our ordinary shares involves a high degree of risk.  Our Annual Report on Form 10-K for 2015 (filed with the SEC on February 25, 2016) includes a detailed discussion of our business and the risks to our business.  You should carefully read that Form 10-K.  You should also read and carefully consider the risks described below and the other information in this Quarterly Report on Form 10-Q.  The occurrence of any of the events or developments described below could harm our business, financial condition, results of operations and/or growth prospects. In such an event, the market price of our ordinary shares could decline, and you may lose all or part of your investment. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations.

Risks Relating to Our Financial Position, Our Need for Additional Capital and Our Business

We anticipate that we will incur losses for the foreseeable future and we may never sustain profitability.

We may not generate the cash that is necessary to finance our operations in the foreseeable future. We incurred net losses of $80.6 million, $7.2 million and $41.0 million for the years ended December 31, 2015, 2014 and 2013, respectively. We expect to continue to incur substantial losses for the foreseeable future as we:

• conduct our Phase 3, Phase 2b and Phase 1/2 clinical trials for NEOD001, conduct our Phase 1 clinical trial for PRX002, conduct our Phase 1 clinical trial for PRX003, and initiate additional clinical trials for these and other programs;

• develop and commercialize our product candidates, including NEOD001, PRX002 and PRX003;

• complete preclinical development of other product candidates and initiate clinical trials, if supported by positive preclinical data; and

• pursue our early stage research and seek to identify additional drug candidates and potentially acquire rights from third parties to drug candidates through licenses, acquisitions or other means.

We must generate significant revenue to achieve and maintain profitability. Even if we succeed in discovering, developing and commercializing one or more drug candidates, we may not be able to generate sufficient revenue and we may never be able to achieve or sustain profitability.

We will require additional capital to fund our operations, and if we are unable to obtain such capital, we will be unable to successfully develop and commercialize drug candidates.

As of March 31, 2016, we had cash and cash equivalents of $474.3 million. Although we believe, based on our current business plans, that our existing cash and cash equivalents will be sufficient to meet our obligations for at least the next twelve months, we anticipate that we will require additional capital in the future in order to continue the research and development, and eventually commercialization, of our drug candidates. Our future capital requirements will depend on many factors that are currently unknown to us, including, without limitation:

• the timing of initiation, progress, results and costs of our clinical trials, including our Phase 3, Phase 2b and Phase 1/2 clinical trials for NEOD001, our Phase 1 clinical trial for PRX002, and our Phase 1 clinical trial for PRX003;

• the timing, initiation, progress, results and costs of these and our other research, development and commercialization activities, including in connection with PRX002 under our License Agreement with Roche;

• the results of our research and preclinical studies;

• the costs of clinical manufacturing and of establishing commercial manufacturing arrangements and other commercialization needs;

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• the costs of preparing, filing and prosecuting patent applications and maintaining, enforcing and defending intellectual property-related claims;

• our ability to establish research collaborations, strategic collaborations, licensing or other arrangements;

• the costs to satisfy our obligations under potential future collaborations; and

• the timing, receipt, and amount of revenues or royalties, if any, from any approved drug candidates.

We have based our expectations relating to liquidity and capital resources on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect. Because of the numerous risks and uncertainties associated with the development and commercialization of our product candidates, we are unable to estimate the amounts of increased capital outlays and operating expenses associated with completing the development of our current product candidates.

In the pharmaceutical industry, the research and development process is lengthy and involves a high degree of risk and uncertainty. This process is conducted in various stages and, during each stage, there is a substantial risk that product candidates in our research and development pipeline will experience difficulties, delays or failures. This makes it difficult to estimate the total costs to complete our ongoing clinical trials and to estimate anticipated completion dates with any degree of accuracy, which raises concerns that attempts to quantify costs and provide estimates of timing may be misleading by implying a greater degree of certainty than actually exists.

In order to develop and obtain regulatory approval for our product candidates we will need to raise substantial additional funds. We expect to raise any such additional funds through public or private equity or debt financings, collaborative agreements with corporate partners or other arrangements. We cannot assure you that additional funds will be available when we need them on terms that are acceptable to us, or at all. General market conditions may make it very difficult for us to seek or obtain financing from the capital markets. If we raise additional funds by issuing equity securities, substantial dilution to existing shareholders would result. If we raise additional funds by incurring debt financing, the terms of the debt may involve significant cash payment obligations as well as covenants and specific financial ratios that may restrict our ability to operate our business. We may be required to relinquish rights to our technologies or drug candidates or grant licenses on terms that are not favorable to us in order to raise additional funds through strategic alliances, joint ventures or licensing arrangements.

If adequate funds are not available on a timely basis, we may be required to:

• terminate or delay clinical trials or other development for one or more of our drug candidates;

• delay arrangements for activities that may be necessary to commercialize our drug candidates;

• curtail or eliminate our drug research and development programs that are designed to identify new drug candidates; or

• cease operations.

In addition, if we do not meet our payment obligations to third parties as they come due, we may be subject to litigation claims. Even if we are successful in defending against these claims, litigation could result in substantial costs and distract management, and may have unfavorable results that could further adversely impact our financial condition.

Our future success depends on our ability to retain key personnel and to attract, retain and motivate qualified personnel.

We are highly dependent on key personnel, including Dr. Dale B. Schenk, our President and Chief Executive Officer. There can be no assurance that we will be able to retain Dr. Schenk or any of our key personnel. The loss of the services of Dr. Schenk or any other person on which we become highly dependent might impede the achievement of our research and development objectives. Recruiting and retaining qualified scientific personnel will also be critical to our success. We may not be able to attract and retain these personnel on acceptable terms given the competition among numerous pharmaceutical and biotechnology companies for similar personnel. We also experience competition for the hiring of scientific personnel from universities and research institutions.

We announced on December 2, 2014 that Dr. Schenk has been diagnosed with pancreatic cancer. He is undergoing treatment for that cancer.

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Our collaborators, prospective collaborators and suppliers may need assurances that our financial resources and stability on a stand-alone basis are sufficient to satisfy their requirements for doing or continuing to do business with us.

Some of our collaborators, prospective collaborators and suppliers may need assurances that our financial resources and stability on a stand-alone basis are sufficient to satisfy their requirements for doing or continuing to do business with us. If our collaborators, prospective collaborators or suppliers are not satisfied with our financial resources and stability, it could have a material adverse effect on our ability to develop our drug candidates, enter into licenses or other agreements and on our business, financial condition or results of operations.

Certain of our historical financial information is not necessarily representative of the results we would have achieved as a separate, publicly traded company and may not be a reliable indicator of our future results.

Prior to our separation from Elan on December 20, 2012, our financial results previously were included within the consolidated results of Elan. Therefore, certain historical financial information we have included or incorporated by reference in this report, to the extent it includes information for periods prior to our separation from Elan, might not reflect what our financial condition, results of operations and cash flows would have been had we been an independent, publicly traded company during those periods presented or what our results of operations, financial position and cash flows will be in the future. This is primarily because:

• our historical financial information reflects allocations for services historically provided to us by Elan, which allocations may not reflect the costs we will incur for similar services in the future as an independent company;

• subsequent to our separation from Elan, the cost of capital for our business has been and may continue to be higher than Elan’s cost of capital prior to the separation because Elan’s cost of debt was lower than ours has been and will likely continue to be; and

• our historical financial information does not reflect changes that we have incurred as a result of the separation from Elan, including changes in the cost structure, personnel needs, financing and operations of the contributed business as a result of the separation from Elan and from reduced economies of scale.

We are also responsible for the additional costs associated with being an independent, public company, including costs related to corporate governance and compliance with the rules of The Nasdaq Stock Market ("Nasdaq") and the SEC. In addition, we incur costs and expenses, including professional fees, to comply with Irish corporate and tax laws and financial reporting requirements and costs and expenses incurred in connection with holding the meetings of our board of directors in Ireland. Prior to our separation from Elan, our business was operated by Elan as part of its broader corporate organization, rather than as an independent company. Elan or one of its affiliates performed various corporate functions for us, including, but not limited to, legal, treasury, accounting, auditing, risk management, information technology, human resources, corporate affairs, tax administration, certain governance functions and external reporting. Our historical financial results for periods prior to our separation from Elan include allocations of corporate expenses from Elan for these and similar functions. These allocations of cash and non-cash expenses are less than the comparable expenses we have incurred thus far as a separate publicly traded company. Therefore, certain financial information in this report might not be indicative of our future performance as an independent company.

The agreements we entered into with Elan involve conflicts of interest and therefore may have materially disadvantageous terms to us.

We entered into certain agreements with Elan in connection with our separation from Elan, which set forth the main terms of the separation and provided a framework for our initial relationship with Elan. These agreements may have terms that are materially disadvantageous to us or are otherwise not as favorable as those that might be negotiated between unaffiliated third parties. In December 2013, Elan was acquired by Perrigo Company plc ("Perrigo"), and in February 2014 Perrigo caused Elan to sell all of its shares of Prothena in an underwritten offering. As a result of the acquisition of Elan by Perrigo and the subsequent sale of all of its shares of Prothena, Perrigo may be less willing to collaborate with us in connection with the agreements to which we and Elan are a party and other matters.

We may be adversely affected by earthquakes or other natural disasters

We have a key facility and operations in the San Francisco, California area, which in the past has experienced severe earthquakes. If an earthquake, other natural disaster or similar event were to occur and prevent us from using all or a significant portion of those operations or local critical infrastructure, or that otherwise disrupts our operations, it could be difficult or, in certain cases, impossible for us to continue our business for a substantial period of time. We have disaster recovery and business continuity plans, but they may prove to be inadequate in the event of a natural disaster or similar event. We may incur substantial expenses if our disaster recovery and business continuity plans prove to be inadequate. We do not carry earthquake insurance. Furthermore, third parties

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upon which we are materially dependent upon may be vulnerable to natural disasters or similar events.  Accordingly, such a natural disaster or similar event could have an adverse effect on our business, financial condition or results of operations.

Risks Related to the Discovery, Development and Regulatory Approval of Drug Candidates

Our success is largely dependent on the success of our research and development programs. Our drug candidates are in various stages of development and we may not be able to successfully discover, develop, obtain regulatory approval for or commercialize any drug candidates.

The success of our business depends substantially upon our ability to discover, develop, obtain regulatory approval for and commercialize our drug candidates successfully. Our research and development programs are prone to the significant and likely risks of failure inherent in drug development. We intend to continue to invest most of our time and financial resources in our research and development programs.

Although we have ongoing Phase 3, Phase 2b and Phase 1/2 clinical trials for NEOD001, a Phase 1 clinical trial for PRX002, and a Phase 1 clinical trial for PRX003, there is no assurance that these clinical trials will support further development of these drug candidates. In addition, we currently do not, and may never, have any other drug candidates in clinical trials and we have not identified drug candidates for many of our research programs.

Before obtaining regulatory approvals for the commercial sale of any drug candidate for a target indication, we must demonstrate with substantial evidence gathered in adequate and well-controlled clinical trials, and, with respect to approval in the U.S., to the satisfaction of the U.S. Food and Drug Administration (the "FDA") or, with respect to approval in other countries, similar regulatory authorities in those countries, that the drug candidate is safe and effective for use for that target indication. Satisfaction of these and other regulatory requirements is costly, time consuming, uncertain, and subject to unanticipated delays. Despite our efforts, our drug candidates may not:

• offer improvement over existing, comparable products;

• be proven safe and effective in clinical trials; or

• meet applicable regulatory standards.

Positive results in preclinical studies of a drug candidate may not be predictive of similar results in humans during clinical trials, and promising results from early clinical trials of a drug candidate may not be replicated in later clinical trials. Interim results of a clinical trial do not necessarily predict final results. A number of companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in late-stage clinical trials even after achieving promising results in early-stage development. Accordingly, the results from completed preclinical studies and clinical trials for our drug candidates may not be predictive of the results we may obtain in later stage trials or studies. Our preclinical studies or clinical trials may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional preclinical studies or clinical trials, or to discontinue clinical trials altogether.

Furthermore, we have not marketed, distributed or sold any products. Our success will, in addition to the factors discussed above, depend on the successful commercialization of our drug candidates, which may require:

• obtaining and maintaining commercial manufacturing arrangements with third-party manufacturers;

• collaborating with pharmaceutical companies or contract sales organizations to market and sell any approved drug; or

• acceptance of any approved drug in the medical community and by patients and third-party payors.

Many of these factors are beyond our control. We do not expect any of our drug candidates to be commercially available for several years and some or all may never become commercially available. Accordingly, we may never generate revenues through the sale of products.

If clinical trials of our drug candidates are prolonged, delayed, suspended or terminated, we may be unable to commercialize our drug candidates on a timely basis, which would require us to incur additional costs and delay our receipt of any revenue from potential product sales.

We cannot predict whether we will encounter problems with our Phase 3, Phase 2b or Phase 1/2 clinical trials for NEOD001, our Phase 1 clinical trial for PRX002, our Phase 1 clinical trial for PRX003, or any future clinical trials that will cause us or any regulatory authority to delay or suspend those clinical trials or delay the analysis of data derived from them. A number of events,

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including any of the following, could delay the completion of our planned clinical trials and negatively impact our ability to obtain regulatory approval for, and to market and sell, a particular drug candidate:

• conditions imposed on us by the FDA or any foreign regulatory authority regarding the scope or design of our clinical trials;

• delays in obtaining, or our inability to obtain, required approvals from institutional review boards ("IRBs") or other reviewing entities at clinical sites selected for participation in our clinical trials;

• insufficient supply or deficient quality of our drug candidates or other materials necessary to conduct our clinical trials;

• delays in obtaining regulatory agency agreement for the conduct of our clinical trials;

• lower than anticipated enrollment and retention rate of subjects in clinical trials for a variety of reasons, including size of patient population, nature of trial protocol, the availability of other treatments for the relevant disease and competition from other clinical trial programs for similar indications;

• serious and unexpected drug-related side effects experienced by patients in clinical trials; or

• failure of our third-party contractors and collaborators to meet their contractual obligations to us in a timely manner.

Clinical trials may also be delayed or terminated as a result of ambiguous or negative interim results. In addition, a clinical trial may be suspended or terminated by us, the FDA, the IRBs at the sites where the IRBs are overseeing a trial, or a data safety monitoring board ("DSMB") overseeing the clinical trial at issue, or other regulatory authorities due to a number of factors, including:

• failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols;

• inspection of the clinical trial operations or trial sites by the FDA or other regulatory authorities resulting in the imposition of a clinical hold;

• varying interpretation of data by the FDA or other regulatory authorities;

• requirement by the FDA or other regulatory authorities to perform additional studies;

• failure to achieve primary or secondary endpoints or other failure to demonstrate efficacy;

• unforeseen safety issues; or

• lack of adequate funding to continue the clinical trial.

Additionally, changes in regulatory requirements and guidance may occur and we may need to amend clinical trial protocols to reflect these changes. Amendments may require us to resubmit our clinical trial protocols to regulatory authorities and IRBs for reexamination, which may impact the cost, timing or successful completion of a clinical trial.

We do not know whether our clinical trials will be conducted as planned, will need to be restructured or will be completed on schedule, if at all. Delays in our clinical trials will result in increased development costs for our drug candidates. In addition, if we experience delays in the completion of, or if we terminate, any of our clinical trials, the commercial prospects for our drug candidates may be delayed or harmed and our ability to generate product revenues will be delayed or jeopardized. Furthermore, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of a drug candidate.

The regulatory approval processes of the FDA and comparable foreign authorities are lengthy, time consuming and inherently unpredictable, and if we are ultimately unable to obtain regulatory approval for our drug candidates, our business will be substantially harmed.

The time required to obtain approval by the FDA and comparable foreign authorities is inherently unpredictable but typically takes many years following the commencement of clinical trials and depends upon numerous factors, including the substantial discretion of the regulatory authorities. In addition, approval policies, regulations, or the type and amount of clinical data necessary to gain approval may change during the course of a drug candidate’s clinical development and may vary among jurisdictions. We have not obtained regulatory approval for any drug candidate and it is possible that none of our existing drug candidates or any drug candidates we may seek to develop in the future will ever obtain regulatory approval.

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Our drug candidates could fail to receive regulatory approval for many reasons, including the following:

• the FDA or comparable foreign regulatory authorities may disagree with the design or implementation of our clinical trials;

• we may be unable to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that a drug candidate is safe and effective for its proposed indication;

• the results of clinical trials may not meet the level of statistical significance required by the FDA or comparable foreign regulatory authorities for approval;

• we may be unable to demonstrate that a drug candidate’s clinical and other benefits outweigh its safety risks;

• the FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical trials;

• the data collected from clinical trials of our drug candidates may not be sufficient to support the submission of a Biologics License Application ("BLA") or other submission or to obtain regulatory approval in the U.S. or elsewhere;

• the FDA or comparable foreign regulatory authorities may fail to approve the manufacturing processes or facilities of third-party manufacturers with which we contract for clinical and commercial supplies; or

• the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval.

This lengthy approval process as well as the unpredictability of future clinical trial results may result in our failing to obtain regulatory approval to market our drug candidates, which would significantly harm our business, results of operations and prospects. In addition, even if we were to obtain approval, regulatory authorities may approve any of our drug candidates for fewer or more limited indications than we request, may not approve the price we intend to charge for our products, may grant approval contingent on the performance of costly post-marketing clinical trials, or may approve a drug candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that drug candidate. Any of the foregoing scenarios could materially harm the commercial prospects for our drug candidates.

We rely on obtaining and maintaining orphan drug exclusivity for NEOD001, if approved, but cannot ensure that we will enjoy market exclusivity in a particular market.

NEOD001 has been granted orphan drug designation by the FDA for the treatment of AL and AA amyloidosis and by the European Medicines Agency (the "EMA") for the treatment of AL amyloidosis. Under the Orphan Drug Act, the FDA may designate a product as an orphan drug if it is intended to treat a rare disease or condition, defined as a disease or condition that affects a patient population of fewer than 200,000 in the U.S., or a patient population greater than 200,000 in the U.S. where there is no reasonable expectation that the cost of developing the drug will be recovered from sales in the U.S. In the European Union (the "EU"), the EMA’s Committee for Orphan Medicinal Products grants orphan drug designation to promote the development of products that are intended for the diagnosis, prevention, or treatment of a life-threatening or chronically debilitating condition affecting not more than five in 10,000 persons in the EU. Additionally, designation is granted for products intended for the diagnosis, prevention, or treatment of a life-threatening, seriously debilitating or serious and chronic condition when, without incentives, it is unlikely that sales of the drug in the EU would be sufficient to justify the necessary investment in developing the drug or biological product or where there is no satisfactory method of diagnosis, prevention, or treatment, or, if such a method exists, the medicine must be of significant benefit to those affected by the condition.

In the U.S., orphan drug designation entitles a party to financial incentives such as opportunities for grant funding towards clinical trial costs, tax advantages, and user-fee waivers. In addition, if a product receives the first FDA approval for the indication for which it has orphan designation, the product is entitled to orphan drug exclusivity, which means the FDA may not approve any other application to market the same drug for the same indication for a period of seven years, except in limited circumstances, such as a showing of clinical superiority over the product with orphan exclusivity or where the manufacturer is unable to assure sufficient product quantity. In the EU, orphan drug designation entitles a party to financial incentives such as reduction of fees or fee waivers and ten years of market exclusivity following drug or biological product approval. This period may be reduced to six years if the orphan drug designation criteria are no longer met, including where it is shown that the product is sufficiently profitable not to justify maintenance of market exclusivity.

Even though we have obtained orphan drug designation for NEOD001 in the U.S. and the EU, we may not be the first to obtain marketing approval for any particular orphan indication due to the uncertainties associated with developing pharmaceutical products. Further, even if we obtain orphan drug designation for a product, that exclusivity may not effectively protect the product

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from competition from different drugs with different active moieties which may be approved for the same condition. Orphan drug designation neither shortens the development time or regulatory review time of a drug nor gives the drug any advantage in the regulatory review or approval process. Even if one of our drug candidates receives orphan exclusivity, the FDA may still approve other drugs that have a different active ingredient for use in treating the same indication or disease, or may approve an application to market the same drug for the same indication that shows clinical superiority over our product. Furthermore, the FDA may waive orphan exclusivity if we are unable to manufacture sufficient supply of our product.

Even if our drug candidates receive regulatory approval in one country or jurisdiction, we may never receive approval or commercialize our products in other countries or jurisdictions.

In order to market drug candidates in a particular country or jurisdiction, we must establish and comply with numerous and varying regulatory requirements of that country or jurisdiction, including with respect tosafety and efficacy. Approval procedures vary among countries and can involve additional product testing and additional administrative review periods. The time required to obtain approval in other countries might differ from that required to obtain, for example, FDA approval in the U.S. The regulatory approval process in other countries may include all of the risks detailed above regarding FDA approval in the U.S. as well as other risks. Regulatory approval in one country or jurisdiction does not ensure regulatory approval in another country or jurisdiction, but a failure or delay in obtaining regulatory approval in one country may have a negative effect on the regulatory process in others. Failure to obtain regulatory approval in one country or jurisdiction or any delay or setback in obtaining such approval would impair our ability to develop other markets for our drug candidates.

Both before and after marketing approval, our drug candidates are subject to ongoing regulatory requirements and continued regulatory review, and if we fail to comply with these continuing requirements, we could be subject to a variety of sanctions and the sale of any approved products could be suspended.

Both before and after regulatory approval to market a particular drug candidate, the manufacturing, labeling, packaging, adverse event reporting, storage, advertising, promotion, distribution and record keeping related to the product are subject to extensive, ongoing regulatory requirements. These requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with current good manufacturing practice ("cGMP") requirements and current good clinical practice ("cGCP") requirements for any clinical trials that we conduct post-approval. Any regulatory approvals that we receive for our drug candidates may also be subject to limitations on the approved indicated uses for which the product may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing testing, including Phase 4 clinical trials, and surveillance to monitor the safety and efficacy of the drug candidate. Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with our third-party manufacturers or manufacturing processes, or failure to comply with the regulatory requirements of the FDA and other applicable U.S. and foreign regulatory authorities could subject us to administrative or judicially imposed sanctions, including:

• restrictions on the marketing of our products or their manufacturing processes;

• warning letters;

• civil or criminal penalties;

• fines;

• injunctions;

• product seizures or detentions;

• import or export bans;

• voluntary or mandatory product recalls and related publicity requirements;

• suspension or withdrawal of regulatory approvals;

• total or partial suspension of production; and

• refusal to approve pending applications for marketing approval of new products or supplements to approved applications.

The FDA’s policies may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our drug candidates. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained, which would adversely affect our business, prospects and ability to achieve or sustain profitability.

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If side effects are identified during the time our drug candidates are in development or after they are approved and on the market, we may choose to or be required to perform lengthy additional clinical trials, discontinue development of the affected drug candidate, change the labeling of any such products, or withdraw any such products from the market, any of which would hinder or preclude our ability to generate revenues.

Undesirable side effects caused by our drug candidates could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or other comparable foreign authorities. The drug-related side effects could affect patient recruitment or the ability of enrolled patients to complete the trial or result in potential product liability claims. Any of these occurrences may harm our business, financial condition and prospects significantly. Even if any of our drug candidates receives marketing approval, as greater numbers of patients use a drug following its approval, an increase in the incidence of side effects or the incidence of other post-approval problems that were not seen or anticipated during pre-approval clinical trials could result in a number of potentially significant negative consequences, including:

• regulatory authorities may withdraw their approval of the product;

• regulatory authorities may require the addition of labeling statements, such as warnings or contraindications;

• we may be required to change the way the product is administered, conduct additional clinical trials or change the labeling of the product;

• we could be sued and held liable for harm caused to patients; and

• our reputation may suffer.

Any of these events could substantially increase the costs and expenses of developing, commercializing and marketing any such drug candidates or could harm or prevent sales of any approved products.

We deal with hazardous materials and must comply with environmental laws and regulations, which can be expensive and restrict how we do business.

Some of our research and development activities involve the controlled storage, use, and disposal of hazardous materials. We are subject to federal, state, local and international laws and regulations governing the use, manufacture, storage, handling, and disposal of these hazardous materials. Although we believe that our safety procedures for the handling and disposing of these materials comply with the standards prescribed by these laws and regulations, we cannot eliminate the risk of accidental contamination or injury from these materials. In the event of an accident, state or federal authorities may curtail our use of these materials, and we could be liable for any civil damages that result, which may exceed our financial resources and may seriously harm our business. Because we believe that our laboratory and materials handling policies and practices sufficiently mitigate the likelihood of materials liability or third-party claims, we currently carry no insurance covering such claims. An accident could damage, or force us to shut down, our operations.

Risks Related to the Commercialization of Our Drug Candidates

Even if any of our drug candidates receives regulatory approval, if such approved product does not achieve broad market acceptance, the revenues that we generate from sales of the product will be limited.

Even if any drug candidates we may develop or acquire in the future obtain regulatory approval, they may not gain broad market acceptance among physicians, healthcare payors, patients and the medical community. The degree of market acceptance for any approved drug candidate will depend on a number of factors, including:

• the indication and label for the product and the timing of introduction of competitive products;

• demonstration of clinical safety and efficacy compared to other products;

• prevalence and severity of adverse side effects;

• availability of coverage and adequate reimbursement from managed care plans and other third-party payors;

• convenience and ease of administration; 

• cost-effectiveness;

• other potential advantages of alternative treatment methods; and

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• the effectiveness of marketing and distribution support of the product.

Consequently, even if we discover, develop and commercialize a product, the product may fail to achieve broad market acceptance and we may not be able to generate significant revenue from the product.

The success of PRX002 in the United States is dependent upon the strength and performance of our collaboration with Roche. If we fail to maintain our existing collaboration with Roche, such termination would likely have a material adverse effect on our ability to develop and commercialize PRX002 and our business. Furthermore, if we opt out of profit and loss sharing with Roche, our revenues from PRX002 will be reduced.

The success of sales of PRX002 in the U.S. will be dependent on the ability of Roche to successfully develop in collaboration with us, and launch and commercialize PRX002, if approved by the FDA, pursuant to the License Agreement we entered into in December 2013. Our collaboration with Roche is complex, particularly with respect to future U.S. commercialization of PRX002, with respect to financial provisions, allocations of responsibilities, cost estimates and the respective rights of the parties in decision making. Accordingly, significant aspects of the development and commercialization of PRX002 require Roche to execute its responsibilities under the arrangement, or require Roche’s agreement or approval, prior to implementation, which could cause significant delays that may materially impact the potential success of PRX002 in the U.S. In addition, Roche may under some circumstances independently develop products that compete with PRX002, or Roche may decide to not commit sufficient resources to the development, commercialization, marketing and distribution of PRX002. If we are not able to collaborate effectively with Roche on plans and efforts to develop and commercialize PRX002, our business could be materially adversely affected.

Furthermore, the terms of the License Agreement provide that Roche has the ability to terminate such arrangement for any reason after the first anniversary of the License Agreement at any time upon 90 days’ notice (if prior to first commercial sale) or 180 days’ notice (if after first commercial sale). For example, Roche may determine that the outcomes of clinical trials have made PRX002 a less attractive commercial product and terminate our collaboration. If the License Agreement is terminated, our business and our ability to generate revenue from sales of PRX002 could be substantially harmed as we will be required to develop, commercialize and build our own sales and marketing organization or enter into another strategic collaboration in order to develop and commercialize PRX002 in the U.S. Such efforts may not be successful and, even if successful, would require substantial time and resources to carry out.

The manner in which Roche launches PRX002, including the timing of launch and potential pricing, will have a significant impact on the ultimate success of PRX002 in the U.S, and the success of the overall commercial arrangement with Roche. If launch of commercial sales of PRX002 in the U.S. by Roche is delayed or prevented, our revenue will suffer and our stock price may decline. Further, if launch and resulting sales by Roche are not deemed successful, our business would be harmed and our stock price may decline. Any lesser effort by Roche in its PRX002 sales and marketing efforts may result in lower revenue and thus lower profits with respect to the U.S. The outcome of Roche’s commercialization efforts in the U.S. could also have a negative effect on investors’ perception of potential sales of PRX002 outside of the U.S., which could also cause a decline in our stock price.

Furthermore, pursuant to the License Agreement, we are responsible for 30% of all development and commercialization costs for PRX002 for the treatment of Parkinson’s disease in the U.S., and for any future Licensed Products and/or indications that we opt to co-develop, in each case unless we elect to opt out of profit and loss sharing. If we elect to opt out of profit and loss sharing, we will instead receive sales milestones and royalties, and our revenue, if any, from PRX002 will be reduced.

Our right to co-develop PRX002 and other Licensed Products under the License Agreement will terminate if we commence certain studies for a competitive product that treats Parkinson’s disease or other indications that we opted to co-develop. In addition, our right to co-promote PRX002 and other Licensed Products will terminate if we commence a Phase 3 study for a competitive product that treats Parkinson’s disease.

 Moreover, under the terms of the License Agreement, we rely on Roche to provide us estimates of their costs, revenue and revenue adjustments and royalties, which estimates we use in preparing our quarterly and annual financial reports. If the underlying assumptions on which Roche’s estimates were based prove to be incorrect, actual results or revised estimates supplied by Roche that are materially different from the original estimates could require us to adjust the estimates included in our reported financial results. If material, these adjustments could require us to restate previously reported financial results, which could have a negative effect on our stock price.

Our ability to receive any significant revenue from PRX002 will be dependent on Roche’s efforts and our participation in profit and loss sharing, and may result in lower levels of income than if we marketed or developed our product candidates entirely on our own. Roche may not fulfill its obligations or carry out marketing activities for PRX002 as diligently as we would like. We could also become involved in disputes with Roche, which could lead to delays in or termination of development or commercialization activities and time-consuming and expensive litigation or arbitration. If Roche terminates or breaches the

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License Agreement, or otherwise decides not to complete its obligations in a timely manner, the chances of successfully developing, commercializing or marketing PRX002 would be materially and adversely affected.

Outside of the United States, we are solely dependent on the efforts and commitments of Roche, either directly or through third parties, to further develop and commercialize PRX002. If Roche’s efforts are unsuccessful, our ability to generate future product sales from PRX002 outside the United States would be significantly reduced.

Under our License Agreement, outside of the U.S., Roche has responsibility for developing and commercializing PRX002 and any future Licensed Products targeting α-synuclein. As a consequence, any progress and commercial success outside of the U.S. is dependent solely on Roche’s efforts and commitment to the program. For example, Roche may delay, reduce or terminate development efforts relating to PRX002 outside of the U.S., or under some circumstances independently develop products that compete with PRX002, or decide not to commit sufficient resources to the commercialization, marketing and distribution of PRX002.

In the event that Roche does not diligently develop and commercialize PRX002, the License Agreement provides us the right to terminate the License Agreement in connection with a material breach uncured for 90 days after notice thereof. However, our ability to enforce the provisions of the License Agreement so as to obtain meaningful recourse within a reasonable timeframe is uncertain. Further, any decision to pursue available remedies including termination would impact the potential success of PRX002, including inside the U.S., and we may choose not to terminate as we may not be able to find another partner and any new collaboration likely will not provide comparable financial terms to those in our arrangement with Roche. In the event of our termination, this may require us to develop and commercialize PRX002 on our own, which is likely to result in significant additional expense and delay. Significant changes in Roche’s business strategy, resource commitment and the willingness or ability of Roche to complete its obligations under our arrangement could materially affect the potential success of the product. Furthermore, if Roche does not successfully develop and commercialize PRX002 outside of the U.S., our potential to generate future revenue outside of the U.S. would be significantly reduced.

If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to market and sell approved products, we may be unable to generate product revenue.

We do not currently have an organization for the sales, marketing and distribution of pharmaceutical products. In order to market any products that may be approved by the FDA, we must build our sales, marketing, managerial and other non-technical capabilities or make arrangements with third parties to perform these services.

We have entered into the License Agreement with Roche for the development of PRX002 and may develop our own sales force and marketing infrastructure to co-promote PRX002 in the U.S. for the treatment of Parkinson’s disease and any future Licensed Products approved for Parkinson’s disease in the U.S. If we exercise our co-promotion option and are unable to develop our own sales force and marketing infrastructure to effectively commercialize PRX002 or other Licensed Products, our ability to generate additional revenue from potential sales of PRX002 or such products in the U.S. may be harmed. In addition, our right to co-promote PRX002 and other Licensed Products will terminate if we commence a Phase 3 study for a competitive product that treats Parkinson’s disease.

For our other approved products, if we are unable to establish adequate sales, marketing and distribution capabilities, whether independently or with third parties, we may not be able to generate product revenue and may not become profitable.

If government and third-party payors fail to provide coverage and adequate reimbursement rates for any of our drug candidates that receive regulatory approval, our revenue and prospects for profitability will be harmed.

In both domestic and foreign markets, our sales of any future products will depend in part upon the availability of reimbursement from third-party payors. Such third-party payors include government health programs such as Medicare, managed care providers, private health insurers, and other organizations. There is significant uncertainty related to the third-party coverage and reimbursement of newly approved drugs. Coverage and reimbursement may not be available for any drug that we or our collaborators commercialize and, even if these are available, the level of reimbursement may not be satisfactory. Third-party payors often rely upon Medicare coverage policy and payment limitations in setting their own reimbursement policies. Third-party payors are also increasingly attempting to contain healthcare costs by demanding price discounts or rebates limiting both coverage and the amounts that they will pay for new drugs, and, as a result, they may not cover or provide adequate payment for our drug candidates. We might need to conduct post-marketing studies in order to demonstrate the cost-effectiveness of any future products to such payors’ satisfaction. Such studies might require us to commit a significant amount of management time and financial and other resources. Our future products might not ultimately be considered cost-effective. Adequate third-party reimbursement might not be available to enable us to maintain price levels sufficient to realize an appropriate return on investment in product development. If coverage and adequate reimbursement are not available or reimbursement is available only to limited levels, we or our collaborators may not be able to successfully commercialize any product candidates for which marketing approval is obtained.

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The regulations that govern marketing approvals, pricing, coverage and reimbursement for new drugs vary widely from country to country. Current and future legislation may significantly change the approval requirements in ways that could involve additional costs and cause delays in obtaining approvals. Some countries require approval of the sale price of a drug before it can be marketed. In many countries, the pricing review period begins after marketing or licensing approval is granted. In some foreign markets, prescription pharmaceutical pricing remains subject to continuing governmental control even after initial approval is granted. As a result, we or our collaborators might obtain marketing approval for a drug in a particular country, but then be subject to price regulations that delay commercial launch of the drug, possibly for lengthy time periods, and negatively impact our ability to generate revenue from the sale of the drug in that country. Adverse pricing limitations may hinder our ability to recoup our investment in one or more drug candidates, even if our drug candidates obtain marketing approval.

U.S. and foreign governments continue to propose and pass legislation designed to reduce the cost of healthcare. In the U.S., we expect that there will continue to be federal and state proposals to implement similar governmental controls. In addition, recent changes in the Medicare program and increasing emphasis on managed care in the U.S. will continue to put pressure on pharmaceutical product pricing. For example, in 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (collectively, the “Healthcare Reform Law”), was enacted. The Healthcare Reform Law substantially changes the way healthcare is financed by both governmental and private insurers and significantly affects the pharmaceutical industry. Among the provisions of the Healthcare Reform Law of importance to the pharmaceutical industry are the following:

• an annual, nondeductible fee on any entity that manufactures or imports certain branded prescription drugs and biologic agents, apportioned among these entities according to their market share in certain government healthcare programs;

• an increase in the minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program to 23.1% and 13.0% of the average manufacturer price for branded and generic drugs, respectively;

• expansion of healthcare fraud and abuse laws, including the False Claims Act and the Anti-Kickback Statute, new government investigative powers and enhanced penalties for non-compliance;

• a new Medicare Part D coverage gap discount program, under which manufacturers must agree to offer 50 percent point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D;

• extension of manufacturers’ Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations;

• expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to additional individuals and by adding new mandatory eligibility categories for certain individuals with income at or below 133% of the federal poverty level, thereby potentially increasing a manufacturer’s Medicaid rebate liability;

• a licensure framework for follow-on biologic products;

• expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program;

• new requirements under the federal Open Payments program and its implementing regulations;

• a new requirement to annually report drug samples that manufacturers and distributors provide to physicians; and

• a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research.

In addition, other legislative changes have been proposed and adopted since the Healthcare Reform Law was enacted. These changes include aggregate reductions to Medicare payments to providers of up to 2% per fiscal year, which went into effect in 2013 and will stay in effect through 2024 unless additional congressional action is taken. In 2013, President Obama signed into law the American Taxpayer Relief Act of 2012, which, among other things, further reduced Medicare payments to several types of providers and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. These new laws may result in additional reductions in Medicare and other healthcare funding, which could have a material adverse effect on customers for our drugs, if approved, and, accordingly, our financial operations.

We expect that the Healthcare Reform Law, as well as other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and in additional downward pressure on the price that we receive for any approved drug. Legislation and regulations affecting the pricing of pharmaceuticals might change before our drug candidates are approved

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for marketing. Any reduction in reimbursement from Medicare or other government healthcare programs may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability or commercialize our drugs.

 There can be no assurance that our drug candidates, if they are approved for sale in the U.S. or in other countries, will be considered medically reasonable and necessary for a specific indication, that they will be considered cost-effective by third-party payors, that coverage or an adequate level of reimbursement will be available, or that third-party payors’ reimbursement policies will not adversely affect our ability to sell our drug candidates profitably if they are approved for sale.

The markets for our drug candidates are subject to intense competition. If we are unable to compete effectively, our drug candidates may be rendered noncompetitive or obsolete.

The research, development and commercialization of new drugs is highly competitive. We will face competition with respect to all drug candidates we may develop or commercialize in the future from pharmaceutical and biotechnology companies worldwide. The key factors affecting the success of any approved product will be its indication, label, efficacy, safety profile, drug interactions, method of administration, pricing, coverage, reimbursement and level of promotional activity relative to those of competing drugs.

Furthermore, many large pharmaceutical and biotechnology companies, academic institutions, governmental agencies and other public and private research organizations are pursuing the development of novel drugs that target the same indications we are targeting with our research and development program. We face, and expect to continue to face, intense and increasing competition as new products enter the market and advanced technologies become available. Many of our competitors have:

• significantly greater financial, technical and human resources than we have and may be better equipped to discover, develop, manufacture and commercialize drug candidates;

• more extensive experience in preclinical testing and clinical trials, obtaining regulatory approvals and manufacturing and marketing pharmaceutical products;

• drug candidates that have been approved or are in late-stage clinical development; and/or

• collaborative arrangements in our target markets with leading companies and research institutions.

Competitive products may render our research and development program obsolete or noncompetitive before we can recover the expenses of developing and commercializing our drug candidates. Furthermore, the development of new treatment methods and/or the widespread adoption or increased utilization of any vaccine or development of other products or treatments for the diseases we are targeting could render any of our drug candidates noncompetitive, obsolete or uneconomical. If we successfully develop and obtain approval for a drug candidate, we will face competition based on the safety and effectiveness of the approved product, the timing of its entry into the market in relation to competitive products in development, the availability and cost of supply, marketing and sales capabilities, coverage, reimbursement, price, patent position and other factors. Even if we successfully develop drug candidates but those drug candidates do not achieve and maintain market acceptance, our business will not be successful.

Our drug candidates for which we intend to seek approval as biologic products may face competition sooner than anticipated.

Our drug candidates are regulated by the FDA as biologic products and we intend to seek approval for these products pursuant to the BLA pathway. The Biologics Price Competition and Innovation Act of 2009 (the "BPCIA") created an abbreviated pathway for the approval of biosimilar and interchangeable biologic products. The abbreviated regulatory pathway establishes legal authority for the FDA to review and approve biosimilar biologics, including the possible designation of a biosimilar as “interchangeable” based on its similarity to an existing brand product. Under the BPCIA, an application for a biosimilar product cannot be approved by the FDA until 12 years after the original branded product was approved under a BLA. The law is complex and is still being interpreted and implemented by the FDA. As a result, its ultimate impact, implementation, and meaning are subject to uncertainty. While it is uncertain when such processes intended to implement BPCIA may be fully adopted by the FDA, any such processes could have a material adverse effect on the future commercial prospects for our biologic products.

We believe that any of our drug candidates approved as a biologic product under a BLA should qualify for the 12-year period of exclusivity. However, there is a risk that this exclusivity could be shortened due to congressional action or otherwise, or that the FDA will not consider our drug candidates to be reference products for competing products, potentially creating the opportunity for generic competition sooner than anticipated. Moreover, the extent to which a biosimilar, once approved, will be substituted for any one of our reference products in a way that is similar to traditional generic substitution for non-biologic products is not yet clear, and will depend on a number of marketplace and regulatory factors that are still developing.

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We may be subject, directly or indirectly, to federal and state anti-kickback, fraud and abuse, false claims, physician payment transparency, health information privacy and security, and other healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm, administrative burdens and diminished profits and future earnings.

If we obtain FDA approval for any of our drug candidates and begin commercializing those products in the U.S., our operations may be directly, or indirectly through our customers, subject to various federal and state fraud and abuse and other healthcare laws and regulations, including, without limitation, the federal Anti-Kickback Statute and the federal False Claims Act, which may constrain the business or financial arrangements and relationships through which we sell, market and distribute any drugs for which we obtain marketing approval. In addition, we may be subject to physician payment transparency laws and patient privacy regulation by both the federal government and the states and foreign jurisdictions in which we conduct our business. The laws that may affect our ability to operate include:

• the federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase or recommendation of an item or service reimbursable under a federal healthcare program, such as the Medicare and Medicaid programs;

• federal civil and criminal false claims laws and civil monetary penalty laws, including the federal False Claims Act, which impose criminal and civil penalties, including civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other third-party payors that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government;

• the federal Health Insurance Portability and Accountability Act of 1996 ("HIPAA"), which created new federal criminal statutes that impose criminal and civil liability for executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters;

• the federal Physician Payment Sunshine Act, which requires manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to the Centers for Medicare & Medicaid Services ("CMS") information related to “payments or other transfers of value” made to physicians, which is defined to include doctors, dentists, optometrists, podiatrists and chiropractors, and teaching hospitals and applicable manufacturers and applicable group purchasing organizations to report annually to CMS ownership and investment interests held by the physicians and their immediate family members. The period between August 1, 2013 and December 31, 2013 was the first reporting period, and manufacturers were required to report aggregate payment data by March 31, 2014, and were required to report detailed payment data and submit legal attestation to the accuracy of such data during Phase 2 of the program (which began in May 2014). Thereafter, manufacturers must submit reports by the 90th day of each subsequent calendar year;

• HIPAA, as amended by the Health Information Technology and Clinical Health Act, and its implementing regulations, which impose obligations on covered healthcare providers, health plans, and healthcare clearinghouses, as well as their business associates that create, receive, maintain or transmit individually identifiable health information for or on behalf of a covered entity, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; and

• analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers; state and foreign laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers; state and foreign laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and state and foreign laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.

Further, the Healthcare Reform Law, among other things, amended the intent requirements of the federal Anti-Kickback Statute and the criminal statutes governing healthcare fraud. A person or entity can now be found guilty of violating the statute without actual knowledge of the statute or specific intent to violate it. In addition, the Healthcare Reform Law provided that the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal False Claims Act.

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Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations may involve substantial costs. It is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our operations are found to be in violation of any of the laws described above or any other governmental regulations that apply to us, we may be subject to significant civil, criminal, and administrative penalties, including, without limitation, exclusion from participation in government healthcare programs, such as Medicare and Medicaid, imprisonment, damages, fines and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations. If any of the physicians or other healthcare providers or entities with whom we expect to do business, including our collaborators, is found not to be in compliance with applicable laws, it may be subject to criminal, civil or administrative sanctions, including exclusions from participation in government healthcare programs, which could also adversely affect our business.

If a successful product liability or clinical trial claim or series of claims is brought against us for uninsured liabilities or in excess of insured liabilities, we could incur substantial liability.

The use of our drug candidates in clinical trials and the sale of any products for which we obtain marketing approval will expose us to the risk of product liability and clinical trial liability claims. Product liability claims might be brought against us by consumers, health care providers or others selling or otherwise coming into contact with our products. Clinical trial liability claims may be filed against us for damages suffered by clinical trial subjects or their families. If we cannot successfully defend ourselves against product liability claims, we could incur substantial liabilities. In addition, regardless of merit or eventual outcome, product liability claims may result in:

• decreased demand for any approved drug candidates;

• impairment of our business reputation;

• withdrawal of clinical trial participants;

• costs of related litigation;

• distraction of management’s attention;

• substantial monetary awards to patients or other claimants; and

• loss of revenues; and the inability to successfully commercialize any approved drug candidates.

We currently have clinical trial liability insurance coverage in the aggregate amount of $10.0 million for all of our clinical trials in all jurisdictions; we have an additional $5.0 million in coverage for certain clinical trials in certain jurisdictions. However, our insurance coverage may not be sufficient to reimburse us for any expenses or losses we may suffer. Moreover, insurance coverage is becoming increasingly expensive, and, in the future, we may not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts to protect us against losses due to liability. If and when we obtain marketing approval for any of our drug candidates, we intend to expand our insurance coverage to include the sale of commercial products; however, we may be unable to obtain this product liability insurance on commercially reasonable terms. On occasion, large judgments have been awarded in class action lawsuits based on drugs that had unanticipated side effects. A successful product liability claim or series of claims brought against us could cause our ordinary share price to decline and, if judgments exceed our insurance coverage, could decrease our cash and adversely affect our business.

Risks Related to Our Dependence on Third Parties

We rely on third parties to conduct our clinical trials, and those third parties may not perform satisfactorily, including failing to meet established deadlines for the completion of any such clinical trials.

We do not have the ability to independently conduct clinical trials for our drug candidates, and we rely on third parties, such as consultants, contract research organizations, medical institutions, and clinical investigators, to assist us with these activities. Our reliance on these third parties for clinical development activities results in reduced control over these activities. Furthermore, these third parties may also have relationships with other entities, some of which may be our competitors. Although we have and will enter into agreements with these third parties, we will be responsible for confirming that our clinical trials are conducted in accordance with their general investigational plans and protocols. Moreover, the FDA requires us to comply with regulations and standards, commonly referred to as cGCPs, for conducting, recording and reporting the results of clinical trials to assure that data and reported results are credible and accurate and that the trial participants are adequately protected. Our reliance on third parties does not relieve us of these responsibilities and requirements. If we or any of our third party contractors fail to comply with applicable cGCPs, the clinical data generated in our clinical trials may be deemed unreliable and the FDA, EMA or comparable

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foreign regulatory authorities may require us to perform additional clinical trials before approving our marketing applications. We cannot assure you that upon inspection by a given regulatory authority, such regulatory authority will determine that any of our clinical trials complies with cGCP regulations. In addition, our clinical trials must be conducted with product produced under cGMP regulations. Our failure to comply with these regulations may require us to repeat clinical trials, which would delay the regulatory approval process.

 To date, we believe our consultants, contract research organizations and other third parties with which we are working have performed well; however, if these third parties do not successfully carry out their contractual duties, meet expected deadlines, or comply with applicable regulations, we may be required to replace them. Although we believe that there are a number of other third-party contractors we could engage to continue these activities, we may not be able to enter into arrangements with alternative third-party contractors or to do so on commercially reasonable terms, which may result in a delay of our planned clinical trials. Accordingly, we may be delayed in obtaining regulatory approvals for our drug candidates and may be delayed in our efforts to successfully develop our drug candidates.

In addition, our third-party contractors are not our employees, and except for remedies available to us under our agreements with such third-party contractors, we cannot control whether or not they devote sufficient time and resources to our ongoing clinical, nonclinical and preclinical programs. If third-party contractors do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols, regulatory requirements or for other reasons, our clinical trials may be extended, delayed or terminated and we may not be able to obtain regulatory approval for or successfully commercialize our drug candidates. As a result, our results of operations and the commercial prospects for our drug candidates would be harmed, our costs could increase and our ability to generate revenues could be delayed.

If we do not establish additional strategic collaborations, we may have to alter our research and development plans.

Our drug research and development programs and potential commercialization of our drug candidates will require substantial additional cash to fund expenses. Our strategy includes potentially collaborating with additional leading pharmaceutical and biotechnology companies to assist us in furthering development and potential commercialization of some of our drug candidates, in some or all geographies. It may be difficult to enter into one or more of such collaborations in the future. We face significant competition in seeking appropriate collaborators and these collaborations are complex and time-consuming to negotiate and document. We may not be able to negotiate collaborations on acceptable terms, or at all, in which case we may have to curtail the development of a particular drug candidate, reduce or delay its development program or one or more of our other development programs, delay its potential commercialization or increase our expenditures and undertake development or commercialization activities at our own expense. If we elect to increase our expenditures to fund development or commercialization activities on our own, we will need to obtain additional capital, which may not be available to us on acceptable terms, or at all. If we do not have sufficient funds, we will not be able to bring our drug candidates to market and generate product revenue.

We have no manufacturing capacity and depend on third-party manufacturers to produce our preclinical and clinical trial drug supplies, and will depend on third-party manufacturers to produce any drug supplies for commercial sale.

We do not own or operate facilities for the manufacture, storage, testing or distribution of preclinical or clinical supplies of any of our drug candidates. We instead contract with and rely on third-parties to manufacture, store, test and distribute pre-clinical and clinical supplies of our drug candidates, and we plan to continue to do so for the foreseeable future.

Boehringer Ingelheim Biopharmaceuticals GmbH & Co. KG (“BI”) has manufactured and is contracted to continue to manufacture clinical supplies of our drug candidate NEOD001 for our Phase 1/2, Phase 2b and Phase 3 clinical trials. We are dependent on BI to continue to manufacture these clinical supplies. We have contracted with Rentschler Biotechnologie GmbH (“Rentschler”) to develop the capability to manufacture drug substance for future commercial supply of NEOD001, if we obtain regulatory approval to market NEOD001. The technology transfer from BI to Rentschler, in order for Rentschler to develop that manufacturing capability, is on-going. In order to be able to use drug substance supplied by Rentschler for commercial purposes, we will need to first establish comparability of drug substance manufactured by Rentschler with clinical supplies manufactured by BI and used by us in clinical development of NEOD001.

BI also manufactured clinical supplies of our drug candidate PRX002 for our completed Phase 1 single ascending dose and on-going multiple ascending dose trials. It is intended that Roche, with whom we are collaborating on development of PRX002, will manufacture clinical supplies for any Phase 2 and subsequent clinical trials. The technology transfer from BI to Roche, in order for Roche to assume that manufacturing, has been completed.

BI is also our third-party manufacturer of clinical supplies of our drug candidate PRX003. We are dependent on BI to continue to manufacture these clinical supplies.

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Any performance failure or capacity limitation on the part of our existing or future third-party manufacturers could delay preclinical or clinical development or regulatory approval of our drug candidates or commercialization of any approved products, which could result in additional losses, deprive us of potential product revenue and have an adverse effect on our business, financial condition and results of operations.

Our drug candidates require precise, high quality manufacturing that meet regulatory requirements and standards. Failure by our third-party manufacturers to achieve and maintain high manufacturing standards could result in patient injury or death, product recalls or withdrawals, delays or failures in testing or delivery, cost overruns, or other problems that could seriously hurt our business. Third-party manufacturers could encounter difficulties involving production yields, quality control, and quality assurance. These manufacturers are subject to ongoing periodic and unannounced inspections by the FDA, EMA and other regulatory agencies to ensure strict compliance with cGMPs and other applicable government regulations and corresponding foreign standards; however, we do not have control over third-party manufacturers’ compliance with these regulations and standards.

If a third-party manufacturer cannot perform as agreed or does not have sufficient capacity to meet our requirements, we may be required to replace it or qualify an additional third-party manufacturer. Although we believe there are a number of potential alternative manufacturers, we may incur additional costs and delays in identifying and qualifying any new third-party manufacturer, due to the technology transfer to such new manufacturer and because the FDA, EMA and/or other regulatory authorities must approve any new manufacturer prior to manufacturing our drug candidates. Such approval would require successful technology transfer, comparability and other testing and compliance inspections. Transferring manufacturing to a new manufacturer could therefore interrupt supply, delay our clinical trials and any commercial launch and/or increase our costs for our drug candidates, which could have an adverse effect on our business, financial condition or results of operations.

We anticipate continued reliance on third-party manufacturers if we are successful in obtaining marketing approval from the FDA and other regulatory agencies for any of our drug candidates, and our commercialization of any of our drug candidates may be halted, delayed or made less profitable if those third parties fail to obtain or maintain necessary regulatory approvals, fail to provide us with sufficient quantities of drug product or fail to do so at acceptable quality levels or prices.

To date, our drug candidates have been manufactured in smaller quantities for preclinical and clinical testing by third-party manufacturers. If the FDA or other regulatory agencies approve any of our drug candidates for commercial sale, we expect that we would continue to rely, at least initially, on third-party manufacturers to produce commercial quantities of approved drug candidates. These manufacturers may not be able to successfully increase the manufacturing capacity for any approved drug candidates in a timely or economic manner, or at all. Significant scale-up of manufacturing may require additional validation studies, which the FDA must review and approve. If third party manufacturers are unable to successfully increase the manufacturing capacity for a drug candidate, or we are unable to establish our own manufacturing capabilities, the commercial launch of any approved products may be delayed or there may be a shortage in supply, which in turn could have a material adverse effect on our business.

In addition, the facilities used by our contract manufacturers to manufacture our drug candidates must be approved by the FDA pursuant to inspections that will be conducted after we submit a BLA to the FDA. We do not control the manufacturing process of, and are completely dependent on, our contract manufacturing partners for compliance with cGMPs, for manufacture of both active drug substances and finished drug products. If our contract manufacturers cannot successfully manufacture material that conforms to our specifications and the strict regulatory requirements of the FDA or other regulatory authorities, they will not be able to secure and/or maintain regulatory approval for their manufacturing facilities. If the FDA or a comparable foreign regulatory authority does not approve these facilities for the manufacture of our drug candidates or if it withdraws any such approval in the future, we may need to find alternative manufacturing facilities, which would significantly impact our ability to develop, obtain regulatory approval for or market our drug candidates, if approved.

We depend on third-party suppliers for key raw materials used in our manufacturing processes, and the loss of these third-party suppliers or their inability to supply us with adequate raw materials could harm our business.

We rely on third-party suppliers for the raw materials required for the production of our drug candidates. Our dependence on these third-party suppliers and the challenges we may face in obtaining adequate supplies of raw materials involve several risks, including limited control over pricing, availability, quality and delivery schedules. We cannot be certain that our suppliers will continue to provide us with the quantities of these raw materials that we require or satisfy our anticipated specifications and quality requirements. Any supply interruption in limited or sole sourced raw materials could materially harm our ability to manufacture our products until a new source of supply, if any, could be identified and qualified. Although we believe there are currently several other suppliers of these raw materials, we may be unable to find a sufficient alternative supply channel in a reasonable time or on commercially reasonable terms. Any performance failure on the part of our suppliers could delay the development and potential commercialization of our drug candidates, including limiting supplies necessary for clinical trials and regulatory approvals, which would have a material adverse effect on our business.

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Risks Related to Our Intellectual Property

If we are unable to adequately protect or enforce the intellectual property relating to our drug candidates our ability to successfully commercialize our drug candidates will be harmed.

Our success depends in part on our ability to obtain patent protection both in the U.S. and in other countries for our drug candidates. Our ability to protect our drug candidates from unauthorized or infringing use by third parties depends in substantial part on our ability to obtain and maintain valid and enforceable patents. Due to evolving legal standards relating to the patentability, validity and enforceability of patents covering pharmaceutical inventions and the scope of claims made under these patents, our ability to obtain, maintain and enforce patents is uncertain and involves complex legal and factual questions. Accordingly, rights under any issued patents may not provide us with sufficient protection for our drug candidates or provide sufficient protection to afford us a commercial advantage against competitive products or processes.

In addition, we cannot guarantee that any patents will issue from any pending or future patent applications owned by or licensed to us or our affiliates. Even if patents have issued or will issue, we cannot guarantee that the claims of these patents are or will be valid or enforceable or will provide us with any significant protection against competitive products or otherwise be commercially valuable to us. Patent applications in the U.S. are maintained in confidence for up to 18 months after their filing. In some cases, however, patent applications remain confidential in the U.S. Patent and Trademark Office (the "USPTO") for the entire time prior to issuance as a U.S. patent. Similarly, publication of discoveries in the scientific or patent literature often lags behind actual discoveries. Consequently, we cannot be certain that we or our licensors or co-owners were the first to invent, or the first to file patent applications on, our drug candidates or their use as drugs. In the event that a third party has also filed a U.S. patent application relating to our drug candidates or a similar invention, we may have to participate in interference or derivation proceedings declared by the USPTO to determine priority of invention in the U.S. The costs of these proceedings could be substantial and it is possible that our efforts would be unsuccessful, resulting in a loss of our U.S. patent position. Furthermore, we may not have identified all U.S. and foreign patents or published applications that affect our business either by blocking our ability to commercialize our drugs or by covering similar technologies. Composition-of-matter patents on the biological or chemical active pharmaceutical ingredient are generally considered to be the strongest form of intellectual property protection for pharmaceutical products, as such patents provide protection without regard to any method of use. We cannot be certain that the claims in our patent applications covering composition-of-matter of our product candidates will be considered patentable by the USPTO and courts in the U.S. or by the patent offices and courts in foreign countries, nor can we be certain that the claims in our issued composition-of-matter patents will not be found invalid or unenforceable if challenged. Method-of-use patents protect the use of a product for the specified method. This type of patent does not prevent a competitor from making and marketing a product that is identical to our product for an indication that is outside the scope of the patented method. Moreover, even if competitors do not actively promote their product for our targeted indications, physicians may prescribe these products “off-label.” Although off-label prescriptions may infringe or contribute to the infringement of method-of-use patents, the practice is common and such infringement is difficult to prevent or prosecute.

Recent patent reform legislation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents. In 2011, the Leahy-Smith America Invents Act (the "Leahy-Smith Act") was signed into law. The Leahy-Smith Act includes a number of significant changes to U.S. patent law. These include provisions that affect the way patent applications are prosecuted, redefine prior art, may affect patent litigation, and switch the U.S. patent system from a “first-to-invent” system to a “first-to-file” system. Under a “first-to-file” system, assuming the other requirements for patentability are met, the first inventor to file a patent application generally will be entitled to the patent on an invention regardless of whether another inventor had made the invention earlier. The USPTO subsequently developed new regulations and procedures to govern administration of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act, and in particular, the first-to-file provisions, only became effective in 2013. Accordingly, it is not clear what, if any, impact the Leahy-Smith Act will have on the operation of our business. However, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business and financial condition.

We may be subject to a third-party preissuance submission of prior art to the USPTO, or become involved in opposition, derivation, reexamination, inter partes review, post-grant review, or other patent office proceedings or litigation, in the U.S. or elsewhere, challenging our patent rights or the patent rights of others. An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate, our patent rights, allow third parties to commercialize our technology or products and compete directly with us, without payment to us, or result in our inability to manufacture or commercialize products without infringing third party patent rights.

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We may not be able to protect our intellectual property rights throughout the world.

The laws of some foreign jurisdictions do not protect intellectual property rights to the same extent as in the U.S. and many companies have encountered significant difficulties in protecting and defending such rights in foreign jurisdictions. If we encounter such difficulties in protecting or are otherwise precluded from effectively protecting our intellectual property rights in foreign jurisdictions, our business prospects could be substantially harmed.

We license patent rights from third-party owners. Such licenses may be subject to early termination if we fail to comply with our obligations in our licenses with third parties, which could result in the loss of rights or technology that are material to our business.

We are a party to licenses that give us rights to third-party intellectual property that is necessary or useful for our business, and we may enter into additional licenses in the future. Under these license agreements we are obligated to pay the licensor fees, which may include annual license fees, milestone payments, royalties, a percentage of revenues associated with the licensed technology and a percentage of sublicensing revenue. In addition, under certain of such agreements, we are required to diligently pursue the development of products using the licensed technology. If we fail to comply with these obligations and fail to cure our breach within a specified period of time, the licensor may have the right to terminate the applicable license, in which event we could lose valuable rights and technology that are material to our business.

If the licensor retains control of prosecution of the patents and patent applications licensed to us, we may have limited or no control over the manner in which the licensor chooses to prosecute or maintain its patents and patent applications and have limited or no right to continue to prosecute any patents or patent applications that the licensor elects to abandon.

Litigation regarding patents, patent applications and other proprietary rights may be expensive and time consuming. If we are involved in such litigation, it could cause delays in bringing drug candidates to market and harm our ability to operate.

Our success will depend in part on our ability to operate without infringing the proprietary rights of third parties. Although we are not currently aware of any litigation or other proceedings or third-party claims of intellectual property infringement related to our drug candidates, the pharmaceutical industry is characterized by extensive litigation regarding patents and other intellectual property rights. Other parties may hold or obtain patents in the future and allege that the use of our technologies infringes these patent claims or that we are employing their proprietary technology without authorization.

In addition, third parties may challenge or infringe upon our existing or future patents. Proceedings involving our patents or patent applications or those of others could result in adverse decisions regarding:

• the patentability of our inventions relating to our drug candidates; and/or

• the enforceability, validity or scope of protection offered by our patents relating to our drug candidates.

Even if we are successful in these proceedings, we may incur substantial costs and divert management time and attention in pursuing these proceedings, which could have a material adverse effect on us.

If we are unable to avoid infringing the patent rights of others, we may be required to seek a license, defend an infringement action or challenge the validity of the patents in court. Patent litigation is costly and time consuming. We may not have sufficient resources to bring these actions to a successful conclusion. In addition, if we do not obtain a license, develop or obtain non-infringing technology, fail to defend an infringement action successfully or have infringed patents declared invalid, we may:

• incur substantial monetary damages;

• encounter significant delays in bringing our drug candidates to market; and/or

• be precluded from participating in the manufacture, use or sale of our drug candidates or methods of treatment requiring licenses.

If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected.

Our registered or unregistered trademarks or trade names may be challenged, infringed, circumvented or declared generic or determined to be infringing on other marks. We may not be able to protect our rights to these trademarks and trade names, which we need to build name recognition by potential partners or customers in our markets of interest. Over the long term, if we are unable to establish name recognition based on our trademarks and trade names, then we may not be able to compete effectively and our business may be adversely affected.

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We may be unable to adequately prevent disclosure of trade secrets and other proprietary information.

We rely on trade secrets to protect our proprietary technologies, especially where we do not believe patent protection is appropriate or obtainable; however, trade secrets are difficult to protect. We rely in part on confidentiality agreements with our employees, consultants, outside scientific collaborators, sponsored researchers, and other advisors to protect our trade secrets and other proprietary information. These agreements may not effectively prevent disclosure of confidential information and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. In addition, others may independently discover our trade secrets and proprietary information. Costly and time consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain trade secret protection could adversely affect our competitive business position.

We may be subject to claims that our employees have wrongfully used or disclosed alleged trade secrets of their former employers.

Many of our employees were previously employed at universities, Elan or Elan subsidiaries, or other biotechnology or pharmaceutical companies, including our competitors or potential competitors. Although we try to ensure that our employees do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or these employees have used or disclosed intellectual property, including trade secrets or other proprietary information, of any such employee’s former employer. Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management.

Risks Related to Our Ordinary Shares

The market price of our ordinary shares may fluctuate widely.

Our ordinary shares commenced trading on The Nasdaq Global Market on December 21, 2012 and currently trade on The Nasdaq Global Select Market. We cannot predict the prices at which our ordinary shares may trade. The market price of our ordinary shares may fluctuate widely, depending upon many factors, some of which may be beyond our control, including:

• our ability to obtain financing as needed;

• progress in and results from our ongoing or future clinical trials;

• our collaboration with Roche pursuant to the License Agreement to develop and commercialize PRX002, as well as any future Licensed Products targeting α-synuclein;

• failure or delays in advancing our preclinical drug candidates or other drug candidates we may develop in the future, into clinical trials;

• results of clinical trials conducted by others on drugs that would compete with our drug candidates;

• issues in manufacturing our drug candidates;

• regulatory developments or enforcement in the U.S. and foreign countries;

• developments or disputes concerning patents or other proprietary rights;

• introduction of technological innovations or new commercial products by our competitors;

• changes in estimates or recommendations by securities analysts, if any, who cover our company;

• public concern over our drug candidates;

• litigation;

• future sales of our ordinary shares;

• general market conditions;

• changes in the structure of healthcare payment systems;

• failure of any of our drug candidates, if approved, to achieve commercial success;

• economic and other external factors or other disasters or crises;

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• period-to-period fluctuations in our financial results;

• overall fluctuations in U.S. equity markets;

• our quarterly or annual results, or those of other companies in our industry;

• announcements by us or our competitors of significant acquisitions or dispositions;

• the operating and ordinary share price performance of other comparable companies;

• investor perception of our company and the drug development industry;

• natural or environmental disasters that investors believe may affect us; or

• fluctuations in the budgets of federal, state and local governmental entities around the world.

These and other external factors may cause the market price and demand for our ordinary shares to fluctuate substantially, which may limit or prevent investors from readily selling their ordinary shares and may otherwise negatively affect the liquidity of our ordinary shares. In particular, stock markets in general have experienced volatility that has often been unrelated to the operating performance of a particular company. These broad market fluctuations may adversely affect the trading price of our ordinary shares. In the past, when the market price of a stock has been volatile, some holders of that stock have instituted securities class action litigation against the company that issued the stock. If any of our shareholders brought a lawsuit against us, we could incur substantial costs defending the lawsuit. Such a lawsuit could also divert the time and attention of our management.

Your percentage ownership in Prothena may be diluted in the future.

As with any publicly traded company, your percentage ownership in us may be diluted in the future because of equity issuances for acquisitions, capital raising transactions or otherwise. We may need to raise additional capital in the future. If we are able to raise additional capital, we may issue equity or convertible debt instruments, which may severely dilute your ownership interest in us. In addition, we intend to continue to grant option awards to our directors, officers and employees, which would dilute your ownership stake in us. As of March 31, 2016, the number of ordinary shares available for issuance pursuant to outstanding and future equity awards under our equity plan was 4,911,053.

If we are unable to maintain effective internal controls, our business could be adversely affected.

We are subject to the reporting and other obligations under the Securities Exchange Act of 1934, as amended, including the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, which require annual management assessments of the effectiveness of our internal control over financial reporting. The rules governing the standards that must be met for management to assess our internal control over financial reporting are complex and require significant documentation, testing and possible remediation to meet the detailed standards under the rules. During the course of its testing, our management may identify material weaknesses or deficiencies which may not be remedied in time to meet the deadline imposed by the Sarbanes-Oxley Act of 2002. These reporting and other obligations place significant demands on our management and administrative and operational resources, including accounting resources.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external purposes in accordance with accounting principles generally accepted in the U.S. During the course of our review and testing of our internal controls, we may identify deficiencies and be unable to remediate them before we must provide the required reports. Furthermore, if we have a material weakness in our internal controls over financial reporting, we may not detect errors on a timely basis and our consolidated financial statements may be materially misstated. We or our independent registered public accounting firm, when required, may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting, which could harm our operating results, cause investors to lose confidence in our reported financial information and cause the trading price of our stock to fall.

        We cannot provide assurance that a material weakness will not occur in the future, or that we will be able to conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 and the related rules and regulations of the SEC when required. A material weakness in internal control over financial reporting is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company's annual or interim consolidated financial statements will not be prevented or detected on a timely basis by the company's internal controls. If we cannot in the future favorably assess, or our independent registered public accounting firm, when required, is unable to provide an unqualified attestation report on, the effectiveness of our internal controls over financial reporting, investor confidence in the reliability of our financial reports may be adversely affected, which

39

could have a material adverse effect on our share price. In addition, any failure to report our financial results on an accurate and timely basis could result in sanctions, lawsuits, delisting of our shares from the Nasdaq Global Select Market or other adverse consequences that would have an adverse effect on our business, financial position and results of operations.

If we were treated as a passive foreign investment company for U.S. federal income tax purposes, it could result in adverse U.S. federal income tax consequences to United States holders of our ordinary shares.

Significant potential adverse U.S. federal income tax implications generally apply to U.S. investors owning shares of a passive foreign investment company (“PFIC”), directly or indirectly. In general, we would be a PFIC for a taxable year if either (i) 75% or more of its income constitutes passive income (the “income test”) or (ii) 50% or more of our assets produce passive income (the “asset test”). Changes in the composition of our active or passive income, passive assets or fair market value may cause us to become a PFIC. A separate determination must be made each taxable year as to whether we are a PFIC (after the close of each taxable year).

We do not believe we were a PFIC for U.S. federal income tax purposes for our taxable years ended December 31, 2015, 2014 or 2013. However, the application of the PFIC rules is subject to uncertainties in a number of respects, and we cannot assure that the U.S. Internal Revenue Service (the “IRS”) will not take a contrary position. We also cannot assure that we will not be a PFIC for U.S. federal income tax purposes for any future taxable year.

Irish law differs from the laws in effect in the United States and may afford less protection to holders of our ordinary shares.

It may not be possible to enforce court judgments obtained in the U.S. against us in Ireland based on the civil liability provisions of the U.S. federal or state securities laws. In addition, there is uncertainty as to whether the courts of Ireland would recognize or enforce judgments of U.S. courts obtained against us or our directors or officers based on the civil liabilities provisions of the U.S. federal or state securities laws or hear actions against us or those persons based on those laws. We have been advised that the U.S. currently does not have a treaty with Ireland providing for the reciprocal recognition and enforcement of judgments in civil and commercial matters. Therefore, a final judgment for the payment of money rendered by any U.S. federal or state court based on civil liability, whether or not based solely on federal or state securities laws, would not automatically be enforceable in Ireland.

As an Irish incorporated company, we are governed by the Irish Companies Act 2014, which differ in some material respects from laws generally applicable to U.S. corporations and shareholders, including, among others, differences relating to interested director and officer transactions and shareholder lawsuits. Likewise, the duties of directors and officers of an Irish company generally are owed to the company only. Shareholders of Irish companies generally do not have a personal right of action against directors or officers of the company and may exercise such rights of action on behalf of the company only in limited circumstances. Accordingly, holders of our ordinary shares may have more difficulty protecting their interests than would holders of securities of a corporation incorporated in a jurisdiction of the U.S.

Irish law differs from the laws in effect in the United States with respect to defending unwanted takeover proposals and may give our board of directors less ability to control negotiations with hostile offerors.

We are subject to the Irish Takeover Panel Act, 1997, Takeover Rules, 2013. Under those Irish Takeover Rules, our Board is not permitted to take any action that might frustrate an offer for our ordinary shares once our Board has received an approach that may lead to an offer or has reason to believe that such an offer is or may be imminent, subject to certain exceptions. Potentially frustrating actions such as (i) the issue of ordinary shares, options or convertible securities, (ii) material acquisitions or disposals, (iii) entering into contracts other than in the ordinary course of business or (iv) any action, other than seeking alternative offers, which may result in frustration of an offer, are prohibited during the course of an offer or at any earlier time during which our Board has reason to believe an offer is or may be imminent. These provisions may give our Board less ability to control negotiations with hostile offerors and protect the interests of holders of ordinary shares than would be the case for a corporation incorporated in a jurisdiction of the U.S.

Transfers of our ordinary shares may be subject to Irish stamp duty.

Transfers of our ordinary shares effected by means of the transfer of book entry interests in DTC should not be subject to Irish stamp duty. However, if a shareholder holds our ordinary shares directly rather than beneficially through DTC any transfer of those ordinary shares could be subject to Irish stamp duty (currently at the rate of 1% of the higher of the price paid or the market value of the ordinary shares acquired). Payment of Irish stamp duty is generally a legal obligation of the transferee. The potential for stamp duty could adversely affect the price of your ordinary shares.

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We do not anticipate paying cash dividends, and accordingly, shareholders must rely on ordinary share appreciation for any return on their investment.

We anticipate losing money for the foreseeable future and, even if we do ever turn a profit, we intend to retain future earnings, if any, for the development, operation and expansion of our business. Thus, we do not anticipate declaring or paying any cash dividends for the foreseeable future. Therefore, the success of an investment in our ordinary shares will depend upon appreciation in their value and in order to receive any income or realize a return on your investment, you will need to sell your Prothena ordinary shares. There can be no assurance that our ordinary shares will maintain their price or appreciate in value.

Dividends paid by us may be subject to Irish dividend withholding tax.

Although we do not currently anticipate paying cash dividends, if we were to do so in the future, a dividend withholding tax (currently at a rate of 20%) may arise. A number of exemptions from dividend withholding tax exist such that shareholders resident in the U.S. and shareholders resident in other countries that have entered into a double taxation treaty with Ireland may be entitled to exemptions from dividend withholding tax subject to the completion of certain dividend withholding tax declaration forms.

Shareholders entitled to an exemption from Irish dividend withholding tax on any dividends received from us will not be subject to Irish income tax in respect of those dividends, unless they have some connection with Ireland other than their shareholding (for example, they are resident in Ireland). Shareholders who receive dividends subject to Irish dividend withholding tax will generally have no further liability to Irish income tax on those dividends.

Prothena ordinary shares received by means of a gift or inheritance could be subject to Irish capital acquisitions tax.

Irish capital acquisitions tax ("CAT") could apply to a gift or inheritance of our ordinary shares irrespective of the place of residence, ordinary residence or domicile of the parties. This is because our ordinary shares will be regarded as property situated in Ireland. The person who receives the gift or inheritance has primary liability for CAT. Gifts and inheritances passing between spouses are exempt from CAT. It is recommended that each shareholder consult his or her own tax advisor as to the tax consequences of holding our ordinary shares or receiving dividends from us.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

See the Exhibit Index following the signature page to this Quarterly Report on Form 10-Q for a list of exhibits filed or furnished with this report, which Exhibit Index is incorporated herein by reference.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Quarterly Report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated:	May 3, 2016	Prothena Corporation plc (Registrant)
		/s/ Dale B. Schenk
		Dale B. Schenk
		President and Chief Executive Officer
		/s/ Tran B. Nguyen
		Tran B. Nguyen
		Chief Financial Officer

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EXHIBIT INDEX

		Previously Filed
Exhibit No.	Description	Form	File No.	Filing Date	Exhibit	Filed Herewith
10.1	Offer letter, dated January 20, 2016, by and between Prothena Biosciences Inc and David McNinch					X
10.2(a)	Sublease, dated as of March 22, 2016, by and between Prothena Biosciences Inc and Amgen Inc.					X
10.2(b)	Consent to Sublease Agreement, dated as of March 28, 2016, by and among Prothena Biosciences Inc, Amgen Inc. and HCP BTC, LLC					X
31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002					X
31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002					X
32.1*	Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002					X
101.INS+	XBRL Instance Document					X
101.SCH+	XBRL Taxonomy Extension Schema Document					X
101.CAL+	XBRL Taxonomy Extension Calculation Linkbase Document					X
101.DEF+	XBRL Taxonomy Extension Definition Linkbase Document					X
101.LAB+	XBRL Taxonomy Extension Label Linkbase Document					X
101.PRE+	XBRL Taxonomy Extension Presentation Linkbase Document					X

_______________

* Exhibit 32.1 is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, nor shall such exhibit be deemed to be incorporated by reference in any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as otherwise specifically stated in such filing.

+ XBRL information is furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934, and is not subject to liability under those sections, is not part of any registration statement or prospectus to which it relates and is not incorporated or deemed to be incorporated by reference into any registration statement, prospectus or other document.

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EX-10.1

David McNinch

REVISED - January 19, 2016

Dear David:

I am pleased to confirm this offer for you to join Prothena Biosciences Inc ("Prothena" or the "Company''). We are confident in your knowledge, expertise and judgment, and believe your performance will meet our team's high-quality objectives and standards.

You will be appointed as Chief Commercial Officerby the Board of Directors of Prothena Corporation plc at its next meeting, scheduled to be held on February 24. In this position, you will report to Dale Schenk (CEO and President), although your duties, title and reporting relationship may change, based on the Company's needs and priorities. This is a full-time, exempt position.

Your starting salary will be $360,000.00/year, paid twice per month. Your pay is subject to applicable taxes and withholdings.

Prothena embraces a pay-for-performance philosophy. All employees are currently eligible for an annual cash bonus under the terms of the Company's cash incentive plan (the Prothena Corporation plc Incentive Compensation Plan). The amount of these annual cash bonuses are determined by the Company on the basis of a number of factors, including industry competitiveness, Prothena'sbusiness strategy, and the degree to which Company, function and/or individual goals are met. Your targeted cash bonus for the 2016 plan year (our fiscal year) will be 40%of your actual plan year salaried earnings. Any earned cash bonus will be paid no later than March 15 in the year following the conclusion of the plan year. The cash bonus plan is operated at the sole discretion of Prothena, is subject to review on a regular basis and may change from time to time.

In connection with your commencement of employment, you will also be eligible to receive an option to acquire 100,000shares of Prothena Corporation plc. We will recommend that the Compensation Committee of the Board of Directors of Prothena Corporation pie approve this option award at its meeting scheduled for February 24, 2016. The award will be subject to the terms and conditions of the Prothena Corporation plc Amended and Restated 2012 Long Term Incentive Plan and the terms and conditions of the award agreement for such a stock option. The grant date of this stock option will be the first business day of the month following the Compensation Committee's approval of the option award or on such other date as determined by the Committee in its sole discretion. The option exercise price will be equal to the closing price of Prothena Corporation plc's ordinary shares on the NASDAQ Global Select Market on that date. Subject to your continued employment, the stock option will vest 25% after the first year of active service from your employment start date, and monthly at a rate of 1/48th of the award thereafter, such that the option will fully vest after a four-year period of continuous employment.

On the first day of the month following your employment start date, you will be eligible to participate in Prothena's comprehensive benefits program, including the company's health and welfare and retirement benefits plans, as well as the Prothena Biosciences Inc Amended and Restated Severance Plan¹. Details about these and other applicable plans will be provided separately.

Further information regarding onboarding requirements and/or documents needed before or after your employment start date (e.g., Employee Proprietary Informationand Invention Assignment Agreement, Code of Conduct, Form 1-9 completion process, direct deposit information, Form W-4 allowance elections) will be provided separately.

Prothena's offer of employment is contingent upon our receiving satisfactory results from your references, background check and drug screening, as well as any other pre-employment testing that may be required due to the specific nature of our industry and/or your position. Your employment is "at will." This means that you and Prothena each have the right to terminate the employment relationship at any time, with or without cause. Nothing in this letter should be taken as a guarantee of continued employment or a specific term of employment. Further, all benefits and compensation provided by the Company are contingent upon your continued employment.

To ensure rapid and economical resolution of any disputes regarding your employment under this offer letter, the parties hereby agree that any and all claims, disputes or controversies of any nature whatsoever arising out of, or relating to, this offer letter, or its interpretation , enforcement, breach, performance or execution, your employment with the Company/ or the termination of such employment, shall be resolved, to the fullest extent permitted by law, by final, binding and confidential arbitration in San Francisco, CA conducted before a single arbitrator by JAMS, Inc. ("JAMS") or its successor, under the then applicable JAMS arbitration rules. The parties each acknowledge that by agreeing to this arbitration procedure, they waive the right to resolve any such dispute, claim or demand through a trial by jury or judge or by administrative proceeding. You may be represented by legal counsel at any arbitration proceeding. The arbitrator shall: (i) have the authority to compel adequate discovery for the resolution of the dispute and to award such relief as would otherwise be available under applicable law in a court proceeding; and (ii) issue a written statement signed by the arbitrator regarding the disposition of each claim and the relief, if any, awarded as to each claim, the reasons for the award, and the arbitrator's essential findings and conclusions on which the award is based. The arbitrator, and not a court, shall also be authorized to determine whether the provisions of this paragraph apply to a dispute, controversy, or claim sought to be resolved in accordance with these arbitration procedures. The parties will share the costs of arbitration equally except that the Company will bear the cost of the arbitrator's fee, any other type of expense or cost that the employee would not be required to bear if the employee were to bring the dispute or claim in court. Both parties will be responsible for their own attorney's fees, and the arbitrator may not award attorney's fees unless a statute or contract at issue specifically authorizes such an award. This arbitration provision does not apply to claims concerning worker's compensation or unemployment insurance claims. Nothing in this Agreement is intended to prevent either you or the Company from obtaining injunctive relief in court to prevent irreparable harm pending the conclusion of any arbitration.

_________________________

¹A summary of the benefits provided at your level under the Prothena Biosciences Inc Amended and Restated Severance Plan is attached

To accept our offer, please sign this letter and return it to Kevin Hickey by January 23, 2016.By signing this letter, you acknowledge that it sets out our entire agreement between you and the Company and supersedes all prior oral and written agreements, understandings, commitments and practices. No amendments to this agreement may be made except in writing signed by a duly authorized representative of Prothena.

We look forward to having you join Prothena. If you have any questions, or would like additional information to help you reach a decision, please feel free to contact Kevin at (650) 278-1762.

Sincerely,

/s/ Dale Schenk

Dale Schenk President and CEO

Prothena Biosciences Inc

ACCEPTANCE:

/s/ David McNinch1/30/16

David McNinch                            Date

PROTHENA BIOSCIENCES INC AMENDED AND RESTATED SEVERANCE PLANATTACHMENT I

BENEFITS SUMMARY FOR ELIGIBLE EMPLOYEES – TIER 1

SEVERANCE PAY	Severance pay consists of fifty-two (52) Weeks of Pay plus your target annual bonus rate during the year in which your Severance Date occurs.
CHANGE IN CONTROL SEVERANCE PAY (IF APPLICABLE)	Severance pay consists of seventy-eight (78) Weeks of Pay plus 150% of your target annual bonus rate during the year in which your Severance Date occurs.
SEVERANCE BENEFITS
MEDICAL, DENTAL AND VISION BENEFITS COVERAGE CONTINUATION	This Plan offers a special subsidy to your health care continuation coverage under federal law (“COBRA”) so that, for the period of time following your Severance Date that corresponds to the Weeks of Pay you are entitled to receive as severance pay (the “Health Subsidy Period”), you do not have to pay the full premium cost for health care coverage under the health plan(s) in which you participated while employed by the Employer. If you elect to exercise your rights under COBRA, for the first six (6) months of the Health Subsidy Period, you will only be required to pay the same share of the applicable premium that would apply if you were participating in the health plan(s) as an active employee. For the remaining Health Subsidy Period, you will be required to pay the full monthly COBRA premium and the Employer will reimburse you for the full cost of the COBRA premiums paid, less the amount that would apply if you were participating in the applicable health plan as an active employee. After the Health Subsidy Period expires, you will be required to pay the full applicable COBRA premium to continue your coverage for the remainder of the COBRA period and the reimbursements will cease. Any partial month will be rounded up to the next whole month. If you or your covered dependents cease to be eligible for COBRA or you become eligible for new healthcare coverage (other than through your spouse), the subsidy described above shall cease. You must notify your Employer within ten (10) days following the date you become eligible for new healthcare coverage. In certain circumstances, the Employer may provide the value of this benefit in a single cash lump sum payment, subject to applicable withholding taxes.
CAREER TRANSITION ASSISTANCE	Career transition assistance will be available from a career transition assistance firm selected and paid by the Employer for a period of twelve (12) months; however, you must begin the available career transition assistance program within sixty (60) days following your Severance Date.

EX-10.2(A)

SUBLEASE

THIS SUBLEASE (this “Sublease”) is made and entered into this 22nd day of March, 2016, by and between AMGEN INC., a Delaware Corporation (“Sublandlord”), and PROTHENA BIOSCIENCES INC, a Delaware corporation (“Subtenant”).

RECITALS

A.    Sublandlord’s predecessor-in-interest, Tularik Inc. (“Original Tenant”), entered into that certain Build-to-Suit Lease dated as of December 20, 2001 (the “Original Master Lease”) with HCP BTC, LLC (“Master Landlord”), a Delaware limited liability company, formerly known as Slough BTC, LLC, for the initial lease of three (3) buildings in the Oyster Point center in South San Francisco, California (the “Center”) and rights to lease additional buildings to be constructed in the Center. The Original Master Lease was subsequently amended on numerous occasions to, among other things, lease additional space and buildings located in the Center to Original Tenant or Sublandlord.

B.    Sublandlord and Master Landlord entered into that certain Fifth Amendment to Build-to-Suit Lease and Second Amendment to Workletter dated as of June 19, 2006 (the “Master Amendment”), pursuant to which Master Landlord leased to Sublandlord and Sublandlord leased from Master Landlord those certain two (2) buildings in the Center with the addresses of 331 Oyster Point Boulevard, as depicted on Exhibit B attached hereto (such building, the “Premises” or the “331 Building”), and 333 Oyster Point Boulevard, consisting of (such building, the “333 Building”). The 331 Building consists of 128,751 rentable square feet and the 333 Building consists of 121,706 rentable square feet. The 331 Building and the 333 Building are collectively referred to herein as the “Buildings”. As used herein, the Original Master Lease, as amended by the Master Amendment only shall be referred to as the “Master Lease”, a copy of which is attached as Exhibit A hereto.

C.    Sublandlord and Subtenant now desire to provide for a sublease of the Premises, subject to and conditioned upon the terms and conditions set forth herein.

AGREEMENT

NOW, THEREFORE, in consideration of the recitals set forth above, the agreements set forth below and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Sublandlord and Subtenant hereby agree as follows:

1.Sublease of Premises; Access 24/7. Subject and pursuant to the provisions hereof, Sublandlord subleases to Subtenant, and Subtenant subleases from Sublandlord, the Premises. Sublandlord shall deliver the entire Premises to Subtenant with the Premises (including all of the current warm shell improvements identified on Exhibit C attached hereto) in good working condition and repair and the systems included therein in good working condition (the “Delivery Condition”) on the date (the “Delivery Date”) that all of the following have been satisfied: (i) this Sublease has been executed and delivered by Sublandlord and Subtenant, (ii) all consents necessary for the effectiveness of this Sublease have been executed and delivered,

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including, without limitation, any consents required pursuant to the Master Lease, including the Consent, (iii) Subtenant has delivered to Sublandlord the first month’s Base Rent and Operating Expenses, as more particularly set forth in Sections 3.1 and 3.3.1 below, (iv) Subtenant has delivered to Sublandlord the Letter of Credit issued by the Bank (as defined in Section 12.1 below) and meeting the criteria set forth in Section 12; (v) Guarantor (as defined in Section 14.16) has executed and delivered to Sublandlord the Guaranty (as defined in Section 14.16), and (vi) Subtenant has delivered to Sublandlord written evidence that Subtenant carries the insurance Subtenant is required to carry as set forth in Section 9.15 of this Sublease.

Subject to the terms of the Master Lease incorporated into this Sublease, Subtenant shall have access to the Premises 24 hours per day, seven days a week, 52 weeks per year.

2.Term; Rent Commencement Date; Early Access.

2.1Term; Measurement. The term (the “Term”) of this Sublease shall commence upon the date (the “Commencement Date”) that this Sublease has been executed and delivered by Sublandlord and Subtenant, all consents necessary for the effectiveness of this Sublease have been executed and delivered, including, without limitation, any consents required pursuant to the Master Lease, including the Consent (as defined in Section 14.11), and shall continue until December 31, 2023 (the “Expiration Date”), unless sooner terminated pursuant to the provisions of this Sublease. The obligations to pay Rent (as defined in Section 3.3.5 below), subject to the rent abatements described in Section 3.2, shall commence upon the Rent Commencement Date as described in Section 2.2 below, and shall continue throughout the Term. The measurement of the Premises were made by Master Landlord’s architect pursuant to Section 1.1(d) of the Original Master Lease, which Section 1.1(d) is incorporated herein by reference solely for purposes of acknowledging how the Premises were measured. Sublandlord and Subtenant hereby agree that the Premises consist of 128,751 rentable square feet.

2.2Rent Commencement.

2.2.1Rent Commencement Date. Subtenant’s obligation to pay Base Rent and Operating Expenses under this Sublease shall commence on the earlier to occur of (a) the date Subtenant completes Subtenant’s Improvements (as defined in Section 10.4.1) and commences conducting business (other than Subtenant’s activities in the Premises to prepare it for Subtenant’s occupancy) in the Premises, or (b) August 1, 2016 (such earlier date, the “Rent Commencement Date”).

2.2.2Confirmation of Dates. Following the request of either party, the parties agree to promptly execute and deliver a factually-correct written confirmation documenting the Commencement Date, the Rent Commencement Date, and the Expiration Date.

2.3Utilities and Maintenance. From and after the Delivery Date, Subtenant shall be solely responsible to obtain and pay for all utilities provided to the Premises. In addition, Subtenant shall be solely responsible for maintenance and repair of the building

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systems serving the Premises commencing on the Delivery Date (other than any repair and maintenance obligations of Master Landlord under the Master Lease), provided, that, Subtenant shall not be obligated to pay its share of Operating Expenses with respect to the Premises until the Rent Commencement Date. Subject to Master Landlord’s written consent (in the Consent or other written agreement with Master Landlord) and any terms and conditions related thereto, Sublandlord hereby consents to Subtenant working directly with Master Landlord on issues related to the maintenance obligations of Master Landlord (including providing notice to Master Landlord with respect to Master Landlord’s obligations under the Master Lease) without Sublandlord’s further consent, consultation or approval.

3.Rent.

3.1Base Rent. Commencing on the Rent Commencement Date, which shall be deemed to be the first day of Month 1 in the table below, Subtenant shall pay as monthly base rent for the Premises (“Base Rent”) those amounts set forth in the following table:

Months	Monthly Base Rent
1-12*	$450,628.50*
13-24*	$464,791.11*
25-36	$477,666.21
37-48	$491,828.82
49-60	$507,278.94
61-72	$522,729.06
73-84	$538,179.18
85-Expiration Date	$553,629.30

* Subject to and in accordance with the terms and conditions of Section 3.2 of this Sublease, Base Rent for the first two years of the Term shall be abated as follows: (i) Base Rent for the first four (4) full calendar months after the Rent Commencement Date shall be abated in its entirety, (ii) Base Rent for the fifth (5^th) through twelfth (12^th) full calendar months after the Rent Commencement Date shall be abated by $240,628.50 per month; and (iii) Base Rent for the thirteenth (13^th) through twenty-fourth (24^th) full calendar months after the Term shall be abated by $103,791.11 per month.

Base Rent and additional rent shall be paid to Sublandlord without demand, deduction, set-off or counterclaim, in each case except as expressly provided to the contrary herein, in advance on the first day of each calendar month during the Term of this Sublease, except Subtenant shall pay the Base Rent payable for the fifth (5^th) full calendar month after the Rent Commencement Date concurrently with Subtenant’s execution and delivery of this Sublease. In the event of a partial rental month, Base Rent shall be prorated on the basis of the number of actual days in such month. All payments due to Sublandlord shall be paid to Sublandlord c/o Amgen Inc., Accounts Payable, PO Box 100909, Pasadena, CA, 91189-0909 or such other address as Sublandlord may specify in a written notice delivered pursuant to Section 10.1, below.

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3.2Base Rent Abatement. Notwithstanding anything to the contrary contained herein and providedthat Subtenant faithfully performs all of the terms and conditions of this Sublease, and no default by Subtenant has occurred and is continuing hereunder, Sublandlord hereby agrees that Base Rent hereunder shall be abated as follows during the first two (2) years after the Rent Commencement Date as follows: (i) Base Rent for the first four (4) full calendar months after the Rent Commencement Date shall be abated in its entirety, (ii) Base Rent for the fifth (5^th) through twelfth (12^th) full calendar months after the Rent Commencement Date shall be abated by $240,628.50 per month; and (iii) Base Rent for the thirteenth (13^th) through twenty-fourth (24^th) full calendar months after the Term shall be abated by $103,791.11 per month. During such periods of full or partial abatement, Subtenant shall still be responsible for the payment of all of its other monetary obligations under this Lease, including without limitation, any unabated portions of Base Rent and all Operating Expenses. In the event of a default by Subtenant under the terms of this Sublease that results in termination of this Sublease in accordance with the terms hereof, Sublandlord shall be entitled to the recovery of the Base Rent that was abated under the provisions of this Section 3.2.

3.3Operating Costs And Expenses.

3.3.1Payment; Annual Statement of Operating Expenses. Commencing on the Rent Commencement Date, Subtenant shall pay to Sublandlord, as additional rent hereunder, all of the Operating Expenses allocated to the Premises under the Master Lease (as amended by the Master Amendment). All Operating Expenses shall be payable in advance on the first day of each calendar month during the Term of this Sublease in accordance with Section 9.3 of the Original Master Lease, except Subtenant shall pay the estimated Operating Expenses payable for the first (1^st) full calendar month after the Rent Commencement Date (currently estimated to be $67,406.97, subject to adjustment and reconciliation in accordance with the terms hereof) concurrently with Subtenant’s execution and delivery of this Sublease. Promptly following Sublandlord’s receipt thereof, Sublandlord shall provide Subtenant with copies of (i) Master Landlord’s estimated statement of Operating Expenses (as applicable to the Premises) provided to Sublandlord pursuant to Section 9.3 of the Master Lease, as may be adjusted from time to time pursuant to the terms of the Master Lease, and (ii) Master Landlord’s annual statement of Operating Expenses (as applicable to the Premises) provided to Sublandlord pursuant to Section 9.4 of the Master Lease. Sublandlord agrees that Subtenant shall be entitled to audit rights with respect to Sublandlord’s books and records relating to the determination and payment of Operating Expenses related to the Premises for the immediately preceding Lease Year. Subject to the Incorporation Provisions (defined below), the provisions of Article 9 of the Master Lease are incorporated herein only to the extent specifically referenced in this Sublease. Further, Subtenant acknowledges and agrees that, although Article 9 of the Original Master Lease is not otherwise specifically incorporated into this Sublease, Article 9 of the Master Lease governs and controls for all purposes the determination of Operating Expenses payable by Sublandlord that Sublandlord is passing through to Subtenant in accordance with the terms of this Section 3.3. Notwithstanding anything in this Sublease to the contrary, Subtenant shall not be required to pay any Operating Expenses attributable to or arising from the Phase I Buildings (as defined in the Original Master Lease), it being agreed that Subtenant shall only be obligated to pay Operating Expenses that Sublandlord

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is obligated to pay under the Master Lease that are allocated by Master Landlord to the Premises, subject to Subtenant’s audit rights set forth in Section 3.3.3.

3.3.2Pro-ration. If the Term shall commence on any day other than January 1 or expire or earlier terminate on any date other than December 31, Subtenant’s obligations under Section 3.3.1 for such first or last partial calendar year shall be prorated on the basis of (a) the number of days elapsed during such calendar year during which this Sublease is in effect bears to (b) 365. In the event that the Term shall expire or earlier terminate on any date other than December 31, for purposes of Section 3.3.1, Sublandlord may either reasonably project, as of the date of such expiration or termination, the Operating Expenses for such calendar year and bill Subtenant for Subtenant’s share thereof at any time thereafter or wait until receipt of Master Landlord’s calculation thereof for the entire calendar year in question and bill Subtenant for Subtenant’s share of Subtenant’s share thereof at any time thereafter; provided, however, if Sublandlord reasonably projects the amount of such Operating Expenses, Sublandlord shall reconcile such projection with the actual Operating Expenses due following the receipt of the actual annual statement of Operating Expenses for such calendar year and shall follow the terms of Section 9.4(a) of the Original Master Lease with respect to the amounts owed or to be reimbursed.

If the obligation to pay any component of Rent under this Sublease commences on a day other than the first day of a calendar month, or if the Term of this Sublease terminates on a day other than the last day of a calendar month, the Rent for such first or last month of the Term shall be prorated based on the number of days the Term of this Sublease is in effect during such month. If an increase in Rent becomes effective on a day other than the first day of a calendar month, the calculation of Rent for such month shall be the sum of the two applicable rates, each prorated for the portion of the month during which such rate is in effect.

3.3.3Annual Reconciliation; Accounting; Audit Rights. Because the Master Lease provides for the payment by Sublandlord of Operating Expenses on the basis of an estimate thereof, as and when adjustments between estimated and actual Operating Expenses are made under the Master Lease, as applicable, the obligations of Sublandlord and Subtenant hereunder shall be adjusted in a like manner; and if any such adjustment shall occur after the expiration or earlier termination of the Term, then the obligations of Sublandlord and Subtenant under this Section 3 shall survive such expiration or termination. Subtenant shall pay those Operating Expenses allocated to the Premises based on Master Landlord’s estimate thereof (as it may be adjusted from time to time in accordance with the Master Lease) provided to Subtenant pursuant to Section 3.3.1 above. Within thirty (30) days after Sublandlord receives from the Master Landlord the annual statement of actual Operating Expenses incurred by Master Landlord (the “Accounting”), Sublandlord shall provide Subtenant an accounting of the actual Operating Expenses payable with respect to the Premises as reflected in the Accounting. In the event that the Accounting shows that Subtenant paid more or less than the actual Operating Expenses payable by Subtenant hereunder, then Subtenant shall either promptly receive a credit against future Rent (or such amount shall be promptly paid to Subtenant if the Term has expired or been terminated) or shall be required to pay to Sublandlord the deficient amount within thirty (30) days after Subtenant’s receipt of such Accounting. Sublandlord shall use commercially reasonable efforts to include in the Consent Master

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Landlord’s agreement that Subtenant may exercise directly Sublandlord’s rights as Tenant under Section 9.4(b) of the Original Master Lease to examine Master Landlord’s books and records, provided, that, (i) Sublandlord's rights to audit Operating Expenses under the Master Lease are not affected or limited thereby, and (ii) in no event will Subtenant be entitled to a reduction of Operating Expenses with respect to the Premises if Sublandlord is obligated to pay such Operating Expenses. If Master Landlord does not so agree, then Sublandlord shall, upon the written request of Subtenant and at Subtenant’s sole cost and expense, exercise such rights in a commercially reasonable manner (subject to, and in accordance with, the terms of the Master Lease), to confirm the accuracy of the Operating Expenses identified in the annual statement provided by Master Landlord as payable with respect to the Premises. In such event, Sublandlord shall promptly deliver the results of such examination to Subtenant, and shall reasonably cooperate with Subtenant and Master Landlord to resolve any outstanding issues or concerns in accordance with the terms of the Master Lease. Subject to the foregoing, any and all amounts paid by Sublandlord under the Master Lease for Operating Expenses, real estate taxes or assessments, and other charges with respect to the Premises accrued during the Term (or otherwise due to the actions of Subtenant, or its agents, employees or contractors) shall be conclusively deemed to be accurate and binding upon Subtenant for purposes of interpretation of this Section 3.

3.3.4Payment of Extra Charges. In addition to the amounts payable under Section 3.3.1, Subtenant shall pay to Sublandlord within ten (10) days of Subtenant’s receipt of Sublandlord’s written invoice therefor: (i) any charges, costs, fees or expenses for which Sublandlord is separately charged under the Master Lease (and which are not part of Operating Expenses) and which are attributable to the Premises and accrued during the Term, including, without limitation, personal property taxes and excess electrical consumption charges (if any); (ii) any and all other sums of money (other than those attributable to Operating Expenses and the charges, costs, fees or expenses covered by clause (i) above) which are or may become payable by Sublandlord to Master Landlord relating to the Premises and that have accrued during the Term; (iii) any real property taxes and assessments related to the Premises that are separately billed to Sublandlord and that have accrued during the Term; and (iv) any and all charges of Master Landlord or other amounts payable to Master Landlord under the Master Lease caused by Subtenant’s failure to perform its obligations under this Sublease.

3.3.5“Rent” Definition. All forms of additional rent and any other amounts payable by Subtenant to Sublandlord shall be payable by Subtenant without notice, demand, deduction, offset or abatement, in each case except as expressly provided to the contrary herein, in lawful money of the United States to Sublandlord at such places and to such persons as Sublandlord may direct. All such amounts, together with Base Rent, are collectively referred to herein as “Rent.”

3.3.6Interest and Late Charges. Subject to the Incorporation Provisions (defined below), Section 3.2 of the Original Master Lease is hereby incorporated by reference. Any interest and late charges accrued under this Section shall be deemed to be additional rent payable hereunder. Notwithstanding anything in this Sublease to the contrary, Subtenant shall be entitled to a grace period of five (5) business days for the first delinquent payment of Base Rent without the payment of interest or late charges, provided,

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however, that such late charge and payment of interest shall accrue from and after expiration of such 5-business day grace period.

3.4Build Out Period. As set forth above, Subtenant shall have no obligation to pay Base Rent or Operating Expenses during the period from the Commencement Date to the Rent Commencement Date (the “Build Out Period”). However, Subtenant shall pay all of the utilities provided to the Premises (power, water/sewer service, and gas service, if applicable) from and after the Delivery Date in accordance with Article 10 of the Original Master Lease (incorporated herein as set forth below) and, except as specifically set forth in this Section 3.4, all other terms and conditions of this Sublease shall apply and Subtenant shall remain responsible for the payment of all other monetary obligations under this Sublease during the Build Out Period.

4.Use. Subtenant shall use and occupy the Premises only for the purposes set forth in Section 13.1 of the Original Master Lease, and for no other purpose.

5.Parking.

5.1Spaces. Subject to the provisions of this Section 5, Subtenant shall have the same parking rights as Sublandlord has with respect to the Premises under the Master Lease (the “Parking Spaces”) during the Term, including, without limitation, as set forth in Section 21.20 of the Original Master Lease and Section 1(g) of the Master Amendment. Sublandlord shall not take any action to cause Master Landlord to reduce Sublandlord’s parking rights with respect to the Premises under the Master Lease. All Parking Spaces are unassigned and nonexclusive spaces, and notwithstanding any provision herein or in the Master Lease to the contrary, shall be provided to Subtenant at no cost or expense, except for expenses included in Operating Expenses pursuant to (i) Section 9.2(a)(vi) of the Master Lease or (ii) the second to last sentence of Section 9.2(b) of the Master Lease.

5.2Compliance. Subtenant shall comply (and cause each of its employees, contractors, representatives, and invitees using such privileges to comply) with all rules, regulations and requirements of Master Landlord with respect to use of the Parking Spaces, the Transportation Demand Management Plan (TDMP) and other matters relating thereto.

6.Additional Rights.

6.1Signage. Subtenant shall have all of the right to signage as set forth in Section 11.5 of the Original Master Lease on, or otherwise specifically allocated to, the 331 Building (including without limitation rights to any monument signage as set forth in Section 11.5 of the Original Master Lease, which is attributable or otherwise allocated to the Premises). Accordingly, subject to the Incorporation Provisions, Section 11.5 of the Original Master Lease is hereby incorporated by reference. All signage of Subtenant shall (i) be subject to the terms of the Master Lease, Sublandlord’s reasonable approval and Master Landlord’s approval as to design, composition, size and location (as and to the extent set forth in the Master Lease or the Consent), and (ii) be undertaken at Subtenant’s sole cost and expense, including, without limitation, all costs of installation, maintenance, repair, restoration and removal.

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6.2Generator. Subtenant has informed Sublandlord that Subtenant wishes to use the existing 1 megawatt emergency backup generator (the “Generator”) which is currently in place on a pad adjacent to the 331 Building (the “Generator Area”). Sublandlord agrees that Subtenant shall be entitled to use and operate the Generator to provide emergency backup power to the Premises, so long as Subtenant obtains its own permits to use and operate the Generator (releasing Sublandlord from any liability with respect to the Generator) and complies with the terms of this Section 6.2. Subject to Section 8, the Generator will be delivered to Subtenant in good working condition and from and after such delivery, Sublandlord shall have no right to use and operate the Generator. Subtenant and its authorized personnel shall further have the right to access the Generator Area for purposes of testing, maintaining, refueling, replacing, repairing and operating the Generator, subject to force majeure and in compliance with any applicable Master Landlord rules and regulations. Subtenant shall maintain and operate the Generator in compliance with all applicable federal, state and local laws, rules and regulations, including, without limitation, applicable zoning restrictions, City and County requirements and regulations of any governing air quality or environmental management district, and obtaining and maintaining at Subtenant’s sole cost and expense all permits, certificates or other authorizations required for operation of the Generator. Subtenant shall be solely responsible to ensure that the Generator is operated in compliance with applicable laws, rules and regulations and the terms of the Master Lease and any governing CC&Rs, and to ensure that the Generator does not interfere with the business operations or quiet enjoyment of other tenants or occupants of the Center. Without limiting the indemnity set forth in Section 11.2 below, Subtenant hereby indemnifies, defends and holds Sublandlord harmless from and against any claims, suits, judgments, losses, costs, obligations, damages, expenses, interest, liabilities or harms (collectively, “Claims”) caused by or resulting from Subtenant’s use and operation of the Generator, provided, that, Subtenant shall not be obligated to indemnify Sublandlord for Claims to the extent caused by or resulting from the negligence or willful misconduct of Sublandlord. Immediately prior to the Expiration Date, promptly following Subtenant’s request, Sublandlord agrees to execute a quit claim bill of sale in form and substance reasonably acceptable to Sublandlord transferring any ownership interest Sublandlord has in the Generator to Subtenant, without warranty. Other than pursuant to such bill of sale, or as may be requested by Master Landlord with respect to Master Landlord’s interest therein under the Master Lease (including, without limitation, Section 11.2 thereof), Sublandlord shall not transfer, sell or convey the Generator to any party or permit any lien or encumbrance on the Generator. Unless otherwise required by the Master Landlord in accordance with the Master Lease, Subtenant shall remove the Generator upon expiration or earlier termination of this Sublease and repair any damage caused by such removal. If required by the terms of applicable laws, rules or regulations, Subtenant will obtain at its cost and deliver to Sublandlord a copy of any closure or similar report issued by any governmental authority with respect to Subtenant’s cessation of use and removal of the Generator.

6.3Other Permits. Subtenant will be responsible for obtaining its own permits with respect to any new or existing building systems which require permits for operation or occupancy, including without limitation, elevator permits, certificates of occupancy, and fire protection system permits, except for any such permits that may have already been obtained by Sublandlord and which are freely transferable to Subtenant without

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the payment of any transfer fee and without any requirement to obtain the consent of any regulatory, governmental, or quasi-governmental agency with respect to such transfer.

6.4Food Trucks. Notwithstanding anything in this Sublease to the contrary, but subject to Master Landlord’s written consent (in the Consent or other written agreement with Master Landlord) and any terms and conditions related thereto, and subject to compliance with all applicable laws, rules and regulations, Subtenant may engage mobile food service vendors (“Food Vendors”) to provide food services for the Premises provided that (i) each Food Vendor shall be reasonably acceptable to Sublandlord and Master Landlord, (ii) the location within the parking areas of the Center where the Food Vendors may park (“Food Vendor Area”) and the hours during which the Food Vendors may be present at the Project shall be subject to Sublandlord’s and Master Landlord’s reasonable approval, (iii) Subtenant shall be responsible, at Subtenant’s sole cost, for ensuring that the Food Vendor Area remains free of debris and trash while, and immediately following, any time any Food Vendor is in the Food Vendor Area, and (iv) the Food Vendors shall not interfere with the use of the Center by any other tenants of the Center. In the event of any such interference or if any Food Vendor causes any damage to the Center, Sublandlord and Master Landlord shall each have the right to immediately remove such Food Vendor from the Center or prohibit such Food Vendor from entering the Center.

7.Broker Commissions. Each party represents and warrants that it has dealt with no broker in connection with this Sublease and the transactions contemplated herein, except that Sublandlord has been represented by Kidder Mathews (in such capacity, “KM-Sublandlord Broker”) and Binswanger (“Binswanger”, and together with KM-Sublandlord Broker, the “Primary Brokers”) and Subtenant has been represented by Kidder Mathews (in such capacity, “KM-Subtenant Broker”) and Cassidy Turley Commercial Real Estate Services, Inc., dba Cushman & Wakefield (“C&W”, and together with KM-Subtenant Broker, the “Secondary Brokers”). Following full execution and delivery of this Sublease and the Consent, Sublandlord shall pay the commission payable to KM-Sublandlord Broker as a result of or in connection with this Sublease (the “Commission”) pursuant to, and in accordance with, the terms of a separate agreement between KM-Sublandlord Broker and Sublandlord. It is Sublandlord’s and Subtenant’s understanding that KM-Sublandlord Broker will share the Commission with Binswanger, and the Secondary Brokers pursuant to separate arrangements amongst KM-Sublandlord Broker, Binswanger and the Secondary Brokers, as applicable. Each party shall indemnify, defend and hold the other party free and harmless from and against any claim, loss, damage, liability, obligation, cost or expense, including reasonable attorneys’ fees suffered, incurred or asserted arising from the breach of the indemnifying party’s representations and warranties set forth in this Section 7. Under no circumstances will the Primary Brokers, the Secondary Brokers or any other broker or agent be deemed to be a third party beneficiary of this Sublease.

8.Condition Of Premises.

8.1AS IS. Subject to Sublandlord’s obligation to deliver the Premises to Tenant in the Delivery Condition as set forth above in Section 1, Subtenant has inspected the Premises and all improvements located therein, and has agreed to accept the Premises in their

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“AS-IS” condition, existing as of the date of this Sublease, and subject to all applicable municipal, county, state and federal laws, ordinances and regulations governing and regulating the use and occupancy of the Premises. Without limiting the generality of the foregoing, it is expressly understood that the Premises and Common Areas surrounding the Premises were constructed some time ago. Accordingly, the Delivery Condition does not include any representations by Sublandlord that the Premises, the building systems serving the Premises, or the Common Areas in and around the Premises comply with current code for Subtenant’s intended use or are sufficient for obtaining certificates of occupancy upon completion of the Subtenant Improvements and Sublandlord shall have no obligations hereunder with respect thereto.Specifically (and without limiting the generality of the foregoing), Sublandlord advises Subtenant that Sublandlord has been advised that the sidewalks around the Premises and the building fire sprinkler system may not comply with current code for Subtenant’s intended use and any necessary upgrades or modifications to the sidewalks or the sprinkler system shall be at Subtenant’s sole cost and expense.

8.2Premises not in Delivery Condition. If it is determined that the Premises or any part thereof, including, without limitation, any building systems or equipment located therein or providing services thereto, were not in the Delivery Condition on the Delivery Date, Sublandlord shall, as Subtenant’s sole remedy hereunder, promptly take such steps as are necessary to cause the Premises to be in the Delivery Condition as soon as reasonably possible after receiving notice thereof from Subtenant at no cost to Subtenant (through Operating Expenses or otherwise), provided, that, (i) Subtenant delivers written notice to Sublandlord detailing such deficiency by no later than the date that is three (3) months after the Delivery Date (time being of the essence), and (ii) the failure of the Premises to be in the Delivery Condition was not directly caused by work performed or modifications made by Subtenant or its agents, employees or contractors to the Premises. Notwithstanding the foregoing or anything to the contrary herein, if the failure of the Premises to be in the Delivery Condition identified in Subtenant’s written notice is due to a failure by Master Landlord to perform any obligations of Master Landlord under the Master Lease (a “Master Landlord Failure”), Sublandlord shall first use commercially reasonable efforts to cause Master Landlord to perform such obligations in accordance with Section 9.1.1. However, if Master Landlord fails to correct the Master Landlord Failure within thirty (30) days after receiving Sublandlord’s written request therefor (or, if more than 30 days is necessary to complete such correction, Master Landlord has not commenced correction within such 30-day period or Master Landlord has commenced correction within such 30-day period but has not thereafter diligently pursued such correction to completion), or the time period for causing Master Landlord to correct the Master Landlord Failure under the Master Lease has expired, Sublandlord shall promptly at Sublandlord’s election, in Sublandlord’s sole and absolute discretion, either (i) take such steps as are necessary to correct the Master Landlord Failure at Sublandlord’s sole cost and expense, or (ii) notify Subtenant in writing that Sublandlord will not correct the Master Landlord Failure. If Sublandlord notifies Subtenant that Sublandlord will not correct the Master Landlord Failure, Subtenant shall be entitled to terminate this Sublease by delivering written notice to Sublandlord of such election within ten (10) business days after receipt of Sublandlord’s notice. If Subtenant elects to terminate this Sublease pursuant to its right in the foregoing sentence, then Sublandlord shall have the right (but not the obligation) to nullify such termination by delivering written notice to Subtenant within three (3) business days after receipt of Subtenant’s termination notice by delivering written notice to

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Subtenant stating that Sublandlord intends to correct the Master Landlord Failure at Sublandlord’s sole cost and expense (a “Sublandlord Nullification Notice”). If Sublandlord delivers a Sublandlord Nullification Notice, then Sublandlord shall promptly take such steps as are necessary to correct the Master Landlord Failure at Sublandlord’s sole cost and expense. The Premises have not undergone inspection by a Certified Access Specialist (CASp).

9.Master Lease.

9.1Compliance With The Master Lease. The terms of this Section 9.1 (including, without limitation, subsections 9.1.1, and 9.1.2 below) shall govern incorporation of any provisions into this Sublease and such provisions are collectively referred to herein as the “Incorporation Provisions.” Subtenant shall not cause a breach of the Master Lease, as more particularly set forth in Section 9.1.3 below. Except as otherwise expressly provided hereunder, or as the context of this Sublease directly indicates otherwise, all of the rights and obligations granted to or imposed on the “Tenant” under the Master Lease with respect to the Premises are hereby granted to or imposed on Subtenant and all of the rights and granted to the “Landlord” under the Master Lease with respect to the Premises are hereby granted to Sublandlord. All of the terms and conditions contained in the Master Lease are incorporated herein, except as specifically provided below, and shall together with the terms and conditions specifically set forth in this Sublease constitute the complete terms and conditions of this Sublease. Subject to the following sentence, capitalized terms used but not defined herein have the meanings given thereto in the Master Lease. To the extent the Master Lease terms are incorporated herein, the following defined terms in the Master Lease shall be deemed to have the respective meanings set forth below for purposes of this Sublease:

Defined Term in Master Lease	Definition Under This Sublease
Amendment	Sublease (as defined herein)
Building(s)	331 Building (as defined herein), provided, that, if it is clear from the context of the applicable use that references to the “Buildings” should refer to more than just the 331 Building (such as for purposes of calculating the allocation of costs or responsibilities among the 331 Building and other buildings), the reference shall be adjusted as appropriate to equitably allocate such costs or responsibilities to the 331 Building.
Landlord	Sublandlord (as defined herein)
Lease	Sublease (as defined herein)
Minimum Rental	Base Rent (as defined herein)
Phase II Building(s)	331 Building (as defined herein), provided, that, if it is clear from the context of the applicable use that references to the “Phase II Buildings” should refer to more than just the 331 Building (such as for purposes of calculating the allocation of costs or responsibilities among the 331 Building and other buildings), the reference shall be adjusted as appropriate to equitably allocate such costs or responsibilities to the 331 Building.

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Defined Term in Master Lease	Definition Under This Sublease
Phase II Rent Commencement Date	Rent Commencement Date (as defined herein)
Property	The Phase II site shown on the Phase II Site Plan attached to the Master Amendment as Exhibit A.
Rent Commencement Date	Rent Commencement Date (as defined herein)
Tenant	Subtenant (as defined herein)
Tenant Improvement Allowance	Allowances (as defined herein)
Tenant Improvements	Subtenant Improvements
Workletter	Subtenant Work Letter

Subtenant acknowledges that it has read the attached copy of the Master Lease and agrees that this Sublease is in all respects subject and subordinate to any mortgage, deed, deed of trust, ground lease or other instrument now or hereafter encumbering the Premises or the land on which it is located to the terms and conditions of the Master Lease and to the matters to which the Master Lease, including any amendments thereto, is or shall be subordinate. Sublandlord agrees that Sublandlord shall not subordinate its interest in the Master Lease to any future ground Lessor, mortgagee, trustee, beneficiary or leaseback lessor without first receiving a Non-Disturbance Agreement in accordance with Section 19.1 of the Master Lease. Sublandlord represents and warrants to Subtenant that (i) the copy of the Original Master Lease and Master Amendment attached hereto as Exhibit A are each true and correct copies, (ii) the Master Lease is in full force and effect, and, to Sublandlord’s knowledge, there does not exist any uncured default or event or circumstance which, with the passage of time, would become a default thereunder by either Sublandlord or Master Landlord, and (iii) the expiration date of the Master Lease with respect to the Premises is December 31, 2023. As used herein, the phrase “to Sublandlord’s knowledge” or similar phrases will be deemed to refer exclusively to matters (i) of which Sublandlord has received written notice pursuant to the requirements of Section 21.1 of the Master Lease, or (ii) within the current actual (as opposed to constructive or imputed) knowledge of Charles Barry (“Sublandlord’s Representative”). No duty of inquiry or investigation on the part of Sublandlord or Sublandlord’s Representative will be required or implied and in no event shall Sublandlord’s Representative have any personal liability therefor.

Notwithstanding anything to the contrary set forth herein:

9.1.1Sublandlord Has No Duty to Perform Master Landlord’s Obligations. Sublandlord shall have no duty to perform any obligations of Master Landlord which are, by their nature, the obligation of an owner or manager of real property, except to the extent that Sublandlord elects to do so pursuant to Section 8 hereof and except for the provision of the Allowances in accordance with Section 10.4.2 hereof. For example, Sublandlord shall not be required to (i) provide services, utilities, repairs, maintenance or other tasks which the Master Landlord is required to provide under the Master Lease, (ii) construct any improvements, (iii) procure or maintain the insurance which the Master Landlord is required to procure and maintain under the Master Lease, (iii) develop or implement the Transportation Demand Management Plan (as defined in the Master Lease) or perform its related obligations and activities, or (iv) provide any non-disturbance protection in connection with any mortgage,

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deed, deed of trust, ground lease or other instrument now or hereafter encumbering the Premises. The parties contemplate that Master Landlord will perform such obligations under the Master Lease to the extent required therein and in the event of any default or failure of such performance by Master Landlord, Sublandlord agrees that it will, upon written request from Subtenant detailing the nature of such failure, use good faith, commercially reasonable efforts to cause Master Landlord to perform its obligations under the Master Lease for the benefit of Subtenant, and such good faith, commercially reasonable efforts shall include, without limitation, efforts (i) to cause Master Landlord to perform its obligations under the Master Lease for the benefit of Subtenant, (ii) to obtain, at Subtenant’s sole cost and expense, the consent of Master Landlord whenever the consent of Master Landlord is required under the Master Lease, (iii) to make any permitted claims for rent abatement from Master Landlord under the terms of the Master Lease, and (iv) upon Subtenant’s written request, to promptly notify Master Landlord of its nonperformance under the Master Lease and request that Master Landlord perform its obligations under the Master Lease. Except as specifically provided in Sections 10.4.2(a) and 13 below, under no circumstances shall Subtenant be entitled to any free rent period, construction allowance, tenant improvements, or any other such economic incentives provided to Sublandlord as set forth in the Master Lease.

9.1.2Time Periods for Performance; Approvals by Both Master Landlord and Sublandlord. Whenever any provision of the Master Lease specifies a time period in connection with the performance of any liability or obligation by Subtenant or any notice period or other time condition to the exercise of any right or remedy by Sublandlord hereunder, such time period shall be shortened in each instance by three (3) business days for the purposes of incorporation into this Sublease, but in no case shall such period be less than three (3) days or the actual time period for performance set forth in the Master Lease, if shorter. Any default notice or other notice of any obligations (including any billing or invoice for any rent or any other expense or charge due under the Master Lease) from Master Landlord which is received by Subtenant (whether directly or as a result of being forwarded by Sublandlord) shall constitute such notice from Sublandlord to Subtenant under this Sublease without the need for any additional notice from Sublandlord. Whenever any provision of the Master Lease requires Subtenant to pay the costs and expenses of “Landlord,” Subtenant shall pay the costs and expenses of both Master Landlord and the costs and expenses of Sublandlord to the extent arising out of this Sublease (other than costs incurred in connection with obtaining Master Landlord’s consent hereto, which shall be Sublandlord’s responsibility) or Subtenant’s use or occupancy of the Premises. Whenever any provision of the Master Lease requires Subtenant to submit evidence, certificates or other documents or materials, Subtenant shall submit such items to both Sublandlord and Master Landlord, and whenever any provision of the Master Lease requires Subtenant to obtain the approval or consent of “Landlord,” Subtenant shall be required to obtain the approval or consent of both Sublandlord and Master Landlord; provided however, that if Master Landlord provides such consent, Sublandlord shall not unreasonably withhold, condition or delay consent. In the event of a conflict between the express provisions of this Sublease and the incorporated provisions of the Master Lease, as between Sublandlord and Subtenant, the express provisions of this Sublease shall control.

9.1.3Subtenant Shall Not Cause a Breach of Master Lease. Subtenant shall not do, permit or suffer any act, occurrence or omission which if done,

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permitted or suffered by Sublandlord would be (with notice, the passage of time or both) in violation of or a default by the “Tenant” under the Master Lease or could lead in any respect to the termination of the Master Lease. If Subtenant shall default in the performance of any of its obligations under this Sublease, other than its obligation to pay rent to Sublandlord, Sublandlord, without being under any obligation to do so and without thereby waiving such default, may remedy such default for the account and at the expense of Subtenant, without notice in a case of emergency and, in all other cases, if the default continues after five (5) business days from the date of written notice thereof from Sublandlord. Subtenant shall defend, indemnify and hold Sublandlord harmless from all Claims, including reasonable attorneys’ fees and costs, arising out of or in connection with any acts or failures to act by Subtenant, or its agents, employees or contractors that causes Sublandlord to be in a default under the Master Lease or otherwise increases Sublandlord’s liability or responsibilities under the Master Lease, provided, that, Subtenant shall not be required to indemnify or defend Sublandlord for any Claims to the extent resulting from the negligence or willful misconduct of Sublandlord.

9.1.4Sublandlord Shall Not Cause a Breach of the Master Lease, and Shall Not Extend. So long as Subtenant is not in default under this Sublease beyond the expiration of any applicable notice and cure periods, Sublandlord shall fully perform all Sublandlord’s covenants, obligations and agreements set forth in the Amended Master Lease (as defined in Section 9.3) (except to the extent they are the corresponding covenants, obligations or agreements of Subtenant hereunder that Subtenant has failed to comply with pursuant to the terms hereof), including without limitation, the payment of rent and all other sums payable by Sublandlord thereunder. Sublandlord further agrees that Sublandlord will not exercise any extension options it may have to extend the term of the Amended Master Lease with respect to the 331 Building only and hereby relinquishes any such right. Master Landlord shall be a third party beneficiary of the previous sentence. In the event (i) Sublandlord defaults in the performance of any of its obligations under this Sublease beyond all applicable notice and cure periods (provided such Sublandlord default under this Sublease is not the result of or caused by Master Landlord’s failure to perform Master Landlord’s stated obligations under the Master Lease, Master Landlord’s default under the Master Lease, or Subtenant’s default under the Sublease), and (ii) such default by Sublandlord adversely impacts Subtenant’s ability to conduct business in the Premises, then Subtenant shall be entitled to “self-help” as set forth below. In such event, after expiration of the initial notice and cure period, if the default is thereafter continuing and Sublandlord has not commenced to cure such default (within the initial cure period) and is not thereafter diligently prosecuting such cure to completion, Subtenant shall be entitled to deliver a second notice to Sublandlord expressly stating in bold and capitalized text that Subtenant intends to cure such default on Sublandlord’s behalf. If Sublandlord fails to commence such repairs within 10 business days after Sublandlord’s receipt of Subtenant’s second notice and fails thereafter to diligently pursue such repairs to completion, Subtenant shall be entitled to proceed to take such steps as are necessary to cure such Sublandlord default and charge Sublandlord Subtenant’s reasonable third party expenses in so doing (including, without limitation, reasonable attorneys’ fees and costs), provided, that, Subtenant provides Sublandlord with invoices and evidence of payment for such costs. Notwithstanding the foregoing or anything to the contrary herein, under no circumstances will Subtenant be entitled to perform obligations of Master Landlord under the Master Lease as part of Subtenant’s “self-help” rights hereunder, unless otherwise expressly agreed to in writing by Master Landlord (in the Consent or

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other written document) and Master Landlord agrees to release Sublandlord from any liability in connection therewith.

9.2Excluded Provisions. Notwithstanding any provision of this Sublease to the contrary, the following provisions of the Master Lease shall not be incorporated into this Sublease:

Provisions in the Original Master Lease

• Section 1.1(a), except for the definitions of “Improvements” and “Common Areas”

• Section 1.1(c)

• Section 1.2, except as referenced in Section 9.8 of this Sublease.

• Sections 2.1 through 2.6

• Section 3.1(a) through (e)

• Section 5.1

• Section 5.2

• Section 5.3

• Article 6

• Section 9.1 through 9.5, except as referenced in Section 3.3 above

• Unless otherwise agreed by Master Landlord in the Consent, the last portion of the first sentence in Section 11.1 beginning with “except that Tenant shall not be required…”

• The fifth sentence of Section 11.2, beginning with “Tenant shall also be responsible…”

• Section 12.1(b)

• The second sentence of Section 12.2(c)

• Section 14.6

• The second sentence and parenthetical third sentence of Section 19.1

• Article 20

• Section 21.1, except as referenced in Section 10.1 of this Sublease.

• Section 21.2

• Section 21.3

• Section 21.5

• Section 21.8

• Section 21.9

• Section 21.15

• Section 21.16

• Section 21.17

• Section 21.18

• Section 21.19

• The fourth sentence (which begins with “The monthly fee”) and the last parenthetical sentence of Section 21.20(b)

• Exhibits A, B, C, D and E (in each case except to the extent expressly referenced in any portion of the Master Lease affirmatively incorporated herein)

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Provisions in the Master Amendment

• Recitals

• Sections 1(a) through (d), including the paragraph that precedes (a)

• Section 1(e), except as referenced in Section 3.3 of this Sublease.

• Section 1(f)

• Clause (ii) of Section 1(g)

• Section 1(h)

• The second, third and fourth sentences of Section 2

• The first sentence of Section 2(b)

• Section 2(a)

• The first two (2) sentences of Section 2(c)

• Section 2(d)

• Sections 3 through 4

• The last sentence of Section 5

• Sections 6 through 8

• Exhibit B

• Schedule C-1

• Schedule C-2

9.3Inapplicable Amendments. In addition to the foregoing, Sublandlord confirms that, except for provisions of this Sublease that refer to the Amended Master Lease, the following amendments to the Original Master Lease are inapplicable to the Premises and are not part of the Master Lease for purposes of this Sublease:

(a)First Amendment to Build-to-Suit Lease dated January 22, 2003;

(b)Second Amendment to Build-to-Suit Lease dated March 26, 2004;

(c)Third Amendment to Build-to-Suit Lease dated August 12, 2004;

(d)Fourth Amendment to Build-to-Suit Lease and First Amendment to Workletter dated June 19, 2006;

(e)Sixth Amendment to Build-to-Suit Lease and Third Amendment to Workletter dated November 21, 2006; and

(f)Seventh Amendment to Build-to-Suit Lease and Fourth Amendment to Workletter dated February 21, 2008.

As used in this Sublease, the term “Amended Master Lease” shall mean the Original Master Lease as amended by all amendments thereto (whether on, before or after the date hereof), including the aforementioned inapplicable amendments.

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9.4Termination Of Master Lease. If for any reason the term of the Master Lease is terminated prior to the Expiration Date of this Sublease, this Sublease shall thereupon terminate and Sublandlord shall not be liable to Subtenant by reason thereof for damages or otherwise unless and to the extent such termination is due to Sublandlord’s default under this Sublease (including, without limitation, a default under Section 9.1.4). In the event of any such early termination, Sublandlord shall return to Subtenant that portion of any rent paid in advance by Subtenant, if any, which is applicable to the period following the date of such termination. Notwithstanding the foregoing, so long as Subtenant is not in default after the expiration of applicable notice and cure periods hereunder, Sublandlord agrees that, except in the event of a casualty or condemnation where Sublandlord is entitled under this Sublease to terminate the Master Lease with respect to the Premises, Sublandlord shall not voluntarily terminate the Master Lease with respect to the Premises without Subtenant’s consent, in its sole discretion, unless Master Landlord agrees to recognize this Sublease as a direct agreement with Subtenant upon substantially the same terms set forth in this Sublease, or Subtenant otherwise has the right to continue to occupy the Premises pursuant to a direct agreement with Master Landlord upon terms satisfactory to Subtenant, in its sole discretion. Nothing herein shall prevent Sublandlord from terminating the Master Lease with respect to spaces other than the Premises leased by Sublandlord thereunder. Sublandlord agrees not to modify the Master Lease in any manner that affects the Premises or Subtenant’s rights or obligations under the Master Lease, without obtaining Subtenant’s prior written consent, to be provided in Subtenant’s sole discretion.

9.5Holding Over. If Subtenant holds possession of the Premises or any portion thereof after the expiration or earlier termination of this Sublease, then Subtenant shall become a tenant at sufferance only, at a sublease base rental rate equal to one hundred fifty percent (150%) of the Base Rent in effect upon the date of such expiration or termination, plus all additional rent payable by Subtenant hereunder (pro-rated on a daily basis) (such amounts, collectively, the “Holdover Rent Payments”). Acceptance by Sublandlord of rent after such expiration or termination date shall not result in a renewal of this Sublease and shall not waive or modify Sublandlord’s rights to pursue any and all legal remedies available to Sublandlord under applicable law with respect to such holding over by Subtenant. It is acknowledged that if Subtenant holds over after the expiration or earlier termination of this Sublease, Sublandlord may be subject to holdover rent with respect to the Premises under the Master Lease. Accordingly, (i) Sublandlord expressly reserves the right to require Subtenant to surrender possession of the Premises upon the expiration of the Term or upon the earlier termination hereof and the right to assert any remedy at law or in equity to evict Subtenant and/or collect damages in connection with any such holding over, and (ii) Subtenant shall indemnify, defend and hold Sublandlord harmless from and against any and all Claims, including, without limitation, attorneys’ fees incurred or suffered by Sublandlord by reason of Subtenant’s failure to surrender the Premises on the expiration or earlier termination of this Sublease in accordance with the provisions of this Sublease (including, without limitation, the cost of all rent payable by Sublandlord with respect to the Premises under the Master Lease caused by or resulting from Subtenant’s holdover) to the extent greater than the Holdover Rent Payments, unless Subtenant has vacated the Premises in accordance with the terms hereof and such holdover rent with respect to the Premises is due to the negligence or willful misconduct of Sublandlord. Notwithstanding the foregoing, Subtenant shall be entitled to make separate arrangements with Master Landlord permitting Subtenant to

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remain in the Premises after expiration of the Term, provided, that, (a) Sublandlord is released from its obligation to surrender the Premises to Master Landlord under the terms of the Master Lease, and (b) the Master Lease terminates with respect to the Premises for all purposes on the Expiration Date.

9.6Compliance with Law. Subtenant warrants to Sublandlord that the Subtenant Improvements (as defined below) and any other improvements constructed by Subtenant on the Premises from time to time shall not violate any applicable law, building code, regulations or ordinance in effect on the Rent Commencement Date or at the time such improvements are placed in service. If it is determined that such warranty has been violated, then Subtenant shall, upon written notice from Sublandlord, promptly correct such violation, at Subtenant’s sole cost and expense. Subtenant acknowledges that neither Sublandlord nor any agent of Sublandlord has made any representation or warranty as to the present of future suitability of the Premises for the conduct of Subtenant’s business or proposed business therein.

9.7Definitions. Subject to the Incorporation Provisions, the definitions of “Improvements” and “Common Areas” set forth in Section 1.1(a) of the Original Master Lease are hereby incorporated by reference; provided however, that the phrase “in the Center” of the definition of “Common Areas” is hereby deleted and replaced with “on the Property”.

9.8Use of Common Areas. Subject to the Incorporation Provisions, Section 1.1(b) of the Original Master Lease is hereby incorporated by reference; provided however, that the phrase “pursuant to Section 1.1(a)” is hereby deleted therefrom. Subtenant acknowledges Master Landlord’s reserved rights set forth in Section 1.2 of the Original Master Lease.

9.9Personal Property. Subject to the Incorporation Provisions, Section 8.1 of the Original Master Lease is hereby incorporated by reference.

9.10Real Property. Subject to the Incorporation Provisions, Section 8.2 of the Original Master Lease is hereby incorporated by reference.

9.11Utilities. Subject to the Incorporation Provisions, Section 10.1 of the Original Master Lease are hereby incorporated by reference; provided however, that the phrases “and, in the case of the Phase II Building, to Tenant’s premises in such Building” and “(or, in the case of the Phase II Building, are not separately metered to Tenant’s premises in that Building)” are hereby deleted in their entirety.

9.12Alterations; Surrender Obligations. Subject to the Incorporation Provisions, Sections 11.1 through 11.4 of the Original Master Lease are hereby incorporated by reference, except for (i) the last portion of the first sentence in Section 11.1, as amended by Section 1(h) of the Master Amendment (beginning with “except that (i) subject to the final sentence…”) and (ii) the fifth sentence of Section 11.2 (which begins with “Tenant shall also be responsible”). Notwithstanding the foregoing, the language excluded by clause (i) above shall not be excluded and shall be deemed to be incorporated into this Sublease, if Master Landlord

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consents to Subtenant having the rights to perform certain alterations, additions or improvements without consent as set forth therein. Further, notwithstanding anything to the contrary herein, Subtenant’s removal and restoration obligations hereunder shall include any removal and restoration obligations of Sublandlord under the Master Lease with respect to the Premise (including, without limitation, removal and restoration obligations with respect to improvements installed by Sublandlord prior to this Sublease if so required), provided, that, if Subtenant enters into a direct lease of the Premises with the Master Landlord commencing immediately upon termination of the Master Lease and Sublandlord is fully released from any obligations with respect to the surrender condition of the Premises under the Master Lease, Sublandlord agrees that Subtenant shall not be obligated under this Sublease to complete any removal or restoration as required under the Master Lease. Further, Sublandlord agrees to cooperate with Subtenant’s efforts to obtain a confirmation from Master Landlord in the Consent that neither Subtenant nor Sublandlord will be required to remove Subtenant’s Improvements upon expiration or earlier termination of the Master Lease. Subtenant shall not be required to remove any alterations or improvements made by or for the account of Sublandlord unless the Master Landlord requires the removal of the same. Sublandlord shall not require Subtenant to perform Subtenant Improvements on all floors of the Premises if a corresponding obligation is not otherwise required of Sublandlord under the Master Lease.

9.13Maintenance and Repairs. Subject to the Incorporation Provisions, Section 12.1(a) and Section 12.2 of the Original Master Lease are hereby incorporated by reference, except for (i) the phrase “pursuant to the indemnification provided in Section 14.6 hereof” of Section 12.1(a), (ii) the phrase “, except to the extent expressly set forth in Section 12.1(b),” of Section 12.1(a), (iii) the phrase “(from and after the applicable Rent Commencement Date for each Phase I Building and for each phase of the Phase II Building)” of Section 12.2(a), (iv) the last proviso of Section 12.2(a) beginning with “provided, however, that (x) Tenant’s ordinary repair obligation...”, and (v) the second sentence of Section 12.2(c).

9.14Use; No Nuisance, Compliance with Laws, Liquidation Sales, & Environmental Matters. Subject to the Incorporation Provisions, Sections 13.1 through 13.6 of the Original Master Lease are hereby incorporated by reference; provided however, that notwithstanding anything to the contrary contained in this Sublease, under no circumstances shall Subtenant ever have any responsibility for any breach or default of these provisions existing on or prior to the date of this Sublease or first arising after the expiration of the Term (unless actually caused by Subtenant); further provided, that (i) the reference to “Landlord” in the first line of Section 13.4(b) hereby refers to Master Landlord, (ii) the reference to “14.6” in the last line of Section 13.6(b)(xi) is hereby deleted, and (iii) Section 13.6(d) is hereby deleted in its entirety.

9.15Insurance. Subject to the Incorporation Provisions, Sections 14.1 through 14.5 of the Original Master Lease and Section 14.7 of the Original Master Lease are hereby incorporated by reference, except the phrase “by Landlord and Tenant under Section 5.1 of the Workletter” in the first sentence shall be deemed to be replaced by the phrase “by Subtenant under the Subtenant Work Letter.” Without limiting the generality of the foregoing, Subtenant acknowledges and agrees that Subtenant shall carry the same insurance that Sublandlord is obligated to carry under the Original Master Lease, provided however, that

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Subtenant shall name Subtenant, Sublandlord and Master Landlord (and any other third parties identified by Sublandlord or Master Landlord in accordance with the terms of the Master Lease) as insureds or additional insureds under such insurance policies as their interests may appear.

9.16Sublease and Assignment. Subject to the Incorporation Provisions, Article 15, as amended by Section 1(i) of the Master Amendment, is hereby incorporated by reference and shall govern any such assignment or subletting, except as set forth in this Section 9.16. Subtenant shall not voluntarily or involuntarily, by operation of law or otherwise, assign, sublet, mortgage or otherwise encumber all or any portion of its interest in this Sublease or in the Premises without obtaining the prior written consent of Sublandlord and Master Landlord with respect thereto. So long as Master Landlord’s consent is obtained, Sublandlord shall not unreasonably withhold, condition, or delay its consent to any proposed assignment or sublease; provided, however, that Sublandlord or Master Landlord, as the case may be, may require as a condition of granting any such consent that (i) the proposed transferee demonstrate that its financial resources and tangible net worth are at least equal to Subtenant’s financial resources and tangible net worth as of the Effective Date, (ii) the nature of the transferee’s proposed use of the Premises and the transferee’s reputation shall be reasonably satisfactory to Sublandlord and (ii) Subtenant reaffirms, in form satisfactory to Sublandlord, its continuing liability under this Sublease. Notwithstanding the foregoing, Sublandlord confirms that Subtenant is entitled to complete a Permitted Transfer (as defined in Section 15.1 of the Original Master Lease) without Sublandlord’s consent, but with prior or concurrent notice by Subtenant to Sublandlord (a “Subtenant Permitted Transfer”). It is acknowledged, however, that, unless and to the extent agreed otherwise in the Consent or other separate agreement between Subtenant and Master Landlord, Subtenant shall be required to obtain Master Landlord’s consent to any Subtenant Permitted Transfer. Any assignment, subletting, mortgage or other encumbrance attempted by Subtenant to which Sublandlord and/or Master Landlord has not consented in writing pursuant to the provisions hereof (unless such consent is not required) shall be null and void and of no effect. Sublandlord hereby agrees to reimburse Master Landlord at its own expense for any fees due to Master Landlord under the Master Lease in connection with the subletting of the Premises to Subtenant.

9.17Right of Entry and Quiet Enjoyment. Subject to the Incorporation Provisions, Article 16 of the Original Master Lease is hereby incorporated by reference.

9.18Casualty and Taking. Subject to the Incorporation Provisions, Article 17 of the Original Master Lease is hereby incorporated by reference, provided, that, Sublandlord shall have no right to terminate this Sublease as a result of damage, destruction or taking, unless (i) such damage, destruction or taking affects the 331 Building, and is of such a magnitude that the Sublandlord has the right to terminate the Master Lease with respect to the 331 Building as a result, provided, that, Sublandlord shall not exercise such termination right with respect to the 331 Building (subject to clause (ii) below) if Subtenant certifies to Sublandlord in writing that Subtenant will fully perform and indemnify Sublandlord for all restoration obligations of Sublandlord under the Master Lease with respect to the 331 Building and can reasonably demonstrate to Sublandlord that Subtenant has the financial ability to perform such restoration; or (ii) the damage, destruction or taking (A) affects spaces other than

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the 331 Building which are leased by Sublandlord under the Master Lease, (B) is of such magnitude that Sublandlord has the right to terminate the Master Lease, and (C) Sublandlord is not entitled to terminate the Master Lease with respect to the affected spaces without also terminating the Lease with respect to the 331 Building.

9.19Default. Subject to the Incorporation Provisions, Article 18 of the Original Master Lease is hereby incorporated by reference.

9.20Subordination. Subject to the Incorporation Provisions (except as provided below), Section 19.1 of the Original Master Lease is hereby incorporated by reference, except for the second and parenthetical third sentence. Notwithstanding anything to the contrary in the Incorporation Provisions, it is acknowledged and agreed that references in Section 19.1 of the Original Master Lease to any assignee, ground lessor, mortgagee, trustee, beneficiary or sale/leaseback lessor or other party with an interest in the Buildings, the Property, the Center or any of them, are deemed to be references to Master Landlord’s (as opposed to Sublandlord’s) assignee, ground lessor, mortgagee, trustee, beneficiary or sale/leaseback lessor.

9.21Sale of Sublandlord’s Interest. Subject to the Incorporation Provisions, Section 19.2 of the Original Master Lease is hereby incorporated by reference, provided however, that, (i) references to “interest in the Buildings and the Property” are hereby deemed to be references to “interest in the Master Lease,” and (ii) the phrase “, except as otherwise expressly provided in Section 21.2 hereof” is hereby deleted.

9.22Estoppel Certificate. Subject to the Incorporation Provisions, Section 19.3 of the Original Master Lease is hereby incorporated by reference, provided however, that, notwithstanding anything to the contrary in the Incorporation Provisions, references therein to the term “Landlord” shall be deemed to refer to both Master Landlord and Sublandlord.

9.23Subordination to CC&Rs. Subject to the Incorporation Provisions, Section 19.4 of the Original Master Lease is hereby incorporated by reference, provided however that (i) references to “sublease” therein are hereby replaced with “sub-sublease”, (ii) the phrase “(including any buildings occupied by or leased to Tenant pursuant to Tenant’s exercise of any of the rights contained in Article 6 of this Lease)” therein is hereby deleted, and (iii) the phrase “or, if Tenant exercises its rights under Section 6.3 of this Lease, on the Expansion Property” therein is hereby deleted.

9.24Mortgagee Protection. Subject to the Incorporation Provisions, Section 19.5 of the Original Master Lease is hereby incorporated by reference, provided that, notwithstanding anything to the contrary in the Incorporation Provisions, references therein to the term “Landlord” are hereby deemed to refer to Master Landlord.

9.25Severability. Subject to the Incorporation Provisions, Section 21.4 of the Original Master Lease is hereby incorporated by reference.

9.26Surrender; No Merger. Subject to the Incorporation Provisions, Section 21.6 of the Original Master Lease is hereby incorporated by reference.

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9.27Interpretation. Subject to the Incorporation Provisions, Section 21.7 of the Original Master Lease is hereby incorporated by reference.

9.28No Partnership. Subject to the Incorporation Provisions, Section 21.10 of the Original Master Lease is hereby incorporated by reference.

9.29Financial Information. Subject to the Incorporation Provisions, Section 21.11 of the Original Master Lease is hereby incorporated by reference. Notwithstanding the foregoing, Subtenant confirms that, as of the date hereof, Sublandlord may access true, correct and complete, consolidated financial statements for Guarantor at www.prothena.com. Notwithstanding anything to the contrary contained herein or in the Master Lease, Sublandlord agrees that, so long as Guarantor’s financial statements are consolidated and that Guarantor’s consolidated group for accounting purposes includes Subtenant, then for purposes of this Sublease: (i) Subtenant shall not be obligated to deliver financial statements to Sublandlord pursuant to the terms of this Section 9.29 if Guarantor’s consolidated financial statements continue to be publicly available on the website referenced above or are otherwise publicly available and fully accessible on the Securities and Exchange Commission website, and (ii) if such consolidated financial statements are no longer publicly available, as referenced in clause (i) above, Subtenant may satisfy the requirements of this Section 9.29 (and Section 21.11 of the Original Master Lease as incorporated herein) by delivering, or causing Guarantor to deliver, consolidated financial statements for Guarantor.

9.30Costs. Subject to the Incorporation Provisions, Section 21.12 of the Original Master Lease is hereby incorporated by reference.

9.31Time. Subject to the Incorporation Provisions, Section 21.13 of the Original Master Lease is hereby incorporated by reference.

9.32Rules and Regulations. Subject to the Incorporation Provisions, Section 21.14 of the Original Master Lease is hereby incorporated by reference.

9.33Parking and Traffic. Subject to the Incorporation Provisions, Section 21.20 of the Original Master Lease (as amended by Section 1(g) of the Master Amendment) is hereby incorporated by reference, except for the following provisions which require payment of a monthly fee for parking: (A) the fourth sentence of Section 21.20(b) of the Original Master Lease, which begins with the phrase “The monthly fee”, (B) the last parenthetical sentence of Section 21.20(b) of the Original Master Lease, and (C) clause (ii) of Section 1(g) of the Master Amendment. Without limiting the generality of the Incorporation Provisions, it is acknowledged that the TDMP program and the administration and management thereof are obligations of the Master Landlord and Sublandlord shall have no responsibility with respect thereto.

9.34Site Plan. Subject to the Incorporation Provisions, the Site Plan attached to the Master Amendment as Exhibit A is hereby incorporated by reference.

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10.Additional Provisions.

10.1Notices. In the event that (i) Sublandlord or Subtenant shall receive any notice or documentation from Master Landlord for any reason pertaining to the Premises or this Sublease (it being agreed that Sublandlord has no obligation to deliver to Subtenant notices under the Master Lease that relate solely to spaces other than the Premises leased by Sublandlord under the Master Lease, unless such notice could adversely impact Subtenant’s rights or obligations hereunder [such as a notice of Sublandlord’s breach or default under the Amended Master Lease]), or (ii) Sublandlord or Subtenant send any notice or documentation to Master Landlord for any reason pertaining to the Premises or this Sublease (it being agreed that Sublandlord has no obligation to deliver to Subtenant notices to Master Landlord under the Master Lease that relate solely to spaces other than the Premises leased by Sublandlord under the Master Lease, unless such notice could adversely impact Subtenant’s rights or obligations hereunder [such as a notice of Master Landlord’s breach or default under the Amended Master Lease]), then, within three (3) business days from the date of such receipt or delivery (as applicable), such party shall send a copy of such notice or document to the other party. All notices, demands, consents and approvals which may or are required to be given by either party to the other hereunder shall be given in the manner provided in Section 21.1 of the Original Master Lease at the addresses shown below (or such other addresses as the parties may designate in writing and delivered in compliance with this Section 10.1). Subject to the Consent, notices to the Master Landlord shall be given in accordance with Section 21.1 of the Master Lease.

Notices To Sublandlord:	Amgen Inc. One Amgen Center Drive Mail Stop: 28-1-A Thousand Oaks, CA 91320-1799 Attention: Corporate Real Estate
With a copy to:	Amgen Inc. One Amgen Center Drive Mail Stop: 35-2-A Thousand Oaks, CA 91320-1799 Attention: Operations Law Group
Notices to Subtenant: With a Copy to:	Prothena Biosciences Inc 650 Gateway Boulevard South San Francisco, CA 94080  Attention: Chief Financial Officer Prothena Biosciences Inc 650 Gateway Boulevard South San Francisco, CA 94080  Attention: Chief Legal Officer

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10.2[Intentionally Omitted]

10.3[Intentionally Omitted]

10.4Subtenant Improvements.

10.4.1Alterations and Improvements By Subtenant.

(a)Subtenant Improvements. Subtenant shall be entitled to construct tenant improvements in the Premises (the “Subtenant Improvements”), including reasonable security measures for the Premises, subject to and in accordance with the terms of that certain Subtenant Work Letter to be attached to the Consent (which is expressly incorporated herein by this reference) (the “Subtenant Work Letter”) and the terms of the Master Lease and this Sublease. All approval rights of Master Landlord and Sublandlord with respect to the Subtenant Improvements shall be governed by the terms of the Subtenant Work Letter. Subtenant shall be solely responsible for paying any management or supervisory fee or reimbursement requests charged by Master Landlord in connection with the Subtenant Improvements (collectively, the “Master Landlord Fees”) in accordance with the terms of the Master Lease and the Subtenant Work Letter. Sublandlord confirms that Sublandlord shall not charge Subtenant any construction management fee or supervisory fees (other than passing through the Master Landlord Fees). However, Subtenant shall be obligated to reimburse Sublandlord for any actual and reasonable third party out-of-pocket costs incurred by Sublandlord in connection with reviewing and approving Subtenant’s plans and specifications promptly upon request. Subject to the terms of the Master Lease, the Subtenant Work Letter, and Sublandlord’s prior written approval, which shall not be unreasonably withheld, conditioned or delayed, Subtenant shall be entitled to use its own architects and contractors for the purpose of completing the Subtenant Improvements.

(b)No Liens. Should a lien be made or filed against the Premises or real property on which the Premises are situated as a result of the construction of any Subtenant Improvements (or any other alterations or actions by Subtenant or its agents, employees or contractors), Subtenant at its sole cost, shall bond against or discharge said lien within ten (10) business days after Sublandlord’s or Master Landlord’s request to do so. If Subtenant fails to do so, Master Landlord and Sublandlord shall each have the right (but not the obligation) to obtain the release or discharge of the lien and Subtenant shall, within fifteen (15) days after written demand by Master Landlord or Sublandlord (as applicable, and accompanied by reasonable documentation of the items claimed), reimburse Master Landlord or Sublandlord for all costs, including (but not limited to) reasonable attorneys’ fees, incurred by Master Landlord or Sublandlord (as the case may be) in obtaining the release or discharge of such lien, together with interest from the date of demand at the interest rate set forth in Section 3.2 of the Original Lease.

(c)Incorporation of Master Amendment Provisions. Subject to the Subtenant Work Letter and the Incorporation Provisions, Section 2 of the Master Amendment is hereby incorporated by reference, but expressly excluding (i) the second, third and fourth sentences of Section 2 of the Master Amendment, (ii) Section 2(a) of the Master

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Amendment, (iii) the first sentence of Section 2(b) of the Master Amendment, (iv) the first two sentences of Section 2(c) of the Master Amendment, and (v) Section 2(d) of the Master Amendment.

10.4.2Allowances. Subtenant shall construct the Subtenant Improvements in accordance with the terms hereof and the Subtenant Work Letter, at Subtenant’s cost, provided, that, Subtenant shall be entitled to apply the Master Lease Allowance (as defined below) and the Sublandlord Allowance (defined below and, collectively with the Master Lease Allowance, the “Allowances”) to Subtenant’s costs and expenses to construct the Subtenant Improvements, as more particularly set forth in this Section 10.4.2.

(a)Master Lease Allowance. Sublandlord confirms and represents that it has not used approximately Two Million Two Hundred Four Thousand Eight Hundred Thirty and No/100 Dollars ($2,204,830.00) of the allowance funds available to Sublandlord under the Master Lease with respect to the Premises (the “Master Lease Allowance”) from Master Landlord. Subject to the terms of the Master Lease, and the terms of the Subtenant Work Letter, Sublandlord agrees to provide Subtenant with the benefit of the Master Lease Allowance to apply towards Subtenant’s costs of completing the Subtenant Improvements as permitted under the terms of the Master Lease. Sublandlord shall disburse the Master Lease Allowance in accordance with the Disbursement Procedures set forth in Section 10.4.3(a) below.

(b)Sublandlord Allowance. In addition to the Master Lease Allowance, Sublandlord shall provide Subtenant with an improvement allowance equal to Eleven Million Nine Hundred Fifty-Eight Thousand Three Hundred Ninety Two and 88/100 Dollars ($11,958,392.88) (the “Sublandlord Allowance”).

(c)Use of Allowances. Subtenant shall be entitled to apply the Master Lease Allowance (subject to the terms of the Master Lease) and the Sublandlord Allowance to hard and soft costs incurred by Subtenant to construct the Subtenant Improvements and to prepare for Subtenant’s occupancy to the Premises, including, without limitation, all architectural and engineering services, project management, design supervision and construction management fees, moving expenses, costs and expenses to acquire and install security systems, furniture, fixtures and equipment, permitting fees, signage, and data/telephone cabling. Sublandlord shall disburse the Allowances in accordance with the Disbursement Procedures set forth in Section 10.4.3 below.

10.4.3Disbursement Procedures. Subtenant acknowledges and agrees that its requests for disbursements of the Allowances in connection with the Subtenant Improvements will, to the extent possible, be allocated first to the Master Lease Allowance and then to the Sublandlord Allowance.

(a)Disbursement of Master Lease Allowance. With respect to distribution of the Master Lease Allowance, Sublandlord shall disburse such payment to Subtenant not more than once per month, within forty-five (45) days after receipt by Sublandlord from Subtenant of the Disbursement Documentation (as defined below), as well as any other

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information required by Master Landlord for disbursement of the Master Lease Allowance. Sublandlord shall be entitled to rely on the accuracy of any and all invoices, fee statements and lien waivers for labor and materials performed on or furnished to the Premises in connection with the Subtenant Improvements and to rely, to the extent submitted, on any and all certifications as to the cost of the improvement submitted by Subtenant’s general contractor or architect. In addition, Sublandlord shall have the option and right to inspect all Subtenant Improvements prior to any disbursement of the Master Lease Allowance, provided that such inspections shall be completed expeditiously. Subtenant acknowledges that, although Sublandlord is disbursing the Master Lease Allowance directly to Subtenant in accordance with the terms hereof, Sublandlord is doing so with the intent of seeking reimbursement of the disbursed amounts from Master Landlord out of the Master Lease Allowance in accordance with the terms of the Master Lease and the Subtenant Work Letter. Accordingly, Subtenant agrees to cooperate fully with Sublandlord’s efforts to receive such reimbursement from Master Landlord, including, without, limitation, by providing Sublandlord with such documentation or other information related to the Subtenant Improvements as may be requested by Master Landlord with respect thereto promptly upon request.

(b)Disbursement of Sublandlord Allowance. With respect to Sublandlord’s contribution obligations for the Sublandlord Allowance, Sublandlord shall disburse such payment to Subtenant not more than once per month, within forty-five (45) days after receipt by Sublandlord from Subtenant of: (i) an invoice from Subtenant for such costs; (ii) copies of all underlying invoices showing such costs; (iii) executed contract waivers and/or mechanic’s lien releases with respect to any portion of the Subtenant Improvements then constructed or completed; and (iv) such other information reasonably requested by Sublandlord (the “Disbursement Documentation”). Sublandlord shall be entitled to rely on the accuracy of any and all invoices, fee statements and lien waivers for labor and materials performed on or furnished to the Premises in connection with the Subtenant Improvements and to rely, to the extent submitted, on any and all certifications as to the cost of the improvement submitted by Subtenant’s general contractor or architect. In addition, Sublandlord shall have the option and right to inspect all Subtenant Improvements prior to any disbursement of the Sublandlord Allowance, provided that such inspections shall be completed expeditiously.

(c)No Default. Sublandlord shall have no obligation to disburse the Allowances to Subtenant during any periods in which Subtenant is in default under this Sublease beyond any applicable notice and cure periods.

10.5Removal of Personal Property. All articles of personal property, and all business and trade fixtures, machinery and equipment (installed by Subtenant and that can be removed without damage to the 331 Building or negatively impacting building systems unless Subtenant repairs any such damage or mitigates any negative impact), cabinet work, furniture and movable partitions (collectively, the “Subtenant’s Property’), if any, owned or installed by Subtenant at its expense in the Premises shall be and remain the property of Subtenant and may be removed by Subtenant at any time, provided that Subtenant, at its expense, shall repair any damage to the Premises caused by such removal or by the original installation. Notwithstanding the foregoing, Subtenant acknowledges and agrees that, pursuant to Section 11.3 of the Original Master Lease, removal of any trade fixtures which are affixed to the 331

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Building or the property or which affect the exterior or structural portions of the 331 Building shall require Master Landlord’s prior written approval as and to the extent set forth in the Original Master Lease. Notwithstanding the foregoing, (i) if Master Landlord approves removal of any such trade fixtures, Sublandlord shall not unreasonably withhold, condition or delay Sublandlord’s approval, and (ii) should the Consent include a list of a trade fixtures which Subtenant shall be allowed to remove from the Premises, then (A) Sublandlord agrees that, subject to the terms of the Consent (and so long as Sublandlord is released by Master Landlord from any obligation or responsibility with respect thereto), it will not have any approval rights in connection therewith, and (B) Sublandlord shall be deemed to have to consented to the removal of any trade fixtures approved by Master Landlord in accordance with the terms of the Consent. Subtenant shall remove all or any part of the aforementioned property at the expiration or sooner termination of this Sublease and repair any damage caused by such removal and/or installation, all at Subtenant’s expense, and shall otherwise leave the Premises in broom-clean condition in compliance with the terms of Section 12.2(c) of the Master Lease (as incorporated herein). Any articles of personal property, or all business and trade fixtures, machinery and equipment, cabinet work, furniture and movable partitions provided by Sublandlord shall remain the property of Sublandlord, and Subtenant shall not remove any of them from the Premises without the prior written consent of Sublandlord.

10.6Waiver. The waiver of either party of any agreement, condition or provision contained herein or any provision incorporated herein by reference shall not be deemed to be a waiver of any subsequent breach of the same or any other agreement, condition or provision, nor shall any custom or practice which may evolve between the parties in the administration of the terms hereof be construed to waive or to lessen the right of a party to insist upon the performance by the other party in strict accordance with said terms. The subsequent acceptance of Rent hereunder by Sublandlord shall not be deemed to be a waiver of any preceding breach by Subtenant of any agreement or condition of this Sublease or the same incorporated herein by reference, other than the failure of Subtenant to pay the particular Rent so accepted, regardless of Sublandlord’s knowledge of such preceding breach at the time of acceptance of such Rent.

10.7Complete Agreement. Except for the Consent and that certain Confidential Disclosure Agreement by and between Subtenant and Sublandlord dated as of October 16, 2015 (the “Confidentiality Agreement”), this written Sublease, together with all exhibits hereto, contains all the representations and the entire understanding between the parties hereto with respect to the subject matter hereof. There are no oral agreements between Sublandlord and Subtenant affecting this Sublease, and this Sublease supersedes and cancels any and all previous negotiations, arrangements, brochures, agreements and understandings, if any, between Sublandlord and Subtenant or displayed by Sublandlord, its agents or real estate brokers to Subtenant with respect to the subject matter of this Sublease, the Premises or the 331 Building. There are no representations between Sublandlord and Subtenant other than those contained in or incorporated by reference into this Sublease.

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11.Indemnification; Exculpation

11.1Non-Liability Of Sublandlord. Sublandlord shall not be liable to Subtenant, and Subtenant hereby waives and releases all Claims against Sublandlord and its partners, officers, directors, employees, trustees, successors, assigns, agents, servants, affiliates, representatives, and contractors (collectively, herein “Sublandlord Affiliates”) for injury or damage to any person or property occurring or incurred in connection with the use of the Premises by Subtenant or any invitees, sub-sublessees, licensees, assignees, agents, employees or contractors of Subtenant. Without limiting the foregoing, neither Sublandlord nor any of the Sublandlord Affiliates shall be liable for and there shall be no abatement of Rent for (i) any damage to Subtenant’s property stored with or entrusted to Sublandlord or Sublandlord Affiliates, or (ii) loss of or damage to any property by theft or any other wrongful or illegal act, or (iii) any injury or damage to persons or property resulting from fire, explosion, falling plaster, steam, gas, electricity, water or rain which may leak from any part of the Premises or from the pipes, appliances, appurtenances or plumbing works therein or from the roof, street or sub-surface or from any other place or resulting from dampness or any other cause whatsoever or from the acts or omissions of other sublessees, occupants or other visitors to the Premises or from any other cause whatsoever, or (iv) any latent or other defect in the Premises. Notwithstanding anything to the contrary set forth herein or in the Master Lease, (i) the waivers of liability contained in this Section 11.1 shall not apply to Claims for bodily injury or death or damage to property to the extent resulting from the negligence or willful misconduct of Sublandlord or its agents, employees or contractors; and (ii) in no event shall Sublandlord ever be liable to Subtenant for (and Subtenant hereby waives any right to recover from Sublandlord for) any lost profits, business interruption or any form of consequential, special or punitive damages.

11.2Non-Liability of Subtenant. Subtenant shall not be liable to Sublandlord, and Sublandlord hereby waives and releases all Claims against Subtenant and its partners, officers, directors, employees, trustees, successors, assigns, agents, servants, affiliates, representatives, and contractors (collectively, herein “Subtenant Affiliates”) for injury or damage to any person or property to the extent resulting from negligence or willful misconduct or negligent omission by Sublandlord or its agents, employees or contractors (exclusive of that resulting from the negligence or willful misconduct or negligent omission by Subtenant or its agents, employees or contractors). Notwithstanding anything to the contrary set forth herein or in the Master Lease, in no event shall Subtenant ever be liable to Sublandlord for (and Sublandlord hereby waives any right to recover from Subtenant for) any lost profits, business interruption or any form of consequential, special or punitive damages, except arising out of a holdover by Subtenant after expiration or earlier termination of the Sublease, as described in Section 9.5 hereof.

11.3Indemnification of Sublandlord; Indemnification of Master Landlord. Subtenant shall indemnify, defend, protect and hold Sublandlord, Master Landlord’s managing agent, Master Landlord and their respective members, partners, shareholders, officers, directors, agents, employees and contractors (collectively, the “Indemnified Parties”), harmless from and against any and all liability for all Claims, including, without limitation, reasonable attorneys’ fees and costs, incurred by Sublandlord or asserted against Sublandlord and occurring

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within the Premises or arising in connection with (i) the use of, or activities in or about, the Premises (including, without limitation, the use, occupancy and enjoyment of the Property) by Subtenant or any invitees, sublessees, licensees, assignees, agents, employees or contractors of Subtenant or holding under Subtenant, (ii) the act, negligence, fault or omission of Subtenant, its agents, servants, contractors, employees, representatives, licensees or invitees, or (iii) Subtenant’s actions under this Sublease, including, without limitation, Claims arising out of Subtenant bringing Food Vendors on the Property or Subtenant’s direct communications with Master Landlord. Notwithstanding any provision of this Section 11.3 to the contrary, the indemnification contained in this Section 11.3 shall not apply to Claims to the extent resulting from the negligence or willful misconduct or negligent omission of the party claiming indemnification or its agents, employees or contractors. Subtenant will give Sublandlord prompt notice of any casualty or accident in, on or about the Premises. The provisions of this Section 11.3 shall survive the expiration or earlier termination of this Sublease.

11.4Indemnification of Subtenant. Sublandlord shall indemnify, defend and hold Subtenant and its members, partners, shareholders, officers, directors, agents, employees and contractors harmless from and against any and all liability for all Claims, including, without limitation, reasonable attorneys’ fees and costs, incurred by Subtenant or asserted against Subtenant to the extent arising out of the negligence or willful misconduct or negligent omission by Sublandlord or its agents, employees or contractors. Notwithstanding any provision of this Section 11.4 to the contrary, the indemnification contained in this Section 11.4 shall not apply to Claims to the extent resulting from the negligence or willful misconduct or negligent omission of the party claiming indemnification or its agents, employees or contractors. The provisions of this Section 11.4 shall survive the expiration or earlier termination of this Sublease.

11.5Master Landlord Default; Refusal of Consents. Notwithstanding any provision of this Sublease to the contrary, but subject to Sections 9.1.1, 9.1.3 and 9.1.4 above, (a) Sublandlord shall not be liable or responsible in any way for any loss, damage, cost, expense, obligation or liability suffered by Subtenant by reason or as the result of any breach, default or failure to perform by the Master Landlord under the Master Lease (provided the same do not arise from the failure of Sublandlord to perform Sublandlord’s covenants, agreements, terms, provisions or conditions set forth in the Master Lease or Subtenant’s failure to perform Subtenant’s covenants, agreements, terms, provisions or conditions set forth in this Sublease), including without limitation, in any case where services, utilities, repairs, maintenance or other performance is to be rendered by Master Landlord with respect to the Premises under the Master Lease and Master Landlord either fails to do so or does so in an improper, negligent, inadequate or otherwise defective manner, and (b) if Master Landlord refuses to grant Subtenant its consent or approval for any action or circumstances requiring Master Landlord’s approval, Sublandlord shall be released from any obligation to grant its consent or approval with respect thereto.

12.Letter of Credit.

12.1Letter of Credit Issuance; Amount. Within ten (10) business days after the execution and delivery of this Sublease and the Consent, Subtenant shall deliver to

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Sublandlord, as collateral for the full and faithful performance by Subtenant of all of its obligations under this Sublease, an irrevocable and unconditional negotiable standby letter of credit (the “Letter of Credit”), in the form attached hereto as Exhibit D (or in such other form meeting similar criteria as Sublandlord may approve in Sublandlord’s reasonable discretion) and containing the terms required herein, payable at a location that is in San Mateo County or San Francisco County, State of California (or other location as Sublandlord may approve in Sublandlord’s reasonable discretion), running in favor of Sublandlord issued by a solvent, nationally recognized commercial bank (the “Bank”) that is (1) is chartered under the laws of the United States, any State thereof or the District of Columbia, and which is insured by the Federal Deposit Insurance Corporation; and (2) has a long term rating of BBB or higher as rated by Moody’s Investors Service and/or A- or higher as rated by Standard & Poor’s, and/or Fitch Ratings Ltd. (collectively, the “Letter of Credit Issuer Requirements”), in the amount of Four Million Fifty-Five Thousand Six Hundred Fifty-Six and 50/100 Dollars ($4,055,656.50) (as may be reduced from time to time pursuant to the terms of this Sublease, the “Letter of Credit Amount”). Subject to the terms of Section 12.8 below, Subtenant shall have the right to reduce the Letter of Credit Amount by One Million Three Hundred Fifty-One Thousand Eight Hundred Eighty-Five and 50/100 Dollars ($1,351,885.50) on the third (3rd) anniversary of the Rent Commencement Date (for a new Letter of Credit Amount of Two Million Seven Hundred Three Thousand Seven Hundred Seventy-One and No/100 Dollars ($2,703,771.00)), and by another One Million Three Hundred Fifty-One Thousand Eight Hundred Eight Five and 50/100 Dollars ($1,351,885.50) on the fifth (5^th) anniversary of the Rent Commencement Date (for a new Letter of Credit Amount of One Million Three Hundred Fifty-One Thousand Eight Hundred Eight Five and 50/100 Dollars ($1,351,885.50)).

12.2Letter of Credit Requirements. The Letter of Credit shall be (i) at sight, irrevocable and unconditional, (ii) maintained in effect, whether through replacement, renewal or extension, for the period from the Commencement Date and continuing until the date (the “LC Expiration Date”) which is one hundred (100) days after the Expiration Date, and Subtenant shall deliver a new Letter of Credit or certificate of renewal or extension to Sublandlord at least thirty (30) days prior to the expiration of the Letter of Credit then held by Sublandlord, without any action whatsoever on the part of Sublandlord, (iii) subject to “International Standby Practices 98” International Chamber Of Commerce Publication No. 590, (iv) fully assignable by Sublandlord, and (v) permit partial draws. In addition to the foregoing, the form and terms of the Letter of Credit shall provide, among other things, in effect that: (A) Sublandlord shall have the right to draw down an amount up to the face amount of the Letter of Credit (1) upon the presentation to the Bank of Sublandlord’s written statement that Sublandlord is entitled to draw down on the Letter of Credit in the amount of such draw pursuant to the terms and conditions of this Sublease, and no other document or certification from Sublandlord shall be required other than its written statement to this effect (a “Default Draw”), (2) Subtenant, as applicant, shall have failed to provide to Sublandlord a new or renewal Letter of Credit satisfying the terms of this Section 12 at least thirty (30) days prior to the expiration of the Letter of Credit then held by Sublandlord, (3) if Subtenant has filed a voluntary petition under the Federal Bankruptcy Code or (4) if an involuntary petition has been filed against Subtenant under the Federal Bankruptcy Code, and Subtenant has failed to have such involuntary petition discharged within sixty (60) days of such filing; and (B) the Letter of Credit will be honored by the Bank without inquiry as to the accuracy thereof and regardless of whether Subtenant disputes the

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content of such statement. Sublandlord confirms and agrees that Sublandlord shall only be entitled to make a Default Draw when permitted under Section 12.5 and Sublandlord shall only make draws from the Letter of Credit in the amounts of damages that Sublandlord reasonably believes Sublandlord will suffer in connection with the event giving rise to the draw. Notwithstanding the foregoing, in the event of any failure by Subtenant to provide a substitution or replacement Letter of Credit when required under this Section 12, Sublandlord shall be entitled to draw down upon the entire amount of the Letter of Credit.

12.3Transfer Rights. The Letter of Credit shall also provide that Sublandlord may, at any time and without notice to Subtenant and without first obtaining Subtenant’s consent thereto, transfer all or any portion of its interest in and to the Letter of Credit to another party, person or entity, but only if such transfer is to an assignee of Sublandlord’s interest in this Sublease. In the event of a transfer of Sublandlord’s interest in the 331 Building, Sublandlord shall transfer the Letter of Credit, in whole or in part (or Subtenant shall, upon Sublandlord’s request, cause a substitute letter of credit to be delivered, as applicable, in which case any Letter of Credit previously provided by Subtenant to Sublandlord hereunder shall be returned to Subtenant) to the transferee and thereupon Sublandlord shall, without any further agreement between the parties, be released by Subtenant from all liability therefor, and it is agreed that the provisions hereof shall apply to every transfer or assignment of the whole or any portion of said Letter of Credit to a new Sublandlord. Any transfer fee required to be paid in connection with the first transfer of the Letter of Credit by the beneficiary thereof during any calendar year shall be at Subtenant’s sole cost and expense. All transfer fees required to be paid in connection with all other transfers of the Letter of Credit shall be at Sublandlord’s sole cost and expense. Subtenant shall reasonably cooperate with Sublandlord in executing and submitting to the Bank any applications, documents and instruments as may be necessary to effectuate such transfers.

12.4Replenishment; Renewal. If, as result of any application or use by Sublandlord of all or any part of the Letter of Credit, the amount of the Letter of Credit shall be less than the Letter of Credit Amount, Subtenant shall, within ten (10) business days after Subtenant receives written notice thereof or otherwise learns of such reduction, provide Sublandlord with additional letter(s) of credit in an amount equal to the deficiency (or a replacement letter of credit in the total Letter of Credit Amount), and any such additional (or replacement) letter of credit shall comply with all of the provisions of this Section 12, and if Subtenant fails to comply with the foregoing, notwithstanding anything to the contrary contained in this Sublease, the same shall constitute an incurable default by Subtenant. Subtenant further covenants and warrants that it will neither assign nor encumber the Letter of Credit or any part thereof and that neither Sublandlord nor its successors or assigns will be bound by any such assignment, encumbrance, attempted assignment or attempted encumbrance. Without limiting the generality of the foregoing, if the Letter of Credit expires earlier than the LC Expiration Date, a renewal thereof or substitute letter of credit, as applicable, shall be delivered to Sublandlord not later than thirty (30) days prior to the expiration of the Letter of Credit, which shall be irrevocable and automatically renewable as above provided through the LC Expiration Date upon the same terms as the expiring Letter of Credit or such other terms as may be acceptable to Sublandlord in its reasonable discretion. However, if the Letter of Credit is not timely renewed or a substitute letter of credit is not timely received, or if Subtenant fails to maintain the Letter of

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Credit in the amount and in accordance with the terms set forth in this Section 12, Sublandlord shall have the right to present the Letter of Credit to the Bank in accordance with the terms of this Section 12, and the proceeds of the Letter of Credit may be applied by Sublandlord for Subtenant’s failure to fully and faithfully perform all of Subtenant’s obligations under this Sublease and against any Rent payable by Subtenant under this Sublease that is not paid when due and/or to pay for all losses and damages that Sublandlord has suffered or that Sublandlord reasonably estimates that it will suffer as a result of any default by Subtenant under this Sublease. Any unused proceeds shall constitute the property of Sublandlord and need not be segregated from Sublandlord’s other assets. However, Sublandlord agrees to pay to Subtenant within thirty (30) days after the LC Expiration Date the amount of any proceeds of the Letter of Credit received by Sublandlord and not applied against any Rent payable by Subtenant under this Sublease that was not paid when due or used to pay for any losses and/or damages suffered by Sublandlord (or reasonably estimated by Sublandlord that it will suffer; provided that to the extent any estimated expenses are not actually expensed within 90 days after the LC Expiration Date, such amounts shall be returned to Subtenant) as a result of any default by Subtenant under this Sublease; provided, however, that if prior to the LC Expiration Date a voluntary petition is filed by Subtenant, or an involuntary petition is filed against Subtenant by any of Subtenant’s creditors, under the Federal Bankruptcy Code, then Sublandlord shall not be obligated to make such payment in the amount of the unused Letter of Credit proceeds until either all preference issues relating to payments under this Sublease have been resolved in such bankruptcy or reorganization case or such bankruptcy or reorganization case has been dismissed.

12.5Security for Subtenant’s Performance. Subtenant hereby acknowledges and agrees that Sublandlord is entering into this Sublease in material reliance upon the ability of Sublandlord to draw upon the Letter of Credit in the event Subtenant fails to fully and faithfully perform all of Subtenant’s obligations under this Sublease and to compensate Sublandlord for all losses and damages Sublandlord may suffer as a result of the occurrence of any default on the part of Subtenant not cured within the applicable cure period under this Sublease. Sublandlord may make a Default Draw (without obligation to do so, and without notice), in part or in whole, only following the occurrence of any default on the part of Subtenant which is not cured within the applicable cure period under this Sublease, and only in the amount of the damages that Sublandlord reasonably believes Sublandlord will suffer as a result of such default. Notwithstanding the foregoing, if Sublandlord is prohibited by law from sending Subtenant a default notice, such as due to a bankruptcy stay, Sublandlord shall be entitled to make a Default Draw upon a default by Subtenant with no notice or cure period being required. Subtenant agrees not to interfere in any way with payment to Sublandlord of the proceeds of the Letter of Credit, either prior to or following a “draw” by Sublandlord of any portion of the Letter of Credit, regardless of whether any dispute exists between Subtenant and Sublandlord as to Sublandlord’s right to draw from the Letter of Credit. No condition or term of this Sublease shall be deemed to render the Letter of Credit conditional to justify the issuer of the Letter of Credit in failing to honor a drawing upon such Letter of Credit in a timely manner. Subtenant agrees and acknowledges that Subtenant has no property interest whatsoever in the Letter of Credit or the proceeds thereof and that, in the event Subtenant becomes a debtor under any chapter of the Federal Bankruptcy Code, neither Subtenant, any trustee, nor Subtenant’s bankruptcy estate shall have any right to restrict or limit Sublandlord’s claim and/or rights to the

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Letter of Credit and/or the proceeds thereof by application of Section 502(b)(6) of the Federal Bankruptcy Code.

12.6Failure of Letter of Credit Issuer Requirements. Notwithstanding anything to the contrary herein, if at any time the Letter of Credit Issuer Requirements are not met, then Subtenant shall within five (5) business days after Subtenant’s receipt of written notice from Sublandlord, deliver to Sublandlord a replacement Letter of Credit which otherwise meets the requirements of this Sublease, including without limitation, the Letter of Credit Issuer Requirements. Notwithstanding anything in this Sublease to the contrary, Subtenant’s failure to replace the Letter of Credit and satisfy the Letter of Credit Issuer Requirements within such five (5) business day period shall constitute a material default for which there shall be no notice or grace or cure periods being applicable thereto. In addition and without limiting the generality of the foregoing, if the issuer of any letter of credit held by Sublandlord is insolvent or is placed in receivership or conservatorship by the Federal Deposit Insurance Corporation, or any successor or similar entity, or if a trustee, receiver or liquidator is appointed for the issuer, then, effective as of the date of such occurrence, said Letter of Credit shall be deemed to not meet the requirements of this Section 12, and Subtenant shall within five (5) business days of written notice from Sublandlord deliver to Sublandlord a replacement Letter of Credit which otherwise meets the requirements of this Section 12 and that meets the Letter of Credit Issuer Requirements (and Subtenant’s failure to do so shall, notwithstanding anything in this Section 12 or this Sublease to the contrary, constitute a material default for which there shall be no notice or grace or cure periods being applicable thereto other than the aforesaid five (5) business day period).

12.7Not a Security Deposit. Sublandlord and Subtenant acknowledge and agree that in no event or circumstance shall the Letter of Credit or any renewal thereof or substitute therefor be (i) deemed to be or treated as a “security deposit” within the meaning of California Civil Code Section 1950.7, (ii) subject to the terms of such Section 1950.7, or (iii) intended to serve as a “security deposit” within the meaning of such Section 1950.7. The parties hereto (A) recite that the Letter of Credit is not intended to serve as a security deposit and such Section 1950.7 and any and all other laws, rules and regulations applicable to security deposits in the commercial context (“Security Deposit Laws”) shall have no applicability or relevancy thereto and (B) waive any and all rights, duties and obligations either party may now or, in the future, will have relating to or arising from the Security Deposit Laws.

12.8Reduction of Letter of Credit Amount. Subject to the terms of this Section 12.8, Subtenant shall be entitled to a reduction of the face amount of the Letter of Credit by One Million Three Hundred Fifty-One Thousand Eight Hundred Eighty-Five and 50/100 Dollars ($1,351,885.50) on the third (3rd) anniversary of the Rent Commencement Date (for a new Letter of Credit Amount of Two Million Seven Hundred Three Thousand Seven Hundred Seventy-One and No/100 Dollars ($2,703,771.00)), and by another One Million Three Hundred Fifty-One Thousand Eight Hundred Eight Five and 50/100 Dollars ($1,351,885.50) on the fifth (5^th) anniversary of the Rent Commencement Date (for a new Letter of Credit Amount of One Million Three Hundred Fifty-One Thousand Eight Hundred Eight Five and 50/100 Dollars ($1,351,885.50)). As a condition to the reduction of the Letter of Credit amount, no uncured default by Subtenant shall then be existing under this Sublease. Provided that such

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condition to reduction is satisfied, Subtenant may cause the Bank to issue a new Letter or Credit or an amendment to the Letter of Credit reflecting the reduced amount, and Sublandlord shall cooperate with such reduction.

13.Abatement for Failure of Services. If and to the extent that Sublandlord receives abatement of the rent or other charges required to be paid by Sublandlord under the Master Lease with respect to the Premises in accordance with the Master Lease, Sublandlord will abate the same proportion of Subtenant’s Rent hereunder. This provision shall not reduce or mitigate the obligation of Sublandlord to make good faith, commercially reasonable efforts to cause Master Landlord to comply with its obligations under the Master Lease as set forth in Section 9.1.1 hereof.

14.Miscellaneous.

14.1Counterparts. This Sublease may be executed in one or more counterparts by the parties hereto. All counterparts shall be construed together and shall constitute one agreement and delivery of PDF or other electronic versions thereof shall have the same force and effect as delivery of originals. However, notwithstanding any such exchange of electronic signatures, each of Sublandlord and Subtenant agree promptly to deliver original hard copies of this Sublease and the Consent to the other party or Master Landlord upon request.

14.2Modification. This Sublease may not be modified in any respect except by a document in writing executed by both parties hereto or their respective successors or assigns.

14.3Attorneys’ Fees. If either party hereto brings an action or other proceeding against the other to enforce, protect, or establish any right or remedy created under or arising out of this Sublease, the prevailing party shall be entitled to recover from the other party, all costs, fees and expenses, including, without limitation, reasonable attorneys’ fees, accounting fees, expenses, and disbursements, incurred or sustained by such prevailing party in connection with such action or proceeding (including, but not limited to, any appellate proceedings relating thereto) or in connection with the enforcement of any judgment or award rendered in such proceeds. The prevailing party’s rights to recover its costs, fees and expenses, and any award thereof, shall be separate from, shall survive, and shall not be merged with any judgment.

14.4Binding Effect. The obligations of this Sublease shall be binding on and inure to the benefit of the parties and their respective heirs, successors and assigns.

14.5Time Is Of Essence. Time is of essence in respect of each and every term, covenant and condition of this Sublease.

14.6Governing Law. This Sublease shall be governed by, and construed in accordance with, the laws of the State of California (without giving effect to any choice or conflict of law provision or rule (whether of the State of California or any other jurisdiction) that would cause the application of laws of any jurisdiction other than those of the State of California).

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14.7Representations And Warranties Regarding Authority. Subtenant and Sublandlord hereby represent and warrant to the other party that (i) each person signing this Sublease on their behalf is duly authorized to execute and deliver this Sublease on their behalf, (ii) the execution, delivery and performance of this Sublease has been duly and validly authorized in accordance with the articles of incorporation, bylaws and other organizational documents of such party, (iii) such party is duly organized and in good standing under the laws of their State of incorporation and (iv) upon the execution and delivery of this Sublease, this Sublease shall be binding and enforceable against such party in accordance with its terms.

14.8Confidentiality. Sublandlord and Subtenant hereby agree that the information contained in this Sublease shall be held in strict confidence and none of the terms or conditions contained herein shall be disclosed to any person or entity, other than Master Landlord and Sublandlord’s and Subtenant’s respective current or prospective attorneys, accountants, consultants, brokers, lenders, investors, acquirers, assignees and subtenants, all of whom (except the Master Landlord) shall agree to the confidentiality of this Sublease. Subtenant and its agents shall avoid discussing with, or disclosing to, any third parties (except those specifically listed above) any of the terms, conditions or particulars contained herein. This provision shall not be deemed breached if disclosure is required by applicable law or otherwise consented to in writing by the non-disclosing party.

14.9Securities Filings. Notwithstanding anything to the contrary in this Sublease or the Confidentiality Agreement (but expressly subject to Master Landlord’s prior written acknowledgment and consent), in the event either party or any of its affiliates (such party, a “Filing Party”) proposes to file with the Securities and Exchange Commission or the securities regulators of any state or other jurisdiction a registration statement or any other disclosure document which describes or refers to this Sublease under the Securities Act of 1933, as amended, the Securities Exchange Act, of 1934, as amended, any other applicable securities law or the rules of any national securities exchange, the Filing Party shall be entitled to file an unredacted copy of the Original Master Lease and a copy of the Master Amendment with those redactions of the Master Amendment reflected on Exhibit A attached hereto.

14.10Publicity. Subject to the Incorporation Provisions, Section 5 of the Master Amendment is hereby incorporated herein by reference, except for the sixth (6^th) and seventh (7^th) sentences thereof. In addition, Subtenant and Sublandlord each hereby acknowledges and agrees that, except as may be necessary to implement or otherwise effectuate the terms of this Sublease, (i) Subtenant shall not use, without Sublandlord’s prior written approval, which may be withheld in Sublandlord’s sole discretion, the name of Sublandlord, its affiliates, trade names, trademarks or trade dress, products, or any signs, markings, or symbols from which a connection to Sublandlord, in Sublandlord’s absolute and sole discretion, may be reasonably inferred or implied, in any manner whatsoever, including, without limitation, press releases, marketing materials, or advertisements; and (ii) Sublandlord shall not use, without Subtenant’s prior written approval, which may be withheld in Subtenant’s sole discretion, the name of Subtenant, its affiliates, trade names, trademarks or trade dress, products, or any signs, markings, or symbols from which a connection to Subtenant, in Subtenant’s absolute and sole

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discretion, may be reasonably inferred or implied, in any manner whatsoever, including, without limitation, press releases, marketing materials, or advertisements.

14.11Consent of Master Landlord. This Sublease is conditioned upon, and shall not take effect until, receipt of the written consent of the Master Landlord hereto (the “Consent”). Subtenant hereby agrees for the benefit of Sublandlord and Master Landlord (as an express intended third party beneficiary) that (a) other than as expressly and specifically agreed to in writing by Master Landlord (in the Consent or other written agreement), no act, consent, approval or omission of Master Landlord pursuant to this Sublease shall (i) constitute any form of recognition of Subtenant as the direct tenant of Master Landlord, (ii) create any form of contractual duty or obligation on the part of Master Landlord in favor of Subtenant or (iii) waive, affect or prejudice in any way Master Landlord’s right to treat this Sublease and Subtenant’s rights to the Premises as being terminated upon any termination of the Master Lease, (b) Master Landlord shall have the absolute right to evict Subtenant, and all parties holding under Subtenant, from the Premises upon any termination of the Master Lease, and (c) without limiting the generality of (a) and (b) above (or Sublandlord’s obligations to maintain the Master Lease pursuant to this Sublease), a voluntary or other surrender of the Master Lease or a termination of the Master Lease shall not result in a merger but shall, at the option of Master Landlord, operate either as an assignment to Master Landlord of this Sublease, or a termination of this Sublease. Notwithstanding the foregoing, Sublandlord agrees to request recognition and non-disturbance protection for Subtenant’s benefit from Master Landlord. Further, it is acknowledged that Subtenant may wish to obtain certain additional rights directly from Master Landlord with respect to Subtenant’s use and occupancy of the Premises. Any such agreement with Master Landlord that would bind Sublandlord or otherwise modify or affect Sublandlord’s rights under the Master Lease or this Sublease shall be subject to Sublandlord’s prior written consent. Notwithstanding anything to the contrary in this Sublease, Subtenant shall have the right to terminate this Sublease if the Consent is not executed and delivered by the date that is forty-five (45) days after the date of full execution and delivery of this Sublease. Sublandlord shall make commercially reasonable efforts to obtain the Consent from Master Landlord.

14.12Cooperation. Each party shall reasonably cooperate with the other party with respect to seeking any necessary approvals from the Master Landlord, including without limitation approval of this Sublease and the Subtenant Improvements. Subtenant and Sublandlord each agree to complete and return any and all forms requested by Master Landlord or Sublandlord, as applicable, from time to time for administrative purposes related to this Sublease within five (5) business days of such party’s written request.

14.13[Intentionally Omitted]

14.14Nonresidential Building Energy Use Disclosure Requirement Compliance. Subtenant hereby acknowledges that Sublandlord may be required to obtain from utility providers and disclose certain information concerning the energy performance of the Premises' recent historical energy use data pursuant to California Public Resources Code Section 25402.10 and the regulations adopted pursuant thereto (collectively, the “Energy Disclosure Requirements”). Sublandlord shall not be liable to Subtenant for the accuracy or content of the information provided by utility providers pursuant to the Energy Disclosure Requirements.

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Without limiting the generality of the foregoing, based on information provided by the California Energy Commission, Sublandlord and Subtenant have agreed that Sublandlord is not required to deliver Subtenant a Data Verification Checklist (the “Energy Disclosure Information”), as defined in the Energy Disclosure Requirements with respect to the Premises, because the Premises have never been fully built out or occupied and will therefore be treated as a brand new building. Under no circumstances shall Subtenant have any claim against Sublandlord nor any right to terminate this Sublease in connection with such determination. Subtenant acknowledges and agrees that (i) Sublandlord makes no representation or warranty regarding the energy performance of the Premises, and (ii) the energy performance of the Premises may vary depending on future condition, occupancy and/or use of the Premises. If and to the extent not prohibited by applicable law, Subtenant hereby waives any right Subtenant may have to receive the Energy Disclosure Information, including, without limitation, any right Subtenant may have to terminate this Sublease as a result of Sublandlord’s failure to disclose such information. Further, Subtenant hereby releases Sublandlord from any and all losses, costs, damages, expenses and/or liabilities relating to, arising out of and/or resulting from the Energy Disclosure Requirements, including, without limitation, any liabilities arising as a result of Sublandlord’s failure to disclose the Energy Disclosure Information to Subtenant prior to the execution of this Sublease. Subtenant further acknowledges that pursuant to the Energy Disclosure Requirements, Sublandlord may be required in the future to disclose information concerning Subtenant’s energy usage to certain third parties, including, without limitation, Master Landlord, prospective purchasers, lenders and tenants of the Premises (the "Subtenant Energy Use Disclosure"). Subtenant hereby (A) consents to all such Subtenant Energy Use Disclosures, (B) acknowledges that Sublandlord shall not be required to notify Subtenant of any Subtenant Energy Use Disclosure, and (C) agrees that upon request from Sublandlord, Subtenant shall provide Sublandlord with any energy usage data for the Premises, including, without limitation, copies of utility bills for the Premises. Further, Subtenant hereby releases Sublandlord from any and all losses, costs, damages, expenses and liabilities relating to, arising out of and/or resulting from any Subtenant Energy Use Disclosure.

14.15Survival. Without limiting survival provisions which would otherwise be implied or construed under applicable law, the provisions of Sections 3.3.3, 6.2, 7, 9.1.3, 9.5, 9.12, 9.14, 9.33, 11.1, 11.2, 11.3, 11.4 and 14.14 hereof shall survive the expiration or earlier termination of this Sublease with respect to matters occurring or liabilities accruing prior to the expiration or earlier termination of this Sublease.

14.16Guaranty. Notwithstanding anything herein to the contrary, Subtenant shall, as a condition precedent to the effectiveness of this Sublease, cause Prothena Corporation plc, an Ireland public limited company (“Guarantor”) to execute and deliver to Sublandlord a guaranty (the “Guaranty”) of all the obligations of Subtenant under this Sublease in the form attached hereto as Exhibit E (along with the associated legal opinion described therein) simultaneously with Subtenant’s execution and delivery of this Sublease.

[remainder of page intentionally left blank; signatures on next page]

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IN WITNESS WHEREOF, the parties hereto have hereunto set their hand on the date first above written.

SUBLANDLORD:

AMGEN INC.,
a Delaware corporation

By: /s/ David Meline

Name: David Meline

Its: Executive Vice President and

Chief Financial Officer

SUBTENANT:

PROTHENA BIOSCIENCES INC,
a Delaware corporation

By: /s/ Tran Nguyen

Name: Tran Nguyen

Its: CFO

By: /s/ A. W. Homan

Name: A. W. Homan

Its: CLO & Secretary

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EXHIBIT A

MASTER LEASE

(to be attached)

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BUILD-TO-SUIT LEASE

Landlord:	Slough BTC, LLC
Tenant:	Tularik Inc.
Date:	December  20, 2001

TABLE OF CONTENTS

1.	PROPERTY		1
	1.1	Lease of Buildings	1
	1.2	Landlord's Reserved Rights	3
2.	TERM		3
	2.1	Term; Rent Commencement Dates	6
	2.2	Early Possession	7
	2.3	Delay In Possession	7
	2.4	Acknowledgment Of Rent Commencement Dates	7
	2.5	Holding Over	7
	2.6	Option To Extend Term	8
3.	RENTAL		8
	3.1	Minimum Rental	8
	3.2	Late Charge	13
4.	[Omitted]		14
5.	CONSTRUCTION		14
	5.1	Construction of Improvements	14
	5.2	Condition of Property	14
	5.3	Compliance with Law	15
6.	EXPANSION RIGHTS		15
	6.1	First Refusal Right to Lease	15
	6.2	Right of First Offer to Lease	15
	6.3	Expansion Option	17
7.	[OMITTED]		18
8.	TAXES		18
	8.1	Personal Property	18
	8.2	Real Property	19
9.	OPERATING EXPENSES		19
	9.1	Liability For Operating Expenses	19
	9.2	Definition Of Operating Expenses	21
	9.3	Determination and Payment of Operating Expenses	22
	9.4	Final Accounting For Lease Year	23
	9.5	Proration	23
10.	UTILITIES		24
	10.1	Payment	24
	10.2	Interruption	24
11.	ALTERATIONS; SIGNS		24
	11.1	Right To Make Alterations	24
	11.2	Title To Alterations	25
	11.3	Tenant Trade Fixtures	26

i

	11.4	No Liens	26
	11.5	Signs	26
12.	MAINTENANCE AND REPAIRS		26
	12.1	Landlord's Work	26
	12.2	Tenant's Obligation For Maintenance	27
13.	USE OF PROPERTY		28
	13.1	Permitted Use	28
	13.2	[Omitted.]	28
	13.3	No Nuisance	28
	13.4	Compliance With Laws	28
	13.5	Liquidation Sales	29
	13.6	Environmental Matters	29
14.	INSURANCE AND INDEMNITY		33
	14.1	Liability and Property Insurance	33
	14.2	Quality Of Policies And Certificates	35
	14.3	Workers' Compensation	35
	14.4	Waiver Of Subrogation	35
	14.5	Increase In Premiums	35
	14.6	Indemnification	36
	14.7	Blanket Policy	36
15.	SUBLEASE AND ASSIGNMENT		36
	15.1	Assignment And Sublease Of Building(s)	36
	15.2	Rights Of Landlord	37
16.	RIGHT OF ENTRY AND QUIET ENJOYMENT		37
	16.1	Right Of Entry	37
	16.2	Quiet Enjoyment	38
17.	CASUALTY AND TAKING		38
	17.1	Damage or Destruction	38
	17.2	Condemnation	39
	17.3	Reservation Of Compensation	40
	17.4	Restoration Of Improvements	41
18.	DEFAULT		41
	18.1	Events Of Default	41
	18.2	Remedies Upon Tenant's Default	42
	18.3	Remedies Cumulative	43
19.	SUBORDINATION, ATTORNMENT AND SALE		43
	19.1	Subordination To Mortgage	43
	19.2	Sale Of Landlord's Interest	44
	19.3	Estoppel Certificates	44
	19.4	Subordination to CC&R's	44
	19.5	Mortgagee Protection	45
20.	SECURITY		46
	20.1	Deposit	46
21.	MISCELLANEOUS		47
	21.1	Notices	47
	21.2	Successors And Assigns	48
	21.3	No Waiver	48
	21.4	Severability	48
	21.5	Litigation Between Parties	49
	21.6	Surrender	49

ii

21.7	Interpretation	49
21.8	Entire Agreement	49
21.9	Governing Law	49
21.1	No Partnership	49
21.11	Financial Information	49
21.12	Costs	50
21.13	Time	50
21.14	Rules And Regulations	50
21.15	Brokers	50
21.16	Memorandum Of Lease	50
21.17	Corporate Authority	51
21.18	Execution and Delivery	51
21.19	Survival	51
21.2	Parking and Traffic	51

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BUILD-TO-SUIT LEASE

        THIS BUILD-TO-SUIT LEASE ("Lease") is made and entered into as of December 20, 2001, by and between SLOUGH BTC, LLC, a Delaware limited liability company ("Landlord"), and TULARIK INC., a Delaware corporation ("Tenant").

THE PARTIES AGREE AS FOLLOWS:

1. PROPERTY

        1.1     Lease of Buildings.

        (a)  Landlord leases to Tenant and Tenant hires and leases from Landlord, on the terms, covenants and conditions hereinafter set forth, the buildings (individually, a "Building" and collectively, the "Buildings") to be constructed pursuant to Article 5 hereof and Exhibit C attached hereto on a portion of the real property described in Exhibit A attached hereto (the "Property"), as follows: (i) a three-story office and laboratory building containing approximately 103,000 square feet (the "Phase IA Building"), to be located on the Property substantially as shown for the building designated "Building A" on the site plan attached hereto as Exhibit B (the "Site Plan"); (ii) a three-story office and laboratory building containing approximately 84,000 square feet (the "Phase IB Building"), to be located on the Property substantially as shown for the building designated "Building B" on the Site Plan; (iii) a four-story building containing approximately 93,200 square feet (and in no event less than 90,000 square feet) of office and laboratory space and approximately 5,000 square feet of ground-floor retail space (the "Phase II Building"), to be located on the Property substantially as shown for the building designated "Building E" on the Site Plan; and (iv) subject to final design and to receipt of all required governmental approvals, an enclosed connector bridge connecting the Phase IA Building to the Phase IB Building at the second-story level (the "Connector Bridge" ). With respect to the governmental approvals described in clause (iv) of the preceding sentence, Landlord has advised Tenant that the additional square footage created by construction of the Connector Bridge will cause the Project to exceed the maximum square footage amount for which the Project is presently entitled and that, without limiting any other governmental approvals that may be required, a modification of the maximum square footage amount under the existing Project entitlements will therefore be necessary in order to permit construction of the Connector Bridge. Landlord shall pursue diligently and reasonably the design of the Connector Bridge and the securing of all governmental approvals and permits necessary for the construction of the Connector Bridge (other than the interior improvements therein, which shall be Tenant's responsibility as part of the Tenant Improvements), and Tenant shall cooperate diligently and reasonably with Landlord, in any respects reasonably requested by Landlord, in connection with the design and authorization of the Connector Bridge. For purposes of this Lease, the Connector Bridge shall generally be considered to be a part of the Phase IB Building, and the square footage of the Connector Bridge (which is not presently included in the estimated square footage figure used in this Lease for the Phase IB Building), determined in accordance with Section 1.1(d) of this Lease, shall be included in the square footage of the Phase IB Building for purposes of calculating Tenant's Minimum Rent, additional rent and Operating Expense obligations with respect to the Phase IB Building and the Tenant Improvement Allowance with respect to the Phase IB Building; provided, however, that the square footage of the Connector Bridge shall not be taken into account in determining the number of parking spaces allocated to Tenant or required to be paid for by Tenant pursuant to Section 21.20(b) of this Lease. All references in this Lease to the Phase II Building as being leased to Tenant hereunder shall be construed to refer solely to the office and laboratory portion of the Phase II Building and not to the ground-floor retail portion of such building. The Phase IA Building and the Phase IB Building (including the Connector Bridge) are sometimes hereinafter collectively referred to as the "Phase I Buildings." The Property is commonly known as Britannia Oyster Point (the "Center") and is located at Oyster Point Boulevard and Veterans Boulevard in the City of South San Francisco, County of San Mateo, State of California. The Buildings and the other improvements to be constructed on the Property pursuant to Article 5 hereof and Exhibit C attached hereto are sometimes referred to collectively herein as the "Improvements." The parking areas,

driveways, sidewalks, landscaped areas and other portions of the Center that lie outside the exterior walls of the Buildings and of the other buildings to be constructed in the Center, as depicted on the Site Plan and as hereafter modified by Landlord from time to time in accordance with the provisions of this Lease, are sometimes referred to herein as the "Common Areas."

        (b)  As an appurtenance to Tenant's leasing of the Buildings pursuant to Section 1.1(a), Landlord hereby grants to Tenant, for the benefit of Tenant and its employees, suppliers, shippers, customers and invitees, during the term of this Lease, the non-exclusive right to use, in common with others entitled to such use, (i) those portions of the Common Areas improved from time to time for use as parking areas, driveways, sidewalks, landscaped areas, or for other common purposes, and (ii) all easements, access rights and similar rights and privileges relating to or appurtenant to the Center and created or existing from time to time under any easement agreements, declarations of covenants, conditions and restrictions, or other written agreements now or hereafter of record with respect to the Center, subject however to any limitations applicable to such rights and privileges under applicable law, under this Lease and/or under the written agreements creating such rights and privileges.

        (c)  Tenant shall be entitled to install, in areas of the Property adjacent to one or more of the Buildings, in what would otherwise constitute Common Areas, at Tenant's sole expense and for the exclusive use of Tenant and its employees and invitees, subject to all of the conditions set forth in this paragraph (c), (1) a half-court basketball court and (2) an equipment yard. In no event shall Tenant be obligated to pay rent for the use of such areas, nor shall such areas be considered part of the Buildings or premises leased by Tenant for purposes of any calculations of rent or of Tenant's Operating Cost Share under this Lease, but for all other purposes (including, but not limited to, the purposes specifically identified in this paragraph (c)), such areas shall be considered part of the Buildings leased by Tenant under this Lease. Without limiting the generality of the foregoing, Tenant's construction and use of such basketball court and equipment yard shall be subject to the following requirements and restrictions: (i) the locations in which such basketball court and equipment yard are to be constructed shall be subject to Landlord's prior written consent, in Landlord's sole discretion; (ii) the plans and specifications for construction of all improvements constituting such basketball court and equipment yard shall be subject to Landlord's prior written consent, in Landlord's sole discretion, and such improvements shall otherwise be constructed in full compliance with the requirements applicable to Tenant's Work under Exhibit C attached hereto; (iii) the liability insurance to be carried by Tenant pursuant to Section 14.1(a) of this Lease shall cover, to Landlord's satisfaction, any claims and liabilities arising out of the use of such basketball court and equipment yard; (iv) Tenant shall ensure that the construction and use of such basketball court and equipment yard do not interfere with the use of any parking or driveway areas on the Property and do not create any visual or noise interference with the use and enjoyment of the Property by the other tenants thereof; (v) Tenant shall be solely responsible for the maintenance and repair of such basketball court and equipment yard, at Tenant's sole expense, as part of Tenant's maintenance obligations under Section 12.2 of this Lease; and (vi) Tenant shall take all such steps as Landlord in its reasonable discretion may require in order to restrict access to and use of such basketball court and equipment yard to Tenant's employees and invitees.

        (d)  All measurements of building areas under this Lease shall be made by Landlord's architect in accordance with the same formula applied by Landlord to the building areas for the other leased buildings in the Center, which formula consists of measurement from the exterior faces of exterior walls, from the dripline of any overhangs and, where applicable, from the centerline of any demising walls. In measuring interior space (relevant only to the determination of space actually being used or occupied by Tenant in the Phase II Building during the phase-in of Tenant's occupancy thereof), measurements involving any demising walls separating space actually used or occupied by Tenant from space not used or occupied by Tenant shall be made to the centerline of the demising wall.

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        1.2     Landlord's Reserved Rights.     To the extent reasonably necessary to permit Landlord to exercise any rights of Landlord and discharge any obligations of Landlord under this Lease, Landlord shall have, in addition to the right of entry set forth in Section 16.1 hereof, the following rights: (i) to make changes to the Common Areas, including, without limitation, changes in the location, size or shape of any portion of the Common Areas, and to construct and/or relocate parking structures and/or parking spaces in the Center, but not materially decrease the number of parking spaces in the Center; (ii) to close temporarily any of the Common Areas for maintenance or other reasonable purposes, provided that reasonable parking and reasonable access to the Buildings remain available; (iii) to construct, alter or add to other buildings or improvements in the Center; (iv) to build in areas adjacent to the Center and to add such areas to the Center; (v) to use the Common Areas while engaged in making additional improvements, repairs or alterations to the Center or any portion thereof; and (vi) to do and perform such other acts with respect to the Common Areas and the Center as may be necessary or appropriate; provided, however, that notwithstanding anything to the contrary in this Section 1.2, Landlord's exercise of its rights hereunder (x) shall not cause any material diminution of Tenant's rights, nor any material increase of Tenant's obligations, under this Lease, and (y) shall be conducted in such a manner as to minimize, to the extent reasonably possible, any adverse effect on Tenant's business operations in the Buildings (including, but not limited to, reasonable prior notice to Tenant of any pile-driving or other activities of Landlord that will cause significant noise or vibration in the Buildings).

2.    TERM

        2.1     Term; Rent Commencement Dates.     The term of this Lease shall commence upon mutual execution of this Lease by Landlord and Tenant.

        (a)  Tenant's Minimum Rental, additional rent and Operating Expense obligations with respect to the Phase I Buildings shall commence on the earlier to occur of (i) the date which is one hundred eighty (180) days after the date Landlord delivers to Tenant a Structural Completion Certificate for each of the Phase I Buildings (or, if the Structural Completion Certificates for the two Phase I Buildings are delivered on different dates, the date Landlord delivers to Tenant the Structural Completion Certificate for the second of the two Phase I Buildings) pursuant to the Workletter attached hereto as Exhibit C (the "Workletter"), subject to any adjustments in such time period to the extent authorized or required under the provisions of such Workletter, or (ii) the date Tenant takes occupancy of and commences operation of its business in either of the Phase I Buildings, the earlier of such dates being herein called the "Phase I Rent Commencement Date"; provided, however, that in no event shall the Phase I Rent Commencement Date occur earlier than May 1, 2003, unless determined pursuant to clause (ii) of this sentence or unless an earlier date is hereafter mutually agreed upon in writing by Landlord and Tenant; and provided further, however, that if the Phase I Rent Commencement Date is determined pursuant to clause (ii) of this sentence as a result of Tenant's occupancy of and commencement of business operations in one of the two Phase I Buildings, then notwithstanding any other provisions of this Lease to the contrary, Tenant's Minimum Rental, additional rent and Operating Expense obligations with respect to the second of the Phase I Buildings and with respect to the Connector Bridge (regardless of whether the Phase IB Building is the first Phase I Building to be occupied by Tenant) shall not commence until the earlier to occur of the date described in clause (i) of this sentence or the date Tenant takes occupancy of and commences operation of its business in the second Phase I Building. Based on the estimated construction schedules attached hereto as Exhibit D, the parties presently estimate that the Phase I Rent Commencement Date shall occur on May 1, 2003.

        (b)  Tenant shall be entitled to occupy the Phase II Building in up to four (4) successive phases. The first such phase ("Phase IIA") shall consist of a minimum of 23,300 square feet of the Phase II Building. The second such phase ("Phase IIB") shall consist of at least that amount of space which, when added to the Phase IIA space, shall equal a minimum of 46,600 square feet of the Phase II

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Building. The third such phase ("Phase IIC") shall consist of at least that amount of space which, when added to the Phase IIA and Phase IIB spaces, shall equal a minimum of 69,900 square feet of the Phase II Building. The fourth such phase ("Phase IID") shall consist of the remainder, if any, of the non-retail portion of the Phase II Building. As to any of such phases, Tenant shall have the right to take and occupy a larger portion of the Phase II Building than the minimum space required for the applicable phase, in which event the space for the applicable phase shall be deemed to consist of the greater of the minimum required amount of space for such phase or the amount of space actually occupied by Tenant. Tenant shall not be deemed to be occupying any portion of the Phase II Building solely by reason of constructing interior improvements in such portion in connection with Tenant's intended future use and occupancy of such portion or by reason of maintaining insurance on or performing maintenance or repair work in such portion, but use of any portion of the Phase II Building for any other purpose by Tenant (including, but not limited to, any storage uses other than storage or staging of materials on a temporary basis in the course of construction) shall be deemed to constitute occupancy of such portion by Tenant. At least thirty (30) days prior to the applicable Rent Commencement Date for each phase of Tenant's occupancy of the Phase II Building as set forth in subparagraphs (i) through (iv) below, Tenant shall notify Landlord in writing of the portion of the Phase II Building that Tenant intends to actually use and occupy during such phase. Tenant acknowledges, however, that if Tenant in fact uses a greater portion of the Phase II Building than specified in Tenant's notice to Landlord with respect to the applicable phase, then Tenant's Minimum Rental, additional rent and Operating Expense obligations with respect to Tenant's occupancy of the Phase II Building during such phase shall be controlled by the amount of space actually used or occupied by Tenant. Landlord shall have the right to inspect the Phase II Building from time to time prior to the Phase IID Rent Commencement Date, on not less than one (1) business day's prior notice to Tenant, to confirm and measure the amount of space actually being occupied by Tenant in the Phase II Building, and the measurement and calculation of such space actually being occupied by Tenant shall be made by Landlord's architect as contemplated in Section 1.1(d) of this Lease. On the Phase IIA Rent Commencement Date as hereinafter defined, all of Tenant's obligations under this Lease shall become applicable and effective in full with respect to all of the Phase II Building, except that the following obligations with respect to each phase of Tenant's occupancy of the Phase II Building shall become effective only on the respective Rent Commencement Date for such phase: (A) Tenant's Minimum Rental, additional rent and Operating Expense obligations with respect to such phase; (B) Tenant's obligations under Section 8.2 of this Lease with respect to real property taxes and assessments upon Improvements constructed by Landlord and located within such phase; (C) Tenant's obligation under Section 10.1 of this Lease to pay for utilities or services supplied to or consumed in or with respect to such phase, but only to the extent such utilities or services are consumed by or supplied at the request of Landlord or its agents, employees or contractors and the cost thereof can reasonably be segregated from the cost of utilities or services furnished to the portions of the Phase II Building occupied by Tenant; (D) Tenant's maintenance and repair obligations under Section 12.2 of this Lease with respect to any Improvements constructed or installed in such phase by Landlord as part of Landlord's Work under the Workletter, except that Tenant shall be responsible for any such maintenance or repairs required as a result of the negligent or willful acts or omissions of Tenant or its agents, employees, contractors or invitees; and (E) Tenant's obligation to cause the applicable phase to comply with any applicable Requirements under Section 13.4(a) of this Lease, except to the extent the applicability of such Requirements is triggered by Tenant's actual use of any portion of the Building or by Tenant's construction of Improvements in any portion of the Building. The Rent Commencement Dates for the respective phases of the Phase II Building shall be as follows:

        (i)    Tenant's Minimum Rental, additional rent and Operating Expense obligations with respect to Phase IIA shall commence on the earlier to occur of (A) the date which is one hundred eighty (180) days after the date Landlord delivers to Tenant a Structural Completion Certificate for the Phase II Building pursuant to the Workletter, subject to any adjustments in such time period to

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the extent authorized or required under the provisions of such Workletter, or (B) the date Tenant takes occupancy of and commences operation of its business in any portion of the Phase II Building, the earlier of such dates being herein called the "Phase IIA Rent Commencement Date"; provided, however, that in no event shall the Phase IIA Rent Commencement Date occur earlier than May 1, 2004, unless determined pursuant to clause (B) of this sentence or unless an earlier date is hereafter mutually agreed upon in writing by Landlord and Tenant. Based on the foregoing provisions and on the estimated construction schedules attached hereto as Exhibit D, the parties presently estimate that the Phase IIA Rent Commencement Date shall occur on May 1, 2004.

        (ii)  Tenant's Minimum Rental, additional rent and Operating Expense obligations with respect to Phase IIB shall commence on the earlier to occur of (A) the date which is six (6) months after the Phase IIA Rent Commencement Date (as extended for any Landlord Delays occurring after the Phase IIA Rent Commencement Date in connection with Tenant's construction of Tenant Improvements in Phase IIB) or (B) the date Tenant takes occupancy of and commences operation of its business in any portion of Phase IIB of the Phase II Building, the earlier of such dates being herein called the "Phase IIB Rent Commencement Date"; provided, however, that in no event shall the Phase IIB Rent Commencement Date occur earlier than November 1, 2004, unless determined pursuant to clause (B) of this sentence or unless an earlier date is hereafter mutually agreed upon in writing by Landlord and Tenant.

        (iii)  Tenant's Minimum Rental, additional rent and Operating Expense obligations with respect to Phase IIC shall commence on the earlier to occur of (A) the date which is six (6) months after the Phase IIB Rent Commencement Date (as extended for any Landlord Delays occurring after the Phase IIB Rent Commencement Date in connection with Tenant's construction of Tenant Improvements in Phase IIC) or (B) the date Tenant takes occupancy of and commences operation of its business in any portion of Phase IIC of the Phase II Building, the earlier of such dates being herein called the "Phase IIC Rent Commencement Date"; provided, however, that in no event shall the Phase IIC Rent Commencement Date occur earlier than May 1, 2005, unless determined pursuant to clause (B) of this sentence or unless an earlier date is hereafter mutually agreed upon in writing by Landlord and Tenant.

        (iv)  Tenant's Minimum Rental, additional rent and Operating Expense obligations with respect to Phase IID shall commence on the earlier to occur of (A) the date which is six (6) months after the Phase IIC Rent Commencement Date (as extended for any Landlord Delays occurring after the Phase IIC Rent Commencement Date in connection with Tenant's construction of Tenant Improvements in Phase IID) or (B) the date Tenant takes occupancy of and commences operation of its business in any portion of Phase IID of the Phase II Building, the earlier of such dates being herein called the "Phase IID Rent Commencement Date"; provided, however, that in no event shall the Phase IID Rent Commencement Date occur earlier than November 1, 2005, unless determined pursuant to clause (B) of this sentence or unless an earlier date is hereafter mutually agreed upon in writing by Landlord and Tenant.

        (c)  Notwithstanding any other provisions of this Section 2.1 or of Section 2.3 below, if Landlord has not delivered a Final Completion Certificate under the Workletter with respect to the Building Shell of a Building or phase of a Building, as applicable, and completed all Building Shell work that must be completed as a condition of delivery of such Final Completion Certificate for the applicable Building or phase, by the date the Rent Commencement Date for such Building or phase would otherwise occur under this Section 2.1, and if the incomplete elements of such Building Shell work materially impair Tenant's ability to occupy and commence operation of its business in the applicable Building or phase, then the Rent Commencement Date for the applicable Building or phase, to the extent it is determined by the passage of time since delivery of the Structural Completion Certificate and not by actual occupancy, shall be extended, day for day, for a period equal to the lesser of (i) the number of days from the date the Rent Commencement Date for such Building or phase would

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otherwise have occurred under this Section 2.1 until the date Landlord has completed all Building Shell work that must be completed as a condition of delivery of the Final Completion Certificate for the applicable Building or phase to such an extent that Tenant's ability to occupy and commence operation of its business in the applicable Building or phase is no longer materially impaired by any remaining incomplete elements of Landlord's Building Shell work in the applicable Building or phase, or (ii) the number of days by which Landlord's delay (beyond the date the applicable Rent Commencement Date would otherwise have occurred pursuant to this Section 2.1) in completing all Building Shell work that must be completed as a condition of delivery of the Final Completion Certificate for the applicable Building or phase has actually delayed Tenant's ability to occupy and commence operation of its business in the applicable Building or phase; provided, however, that the period (if any) for which any Rent Commencement Date is extended pursuant to this paragraph (c) shall be reduced, day for day, for a period equal to the length of any delays in Landlord's completion of the Building Shell work that must be completed as a condition of delivery of the Final Completion Certificate for the applicable Building or phase to the extent such delays are caused by any Tenant Delays (as defined in the Workletter). Nothing in this paragraph (c) is intended to imply or require that Landlord's Site Improvements relating to a Building or phase shall be completed by the Rent Commencement Date for such Building or phase; in fact, the parties expressly contemplate that completion of various elements of the Site Improvements may be deferred by Landlord, in its discretion, until after completion of Tenant's Work under the Workletter in order to avoid the risk of damage to such Site Improvements in the course of Tenant's Work, and Landlord agrees to complete such Site Improvements with reasonable diligence following completion of Tenant's Work under the Workletter, subject to the effects of any Tenant Delays and/or Unavoidable Delays (as defined in the Workletter).

        (d)  The term of this Lease shall end on the day (the "Termination Date") immediately preceding the fifteenth (15^th ) anniversary of the last of the Phase II Rent Commencement Dates to occur, unless sooner terminated or extended as hereinafter provided.

        2.2     Early Possession.     Tenant shall have the nonexclusive right to occupy and take possession of the respective Buildings from and after the date of Landlord's delivery of the Structural Completion Certificate described in the applicable portion of Section 2.1 for the applicable Building, even though Landlord will be continuing to construct the balance of Landlord's Work as contemplated in the Workletter, for the purpose of constructing Tenant's Work as contemplated in the Workletter and for the purpose of installing fixtures and furniture, laboratory equipment, computer equipment, telephone equipment, low voltage data wiring and personal property and other similar work related to the construction of Tenant's Work and/or preparatory to the commencement of Tenant's business in the applicable Building. Such occupancy and possession, and any early access under the next sentence of this Section 2.2, shall be subject to and upon all of the terms and conditions of this Lease and of the Workletter (including, but not limited to, conditions relating to the maintenance of required insurance), except that Tenant shall have no obligation to pay Minimum Rental or Operating Expenses for any period prior to the applicable Rent Commencement Date as determined under Section 2.1; such early possession shall not advance or otherwise affect the respective Rent Commencement Dates or the Termination Date determined under Section 2.1. Tenant shall also be entitled to have early access to the respective Buildings and the Property at all appropriate times prior to Landlord's delivery of the Structural Completion Certificate for the applicable Building, subject to the approval of Landlord and its general contractor (which approval shall not be unreasonably withheld or delayed) and to all other provisions of this Section 2.2 and of the Workletter (including, but not limited to, conditions relating to the maintenance of required insurance), solely for the purpose of installing fixtures and equipment and other similar work preparatory to the construction of Tenant's Work and the commencement of Tenant's business on the Property, and Tenant shall not be required to pay Minimum Rental or Operating Expenses by reason of such early access until the applicable Rent Commencement Date otherwise occurs; without limiting the generality of the preceding portion of this sentence, Tenant shall be entitled to have early access to the Property and the respective Buildings as soon as the roof metal

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decking of the applicable Building is in place, to begin hanging electrical, mechanical and plumbing services from the overhead structure, subject to all of the provisions of this Section 2.2.

        2.3     Delay In Possession.     Landlord agrees to use its best reasonable efforts to complete Landlord's Work (as defined in the Workletter) promptly, diligently and within the respective time periods set forth in the respective estimated construction schedules attached hereto as Exhibit D and incorporated herein by this reference, as such schedules may be modified from time to time by mutual written agreement of Landlord and Tenant, and subject to any Tenant Delays and Unavoidable Delays (as respectively defined in the Workletter); provided, however, that Landlord shall not be liable for any damages caused by any delay in the completion of such work, nor shall any such delay affect the validity of this Lease or the obligations of Tenant hereunder. Notwithstanding any other provision of this Section 2.3, however, unless Landlord delivers a Structural Completion Certificate for at least one of the two Phase I Buildings and tenders possession of those completed structural portions of the Building Shell for such Building that must be completed as a condition of delivery of the Structural Completion Certificate by the date which is one hundred twenty (120) days after the date specified for structural completion as to such Phase I Building in the applicable Estimated Construction Schedule attached hereto as Exhibit D, Tenant shall have the right to terminate this Lease without further liability hereunder by written notice delivered to Landlord at any time prior to Landlord's delivery of a Structural Completion Certificate for at least one Phase I Building and tender of possession of the completed structural portions of the Building Shell for such Phase I Building to Tenant; provided, however, that the applicable date on which Tenant's termination right becomes exercisable pursuant to this sentence shall be extended, day for day, for a period equal to the length of any delays in Landlord's design and construction of the respective Phase I Building Shells that are caused by any Unavoidable Delays or Tenant Delays (as respectively defined in the Workletter). If such a termination right arises in favor of Tenant and is properly exercised by Tenant, then Landlord shall reimburse Tenant for all of Tenant's out-of-pocket fees and costs incurred prior to the date of such termination for design, space planning, architectural, engineering and construction management services in connection with this Lease and the Workletter, which reimbursement shall be paid by Landlord to Tenant within thirty (30) days after Landlord's receipt of Tenant's written request for such reimbursement, accompanied by copies of such invoices and other supporting documentation as Landlord may reasonably request to evidence the nature and amount of the fees and costs for which such reimbursement is requested.

        2.4     Acknowledgment Of Rent Commencement Dates.     Promptly following the respective Rent Commencement Date for each Building or portion thereof, Landlord and Tenant shall execute a written acknowledgment of such Rent Commencement Date, the square footage of the Building or portion thereof (in the case of the Phase II Rent Commencement Dates) as to which the Rent Commencement Date applies, the Termination Date (if then determined) and related matters, substantially in the form attached hereto as Exhibit E (with appropriate insertions), which acknowledgment shall be deemed to be incorporated herein by this reference. Notwithstanding the foregoing requirement, the failure of either party to execute such a written acknowledgment shall not affect the determination of the applicable Rent Commencement Date, the applicable minimum rental and Operating Expense obligations, the Termination Date and related matters in accordance with the provisions of this Lease.

        2.5     Holding Over.     If Tenant holds possession of the Property or any portion thereof after the term of this Lease with Landlord's written consent, then except as otherwise specified in such consent, Tenant shall become a tenant from month to month at one hundred twenty-five percent (125%) of the rental and otherwise upon the terms herein specified for the period immediately prior to such holding over and shall continue in such status until the tenancy is terminated by either party upon not less than thirty (30) days prior written notice. If Tenant holds possession of the Property or any portion thereof after the term of this Lease without Landlord's written consent, then Landlord in its sole discretion may

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elect (by written notice to Tenant) to have Tenant become a tenant either from month to month or at will, at one hundred fifty percent (150%) of the rental (prorated on a daily basis for an at-will tenancy, if applicable) and otherwise upon the terms herein specified for the period immediately prior to such holding over, or may elect to pursue any and all legal remedies available to Landlord under applicable law with respect to such unconsented holding over by Tenant. Tenant shall indemnify and hold Landlord harmless from any loss, damage, claim, liability, cost or expense (including reasonable attorneys' fees) resulting from any delay by Tenant in surrendering the Property (except with Landlord's prior written consent), including but not limited to any claims made by a succeeding tenant by reason of such delay. Acceptance of rent by Landlord following expiration or termination of this Lease shall not constitute a renewal of this Lease.

        2.6     Option To Extend Term.     Tenant shall have the option to extend the term of this Lease with respect to any one or more of the Buildings, on a Building by Building basis (provided, however, that notwithstanding any other provisions of this Section 2.6, if the Connector Bridge is constructed as contemplated in Section 1.1(a) of this Lease and if Tenant elects to exercise this extension option with respect to one but not both of the Phase I Buildings, then Landlord's election regarding removal of the Connector Bridge by Landlord at Tenant's expense, as provided in Section 12.2(c) of this Lease, shall be exercisable in Landlord's discretion either at the expiration of this Lease with respect to the Phase I Building for which the extension option was not exercised or at the expiration of this Lease with respect to the Phase I Building for which the extension option was exercised), at the Minimum Rental set forth in Section 3.1(b) and (c) (as applicable) and otherwise upon all the terms and provisions set forth herein with respect to the initial term of this Lease, for up to two (2) additional periods of five (5) years each, the first commencing upon the expiration of the initial term hereof and the second (applicable only to the Building or Buildings as to which a first extended term has been duly elected) commencing upon the expiration of such first extended term, if any. Exercise of such option with respect to the first such extended term shall be by written notice to Landlord at least nine (9) months and not more than twelve (12) months prior to the expiration of the initial term hereof; exercise of such option with respect to the second extended term, if the first extension option has been duly exercised, shall be by like written notice to Landlord at least nine (9) months and not more than twelve (12) months prior to the expiration of the first extended term hereof. If Tenant is in default hereunder on the date of such notice or on the date any extended term is to commence, then the exercise of the option shall be of no force or effect, the extended term shall not commence and this Lease shall expire at the end of the then current term hereof (or at such earlier time as Landlord may elect pursuant to the default provisions of this Lease). If Tenant properly exercises one or more extension options under this Section, then all references in this Lease (other than in this Section 2.6) to the "term" of this Lease shall be construed to include the extension term(s) thus elected by Tenant. Except as expressly set forth in this Section 2.6, Tenant shall have no right to extend the term of this Lease beyond its prescribed term.

3.    RENTAL

        3.1     Minimum Rental.

        (a)     Rental Amounts.     Tenant shall pay to Landlord as minimum rental for the respective Buildings or applicable portions thereof, in advance, without deduction, offset (except as specifically authorized under Paragraph 4(c) of the Workletter, if applicable), notice or demand, on or before the applicable Rent Commencement Date for the respective Building and on or before the first day of each subsequent calendar month of the initial term of this Lease, the following

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amounts per month (the "Minimum Rental"), subject to adjustment in accordance with the terms of this Section 3.1:

        (i)    For the Phase IA Building, beginning on the Phase I Rent Commencement Date, an amount equal to the applicable amount per square foot from the following table multiplied by the square footage of the Phase IA Building as determined pursuant to Section 3.1(d):

Months	Monthly Minimum Rental
001 - 012	$4.0500/sq ft
013 - 024	$4.1715/sq ft
025 - 036	$4.2966/sq ft
037 - 048	$4.4255/sq ft
049 - 060	$4.5583/sq ft
061 - 072	$4.6951/sq ft
073 - 084	$4.8359/sq ft
085 - 096	$4.9810/sq ft
097 - 108	$5.1304/sq ft
109 - 120	$5.2843/sq ft
121 - 132	$5.4429/sq ft
133 - 144	$5.6061/sq ft
145 - 156	$5.7743/sq ft
157 - 168	$5.9476/sq ft
169 - 180	$6.1260/sq ft
181 - 192	$6.3098/sq ft
193 - 204	$6.4991/sq ft
205 - 216 (if applicable)	$6.6940/sq ft
217 and after (if applicable), continued 3.0% annual escalations

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        (ii)  For the Phase IB Building, beginning on the Phase I Rent Commencement Date, an amount equal to the applicable amount per square foot from the following table multiplied by the square footage of the Phase IB Building as determined pursuant to Section 3.1(d):

Months	Monthly Minimum Rental
001 - 012	$4.0500/sq ft
013 - 024	$4.1715/sq ft
025 - 036	$4.2966/sq ft
037 - 048	$4.4255/sq ft
049 - 060	$4.5583/sq ft
061 - 072	$4.6951/sq ft
073 - 084	$4.8359/sq ft
085 - 096	$4.9810/sq ft
097 - 108	$5.1304/sq ft
109 - 120	$5.2843/sq ft
121 - 132	$5.4429/sq ft
133 - 144	$5.6061/sq ft
145 - 156	$5.7743/sq ft
157 - 168	$5.9476/sq ft
169 - 180	$6.1260/sq ft
181 - 192	$6.3098/sq ft
193 - 204	$6.4991/sq ft
205 - 216 (if applicable)	$6.6940/sq ft
217 and after (if applicable), continued 3.0% annual escalations

        (iii)  For the Phase II Building, beginning on the Phase IIA Rent Commencement Date (with each successive phase of Tenant's occupancy of the Phase II Building being brought under the following table as of the applicable Rent Commencement Date for such phase at the rental rate determined under the following table by counting from the Phase IIA Rent Commencement Date), an amount equal to the applicable amount per square foot from the following table multiplied by

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the aggregate square footage of all then applicable phases of the Phase II Building as determined pursuant to Section 3.1(d):

Months	Monthly Minimum Rental
001 - 012	$4.1715/sq ft
013 - 024	$4.2966/sq ft
025 - 036	$4.4255/sq ft
037 - 048	$4.5583/sq ft
049 - 060	$4.6951/sq ft
061 - 072	$4.8359/sq ft
073 - 084	$4.9810/sq ft
085 - 096	$5.1304/sq ft
097 - 108	$5.2843/sq ft
109 - 120	$5.4429/sq ft
121 - 132	$5.6061/sq ft
133 - 144	$5.7743/sq ft
145 - 156	$5.9476/sq ft
157 - 168	$6.1260/sq ft
169 - 180	$6.3098/sq ft

        (iv)  If the obligation to pay Minimum Rental or additional rent hereunder commences on other than the first day of a calendar month or if the term of this Lease terminates on other than the last day of a calendar month, the Minimum Rental and any additional rent for such first or last month of the term of this Lease, as the case may be, shall be prorated based on the number of days the term of this Lease is in effect during such month. If an increase in Minimum Rental or additional rent becomes effective on a day other than the first day of a calendar month, the Minimum Rental or additional rent, as applicable, for that month shall be the sum of the two applicable rates, each prorated for the portion of the month during which such rate is in effect.

        (b)     Rental Amounts During First Extended Term.     If Tenant properly exercises its right to extend the term of this Lease pursuant to Section 2.6 hereof, the Minimum Rental for each Building as to which Tenant has elected to extend during the first year of the first extended term shall be equal to the initial fair market rental (as defined below) for the applicable Building, determined as of the commencement of such extended term in accordance with this Section 3.1(b), and as of the beginning of each subsequent year of the first extended term such Minimum Rental shall be increased by an amount equal to the greater of (i) three percent (3%) of the Minimum Rental in effect during the immediately preceding lease year or (ii) the fair market rental escalation percentage (as defined below) for the applicable Building, determined as of the commencement of such extended term in accordance with this Section 3.1(b). Upon Landlord's receipt of a timely notice of Tenant's exercise of its option to extend the term of this Lease, the parties shall have sixty (60) days in which to agree on the initial fair market rental and the applicable rental escalation percentage for the Buildings as of the commencement of the first extended term for the uses permitted hereunder. If the parties agree on such initial fair market rental and rental escalation percentage, they shall execute an amendment to this Lease stating the amount of the Minimum Rental during the first year of the extended term (determined in accordance with this Section 3.1(b)) and the annually increased Minimum Rental for the balance of the first extended term. If the parties are unable to agree on such initial fair market rental and/or applicable rental escalation percentage within such sixty (60) day period, then within fifteen (15) days after the expiration of such period each party, at its cost and by giving notice to the other party, shall appoint a real estate appraiser who is a member of the American Institute of

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Real Estate Appraisers, or any other similar organization, and has at least five (5) years experience appraising similar commercial properties in northeastern San Mateo County, to determine the initial fair market rental and applicable rental escalation percentage for the Buildings as of the commencement of the first extended term in accordance with the provisions of this Section 3.1(b). If either party fails to appoint an appraiser within the allotted time, the single appraiser appointed by the other party shall be the sole appraiser. If an appraiser is appointed by each party and the two appraisers so appointed are unable to agree upon the initial fair market rental and/or the applicable rental escalation percentage within thirty (30) days after the appointment of the second, the two appraisers shall appoint a third similarly qualified appraiser within ten (10) days after expiration of such 30-day period; if they are unable to agree upon a third appraiser, then either party may, upon not less than five (5) days notice to the other party, apply to the Presiding Judge of the San Mateo County Superior Court for the appointment of a third similarly qualified appraiser. Each party shall bear its own legal fees in connection with appointment of the third appraiser and shall bear one-half of any other costs of appointment of the third appraiser and of such third appraiser's fee. The third appraiser, however selected, shall be a person who has not previously acted for either party in any capacity. Within thirty (30) days after the appointment of the third appraiser, a majority of the three appraisers shall set the initial fair market rental and the applicable rental escalation percentage for the first extended term and shall so notify the parties. If a majority are unable to agree within the allotted time, (i) the three appraised initial fair market rentals shall be added together and divided by three and the resulting quotient shall be the initial fair market rental for the first extended term, and (ii) the three appraised fair market rental escalation percentages shall be added together and divided by three and the resulting quotient shall be the fair market rental escalation percentage used in determining the applicable rental escalation percentage for purposes of clause (ii) of the first sentence of this Section 3.1(b), which determinations shall be binding on the parties and shall be enforceable in any further proceedings relating to this Lease. For purposes of this Section 3.1(b), the "fair market rental" and "fair market rental escalation percentage" for the respective Buildings shall be determined as follows: (x) in the case of a renewal term for any of the Buildings, with reference to the then prevailing market rental rates for properties in northeastern San Mateo County with shell and standard office, research and development improvements and site (common area) improvements comparable to those then existing in the applicable Building and on the Property, provided that no equipment or laboratory improvements shall be taken into account in determining such fair market rental; and (y) in the case of a lease or renewal term for any other building leased by Tenant under terms based on the terms of this Lease (for example, any building leased by Tenant pursuant to any of the provisions of Article 6 hereof, except to the extent any different basis of determination is specified in Landlord's First Refusal Notice or First Offer Notice, if applicable, under such Article 6), with reference to the then prevailing market rental rates and then prevailing market rental escalation provisions for leases of comparable length of properties in the South San Francisco market with shell and office, research and development improvements and site (common area) improvements comparable to those then existing in the applicable building and on the Property, taking into account for such determination all tenant improvements then existing in the applicable building (including, but not limited to, equipment and laboratory improvements installed as part of the initial construction of tenant improvements in such building).

        (c)     Rental Amounts During Second Extended Term.     If Tenant properly exercises its right to a second extended term of this Lease pursuant to Section 2.6 hereof, the Minimum Rental during such second extended term shall be determined in the same manner provided in the preceding paragraph for the first extended term (initial fair market rental followed by subsequent annual escalations equal to the greater of 3% or fair market rental escalation percentage during the balance of the term), except that the determination shall be made as of the commencement of the second extended term.

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        (d)     Determination of Square Footage for Rent Calculation Purposes.     After completion of the Building Shell of each respective Building, Landlord shall cause the square footage of the respective Building (including, in the case of the Phase IB Building, the Connector Bridge if constructed as contemplated in Section 1.1(a) hereof) to be measured by Landlord's architect, and at the commencement of each phase of Tenant's occupancy of the Phase II Building, Landlord shall cause the square footage of the space actually used or occupied by Tenant in the Phase II Building to be measured by Landlord's architect, in each case in accordance with the measurement formula specified in Section 1.1(d) of this Lease, which measurements by Landlord's architect shall be subject to approval (not unreasonably withheld or delayed) by Tenant's architect. Upon mutual approval of such measurement by Landlord's and Tenant's respective architects, the applicable square footages shall be set forth in the applicable Acknowledgment of Rent Commencement Date under Section 2.4 hereof and shall be used for calculation of Minimum Rental under Section 3.1(a), additional rent under Section 3.1(e) and Tenant's Operating Cost Share under Section 9.1 for all applicable periods.

        (e)     Additional Rent for Tenant Improvement Costs.     In consideration of Landlord's willingness to provide the Tenant Improvement Allowance to Tenant in accordance with the provisions of the Workletter, Tenant agrees to pay to Landlord as additional rent hereunder, which additional rent shall be due with respect to each Building or phase thereof on the same dates and in the same manner as Minimum Rental for such Building or phase thereof, beginning on the applicable Rent Commencement Date for the applicable Building or phase thereof, an amount calculated separately for each such Building or phase thereof as follows: (i) for each of the Phase I Buildings, for the first one hundred twenty (120) months after the applicable Rent Commencement Date for the applicable Building, an amount equal to $0.72 per square foot per month multiplied by the applicable square footage for such Building as determined for purposes of Section 3.1(d) above, (ii) for each of the Phase I Buildings, for months one hundred twenty-one (121) through one hundred eighty (180) after the applicable Rent Commencement Date for the applicable Building, an amount equal to $0.33 per square foot per month multiplied by the applicable square footage for such Building as determined for purposes of Section 3.1(d) above, and (iii) for each phase of the Phase II Building, for the first one hundred eighty (180) months after the applicable Rent Commencement Date for such phase, an amount equal to $0.13 per square foot per month multiplied by the applicable square footage for such phase as determined for purposes of Section 3.1(d) above.

        3.2     Late Charge.     If Tenant fails to pay when due rental or other amounts due Landlord hereunder, such unpaid amounts shall bear interest for the benefit of Landlord at a rate equal to the lesser of fifteen percent (15%) per annum or the maximum rate permitted by law, from the date due to the date of payment. In addition to such interest, Tenant shall pay to Landlord a late charge in an amount equal to six percent (6%) of any installment of minimum rental and any other amounts due Landlord if not paid in full on or before the fifth (5th) day after such rental or other amount is due. Tenant acknowledges that late payment by Tenant to Landlord of rental or other amounts due hereunder will cause Landlord to incur costs not contemplated by this Lease, including, without limitation, processing and accounting charges and late charges which may be imposed on Landlord by the terms of any loan relating to the Property. Tenant further acknowledges that it is extremely difficult and impractical to fix the exact amount of such costs and that the late charge set forth in this Section 3.2 represents a fair and reasonable estimate thereof. Acceptance of any late charge by Landlord shall not constitute a waiver of Tenant's default with respect to overdue rental or other amounts, nor shall such acceptance prevent Landlord from exercising any other rights and remedies available to it. Acceptance of rent or other payments by Landlord shall not constitute a waiver of late charges or interest accrued with respect to such rent or other payments or any prior installments thereof, nor of any other defaults by Tenant, whether monetary or non-monetary in nature, remaining uncured at the time of such acceptance of rent or other payments.

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4.    [OMITTED]

5.    CONSTRUCTION

        5.1     Construction of Improvements.

        (a)  Landlord shall, at Landlord's cost and expense (except as otherwise provided herein and in the Workletter), construct Landlord's Work as defined in and in accordance with the terms and conditions of the Workletter. Landlord shall use its best efforts to complete such construction promptly, diligently and within the applicable time periods set forth in the estimated construction schedules attached hereto as Exhibit D and incorporated herein by this reference, as such schedules may be modified or revised from time to time in accordance with the Workletter, subject to Tenant Delays and Unavoidable Delays as defined in the Workletter.

        (b)  Tenant shall, at Tenant's cost and expense (except as otherwise provided herein and in the Workletter), construct Tenant's Work as defined in and in accordance with the terms and conditions of the Workletter.

        5.2     Condition of Property.     Landlord shall deliver the Building Shell for each Building and the other Improvements constructed by Landlord to Tenant clean and free of debris, promptly upon completion of construction thereof, and Landlord warrants to Tenant that each Building Shell and the other Improvements constructed by Landlord (i) shall be free from material structural defects and (ii) shall be constructed in compliance in all material respects with the plans and specifications developed pursuant to the Workletter and mutually approved (to the extent required thereunder) by Landlord and Tenant, subject to any changes implemented in such plans and specifications in accordance with the procedures set forth in the Workletter. If it is determined that this warranty has been violated in any respect, then it shall be the obligation of Landlord, after receipt of written notice from Tenant setting forth with specificity the nature of the violation, to correct promptly, at Landlord's sole cost, the condition(s) constituting such violation. Tenant's failure to give such written notice to Landlord within ninety (90) days after the Rent Commencement Date for the applicable Building shall give rise to a conclusive presumption that Landlord has complied with all Landlord's obligations under this Section 5.2 with respect to the applicable Building, except with respect to latent defects (as to which such 90-day limit shall not apply). Without limiting the scope of Landlord's obligations under the foregoing provisions of this Section 5.2, Landlord also agrees to either (x) use its best reasonable efforts to enforce when and as necessary, for the benefit of Tenant and the Improvements, any and all contractor's and/or manufacturer's warranties with respect to any of Landlord's Work or, at Tenant's request, (y) assign any or all of such warranties to Tenant for enforcement purposes (provided, however, that Landlord may reserve joint enforcement rights under such warranties to the extent of Landlord's continuing obligations or warranties hereunder), and shall cooperate with Tenant in all reasonable respects in any enforcement of such assigned warranties. TENANT ACKNOWLEDGES THAT THE WARRANTIES CONTAINED IN THIS SECTION ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE PHYSICAL CONDITION OF THE IMPROVEMENTS TO BE CONSTRUCTED BY LANDLORD AND THAT LANDLORD MAKES NO OTHER WARRANTIES EXCEPT AS EXPRESSLY SET FORTH IN THIS LEASE.

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        5.3     Compliance with Law.     Landlord warrants to Tenant that the Building Shells and other Improvements constructed by Landlord (when constructed), as they exist on the respective applicable Rent Commencement Dates, but without regard to the use for which Tenant will occupy the Buildings, shall not violate any covenants or restrictions of record or any applicable law, building code, regulation or ordinance in effect on the applicable Rent Commencement Date. Tenant warrants to Landlord that the Tenant Improvements and any other improvements constructed by Tenant from time to time shall not violate any applicable law, building code, regulation or ordinance in effect on the applicable Rent Commencement Date or at the time such improvements are placed in service. If it is determined that any of these warranties has been violated, then it shall be the obligation of the warranting party, after written notice from the other party, to correct the condition(s) constituting such violation promptly, at the warranting party's sole cost and expense. Tenant acknowledges that neither Landlord nor any agent of Landlord has made any representation or warranty as to the present or future suitability of the Property for the conduct of Tenant's business or proposed business thereon.

6.    EXPANSION RIGHTS

        6.1     First Refusal Right to Lease.

        (a)  The building commonly known as Building C in the Center, also commonly known as 1140 Veterans Boulevard and designated as "First Refusal Building" on the Site Plan (the "First Refusal Building"), is presently leased to Raven Biotechnologies, Inc. pursuant to a Build-to-Suit Lease dated as of May 1, 2001 (the "Existing Raven Lease"). Landlord shall not lease all or any portion of the First Refusal Building at any time during the term of this Lease (as extended, if applicable), except in compliance with this Section 6.1; provided, however, that the foregoing restriction shall not apply during any period in which Tenant is in default under this Lease, beyond any applicable notice and cure periods, and provided further, however, that Tenant's rights pursuant to this Section 6.1 are subordinate to the rights of Raven Biotechnologies, Inc. and its successors in interest (collectively, "Raven") pursuant to the Existing Raven Lease, as the same may be amended from time to time.

        (b)  If, at any time during the term of this Lease (as extended, if applicable), Landlord receives and wishes to accept a bona fide written offer from a person or entity (an "Offeror," provided , however, that the term "Offeror" shall not include Tenant itself, nor shall it include Raven with respect to any rights or negotiations under the Existing Raven Lease, as the same may be amended from time to time) to lease all or any portion of the First Refusal Building and if Tenant is not then in default under this Lease (beyond any applicable notice and cure periods), then Landlord shall give written notice of such bona fide written offer to Tenant (the "First Refusal Notice"), specifying the material terms on which the Offeror proposes to lease the First Refusal Building or applicable portion thereof (the "First Refusal Space"), and shall offer to Tenant the opportunity to lease the First Refusal Space on the terms specified in the First Refusal Notice. For purposes of this Section 6.1(b), an offer shall be considered bona fide if it is contained in a letter of intent or other writing signed by the Offeror and specifies the material terms of the proposed lease. Tenant shall have ten (10) business days after the date of giving of the First Refusal Notice in which to accept such offer by written notice to Landlord. Upon such acceptance by Tenant, the First Refusal Space shall be leased to Tenant on the terms set forth in the First Refusal Notice and on the additional terms and provisions set forth in this Lease (except to the extent inconsistent with the terms set forth in the First Refusal Notice), excluding Article 6 hereof, and the parties shall promptly (and in all events within ten (10) business days after delivery of Tenant's acceptance) execute a lease amendment or other written agreement containing the terms of the First Refusal Notice and all other terms and provisions of this Lease not inconsistent with the terms of said First Refusal Notice, except Article 6 hereof and except as the parties may otherwise mutually agree. If Tenant does not accept Landlord's offer within the allotted time or if the parties fail to enter into such a lease amendment or other written agreement in a timely manner, Landlord shall thereafter have the right to lease the First Refusal Space to the Offeror, at any time within one hundred eighty (180) days

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thereafter, at a minimum rental and on other terms and conditions not more favorable to the Offeror than the minimum rental and other terms offered to Tenant in the First Refusal Notice. If Landlord does not lease the First Refusal Space to the Offeror pursuant to the preceding sentence within such one hundred eighty (180) days, or if Landlord desires to lease the First Refusal Space to another third party within such one hundred eighty (180) days, this First Refusal Right shall reattach to the First Refusal Space on all of the same terms set forth above.

        6.2     Right of First Offer to Lease.

        (a)  Landlord has advised Tenant that Buildings F and G in the Center, designated as "First Offer Buildings" on the Site Plan (collectively, the "First Offer Buildings"), are presently leased to Rigel Pharmaceuticals, Inc. pursuant to a Build-to-Suit Lease dated as of May 16, 2001 (the "Existing Rigel Lease"). Landlord shall not lease all or any portion of the First Offer Buildings at any time during the term of this lease (as extended, if applicable), except in compliance with this Section 6.2; provided, however, that the foregoing restriction shall not apply during any period in which Tenant is in default under this Lease, beyond any applicable notice and cure periods, and provided further, however, that Tenant's rights pursuant to this Section 6.2 are subordinate to the rights of Rigel Pharmaceuticals, Inc. and its successors in interest (collectively, "Rigel") pursuant to the Existing Rigel Lease, as the same may be amended from time to time.

        (b)  If, at any time during the term of this Lease (as extended, if applicable), any of the First Offer Buildings or any portion thereof becomes available for leasing by Landlord and Landlord intends to pursue the leasing of such First Offer Building(s) or portion thereof (the "First Offer Space," provided, however, that the provisions of this paragraph shall not apply to any negotiations or discussions Landlord may have with Tenant itself, nor to any negotiations or discussions Landlord may have with Rigel, or any exercise of rights by Rigel, under or in connection with the Rigel Lease as the same may be amended from time to time), and if Tenant is not then in default under this Lease (beyond any applicable notice and cure periods), then Landlord shall first give written notice of such intention to Tenant (a "First Offer Notice") identifying the First Offer Space and the rent, improvement allowance and other material terms upon which Landlord proposes to offer such First Offer Space to prospective tenants. Tenant and Landlord shall have ten (10) business days after Tenant's receipt of such First Offer Notice in which to reach agreement on all terms and achieve execution of a written lease amendment or other written agreement regarding Tenant's leasing and occupancy of the First Offer Space. It is generally the intention of the parties that except with respect to the economic and other terms specified in the First Offer Notice, the form of lease for any such leasing of First Offer Space would be similar to this Lease, excluding Article 6 hereof and subject to such other modifications as may be reasonably necessary to reflect differences in the First Offer Space and/or in the economic and other terms applicable to Tenant's leasing of such First Offer Space pursuant to the First Offer Notice. If Landlord and Tenant fail to reach agreement on all terms and achieve execution of a written lease within ten (10) business days after Tenant's receipt of such First Offer Notice, then Landlord shall thereafter have the right to lease the First Offer Space, at any time within two hundred seventy (270) days thereafter, to such persons or entities and on such terms as Landlord in its sole discretion may deem appropriate, without any further limitation or restriction hereunder. If Landlord does not lease the First Offer Space to any such person or entity within such two hundred seventy (270) days, this First Offer Right shall reattach to the First Offer Space on all of the same terms set forth above, except that in connection with any subsequent First Offer Notice delivered by Landlord to Tenant with respect to any First Offer Space that has previously been the subject of a First Offer Notice which did not result in the leasing of such First Offer Space by Tenant, Tenant's time to reach a written agreement with Landlord in response to such subsequent First Offer Notice shall be reduced from ten (10) business days to five (5) business days.

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        6.3     Expansion Option.

        (a)  Landlord presently owns the property lying easterly of the Property and commonly known as 333 Oyster Point Boulevard, South San Francisco (the "Expansion Property"). The Expansion Property is presently operated as a commercial warehouse facility, but it is also Landlord's present intention to redevelop the Expansion Property as a biotechnology facility during calendar year 2005, and Landlord agrees to undertake such redevelopment, subject to the conditions set forth in this Section 6.3, in order to accommodate any proper exercise of Tenant's rights under this Section 6.3. Tenant shall have a one-time option (the "Expansion Option"), exercisable only in accordance with this Section 6.3, to lease a minimum amount of at least 100,000 square feet of redeveloped biotechnology space on the Expansion Property; provided, however, that the Expansion Option shall not apply if Tenant is in default under this Lease (beyond any applicable notice and cure periods) on the date the Expansion Option is exercisable. The exact size and location of the space subject to the Expansion Option within the Expansion Property (the "Expansion Space") shall be mutually agreed upon in writing by Landlord and Tenant, subject to the minimum size of 100,000 square feet as specified above, after Landlord has approved a final design and site plan for the redevelopment of the Expansion Property. If Tenant notifies Landlord in writing, at least seventy-five (75) days prior to the date the Expansion Option must be exercised, that Tenant is considering exercise of the Expansion Option (which notice may be given by Tenant in its sole and absolute discretion), then (i) Landlord agrees to adopt and approve a final design and site plan for the redevelopment of the Expansion Property at least forty-five (45) days prior to the date the Expansion Option must be exercised, in order to allow a reasonable time for the parties to reach mutual agreement regarding the size and location of the Expansion Space in a timely manner and (ii) Landlord and Tenant agree to negotiate diligently, reasonably and in good faith to reach such an agreement regarding the size and location of the Expansion Space at least fifteen (15) days prior to the date the Expansion Option must be exercised.

        (b)  The Expansion Option shall be exercisable only by written notice from Tenant to Landlord no later than March 1, 2005, and only if Tenant is not then in default under this Lease (beyond any applicable notice and cure periods). Such written notice (the "Exercise Notice") shall state that Tenant is exercising the Expansion Option hereunder and shall state specifically the phasing (if any) pursuant to which Tenant proposes to occupy the Expansion Space, subject to the limitations hereinafter set forth. Upon timely giving of a timely Exercise Notice by Tenant, (i) Landlord shall proceed with reasonable diligence and with commercially reasonable efforts to obtain all governmental approvals required for the construction of the Expansion Space, including, but not limited to, any governmental approvals required for the redevelopment of the Expansion Property to accommodate the construction of the Expansion Space (provided that if Landlord is unable, despite the exercise of reasonable diligence and commercially reasonable efforts, to obtain all such required governmental approvals within six (6) months after delivery of Tenant's Exercise Notice, then upon written notice thereof by either party to the other, Tenant's Exercise Notice shall be deemed to be rescinded and the Expansion Option shall be of no further force or effect) and (ii) subject to the receipt of such required governmental approvals, the Expansion Space shall be leased to Tenant on the following terms (and on the additional terms and provisions set forth in this Lease, except for Article 6 hereof and except to the extent inconsistent with the terms specified in this Section 6.3): The Expansion Space shall, at Tenant's election as set forth in the Exercise Notice, be leased and occupied either all at once, with a single Rent Commencement Date, or in two separate phases, with the first phase having a minimum size of at least fifty percent (50%) of the total Expansion Space and the second phase constituting the balance of the Expansion Space. The Rent Commencement Date for the Expansion Space (or for the first phase thereof, if applicable) shall be determined in the same manner as provided in Section 2.1 hereof (180 days after Landlord's delivery of a Structural Completion Certificate, subject to any adjustments applicable under the Workletter, or on the date Tenant takes occupancy of and commences operation of its business in the applicable space, whichever occurs first), provided that such Rent Commencement Date shall not occur prior to December 1, 2006 unless triggered at an earlier date by Tenant's

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occupancy of and commencement of operation of its business in the applicable space or unless an earlier date is mutually agreed upon by Landlord and Tenant. If Tenant elects to take down the Expansion Space in two phases as provided above, then the Rent Commencement Date for the second phase of the Expansion Space shall occur on the earlier of December 1, 2007 or the date Tenant actually occupies and commences operation of its business in the second phase of the Expansion Space, unless an earlier date is mutually agreed upon by Landlord and Tenant. Landlord shall perform the equivalent of Landlord's Work (as defined in the Workletter) at its sole cost and expense, for the Expansion Space, subject to such modifications of the scope and definition of Landlord's Work as are consistent with Landlord's design, plans and specifications for the other buildings and facilities to be constructed on the Expansion Property, and Tenant shall be entitled to a Tenant Improvement Allowance of One Hundred Thirty-Five and No/100 Dollars ($135.00) per square foot for the Expansion Space. The minimum monthly rental commencing as of the Rent Commencement Date for the Expansion Space (or for the first phase thereof, if applicable) shall be $4.43 per square foot per month, with annual escalations thereafter on each anniversary of such Rent Commencement Date in an amount equal to three percent (3.0%) of the rental rate in effect immediately prior to the applicable escalation date. If Tenant elects to take down the Expansion Space in two phases as provided above, then the minimum monthly rental applicable to the second phase as of the Rent Commencement Date for such second phase shall be equal to the minimum monthly rental rate then in effect for the first phase, and the minimum monthly rental rate for the second phase shall thereafter at all times be equal to the minimum monthly rental rate in effect for the first phase from time to time, as escalated in accordance with the foregoing provisions. Tenant's Operating Expense obligations with respect to the Expansion Space shall be determined in a manner both similar to and proportional to the Operating Expense obligations of other tenants of the Expansion Property, depending on whether, in Landlord's discretion, the Expansion Property is combined with the Center for Operating Expense purposes or is operated on a stand-alone basis for such purposes, and if operated on a stand-alone basis, whether the Expansion Property is operated on a project-wide basis for Operating Expense purposes or the respective buildings within the Expansion Property are operated in whole or in part on a stand-alone basis for such purposes. Following a timely exercise of the Expansion Option by Tenant, the parties shall promptly (and in all events within ten (10) business days after delivery of Tenant's Exercise Notice) execute a lease amendment or other written agreement reflecting the terms applicable to the Expansion Space as set forth above and reflecting all other terms and provisions of this Lease not inconsistent with the terms set forth above, except for Article 6 hereof and except as the parties may otherwise mutually agree. If Tenant does not validly and timely exercise the Expansion Option in accordance with this Section 6.3 or if the parties do not timely enter into such a lease amendment or other written agreement with respect to the Expansion Space, then the Expansion Option shall be of no further force or effect and Landlord shall thereafter have the right to lease the Expansion Space and the Expansion Property at any time and from time to time to such persons or entities and on such terms as Landlord in its sole discretion may deem appropriate, without any further limitation or restriction hereunder.

7.    [OMITTED]

8.    TAXES

        8.1     Personal Property.     Tenant shall be responsible for and shall pay prior to delinquency all taxes and assessments levied against or by reason of (a) any and all alterations, additions and items installed or placed on, in or about any of the Buildings by Tenant or for Tenant's use and taxed as personal property rather than as real property, and/or (b) all personal property, trade fixtures and other property placed by Tenant on or about the Property. Upon request by Landlord, Tenant shall furnish Landlord with satisfactory evidence of Tenant's payment thereof. If at any time during the term of this Lease any of said alterations, additions or personal property, whether or not belonging to Tenant, shall be taxed

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or assessed as part of the Property, then such tax or assessment shall be paid by Tenant to Landlord immediately upon presentation by Landlord of copies of the tax bills in which such taxes and assessments are included and shall, for the purposes of this Lease, be deemed to be personal property taxes or assessments under this Section 8.1.

        8.2     Real Property.     To the extent any real property taxes and assessments on any of the Buildings (including, but not limited to, the Improvements) are assessed directly to Tenant, Tenant shall be responsible for and shall pay prior to delinquency all such taxes and assessments levied against the Buildings. Upon request by Landlord, Tenant shall furnish Landlord with satisfactory evidence of Tenant's payment thereof. To the extent the Buildings, the Property and/or the Improvements are taxed or assessed to Landlord following the applicable Rent Commencement Dates, such real property taxes and assessments shall constitute Operating Expenses (as that term is defined in Section 9.2 of this Lease) and shall be paid in accordance with the provisions of Article 9 of this Lease.

9.    OPERATING EXPENSES

        9.1     Liability For Operating Expenses.

        (a)  Tenant shall pay to Landlord, at the time and in the manner hereinafter set forth, as additional rental, Tenant's Operating Cost Share (as hereinafter defined) of the Operating Expenses defined in Section 9.2, subject to adjustment pursuant to Sections 9.1(b) and (c) when applicable. The parties presently anticipate that the percentage amount constituting Tenant's applicable share of Operating Expenses ( "Tenant's Operating Cost Share"), except as otherwise provided herein, will be thirty-eight and eighty hundredths percent (38.80%) as of the Phase I Rent Commencement Date, forty-one and twenty-one hundredths percent (41.21%) as of the Phase IIA Rent Commencement Date, forty-three and seventy-eight hundredths percent (43.78%) as of the Phase IIB Rent Commencement Date, forty-six and thirteen hundredths percent (46.13%) as of the Phase IIC Rent Commencement Date and forty-eight and twenty-nine hundredths percent (48.29%) as of the Phase IID Rent Commencement Date. Notwithstanding the foregoing and the provisions of Section 9.1(c), with respect to liability insurance premiums (except to the extent separately and specifically allocable to a Building, in which event Tenant's Operating Cost Share with respect thereto shall be 100% for the Phase IA Building and the Phase IB Building and 94.91% for the Phase II Building), the land component of real property taxes and assessments, common area lighting and maintenance expenses, and other similar expenses that are incurred or measured on a Center-wide basis (rather than being clearly and reasonably allocable or attributable to a specific Building alone, in which event Tenant's Operating Cost Share with respect thereto shall be 100% for the Phase IA Building and the Phase IB Building and 94.91% for the Phase II Building) or that are incurred with respect to common area facilities, notwithstanding any other provisions of this Article 9, Tenant's Operating Cost Share with respect to such Center-wide and/or common area expenses from and after each respective Rent Commencement Date, regardless of the status of construction and occupancy of the other contemplated buildings in the Center, shall be equal to the percentage amount which is equivalent to a fraction, the numerator of which is the actual square footage of the Building(s) as to which a Rent Commencement Date has then occurred, as determined on the basis of measurement set forth in Section 1.1(c) hereof, and the denominator of which is the sum of the actual square footage of all then completed buildings in the Center plus the proposed square footage (as reflected in Landlord's entitlements for the Property) of all not yet completed buildings that Landlord proposes to construct in the Center (excluding the proposed child care facility and proposed stand-alone restaurant as hereinafter set forth), in each case as determined on the basis of measurement set forth in Section 1.1(c) hereof, consistently applied; provided, however, that the adjusted Tenant's Operating Cost Share determined pursuant to this sentence shall be further adjusted from time to time to reflect (x) any difference between the actual square footage of any additional buildings completed in the Center from time to time and the proposed square footage at which such additional buildings were previously included in the application of the

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foregoing formula, and (y) any increase or decrease in the aggregate square footage of the buildings that Landlord proposes to construct in the Center as part of the initial phased development of the Center (such as, but not limited to, any decision by Landlord to defer indefinitely, beyond the normal and reasonable phasing of the Center, the construction of any of the planned buildings in the Center and/or any action by governmental authorities to reduce the aggregate square footage of the buildings that Landlord is entitled to construct in the Center pursuant to Landlord's entitlements as amended from time to time), provided that in no event shall Tenant's Operating Share be calculated with a denominator of less than 550,000 square feet (except that such minimum denominator shall be reduced to the extent any square footage of existing or proposed buildings in the Center from time to time is removed from commercial use entirely, other than on a temporary or interim basis, as a result of casualty or condemnation, or to the extent any buildings in the Center from time to time cease to be operated and accounted for on an integrated basis with the rest of the Center for Operating Expense purposes as a result of the sale of a portion of the Property or otherwise).

        (b)  Tenant's Operating Cost Share as specified in Section 9.1(a) as of the Phase I Rent Commencement Date is based upon an estimated area of 103,000 square feet for the Phase IA Building, an estimated area of 87,000 square feet for the Phase IB Building (not including the Connector Bridge contemplated in Section 1.1(a), but if such Connector Bridge is in fact constructed, the square footage thereof shall be included in the square footage of the Phase IB Building for purposes of all calculations of Tenant's Operating Cost Share under this Article 9) and an aggregate estimated area of 482,000 square feet for all of the buildings that Landlord presently expects to have in fully constructed and occupied condition on the Property at the Phase I Rent Commencement Date; Tenant's Operating Cost Share as specified in Section 9.1(a) as of the Phase IIA Rent Commencement Date is based upon an estimated area of 23,300 square feet for Phase IIA and upon an aggregate estimated area of 510,200 square feet for all of the buildings that Landlord presently expects to have in fully constructed and occupied condition on the Property at the Phase IIA Rent Commencement Date; Tenant's Operating Cost Share as specified in Section 9.1(a) as of the Phase IIB Rent Commencement Date is based upon an estimated area of 23,300 square feet for Phase IIB and upon an aggregate estimated area of 533,600 square feet for all of the buildings that Landlord presently expects to have in fully constructed and occupied condition on the Property at the Phase IIB Rent Commencement Date; Tenant's Operating Cost Share as specified in Section 9.1(a) as of the Phase IIC Rent Commencement Date is based upon an estimated area of 23,300 square feet for Phase IIC and upon an aggregate estimated area of 556,900 square feet for all of the buildings that Landlord presently expects to have in fully constructed and occupied condition on the Property at the Phase IIC Rent Commencement Date; and Tenant's Operating Cost Share as specified in Section 9.1(a) as of the Phase IID Rent Commencement Date is based upon an estimated area of 23,300 square feet for Phase IID and upon an aggregate estimated area of 580,200 square feet for all of the buildings that Landlord presently expects to have in fully constructed and occupied condition on the Property at the Phase IID Rent Commencement Date. If the actual area of the respective Buildings (when completed) or phases thereof (in the case of the Phase II Building) or of the other buildings existing from time to time in the Center, as determined on the basis of measurement set forth in Section 1.1(c) hereof (which basis of measurement shall be applied consistently for all buildings in the Center), differs from the assumed numbers set forth above (including, but not limited to, any such difference arising from the completion and occupancy of buildings in the Center before or after the respective Rent Commencement Dates hereunder, as contemplated in Section 9.1(c) below, and/or from the construction of the Connector Bridge contemplated in Section 1.1(a), if applicable), then Tenant's Operating Cost Share shall be adjusted to reflect the actual areas so determined as they exist from time to time. In no event, however, shall the square footage of any child care facility or stand-alone restaurant on the Property be included as part of the square footage of buildings on the Property in calculating Tenant's Operating Cost Share, nor shall any costs or expenses relating to the proposed child care facility and proposed stand-alone restaurant on the Property be included in Operating Expenses as hereinafter defined. In

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the case of expenses that are incurred or measured on a Center-wide basis or that are incurred with respect to Common Area facilities, Landlord shall allocate a reasonable share of such expenses to the proposed child care facility and proposed stand-alone restaurant on the Property and shall exclude such share from Operating Expenses pursuant to the preceding sentence.

        (c)  As Landlord constructs additional buildings in the Center (other than those described in the first sentence of Section 9.1(b) as already being taken into account in the estimated figures set forth above), Tenant's Operating Cost Share shall be adjusted from time to time to be equal to the percentage determined by dividing the gross square footage of the Building(s) as to which a Rent Commencement Date has occurred hereunder, as they then exist, by the gross square footage of all buildings located in the Center (subject to the exclusion set forth in Section 9.1(b) with respect to the proposed child care facility and proposed restaurant). In determining such percentage, a building shall be taken into account from and after the date on which a tenant first enters into possession of the building or a portion thereof; the determination of the gross square footage of any such building by Landlord's architect in a manner consistent with the manner in which other buildings in the Center are measured shall be final and binding upon the parties; and costs and expenses relating to a new building shall be taken into account as Operating Expenses under this Article 9 only from and after the date on which the square footage of the building is taken into account in determining Tenant's Operating Cost Share under the criteria set forth in this paragraph.

        9.2     Definition Of Operating Expenses.

        (a)  Subject to the exclusions and provisions set forth in this Article 9, the term "Operating Expenses" shall mean the total costs and expenses incurred by or allocable to Landlord for management, operation and maintenance of the Improvements, the Property and the Center, including, without limitation, costs and expenses of (i) insurance (including, but not limited to, earthquake insurance and environmental insurance), property management (provided that Tenant's allocable share of property management fees for any applicable period during the term of this Lease shall not exceed a maximum amount equal to one and one half percent (1.5%) of the Minimum Rental payable hereunder with respect to such period), landscaping, and the operation, repair and maintenance of buildings and Common Areas; (ii) all utilities and services; (iii) real and personal property taxes and assessments or substitutes therefor levied or assessed against the Center or any part thereof, including (but not limited to) any possessory interest, use, business, license or other taxes or fees, any taxes imposed directly on rents or services, any assessments or charges for police or fire protection, housing, transit, open space, street or sidewalk construction or maintenance or other similar services from time to time by any governmental or quasi-governmental entity, and any other new taxes on landlords in addition to taxes now in effect; (iv) supplies, equipment, utilities and tools used in management, operation and maintenance of the Center; (v) capital improvements to the Property, the Improvements or the Center, amortized over their useful lives as determined by Landlord's accountants consistent with generally accepted accounting principles and/or tax accounting principles, (aa) which reduce or will cause future reduction of other items of Operating Expenses for which Tenant is otherwise required to contribute or (bb) which are required by law, ordinance, regulation or order of any governmental authority; and (vi) any other costs (including, but not limited to, any parking or utilities fees or surcharges not otherwise specifically addressed elsewhere in this Lease) allocable to or paid by Landlord, as owner of the Center or Improvements, pursuant to any applicable laws, ordinances, regulations or orders of any governmental or quasi-governmental authority or pursuant to the terms of any declarations of covenants, conditions and restrictions now or hereafter affecting the Center or any other property over which Tenant has non-exclusive usage rights as contemplated in Section 1.1(b) hereof. Operating Expenses shall not include any costs attributable to the work for which Landlord is required to pay under Article 5 or the Workletter, nor any costs attributable to the initial construction of buildings or Common Area improvements in the Center, nor any costs attributable to buildings the square footage of which is not taken into account in determining Tenant's Operating Cost Share under

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Section 9.1 for the applicable period. The distinction between items of ordinary operating maintenance and repair and items of a capital nature shall be made in accordance with generally accepted accounting principles applied on a consistent basis or in accordance with tax accounting principles, as determined in good faith by Landlord's accountants.

        (b)  Notwithstanding any other provisions of this Section 9.2, the following shall not be included within Operating Expenses: (i) rent paid to any ground lessor; (ii) the cost of constructing tenant improvements for any other tenant of a Building or the Center; (iii) the costs of special services, goods or materials provided to any other tenant of a Building or the Center and not offered or made available to Tenant; (iv) repairs covered by proceeds of insurance or from funds provided by Tenant or any other tenant of the Center, or as to which any other tenant of the Center is obligated to make such repairs or to pay the cost thereof; (v) legal fees, advertising costs, commissions or other related expenses incurred by Landlord in connection with the leasing of space to individual tenants of the Center; (vi) repairs, alterations, additions, improvements or replacements needed to rectify or correct any defects in the original design, materials or workmanship of a Building, the Center or the Common Areas; (vii) damage and repairs necessitated by the negligence or willful misconduct of Landlord or of Landlord's employees, contractors or agents; (viii) Landlord's general overhead expenses not related to the Buildings or the Center; (ix) legal fees, accountants' fees and other expenses incurred in connection with disputes with tenants or other occupants of the Center, or in connection with the enforcement of the terms of any leases with tenants or the defense of Landlord's title to or interest in the Center or any part thereof; (x) costs incurred due to a violation by Landlord or any other tenant of the Center of the terms and conditions of any lease; (xi) costs of any service provided to Tenant or to other occupants of a Building or the Center for which Landlord is reimbursed other than through recovery of Operating Expenses; (xii) personal property taxes due and payable by any other tenant of the Center; (xiii) costs incurred by Landlord pursuant to Article 17 of this Lease in connection with an event of casualty or condemnation; (xiv) depreciation on buildings; (xv) interest; (xvi) capital items (other than as expressly provided above); (xvii) payments on debt (principal or interest); (xviii) legal fees; (xix) amounts paid to any affiliates of Landlord ( i.e., persons or companies controlling, controlled by or under common control with Landlord) for provision of services, except to the extent that the costs of such services do not exceed a reasonable and competitive rate for such services in the market for provision of comparable commercial services in the San Francisco Bay Area; (xx) any bad debt losses, rent losses or reserves for bad debt; (xxi) any costs relating to the creation, maintenance and operation of and the internal accounting for the legal entity which constitutes the landlord hereunder; and (xxii) any late fees or penalties or similar fees resulting from delinquent payment by Landlord of any taxes, fees or contract amounts. Moreover, Operating Expenses shall not include any expenses of operation and maintenance of the parking structure and parking areas on the Property or of measures undertaken by Landlord pursuant to the TDMP (as defined in Section 21.20(a)), except to the extent such expenses in the aggregate exceed, for the applicable period, aggregate parking revenues received by Landlord with respect to that period from tenants under provisions comparable to Section 21.20(b) hereof and from any other users paying hourly, daily, monthly or other fees for the use of such parking structure and/or parking areas from time to time. Landlord presently estimates that parking-related revenues will generally exceed expenses of operation and maintenance of the parking structure and parking areas on the Property, leaving a portion of such revenues available to support TDMP measures undertaken by Landlord as contemplated in the preceding sentence.

        9.3     Determination and Payment of Operating Expenses.     On or before the Phase I Rent Commencement Date and during the last month of each calendar year of the term of this Lease ( "Lease Year"), or as soon thereafter as practical, Landlord shall provide Tenant notice of Landlord's estimate of the Operating Expenses for the ensuing Lease Year or applicable portion thereof. On or before the first day of each month during the ensuing Lease Year or applicable portion thereof, beginning on the Phase I Rent Commencement Date, Tenant shall pay to Landlord Tenant's Operating Cost Share of the portion of such estimated Operating Expenses allocable (on a prorata basis) to such

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month; provided, however, that if such notice is not given in the last month of a Lease Year, Tenant shall continue to pay on the basis of the prior year's estimate, if any, until the month after such notice is given. If at any time or times it appears to Landlord that the actual Operating Expenses will vary from Landlord's estimate by more than five percent (5%), Landlord may, by notice to Tenant, revise its estimate for such year and subsequent payments by Tenant for such year shall be based upon such revised estimate. In the event of any subsequent rebate, refund, adjustment or surcharge with respect to any item of Operating Expenses allocable to any portion of the term of this Lease, the amount of such rebate, refund, adjustment or surcharge shall be for Tenant's benefit or account.

        9.4     Final Accounting For Lease Year.

        (a)  Within ninety (90) days after the close of each Lease Year, or as soon after such 90-day period as practicable, Landlord shall deliver to Tenant a statement of Tenant's Operating Cost Share of the Operating Expenses for such Lease Year prepared by Landlord from Landlord's books and records, which statement shall be final and binding on Landlord and Tenant (except as provided in Section 9.4(b)). If on the basis of such statement Tenant owes an amount that is more or less than the estimated payments for such Lease Year previously made by Tenant, Tenant or Landlord, as the case may be, shall pay the deficiency to the other party within thirty (30) days after delivery of the statement. Failure or inability of Landlord to deliver the annual statement within such ninety (90) day period shall not impair or constitute a waiver of Tenant's obligation to pay Operating Expenses, or cause Landlord to incur any liability for damages.

        (b)  At any time within four (4) months after receipt of Landlord's annual statement of Operating Expenses as contemplated in Section 9.4(a), Tenant shall be entitled, upon reasonable written notice to Landlord and during normal business hours at Landlord's office or such other places as Landlord shall designate, to inspect and examine those books and records of Landlord relating to the determination and payment of Operating Expenses relating to the immediately preceding Lease Year covered by such annual statement or, if Tenant so elects by written notice to Landlord, to request an independent audit of such books and records. The independent audit of the books and records shall be conducted by a certified public accountant reasonably acceptable to both Landlord and Tenant or, if the parties are unable to agree, by a certified public accountant appointed by the Presiding Judge of the San Mateo County Superior Court upon the application of either Landlord or Tenant (with notice to the other party). In either event, such certified public accountant shall be one who is not then employed in any capacity by Landlord or Tenant or by any of their respective affiliates. The audit shall be limited to the determination of the amount of Operating Expenses for the subject Lease Year, and shall be based on generally accepted accounting principles and tax accounting principles, consistently applied. If it is determined, by mutual agreement of Landlord and Tenant or by independent audit, that the amount of Operating Expenses billed to or paid by Tenant for the applicable Lease Year was incorrect, then the appropriate party shall pay to the other party the deficiency or overpayment, as applicable, within thirty (30) days after the final determination of such deficiency or overpayment. All costs and expenses of the audit shall be paid by Tenant unless the audit shows that Landlord overstated Operating Expenses for the subject Lease Year by more than five percent (5%), in which case Landlord shall pay all costs and expenses of the audit. Each party agrees to maintain the confidentiality of the findings of any audit in accordance with the provisions of this Section 9.4.

        9.5     Proration.     If a Rent Commencement Date falls on a day other than the first day of a Lease Year or if this Lease terminates on a day other than the last day of a Lease Year, then the amount of Operating Expenses payable by Tenant with respect to such first or last partial Lease Year shall be prorated on the basis which the number of days during such Lease Year in which this Lease is in effect bears to 365. The termination of this Lease shall not affect the obligations of Landlord and Tenant pursuant to Section 9.4 to be performed after such termination.

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10.    UTILITIES

        10.1     Payment.     Commencing with the applicable Rent Commencement Date for each Building and thereafter throughout the term of this Lease, Tenant shall pay, before delinquency, all charges for water, gas, heat, light, electricity, power, sewer, telephone, alarm system, janitorial and other services or utilities supplied to or consumed in or with respect to such Building (other than any separately metered costs for water, electricity or other services or utilities furnished with respect to the Common Areas, which costs shall be paid by Landlord and shall constitute Operating Expenses under Section 9.2 hereof), including any taxes on such services and utilities. It is the intention of the parties that all such services and utilities shall be separately metered to each Building and, in the case of the Phase II Building, to Tenant's premises in such Building. In the event that any of such services or utilities supplied to any Building are not separately metered (or, in the case of the Phase II Building, are not separately metered to Tenant's premises in that Building), then the amount thereof shall be an item of Operating Expenses allocable to the specific Building and shall be allocated to and paid by the tenants of that specific Building as provided in Article 9.

        10.2     Interruption.     There shall be no abatement of rent or other charges required to be paid hereunder and Landlord shall not be liable in damages or otherwise for interruption or failure of any service or utility furnished to or used with respect to any Building or the Property because of accident, making of repairs, alterations or improvements, severe weather, difficulty or inability in obtaining services or supplies, labor difficulties or any other cause unless the interruption or failure of a service or utility is caused by the negligence or willful misconduct of Landlord, its agents, employees or contractors, in which case all rent hereunder shall be abated for each Building for each day that such service or utility is not available at such Building as a result of such negligence or willful misconduct, beginning on the first business day following the day on which the unavailability of such service or utility at the applicable Building commences, and Landlord shall be liable for Tenant's actual damages (but not lost profits or other consequential damages) as a result of the unavailability of such service or utility caused by such negligence or willful misconduct. Notwithstanding the foregoing, Landlord agrees that except in case of emergency, it will not voluntarily interrupt, shut down, or otherwise interfere with utilities or services to any Building between the hours of 8:00 a.m. and 5:00 p.m. (excluding weekends and holidays) for any reason, including without limitation, development of other buildings and improvements on the Property (but excluding any necessary interruption or shutdown of utilities or services in connection with the construction of any of the Buildings themselves). In the event Landlord violates the foregoing prohibition, all rent hereunder for each Building shall be abated for each day any service or utility is not available at such Building as a result of Landlord's voluntary interruption, shutdown or interference therewith and Tenant shall have the right to exercise all rights and remedies available at law or in equity for such violation, including the right to enjoin Landlord's actions which are the cause of such interruption, shut down or interference. In the event of any interruption or shutdown of utilities or services by Landlord under emergency circumstances, Landlord shall use reasonable efforts to provide Tenant with oral notice of such interruption or shutdown as promptly as the circumstances reasonably permit.

11.    ALTERATIONS; SIGNS

        11.1     Right To Make Alterations.     Tenant shall make no alterations, additions or improvements to the Property without the prior written consent of Landlord, which consent shall not be unreasonably withheld or delayed, except that Tenant shall not be required to obtain such consent for interior non-structural alterations costing less than Fifty Thousand Dollars ($50,000.00) for any single project ( i.e., any single item of alterations or set of related alterations in a Building) and less than One Hundred Thousand Dollars ($100,000.00) in the aggregate with respect to the applicable Building, on a Building by Building basis, during any twelve (12) month period. All such alterations, additions and improvements shall be completed with due diligence in a first-class workmanlike manner, in compliance with plans and specifications approved in writing by Landlord and in compliance with all applicable

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laws, ordinances, rules and regulations, and to the extent Landlord's consent is not otherwise required hereunder for such alterations, additions or improvements, Tenant shall give prompt written notice thereof to Landlord. Tenant shall cause any contractors engaged by Tenant for work on the Property to maintain public liability and property damage insurance, and other customary insurance, with such terms and in such amounts as Landlord may reasonably require, naming as additional insureds Landlord and any of its members, partners, shareholders, property managers, lenders, agents and employees designated by Landlord for this purpose, and shall furnish Landlord with certificates of insurance or other evidence that such coverage is in effect. Notwithstanding any other provisions of this Section 11.1, under no circumstances shall Tenant make any structural alterations or improvements, or any substantial changes to the roof or substantial equipment installations on the roof, or any substantial changes or alterations to building systems, without Landlord's prior written consent.

        11.2     Title To Alterations.     All alterations, additions and improvements installed in, on or about the Buildings or the Property shall become part of the Improvements and the property of Landlord, unless Landlord elects to require Tenant to remove the same upon the termination of this Lease; provided, however, that the foregoing shall not apply to (i) any Tenant Improvements, (ii) any other alterations, additions or improvements or (iii) Tenant's movable furniture, equipment and trade fixtures, to the extent Tenant can demonstrate that any such items described in the preceding clauses (i) through (iii) were acquired and installed by Tenant at Tenant's sole expense, without any use of funds from the Tenant Improvement Allowance under the Workletter, and are not an integral part of the applicable Building's structure, interior architectural improvements, HVAC, plumbing or electrical systems or other standard operating systems. All of such items described in clauses (i) through (iii) of the preceding sentence and meeting the requirements set forth following clause (iii) in the preceding sentence (in all events including, but not limited to, lab benches, fume hoods and portable cold rooms, to the extent they meet the requirements set forth following clause (iii) in the preceding sentence) may (and, if duly elected by Landlord hereunder, shall) be removed by Tenant upon termination of this Lease. Tenant shall promptly repair any damage caused by its removal of any such improvements from time to time. Notwithstanding any other provisions of this Article 11, however, under no circumstances shall Tenant have any right to remove from the Buildings or the Property, at the expiration or termination of this Lease, any lab benches, fume hoods, cold rooms or other similar improvements and equipment installed in the Buildings with use of funds from the Tenant Improvement Allowance. Tenant shall also be responsible, to the extent provided in Section 12.2(c) hereof, for the cost of removal of the Connector Bridge at the expiration or termination of this Lease if such Connector Bridge is constructed as contemplated in Section 1.1(a) hereof. Notwithstanding any other provisions of this Article 11, (x) it is the intention of the parties that Landlord shall be entitled to claim all tax attributes associated with alterations, additions, improvements and equipment constructed or installed by Tenant or Landlord with funds provided by Landlord pursuant to the Tenant Improvement Allowance; and (y) it is the intention of the parties that Tenant shall be entitled to claim, during the term of this Lease, all tax attributes associated with alterations, additions, improvements and equipment constructed or installed by Tenant with Tenant's own funds (and without any payment or reimbursement by Landlord pursuant to the Tenant Improvement Allowance), despite the fact that many items described in this clause (y) may be characterized in this Section 11.2 as becoming Landlord's property upon installation, in recognition of the fact that Tenant will have installed and paid for such items, will have the right of possession and use of such items during the term of this Lease and will have the obligation to pay (directly or indirectly) property taxes on such items, carry insurance on such items and bear the risk of loss with respect to such items under Article 17 hereof. If and to the extent it becomes necessary, in implementation of the foregoing intentions, to identify (either specifically or on a percentage basis, as may be required under applicable tax laws) which alterations, additions, improvements and equipment constructed as part of Tenant's Work under the Workletter have been funded through the Tenant Improvement Allowance and which have been constructed or installed with Tenant's own funds, Landlord and Tenant agree to cooperate reasonably and in good faith to make such an identification by mutual agreement.

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        11.3     Tenant Trade Fixtures.     Notwithstanding the provisions of Sections 11.1 and 11.2, but subject to the third sentence of Section 11.2 and to Section 11.5 (which shall be controlling in the case of signs, logos and insignia), Tenant may install, remove and reinstall trade fixtures without Landlord's prior written consent, except that installation and removal of any trade fixtures which are affixed to the Buildings or the Property or which affect the exterior or structural portions of the Buildings or the building systems shall require Landlord's written approval. Tenant shall immediately repair any damage caused by installation and removal of trade fixtures under this Section 11.3.

        11.4     No Liens.     Tenant shall at all times keep the Buildings and the Property free from all liens and claims of any contractors, subcontractors, materialmen, suppliers or any other parties employed either directly or indirectly by Tenant in construction work on the Buildings or the Property. Tenant may contest any claim of lien, but only if, prior to such contest, Tenant either (i) posts security in the amount of the claim, plus estimated costs and interest, or (ii) records a bond of a responsible corporate surety in such amount as may be required to release the lien from the Buildings and the Property. Tenant shall indemnify, defend and hold Landlord harmless against any and all liability, loss, damage, cost and other expenses, including, without limitation, reasonable attorneys' fees, arising out of claims of any lien for work performed or materials or supplies furnished at the request of Tenant or persons claiming under Tenant.

        11.5     Signs.     Tenant shall have the right to display its corporate name, logo and/or insignia with lighted signage on the exterior of the Buildings and in front of the entrance to each Building, subject to (a) Landlord's prior approval as to location, size, design and composition (which approval shall not be unreasonably withheld or delayed), (b) the sign criteria established for the Center from time to time and (c) all restrictions and requirements of applicable law and of any covenants, conditions and restrictions or other written agreements now or hereafter applicable to the Property. Tenant shall immediately repair any damage caused by installation and removal of signs under this Section 11.5 from time to time. In the event Landlord installs at the Project any monument sign(s) on which identification signage for any individual tenants is included, Tenant shall be entitled to have identification signage on such monument sign(s) on a basis comparable to that made available to any other tenants.

12.    MAINTENANCE AND REPAIRS

        12.1     Landlord's Work.

        (a)  Landlord shall repair and maintain or cause to be repaired and maintained the Common Areas of the Center, the roofs (structural portions only), exterior walls and other structural portions of the Buildings, any demising walls between Tenant's portion of the Phase II Building and the retail portion of the Phase II Building (other than painting, minor surface damage and other cosmetic matters affecting only Tenant's side of any such demising walls), and any building systems that serve, in common, both Tenant's portion of the Phase II Building and the retail portion of the Phase II Building. The cost of all work performed by Landlord under this Section 12.1 shall be an Operating Expense hereunder, except to the extent such work (i) is required due to the negligence of Landlord, (ii) is a capital expense not includible as an Operating Expense under Section 9.2 hereof, or (iii) is required due to the negligence or willful misconduct of Tenant or its agents, employees or invitees (in which event Tenant shall bear the full cost of such work pursuant to the indemnification provided in Section 14.6 hereof, subject to the release set forth in Section 14.4 hereof). Tenant knowingly and voluntarily waives the right to make repairs at Landlord's expense, except to the extent expressly set forth in Section 12.1(b), or to offset the cost thereof against rent, under any law, statute, regulation or ordinance now or hereafter in effect.

        (b)  If Landlord fails to perform any repairs or maintenance required to be performed by Landlord on any of the Buildings under Section 12.1(a) and such failure continues for thirty (30) days or more after Tenant gives Landlord written notice of such failure (or, if such repairs or maintenance cannot reasonably be performed within such 30-day period, then if Landlord fails to commence

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performance within such 30-day period and thereafter to pursue such performance diligently to completion), then except as otherwise expressly excluded herein, Tenant shall have the right to perform such repairs or maintenance and Landlord shall reimburse Tenant for the reasonable cost thereof within fifteen (15) days after written notice from Tenant of the completion and cost of such work, accompanied by copies of invoices or other reasonable supporting documentation. Under no circumstances, however, shall Tenant have any right to offset the cost of any such work against rent or other charges falling due from time to time under this Lease. Moreover, under no circumstances shall this Section 12.1(b) authorize Tenant to perform any of Landlord's repairs or maintenance obligations (x) in the Phase II Building, except to the extent the conditions requiring repair or maintenance affect only Tenant's portion of the Phase II Building and not the retail portion of the Phase II Building, or (y) in the Common Areas of the Property.

        12.2     Tenant's Obligation For Maintenance.

        (a)     Good Order, Condition And Repair.     Except as provided in Section 12.1 hereof, Tenant at its sole cost and expense shall keep and maintain in good and sanitary order, condition and repair the Buildings (from and after the applicable Rent Commencement Date for each Phase I Building and for each phase of the Phase II Building) and every part thereof, wherever located, including but not limited to the roofs (non-structural portions only), signs, interiors, ceilings, electrical systems, plumbing systems, telephone and communications systems of the Buildings, the HVAC equipment and related mechanical systems serving the Buildings (for which equipment and systems Tenant shall enter into a service contract with a person or entity designated or approved by Landlord), all doors, door checks, windows, plate glass, door fronts, exposed plumbing and sewage and other utility facilities, fixtures, lighting, wall surfaces, floor surfaces and ceiling surfaces of the Buildings and all other interior repairs, foreseen and unforeseen, with respect to the Buildings, as required; provided, however, that (x) Tenant's ordinary repair obligation with respect to any demising walls between Tenant's portion of the Phase II Building and the retail portion of the Phase II Building shall be limited to painting, minor surface damage and other cosmetic matters affecting only Tenant's side of any such demising walls, and (y) Tenant's ordinary repair obligation with respect to building systems in the Phase II Building shall be limited to building systems or portions thereof that serve only Tenant's portion of the Phase II Building and shall not include building systems or portions thereof which serve, in common, both Tenant's portion of the Phase II Building and the retail portion of the Phase II Building.

        (b)     Landlord's Remedy.     If Tenant, after notice from Landlord, fails to make or perform promptly any repairs or maintenance which are the obligation of Tenant hereunder, Landlord shall have the right, but shall not be required, to enter the applicable Building(s) and make the repairs or perform the maintenance necessary to restore the applicable Building(s) to good and sanitary order, condition and repair. Immediately on demand from Landlord, the cost of such repairs shall be due and payable by Tenant to Landlord.

        (c)     Condition Upon Surrender; Removal of Connector Bridge.     At the expiration or sooner termination of this Lease, Tenant shall surrender the Buildings and the Improvements, including any additions, alterations and improvements thereto, broom clean, in good and sanitary order, condition and repair, ordinary wear and tear and casualty damages (the latter of which shall be governed by the provisions of Article 17 hereof) excepted, first, however, removing all goods and effects of Tenant and all and fixtures and items required or permitted to be removed pursuant to this Lease (including, but not limited to, any such removal required as a result of an election duly made by Landlord to require such removal as contemplated in Section 11.2), and repairing any damage caused by such removal. In addition, notwithstanding any other provisions of this Lease, if the Connector Bridge is constructed as contemplated in Section 1.1(a) hereof and if Landlord notifies Tenant in writing, prior to or within six (6) months after the expiration or sooner termination of this Lease, that Landlord wishes, in its sole discretion, to remove the Connector

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Bridge following the expiration or sooner termination of this Lease in order to facilitate the re-leasing of the Phase I Buildings, then Tenant shall be responsible for all costs reasonably incurred by Landlord in connection with the removal of the Connector Bridge and the restoration and repair of the areas where the Connector Bridge was attached to the respective Phase I Buildings, and Tenant shall reimburse the amount of such costs to Landlord from time to time within twenty (20) days after receipt of Landlord's written request(s) for reimbursement, accompanied by supporting documentation evidencing, in reasonable detail, the costs for which such reimbursement is requested. Tenant expressly waives any and all interest in any personal property and trade fixtures not removed from the Property by Tenant at the expiration or termination of this Lease, agrees that any such personal property and trade fixtures may, at Landlord's election, be deemed to have been abandoned by Tenant, and authorizes Landlord (at its election and without prejudice to any other remedies under this Lease or under applicable law) to remove and either retain, store or dispose of such property at Tenant's cost and expense, and Tenant waives all claims against Landlord for any damages resulting from any such removal, storage, retention or disposal.

13.    USE OF PROPERTY

        13.1     Permitted Use.     Subject to Sections 13.3 and 13.4 hereof, Tenant shall use the Buildings solely as laboratory and research and development facilities, including (but not limited to) wet chemistry and biology labs, clean rooms, storage and use of toxic and radioactive materials incidental to such laboratory, research and development activities (subject to the provisions of Section 13.6 hereof), storage and use of laboratory animals, administrative offices, and other lawful purposes related to or incidental to such research and development use (subject in each case to receipt of all necessary approvals from the City of South San Francisco and other governmental agencies having jurisdiction over the Buildings), and for no other purpose without Landlord's written consent (not to be unreasonably withheld or delayed).

        13.2 [Omitted.]    

        13.3     No Nuisance.     Tenant shall not use the Buildings or the Property for or carry on or permit upon the Property or any part thereof any offensive, noisy or dangerous trade, business, manufacture, occupation, odor or fumes, or any nuisance or anything against public policy, nor interfere with the rights or business of Landlord in the Buildings or the Property, nor commit or allow to be committed any waste in, on or about the Property. Tenant shall not do or permit anything to be done in or about the Property, nor bring nor keep anything therein, which will in any way cause the Property to be uninsurable with respect to the insurance required by this Lease or with respect to standard fire and extended coverage insurance with vandalism, malicious mischief and riot endorsements.

        13.4     Compliance With Laws.

        (a)  Tenant shall not use the Buildings or the Property, or permit the Buildings or the Property to be used, in whole or in part for any purpose or use that is in violation of any applicable laws, ordinances, regulations or rules of any governmental agency or public authority. Tenant shall keep the Buildings and the Improvements equipped with all safety appliances required by law, ordinance or insurance on the Property, or any order or regulation of any public authority, because of Tenant's particular use of the Property. Tenant shall procure all licenses and permits required for Tenant's use of the Property. Tenant shall use the Property in strict accordance with all applicable ordinances, rules, laws and regulations and shall comply with all requirements of all governmental authorities now in force or which may hereafter be in force pertaining to the use of the Property by Tenant, including, without limitation, regulations applicable to noise, water, soil and air pollution, and making such nonstructural alterations and additions thereto as may be required from time to time by such laws, ordinances, rules, regulations and requirements of governmental authorities or insurers of the Property (collectively, "Requirements") because of Tenant's construction of improvements or other particular use

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of the Property. Any structural alterations or additions required from time to time by applicable Requirements because of Tenant's construction of improvements in the Buildings or other particular use of the Property shall, at Landlord's election, either (i) be made by Tenant, at Tenant's sole cost and expense, in accordance with the procedures and standards set forth in Section 11.1 for alterations by Tenant, or (ii) be made by Landlord at Tenant's sole cost and expense, in which event Tenant shall pay to Landlord as additional rent, within ten (10) days after demand by Landlord, an amount equal to all reasonable costs incurred by Landlord in connection with such alterations or additions. The judgment of any court, or the admission by Tenant in any proceeding against Tenant, that Tenant has violated any law, statute, ordinance or governmental rule, regulation or requirement shall be conclusive of such violation as between Landlord and Tenant.

        (b)  In compliance with requirements imposed upon Landlord by an Owner Participation Agreement between Landlord and The Redevelopment Agency of the City of South San Francisco, Tenant hereby agrees to and accepts the following provision:

        "Tenant herein covenants by and for itself and its successors and assigns, and all persons claiming under or through it, and this Lease is made and accepted upon and subject to the conditions that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, religion, creed, sex, marital status, ancestry or national origin in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the property herein leased, nor shall Tenant or any person claiming under or through it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees, subtenants or vendees in the property herein leased."

        13.5     Liquidation Sales.     Tenant shall not conduct or permit to be conducted any auction, bankruptcy sale, liquidation sale, or going out of business sale, in, upon or about the Property, whether said auction or sale be voluntary, involuntary or pursuant to any assignment for the benefit of creditors, or pursuant to any bankruptcy or other insolvency proceeding.

        13.6     Environmental Matters.

        (a)  For purposes of this Section, "hazardous substance" shall mean the substances included within the definitions of the term "hazardous substance" under (i) the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. §§ 9601 et seq., and the regulations promulgated thereunder, as amended, (ii) the California Carpenter-Presley-Tanner Hazardous Substance Account Act, California Health & Safety Code §§ 25300 et seq., and regulations promulgated thereunder, as amended, (iii) the Hazardous Materials Release Response Plans and Inventory Act, California Heath & Safety Code §§ 25500 et seq., and regulations promulgated thereunder, as amended, and (iv) petroleum; "hazardous waste" shall mean (i) any waste listed as or meeting the identified characteristics of a "hazardous waste" under the Resource Conservation and Recovery Act of 1976, 42 U.S.C. §§ 6901 et seq., and regulations promulgated pursuant thereto, as amended (collectively, "RCRA"), (ii) any waste meeting the identified characteristics of "hazardous waste,""extremely hazardous waste" or "restricted hazardous waste" under the California Hazardous Waste Control Law, California Health & Safety Code §§ 25100 et seq. , and regulations promulgated pursuant thereto, as amended (collectively, the "CHWCL"), and/or (iii) any waste meeting the identified characteristics of "medical waste" under California Health & Safety Code §§ 25015-25027.8, and regulations promulgated thereunder, as amended; and "hazardous waste facility" shall mean a hazardous waste facility as defined under the CHWCL.

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        (b)  Without limiting the generality of the obligations set forth in Section 13.4 of this Lease:

        (i)    Tenant shall not cause or permit any hazardous substance or hazardous waste to be brought upon, kept, stored or used in or about the Property without the prior written consent of Landlord, which consent shall not be unreasonably withheld or delayed, except that Tenant, in connection with its permitted use of the Property as provided in Section 13.1, may keep, store and use materials that constitute hazardous substances which are customary for such permitted use, provided such hazardous substances are kept, stored and used in quantities which are customary for such permitted use and are kept, stored and used in full compliance with clauses (ii) and (iii) immediately below.

        (ii)  Tenant shall comply with all applicable laws, rules, regulations, orders, permits, licenses and operating plans of any governmental authority with respect to the receipt, use, handling, generation, transportation, storage, treatment and/or disposal of hazardous substances or wastes by Tenant or its agents or employees, and Tenant shall provide Landlord with copies of all permits, licenses, registrations and other similar documents that authorize Tenant to conduct any such activities in connection with its authorized use of the Property from time to time.

        (iii)  Tenant shall not (A) operate on or about the Property any facility required to be permitted or licensed as a hazardous waste facility or for which interim status as such is required, nor (B) store any hazardous wastes on or about the Property for ninety (90) days or more, nor (C) conduct any other activities on or about the Property that could result in the Property being deemed to be a "hazardous waste facility" (including, but not limited to, any storage or treatment of hazardous substances or hazardous wastes which could have such a result), nor (D) store any hazardous wastes on or about the Property in violation of any federal or California laws or in violation of the terms of any federal or California licenses or permits held by Tenant.

        (iv)  Tenant shall comply with all applicable laws, rules, regulations, orders and permits relating to underground storage tanks installed by Tenant or its agents or employees or at the request of Tenant (including any installation, monitoring, maintenance, closure and/or removal of such tanks) as such tanks are defined in California Health & Safety Code § 25281(x), including, without limitation, complying with California Health & Safety Code §§ 25280-25299.7 and the regulations promulgated thereunder, as amended. Tenant shall furnish to Landlord copies of all registrations and permits issued to or held by Tenant from time to time for any and all underground storage tanks located on or under the Property.

        (v)  If applicable, Tenant shall provide Landlord in writing the following information and/or documentation at the commencement of this Lease and within sixty (60) days of any change in or addition to the required information and/or documentation (provided, however, that in the case of the materials described in subparagraphs (B), (C) and (E) below, Tenant shall not be required to deliver copies of such materials to Landlord but shall maintain copies of such materials to such extent and for such periods as may be required by applicable law and shall permit Landlord or its representatives to inspect and copy such materials during normal business hours at any time and from time to time upon reasonable notice to Tenant):

        (A)  A list of all hazardous substances and/or wastes that Tenant receives, uses, handles, generates, transports, stores, treats or disposes of from time to time in connection with its operations on the Property.

        (B)  All Material Safety Data Sheets ( "MSDS's"), if any, required to be completed with respect to operations of Tenant at the Property from time to time in accordance with Title 26, California Code of Regulations § 8-5194 or 42 U.S.C. § 11021, or any amendments thereto, and any Hazardous Materials Inventory Sheets that detail the MSDS's.

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        (C)  All hazardous waste manifests (as defined in Title 26, California Code of Regulations § 22-66481), if any, that Tenant is required to complete from time to time in connection with its operations at the Property.

        (D)  A copy of any Hazardous Materials Management Plan required from time to time with respect to Tenant's operations at the Property, pursuant to California Health & Safety Code §§ 25500 et seq., and any regulations promulgated thereunder, as amended.

        (E)  Copies of any Contingency Plans and Emergency Procedures required of Tenant from time to time due to its operations in accordance with Title 26, California Code of Regulations §§ 22-67140 et seq., and any amendments thereto, and copies of any Training Programs and Records required under Title 26, California Code of Regulations, § 22-67105, and any amendments thereto.

        (F)  Copies of any biennial reports required to be furnished to the California Department of Health Services from time to time relating to hazardous substances or wastes, pursuant to Title 26, California Code of Regulations, § 22-66493, and any amendments thereto.

        (G)  Copies of all industrial wastewater discharge permits issued to or held by Tenant from time to time in connection with its operations on the Property.

        (H)  Copies of any other lists or inventories of hazardous substances and/or wastes on or about the Property that Tenant is otherwise required to prepare and file from time to time with any governmental or regulatory authority.

        (vi)  Tenant shall secure Landlord's prior written approval for any proposed receipt, storage, possession, use, transfer or disposal of "radioactive materials" or "radiation," as such materials are defined in Title 26, California Code of Regulations § 17-30100, and/or any other materials possessing the characteristics of the materials so defined, which approval Landlord may withhold in its sole and absolute discretion; provided, that such approval shall not be required for any radioactive materials (x) for which Tenant has secured prior written approval of the Nuclear Regulatory Commission and delivered to Landlord a copy of such approval (if applicable), or (y) which Tenant is authorized to use pursuant to the terms of a Radioactive Material License (if any) issued by the State of California, provided that Tenant has delivered a copy of such License to Landlord. Tenant, in connection with any such authorized receipt, storage, possession, use, transfer or disposal of radioactive materials or radiation, shall:

        (A)  Comply with all federal, state and local laws, rules, regulations, orders, licenses and permits issued to or applicable to Tenant with respect to its business operations on the Property;

        (B)  Maintain, to such extent and for such periods as may be required by applicable law, and permit Landlord or its representatives to inspect during normal business hours at any time and from time to time upon reasonable notice to Tenant, a list of all radioactive materials or radiation received, stored, possessed, used, transferred or disposed of from time to time, to the extent not already disclosed through delivery of a copy of a Nuclear Regulatory Commission approval and/or a California Radioactive Material License with respect thereto as contemplated above; and

        (C)  Maintain, to such extent and for such periods as may be required by applicable law, and permit Landlord or its representatives to inspect during normal business hours at any time and from time to time upon reasonable notice to Tenant, all licenses, registration materials, inspection reports, governmental orders and permits in connection with the receipt, storage, possession, use, transfer or disposal of radioactive materials or radiation by Tenant or in connection with the operation of Tenant's business on the Property from time to time.

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        (vii) Tenant shall comply with any and all applicable laws, rules, regulations and orders of any governmental authority with respect to the release into the environment of any hazardous wastes or substances or radiation or radioactive materials by Tenant or its agents or employees. Tenant shall give Landlord immediate verbal notice of any unauthorized release of any such hazardous wastes or substances or radiation or radioactive materials into the environment, and to follow such verbal notice with written notice to Landlord of such release within twenty-four (24) hours of the time at which Tenant became aware of such release.

        (viii)Tenant shall indemnify, defend and hold Landlord harmless from and against any and all claims, losses (including, but not limited to, loss of rental income and loss due to business interruption), damages, liabilities, costs, legal fees and expenses of any sort arising out of or relating to (A) any failure by Tenant to comply with any of its obligations under this Section 13.6(b), or (B) any receipt, use handling, generation, transportation, storage, treatment, release and/or disposal of any hazardous substance or waste or any radioactive material or radiation on or about the Property in connection with Tenant's use or occupancy of the Property or as a result of any intentional or negligent acts or omissions of Tenant or of any agent, employee or invitee of Tenant.

        (ix)  Tenant shall cooperate with Landlord in furnishing Landlord with complete information regarding Tenant's receipt, handling, use, storage, transportation, generation, treatment and/or disposal of any hazardous substances or wastes or radiation or radioactive materials. Upon request, Tenant agrees to grant Landlord reasonable access at reasonable times to the Property to inspect Tenant's receipt, handling, use, storage, transportation, generation, treatment and/or disposal of hazardous substances or wastes or radiation or radioactive materials, without being deemed guilty of any disturbance of Tenant's use or possession and without being liable to Tenant in any manner.

        (x)  Notwithstanding Landlord's rights of inspection and review under this Section 13.6(b), Landlord shall have no obligation or duty to so inspect or review, and no third party shall be entitled to rely on Landlord to conduct any sort of inspection or review by reason of the provisions of this Section 13.6(b).

        (xi)  If Tenant or its employees, agents, contractors, vendors, customers or guests receive, handle, use, store, transport, generate, treat and/or dispose of any hazardous substances or wastes or radiation or radioactive materials on or about the Property at any time during the term of this Lease, then within thirty (30) days after termination or expiration of this Lease, Tenant at its sole cost and expense shall obtain and deliver to Landlord an environmental study, performed by an expert reasonably satisfactory to Landlord, evaluating the presence or absence of hazardous substances and wastes, radiation and radioactive materials on and about the Property. Such study shall be based on a reasonable and prudent level of tests and investigations of the Buildings and other appropriate portions of the Property (if any), which tests shall be conducted no earlier than the date of termination or expiration of this Lease. Liability for any remedial actions required or recommended on the basis of such study shall be allocated in accordance with Sections 13.4, 13.6, 14.6 and other applicable provisions of this Lease.

        (c)  Landlord shall indemnify, defend and hold Tenant harmless from and against any and all claims, losses, damages, liabilities, costs, legal fees and expenses of any sort arising out of or relating to (i) the presence on the Property of any hazardous substances or wastes or radiation or radioactive materials present on the Property as of the first Rent Commencement Date to occur hereunder (other than as a result of any intentional or negligent acts or omissions of Tenant or of any agent, employee or invitee of Tenant), and/or (ii) any unauthorized release into the environment (including, but not limited to, the Property) of any hazardous substances or wastes or radiation or radioactive materials to the extent such release results from the negligence of or willful misconduct or omission by Landlord or its agents or employees.

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        (d)  In the event of any third-party claims, losses, damages, liabilities, costs, legal fees and expenses of any sort (including, but not limited to, costs incurred with respect to any government-mandated remediation), against either Landlord or Tenant or both, arising out of or relating to (i) the presence on the Property of any hazardous substances or wastes or radiation or radioactive materials not present on the Property as of the first Rent Commencement Date to occur (except to the extent the presence thereof is already covered by an express indemnification obligation under Section 13.6(b)(viii) or Section 13.6(c), as applicable), and/or (ii) any unauthorized release into the environment (including, but not limited to, the Property) of any hazardous substances or wastes or radiation or radioactive materials (except to the extent such release is already covered by an express indemnification obligation under Section 13.6(b)(viii) or Section 13.6(c), as applicable), then (x) Landlord and Tenant shall cooperate reasonably and in good faith in the defense of such third-party claims, liabilities and related matters and (y) Landlord and Tenant shall each bear fifty percent (50%) of the total claims, losses, damages, liabilities, costs, legal fees and expenses incurred by Landlord and/or Tenant in connection with matters covered by this Section 13.6(d). For purposes of the sharing of expenses contemplated in clause (y) of the preceding sentence, the party directly paying or incurring such costs or expenses shall be entitled to invoice the other party from time to time (on a monthly basis or at other appropriate intervals) for such other party's respective share thereof, which invoice shall be accompanied by copies of third-party invoices or other reasonable documentation supporting the invoiced amounts, and the party receiving such invoice shall pay its share as reflected in the applicable invoice within fifteen (15) days after receipt thereof, unless the parties agree otherwise. Within three (3) months after receipt of any such invoice, the party receiving the invoice shall be entitled, upon reasonable written notice and during normal business hours, to inspect and examine the books and records of the party submitting the invoice with respect to the invoiced amounts. Any dispute with respect thereto that the parties are unable to resolve by good faith negotiations shall be resolved by an independent audit using the same procedure set forth in Section 9.3(b).

        (e)  The provisions of this Section 13.6 shall survive the termination of this Lease.

14.    INSURANCE AND INDEMNITY

        14.1     Liability and Property Insurance.

        (a)  Tenant shall procure and maintain in full force and effect at all times during the term of this Lease, at Tenant's cost and expense, commercial general liability insurance to protect against liability arising out of or related to the use of or resulting from any accident occurring in, upon or about the Property, with combined single limit of liability of not less than Five Million Dollars ($5,000,000) per occurrence for bodily injury and property damage. Such insurance shall name Landlord, its Manager, its property manager and any lender holding a deed of trust on the Property from time to time (as designated in writing by Landlord to Tenant from time to time) as additional insureds thereunder. The amount of such insurance shall not be construed to limit any liability or obligation of Tenant under this Lease. Tenant shall also procure and maintain in full force and effect at all times during the term of this Lease, at Tenant's cost and expense, products/completed operations coverage on terms and in amounts satisfactory to Landlord in its reasonable discretion.

        (b)  Landlord shall procure and maintain in full force and effect at all times during the term of this Lease, at Landlord's cost and expense (but reimbursable as an Operating Expense under Section 9.2 hereof), commercial general liability insurance to protect against liability arising out of or related to the use of or resulting from any accident occurring in, upon or about the Property, with combined single limit of liability of not less than Five Million Dollars ($5,000,000) per occurrence for bodily injury and property damage.

        (c)  Landlord shall procure and maintain in full force and effect at all times during the term of this Lease, at Landlord's cost and expense (but reimbursable as an Operating Expense under

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Section 9.2 hereof), policies of property insurance providing protection against "all risk of direct physical loss" (as defined by and detailed in the Insurance Service Office's Commercial Property Program "Cause of Loss-Special Form [CP 1030]" or its equivalent) for the Building Shell (as defined in the Workletter) of each Building and for the improvements in the Common Areas of the Property, on a full replacement cost basis (with no co-insurance or, if coverage without co-insurance is not reasonably available, then on an "agreed amount" basis). Such insurance shall include earthquake and environmental coverage and shall have such commercially reasonable deductibles and other terms as Landlord in its reasonable discretion determines to be appropriate. Landlord shall, in all events, have no obligation to insure the Tenant Improvements or any other alterations, additions or improvements installed by Tenant in the Buildings or on or about the Property; provided, however, that if Tenant so requests in writing, Landlord agrees to include the Tenant Improvements under Landlord's earthquake coverage, in which event (i) such earthquake coverage with respect to the Tenant Improvements shall be in such amounts and with such commercially reasonable deductibles and other terms as Landlord and Tenant may mutually and reasonably determine to be appropriate, (ii) such earthquake coverage shall, in Landlord's discretion, either name both Landlord and Tenant as insureds as their interests may appear or name Tenant as an additional insured with respect to the portion of the policy that provides earthquake coverage for the Tenant Improvements, (iii) the cost of such earthquake coverage for the Tenant Improvements shall be charged back to Tenant as additional rent under this Lease and shall be reimbursed by Tenant to Landlord within ten (10) business days after Tenant's receipt of a written invoice from Landlord with respect to the premium costs attributable to such coverage, (iv) Tenant shall provide to Landlord from time to time, at or about the Rent Commencement Date for the applicable Building and thereafter annually or at such intervals as Landlord may reasonably request, an updated schedule of values or other appropriate information with respect to the insurable value of the Tenant Improvements, and (v) Landlord shall have no obligation or liability with respect to any underinsurance of the Tenant Improvements that results from Tenant's failure to keep Landlord informed on a current basis of the insurable value of such Tenant Improvements from time to time.

        (d)  Tenant shall procure and maintain in full force and effect at all times during the term of this Lease, at Tenant's cost and expense, policies of property insurance providing protection against "all risk of direct physical loss" (as defined by and detailed in the Insurance Service Office's Commercial Property Program "Cause of Loss-Special Form [CP1030]" or its equivalent) for the Tenant Improvements constructed by Tenant pursuant to the Workletter and on all other alterations, additions and improvements installed by Tenant from time to time in or about the Building, on a full replacement cost basis (with no co-insurance or, if coverage without co-insurance is not reasonably available, then on an "agreed amount" basis). Such insurance may have such commercially reasonable deductibles and other terms as Tenant in its reasonable discretion determines to be appropriate, and shall name both Tenant and Landlord as insureds as their interests may appear. Without limiting the generality of the foregoing provisions, Tenant's property insurance on the Tenant Improvements in each Building shall in all events include (i) earthquake insurance (except as otherwise provided in paragraph (c) above, if applicable) in an amount at least equal to the amount of the Tenant Improvement Allowance paid by Landlord pursuant to the Workletter in connection with the construction of the Tenant Improvements in such Building, and (ii) business interruption (income) coverage, including extra expense coverage and off-premises utility interruption coverage, in such amounts and on such terms as Tenant in its reasonable discretion determines to be appropriate.

        (e)  During the course of construction of the improvements being constructed by Landlord and Tenant under Section 5.1 and the Workletter, Landlord shall procure and maintain in full force and effect, at its sole cost and expense, a policy or policies of builder's risk insurance on both the improvements being constructed by it and the improvements being constructed by Tenant, (i) in such amounts and with such commercially reasonable deductibles and other terms as Landlord in its reasonable discretion determines to be appropriate with respect to the insurance on the improvements being constructed by Landlord, and (ii) in such amounts and with such commercially reasonable

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deductibles and other terms as Landlord and Tenant may mutually and reasonably determine to be appropriate with respect to the insurance on the improvements being constructed by Tenant. Such insurance shall, in Landlord's discretion, either name both Landlord and Tenant as insureds as their interests may appear or name Tenant as an additional insured with respect to the portion of the policy that covers the improvements being constructed by Tenant. Tenant shall provide to Landlord from time to time during the course of construction of improvements by Tenant, at such intervals as Landlord may reasonably request, an updated schedule of values or other appropriate information with respect to the insurable value of the improvements, work in progress and materials located on the Property in connection with Tenant's construction of improvements, and Landlord shall have no obligation or liability with respect to any underinsurance of Tenant's improvements, work in progress and materials that results from Tenant's failure to keep Landlord informed on a current basis, during the course of construction, of the insurable value of such improvements, work in progress and materials on the Property from time to time.

        14.2     Quality Of Policies And Certificates.     All policies of insurance required hereunder shall be issued by responsible insurers and, in the case of policies carried or required to be carried by Tenant, shall be written as primary policies not contributing with and not in excess of any coverage that Landlord may carry. The coverage provided by such policies shall include, where applicable, the clause or endorsement referred to in Section 14.4. Each party shall deliver to the other party certificates of insurance showing that the insuring party's required policies are in effect. If either party fails to acquire, maintain or renew any insurance required to be maintained by it under this Article 14 or to pay the premium therefor, then the other party, at its option and in addition to its other remedies, but without obligation so to do, may procure such insurance, and any sums expended by Landlord to procure any such insurance on behalf of or in place of Tenant shall be repaid upon demand, with interest as provided in Section 3.2 hereof. Tenant shall give Landlord at least thirty (30) days prior written notice of any cancellation or nonrenewal of insurance required to be maintained by Tenant under this Article 14, and shall obtain written undertakings from each insurer under policies required to be maintained by Tenant to notify all insureds thereunder at least thirty (30) days prior to cancellation of coverage.

        14.3     Workers' Compensation.     Tenant shall maintain in full force and effect during the term of this Lease workers' compensation insurance, in at least the minimum amounts required by law, covering all of Tenant's employees working on the Property.

        14.4     Waiver Of Subrogation.     To the extent permitted by law and without affecting the coverage provided by insurance required to be maintained hereunder, Landlord and Tenant each waive any right to recover against the other with respect to (i) damage to property, (ii) damage to the Property or any part thereof, or (iii) claims arising by reason of any of the foregoing, but only to the extent that any of the foregoing damages and claims under clauses (i)-(iii) hereof are covered, and only to the extent of such coverage, by property insurance actually carried or required to be carried hereunder by either Landlord or Tenant. This provision is intended to waive fully, and for the benefit of each party, any rights and claims which might give rise to a right of subrogation in any insurance carrier. Each party shall procure a clause or endorsement on any property insurance policy denying to the insurer rights of subrogation against the other party to the extent rights have been waived by the insured prior to the occurrence of injury or loss. Coverage provided by insurance maintained by Tenant shall not be limited, reduced or diminished by virtue of the subrogation waiver herein contained.

        14.5     Increase In Premiums.     Tenant shall do all acts and pay all expenses necessary to insure that the Buildings are not used for purposes prohibited by any applicable fire insurance, and that Tenant's use of the Buildings and the Property complies with all requirements necessary to obtain any such insurance. If Tenant uses or permits the Buildings or the Property to be used in a manner which increases the existing rate of any insurance carried by Landlord on the Center, then Tenant shall pay the amount of the increase in premium caused thereby, and Landlord's costs of obtaining other

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replacement insurance policies, including any increase in premium, within ten (10) days after demand therefor by Landlord.

        14.6     Indemnification.

        (a)  Except as otherwise expressly provided in this Lease, Tenant shall indemnify, defend and hold Landlord and its members, partners, shareholders, officers, directors, agents, employees and contractors harmless from any and all liability for bodily injury to or death of any person, or loss of or damage to the property of any person, and all actions, claims, demands, costs (including, but not limited to, reasonable attorneys' fees), damages or expenses of any kind arising therefrom which may be brought or made against Landlord or which Landlord may pay or incur by reason of the use, occupancy and enjoyment of the Property by Tenant or any invitees, sublessees, licensees, assignees, agents, employees or contractors of Tenant or holding under Tenant (including, but not limited to, any such matters arising out of or in connection with any early entry upon the Property by Tenant pursuant to Section 2.2 hereof) from any cause whatsoever other than negligence or willful misconduct or omission by Landlord or its agents, employees or contractors. Landlord and its members, partners, shareholders, officers, directors, agents, employees and contractors shall not be liable for, and Tenant hereby waives all claims against such persons for, damages to goods, wares and merchandise in or upon the Property, or for injuries to Tenant, its agents or third persons in or upon the Property, from any cause whatsoever other than negligence or willful misconduct or omission by Landlord or its agents, employees or contractors. Tenant shall give prompt notice to Landlord of any casualty or accident in, on or about the Property.

        (b)  Except as otherwise expressly provided in this Lease, Landlord shall indemnify, defend and hold Tenant and its shareholders, officers, directors, agents, employees and contractors harmless from any and all liability for bodily injury to or death of any person, or loss of or damage to the property of any person, and all actions, claims, demands, costs (including, but not limited to, reasonable attorneys' fees), damages or expenses of any kind arising therefrom which may be brought or made against Tenant or which Tenant may pay or incur, to the extent such liabilities or other matters arise in, on or about the Property by reason of any negligence or willful misconduct or omission by Landlord or its agents, employees or contractors.

        14.7     Blanket Policy.     Any policy required to be maintained hereunder may be maintained under a so-called "blanket policy" insuring other parties and other locations so long as the amount of insurance required to be provided hereunder is not thereby diminished. Without limiting the generality of the requirement set forth at the end of the preceding sentence, property insurance provided under a blanket policy shall provide full replacement cost coverage and liability insurance provided under a blanket policy shall include per location aggregate limits meeting or exceeding the limits required under this Article 14.

15.    SUBLEASE AND ASSIGNMENT

        15.1     Assignment And Sublease Of Building(s).     Except in the case of a Permitted Transfer (as hereinafter defined), Tenant shall not have the right or power to assign its interest in this Lease, or make any sublease of any Building or any portion thereof, nor shall any interest of Tenant under this Lease be assignable involuntarily or by operation of law, without on each occasion obtaining the prior written consent of Landlord, which consent shall not be unreasonably withheld or delayed. Any purported sublease or assignment of Tenant's interest in this Lease requiring but not having received Landlord's consent thereto (to the extent such consent is required hereunder) shall be void. Without limiting the generality of the foregoing provisions, Landlord may withhold consent to any proposed subletting or assignment solely on the ground, if applicable, that the use by the proposed subtenant or assignee is reasonably likely to be incompatible with Landlord's use of the balance of the Property or of any adjacent property owned or operated by Landlord, unless the proposed use is within the

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permitted uses specified in Section 13.1, in which event it shall not be reasonable for Landlord to object to the proposed use. Except in the case of a Permitted Transfer, any dissolution, consolidation, merger or other reorganization of Tenant, or any sale or transfer of the stock or assets of or other interest in Tenant, in a single transaction or series of related transactions, involving in the aggregate a change of fifty percent (50%) or more in the beneficial ownership of Tenant or its assets shall be deemed to be an assignment hereunder and shall be void without the prior written consent of Landlord as required above. Notwithstanding the foregoing, (i) an initial public offering of the common stock of Tenant shall not be deemed to be an assignment hereunder; and (ii) Tenant shall have the right to assign this Lease or sublet the Buildings, or any portion thereof, without Landlord's consent (but with prior or concurrent written notice by Tenant to Landlord), to any entity which controls, is controlled by, or is under common control with Tenant, or to any entity which results from a merger or consolidation with Tenant, or to any entity engaged in a bona fide joint venture with Tenant, or to any entity which acquires substantially all of the stock or assets of Tenant, as a going concern, with respect to the business that is being conducted on the Property (hereinafter each a "Permitted Transfer"). In addition, a sale or transfer of the capital stock of Tenant shall be deemed a Permitted Transfer (x) if such sale or transfer occurs in connection with any bona fide financing or capitalization for the benefit of Tenant, or (y) if Tenant becomes, and while Tenant is, a publicly traded corporation. Landlord shall have no right to terminate this Lease in connection with, and shall have no right to any sums or other economic consideration resulting from, any Permitted Transfer. Except as expressly set forth in this Section 15.1, however, the provisions of Section 15.2 shall remain applicable to any Permitted Transfer and the transferee under such Permitted Transfer shall be and remain subject to all of the terms and provisions of this Lease.

        15.2     Rights Of Landlord.     Consent by Landlord to one or more assignments of this Lease, or to one or more sublettings of any Building or any portion thereof, or collection of rent by Landlord from any assignee or sublessee, shall not operate to exhaust Landlord's rights under this Article 15, nor constitute consent to any subsequent assignment or subletting. No assignment of Tenant's interest in this Lease and no sublease shall relieve Tenant of its obligations hereunder, notwithstanding any waiver or extension of time granted by Landlord to any assignee or sublessee, or the failure of Landlord to assert its rights against any assignee or sublessee, and regardless of whether Landlord's consent thereto is given or required to be given hereunder. In the event of a default by any assignee, sublessee or other successor of Tenant in the performance of any of the terms or obligations of Tenant under this Lease, Landlord may proceed directly against Tenant without the necessity of exhausting remedies against any such assignee, sublessee or other successor. In addition, Tenant immediately and irrevocably assigns to Landlord, as security for Tenant's obligations under this Lease, all rent from any subletting of all or a part of any Building as permitted under this Lease, and Landlord, as Tenant's assignee and as attorney-in-fact for Tenant, or any receiver for Tenant appointed on Landlord's application, may collect such rent and apply it toward Tenant's obligations under this Lease; except that, until the occurrence of an act of default by Tenant, Tenant shall have the right to collect such rent and to retain all sublease profits.

16.    RIGHT OF ENTRY AND QUIET ENJOYMENT

        16.1     Right Of Entry.     Landlord and its authorized representatives shall have the right to enter the Buildings at any time during the term of this Lease during normal business hours and upon not less than twenty-four (24) hours prior notice, except in the case of emergency (in which event no notice shall be required and entry may be made at any time), for the purpose of inspecting and determining the condition of the Buildings or for any other proper purpose including, without limitation, to make repairs, replacements or improvements which Landlord may deem necessary, to show the Buildings to prospective purchasers, to show the Buildings to prospective tenants (but only during the final year of the term of this Lease), and to post notices of nonresponsibility. Landlord shall not be liable for inconvenience, annoyance, disturbance, loss of business, quiet enjoyment or other damage or loss to

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Tenant by reason of making any repairs or performing any work upon the Buildings or the Property or by reason of erecting or maintaining any protective barricades in connection with any such work, and the obligations of Tenant under this Lease shall not thereby be affected in any manner whatsoever, provided, however, Landlord shall use reasonable efforts to minimize the inconvenience to Tenant's normal business operations caused thereby.

        16.2     Quiet Enjoyment.     Landlord covenants that Tenant, upon paying the rent and performing its obligations hereunder and subject to all the terms and conditions of this Lease, shall peacefully and quietly have, hold and enjoy the Buildings and the Property throughout the term of this Lease, or until this Lease is terminated as provided by this Lease.

17.    CASUALTY AND TAKING

        17.1     Damage or Destruction.

        (a)  If any or all Buildings, or the Common Areas of the Property necessary for Tenant's use and occupancy of any or all Buildings, are damaged or destroyed in whole or in part under circumstances in which (i) repair and restoration is permitted under applicable governmental laws, regulations and building codes then in effect and (ii) repair and restoration reasonably can be completed within a period of one (1) year (or, in the case of an occurrence during the last two (2) years of the term of this Lease, within a period of sixty (60) days) following the date of the occurrence, then Landlord, as to the Common Areas of the Property and the Building Shell of the applicable Building(s), and Tenant, as to the Tenant Improvements constructed by Tenant, shall commence and complete, with all due diligence and as promptly as is reasonably practicable under the conditions then existing, all such repair and restoration as may be required to return the affected portions of the Property to a condition comparable to that existing immediately prior to the occurrence. In the event of damage or destruction the repair of which is not permitted under applicable governmental laws, regulations and building codes then in effect, if such damage or destruction (despite being corrected to the extent then permitted under applicable governmental laws, regulations and building codes) would still materially impair Tenant's ability to conduct its business in the applicable Building(s), then either party may terminate this Lease with respect to the applicable Building(s) as of the date of the occurrence by giving written notice to the other within thirty (30) days after the date of the occurrence; if neither party timely elects such termination, or if such damage or destruction does not materially impair Tenant's ability to conduct its business in the applicable Building(s), then this Lease shall continue in full force and effect, except that there shall be an equitable adjustment in monthly minimum rental and of Tenant's Operating Cost Share of Operating Expenses, based upon the extent to which Tenant's ability to conduct its business in the applicable Building(s) is impaired, and Landlord and Tenant respectively shall restore the Common Areas and Building Shell and the Tenant Improvements in the applicable Building(s) to a complete architectural whole and to a functional condition. In the event of damage or destruction which cannot reasonably be repaired within one (1) year (or, in the case of an occurrence during the last two (2) years of the term of this Lease, within a period of sixty (60) days) following the date of the occurrence, then either Landlord or Tenant, at its election, may terminate this Lease with respect to the applicable Building(s) as of the date of the occurrence by giving written notice to the other within thirty (30) days after the date of the occurrence; if neither party timely elects such termination, then this Lease shall continue in full force and effect and Landlord and Tenant shall each repair and restore applicable portions of the Property in accordance with the first sentence of this Section 17.1(a).

        (b)  The respective obligations of Landlord and Tenant pursuant to Section 17.1(a) are subject to the following limitations:

        (i)    If the occurrence results from a peril which is required to be insured pursuant to Section 14.1(c) and (d) above, the obligations of each party shall not exceed the amount of

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insurance proceeds received from insurers (or, in the case of any failure to maintain required insurance, proceeds that reasonably would have been available if the required insurance had been maintained) by reason of such occurrence, plus the amount of the party's permitted deductible ( provided that each party shall be obligated to use its best efforts to recover any available proceeds from the insurance which it is required to maintain pursuant to the provisions of Section 14.1(c) or (d), as applicable), and, if such proceeds (including, in the case of a failure to maintain required insurance, any proceeds that reasonably would have been available) are insufficient, either party may terminate this Lease with respect to the applicable Building(s) unless the other party promptly elects and agrees, in writing, to contribute the amount of the shortfall; and

        (ii)  If the occurrence results from a peril which is not required to be insured pursuant to Section 14.1(c) and (d) above and is not actually insured, Landlord shall be required to repair and restore the Common Areas and the Building Shell of the applicable Building(s) to the extent necessary for Tenant's continued use and occupancy of the applicable Building(s), and Tenant shall be required to repair and restore the Tenant Improvements to the extent necessary for Tenant's continued use and occupancy of the applicable Building(s), provided that each party's out of pocket cost (after application of any insurance proceeds) to repair and restore shall not exceed an amount equal to fifteen percent (15%) of the replacement cost of the Building Shell of the applicable Building(s) and the Common Area improvements, as to Landlord, or fifteen percent (15%) of the replacement cost of the Tenant Improvements in the applicable Building(s), as to Tenant; if the out of pocket replacement cost as to either party exceeds such amount, then the party whose limit has been exceeded may terminate this Lease with respect to the applicable Building(s) unless the other party promptly elects and agrees, in writing, to contribute the amount of the shortfall.

        (c)  If this Lease is terminated with respect to the applicable Building(s) pursuant to the foregoing provisions of this Section 17.1 following an occurrence which is a peril actually insured or required to be insured against pursuant to Section 14.1(c) and (d), Landlord and Tenant agree (and any Lender shall be asked to agree) that such insurance proceeds shall be allocated between Landlord and Tenant in a manner which fairly and reasonably reflects their respective ownership rights under this Lease, as of the termination or expiration of the term of this Lease, with respect to the improvements, fixtures, equipment and other items to which such insurance proceeds are attributable.

        (d)  From and after the date of an occurrence resulting in damage to or destruction of a Building or of the Common Areas necessary for Tenant's use and occupancy of the Buildings, and continuing until repair and restoration thereof are completed, there shall be an equitable abatement of Minimum Rental and additional rent and of Tenant's Operating Cost Share of Operating Expenses based upon the degree to which Tenant's ability to conduct its business in the applicable Building(s) is impaired.

        17.2     Condemnation.

        (a)  If during the term of this Lease one or more Buildings, the Property or Improvements, or any substantial part of any of them, is taken by eminent domain or by reason of any public improvement or condemnation proceeding, or in any manner by exercise of the right of eminent domain (including any transfer in avoidance of an exercise of the power of eminent domain), or receives irreparable damage by reason of anything lawfully done under color of public or other authority, then (i) this Lease shall terminate as to the entire applicable Building(s) at Landlord's election by written notice given to Tenant within sixty (60) days after the taking has occurred, and (ii) this Lease shall terminate as to the entire applicable Building(s) at Tenant's election, by written notice given to Landlord within thirty (30) days after the nature and extent of the taking have been finally determined, if the portion of the Property taken is of such extent and nature as substantially to handicap, impede or permanently impair Tenant's use of the balance of the applicable Building(s). If Tenant elects to terminate this Lease, Tenant shall also notify Landlord of the date of termination, which date shall not be earlier than thirty (30) days nor later than ninety (90) days after Tenant has notified Landlord of Tenant's election to

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terminate, except that this Lease shall terminate on the date of taking if such date falls on any date before the date of termination designated by Tenant. If neither party elects to terminate this Lease as to the applicable Building(s) as hereinabove provided, this Lease shall continue in full force and effect (except that there shall be an equitable abatement of Minimum Rental and additional rent and of Tenant's Operating Cost Share of Operating Expenses based upon the degree to which Tenant's ability to conduct its business in the applicable Building(s) is impaired), Landlord shall restore the Building Shell of the applicable Building(s) and the Common Area improvements to a complete architectural whole and a functional condition and as nearly as reasonably possible to the condition existing before the taking, and Tenant shall restore the Tenant Improvements and Tenant's other alterations, additions and improvements to a complete architectural whole and a functional condition and as nearly as reasonably possible to the condition existing before the taking. In connection with any such restoration, each party shall use its respective best efforts (including, without limitation, any necessary negotiation or intercession with its respective lender, if any) to ensure that any severance damages or other condemnation awards intended to provide compensation for rebuilding or restoration costs are promptly collected and made available to Landlord and Tenant in portions reasonably corresponding to the cost and scope of their respective restoration obligations, subject only to such payment controls as either party or its lender may reasonably require in order to ensure the proper application of such proceeds toward the restoration of the Improvements. Each party waives the provisions of Code of Civil Procedure Section 1265.130, allowing either party to petition the Superior Court to terminate this Lease in the event of a partial condemnation of one or more Buildings or the Property.

        (b)  The respective obligations of Landlord and Tenant pursuant to Section 17.2(a) are subject to the following limitations:

        (i)    Each party's obligation to repair and restore shall not exceed, net of any condemnation awards or other proceeds available for and allocable to such restoration as contemplated in Section 17.2(a), an amount equal to five percent (5%) of the replacement cost of the Building Shell of the applicable Building(s) and the Common Area improvements, as to Landlord, or five percent (5%) of the replacement cost of the Tenant Improvements in the applicable Building(s), as to Tenant; if the replacement cost as to either party exceeds such amount, then the party whose limit has been exceeded may terminate this Lease with respect to the applicable Building(s) unless the other party promptly elects and agrees, in writing, to contribute the amount of the shortfall; and

        (ii)  If this Lease is terminated with respect to the applicable Building(s) pursuant to the foregoing provisions of this Section 17.2, or if this Lease remains in effect but any condemnation awards or other proceeds become available as compensation for the loss or destruction of any of the Improvements, then Landlord and Tenant agree (and any Lender shall be asked to agree) that there shall be paid from such award or proceeds (i) to Landlord, the award or proceeds attributable or allocable to the Building Shell of the applicable Building(s) and/or the Common Area improvements, and (ii) to Landlord and Tenant, respectively, portions of the award or proceeds attributable or allocable to the Tenant Improvements in the applicable Building(s), in the respective proportions in which Landlord and Tenant would have shared, under Section 17.1(c), the proceeds of any insurance proceeds following loss or destruction of such Tenant Improvements by an insured casualty.

        17.3     Reservation Of Compensation.     Landlord reserves, and Tenant waives and assigns to Landlord, all rights to any award or compensation for damage to the Improvements, the Property and the leasehold estate created hereby, accruing by reason of any taking in any public improvement, condemnation or eminent domain proceeding or in any other manner by exercise of the right of eminent domain or of anything lawfully done by public authority, except that (a) Tenant shall be entitled to any and all compensation or damages paid for or on account of Tenant's moving expenses, trade fixtures and equipment, and (b) any condemnation awards or proceeds described in

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Section 17.2(b)(ii) shall be allocated and disbursed in accordance with the provisions of Section 17.2(b)(ii), notwithstanding any contrary provisions of this Section 17.3.

        17.4     Restoration Of Improvements.     In connection with any repair or restoration of Improvements by either party following a casualty or taking as hereinabove set forth, the party responsible for such repair or restoration shall, to the extent possible, return such Improvements to a condition substantially equal to that which existed immediately prior to the casualty or taking. To the extent such party wishes to make material modifications to such Improvements, such modifications shall be subject to the prior written approval of the other party (not to be unreasonably withheld or delayed), except that no such approval shall be required for modifications that are required by applicable governmental authorities as a condition of the repair or restoration, unless such required modifications would impair or impede Tenant's conduct of its business in the applicable Building(s) (in which case any such modifications in Landlord's work shall require Tenant's consent, not unreasonably withheld or delayed) or would materially and adversely affect the exterior appearance, the structural integrity or the mechanical or other operating systems of the applicable Building(s) (in which case any such modifications in Tenant's work shall require Landlord's consent, not unreasonably withheld or delayed).

18.    DEFAULT

        18.1     Events Of Default.     The occurrence of any of the following shall constitute an event of default on the part of Tenant:

        (a)     Abandonment.     Abandonment of one or more Buildings. "Abandonment" is hereby defined to include, but is not limited to, any absence by Tenant from the applicable Building(s) for fifteen (15) consecutive days or more while Tenant is in default under any other provision of this Lease. Tenant waives any right Tenant may have to notice under Section 1951.3 of the California Civil Code, the terms of this subsection (a) being deemed such notice to Tenant as required by said Section 1951.3;

        (b)     Nonpayment.     Failure to pay, when due, any amount payable to Landlord hereunder, such failure continuing for a period of five (5) days after written notice of such failure; provided, however, that any such notice shall be in lieu of, and not in addition to, any notice required under California Code of Civil Procedure Section 1161 et seq., as amended from time to time;

        (c)     Other Obligations.     Failure to perform any obligation, agreement or covenant under this Lease other than those matters specified in subsection (b) hereof, such failure continuing for fifteen (15) days after written notice of such failure; provided, however, that if such failure is curable in nature but cannot reasonably be cured within such 15-day period, then Tenant shall not be in default if, and so long as, Tenant promptly (and in all events within such 15-day period) commences such cure and thereafter diligently pursues such cure to completion; and provided further, however, that any such notice shall be in lieu of, and not in addition to, any notice required under California Code of Civil Procedure Section 1161 et seq., as amended from time to time;

        (d)     General Assignment.     A general assignment by Tenant for the benefit of creditors;

        (e)     Bankruptcy.     The filing of any voluntary petition in bankruptcy by Tenant, or the filing of an involuntary petition by Tenant's creditors, which involuntary petition remains undischarged for a period of thirty (30) days. In the event that under applicable law the trustee in bankruptcy or Tenant has the right to affirm this Lease and continue to perform the obligations of Tenant hereunder, such trustee or Tenant shall, in such time period as may be permitted by the bankruptcy court having jurisdiction, cure all defaults of Tenant hereunder outstanding as of the date of the affirmance of this Lease and provide to Landlord such adequate assurances as may be necessary to ensure Landlord of the continued performance of Tenant's obligations under this Lease. Specifically, but without limiting the generality of the foregoing, such adequate assurances

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must include assurances that the Buildings continue to be operated only for the use permitted hereunder. The provisions hereof are to assure that the basic understandings between Landlord and Tenant with respect to Tenant's use of the Property and the benefits to Landlord therefrom are preserved, consistent with the purpose and intent of applicable bankruptcy laws;

        (f)     Receivership.     The employment of a receiver appointed by court order to take possession of substantially all of Tenant's assets or Tenant's interest in one or more of the Buildings, if such receivership remains undissolved for a period of thirty (30) days;

        (g)     Attachment.     The attachment, execution or other judicial seizure of all or substantially all of Tenant's assets or Tenant's interest in one or more of the Buildings, if such attachment or other seizure remains undismissed or undischarged for a period of thirty (30) days after the levy thereof; or

        (h)     Insolvency.     The admission by Tenant in writing of its inability to pay its debts as they become due, the filing by Tenant of a petition seeking any reorganization or arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future statute, law or regulation, the filing by Tenant of an answer admitting or failing timely to contest a material allegation of a petition filed against Tenant in any such proceeding or, if within thirty (30) days after the commencement of any proceeding against Tenant seeking any reorganization or arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future statute, law or regulation, such proceeding shall not have been dismissed.

        18.2     Remedies Upon Tenant's Default.

        (a)  Upon the occurrence of any event of default described in Section 18.1 hereof, Landlord, in addition to and without prejudice to any other rights or remedies it may have, shall have the immediate right to re-enter the Buildings or any part thereof and repossess the same, expelling and removing therefrom all persons and property (which property may be stored in a public warehouse or elsewhere at the cost and risk of and for the account of Tenant), using such force as may be necessary to do so (as to which Tenant hereby waives any claim for loss or damage that may thereby occur). In addition to or in lieu of such re-entry, and without prejudice to any other rights or remedies it may have, Landlord shall have the right either (i) to terminate this Lease and recover from Tenant all damages incurred by Landlord as a result of Tenant's default, as hereinafter provided, or (ii) to continue this Lease in effect and recover rent and other charges and amounts as they become due.

        (b)  Even if Tenant has breached this Lease and abandoned one or more Building(s), this Lease shall continue in effect for so long as Landlord does not terminate Tenant's right to possession under subsection (a) hereof and Landlord may enforce all of its rights and remedies under this Lease, including the right to recover rent as it becomes due, and Landlord, without terminating this Lease, may exercise all of the rights and remedies of a lessor under California Civil Code Section 1951.4 (lessor may continue lease in effect after lessee's breach and abandonment and recover rent as it becomes due, if lessee has right to sublet or assign, subject only to reasonable limitations), or any successor Code section. Acts of maintenance, preservation or efforts to relet the Building(s) or the appointment of a receiver upon application of Landlord to protect Landlord's interests under this Lease shall not constitute a termination of Tenant's right to possession.

        (c)  If Landlord terminates this Lease pursuant to this Section 18.2, Landlord shall have all of the rights and remedies of a landlord provided by Section 1951.2 of the Civil Code of the State of California, or any successor Code section, which remedies include Landlord's right to recover from Tenant (i) the worth at the time of award of the unpaid rent and additional rent which had been earned at the time of termination, (ii) the worth at the time of award of the amount by which the unpaid rent and additional rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided,

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(iii) the worth at the time of award of the amount by which the unpaid rent and additional rent for the balance of the term after the time of award exceeds the amount of such rental loss that Tenant proves could be reasonably avoided, and (iv) any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant's failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom, including, but not limited to, the cost of recovering possession of the Buildings, expenses of reletting, including necessary repair, renovation and alteration of the Buildings, reasonable attorneys' fees, and other reasonable costs. The "worth at the time of award" of the amounts referred to in clauses (i) and (ii) above shall be computed by allowing interest at ten percent (10%) per annum from the date such amounts accrued to Landlord. The "worth at the time of award" of the amounts referred to in clause (iii) above shall be computed by discounting such amounts at one percentage point above the discount rate of the Federal Reserve Bank of San Francisco at the time of award.

        18.3     Remedies Cumulative.     All rights, privileges and elections or remedies of Landlord contained in this Article 18 are cumulative and not alternative to the extent permitted by law and except as otherwise provided herein.

19.    SUBORDINATION, ATTORNMENT AND SALE

        19.1     Subordination To Mortgage.     This Lease, and any sublease entered into by Tenant under the provisions of this Lease, shall be subject and subordinate to any ground lease, mortgage, deed of trust, sale/leaseback transaction or any other hypothecation for security now or hereafter placed upon the Buildings, the Property, the Center, or any of them, and the rights of any assignee of Landlord or of any ground lessor, mortgagee, trustee, beneficiary or leaseback lessor under any of the foregoing, and to any and all advances made on the security thereof and to all renewals, modifications, consolidations, replacements and extensions thereof; provided, however, that such subordination in the case of any future ground lease, mortgage, deed of trust, sale/leaseback transaction or any other hypothecation for security placed upon the Buildings, the Property, the Center or any of them shall be conditioned on Tenant's receipt from the ground lessor, mortgagee, trustee, beneficiary or leaseback lessor of a Non-Disturbance Agreement in a form reasonably acceptable to Tenant confirming that so long as Tenant is not in default hereunder, Tenant's rights hereunder shall not be disturbed by such person or entity. Moreover, Tenant's obligations under this Lease shall be conditioned on Tenant's receipt within thirty (30) days after mutual execution of this Lease, from any ground lessor, mortgagee, trustee, beneficiary or leaseback lessor currently owning or holding a security interest in the Property, of a Non-Disturbance Agreement in a form reasonably acceptable to Tenant confirming that so long as Tenant is not in default hereunder, Tenant's rights hereunder shall not be disturbed by such person or entity. (Landlord hereby advises Tenant, however, that in fact there is no mortgagee, trustee, beneficiary, ground lessor or leaseback lessor holding an interest in the Property on the date of this Lease.) If any mortgagee, trustee, beneficiary, ground lessor, sale/leaseback lessor or assignee elects to have this Lease be an encumbrance upon the Property prior to the lien of its mortgage, deed of trust, ground lease or leaseback lease or other security arrangement and gives notice thereof to Tenant, this Lease shall be deemed prior thereto, whether this Lease is dated prior or subsequent to the date thereof or the date of recording thereof. Tenant, and any sublessee, shall execute such documents as may reasonably be requested by any mortgagee, trustee, beneficiary, ground lessor, sale/leaseback lessor or assignee to evidence the subordination herein set forth, subject to the conditions set forth above, or to make this Lease prior to the lien of any mortgage, deed of trust, ground lease, leaseback lease or other security arrangement, as the case may be, and if Tenant fails to do so within ten (10) days after demand from Landlord, Tenant constitutes and appoints Landlord as Tenant's attorney-in-fact and in Tenant's name, place and stead to do so. Upon any default by Landlord in the performance of its obligations under any mortgage, deed of trust, ground lease, leaseback lease or assignment, Tenant (and any sublessee) shall, notwithstanding any subordination hereunder, attorn to the mortgagee, trustee, beneficiary, ground lessor, leaseback lessor or assignee thereunder upon demand and become the

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tenant of the successor in interest to Landlord, at the option of such successor in interest, and shall execute and deliver any instrument or instruments confirming the attornment herein provided for.

        19.2     Sale Of Landlord's Interest.     Upon sale, transfer or assignment of Landlord's entire interest in the Buildings and the Property, Landlord shall be relieved of its obligations hereunder with respect to liabilities accruing from and after the date of such sale, transfer or assignment, except as otherwise expressly provided in Section 21.2 hereof.

        19.3     Estoppel Certificates.     Either Tenant or Landlord (the "certifying party" ) shall at any time and from time to time, within ten (10) days after written request by the other party (the "requesting party" ), execute, acknowledge and deliver to the requesting party a certificate in writing stating: (i) that this Lease is unmodified and in full force and effect, or if there have been any modifications, that this Lease is in full force and effect as modified and stating the date and the nature of each modification; (ii) the date to which rental and all other sums payable hereunder have been paid; (iii) that the requesting party is not in default in the performance of any of its obligations under this Lease, that the certifying party has given no notice of default to the requesting party and that no event has occurred which, but for the expiration of the applicable time period, would constitute an event of default hereunder, or if the certifying party alleges that any such default, notice or event has occurred, specifying the same in reasonable detail; and (iv) such other matters as may reasonably be requested by the requesting party or by any institutional lender, mortgagee, trustee, beneficiary, ground lessor, sale/leaseback lessor or prospective purchaser of the Property or of Tenant's leasehold interest therein. Any such certificate provided under this Section 19.3 may be relied upon by any lender, mortgagee, trustee, beneficiary, assignee or successor in interest to the requesting party, by any prospective purchaser, by any purchaser on foreclosure or sale, by any grantee under a deed in lieu of foreclosure of any mortgage or deed of trust on the Property, or by any other third party. Failure to execute and return within the required time any estoppel certificate requested hereunder shall be deemed to be an admission of the truth of the matters set forth in the form of certificate submitted to the certifying party for execution.

        19.4     Subordination to CC&R's.     This Lease, and any permitted sublease entered into by Tenant under the provisions of this Lease, and the interests in real property conveyed hereby and thereby, shall be subject and subordinate (a) to any declarations of covenants, conditions and restrictions or other recorded restrictions affecting the Property or the Center from time to time, which may include easements, access rights and similar non-exclusive use rights and privileges in favor of appropriate third parties; provided that the terms of such declarations or restrictions are reasonable (or, to the extent they are not reasonable, are mandated by applicable law), do not materially impair Tenant's ability to conduct the uses permitted hereunder on the Property, and do not discriminate against Tenant relative to other similarly situated tenants occupying portions of the Center, and provided further that except with Tenant's prior written consent, Landlord shall not enter into any such future declarations of covenants, conditions and restrictions or other recorded restrictions that are applicable, by their terms, solely to one or more of the buildings occupied by or leased to Tenant under this Lease (including any buildings occupied by or leased to Tenant pursuant to Tenant's exercise of any of the rights contained in Article 6 of this Lease) and not to any buildings occupied by or leased to other tenants in the Center or, if Tenant exercises its rights under Section 6.3 of this Lease, on the Expansion Property; (b) to the Declaration of Covenants, Conditions and Restrictions and Reciprocal Easements for Shearwater Project dated January 21, 1998 and recorded on January 22, 1998 as Instrument No. 98-008277, Official Records of San Mateo County, as amended from time to time (the "Shearwater Declaration" ), the provisions of which Shearwater Declaration are an integral part of this Lease; and (c) to the Covenant and Environmental Restriction dated as of January 26, 1998 and recorded on February 3, 1998 as Instrument No. 98-013813, Official Records of San Mateo County, as amended from time to time (the "Environmental Restriction" ), the provisions of which Environmental Restriction

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are incorporated herein by this reference. Tenant agrees to execute, upon request by Landlord, any documents reasonably required from time to time to evidence the foregoing subordination.

        19.5     Mortgagee Protection.

        (a)  If, in connection with any future ground lease, mortgage, deed of trust, sale/leaseback transaction or any other hypothecation for security placed upon the Buildings, the Property, the Center, or any of them, the ground lessor, mortgagee, trustee, beneficiary or leaseback lessor requests any changes in this Lease as a condition to its willingness to enter into or accept the ground lease, mortgage, deed of trust, sale/leaseback transaction or other hypothecation for security, then Tenant shall not unreasonably withhold or delay its consent to any such requested changes and shall execute, at the request of Landlord, an amendment to this Lease incorporating the changes thus reasonably consented to by Tenant. It shall be deemed reasonable for Tenant to withhold consent to any requested change which imposes a substantial new monetary obligation on Tenant or which otherwise substantially impairs Tenant's rights under this Lease. Tenant's obligations under this Section 19.5(a) shall be conditioned on Tenant's concurrent receipt, from the ground lessor, mortgagee, trustee, beneficiary or leaseback lessor, of a Non-Disturbance Agreement in a form reasonably acceptable to Tenant confirming that so long as Tenant is not in default hereunder, Tenant's rights hereunder shall not be disturbed by such person or entity.

        (b)  If, following a default by Landlord under any mortgage, deed of trust, ground lease, leaseback lease or other security arrangement covering the Buildings, the Property, the Center or any of them, the Buildings, the Property and/or the Center, as applicable, is acquired by the mortgagee, beneficiary, master lessor or other secured party, or by any other successor owner, pursuant to a foreclosure, trustee's sale, sheriff's sale, lease termination or other similar procedure (or deed in lieu thereof), then any such person or entity so acquiring the Buildings, the Property and/or the Center shall not be:

        (i)    liable for any act or omission of a prior landlord or owner of the Property and/or the Center (including, but not limited to, Landlord);

        (ii)  subject to any offsets or defenses that Tenant may have against any prior landlord or owner of the Property and/or the Center (including, but not limited to, Landlord);

        (iii)  bound by any rent or additional rent that Tenant may have paid in advance to any prior landlord or owner of the Property and/or the Center (including, but not limited to, Landlord) for a period in excess of one month, or by any security deposit, cleaning deposit or other prepaid charge that Tenant may have paid in advance to any prior landlord or owner (including, but not limited to, Landlord) except to the extent such deposit or prepaid amount has been expressly turned over to or credited to the successor owner thus acquiring the Property and/or the Center, as applicable;

        (iv)  liable for any warranties or representations of any nature whatsoever, whether pursuant to this Lease or otherwise, by any prior landlord or owner of the Property and/or the Center (including, but not limited to, Landlord) with respect to the use, construction, zoning, compliance with laws, title, habitability, fitness for purpose or possession, or physical condition (including, without limitation, environmental matters) of the Property, the Buildings or the Center; or

        (v)  liable to Tenant in any amount beyond the interest of such mortgagee, beneficiary, master lessor or other secured party or successor owner in the Property and the Center as they exist from time to time, it being the intent of this provision that Tenant shall look solely to the interest of any such mortgagee, beneficiary, master lessor or other secured party or successor owner in the Property and Center for the payment and discharge of the landlord's obligations under this Lease and that such mortgagee, beneficiary, master lessor or other secured party or successor owner shall have no separate personal liability for any such obligations.

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20.    SECURITY

        20.1     Deposit.

        (a)  Concurrently with Tenant's execution of this Lease, Tenant shall deposit with Landlord the sum of Two Million Two Hundred Seventy Thousand Four Hundred Thirty and No/100 Dollars ($2,270,430.00), which sum (the "Security Deposit" ) shall be held by Landlord as security for the faithful performance of all of the terms, covenants, and conditions of this Lease to be kept and performed by Tenant during the term hereof. If Tenant defaults with respect to any provision of this Lease, including, without limitation, the provisions relating to the payment of rental and other sums due hereunder, Landlord shall have the right, but shall not be required, to use, apply or retain all or any part of the Security Deposit for the payment of rental or any other amount which Landlord may spend or become obligated to spend by reason of Tenant's default or to compensate Landlord for any other loss or damage which Landlord may suffer by reason of Tenant's default. If any portion of the Security Deposit is so used or applied, Tenant shall, within ten (10) days after written demand therefor, deposit cash with Landlord in an amount sufficient to restore the Security Deposit to its original amount and Tenant's failure to do so shall be a material breach of this Lease. Landlord shall not be required to keep any deposit under this Section separate from Landlord's general funds, and Tenant shall not be entitled to interest thereon. If Tenant fully and faithfully performs every provision of this Lease to be performed by it, the Security Deposit, or any balance thereof, shall be returned to Tenant or, at Landlord's option, to the last assignee of Tenant's interest hereunder, at the expiration of the term of this Lease and after Tenant has vacated the Property. In the event of termination of Landlord's interest in this Lease, Landlord shall transfer all deposits then held by Landlord under this Section to Landlord's successor in interest, whereupon Tenant agrees to release Landlord from all liability for the return of such deposit or the accounting thereof.

        (b)  As an alternative to the cash Security Deposit described in Section 20.1(a), Tenant may instead deliver to Landlord, within ten (10) days after mutual execution of this Lease, an irrevocable standby letter of credit (the "Letter of Credit" ) issued in favor of Landlord by a federally insured commercial bank or trust company approved in writing by Landlord (which approval shall not be unreasonably withheld), in form and substance reasonably satisfactory to Landlord, to be held by Landlord as security for the faithful performance of all the obligations of Tenant under this Lease, subject to the following terms and conditions:

        (i)    The amount of the Letter of Credit shall be at least Two Million Two Hundred Seventy Thousand Four Hundred Thirty and No/100 Dollars ($2,270,430.00), and Tenant shall maintain the Letter of Credit in that amount in full force and effect throughout the term of this Lease (including any extensions thereof) and until thirty (30) days after the expiration of the term of this Lease, unless Tenant elects at any time to replace the Letter of Credit with a full cash Security Deposit in compliance with Section 20.1(a). The Letter of Credit may be for an initial one-year term, with automatic renewal provisions, provided that Landlord shall be given at least thirty (30) days prior written notice if the Letter of Credit will not be renewed as of any otherwise applicable renewal date and shall be entitled to draw against the expiring Letter of Credit if a replacement Letter of Credit is not furnished to Landlord at least twenty (20) days prior to the scheduled expiration date, as provided in Section 20.1(b)(iii)(A) below.

        (ii)  Landlord shall be entitled (but shall not be required) to draw against the Letter of Credit and receive and retain the proceeds thereof upon any default by Tenant in the payment of any rent or other amounts required to be paid by Tenant under this Lease, or upon the occurrence of any other Event of Default under this Lease. The amount of the draw shall not exceed the amount of the payments (if any) as to which Tenant is then in default and/or the amount reasonably necessary to cure any non-monetary Events of Default by Tenant, and shall be applied by Landlord to the cure of the applicable default(s). Following any partial draw under this paragraph (ii), if Tenant

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fully cures all outstanding defaults and provides Landlord with a new Letter of Credit in the full required amount under this Section 20.1(b), Landlord shall surrender and return to Tenant, within ten (10) days after Tenant's satisfaction of the foregoing conditions, the Letter of Credit under which the partial draw was made, and any unapplied cash drawn under such Letter of Credit.

        (iii)  Landlord shall also be entitled (but shall not be required) to draw against the Letter of Credit in full and to receive the entire proceeds thereof under either of the following circumstances:

        (A)  If the Letter of Credit will expire as of a date prior to the date thirty (30) days after the expiration of the term of this Lease and Tenant fails to provide to Landlord an extension or replacement of such Letter of Credit, in at least the minimum amount required under this Section 20.1(b), at least twenty (20) days prior to the scheduled expiration date of the Letter of Credit; or

        (B)  If, as a result of a draw against the Letter of Credit by Landlord or for any other reason, the amount of the Letter of Credit falls below the minimum amount required to be maintained from time to time pursuant to this Section 20.1(b) and Tenant has failed to cause the Letter of Credit to be restored to at least the minimum required amount within ten (10) days after written demand by Landlord. Landlord shall return any unapplied cash to Tenant upon receipt a new Letter of Credit in the full amount required by the terms of the Lease.

        (iv)  If Landlord draws against the Letter of Credit in any of the circumstances described in subparagraph (iii) above, Landlord shall use, apply and/or retain all or any part of the amount drawn for the cure of any then existing defaults under this Lease. Any amount drawn that is not immediately so used or applied by Landlord shall be retained by Landlord as a cash security deposit, subject to and in accordance with the provisions of Section 20.1(a).

        (v)  Any actual or purported withdrawal, rescission, termination or revocation of the Letter of Credit by the issuer thereof prior to the expiration of the term of this Lease (except when replaced prior to the effectiveness of such withdrawal, rescission, termination or revocation by a replacement Letter of Credit as contemplated in Section 20.1(b)(iii)(A) hereof) shall be a material breach of this Lease.

21.    MISCELLANEOUS

        21.1     Notices.     All notices, consents, waivers and other communications which this Lease requires or permits either party to give to the other shall be in writing and shall be deemed given when delivered personally (including delivery by private same-day or overnight courier or express delivery service) or by telecopier with mechanical confirmation of transmission, effective upon personal delivery to or refusal of delivery by the recipient (in the case of personal delivery by any of the means described above) or upon telecopier transmission during normal business hours at the recipient's office (in the case of telecopier transmission, with any transmission outside of normal business hours being effective as of the beginning of the first business day commencing after the time of actual transmission) to the parties at their respective addresses as follows:

To Tenant: (until Phase I Rent Commencement Date) Tularik Inc. Two Corporate Drive South San Francisco, CA 94080 Attn: Luis Bayol Telecopier: (650) 825-7554

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	(after Phase I Rent Commencement Date) Tularik Inc.             Veterans Boulevard South San Francisco, CA 94080 Attn: Telecopier: (650) [as specified by Tenant in written notice at or about the Phase I Rent Commencement Date]
with a copy to:	Cooley Godward LLP 4401 Eastgate Mall San Diego, CA 92121-1909 Attn: Elizabeth A. Willes, Esq. Telecopier: (858) 550-6420
To Landlord:	Slough BTC, LLC 33 West Monroe Street, Suite 2000 Chicago, IL 60603 Attn: William Rogalla Telecopier: (312) 558-9041
with a copy to:	Folger Levin & Kahn LLP Embarcadero Center West 275 Battery Street, 23rd Floor San Francisco, CA 94111 Attn: Donald E. Kelley, Jr., Esq. Telecopier: (415) 986-2827
and a copy to:	Britannia Management Services, Inc. 1939 Harrison Street, Suite 715 Oakland, CA 94612 Telecopier: (510) 763-6262

or to such other address as may be contained in a notice at least fifteen (15) days prior to the address change from either party to the other given pursuant to this Section. Rental payments and other sums required by this Lease to be paid by Tenant shall be delivered to Landlord in care of Britannia Management Services, Inc. at the address provided above in this Section, or to such other address as Landlord may from time to time specify in writing to Tenant, and shall be deemed to be paid only upon actual receipt.

        21.2     Successors And Assigns.     The obligations of this Lease shall run with the land, and this Lease shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that the original Landlord named herein and each successive Landlord under this Lease shall be liable only for obligations accruing during the period of its ownership of the Property, said liability terminating upon termination of such ownership and passing to the successor lessor.

        21.3     No Waiver.     The failure of Landlord to seek redress for violation, or to insist upon the strict performance, of any covenant or condition of this Lease shall not be deemed a waiver of such violation, or prevent a subsequent act which would originally have constituted a violation from having all the force and effect of an original violation.

        21.4     Severability.     If any provision of this Lease or the application thereof is held to be invalid or unenforceable, the remainder of this Lease or the application of such provision to persons or circumstances other than those as to which it is invalid or unenforceable shall not be affected thereby,

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and each of the provisions of this Lease shall be valid and enforceable, unless enforcement of this Lease as so invalidated would be unreasonable or grossly inequitable under all the circumstances or would materially frustrate the purposes of this Lease.

        21.5     Litigation Between Parties.     In the event of any litigation or other dispute resolution proceedings between the parties hereto arising out of or in connection with this Lease, the prevailing party shall be reimbursed for all reasonable costs, including, but not limited to, reasonable accountants' fees and attorneys' fees, incurred in connection with such proceedings (including, but not limited to, any appellate proceedings relating thereto) or in connection with the enforcement of any judgment or award rendered in such proceedings. "Prevailing party" within the meaning of this Section shall include, without limitation, a party who dismisses an action for recovery hereunder in exchange for payment of the sums allegedly due, performance of covenants allegedly breached or consideration substantially equal to the relief sought in the action.

        21.6     Surrender.     A voluntary or other surrender of this Lease by Tenant, or a mutual termination thereof between Landlord and Tenant, shall not result in a merger but shall, at the option of Landlord, operate either as an assignment to Landlord of any and all existing subleases and subtenancies, or a termination of all or any existing subleases and subtenancies. This provision shall be contained in any and all assignments or subleases made pursuant to this Lease.

        21.7     Interpretation.     The provisions of this Lease shall be construed as a whole, according to their common meaning, and not strictly for or against Landlord or Tenant. The captions preceding the text of each Section and subsection hereof are included only for convenience of reference and shall be disregarded in the construction or interpretation of this Lease.

        21.8     Entire Agreement.     This written Lease, together with the exhibits hereto, contains all the representations and the entire understanding between the parties hereto with respect to the subject matter hereof. Any prior correspondence, memoranda or agreements are replaced in total by this Lease and the exhibits hereto. This Lease may be modified only by an agreement in writing signed by each of the parties.

        21.9     Governing Law.     This Lease and all exhibits hereto shall be construed and interpreted in accordance with and be governed by all the provisions of the laws of the State of California.

        21.10     No Partnership.     The relationship between Landlord and Tenant is solely that of a lessor and lessee. Nothing contained in this Lease shall be construed as creating any type or manner of partnership, joint venture or joint enterprise with or between Landlord and Tenant.

        21.11     Financial Information.     From time to time Tenant shall promptly provide directly to prospective lenders and purchasers of the Property and/or Center designated by Landlord such financial information pertaining to the financial status of Tenant as Landlord may reasonably request; provided, Tenant shall be permitted to provide such financial information in a manner which Tenant deems reasonably necessary to protect the confidentiality of such information. In addition, from time to time, Tenant shall provide Landlord with such financial information pertaining to the financial status of Tenant as Landlord may reasonably request. Landlord agrees that all financial information supplied to Landlord by Tenant shall be treated as confidential material, and shall not be disseminated to any party or entity (including any entity affiliated with Landlord) without Tenant's prior written consent, except that Landlord shall be entitled to provide such information, subject to reasonable precautions to protect the confidential nature thereof, (i) to Landlord's partners and professional advisors, solely to use in connection with Landlord's execution and enforcement of this Lease, and (ii) to prospective lenders and/or purchasers of the Property and/or Center, solely for use in connection with their bona fide consideration of a proposed financing or purchase of the Property and/or Center. For purposes of this Section, without limiting the generality of the obligations provided herein, it shall be deemed reasonable for Landlord to request copies of Tenant's most recent audited annual financial statements,

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or, if audited statements have not been prepared, unaudited financial statements for Tenant's most recent fiscal year, accompanied by a certificate of Tenant's chief financial officer that such financial statements fairly present Tenant's financial condition as of the date(s) indicated. Notwithstanding any other provisions of this Section 21.11, during any period in which Tenant has outstanding a class of publicly traded securities and is filing with the Securities and Exchange Commission, on a regular basis, Forms 10Q and 10K and any other periodic filings required under the Securities Exchange Act of 1934, as amended, it shall constitute sufficient compliance under this Section 21.11 for Tenant to furnish Landlord with copies of such periodic filings substantially concurrently with the filing thereof with the Securities and Exchange Commission.

        Landlord and Tenant recognize the need of Tenant to maintain the confidentiality of information regarding its financial status and the need of Landlord to be informed of, and to provide to prospective lenders and purchasers of the Property and/or Center financial information pertaining to, Tenant's financial status. Landlord and Tenant agree to cooperate with each other in achieving these needs within the context of the obligations set forth in this Section. Landlord also acknowledges and agrees that Tenant's obligations to furnish information to Landlord under this Section are in all events subject to Tenant's compliance with, and may therefore be limited by, applicable securities laws.

        21.12     Costs.     If Tenant requests the consent of Landlord under any provision of this Lease for any act that Tenant proposes to do hereunder, including, without limitation, assignment of this Lease or subletting of any one or more of the Buildings or any part thereof, Tenant shall, as a condition to doing any such act and the receipt of such consent, reimburse Landlord promptly for any and all reasonable costs and expenses incurred by Landlord in connection therewith, including, without limitation, reasonable attorneys' fees.

        21.13     Time.     Time is of the essence of this Lease, and of every term and condition hereof.

        21.14     Rules And Regulations.     Tenant shall observe, comply with and obey, and shall cause its employees, agents and, to the best of Tenant's ability, invitees to observe, comply with and obey such rules and regulations as Landlord may promulgate from time to time for the safety, care, cleanliness, order and use of the Improvements, the Property and the Center.

        21.15     Brokers.     Landlord agrees to pay a brokerage commission to CRESA Partners ( "Tenant's Broker"), in connection with the consummation of this Lease in the amount of $6.50 per rentable square foot, payable 50% upon mutual execution of this Lease and 50%, as to each Building, upon the Rent Commencement Date for such Building or, in the case of the Phase II Building, upon the Rent Commencement Date for each phase of the Phase II Building (in proportion to the ratio between the square footage covered by such phase and the total square footage of the Phase II Building). In addition, in the event Tenant exercises the Expansion Option, Landlord shall pay to Tenant's Broker a commission on the same terms as set forth in the first sentence of this Section 21.15. Tenant shall be solely responsible for any claims for brokerage commissions or similar compensation by Tenant's Broker and/or Mark Pearson in excess of the amount described in the preceding two sentences. Each party represents and warrants that no other broker participated in the consummation of this Lease and agrees to indemnify, defend and hold the other party harmless against any liability, cost or expense, including, without limitation, reasonable attorneys' fees, arising out of any claims for brokerage commissions or other similar compensation in connection with any conversations, prior negotiations or other dealings by the indemnifying party with any other broker.

        21.16     Memorandum Of Lease.     At any time during the term of this Lease, either party, at its sole expense, shall be entitled to record a memorandum of this Lease and, if either party so elects, both parties agree to cooperate in the preparation, execution, acknowledgement and recordation of such document in reasonable form.

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        21.17     Corporate Authority.     The person signing this Lease on behalf of Tenant warrants that he or she is fully authorized to do so and, by so doing, to bind Tenant.

        21.18     Execution and Delivery.     This Lease may be executed in one or more counterparts and by separate parties on separate counterparts, but each such counterpart shall constitute an original and all such counterparts together shall constitute one and the same instrument.

        21.19     Survival.     Without limiting survival provisions which would otherwise be implied or construed under applicable law, the provisions of Sections 2.5, 9.4, 11.2, 11.3, 11.4, 13.6, 14.6, 21.5 and 21.20 hereof shall survive the termination of this Lease with respect to matters occurring prior to the expiration of this Lease.

        21.20     Parking and Traffic.

        (a)  Landlord has advised Tenant that the approval of the Britannia Oyster Point project by the City of South San Francisco was conditioned upon, among other things, Landlord's development and implementation of a Transportation Demand Management Plan (the "TDMP") pursuant to which Landlord is required to undertake various measures to try to reduce the volume of traffic generated by the Center. Landlord covenants with Tenant that Landlord will use reasonable efforts to try to reduce the volume of traffic generated by the Center, as contemplated by the TDMP, including (but not limited to) substantially complying with any specific measures required by the City of South San Francisco or its Redevelopment Agency. Tenant hereby agrees (i) to designate one of its employees to act as a liaison with Landlord's designated transportation coordinator in facilitating and coordinating such programs as may be required from time to time by governmental agencies and/or by the terms of the TDMP to reduce the traffic generated by the Center (as required by the City of South San Francisco as part of the conditions of approval of this project) and to facilitate and encourage the use of public transportation, (ii) to make reasonable efforts to encourage cooperation and participation by Tenant's employees in the programs implemented from time to time pursuant to the TDMP, including (but not limited to) programs described in this Section 21.20, and (iii) to cooperate with Landlord's designated transportation coordinator in identifying an appropriate area within each Building where an information kiosk can be maintained for the dissemination of transportation-related information, to be updated from time to time by Landlord's designated transportation coordinator.

        (b)  The Center is presently intended to contain a maximum of approximately 2.9 parking spaces per 1,000 square feet of rentable area in the buildings to be constructed on the Property, subject to approval by appropriate agencies of the City of South San Francisco. Consistent with the TDMP, a specified percentage (presently anticipated to be ten percent (10%)) of these spaces will be designated for carpool, vanpool and clean fuel vehicles. Among other things, the City of South San Francisco requires that Landlord charge a monthly parking fee for each parking space allocated to tenants and their employees. The monthly fee per parking space shall be $20 per parking space for each Building for the first five (5) years after the Rent Commencement Date for such Building, and shall increase to $30 per parking space for each Building immediately after the fifth (5^th) anniversary of the Rent Commencement Date for such Building. In accordance with the policies and requirements of the City of South San Francisco, Landlord recommends that Tenant pass through these parking charges to Tenant's employees using the spaces. (Thus, for example, in years one (1) through five (5) of the Lease term, assuming an aggregate of 280,200 square feet in the Buildings and 2.9 spaces of parking per 1,000 square feet in the Center, Tenant would have 813 allocable parking spaces at $20 per space per month, for a total monthly parking fee of $16,260.)

        (c)  On or about the date Tenant commences business in the respective Buildings, Landlord intends to provide Tenant, through Landlord's designated transportation coordinator, with an appropriate number of packets of employee transportation information, presently expected to include (but not be limited to) information about carpool parking; schedules and maps for SamTrans, Caltrain, BART and shuttle services operating to and from the Property; and a bicycle map. Landlord shall

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thereafter cause its designated transportation coordinator to provide updated copies of the employee transportation information packet to Tenant from time to time, as appropriate, and to make additional copies of the packet available to Tenant from time to time, upon request by Tenant, for new employees. Tenant shall distribute copies of the employee transportation information packet to all employees commuting to the Property at the time Tenant commences business in the respective Buildings, shall thereafter distribute copies of the packet to new employees from time to time and shall distribute updated packets to all employees from time to time when and as such updated packets are furnished to Tenant by Landlord's designated transportation coordinator.

        (d)  Landlord is required to conduct, pursuant to the TDMP, annual surveys of its tenants and their employees regarding both quantitative and qualitative aspects of commuting and transportation patterns at the Center. Landlord anticipates that these surveys will be prepared, administered and analyzed by an independent transportation consultant retained by the City of South San Francisco, and will be summarized by that consultant in an annual report to be submitted by that consultant to the City of South San Francisco and its Redevelopment Agency with respect to the Center. Tenant shall cooperate with Landlord, with Landlord's designated transportation coordinator and with any independent transportation consultant retained by the City, and shall use reasonable efforts to cause Tenant's employees to so cooperate, in the completion and return of such surveys from time to time, when and as requested by Landlord or its designated transportation coordinator or the independent consultant. Tenant acknowledges and understands that employees who fail to respond to such surveys will be counted as drive-alone commuters.

        (e)  Landlord has advised Tenant that pursuant to conditions imposed by the City of South San Francisco and its Redevelopment Agency, Landlord may incur financial penalties if implementation of the TDMP at the Center fails to achieve a target rate of at least thirty-five percent (35%) alternative mode transportation usage (the "Alternative Mode Standard") by employees working at the Center, as reflected in the surveys conducted pursuant to Section 21.20(d) above. Any such financial penalties shall be imposed by the City of South San Francisco Redevelopment Agency (the "Redevelopment Agency"), in its sole discretion, based on its review of the annual reports submitted from time to time pursuant to Section 21.20(d) above. The amount of such financial penalties is presently set at $15,000 per year for each percentage point (if any) by which, after a phase-in period (two (2) years after the granting of a certificate of occupancy) for each building, the aggregate rate of alternative mode transportation usage by employees throughout the Center falls short of the Alternative Mode Standard. If any such financial penalties are imposed on Landlord for failure to meet the Alternative Mode Standard on a Center-wide basis for any applicable survey period, then Landlord shall be entitled to pass such financial penalties through to all tenants of the Center whose employees have failed to demonstrate (pursuant to the applicable surveys) compliance with the Alternative Mode Standard for the applicable period (each such tenant being hereinafter referred to as a "Noncomplying Tenant" for that period), in which event the actual penalty amount shall be allocated among the Noncomplying Tenants for the applicable period in the following manner: Each Noncomplying Tenant shall bear a portion of the applicable penalty amount equal to a fraction, the numerator of which is the number of employees by which such Noncomplying Tenant fell short of meeting the Alternative Mode Standard for the applicable period and the denominator of which is the sum of the respective numbers of employees by which all Noncomplying Tenants, in the aggregate, fell short of meeting the Alternative Mode Standard for the applicable period. Each such Noncomplying Tenant shall pay its share of the applicable penalty amount to Landlord within thirty (30) days after receipt of written demand from Landlord, accompanied by supporting documentation evidencing the applicable penalty amount, as provided by the Redevelopment Agency or its consultant, and demonstrating in reasonable detail the calculation of such Noncomplying Tenant's share of that penalty amount. Under no circumstances shall Tenant be required to bear any portion of any penalties contemplated in this paragraph with respect to any period as to which Tenant can demonstrate that its employees, as evidenced by the applicable survey(s) for that period, met the Alternative Mode Standard. If Tenant subleases any portion(s) of any

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of the Buildings from time to time, then for purposes of this Section 21.20, as between Tenant and Landlord, Tenant shall be fully and solely responsible for compliance by its subtenant(s) and their employees with the requirements of this Section 21.20, and all surveys and reports submitted by Tenant to Landlord or its designated transportation coordinator or to the independent consultant pursuant to this Section 21.20 shall cover the entire Buildings (other than the retail space in the Phase III Building) and shall report figures for Tenant and its subtenant(s) on an aggregate basis. Nothing in the preceding sentence, however, shall preclude Tenant, as between itself and its subtenant(s), from allocating to such subtenant(s) in the applicable sublease agreement any compliance obligations and/or penalty reimbursement obligations under this Section 21.20(e), but no such allocation shall be binding on Landlord or require Landlord, its designated transportation

[rest of page intentionally left blank; signature page follows]

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coordinator or the independent consultant to deal directly with any such subtenant(s) regarding the matters addressed in this Section 21.20. If Tenant believes, reasonably and in good faith, that there are circumstances particular to the nature of Tenant's business operations that would justify a mitigation of penalties and/or a modification of the implementation of the TDMP as applied to Tenant's business, and requests in writing (with supporting information describing, in reasonable detail, the circumstances on which Tenant is relying) that Landlord present such mitigation or modification arguments to the Redevelopment Agency, then Landlord shall use reasonable and good faith efforts to present or cause its designated transportation coordinator to present such mitigation and/or modification arguments, but Tenant acknowledges and understands that any decision with respect to such mitigation and/or modification arguments will be in the sole discretion of the Redevelopment Agency and agrees that Landlord shall have no liability to Tenant if such mitigation and/or modification arguments are not accepted by the Redevelopment Agency.

        IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the day and year first set forth above.

"Landlord"		"Tenant"
SLOUGH BTC, LLC, a Delaware limited liability company		TULARIK INC., a Delaware corporation
By:	Slough Estates USA Inc., a Delaware corporation, Its Manager	By: /s/ DAVID V. GOEDDEL Its: CEO
	By: /s/ WILLIAM ROGALLA Its: VP	By: /s/ WILLIAM J. RIEFLIN Its: EVP

EXHIBITS

EXHIBIT A	Real Property Description (Center)
EXHIBIT B	Site Plan
EXHIBIT C	Workletter
EXHIBIT D	Estimated Construction Schedules
EXHIBIT E	Acknowledgment of Rent Commencement Date

EXHIBIT A

REAL PROPERTY DESCRIPTION (CENTER)

All that certain real property in the City of South San Francisco, County of San Mateo, State of California, more particularly described as follows:

Parcels 2, 3, 5 and 6 as shown on the Bay West Cove Final Subdivision Map, Parcel Map No. 97-027, recorded January 22, 1998 in Book 70, at pages 33-40, File No. 98-008274, Official Records of San Mateo County, California.

EXHIBIT B

BRITANNIA OYSTER POINT

SITE PLAN

EXHIBIT C

WORKLETTER

        This Workletter ("Workletter") constitutes part of the Build-to-Suit Lease dated as of December 20, 2001 (the "Lease") between SLOUGH BTC, LLC, a Delaware limited liability company ("Landlord"), and TULARIK INC., a Delaware corporation ("Tenant"). The terms of this Workletter are incorporated in the Lease for all purposes.

        1. Defined Terms.    As used in this Workletter, the following capitalized terms have the following meanings:

        (a)   Approved Plans: Plans and specifications prepared by the applicable Architect for the respective Improvements and approved by Landlord and, to the extent applicable, Tenant in accordance with Paragraph 2 of this Workletter, subject to further modification from time to time to the extent provided in and in accordance with such Paragraph 2.

        (b)   Architect: Chamorro Design Group, or any other architect selected by Landlord in its sole discretion, with respect to the respective Building Shells, the Site Improvements and any other Improvements which Landlord is to design pursuant to this Workletter; any architect selected by Tenant with the written approval of Landlord (which shall not be unreasonably withheld or delayed) with respect to the Tenant Improvements and any other Improvements which Tenant is to design pursuant to the this Workletter.

        (c)   Building Shells: The shells of the respective Buildings, as more fully described in Schedule C-1 attached to this Workletter, including the shell of the Connector Bridge (as described in Section 1.1(a) of the Lease).

        (d)   Change Order Request: See definition in Paragraph 2(e)(ii) hereof.

        (e)   Cost of Improvement: See definition in Paragraph 2(c) hereof.

        (f)    Final Completion Certificate: See definition in Paragraph 3(b) hereof.

        (g)   Final Working Drawings: See definition in Paragraph 2(a) hereof.

        (h)   General Contractor: Hathaway Dinwiddie Construction Company, or any other general contractor selected by Landlord in its sole discretion, with respect to Landlord's Work. The General Contractor with respect to Tenant's Work shall be selected by Tenant, subject to Landlord's approval (not to be unreasonably withheld or delayed), as contemplated in Paragraph 5(a) hereof.

        (i)     Improvements: The Building Shells, Site Improvements, Tenant Improvements and other improvements shown on the Approved Plans from time to time and to be constructed on the Property pursuant to the Lease and this Workletter.

        (j)     Landlord Delay: See definition in Paragraph 10 hereof.

        (k)   Landlord's Work: The Building Shells and Site Improvements, and any other Improvements which Landlord is to construct or install pursuant to this Workletter (including, but not limited to, any Tenant Improvements identified in Schedule C-2 to this Workletter as being Landlord's responsibility to construct) or by mutual agreement of Landlord and Tenant from time to time.

        (l)     Punch List Work: Minor corrections of construction or decoration details, and minor mechanical adjustments, that are required in order to cause any applicable portion of the Improvements as constructed to conform to the Approved Plans in all material respects and that do not materially interfere with Tenant's use or occupancy of the applicable Building and the Property.

        (m)   Site Improvements: The parking areas, driveways, landscaping and other improvements to the Common Areas of the Property that are depicted on Exhibit B to the Lease

(as the same may be modified by Landlord from time to time pursuant to the process of development and approval of the Approved Plans).

        (n)   Structural Completion Certificate: See definition in Paragraph 3(a) hereof.

        (o)   Tenant Delay: Any of the following types of delay in the completion of construction of the Building Shell(s):

        (i)    Any delay resulting from Tenant's failure to furnish, within the time frames required in the Estimated Construction Schedules attached as Exhibit D to the Lease (or, in the case of any requests for which no specific time frame is specified in such Estimated Construction Schedules, within the time frame reasonably specified in writing by Landlord or its project manager in making such request), information reasonably requested by Landlord or by Landlord's project manager (Project Management Advisors, Inc. or such other person or entity as Landlord may designate from time to time) in connection with the design or construction of the respective Building Shells, or from Tenant's failure to approve within the time frames required in the Estimated Construction Schedules attached as Exhibit D to the Lease (or, in the case of any requests for which no specific time frame is specified in such Estimated Construction Schedules, within the time frame reasonably specified in writing by Landlord or its project manager in requesting such approval) any matters requiring approval by Tenant;

        (ii)  Any delay resulting from changes in Landlord's Final Working Drawings and/or Landlord's Approved Plans with respect to the Phase IA Building and/or the Phase IB Building in order to accommodate the construction of the Connector Bridge, under the circumstances and to the extent provided in Paragraph 2(e)(iii) of this Workletter;

        (iii)  Any delay resulting from Change Order Requests initiated by Tenant, including any delay resulting from the need to revise any drawings or obtain further governmental approvals as a result of any such Change Order Request; or

        (iv)  Any delay of any other kind or nature caused by Tenant (or Tenant's contractors, agents or employees) or resulting from the performance of Tenant's Work.

        (p)   Tenant Improvements: The improvements to or within the respective Buildings, other than improvements constituting part of the respective Building Shells, shown on the Approved Plans from time to time and to be constructed by Tenant (except as otherwise provided herein) pursuant to the Lease and this Workletter, including (but not limited to) the improvements described in Schedule C-2 attached to this Workletter.

        (q)   Tenant's Work: All of the Improvements other than those constituting Landlord's Work, and such other materials and improvements as Tenant deems necessary or appropriate for Tenant's use and occupancy of the respective Buildings.

        (r)   Unavoidable Delays: Delays due to acts of God, action or inaction of public agencies, labor disputes, strikes, fires, freight embargoes, rainy or stormy weather (but only to the extent such weather prevents the affected party from conducting any substantial element of its construction work for a period of at least one full work day), inability to obtain supplies, materials, fuels or permits, delays of contractors or subcontractors, or other causes or contingencies beyond the reasonable control of Landlord or Tenant, as applicable.

        (s)   Work Deadlines: The target dates for performance by the applicable party of the steps listed in the Estimated Construction Schedules for the respective Buildings attached as Exhibit D to the Lease.

        (t)    Capitalized terms not otherwise defined in this Workletter shall have the definitions set forth in the Lease.

        2. Plans, Cost of Improvements and Construction.    Landlord and Tenant shall comply with the procedures set forth in this Paragraph 2 in preparing, delivering and approving matters relating to the Improvements.

(a)   Approved Plans and Working Drawings for Landlord's Work. Landlord shall promptly and diligently (and in all events prior to any applicable Work Deadlines, subject to Tenant Delays and Unavoidable Delays) prepare or cause to be prepared plans and specifications

C-2

for the Improvements constituting Landlord's Work and for all other Improvements (if any) for which Landlord is expressly assigned design responsibility under Schedule C-2 to this Workletter. Such plans and specifications shall not be subject to Tenant's approval, except to the extent (and only to the extent) that Landlord's Work includes, pursuant to this Workletter or by other mutual agreement of Landlord and Tenant, any portion of the Tenant Improvements. Landlord shall deliver copies of such plans and specifications to Tenant for Tenant's approval (but only to the extent provided in the preceding sentence) and information, to assist Tenant in providing any information and making any decisions necessary to be provided or made by Tenant in order to permit preparation of Landlord's Final Working Drawings as hereinafter defined, and to assist Tenant in preparing plans, specifications and drawings for Tenant's Work as hereinafter set forth. Following approval of such plans and specifications by Landlord and, if applicable, by Tenant (as so approved, the "Landlord's Approved Plans"), Landlord shall then prepare or cause to be prepared, on or before the applicable Work Deadline (assuming timely delivery by Tenant of all information and decisions required to be furnished or made by Tenant in order to permit complete preparation of Landlord's Final Working Drawings), final detailed working drawings and specifications for the Improvements constituting Landlord's Work, including structural, fire protection, life safety, mechanical and electrical working drawings and final architectural drawings (collectively, "Landlord's Final Working Drawings"). Landlord's Final Working Drawings shall substantially conform to the Landlord's Approved Plans. Landlord's Final Working Drawings shall not be subject to Tenant's approval, except to the extent (and only to the extent), as noted above, that Landlord's Work includes, pursuant to this Workletter or by other mutual agreement of Landlord and Tenant, any portion of the Tenant Improvements. Landlord shall deliver copies of Landlord's Final Working Drawings to Tenant for Tenant's approval (but only to the extent provided in the preceding sentence) and information, and to assist Tenant in preparing plans, specifications and drawings for Tenant's Work as hereinafter set forth. Landlord's obligation to deliver Landlord's Final Working Drawings to Tenant within the time period set forth above shall be extended for any delay encountered by Landlord as a result of a request by Tenant for changes in accordance with the procedure set forth below, any other Tenant Delays, or any Unavoidable Delays. To the extent Tenant has any right of approval over Landlord's proposed plans and specifications or Landlord's proposed Final Working Drawings pursuant to the foregoing provisions, no later than the applicable Work Deadline (assuming timely delivery of plans and drawings by Landlord), Tenant shall either approve (to the extent of Tenant's approval right) Landlord's proposed plans and specifications or Landlord's proposed Final Working Drawings, as applicable, or set forth in writing with particularity any changes necessary to bring the aspects of such proposed plans and specifications or proposed Landlord's Final Working Drawings over which Tenant has a right of approval into a form which will be acceptable to Tenant or, in the case of Landlord's Final Working Drawings, into substantial conformity with the Landlord's Approved Plans. Notwithstanding any other provisions of this paragraph (other than the final sentence thereof), in no event shall Tenant have the right to object to any aspect of the Landlord's proposed plans and specifications or proposed Landlord's Final Working Drawings (including, but not limited to, any subsequently proposed changes therein from time to time) that is necessitated by applicable law or as a condition of any governmental or other third-party approvals that are required to be obtained in connection with Landlord's Work, or that is required as a result of unanticipated conditions encountered in the course of construction of Landlord's Work. Failure of Tenant to deliver to Landlord written notice of disapproval and specification of required changes (to the extent Tenant has a right of approval or objection under this paragraph) on or before the applicable Work Deadline shall constitute and be deemed to be approval of Landlord's proposed plans and specifications or proposed Landlord's Final Working Drawings, as applicable. Upon approval, actual or deemed, of Landlord's Final Working Drawings by Landlord and Tenant (to the extent Tenant has such a right of approval under this paragraph), Landlord's Final Working Drawings shall be deemed to be incorporated in and considered part of the Landlord's Approved Plans, superseding (to the extent of any inconsistencies) any inconsistent features of the previously existing Landlord's Approved Plans. Notwithstanding the foregoing provisions of this paragraph, the parties acknowledge and agree as follows: (i) as to the Building Shells for the Phase IA and Phase IB Buildings (excluding the Connector Bridge, which has not yet been designed), the plans and specifications for which building permits have already been issued by the City of South San Francisco constitute Landlord's Approved Plans for such Building Shells, subject to any changes

C-3

that may be required in connection with the design and construction of the Connector Bridge; (ii) as to the Building Shell for the Phase II Building, the plans and specifications filed with Landlord's pending permit application with the City of South San Francisco constitute Landlord's Approved Plans for such Building Shell, subject to any changes that may be required by the City of South San Francisco in connection with the issuance of a building permit for such Building Shell; and (iii) Tenant shall have a right of approval over the plans and specifications to be prepared by Landlord for the shell of the Connector Bridge, which approval shall not be unreasonably withheld and which right of approval shall be exercised within any applicable Work Deadlines or, to the extent there is no specifically applicable Work Deadline, within five (5) business days after delivery of plans and specifications for review by Tenant.

        (b)   Approved Plans and Working Drawings for Tenant's Work. Tenant shall promptly and diligently cause to be prepared and delivered to Landlord, for approval, a space plan and detailed plans and specifications for the Improvements constituting Tenant's Work (as so approved, the "Tenant's Approved Plans"). Landlord shall approve or disapprove of Tenant's Plans, following receipt thereof from Tenant, within the applicable number of days specified on the applicable Estimated Construction Schedule(s) attached as Exhibit D to the Lease. Following mutual approval of the Tenant's Approved Plans, Tenant shall then cause to be prepared and delivered to Landlord, for approval, final working drawings and specifications for the Improvements constituting Tenant's Work, including any applicable life safety, mechanical and electrical working drawings and final architectural drawings (collectively, "Tenant's Final Working Drawings"). Tenant's Final Working Drawings shall substantially conform to the Tenant's Approved Plans. Landlord shall, within the applicable number of days specified on the applicable Estimated Construction Schedule(s) attached as Exhibit D to the Lease, either approve Tenant's Final Working Drawings or set forth in writing with particularity any changes necessary to bring Tenant's Final Working Drawings into substantial conformity with Tenant's Approved Plans or into a form which will be acceptable to Landlord. Upon approval of Tenant's Final Working Drawings by Landlord and Tenant, Tenant's Final Working Drawings shall be deemed to be incorporated in and considered part of the Tenant's Approved Plans, superseding (to the extent of any inconsistencies) any inconsistent features of the previously existing Tenant's Approved Plans.

        (c)   Cost of Improvements. "Cost of Improvement" shall mean, with respect to any item or component for which a cost must be determined in order to allocate such cost, or an increase in such cost, to Landlord and/or Tenant pursuant to this Workletter, the sum of the following (unless otherwise agreed in writing by Landlord and Tenant with respect to any specific item or component or any category of items or components): (i) all sums paid to contractors or subcontractors for labor and materials furnished in connection with construction of such item or component; (ii) all costs, expenses, payments, fees and charges (other than penalties) paid or incurred to or at the direction of any city, county or other governmental or quasi-governmental authority or agency which are required to be paid in order to obtain all necessary governmental permits, licenses, inspections and approvals relating to construction of such item or component; (iii) engineering and architectural fees for services rendered in connection with the design and construction of such item or component (including, but not limited to, the applicable Architect for such item or component and an electrical engineer, mechanical engineer and civil engineer); (iv) sales and use taxes; (v) testing and inspection costs; (vi) the cost of power, water and other utility facilities and the cost of collection and removal of debris required in connection with construction of such item or component; (vii) all other "hard" costs incurred in the construction of such item or component in accordance with the applicable Approved Plans and this Workletter; and (viii) as to the Tenant Improvements, all costs and items specifically described as being at Tenant's cost in Schedules C-1 and C-2 attached hereto. Notwithstanding the foregoing provisions, however, Cost of Improvement shall not include any project management fee relating to the construction of the applicable item or component, except to the extent of any project management fees expressly set forth in Schedules C-1 and C-2 attached hereto.

        (d)   Construction of Landlord's Work. Promptly following approval of Landlord's Final Working Drawings, Landlord shall apply for and use reasonable efforts to obtain the necessary permits and approvals to allow construction of all Improvements constituting Landlord's Work. Upon receipt of such permits and approvals, Landlord shall, at Landlord's sole expense (except as otherwise provided in the Lease or in this Workletter), diligently construct and complete the Improvements constituting Landlord's Work substantially in accordance with the Landlord's Approved Plans, subject to Unavoidable Delays and Tenant Delays (if any). Such construction shall be performed in a neat and workmanlike manner and shall conform to all applicable governmental codes, laws and regulations in force at the time such work is completed. Without limiting the generality of the foregoing, Landlord shall be

C-4

responsible for compliance of all Improvements designed and constructed by Landlord with the requirements of the Americans with Disabilities Act and all similar or related requirements pertaining to access by persons with disabilities. Landlord shall have the right, in its sole discretion, to decide whether and to what extent to use union labor on or in connection with Landlord's Work and shall use the General Contractor designated or selected pursuant to Paragraph 1(h) to construct all Improvements constituting Landlord's Work.

        (e)   Changes.

        (i)    If Landlord determines at any time that changes in Landlord's Final Working Drawings or in any other aspect of the Landlord's Approved Plans relating to any item of Landlord's Work are required as a result of applicable law or governmental requirements, or at the insistence of any other third party whose approval may be required with respect to the Improvements, or are required as a result of unanticipated conditions encountered in the course of construction, then Landlord shall promptly (A) advise Tenant of such circumstances and (B) cause revised Landlord's Approved Plans and/or Landlord's Final Working Drawings, as applicable, reflecting such changes to be prepared by Architect and submitted to Tenant, for Tenant's information (and to assist Tenant in determining the need for any related changes in Tenant's Approved Plans) and, to the extent such changes relate to any Tenant Improvements being constructed by Landlord pursuant to mutual agreement of Landlord and Tenant or are subject to Tenant's approval pursuant to the final sentence of this paragraph, for approval by Tenant in accordance with the procedure contemplated in Paragraph 2(a) hereof. Upon final approval of such revised drawings by Landlord and Tenant (if applicable), Landlord's Final Working Drawings and/or the Landlord's Approved Plans shall be deemed to be modified accordingly. In the case of any such changes in Landlord's Final Working Drawings and/or Landlord's Approved Plans that are required as a result of applicable law or governmental requirements, or are required at the insistence of any other third party whose approval is required with respect to the Improvements, or are required as a result of unanticipated conditions encountered in the course of construction, Tenant shall have no approval right and Landlord shall have no liability or responsibility for any costs or cost increases incurred by Tenant as a result of any such required changes. However, in the case of any changes in Landlord's Final Working Drawings and/or Landlord's Approved Plans that are merely deemed desirable by Landlord without being required by any of the circumstances described in the preceding sentence, (A) Landlord shall not make any such change without Tenant's written approval, which approval shall not be unreasonably withheld and which right of approval shall be exercised within five (5) business days after Tenant's receipt of Landlord's request for approval of the proposed change, and (B) Landlord shall be responsible for all actual costs or cost increases reasonably incurred by Tenant as a result of such changes and shall reimburse Tenant for any such actual costs or cost increases promptly following receipt of Tenant's written request for such reimbursement, accompanied by documentation reasonably supporting Tenant's claimed costs or cost increases and their relationship to the changes made by Landlord.

        (ii)  If Tenant at any time desires any changes, alterations or additions to the Landlord's Approved Plans or Landlord's Final Working Drawings with respect to any of Landlord's Work, Tenant shall submit a detailed written request to Landlord specifying such changes, alterations or additions (a "Change Order Request"). Upon receipt of any such request, Landlord shall promptly notify Tenant of (A) whether the matters proposed in the Change Order Request are approved by Landlord (which approval shall not be unreasonably withheld as to any matters relating to Tenant Improvements which are being constructed by Landlord pursuant to mutual agreement of Landlord and Tenant, but may be granted or withheld by Landlord in its sole discretion as to any other aspects of Landlord's Work), (B) Landlord's estimate of the number of days of delay, if any, which shall be caused by such Change Order Request if implemented (including, without limitation, delays due to the need to obtain any revised plans or drawings and any governmental approvals), and (C) Landlord's estimate of the increase, if any, which shall occur in the Cost of Improvement for the items or components affected by such Change Order Request if such Change Order Request is implemented (including, but not limited to, any costs of compliance with laws or governmental regulations that become applicable because of the implementation of the Change Order Request). If Landlord approves the Change Order Request and Tenant notifies Landlord in writing, within five (5) business days after receipt of such notice from Landlord, of Tenant's approval of the Change Order Request (including the estimated delays and cost increases, if any, described in Landlord's notice), then Landlord shall cause such Change Order Request to be implemented and Tenant shall be responsible for all costs or cost increases resulting from or attributable to the implementation of the Change Order

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Request, subject to the provisions of Paragraph 4 hereof. If Tenant fails to notify Landlord in writing of Tenant's approval of such Change Order Request within said five (5) business day period, then such Change Order Request shall be deemed to be withdrawn and shall be of no further effect.

        (iii)  If Landlord determines at any time in the course of design and construction of the Connector Bridge that changes in Landlord's Final Working Drawings or in any other aspect of the Landlord's Approved Plans for the Phase IA Building and/or the Phase IB Building are required in order to accommodate the construction of the Connector Bridge, then Landlord shall promptly (A) advise Tenant of such circumstances and (B) notify Tenant of Landlord's estimate of the number of days of delay, if any, which shall be caused in Landlord's achievement of structural completion for the Phase IA Building and/or the Phase IB Building as a result of such changes if implemented (including, without limitation, delays due to the need to obtain any revised plans or drawings and any governmental approvals) (the "Estimated Delay"). If Tenant notifies Landlord in writing, within five (5) business days after receipt of such notice from Landlord, of Tenant's approval of the Connector Bridge design which requires such changes and of Tenant's desire to have Landlord proceed with the construction of the Connector Bridge notwithstanding the Estimated Delay (if any), then Landlord shall cause such changes to be implemented and the amount of the Estimated Delay (if any) as specified in Landlord's notice shall constitute a Tenant Delay; provided, however, that notwithstanding the characterization of such changes as a Tenant Delay and notwithstanding any contrary provisions of the Lease or of this Workletter, under no circumstances shall Tenant be responsible for any costs or cost increases resulting from or attributable to the implementation of the changes described in this subparagraph (iii). If Tenant fails to notify Landlord in writing, within said five (5) business day period, of Tenant's approval of the Connector Bridge design which requires such changes and of Tenant's desire to have Landlord proceed with the construction of the Connector Bridge notwithstanding the estimated delays (if any), then such design changes shall be deemed to be disapproved and Landlord shall be under no further obligation to construct the Connector Bridge.

        (iv)  If Tenant at any time desires to make any changes, alterations or additions to the Tenant's Approved Plans, such changes, alterations or additions shall be subject to approval by Landlord in the same manner as the original Tenant's Approved Plans as provided above.

        3.     Completion.

        (a)  When Landlord receives written certification from Architect that construction of the foundation, structural slab on grade (except to the extent delayed at Tenant's request to accommodate Tenant's design requirements and/or any underslab aspects of Tenant's Work), Landlord's underslab plumbing work, structural steel framework, decking and concrete on second, third and fourth (if applicable) floors, roof structure, roof membrane and installation of main fire sprinkler risers in a Building have been substantially completed in accordance with the Landlord's Approved Plans, Landlord shall prepare and deliver to Tenant a certificate signed by both Landlord and Architect (the "Structural Completion Certificate") certifying that the construction of such portions of the applicable Building has been substantially completed in accordance with the Landlord's Approved Plans in all material respects and specifying the date of that completion. The delivery of such Structural Completion Certificate shall commence the running of the 180-day time period (which period shall be extended day for day by any Landlord Delay, as hereinafter defined, occurring after the date of delivery of such Structural Completion Certificate) until the Rent Commencement Date for the applicable Building (or in the case of the Phase II Building, until the Phase IIA Rent Commencement Date) under Section 2.1 of the Lease. Notwithstanding any other provisions of this Workletter or of the Lease, Landlord's right to issue a Structural Completion Certificate with respect to the respective Phase I Buildings shall be determined without reference to the degree of completion of the Connector Bridge, and any delay in the construction or structural completion of the shell for the Connector Bridge shall not delay the determination of structural completion or the Rent Commencement Date for either of the Phase I Buildings, treating each of such Buildings (without the Connector Bridge) as a stand-alone building and ignoring, for this purpose, any lack of completion of Landlord's Work at and in the immediate vicinity of the point of attachment of the Connector Bridge to the applicable Building.

        (b)  When Landlord receives written certification from Architect that construction of the remaining Improvements constituting Landlord's Work with respect to a Building has been substantially completed in accordance with the Landlord's Approved Plans (except for Punch List Work), Landlord shall prepare and deliver to Tenant a certificate signed by both Landlord and Architect (the "Final Completion Certificate") certifying that the construction of the remaining Improvements constituting Landlord's Work with respect to such Building has been

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substantially completed in accordance with the Landlord's Approved Plans in all material respects, subject only to completion of Punch List Work, and specifying the date of that completion. Upon receipt by Tenant of the Final Completion Certificate, the Improvements constituting Landlord's Work will be deemed delivered to Tenant for all purposes of the Lease (subject to Landlord's continuing obligations with respect to the Punch List Work). Notwithstanding any other provisions of this Workletter or of the Lease, Landlord's right to issue a Final Completion Certificate with respect to the respective Phase I Buildings shall be determined without reference to the degree of completion of the Connector Bridge, and any delay in the construction or final completion of the shell for the Connector Bridge shall not delay the determination of final completion or the Rent Commencement Date for either of the Phase I Buildings, treating each of such Buildings (without the Connector Bridge) as a stand-alone building and ignoring, for this purpose, any lack of completion of Landlord's Work at and in the immediate vicinity of the point of attachment of the Connector Bridge to the applicable Building.

        (c)  Notwithstanding any other provisions of this Workletter or of the Lease, Rent Commencement Dates for the applicable Buildings shall be subject to adjustment under the following circumstances:

        (i)    If Landlord is delayed in substantially completing any of Landlord's Work necessary for issuance of the Structural Completion Certificate with respect to a Building as a result of any Tenant Delay, then the 180-day period between the delivery of the Structural Completion Certificate and the Rent Commencement Date for such Building pursuant to Section 2.1 of the Lease shall be reduced, day for day, by the number of days by which such Tenant Delay delayed completion of the portions of Landlord's Work necessary for issuance of the Structural Completion Certificate for such Building, and Tenant shall reimburse Landlord in cash, within fifteen (15) days after written demand by Landlord (accompanied by reasonable documentation of the items claimed), for any increased construction-related costs and expenses incurred by Landlord as a result of the Tenant Delay (except to the extent otherwise expressly provided in Paragraph 2(e)(iii) of this Workletter).

        (ii)  If Tenant is delayed in substantially completing any of Tenant's Work necessary for Tenant's occupancy of and commencement of business in a Building as a result of any Landlord Delay, then the 180-day period between the delivery of the Structural Completion Certificate and the Rent Commencement Date for such Building pursuant to Section 2.1 of the Lease shall be extended, day for day, by the number of days by which such Landlord Delay delayed completion of the portions of Tenant's Work necessary for Tenant's occupancy of and commencement of business in such Building.

        (iii)  Rent Commencement Dates shall also be subject to adjustment under the circumstances and to the extent provided in Section 2.1(c) of the Lease, if applicable.

        (d)  At any time within thirty (30) days after delivery of the Structural Completion Certificate or the Final Completion Certificate, as applicable, for a Building, Tenant shall be entitled to submit one or more lists to Landlord specifying Punch List Work to be performed on the applicable Improvements constituting Landlord's Work with respect to such Building, and upon receipt of such list(s), Landlord shall diligently complete such Punch List Work at Landlord's sole expense. Promptly after Landlord provides Tenant with the Final Completion Certificate for a Building, Landlord shall cause the recordation of a Notice of Completion (as defined in Section 3093 of the California Civil Code) with respect to Landlord's Work for such Building.

        4. Payment of Costs.    

        (a)   Landlord's Work. Except as otherwise expressly provided in this Workletter (including, but not limited to, the cost allocations set forth in Schedules C-1 and C-2 attached hereto) or by mutual written agreement of Landlord and Tenant, the cost of construction of Landlord's Work shall be borne by Landlord at its sole cost and expense, including any costs or cost increases incurred as a result of Unavoidable Delays, governmental requirements or unanticipated conditions; provided, however, that notwithstanding any other provisions of this

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Paragraph 4(a), to the extent the Cost of Improvement relating to the construction of any item or component of Landlord's Work is increased as a result of any implemented Change Order Request or any Tenant Delay, or as a result of any other plan changes or compliance costs attributable to Tenant's particular use requirements or to the contemplated Tenant's Work, the amount of the increase in the Cost of Improvement with respect to such item or component, as well as the Cost of Improvement with respect to any matters listed on Schedule C-1 or C-2 as being installed by Landlord but as having the cost thereof borne by Tenant, shall be reimbursed by Tenant to Landlord in cash or, by mutual agreement of Landlord and Tenant, may be deducted from Landlord's maximum obligation under Paragraph 4(b) with respect to the cost of Tenant's Work.

        (b)   Tenant's Work. Except as otherwise expressly provided in this Workletter (including, but not limited to, the cost allocations set forth in Schedules C-1 and C-2 attached hereto) or by mutual written agreement of Landlord and Tenant, the cost of construction of Tenant's Work shall be borne by Tenant at its sole cost and expense, including any costs or cost increases incurred as a result of Unavoidable Delays, governmental requirements or unanticipated conditions. Notwithstanding the foregoing sentence, the Cost of Improvements with respect to the construction of the Tenant Improvements in each Building shall be borne by Landlord up to a maximum contribution by Landlord equal to One Hundred Ninety and No/100 Dollars ($190.00) per square foot, in the case of each of the Phase I Buildings (including the Connector Bridge), and One Hundred Forty-Five and No/100 Dollars ($145.00) per square foot, in the case of each phase of the Phase II Building, times the square footage of the applicable Building, as and when constructed (measured in accordance with Sections 1.1(c) and 3.1(d) of the Lease), toward the Cost of Improvements for the Tenant Improvements in the respective Buildings (the "Tenant Improvement Allowance"), less any reduction in such sum pursuant to Paragraph 4(a) or any other applicable provision of this Workletter. Tenant shall be entitled to utilize the entire Tenant Improvement Allowance for each respective Building or phase prior to being required to expend any of Tenant's own funds on an unreimbursed basis for Tenant Improvements in such Building or phase. In all other respects, the timing, conditions and other procedures for Landlord's disbursement of the Tenant Improvement Allowance for each Building or phase shall be as reasonably prescribed by Landlord, subject to approval by Tenant (which approval shall not be unreasonably withheld or delayed by Tenant); provided, however, that progress payments of the Tenant Improvement Allowance shall be made not less often than monthly, subject to Tenant's timely compliance with all applicable conditions and procedures established pursuant to this sentence. To the extent the Cost of Improvement with respect to the Tenant Improvements for any Building or Phase exceeds the Tenant Improvement Allowance (as reduced, if applicable), whether as a result of implemented Change Order Requests, Tenant Delays and/or Unavoidable Delays or otherwise, the amount of such excess shall in all events be Tenant's sole responsibility and expense. The rental amounts set forth in Section 3.1 of the Lease are not subject to adjustment based on the Cost of Improvements of the Tenant Improvements, regardless of whether the final Cost of Improvements for the Tenant Improvements in any Building or Phase uses the entire Tenant Improvement Allowance or not. The foregoing Tenant Improvement Allowance assumes that each Phase I Building will be composed of a minimum of 65% laboratory space and a maximum of 35% office space, and that the Phase II Building will be composed of a minimum of 50% laboratory space and a maximum of 50% office space, and such Tenant Improvement Allowance shall be subject to reduction (and/or to disapproval by Landlord of Tenant's proposed plans and specifications for the Tenant Improvements in the applicable Building) if the proposed laboratory space in a Building is less than the minimum percentage specified in this sentence. The square footage attributable to the Connector Bridge shall be disregarded for purposes of applying the ratios set forth in the preceding sentence to the Phase I Buildings.

        (c)   Tenant Funding of Tenant Improvement Allowance. If Landlord fails to timely fulfill its obligation to fund any portion of the Tenant Improvement Allowance pursuant to Paragraph 4(b) above, Tenant shall be entitled to deliver written notice thereof (a "Payment Notice") to Landlord. If Landlord still fails to fulfill any such payment obligation within seventy-five (75) days after Landlord's receipt of the Payment Notice from Tenant and fails to deliver written notice to Tenant within such 75-day period explaining the reasons for which Landlord believes that the amounts described in Tenant's Payment Notice are not in fact due and payable by Landlord, then Tenant shall be entitled to fund the portion of the Tenant Improvement Allowance described in the Payment Notice and to offset the amount so funded,

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together with interest at the prime rate plus two percentage points (2%) from the date of funding until the date of offset, against Tenant's next obligations to pay Rent under the Lease.

        5. Tenant's Work.    Tenant shall construct and install in each Building or Phase the Tenant's Work, substantially in accordance with the Tenant's Approved Plans or, with respect to Tenant's Work not otherwise shown on the Tenant's Approved Plans, substantially in accordance with plans and specifications prepared by Tenant and approved in writing by Landlord (which approval shall not be unreasonably withheld or delayed). Tenant's Work shall be performed in accordance with, and shall in all respects be subject to, the terms and conditions of the Lease (to the extent not inconsistent with this Workletter), and shall also be subject to the following conditions:

        (a)   Contractor Requirements. The contractor engaged by Tenant for Tenant's Work, and any subcontractors, shall be duly licensed in California and shall be subject to Landlord's prior written approval, which approval shall not be unreasonably withheld or delayed. Tenant shall engage only union contractors for the construction of Tenant's Work and for the installation of Tenant's fixtures and equipment in the Buildings, and shall require all such contractors engaged by Tenant, and all of their subcontractors, to use only union labor on or in connection with such work, except to the extent Landlord determines, in its reasonable discretion, that the use of non-union labor would not create a material risk of labor disputes, picketing or work interruptions at the Property, in which event Landlord shall, to that extent, waive such union labor requirement.

        (b)   Costs and Expenses of Tenant's Work. Subject to Landlord's payment or reimbursement obligations under Paragraph 4(b) hereof with respect to the Tenant Improvement Allowance, Tenant shall promptly pay all costs and expenses arising out of the performance of Tenant's Work (including the costs of permits) and shall furnish Landlord with evidence of payment on request. Tenant shall provide Landlord with ten (10) days' prior written notice before commencing any Tenant's Work. On completion of Tenant's Work (assuming Landlord has complied with its payment or reimbursement obligations under Paragraph 4(b) hereof), Tenant shall deliver to Landlord a release and unconditional lien waiver executed by each contractor, subcontractor and materialman involved in the performance of Tenant's Work. If any lien is filed against the Property or against Tenant's leasehold interest, Tenant shall obtain, within ten (10) days after the filing, the release or discharge of that lien. If Tenant fails to do so, Landlord shall have the right (but not the obligation) to obtain the release or discharge of the lien and Tenant shall, within fifteen (15) days after written demand by Landlord (accompanied by reasonable documentation of the items claimed), reimburse Landlord for all costs, including (but not limited to) reasonable attorneys' fees, incurred by Landlord in obtaining the release or discharge of such lien, together with interest from the date of demand at the interest rate set forth in Section 3.2 of the Lease.

        (c)   Indemnification. Tenant shall indemnify, defend (with counsel satisfactory to Landlord) and hold Landlord and its agents and employees harmless from all suits, claims, actions, losses, costs and expenses (including, but not limited to, claims for workers' compensation, attorneys' fees and costs) based on personal injury or property damage or contract claims (including, but not limited to, claims for breach of warranty) arising from the performance of Tenant's Work, including (but not limited to) from any early access to the Property by Tenant and its contractors in preparation for Tenant's Work as contemplated in Section 2.2 of the Lease and in this Workletter. Tenant shall repair or replace (or, at Landlord's election, reimburse Landlord for the cost of repairing or replacing) any portion of the Improvements and/or any of Landlord's real or personal property or equipment that is damaged, lost or destroyed in the course of or in connection with the performance of Tenant's Work.

        (d)   Insurance. Tenant's contractors shall obtain and provide to Landlord certificates evidencing workers' compensation, public liability, and property damage insurance in amounts and forms and with companies reasonably satisfactory to Landlord.

        (e)   Rules and Regulations. Tenant and Tenant's contractors shall comply with any other reasonable rules, regulations and requirements that Landlord or Landlord's General Contractor or project manager may impose from time to time with respect to the performance of Tenant's Work. Tenant's agreement with Tenant's contractors shall require each contractor to provide daily cleanup of the construction area to the extent that such cleanup is necessitated by the performance of Tenant's Work.

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        (f)     Early Entry. Landlord shall permit entry of contractors into the Buildings for the purposes of performing Tenant's Work, upon delivery of the Structural Completion Certificate and, to the extent provided in Section 2.2 of the Lease, prior to such delivery, subject to satisfaction of the conditions set forth in the Lease and in this Workletter. This license to enter is expressly conditioned on the contractor(s) retained by Tenant working in harmony with, and not interfering with, the workers, mechanics and contractors of Landlord. If at any time the entry or work by Tenant's contractor(s) causes any material interference with the workers, mechanics or contractors of Landlord, permission to enter may be withdrawn by Landlord immediately on written notice to Tenant. Landlord agrees to use reasonable efforts to cause its workers, mechanics and contractors to work in harmony with Tenant's contractors. Any unreasonable exclusion of Tenant's contractors from the Buildings shall be a Landlord Delay to the extent provided in the definition of that term.

        (g)   Risk of Loss. All materials, work, installations and decorations of any nature brought onto or installed in the Buildings, by or at the direction of Tenant or in connection with the performance of Tenant's Work, before the applicable Rent Commencement Date shall be at Tenant's risk, and neither Landlord nor any party acting on Landlord's behalf shall be responsible for any damage, loss or destruction thereof.

        (h)   Condition of Tenant's Work. All work performed by Tenant shall be performed in a good and workmanlike manner, shall be free from defects in design, materials and workmanship, and shall be completed in compliance with the plans approved by Landlord for such Tenant's Work in all material respects and in compliance with all applicable governmental laws, ordinances, codes and regulations in force at the time such work is completed. Without limiting the generality of the foregoing, Tenant shall be responsible for compliance of all Improvements designed and constructed by Tenant with the requirements of the Americans with Disabilities Act and all similar or related requirements pertaining to access by persons with disabilities.

        6. [Omitted.]    

        7. No Agency.    Nothing contained in this Workletter shall make or constitute Tenant as the agent of Landlord.

        8. Survival.    Without limiting survival provisions which would otherwise be implied or construed under applicable law, the provisions of Paragraph 5(c) of this Workletter shall survive the termination of the Lease with respect to matters occurring prior to expiration of the Lease.

        9. Miscellaneous.    All references in this Workletter to a number of days shall be construed to refer to calendar days, unless otherwise specified herein. In all instances where Tenant's approval is required, if no written notice of disapproval is given within the applicable time period, at the end of that period Tenant shall be deemed to have given approval (unless the provision requiring Tenant's approval expressly states that non-response is deemed to be a disapproval or withdrawal of the pending action or request, in which event such express statement shall be controlling over the general statement set forth in this sentence) and the next succeeding time period shall commence. If any item requiring approval is disapproved by Tenant in a timely manner, the procedure for preparation of that item and approval shall be repeated.

        10. Landlord Delay.    As used in this Workletter and the Lease, "Landlord Delay" shall mean any of the following types of delay in the completion of construction of the Tenant Improvements necessary for Tenant's occupancy of and commencement of business in the respective Buildings or phases, but only to the extent of the actual delay reasonably attributable to the causes or circumstances described herein and directly or proximately caused by such causes or circumstances after the delivery of Landlord's Structural Completion Certificate for the applicable Building or phase:

        (a)  Any delay resulting from Landlord's failure to approve within the time frames required in the Estimated Construction Schedules attached as Exhibit D to the Lease (or, in the case of any requests for which no specific time frame is specified in such Estimated Construction Schedules, within the time frame reasonably specified in writing by Tenant or its construction manager in requesting such approval) any matters requiring approval by Landlord;

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        (b)  Any delay resulting from any unreasonable or wrongful denial by Landlord or its agents or contractors to Tenant or its agents or contractors of access to the applicable Building or phase, or from any negligent or willful acts or omissions of Landlord or its agents or contractors that interfere materially and unreasonably (beyond reasonable and customary accommodations and coordination issues necessarily involved in the conduct of concurrent work in the applicable premises by Landlord and Tenant) with the actual construction of Tenant's Work; or

        (c)  Any delay resulting from changes by Landlord in Landlord's approved Final Working Drawings and/or Landlord's Approved Plans that are merely deemed desirable by Landlord without being required by any of the circumstances described in the next to last sentence of Paragraph 2(e)(i) of this Workletter.

        11. Financial Information.    In August 2002, upon written request by Tenant, Landlord agrees to provide to Tenant, for Tenant's review, copies of the most recently available financial statements for Landlord and for Landlord's manager and sole member, Slough Estates USA Inc. Tenant agrees that such financial statements shall be treated as confidential material, and shall not be disseminated to any person or entity (including, but not limited to, any prospective subtenants of Tenant's existing premises in South San Francisco) without Landlord's prior written consent, except that Tenant shall be entitled to provide such information, subject to reasonable precautions to protect the confidential nature thereof, to Tenant's officers, directors and professional advisors, solely to use in connection with Tenant's analysis and enforcement of its rights under the Lease and this Workletter.

        IN WITNESS WHEREOF, the parties have executed this Workletter concurrently with and as of the date of the Lease.

"Landlord"			"Tenant"
SLOUGH BTC, LLC, a Delaware limited liability company			TULARIK INC., a Delaware corporation
By:	Slough Estates USA Inc., a Delaware corporation, Its Manager		By:	/s/ David V. Goeddel
			Its:	CEO
	By:	/s/ William Rogalla	By:	/s/ William J. Rieflin
	Its:	VP	Its:	EVP

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Schedule C-1 to Workletter

BUILDING SHELL

The "Building Shell" as defined in the Workletter to which this Schedule C-1 is attached shall consist of the following:

Building envelope and waterproofing (the Building "shell"), except as specifically indicated as being included in Tenant Improvements under Schedule C-2, including: reinforced grade beam foundation on prestressed concrete piles; ground floor to be reinforced concrete slab supported by concrete piles; second, third and fourth (where applicable) floors to have metal decking with concrete topping slab; roof structure to be metal deck with concrete for mass dampening in areas to receive mechanical equipment and to include a mechanical penthouse; roof membrane to be built-up system, four-ply including mineral fiber cap sheet, with flashing and sealants; building structural framing to consist of steel beams, girders, columns with a non-bearing exterior curtain wall; seismic system utilizing steel braced frames; floor system designed with live load capacity of 100 psf; roof live load to be 20 psf with minimum of 50 psf (more if required) in all areas within the roofscreen and mechanical penthouse; floor to floor heights of 17 feet, all three (or four) floors.

All other structural work except that driven specifically by Tenant Improvements programming (e.g., interior masonry walls)

Main Building entrances plus 14' 6" rollup door

Building code required primary structure fireproofing, 1 hour deck at elevated floors

Building code required stairs

Pit and jack for elevator; framed openings at 2^nd and 3^rd floors (and 4th floors where applicable); pits/openings sized for 5' 8" × 8' 5" deep inside clear dimension if Tenant provides elevator selection information prior to design completion by Landlord.

Exterior hardscape and landscape, except as specifically included in Tenant Improvements under Schedule C-2

Polyethylene vapor barrier under slab on grade

Site underground water, fire, storm and sanitary service to 5' outside Building line; sanitary to include monitoring manhole if required by City (but not including any connection, capacity or service fees associated with or imposed in connection with the construction of such manhole)

Building storm and overflow drainage systems

Site underground conduits for "normal" electrical and communications, terminated within the Building, including at least two 4" Pac Bell conduits into Building.

Electrical utility pad and transformer, and primary and secondary service conduits terminated at building switchgear location for TI-provided electrical service. Sizing for Building shall be a 3000A service, unless not approved by PG&E based on Tenant loads and demands.

Gas service to exterior meter at Building.

Wet fire protection (risers, loops, branches and heads), evenly distributed for "ordinary hazard-group 2" occupancy, including plug T's to accommodate three branch lines per bay, .20/3000 sf.

Shell design and permitting fees, except as specifically included in Tenant Improvements under Schedule C-2

Vented deck at 2^nd and 3^rd floors

Temporary project fencing

Construction lift for contractor access and stocking of materials (split with TI-50%)

Underslab plumbing and main trunk line for sanitary waste and lab waste (lab waste cost split ⁵⁰ / 50 between shell and TI)

Rigid roof insulation

Site directional signage program: a) "Tularik Main Lobby ->"; b) "Tularik shipping/receiving ->"; c) "Tularik Building A->"" d) "Tularik Building B->"; e) "Tularik Building E ->". $5,000 allowance by Landlord; balance chargeable to Tenant under TI

Schedule C-2 to Workletter

TENANT IMPROVEMENTS

The "Tenant Improvements" as defined in the Workletter to which this Schedule C-2 is attached may include, but shall not necessarily be limited to, the following:

All tenant construction, design fees, fixtures, furnishings, etc. to support tenant operations, including use space, offices, lobbies, circulation, restrooms and all other features not indicated as part of the Building Shell in Schedule C-1

Service Yard foundations, structure, enclosure and waterproofing

Shipping/receiving/dock equipment and bollards

Exterior Building skin modifications to support TI systems (e.g., louvers for HVAC accommodation)

Outdoor lounge and eating area

Topical emission barriers at slab on grade, if moisture test exceeds 3 lbs. Vapor barrier to be @ VCT, sheet vinyl and epoxy floor areas only. (cost split 50/50 with Shell)

Slab depressions for special finishes or special uses

Enhancement of structure for live loading above 100 PSF or vibration control criteria

Modification of structure for openings at floors and roof

Modification or repair of structure fireproofing required by TI construction

All minor support structures for ducts, conduits, pipes, etc.

Stair enclosures

Stair penthouse, if required

Exterior wall insulation

Firesafing at floor decks, exterior wall and interior openings

Custom doors

Security or other upgrades to exterior doors

Wallboard capture trim at exterior window wall

Visual screens for rooftop equipment

Supports, sleepers, etc. for all rooftop equipment, ducts, plumbing. electrical, etc.

Roof patching for all penetrations relating to Tenant Improvements

Skylights, if used, including curbs, roof patching, etc.

Elevator cab and equipment, except for pit and jack

Shaft walls or other fire separations required for vertical openings (stairs, elevators) or control zones

Distribution/laterals from Building main trunk line for sanitary waste

All underground plumbing (distribution/laterals) and related systems and fixtures for lab waste. Cost of main trunk line for lab waste split 50-50 with shell.

Modifications/enhancements to wet fire protection systems required by TI design

Fire alarm and signal systems

All secondary electrical service for Tenant demand loads, including 3000A main service disconnect, Tenant meter section and distribution panels

Standby electrical generator, if required

Schedule C-2, Page 1 of 2

All electrical communications wire and service not included in Building Shell

All TI design fees and reimbursables

All other "soft" costs, including TI permit fees, utility capacity or connection charges

All testing and inspection of TI construction

Construction lift for contractor access and stocking of materials (split with shell-50%)

Schedule C-2, Page 2 of 2

EXHIBIT D

ESTIMATED CONSTRUCTION SCHEDULES

[attached]

EXHIBIT E

ACKNOWLEDGMENT OF RENT COMMENCEMENT DATE

        This Acknowledgment is executed as of  , 200, by SLOUGH BTC, LLC, a Delaware limited liability company ("Landlord"), and TULARIK INC., a Delaware corporation ("Tenant"), pursuant to Section 2.4 of the Build-to-Suit Lease dated December , 2001 between Landlord and Tenant (the "Lease") covering premises located at    Veterans Boulevard, South San Francisco, CA 94080 (the Phase   Building, hereinafter referred to as the "Building"). [In the case of the Phase II Building: This Acknowledgment covers Phase II  of Tenant's occupancy of the Building.]

        Landlord and Tenant hereby acknowledge and agree as follows:

        1.    The Rent Commencement Date for [Phase II of] the Building under the Lease is  , 200.

        2.    The termination date under the Lease (if determinable at this time) shall be    , 201, subject to any applicable provisions of the Lease for extension or early termination thereof.

        3.    The square footage of the Building, as finally designed and built, measured in accordance with Sections 1.1(c) and 3.1(d) of the Lease, is  square feet. [The square footage of Phase II of the Phase II Building is    square feet.]

        4.    Tenant accepts [Phase II    of] the Building and acknowledges the satisfactory completion of all Improvements thereon required to be made by Landlord, subject only to any applicable "punch list" or similar procedures specifically provided under the Lease or under the Workletter governing such work.

        EXECUTED as of the date first set forth above.

"Landlord"		"Tenant"
SLOUGH BTC, LLC, a Delaware limited liability company		TULARIK INC., a Delaware corporation
By:	Slough Estates USA Inc., a Delaware corporation, Its Manager	By:
		Its:
	By:	By:
	Its:	Its:

FIFTH AMENDMENT TO BUILD-TO-SUIT LEASE

AND SECOND AMENDMENT TO WORKLETTER

THIS FIFTH AMENDMENT TO BUILD-TO-SUIT LEASE AND SECOND AMENDMENT TO WORKLETTER ("Amendment") is dated as of June 19, 2006 (the "Phase II Lease Commencement Date") and is entered into by and between SLOUGH BTC, LLC, a Delaware limited liability company ("Landlord") and AMGEN INC., a Delaware corporation ("Tenant"), with reference to the following facts:

Recitals

A. Landlord and Tenant (as successor to Tularik Inc.) are parties to (1) a Build-to Suit Lease dated as of December 20, 2001, as amended by that certain First Amendment to Build-to-Suit Lease dated as of January 22, 2003, that certain Second Amendment to Build-to-Suit Lease dated as of March 26, 2004, that certain Third Amendment to Build-to-Suit Lease dated.as of August 12, 2004; and that certain Fourth Amendment to Build-to-Suit Lease and First Amendment to Workletter dated as of June 19, 2006 (collectively, as amended, the "Lease"), covering the [omitted from original] buildings in Phase I of the Britannia Oyster Point research and development center in South San Francisco, California (the ''Center")[omitted from original] (collectively, the "Phase I Buildings"), and (2) a Workletter dated as of December 20, 200 1, as amended by that certain Fourth Amendment to Build-to-Suit Lease and First Amendment to Workletter dated as of June 19, 2006 (collectively, as amended, the "Workletter"), covering various aspects of the construction of the respective Building Shells for the Phase I Buildings and of the construction of Tenant Improvements in the respective Phase I Buildings. Tenant is already occupying Phase I Buildings A and B; Phase I Building E is under construction for projected occupancy by Tenant on or about January l , 2007; the shell of Phase I Building D has been constructed, and the interior improvements therein will be constructed by Tenant for projected occupancy on or after November 1, 2006.

B. Landlord is in the process of developing the site adjacent to the easterly side of Phase I of the Center as a second phase ("Phase II") consisting of three additional buildings and related site improvements. A site plan for Phase II is attached to this Amendment as Exhibit A and incorporated herein by this reference (the "Phase II Site Plan"). As used herein, the phrase "Phase II Buildings" refers to Building A (a four-story steel frame building totaling approximately 115,000 square feet) and Building B (a four-story steel frame building totaling approximately 122,000 square feet), to be constructed as part of Phase II in approximately the locations designated for them on the Site Plan. Landlord and Tenant wish to add the Phase II Buildings to the Buildings covered by the Lease and to add the Phase II site to the Property covered by the Lease, and in connection therewith to modify certain provisions of the Lease and Workletter and certain of the parties' respective rights and obligations thereunder, all subject to and as more particularly set forth in this Amendment. This Amendment modifies and amends both the Lease and Workletter, and shall be controlling over any inconsistent provisions of the Lease and Workletter, with respect to the matters specifically addressed in this Amendment.

C. Capitalized terms used in this Amendment as defined terms but not specifically defined in this Amendment shall have the meanings assigned to such terms in the Lease or in the Workletter, as applicable. Notwithstanding the foregoing, the parties note that the phrase "Phase II Building" and related phrases (such as "Phase II Rent Commencement Date") were used in the Lease as it existed prior to this Amendment to refer to Phase I Building E (1130 Veterans Blvd.) as described above, and that there is some risk of confusion in using the terms "Phase II," "Phase II Buildings" and similar terms under this Amendment in the manner described in Recital B above. Nevertheless, the parties believe that it is important, for clarity and consistency with the terminology Landlord has used generally in connection with its development of the expansion property described in Recital B above, to adopt the terminology and definitions set forth in Recital B above. Accordingly, the parties hereby confirm and agree, for purposes of clarification, that (I) in connection with the construction and occupancy of Phase I Building E (1130 Veterans Blvd.) as part of the Phase Buildings as defined above, the Lease and all references therein to "the Phase II Building," the "Phase II Rent Commencement Date" and similar phrases shall be construed to continue to apply to such Building E in the same manner as they applied prior to adoption of this Amendment, without regard to the provisions of this Amendment, and (2) in connection with the construction and occupancy of Phase II Buildings A and B as the Phase II Buildings as defined above, references in this Amendment and in the Lease as amended hereby to "the Phase II Building(s)," the "Phase II Rent Commencement Date" and similar phrases shall be construed to apply to such Phase II Buildings A and B in accordance with the provisions of this Amendment.

Agreement

NOW, THEREFORE, in consideration of the mutual agreements contained in this Amendment and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant agree as follows:

I.     Leasing of Phase II Buildings and Amendment of Lease. The two Phase II Buildings (as defined above) are hereby designated as additional Buildings under the Lease and the real property constituting Phase II of the Center, as depicted on the Phase II Site Plan, is hereby added to the Property as defined in the Lease, subject to all of the terms and conditions set forth in this Amendment, and Landlord leases the Phase II Buildings to Tenant and Tenant leases the Phase II Buildings from Landlord on the terms, covenants and conditions set forth in the Lease, as modified by this Amendment and subject to all of the terms and conditions set forth in this Amendment. Effective upon mutual execution of this Amendment (the date of which mutual execution shall be inserted at the beginning of this Amendment as the Phase II Lease Commencement Date), the Lease shall be deemed to be and is hereby, amended to reflect and incorporate all of the terms and conditions set forth in this Amendment. In the event of any inconsistency between provisions of the Lease und provisions of this Amendment, the provisions of this Amendment shall be controlling with respect to the matters specifically addressed in this Amendment.

(a) Except as otherwise expressly provided herein, Tenant's Minimum Rental and Operating Expense obligations with respect to the Phase II Buildings shall commence on the earlier to occur of (i) the date which is three hundred sixty (360) days after the date Landlord delivers to Tenant a Structural Completion Certificate for the Phase II Buildings pursuant to the

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Workletter, subject to any adjustments in such time period to the extent authorized or required under the provisions of the Workletter, or (ii) the date Tenant takes occupancy of and commences operation of its business in any material portion of the Phase II Buildings (the "Phase II Rent Commencement Date"); provided, however, that if Landlord delivers (or is deemed to deliver) the Structural Completion Certificates for the respective Phase II Buildings on different dates, or if Tenant commences operation of its business in the respective Phase II Buildings on different dates, then the Phase II Rent Commencement Date shall be determined separately for each of the respective Phase II Buildings pursuant to the provisions of clauses (i) and (ii) above, applied separately and independently with respect to each Phase II Building. Based on the milestone construction schedule and the draft detailed Master Schedule (6/1/06) collectively attached hereto as Exhibit B(the “Milestone Construction Schedule"), the parties presently estimate that the Phase II Rent Commencement Date will occur on or about November 1, 2008. The Termination Date for Tenant's leasing of the Phase II Buildings shall be the day immediately preceding the fifteenth (15th) anniversary of the Phase II Rent Commencement Date (or, if there are different Rent Commencement Dates for the respective Phase II Buildings, the day immediately preceding the fifteenth (15th) anniversary of the later of such Phase II Rent Commencement Dates to occur), unless sooner terminated or extended as hereinafter provided. Consistent with Recital C above, the provisions of Section 2.1(b) of the Lease (regarding phased occupancy of and phased rent commencement for the "Phase II Building" as defined in the original Lease) shall be construed to apply solely to Phase I Building E (1130 Veterans Blvd.) as described above, and shall be inapplicable to the Phase II Buildings as defined in this Amendment.

(b) The Milestone Construction Schedule is predicated on execution of this Amendment and release of project teams by Landlord on June 1, 2006. To the extent that such execution and release are delayed materially beyond June 1, 2006, the dates set forth in the Milestone Construction Schedule may be affected by such delay. In any event, the Milestone Construction Schedule as attached hereto is merely preliminary and non-binding in nature. A draft of a detailed master construction schedule (similar to the schedules attached as Exhibit D to the original Lease) for the Phase II Buildings as of June 1, 2006, including milestone dates outlining specific Landlord and Tenant responsibilities, is attached hereto as the second page of the Milestone Construction Schedule. Following the Phase II Lease Commencement Date, Landlord and Tenant shall cooperate reasonably, diligently and in good faith to achieve mutual approval of such detailed construction schedule (which shall then be referred to as the "Approved Construction Schedule"), including any mutually agreeable modifications to such draft schedule. Thereafter, references in the Lease and Workletter (as amended hereby) to the Estimated Construction Schedule shall, with respect to the Phase II Buildings, be construed to refer to such Approved Construction Schedule. Notwithstanding anything to the contrary in Section 10.1 of the Lease, Tenant's obligation under Section 10.1 for payment of all charges for services and utilities supplied to or consumed in or with respect to the respective Phase II Buildings, including any taxes on such services and utilities, shall commence on the date Landlord delivers the Structural Completion Certificate for the applicable Phase II Building to Tenant.

(c) Beginning on the Phase II Rent Commencement Date for the applicable Phase II Building and continuing through the Termination Date for the initial Term of the Lease with respect to the Phase II Buildings, Tenant's monthly Minimum Rental obligation for each

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Phase II Building pursuant to Section 3. l (a) of the Lease shall be equal to the applicable amount per square foot from the following table multiplied by the square footage of the applicable Phase II Building as determined pursuant to Section 3.l (d) of the Lease:

MonthsMonthly Minimum Rental

[omitted from original]         [omitted from original]

[omitted from original]

(d) Notwithstanding any provisions of Section 3.1(b); (c) and/or (e) of the Lease to the contrary:

(i) If Tenant properly exercises its right under Section 2.6 of the Lease to one or both extended terms with respect to the Phase II Buildings, the Minimum Rental for each Phase II Building during the first year of each applicable extended term shall be one hundred four percent (104%) of the Minimum Rental payable for such Phase II Building during the last full month of the Lease year immediately preceding the commencement of the applicable extended term, and such Minimum Rental shall be further increased on each anniversary of the commencement of the applicable extended term to one hundred four percent ( 104%) of the Minimum Rental payable for such Phase II Building during the last full month of the immediately preceding lease year of the applicable extended term.

(ii) The entire Tenant Improvement Allowance for the Phase II Buildings as described in Section2(c) of this Amendment has already been taken into account in

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establishing the Minimum Rental rates set forth above. Accordingly, the "additional rent" provisions set forth in Section 3.1(e) of the Lease are inapplicable to the Phase II Buildings and Tenant shall have no liability for any additional rent under Section 3.1 (e) of the Lease with respect to the Phase II Buildings.

(e) Landlord's intention is to calculate and allocate Operating Expenses for Phase II of the Center separately from and independently of the calculation and allocation of Operating Expenses for Phase I of the Center. Tenant's Operating Cost Share (as such term is used in the Lease) with respect to each Phase II Building shall be 100% for Operating Expenses which are allocable solely to such Phase II Building, and (subject to the assumption set forth i n the preceding sentence) for Operating Expenses Which are allocated on a Phase II-wide basis, shall for each Phase II Building be equal to. the percentage share calculated by dividing the square footage of such Phase II Building (determined on the basis of measurement set forth in Section 1.1(c) of the Lease) by the aggregate square footage of all three (3) Buildings in Phase II of the Center (similarly and consistently determined on the basis of measurement set forth in Section 1.1(c) of the Lease). The foregoing shares do not include the Operating Cost Shares attributable to any of the Phase I Buildings, which shall continue to be calculated under the Lease in a manner consistent with prior practice, and Tenant's payment obligations arising from the Operating Cost Shares for the Phase II Buildings as described. above shall simply be added to the payment obligations arising from the Operating Cost Shares for the Phase I Buildings in determining Tenant's total payment obligations for Operating Expenses under the Lease. All such Operating Cost Shares with respect to the Phase II Buildings shall remain subject to adjustment under the circumstances and to the extent set forth in the Lease, and shall be subject to the following additional provisions, notwithstanding anything to the contrary contained in the Lease or elsewhere in this Amendment:

(i) For purposes of calculating Tenant's Operating Cost Share of Operating Expenses which are allocated on a Phase II-wide basis, the aggregate square footage of all three (3) Buildings constructed or to be constructed in Phase II of the Center shall be included as if all three (3) such Buildings (including, but not limited to, Building C as designated on the Phase II Site Plan) were fully built-out at the time Tenant's obligation with respect to Operating Expenses for the Phase II Buildings commences.

(ii) Solely during the first two (2) years following the date on which Tenant's obligation for payment of Operating Expenses with respect to the Phase II Buildings commences, Tenant's Operating Cost Share for each Phase II Building shall be based solely on the square footage actually used or occupied by Tenant in that Phase II Building, so that Tenant's Operating Cost Share for Operating Expenses allocated solely to that Phase II Building shall be equal to the square. footage actually used or occupied by Tenant in that Phase II Building divided by the total square footage of that Phase II Building, and Tenant's Operating Cost Share for Operating Expenses allocated on a Phase II-wide basis shall be equal to the square footage actually used or occupied by Tenant in that Phase II Building divided by the total square footage of all three (3) Buildings constructed or to be constructed in Phase II of the Center, as provided in subparagraph (i) above.

(f) To the extent (if any) that Landlord already holds a security deposit or deposits under the Lease with respect to the Phase I Buildings, such existing deposit(s), whether

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in the form of a cash deposit or a Letter of Credit, shall also be deemed to be useable by Landlord, under the provisions of the Lease, in connection with any defaults by Tenant relative to its leasing and occupancy of the Phase II Buildings pursuant to the Lease as amended hereby, but no additional or increased security deposit shall be required from Tenant with respect to the addition of the Phase II Buildings to the Buildings pursuant to this Amendment.

(g) Notwithstanding the provisions of Section 21.20(b) of the Lease, (i) Phase II of the Center is presently intended to contain approximately 2.8 parking spaces per 1,000 square feet of rentable area in the buildings to be constructed in Phase II of the Center, which ratio shall be used in allocating nonexclusive parking spaces to Tenant under Section 21.20 of the Lease with respect to the Phase II Buildings, and (ii) the monthly fee per parking space allocable to each Phase II Building shall be [omitted from original] per parking space for the first five (5) years after the Phase II Rent Commencement Date for such Building, [omittedfrom original] per parking space for years six (6) through ten (10) after the Phase II Rent Commencement Date for such Building, and [omitted from original] per parking space thereafter.

(h) Solely as applied to the Phase II Buildings, the first sentence of Section 11.1 of the Lease is amended to read as follows:

"Tenant shall make no alterations, additions or improvements to any Phase II Building without the prior written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed, except that (i) subject to the final sentence of this Section 11.1 (regarding structural or roof alterations, substantial equipment installations on the roof, or alterations to building systems), Tenant shall not be required to obtain such consent for interior alterations costing less than One Hundred Thousand Dollars ($100,000.00) for any single project (i.e. any single item of alterations or set of related alterations in a Phase II Building), and (ii) regardless of whether Landlord's consent would otherwise be required under this Lease, Tenant shall provide Landlord with prior written notice of any proposed alterations, additions or improvements having a cumulative estimated cost of more than Four Hundred Thousand Dollars ($400,000.00) in any twelve (12) month period."

(i) Supplementing the provisions of Article 15 of the Lease with respect to assignment and subleasing, Landlord and Tenant agree that with respect to the Phase II Buildings, in the case of any assignment or subleasing other than a Permitted Transfer as defined in Section 15.I of the Lease, the following provisions shall apply:

(i)Upon any assignment of Tenant's interest in the Lease for which Landlord's consent is required under Section 15.1 of the Lease, Tenant shall pay to Landlord, within ten (10) days after receipt thereof by Tenant from time to time, one-half (1/2) of all cash sums and other economic considerations received by Tenant in connection with or as a result of such assignment, after first deducting therefrom (i) any costs incurred by Tenant for leasehold improvements (including, but not limited to, third-party architectural and space planning costs) in the Premises in connection with such assignment, amortized over the remaining term of this Lease, and (ii) any reasonable real estate commissions and/or reasonable attorneys' fees actually incurred by Tenant in connection with such assignment.

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(ii)Upon any sublease of all or any portion of a Phase II Building for which Landlord's consent is required under Section 15.1 of the Lease, Tenant shall pay to Landlord, within ten (10) days after receipt thereof by Tenant from time to time, one-half (1/2) of all cash sums and other economic considerations received by Tenant in connection with or as a result of such sublease, after first deducting therefrom (i) the minimum rental due under the Lease for the applicable Phase II Building for the corresponding period, prorated (on the basis of the average per-square-foot cost paid by Tenant for such Phase II Building for the applicable period under the Lease) to reflect the size of the subleased portion of such Phase II Building, (ii) any costs incurred by Tenant for leasehold improvements in the subleased portion of such Phase II Building (including, but not limited to, third-party architectural and space planning costs) for the specific benefit of the sublessee in connection with such sublease, amortized over the remaining term of the Lease, and (iii) any reasonable real estate commissions and/or reasonable attorneys' fees actually incurred by Tenant in connection with such sublease, amortized over the term of such sublease.

2.Construction; Amendment of Workletter. The parties intend and agree that the construction of the Phase II Buildings and of the Tenant Improvements necessary for Tenant's occupancy and use thereof shall be governed by and performed in accordance with the provisions of the Workletter, subject to all of the terms and conditions set forth in this Amendment. Effective upon the Phase II Lease Commencement Date, the Workletter shall be deemed to be, and is hereby, amended to reflect and incorporate all of the terms and conditions set forth in this Amendment. In the event of any inconsistency between provisions of the Workletter and provisions of this Amendment, the provisions of this Amendment shall be controlling with respect to the matters specifically addressed in this Amendment. Without limiting the generality of the foregoing, Schedule C-1 and Schedule C-2attached hereto shall supersede, with respect to the Phase II Buildings, the comparable schedules attached to the Workletter.

(a) The Building Shell for each Phase II Building shall be constructed by Land lord in accordance with (i) Article 5 of the Lease, (ii) the Workletter (as amended hereby), and (iii) the shell definition set forth in Schedule C-1attached hereto and incorporated herein by this reference. Landlord acknowledges that pursuant to the foregoing provisions, (i) Landlord and Landlord's Architect shall be responsible for code compliance (including, but not limited to, compliance with any applicable requirements of the Americans with Disabilities Act and any applicable similar or related requirements pertaining to access by persons with disabilities) with respect to the Building Shell and any other improvements designed by Landlord, and (ii) all Phase II Building improvements and site improvements constructed by Landlord in Phase II of the Center shall be constructed (A) free of hazardous substances (as defined in Section l 3.6(a) of the Lease), asbestos, asbestos-containing materials and presumed asbestos-containing materials, and (B) in compliance in all material respects with all applicable federal and state laws and requirements relating to hazardous substances.

(b) The Tenant Improvements for each Phase II Building shall be constructed by Tenant (and/or by Landlord, if applicable) in accordance with (i) Article 5 of the Lease, (ii) the Workletter (as amended hereby), and (iii) the tenant improvements definition set forth m Schedule C-2 attached hereto and incorporated herein by this reference, subject to any alternative arrangements mutually approved in writing by Landlord and Tenant from time to time. Tenant acknowledges that pursuant to the foregoing provisions, Tenant and Tenant's

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Architect shall be responsible for code compliance (including, but not limited to, compliance with any applicable requirements of the Americans with Disabilities Act and any applicable similar or related requirements pertaining to access by persons with disabilities) with respect to any and all improvements designed by Tenant or Tenant's Architect. Without limiting the breadth of the approval rights otherwise reserved to Landlord under the Workletter, Landlord reserves the right, in reviewing Tenant's proposed drawings and specifications at any stage to require specific modifications to the proposed Tenant Improvements, at no material additional cost to Tenant, in order to maintain or enhance flexibility with respect to other potential future uses of the Phase II Buildings. Tenant shall have the right to provide, install and maintain, at its sole cost and expense, a security system (including, without limitation, automatic door latches, card-key systems, cameras, etc.) in the Phase II Buildings, which security system shall be surrendered to Landlord upon expiration or termination of the Lease with respect to such Phase II Buildings and Tenant shall have no obligation to restore or remove such security system. Tenant shall provide Landlord and its property manager with copies of any card-keys or other required access devices in order to facilitate emergency entry by Landlord or its agents during the term of the Lease, subject to the provisions of Section 16.I of the Lease.

(c)[omitted from original]

Under no circumstances shall the Tenant Improvement Allowance or any portion thereof be used or useable for any moving or relocation expenses of Tenant, or for any Cost of Improvement (or any other cost or expense) associated with any moveable furniture, trade fixtures, personal property or any other item or element which, under the applicable provisions of the Lease, will not become Landlord's property and remain with the applicable Phase II Building upon expiration or termination of the Lease. The provisions in Paragraph 4(b) of the Workletter regarding relative proportions of laboratory space and office space in the Buildings shall be inapplicable to the Phase II Buildings, and without limiting the generality of the foregoing, Landlord specifically agrees that the relative proportions of office space (if any) and/or laboratory space (if any) in the respective Phase II Buildings shall have no adverse effect on the amount of the Tenant Improvement Allowance for the Phase II Buildings as described above.

(d) Unless and until revoked by Landlord by written notice delivered to Tenant, Landlord hereby (i) delegates to Project Management Advisors, Inc., or any other project manager designated by Landlord in its sole discretion from time to time by written notice to Tenant ("Project Manager"), the authority to exercise all approval rights and other rights and powers of Landlord under the Workletter with respect to the design and construction of the Building Shell and Tenant Improvements for the Phase II Buildings, and (ii) requests that Tenant work with Project Manager with respect to any logistical or other coordination matters arising in the course of construction of the respective Building Shells and Tenant Improvements, including

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(but not limited to) reviewing and processing Tenant's requests for disbursement of the Tenant Improvement Allowance, monitoring Tenant's and Landlord 's compliance with their respective obligations under the Workletter and under the Lease (as amended hereby) with respect to the design and construction of the Building Shell and the Tenant Improvements, and addressing any coordination issues that may arise in the course of construction of the Building Shell and Tenant Improvements. Tenant acknowledges the foregoing delegation and request, and agrees to cooperate reasonably with Project Manager as Landlord's representative pursuant to such delegation and request. As between Landlord and Tenant, however, Landlord shall be bound by and be fully responsible for all acts and omissions of Project Manager and for the performance of all of Landlord's obligations under the Lease (as amended hereby) and the Workletter, notwithstanding such delegation of authority to Project Manager. Notwithstanding the preceding sentence, neither Landlord's delegation of authority to Project Manager nor Project Manager's performance of the functions and responsibilities contemplated in this paragraph shall cause Landlord or Project Manager to incur any obligations or responsibilities for the design, construction or delivery of the Tenant Improvements, except to the extent of the specific obligations and responsibilities of Landlord expressly set forth in the Lease (as amended hereby) and in the Workletter. [omitted from original]

(e) Notwithstanding anything to the contrary contained in Section 14.1(e) of the Lease or in the Workletter, the builder's risk insurance contemplated in such Section 14.1 (e) for the Tenant Improvements constructed by Tenant in the Phase II Buildings pursuant to this Amendment and the Workletter shall be maintained by Tenant, at Tenant's sole expense, and shall otherwise comply with all applicable requirements under such Section 14.l (e).

[omitted from original]

--9-    200422044-002

[omitted from original]

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[omitted from original]

4.Brokers. Each party respectively (i) represents and warrants that no broker participated in the consummation of this Amendment or of the transactions contemplated herein, and (ii) agrees to indemnify, defend and hold the other party harmless against any liability, cost or expense, including (but not limited to) reasonable attorneys' fees, arising out of any claims for brokerage commissions or other similar compensation by any broker or agent alleging to have acted on behalf of the indemnifying party in connection with this Amendment and the transactions contemplated herein. The provisions of Section 21.1 5 of the Lease. (Brokers) do not apply to this Amendment or the transactions contemplated herein.

5.Publicity. Neither party will make any press release or other media, promotional or advertising disclosure regarding this Amendment or the transactions contemplated hereby without the other party's express prior written consent, except as required under applicable law, or by any governmental agency. Without limiting the generality of the foregoing, each party agrees that the other party will have no less than five (5) business days to review and provide comment regarding any such proposed press release or publicity regarding this Amendment or the transactions contemplated hereby, unless a shorter review time is agreed to by both parties. In the event that one party reasonably concludes that a given disclosure is required by law and the other party would prefer not to make such disclosure, then the party seeking such disclosure shall either (i) limit said disclosure to address the concerns of the other party, or (ii) provide a written opinion from counsel stating that such disclosure is indeed required by law. With respect to complying with the disclosure requirements of the SEC or other securities regulatory bodies in other nations, in connection with any required securities filing of this Amendment, the filing party shall seek confidential treatment of this Amendment to the maxi mum extent permitted by such regulatory bod y and shall provide the other party with the opportunity, for at least fifteen (15) days, to review any such proposed filing. Each party agrees that it will obtain its own legal advice with regard to its compliance with securities laws and regulations, and will not rely on any statements made by the other party relating to such securities laws and regulations. Further, Landlord shall not use the name of Tenant, its affiliates or products or any signs, markings, or symbols from which a connection to Tenant, in Tenant's sole judgment, may be reasonably inferred or implied, in any manner whatsoever, including, without limitation, press releases; marketing materials, and advertisements, without Tenant's prior written approval. Tenant may withhold approval at Tenant's sole discretion. Nothing in this paragraph, however, is intended or shall be construed to prohibit; or to require Tenant's approval for, Landlord's inclusion of Tenant's name and of pertinent business terms of the Lease (as amended hereby) on any rent rolls, tenant lists or other similar documents that Landlord may submit from time to time to any lender or prospective lender, purchaser or prospective purchaser, or governmental or quasi-

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governmental authority in connection with Landlord's ownership and operation of the Center, but only to the extent that Landlord determines in its sole discretion that such disclosure is reasonably necessary in order to advance Landlord's dealings with the applicable lender, purchaser and/or governmental or quasi-governmental authority, and then only to the extent that disclosure of comparable information is concurrently being made with respect to other tenants of the Center

6.Entire Agreement. This Amendment constitutes the entire agreement between Landlord and Tenant regarding the subject matter hereof and supersedes all prior negotiations; discussions, terms sheets, letters, understandings and agreements, whether oral or written, between the parties with respect to such subject matter (other than the Lease itself, as expressly amended hereby).    

7.Execution and Delivery. This Amendment may be executed in one or more counterparts and by separate parties on separate counterparts, effective when each party has executed at least one such counterpart or separate counterpart, but each such counterpart shall constitute an original and all such counterparts together shall constitute one and the same instrument.

8.Full Force and Effect. Except as expressly set forth herein, the Lease has not been modified or amended and remains in full force and effect.

[rest of page intentionally left blank]

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IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment as of the date first set forth above.

"Landlord"			"Tenant"
SLOUGH BTC, LLC, a Delaware limited liability company			AMGEN INC., a Delaware corporation
By:	Slough Estates USA Inc., a		By:	/s/ Michael A. Kelly
	Delaware corporation, Its Manager		Name:	Michael A. Kelly
	By:	/s/ Jonathan M. Bergschneider	Title:	VP Corporate Planning & Control, CA
	Name:	Jonathan M. Bergschneider
	Title:	Vice President

Attachments:

Exhibit A    Phase II Site Plan

Exhibit B    Milestone Construction Schedule [including draft Master Schedule as of (6/1/06)]

Schedule C-l    Phase II Buildings Shell Description

Schedule C-2     Phase II Buildings Tenant Improvements Description

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EXHIBIT A

PHASE II SITE PLAN

[See attached page.]

EXHIBIT A to Fifth Amendment    200422044-002

EXHIBIT B

MILESTONE CONSTRUCTION SCHEDU LE

Milestone construction schedule for Britannia Oyster Point Phase II (333 Oyster Point Blvd.), Buildings A and B, assuming a June l , 2006 release date, and subject to review and mutual approval of the detailed master construction schedule attached as the following page hereof (including any mutually agreed modifications thereto) as provided in the Lease, as amended:

Activity	Building A	Building B
Schematic Design	12/01/2005	12/01/2005
DD/Construction Documents Complete	07/05/2006	07/05/2006
Steel Mill Order	07/12/2006	07/12/2006
Skin Materials Order - Glass/Aluminum	09/21/2006	09/21/2006
Skin Materials Order - GFRC	09/07/2006	09/07/2006
Permit Application Review Completion	09/28/2006	09/28/2006
Begin Excavation	07/05/2006	07/05/2006
Begin Steel Erection	03/26/2007	02/27/2007
Shell Structural Completion	11/07/2007	11/07/2007
Shell Substantial Completion	01/31/2008	01/31/2008
Tenant Major Structural TCR (Importance Factor, brace frames and lobby infill, additional elevators, etc.)	ASAP	ASAP
TI Schematic Design Submission to Landlord	0l/12/2007	01/12/2007
Tl Final Working Drawing Submission to Landlord and for Permit	08/15/2007	08/15/2007
Start TI Construction	11/07/2007	11/07/2007
Tenant Occupancy/Rent Commencement	11/01/2008	11/01/2008

EXHIBIT B to Fifth Amendment (Page 1 of 2)    200422044-002

Schedule C-1

PHASE II BUILDINGS SHELL DESCRIPTION

The "Building Shell" as used in the Amendment to which this Schedule C-1 is attached and in the Workletter described therein shall consist of the following:    

Building envelope and waterproofing (the Building "shell"), except as specifically indicated as being included in Tenant Improvements under “ Schedule C-2”, including: two levels of below "street level'' parking supported on reinforced concrete shallow foundations and constructed of steel and concrete structural elements; elevated floors of metal decking with concrete fill; roof structure of metal deck with concrete fill; roof membrane to be a built-up system, with rigid insulation, flashing and sealants; building structural framing to consist of steel beams, girders, columns with a non-load-bearing exterior curtain wall; seismic system utilizing steel braced frames and concrete shear walls; roof live load to be 20 PSF with 75 PSF in all areas within the roofscreen (roofscreen loading is non-reducible)); floor to floor heights within the Shell Buildings (superstructure) of 17feet, all floors

All other structural work except that driven specifically by Tenant Improvements programming (e.g., interior masonry walls)

Floor designed for 100 PSF uniform live load capacity (reducible as allowed by code)

Main Building entrance(s)

Building code required primary structure fireproofing

Building code required stairs. Stair enclosures & handrails at lower level parking only

Pit and floor openings for one elevator

Exterior hardscape and landscape, except as specifically indicated as included in Tenant Improvements under Schedule C-2

Two-level steel and concrete parking structure beneath the Shell (superstructure) Buildings

Site underground water, fire, storm and sanitary service to 5 feet outside Building line

Building storm and overflow drainage systems

Site underground conduits for "norma1" electrical and communications, terminated within the parking structure beneath each Shell Building

Electrical utility pad and transformer, primary service conduits terminated at Shell building switchgear location (within the parking structure beneath each Shell Building) for TI-provided electrical service

Gas service up to exterior meter location at each Building (but not including meter)

Wet fire protection (risers, loops. branches and heads), evenly distributed for "ordinary hazard, group 2" occupancy

Shipping/receiving dock and services room and foundation within garage envelope

Schedule C-1 - Page 1 of 2        200422044-002

Shell design and permitting fees, except as specifically included in Tenant Improvements under Schedule C-2

Vented deck at upper floors

Temporary project fencing

Construction lift for contractor safety, access and stocking of materials (split with Tl - 50%)

Underslab sanitary waste main trunk line (split with TI - 50%; branch distribution by Tl)

Schedule C-1 - Page 2 of 2        200422044-002

Schedule C-2

PHASE II BUILDINGS TENANT IMPROVEMENTS DESCRIPTION

The "Tenant Improvements" as defined in the Amendment to which this Schedule C-2is attached and in the Workletter described therein shall include, but not necessarily be limited to, the following, to be constructed from Tenant Improvement Allowance funds or otherwise at Tenant’s expense:

All tenant construction, design fees, fixtures, furnishings, etc. to support tenant operations, including use space, offices, lobbies, circulation, restrooms and all other features not specifically indicated as part of the Building Shell in Schedule C-1

Foundations, structure, enclosure and waterproofing emergency generator a nd trash enclosure.

Any service area that is included in the area (square footage) calculation for the applicable Building, and upon which rent is therefore paid by Tenant, will not fall under this definition for purposes of this schedule. [l]

Exterior building skin modifications to support TI systems (e.g., louvers· for HVAC accommodation)[2]

Outdoor lounge and eating area[2]

Topical emission barriers on slabs, if required

Slab depressions for special finishes or special uses[2]

Enhancement of structure for live loading above 100 PSF or vibration control criteria[2]

Modification of structure for openings at floors and roof[2]

Modification or repair of structure fireproofing required by TI construction

All minor support structures for ducts, conduits, pipes, etc.

Stair enclosures, vestibule doors dedicated mechanical shafts & ducts for stair pressurization, handrails and guardrails (except at parking levels, per Schedule C-l) [1]

Mechanical equipment, controls & monitoring, ductwork and penetrations required to pressurize stairs in advance of occupancy, per South San Francisco code. [1]

Stair penthouse, if required [1]

Exterior wall insulation

Firesafing at floor decks, exterior walls and interior openings [performed under Method 1only if required during shell construction by City of SSF, otherwise performed by TI contractor] [1]

Custom doors

Security or other upgrades to exterior doors

Schedule C-2 - Page 1 of 3        200422044-002

Wallboard capture trim at exterior window wall

Visual screens and supporting structures/platforms/sleepers, etc. for rooftop equipment, ducts, plumbing, electrical, etc. [1]

Roof patching for all penetrations relating to Tenant Improvements

Skylights, if used, including curbs, roof patching, etc.

Elevator cab and equipment, except for one pit and floor openings. Additional elevators by Tenant.

Shaft walls or other fire separations in buildings required for vertical openings (stairs, elevators) or control zones

Distribution/laterals from sanitary waste main trunk line (main trunk line split with Shell 50%)

All lab waste plumbing and related systems and fixtures, if required

Gas meter and piping from gas meter to Building

Modifications/enhancements to wet fire protection systems required by TI design

Fire alarm, signal and security systems (some of which may need to be installed as part of the Shell due to code requirements [Method 1 below], in which event they will be charged against the TI Allowance).

All secondary electrical service for Tenant demand loads, including main service disconnect, Tenant meter section and distribution panels

Standby electrical generator, if required

All electrical communications wire and service .not specifically included in Building Shell

All Tl design fees and reimbursables

All other "soft" costs, including Tl permit/development fees, utility capacity or· connection charges, etc.

Landlord-provided oversight of TI activities as specified in Amendment and Workletter

All testing and inspection of TI construction

Builders risk insurance for TI construction including earthquake coverage

All general contractor preconstruction services costs related to TI construction

Construction lift for contractor safety, access and stocking of materials. (split with shell -50%)

"Tenant Improvements" shall not include the design and/or construction of infrastructure, landscaping or other site improvements unless specifically requested by Tenant or as a result of Tenant Improvements or Tenant's requested modifications to existing plans

Elements shown in bold and underlined will be implemented in accordance with Page 3 of this Schedule C-2 and charged against the Tenant Improvement Allowance.

Schedule C-2 - Page 2 of 3        200422044-002

IMPLEMENTATION METHODS FOR WORK CONSTRUCTED BY LANDLORD

ON BEHALF OF TENANT AT TENANT'S EXPENSE

Method No.	Programming and/or Preliminary Design Requirements	Architect/Engineer of Record	Contractor of Record/Contract Relationship	Coordination Responsibility	Examples
1	Landlord design included as part of shell documents and construction	Landlord design team	Landlord Contractor under main Shell contract or change order to main Shell contract	Landlord team	Service yard, loading dock area, roof screens, stair pressurization, etc.
2	Tenant provides program or design requirements and/or schematic design information	Landlord design team takes info provided by Tenant team and incorporates it into the shell documents	Landlord Contractor via change order to main Shell contract	Tenant team responsible for coordination of work with Landlord Contractor	Tl required slab depressions

Schedule C-2 - Page 3 of 3        200422044-002

EXHIBIT B

PREMISES

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EXHIBIT C

WARM SHELL CONDITION

Britannia Oyster Point Sublease

Summary Scope of Warm Shell

Lobby

• Ground Floor Lobby approximately 500 s/f

• Ground Floor Fire Control Room

Stairways

• Smoke Control

• Pressure control

• Finished on the interior, inc: flooring and lighting

Elevators

• Service Elevators (1 per building) 5,000 lbs @ 350 fpm

• Passenger Elevators (2 per building) 3,500 lbs @350 fpm

Restrooms and Showers

• Central Restroom on each floor (inc janitor’s closet)

• Shared Shower off Ground floor lobby

Mechanical/Electrical Design Criteria

• On each floor 35% laboratory, 30% laboratory support, 35% office space

• Utilities shall be sized for Chemistry laboratories on the ground floor and biology laboratories on the upper floors

HVAC Units

• Five HVAC units located on the roof

• Main ducts are sized for present and future loads as defined in the Basis of Design

• Main ducts terminate at each floor just outside of riser shaft

Exhaust Fans

• Five exhaust fans located on the roof

Hot Water

• Two high efficiency heating hot water boilers and recirculation pumps and controls per building

• Heating hot water will serve preheat coils for HVAC units and reheat coils at variable air volume terminal units.

• Main pipes are sized for present and future loads as defined in the Basis of Design.

• Main pipes terminate at each floor just outside of riser shaft with isolation valve/cap.

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Industrial Cold Water

• System sized to serve all future laboratory fixtures, lab sinks, cup sinks, and devices that require industrial water.

• Pipe risers terminate at each floor with isolation valves

• Gas fired heater provides hot water

Potable Hot and Cold Water

• Are provided to all restrooms, showers, indicated above, and other fixtures and devices that may require potable water.

• Piping shall be sized for future needs

• Piping terminates at each floor with isolation valves

• Gas fired heater provides Hot water

Building Automation System

• DDC System has 25% excess capacity to the BOD requirements, in addition has the ability to be expanded to cover future tenant’s requirements

Natural Gas

• Provided to the necessary mechanical equipment

Sanitary Waste

• A sanitary waste and vent system is provided for potable waste producing fixtures and equipment, with all fixtures trapped and vented to atmosphere.

Laboratory Waste

• Risers and drains as shown in the CAD files provided by Sublandlord to Subtenant.

Electrical

• 4,000 amp, 480/277 volt Main Switch Board located on the G-1 level below each building

• Normal power distribution rooms are located on each floor with 100 amp 480/277 volt lighting panels and 45KVA transformers along with 150 amp 120/208 volt convenience power panels.

• Emergency power distribution rooms are located on each floor with 100 amp 480/277 volt lighting panels and 45KVA transformers along with 150 amp 120/208 volt convenience power panels

• Life Safety Power are located on each floor with 50 amp 480/277 volt lighting panels and 50 amp 120/208 volt panels

• Motor Control Center for roof top equipment are located on the roof

• Power metering is provided on each floor to measure power consumption floor by floor.

• The Premises is provided with a 1,000 KW Generator with two, bypass isolation type, transfer switches. One for life safety functions while the other serves tenant loads.

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Life Safety System

• A new fire alarm system, with code compliant smoke control in each building, a control panel located on the ground floor within the new fire control room.

Telecommunications

• Two 4” raceways from the main telephone room in the parking structure near the center quadrant of each floor is provided.

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EXHIBIT D

FORM OF LETTER OF CREDIT

Wells Fargo Bank, N.A.
U.S. Trade Services
Standby Letters of Credit
794 Davis Street, 2nd Floor
MAC A0283-023,
San Leandro, CA 94577-6922
Phone: 1(800) 798-2815 Option 1
E-Mail: sftrade@wellsfargo.com

This sample wording is presented without any responsibility on our part. This draft is provided to you as a suggestion only at your request

Please note that the draft remains unissued and is not an enforceable instrument.

Wording Reviewed and Approved: 
By: Applicant Signature 
This form is an integral part of the application and agreement for the issuance of your Standby Letter of Credit.

The Letter of Credit cannot be issued until this draft is returned to us with the Applicant’s Signature above.

Irrevocable Standby Letter Of Credit

Number: IS0394885UIssue Date: March 11, 2016

BENEFICIARY	APPLICANT
AMGEN INC. ATTN: CORPORATE REAL ESTATE ONE AMGEN CENTER DRIVE THOUSAND OAKS, CALIFORNIA 91320-1799	PROTHENA BIOSCIENCES, INC 650 GATEWAY BLVD SOUTH SAN FRANCISCO, CALIFORNIA 94080

LETTER OF CREDIT ISSUE AMOUNT     USD 4,055,656.50     EXPIRY DATE     APRIL 9, 2017    

LADIES AND GENTLEMEN:

AT THE REQUEST AND FOR THE ACCOUNT OF THE ABOVE REFERENCED APPLICANT, WE HEREBY ISSUE OUR IRREVOCABLE STANDBY LETTER OF CREDIT IN YOUR FAVOR IN THE AMOUNT OF FOUR MILLION FIFTY FIVE THOUSAND SIX HUNDRED FIFTY-SIX AND 50/100 UNITED STATES DOLLARS (US$4,055,656.50) AVAILABLE WITH US AT OUR ABOVE OFFICE BY PAYMENT AGAINST PRESENTATION OF THE FOLLOWING DOCUMENTS:

1. A DRAFT DRAWN ON US AT SIGHT MARKED “DRAWN UNDER WELLS FARGO BANK, N.A. STANDBY LETTER OF CREDIT NO. IS0394885U.”

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2. THE ORIGINAL OF THIS STANDBY LETTER OF CREDIT AND ANY AMENDMENTS THERETO.

3. BENEFICIARY’S SIGNED AND DATED STATEMENT WORDED IN ONE OR MORE OF THE FOLLOWING CONDITIONS (WITH THE INSTRUCTIONS IN BRACKETS THEREIN COMPLIED WITH):

“BENEFICIARY CERTIFIES THAT BENEFICIARY IS ENTITLED TO DRAW ON WELLS FARGO BANK, N.A. LETTER OF CREDIT NO. IS0394885U PURSUANT TO AND IN CONNECTION WITH THAT CERTAIN SUBLEASE DATED [INSERT DATE] FOR PREMISES LOCATED AT 331 OYSTER POINT BOULEVARD, SOUTH SAN FRANCISCO, CALIFORNIA ORIGINALLY BETWEEN AMGEN INC. AND PROTHENA BIOSCIENCES INC (AS SUCH SUBLEASE MAY HAVE BEEN AMENDED OR RESTATED).”

OR

“BENEFICIARY CERTIFIES THAT BENEFICIARY HAS RECEIVED NOTIFICATION FROM WELLS FARGO BANK, N.A. THAT THIS LITTER OF CREDIT NO. IS0394885U WILL NOT BE EXTENDED PAST ITS CURRENT EXPIRATION DATE. AS OF THE DATE OF THIS STATEMENT, THIS LETTER OF CREDIT’S EXPIRATION DATE WILL OCCUR WITHIN FIFTEEN (15) DAYS AFTER TODAY’S DATE AND BENEFICIARY HAS NOT RECEIVED A LETTER OF CREDIT OR OTHER INSTRUMENT ACCEPTABLE TO BENEFICIARY AS A REPLACEMENT AND SUBTENANT HAS NOT BEEN RELEASED FROM ITS OBLIGATIONS UNDER THE SUBLEASE. “SUBTENANT” MEANS THE SUBTENANT UNDER THE SUBLEASE. “SUBLEASE” MEANS THAT CERTAIN SUBLEASE DATED [INSERT DATE] FOR PREMISES LOCATED AT 331 OYSTER POINT BOULEVARD, SOUTH SAN FRANCISCO, CALIFORNIA ORIGINALLY BETWEEN AMGEN INC. AND PROTHENA BIOSCIENCES INC (AS SUCH SUBLEASE MAY HAVE BEEN AMENDED OR RESTATED).”

OR

“BENEFICIARY CERTIFIES THAT SUBTENANT HAS FILED A VOLUNTARY PETITION UNDER THE FEDERAL BANKRUPTCY CODE. “SUBTENANT” MEANS THE SUBTENANT UNDER THE SUBLEASE. “SUBLEASE” MEANS THAT CERTAIN SUBLEASE DATED [INSERT DATE] FOR PREMISES LOCATED AT 331 OYSTER POINT BOULEVARD, SOUTH SAN FRANCISCO, CALIFORNIA ORIGINALLY BETWEEN AMGEN INC. AND PROTHENA BIOSCIENCES INC (AS SUCH SUBLEASE MAY HAVE BEEN AMENDED OR RESTATED)”“

OR

“BENEFICIARY CERTIFIES THAT AN INVOLUNTARY PETITION HAS BEEN FILED AGAINST SUBTENANT UNDER THE FEDERAL BANKRUPTCY CODE AND SUBTENANT HAS FAILED TO HAVE SUCH INVOLUNTARY PETITION DISCHARGED WITHIN SIXTY (60) DAYS OF SUCH FILING. “SUBTENANT” MEANS THE SUBTENANT UNDER THE SUBLEASE. “SUBLEASE” MEANS THAT CERTAIN SUBLEASE DATED [INSERT DATE] FOR PREMISES LOCATED AT 331 OYSTER POINT BOULEVARD, SOUTH SAN FRANCISCO, CALIFORNIA ORIGINALLY BETWEEN AMGEN INC. AND PROTHENA BIOSCIENCES INC (AS SUCH SUBLEASE MAY HAVE BEEN AMENDED OR RESTATED).”

THIS LETTER OF CREDIT EXPIRES AT OUR ABOVE OFFICE ON APRIL 9, 2017. IT IS A CONDITION OF THIS LETTER OF CREDIT THAT SUCH EXPIRATION DATE SHALL BE DEEMED AUTOMATICALLY EXTENDED, WITHOUT WRITTEN AMENDMENT, FOR ONE YEAR PERIODS TO APRIL 9 IN EACH SUCCEEDING CALENDAR YEAR, UNLESS AT LEAST THIRTY (30) DAYS PRIOR TO SUCH EXPIRATION DATE WE SEND WRITTEN NOTICE TO YOU AT YOUR ADDRESS ABOVE BY OVERNIGHT COURIER OR REGISTERED MAIL THAT WE ELECT NOT TO EXTEND THE EXPIRATION DATE OF THIS LETTER OF CREDIT BEYOND THE DATE SPECIFIED IN SUCH NOTICE. IN NO EVENT SHALL THIS LETTER OF CREDIT BE EXTENDED BEYOND APRIL 9, 2024 WHICH WILL BE CONSIDERED THE FINAL EXPIRATION DATE. ANY REFERENCE TO A FINAL EXPIRATION DATE DOES NOT IMPLY THAT WE ARE OBLIGATED TO EXTEND THE EXPIRATION DATE BEYOND THE INITIAL OR ANY EXTENDED DATE THEREOF.

UPON OUR SENDING YOU SUCH NOTICE OF THE NON-EXTENSION OF THE EXPIRATION DATE OF THIS LETTER OF CREDIT, YOU MAY ALSO DRAW UNDER THIS LETTER OF CREDIT, ON OR BEFORE

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THE EXPIRATION DATE SPECIFIED IN SUCH NOTICE, BY PRESENTATION OF THE ABOVE-MENTIONED DOCUMENTS TO US AT OUR ABOVE ADDRESS.

PARTIAL DRAWING(S) ARE PERMITTED UNDER THIS LETTER OF CREDIT; PROVIDED, HOWEVER, THAT THE TOTAL AMOUNT OF ANY PAYMENT(S) MADE UNDER THIS LETTER OF CREDIT WILL NOT EXCEED THE TOTAL AMOUNT AVAILABLE UNDER THIS LETTER OF CREDIT.

IN THE EVENT OF PARTIAL DRAWINGS, WELLS FARGO BANK, N.A. SHALL ENDORSE THE ORIGINAL OF THIS LETTER OF CREDIT AND RETURN IT TO THE BENEFICIARY.

DRAWINGS MAY ALSO BE PRESENTED TO US BY FACSIMILE TRANSMISSION TO FACSIMILE NUMBER 336-735-0952 (EACH SUCH DRAWING, A “FAX DRAWING”); PROVIDED, HOWEVER, THAT A FAX DRAWING WILL NOT BE EFFECTIVELY PRESENTED UNTIL YOU CONFIRM BY TELEPHONE OUR RECEIPT OF SUCH FAX DRAWING BY CALLING US AT TELEPHONE NUMBER 1-800-798-2815 OPTION 1. IF YOU PRESENT A FAX DRAWING UNDER THIS LETTER OF CREDIT YOU DO NOT NEED TO PRESENT THE ORIGINAL OF ANY DRAWING DOCUMENTS, AND IF WE RECEIVE ANY SUCH ORIGINAL DRAWING DOCUMENTS THEY WILL NOT BE EXAMINED BY US. IN THE EVENT OF A FULL OR FINAL DRAWING THE ORIGINAL STANDBY LETTER OF CREDIT MUST BE RETURNED TO US BY OVERNIGHT COURIER.

THIS LETTER OF CREDIT IS TRANSFERABLE ONE OR MORE TIMES, BUT IN EACH INSTANCE ONLY TO A SINGLE TRANSFEREE AND ONLY IN THE FULL AMOUNT AVAILABLE TO BE DRAWN UNDER THE LETTER OF CREDIT AT THE TIME OF SUCH TRANSFER. ANY SUCH TRANSFER MAY BE EFFECTED ONLY THROUGH WELLS FARGO BANK, N.A. AND ONLY UPON PRESENTATION TO US AT OUR PRESENTATION OFFICE SPECIFIED HEREIN OF A DULY EXECUTED TRANSFER REQUEST IN THE FORM ATTACHED HERETO AS EXHIBIT A, WITH INSTRUCTIONS THEREIN IN BRACKETS COMPLIED WITH, TOGETHER WITH THE ORIGINAL OF THIS LETTER OF CREDIT AND ANY AMENDMENTS THERETO. EACH TRANSFER SHALL BE EVIDENCED BY OUR ENDORSEMENT ON THE REVERSE OF THE ORIGINAL OF THIS LETTER OF CREDIT, AND WE SHALL DELIVER SUCH ORIGINAL TO THE TRANSFEREE. ALL CHARGES IN CONNECTION WITH ANY TRANSFER OF THIS LETTER OF CREDIT ARE FOR THE APPLICANT’S ACCOUNT.

WE ARE SUBJECT TO VARIOUS LAWS, REGULATIONS AND EXECUTIVE AND JUDICIAL ORDERS (INCLUDING ECONOMIC SANCTIONS, EMBARGOES, ANTI-BOYCOTT, ANTI-MONEY LAUNDERING, ANTI-TERRORISM, AND ANTI-DRUG TRAFFICKING LAWS AND REGULATIONS) OF THE U.S. AND OTHER COUNTRIES THAT ARE ENFORCEABLE UNDER APPLICABLE LAW. WE WILL NOT BE LIABLE FOR OUR FAILURE TO MAKE, OR OUR DELAY IN MAKING, PAYMENT UNDER THIS LETTER OF CREDIT OR FOR ANY OTHER ACTION WE TAKE OR DO NOT TAKE, OR ANY DISCLOSURE WE MAKE, UNDER OR IN CONNECTION WITH THIS LETTER OF CREDIT (INCLUDING, WITHOUT LIMITATION, ANY REFUSAL TO TRANSFER THIS LETTER OF CREDIT) IF SUCH FAILURE, DELAY, ACTION OR DISCLOSURE IS REQUIRED BY SUCH LAWS, REGULATIONS, OR ORDERS.

WE HEREBY ENGAGE WITH YOU THAT EACH DRAFT DRAWN UNDER AND IN COMPLIANCE WITH THE TERMS AND CONDITIONS OF THIS LETTER OF CREDIT WILL BE DULY HONORED IF PRESENTED TOGETHER WITH THE DOCUMENTS SPECIFIED IN THIS LETTER OF CREDIT AT OUR OFFICE LOCATED AT 794 DAVIS STREET, 2ND FLOOR, SAN LEANDRO, CA 94577-6922, ATTENTION: US TRADE SERVICES - STANDBY LETTERS OF CREDIT (OR BY FAX AS REFERENCED ABOVE) ON OR BEFORE THE ABOVE STATED EXPIRY DATE, OR ANY EXTENDED EXPIRY DATE IF APPLICABLE.

THIS IRREVOCABLE STANDBY LETTER OF CREDIT SETS FORTH IN FULL THE TERMS OF OUR UNDERTAKING. THIS UNDERTAKING IS INDEPENDENT OF AND SHALL NOT IN ANY WAY BE MODIFIED, AMENDED, AMPLIFIED OR INCORPORATED BY REFERENCE TO ANY DOCUMENT, CONTRACT OR AGREEMENT REFERENCED HEREIN OTHER THAN THE STIPULATED ICC RULES AND GOVERNING LAWS.

CANCELLATION PRIOR TO EXPIRATION: YOU MAY RETURN THIS LETTER OF CREDIT TO US FOR CANCELLATION PRIOR TO ITS EXPIRATION PROVIDED THAT THIS LETTER OF CREDIT IS ACCOMPANIED BY YOUR WRITTEN AGREEMENT TO ITS CANCELLATION. SUCH WRITTEN AGREEMENT TO CANCELLATION SHOULD SPECIFICALLY REFERENCE THIS LETTER OF CREDIT

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BY NUMBER, CLEARLY INDICATE THAT IT IS BEING RETURNED FOR CANCELLATION AND BE SIGNED BY A PERSON IDENTIFYING THEMSELVES AS AUTHORIZED TO SIGN FOR YOU.

EXCEPT AS OTHERWISE EXPRESSLY STATED HEREIN, THIS STANDBY LETTER OF CREDIT IS SUBJECT TO THE INTERNATIONAL STANDBY PRACTICE 1998, INTERNATIONAL CHAMBER OF COMMERCE PUBLICATION NO. 590

Very Truly Yours,WELLS FARGO BANK, N.A.
By: Authorized Signature

The original of the Letter of Credit contains an embossed seal over the Authorized Signature.

Please direct any written correspondence or inquiries regarding this Letter of Credit, always quoting our reference number, to Wells Fargo Bank, National Association, Attn: U.S. Standby Trade Services

at either   794 Davis Street, 2nd Floor MAC A0283-023, San Leandro, CA 94577-6922	or   401 N. Research Pkwy, 1st Floor MAC 04004-017, WINSTON-SALEM, NC 27101-4157
Phone inquiries regarding this credit should be directed to our Standby Customer Connection Professionals
1-800-798-2815 Option 1 (Hours of Operation: 8:00 a.m. PT to 5:00 p.m. PT)	1-800-776-3862 Option 2 (Hours of Operation: 8:00 a.m. EST to 5:30 p.m. EST)

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EXHIBIT A
TRANSFER REQUEST OF WELLS FARGO BANK, N.A. IRREVOCABLE STANDBY
LETTER OF CREDIT NUMBER: IS0394885U

TO: WELLS FARGO BANK, N.A. 
U.S. TRADE SERVICES
STANDBY LETTER OF CREDIT DEPARTMENT
794 DAVIS STREET, 2ND FLOOR, MAC A0283-023
SAN LEANDRO, CALIFORNIA 94577-6922 DATE:  
U.S. TRADE SERVICES
STANDBY LETTER OF CREDIT DEPARTMENT
401 N. RESEARCH PKWY, MAC-D4004-017
WINSTON-SALEM, NORTH CAROLINA 27101

FOR VALUE RECEIVED, THE UNDERSIGNED BENEFICIARY OF THE ABOVE DESCRIBED LETTER OF CREDIT (THE “TRANSFEROR”) HEREBY IRREVOCABLY TRANSFERS ALL ITS RIGHTS UNDER THE LETTER OF CREDIT AS AMENDED TO THIS DATE (THE “CREDIT”) TO THE FOLLOWING TRANSFEREE (THE ‘‘TRANSFEREE”):

    NAME OF TRANSFEREE

    ADDRESS

BY THIS TRANSFER, ALL RIGHTS OF TRANSFEROR IN THE LETTER OF CREDIT ARE TRANSFERRED TO THE TRANSFEREE, AND THE TRANSFEREE SHALL BE THE SOLE BENEFICIARY OF THE LETTER OF CREDIT, POSSESSING ALL RIGHTS PERTAINING THERETO, INCLUDING, BUT NOT LIMITED TO, SOLE RIGHTS RELATING TO THE APPROVAL OF ANY AMENDMENTS, WHETHER INCREASES OR EXTENSIONS OR OTHER AMENDMENTS, AND WHETHER NOW EXISTING OR HEREAFTER MADE. YOU ARE HEREBY IRREVOCABLY INSTRUCTED TO ADVISE FUTURE AMENDMENT(S) OF THE LETTER OF CREDIT TO THE TRANSFEREE WITHOUT THE TRANSFEROR’S CONSENT OR NOTICE TO THE TRANSFEROR.

ENCLOSED ARE THE ORIGINAL LETTER OF CREDIT AND THE ORIGINAL(S) OF ALL AMENDMENTS TO DATE.

THE TRANSFEROR WARRANTS TO YOU THAT THIS TRANSFER AND THE TRANSACTION(S) HEREUNDER WILL NOT CONTRAVENE ANY FEDERAL LAWS OR REGULATIONS OF THE UNITED STATES NOR THE LAWS OR REGULATIONS OF ANY STATE THEREOF. PLEASE NOTIFY THE TRANSFEREE OF THIS TRANSFER AND OF THE TERMS AND CONDITIONS OF THE LETTER OF CREDIT AS TRANSFERRED. THIS TRANSFER WILL BECOME EFFECTIVE UPON WELLS FARGO BANK, N.A.’S WRITTEN NOTIFICATION TO THE TRANSFEREE THAT SUCH TRANSFER WAS EFFECTED.

    (TRANSFEROR’S NAME)

BY:

PRINTED NAME:

TITLE:

PHONE NUMBER:

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THE BANK SIGNING BELOW GUARANTEES THAT THE TRANSFEROR’S SIGNATURE IS GENUINE AND THAT THE INDIVIDUAL SIGNING THIS TRANSFER REQUEST HAS THE AUTHORITY TO DO SO:

    (BANK’S NAME)

BY:

PRINTED NAME:

TITLE:

[A CORPORATE NOTARY ACKNOWLEDGMENT OR A CERTIFICATE OF AUTHORITY WITH CORPORATE SEAL IS ACCEPTABLE IN LIEU OF A BANK GUARANTEE]

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EXHIBIT E

FORM OF GUARANTY

GUARANTY OF SUBLEASE

THIS GUARANTY OF SUBLEASE (this "Guaranty") is made by PROTHENA CORPORATION plc, an Ireland public limited company (the "Guarantor"), in favor of AMGEN INC., a Delaware corporation ("Sublandlord"), in connection with that certain Sublease, dated March 22, 2016, and entered into concurrently with this Guaranty (the "Sublease"), by which Sublandlord subleases to PROTHENA BIOSCIENCES INC, a Delaware corporation ("Subtenant"), certain premises (as more particularly defined in the Sublease) (the "Premises") consisting of a building located at 331 Oyster Point Boulevard in South San Francisco, California. As a material inducement to and in consideration of Sublandlord entering into the Sublease (Sublandlord having indicated that it would not enter into the Sublease without the execution of this Guaranty), Guarantor and Sublandlord agrees as follows:

1.Guarantor unconditionally and irrevocably guarantees, as a primary obligor and not as a surety, and promises to perform and be liable for, any and all obligations and liabilities of Subtenant under the terms of the Sublease.

2.Guarantor agrees that, without the consent of, or notice to, Guarantor and without affecting any of the obligations of Guarantor under this Guaranty, (a) Sublandlord and Subtenant may amend, compromise, release, or otherwise alter any term, covenant, or condition of the Sublease, and Guarantor guarantees and promises to perform all the obligations of Subtenant under the Sublease as so amended, compromised, released, or altered; (b) Sublandlord may release, substitute, or add any guarantor of or party to the Sublease; (c) Sublandlord may exercise, not exercise, impair, modify, limit, destroy, or suspend any right or remedy of Sublandlord under the Sublease; (d) Sublandlord or any other person acting on Sublandlord's behalf may deal in any manner with Subtenant, any guarantor, any party to the Sublease, or any other person; and (e) Sublandlord may permit all or any part of the Premises or of the rights or liabilities of Subtenant under the Sublease to be sublet, assigned, or assumed in accordance with the terms set forth in the Sublease. This is a continuing guaranty, and Guarantor waives the benefit of the provisions of California Civil Code §2815.

3.Guarantor waives and agrees not to assert or take advantage of (a) any right to require Sublandlord to proceed against Subtenant or any other person, or to pursue any other remedy before proceeding against Guarantor; (b) any right or defense that may arise by reason of the incapacity, lack of authority, death, or disability of Subtenant or any other person; (c) any right or defense arising by reason of the absence, impairment, modification, limitation, destruction, or cessation (in bankruptcy, by an election of remedies, or otherwise) of the liability of Subtenant, of the subrogation rights of Guarantor, or of the right of Guarantor to proceed against Subtenant for reimbursement; and (d) the benefit of any statute of limitations affecting the liability of Guarantor under this Guaranty or the enforcement of this Guaranty. Without in any manner limiting the generality of the foregoing, Guarantor waives the benefits of the

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provisions of California Civil Code §§2809-2810, 2819, 2820, 2821, 2839, 2845, 2847. 2848, 2849-2850 and 2855 and any similar or analogous statutes of California or any other jurisdiction. In addition, Guarantor waives and agrees not to assert or take advantage of any right or defense based on the absence of any or all presentments, demands (including demands for performance), notices (including notices of adverse change in the financial status of Subtenant or other facts that increase the risk to Guarantor, notices of nonperformance, and notices of acceptance of this Guaranty), and protests of each and every kind.

4.Until all Subtenant's obligations under the Sublease are fully performed, Guarantor (a) will have no right of subrogation against Subtenant by reason of any payments or acts of performance by Guarantor under this Guaranty; and (b) subordinates any liability or indebtedness of Subtenant now or hereafter held by Guarantor to Subtenant's obligations under, arising out of, or related to the Sublease or Subtenant's use or occupancy of the Premises.

5.The liability of Guarantor and all rights, powers, and remedies of Sublandlord under this Guaranty and under any other agreement now or at any time hereafter in force between Sublandlord and Guarantor relating to the Sublease will be cumulative and not alternative, and such rights, powers, and remedies will be in addition to all rights, powers, and remedies given to Sublandlord by law or in equity.

6.This Guaranty applies to, inures to the benefit of, and binds all parties to this Guaranty, their heirs, devisees, legatees, executors, administrators, representatives, successors, and assigns (including any purchaser at a judicial foreclosure or trustee's sale or a holder of a deed in lieu of foreclosure). This Guaranty may be assigned by Sublandlord voluntarily or by operation of law.

7.Guarantor will not, without the prior written consent of Sublandlord, commence (or join with any other person in commencing) any bankruptcy, reorganization, or insolvency proceeding against Subtenant. The obligations of Guarantor under this Guaranty will not be altered, limited, or affected by any proceeding, voluntary or involuntary, involving the bankruptcy, insolvency, receivership, reorganization, liquidation, or arrangement of Subtenant, or by any defense that Subtenant may have by reason of any order, decree, or decision of any court or administrative body resulting from any such proceeding. Unless and until all Subtenant's obligations under the Sublease are fully performed, Guarantor will file in any bankruptcy, or other proceeding in which the filing of claims is required or permitted by law, all claims that Guarantor may have against Subtenant relating to any indebtedness of Subtenant to Guarantor, and Guarantor will assign to Sublandlord all rights of Guarantor under these claims. Sublandlord will have the sole right to accept or reject any plan proposed in such proceeding and to take any other action that a party filing a claim is entitled to take. In all such cases, whether in administration, bankruptcy, or otherwise, the person or persons authorized to pay such claim will pay to Sublandlord the amount payable on such claim and, to the full extent necessary for that purpose, Guarantor assigns to Sublandlord all of Guarantor's rights to any such payments or distributions to which Guarantor would otherwise be entitled; provided that Guarantor's obligations under this Guaranty will not be satisfied except to the extent that Sublandlord receives cash by reason of any such payment or distribution. If Sublandlord receives anything other than cash, it will be held as collateral for amounts due under this Guaranty.

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8.It is acknowledged and confirmed that as of the date of execution and delivery of this Guaranty, Guarantor is a publicly traded corporation and audited financials for Guarantor are available for public review. If during any period of time when the Sublease remains in effect, Guarantor is not a publicly traded corporation with publicly available audited financials, then, subject to force majeure, Guarantor shall deliver to Landlord within sixty (60) days of Sublandlord's request (but no more frequently than once annually) a copy of an audited balance sheet and an audited income statement of Guarantor (the "Financial Statements"), which Financial Statements shall be (a) dated as of the end of the most recent fiscal year for which such statements are available (it being acknowledged, that statements for the immediately previous fiscal year may not be available until up to one hundred fifty (150) days after the end of such fiscal year), and (b) prepared in accordance with generally accepted accounting principles. In such event, Guarantor may condition delivery of any non-public Financial Statements on Sublandlord delivering a commercially reasonable confidentiality agreement, signed by Sublandlord and any other parties that will be entitled to review the Financial Statements.

9.TO THE EXTENT NOW OR HEREAFTER PERMITTED BY LAW, SUBLANDLORD AND GUARANTOR WAIYE THE RIGHT TO A JURY TRIAL OF ANY CAUSE OF ACTION, CLAIM, COUNTERCLAIM, OR CROSS-COMPLAINT IN ANY ACTION, PROCEEDING, OR OTHER HEARING BROUGHT BY EITHER SUBLANDLORD AGAINST SUBTENANT OR GUARANTOR OR BY SUBTENANT OR GUARANTOR AGAINST SUBLANDLORD ON ANY MATTER ARISING OUT OF, OR IN ANY WAY CONNECTED WITH, THE SUBLEASE, THIS GUARANTY, THE RELATIONSHIP OF SUBLANDLORD AND SUBTENANT, SUBTENANT'S USE OR OCCUPANCY OF THE PREMISES, OR ANY CLAIM OF INJURY OR DAMAGE, OR THE ENFORCEMENT OF ANY REMEDY UNDER ANY LAW, STATUTE, OR REGULATION, EMERGENCY OR OTHERWISE, NOW OR HEREAFTER IN EFFECT.

10.Sublandlord and Guarantor shall settle any dispute arising from or relating to this Guaranty by arbitration in the English language in San Francisco County, California before a single arbitrator appointed by the International Centre for Dispute Resolution. The Commercial Arbitration Rules of the American Arbitration Association, including the Optional Rules for Emergency Measures of Protection, shall apply in the arbitration. The parties irrevocably consent to the jurisdiction and venue of the state and federal courts having jurisdiction over San Francisco County, California for proceedings ("Related Proceedings") relating to enforcement of a party's obligation to arbitrate and to enforcement of any arbitral award. Any court having jurisdiction may enforce an arbitral award. The prevailing party in any arbitration or Related Proceedings shall recover its reasonable costs and attorneys' fees. Service of any document or pleading in an arbitration or Related Proceedings is proper if by personal delivery, commercial courier, or any form of mail requiring a return receipt at the address shown in this Guaranty for each party or at the address of Subtenant identified in the Sublease on behalf of Guarantor. Any notice, complaint, legal process or arbitration document shall be deemed properly served upon Guarantor if served upon Subtenant. Without limiting the generality of this Section 10, Guarantor waives and agrees not to assert by way of motion, defense, or otherwise in any Related Proceedings any claim that Guarantor is not personally subject to the jurisdiction of the above-named courts, that such Related Proceedings are brought in an inconvenient forum, or that the venue of such Related Proceedings is improper. Guarantor hereby represents and warrants

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that the obligations of Guarantor under this Guaranty are fully enforceable against Guarantor in the State of California and Guarantor will raise no defenses to the enforceability of this Guaranty relating to Guarantor being a Ireland public limited company having its headquarters in Dublin, Ireland.

11.If a claim ("Recovery Claim") is made on Sublandlord at any time (whether before or after payment or performance in full of any obligation of Guarantor, and whether such Recovery Claim is asserted in a bankruptcy proceeding or otherwise) for repayment or recovery of any amount or other value received by Sublandlord (from any source) in payment of, or on account of, any obligation of Guarantor under this Guaranty, and if Sublandlord repays such amount, returns value, or otherwise becomes liable for all or part of such Recovery Claim by reason of (a) any judgment, decree, or order of any court or administrative body; or (b) any settlement or compromise of such Recovery Claim, then Guarantor will remain severally liable to Sublandlord for the amount so repaid or returned or for which Sublandlord is liable to the same extent as if such payments or value had never been received by Sublandlord, despite any termination of this Guaranty, termination of the Sublease, or cancellation of any document evidencing any obligation of Guarantor under this Guaranty.

12.This Guaranty will constitute the entire agreement between Guarantor and Sublandlord with respect to the subject matter of this Guaranty and supersedes all prior agreements, understandings, negotiations, representations, and discussions, whether verbal or written, of the parties, pertaining to that subject matter. Guarantor is not relying on any representations, warranties, or inducements from Sublandlord that are not expressly stated in this Guaranty.

13.No provision of this Guaranty or right of Sublandlord under it may be waived, nor may any Guarantor be released from any obligation under this Guaranty except by a writing duly executed by an authorized officer or director of Sublandlord, which writing shall be promptly provided by Sublandlord upon full satisfaction of Guarantor's obligations hereunder.

14.When the context and construction so requires, all words used in the singular in this Guaranty will be deemed to have been used in the plural. The word "person" as used in this Guaranty will include an individual, company, firm, association, partnership, corporation, trust, or other legal entity of any kind whatsoever. "Sublandlord," whenever used in this Guaranty, refers to and means Sublandlord under the Sublease specifically named and also any assignee of Sublandlord, whether by outright assignment or by assignment for security, and also any successor to the interest of Sublandlord or of any assignee of the Sublease or any part of the Sublease, whether by assignment or otherwise. "Subtenant," whenever used in this Guaranty, refers to and means Subtenant under the Sublease and also any assignee of the interest of Subtenant in the Sublease and their respective successors in interest.

15.If any provision of this Guaranty is determined to be illegal or unenforceable, all other provisions will nevertheless be effective.

16.The waiver or failure to enforce any provision of this Guaranty will not operate as a waiver of any other breach of such provision or any other provisions of this Guaranty; nor will

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any single or partial exercise of any right, power, or privilege preclude any other or further such exercise or the exercise of any other right, power, or privilege.

17.Time is strictly of the essence under this Guaranty and any amendment, modification, or revision of this Guaranty.

18.Guarantor represents and warrants that each individual executing this Guaranty on behalf of Guarantor is duly authorized to execute and deliver this Guaranty on behalf of Guarantor. Concurrently herewith, Guarantor shall deliver to Sublandlord evidence of such authority, including a legal opinion from Ireland counsel.

19.If either party to this Guaranty participates in an action against the other party arising out of or in connection with this Guaranty, the prevailing party will be entitled to have and recover from the other party reasonable attorney fees, collection costs, and other costs incurred in, and in preparation for, the action, arbitration, or mediation.

20.All notices given hereunder must be in writing delivered by certified or registered mail, return receipt requested, or by a nationally recognized overnight delivery service. Notice by registered or certified mail will be effective when the return receipt thereof is signed, and notice by overnight delivery will be effective when received or when receipt is refused as evidenced by the records of the courier service. Notices must be addressed to the following addresses, or to such other address or addresses as the parties may from time to time specify by notice so given:

In the case of notice to Guarantor, to:    Prothena Corporation plc

Adelphi Plaza

Upper George's Street, Dun Laoghaire Co. Dublin, A96 T927, Ireland

Attn: Company Secretary

With a copy to: Prothena Biosciences Inc 650 Gateway Boulevard

South San Francisco, CA 94010 Attn: Legal Department

In the case of notice to Sublandlord, to:    Amgen Inc.

One Amgen Center Drive Mail Stop: 28-1-A

Thousand Oaks, CA 91320-1799 Attention: Corporate Real Estate

With a copy to:    Amgen Inc.

One Amgen Center Drive Mail Stop: 35-2-A

Thousand Oaks, CA 91320-1799 Attention: Operations Law Group

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The parties shall be responsible for notifying each other hereunder of any changes of address by notice given in accordance with the above provisions.

21.Guarantor's execution and delivery of this Guaranty will not result in any breach of, or constitute a default under, any mortgage, deed of trust, lease loan, credit agreement, partnership agreement, or other contract or instrument to which Guarantor is a party or by which Guarantor may be bound.

22.If Guarantor is more than one (1) person, the obligations of the persons comprising Guarantor will be joint and several and the unenforceability of this Guaranty or Sublandlord's election not to enforce this Guaranty against one (1) or more of the persons comprising Guarantor will not affect the obligations of the remaining persons comprising Guarantor or the enforceability of this Guaranty against such remaining persons.

23.Each of the parties will execute such other and further documents and do such further acts as may be reasonably required to effectuate the intent of the parties and carry out the terms of this Guaranty.

[SIGNATURES ON NEXT PAGE]

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IN WITNESS WHEREOF, the parties hereto have hereunto set their hand on the date first above written.

"Guarantor"

PROTHENA CORPORATION plc,

an Ireland public limited company

By: /s/ Tran Nguyen

Name: Tran Nguyen

Its: CFO

By: /s/ A. W. Homan

Name: A. W. Homan

Its: CLO & Secretary

"Sublandlord"

AMGEN INC.,

a Delaware corporation

By: /s/David Meline

Name: David Meline

Title: Executive Vice President and Chief Financial Officer

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EX-10.2(B)

CONSENT TO SUBLEASE AGREEMENT

THIS CONSENT TO SUBLEASE AGREEMENT (this "Agreement") is made as of March 28, 2016, by and among HCP BTC, LLC, a Delaware limited liability company ("Landlord"), AMGEN INC., a Delaware corporation ("Tenant"), and PROTHENA BIOSCIENCES INC, a Delaware corporation ("Subtenant").

RECITALS

A.Reference is hereby made to that certain Build-to-SuitLeasedated December 20, 2001, between Landlord, formerly known as Slough BTC, LLC, and Tenant, as successor in interest to Tularik Inc. (the "Original Lease"), as amended by that certain First Amendment to Build-to-Suit Lease dated January 22, 2003 (the "First Amendment"), that certain Second Amendment to Build-to-Suit Lease dated March 26, 2004 (the "Second Amendment"), that certain Third Amendment to Build-to-Suit Lease dated August 12, 2004 (the "Third Amendment"), that certain Fourth Amendment to Build-to-Suit Lease and First Amendment to Workletter dated June 19, 2006 (the "Fourth Amendment"), that certain Fifth Amendment to Build-to-Suit Lease and Second Amendment to Workletter dated June 19, 2006 (the "Fifth Amendment"), that certain Sixth Amendment to Build-to-Suit Lease and Third Amendment to Workletter dated November 21, 2006 (the "Sixth Amendment"), and that certain Seventh Amendment to Build-to-Suit Lease and Fourth Amendment to Workletter dated February 21, 2008 (the "Seventh Amendment", and together with the Original Lease, the First Amendment, Second Amendment, Third Amendment, Fourth Amendment, Fifth Amendment and Sixth Amendment, collectively, the "Lease"), for seven (7) buildings in the Oyster Point center located in South San Francisco, California(the "Premises"), including the building located at 331 Oyster Point Boulevard, consisting of 128,751 rentable square feet (the "Building").

B.Pursuant to the terms of Article 15 of the Original Lease, Tenant has requested Landlord's consent to that certain Sublease dated March 22, 2016, between Tenant and Subtenant (the "Sublease"), with respect to a subletting by Subtenant of the entire Building, as more particularly described in the Sublease (the "Sublet Premises"). A copy of the Sublease is attached hereto as Exhibit A. Landlord is willing to consent to the Sublease on the terms and conditions contained herein.

C.All defined terms not otherwise expressly defined herein shall have the respective meanings given in the Lease.

AGREEMENT

1.Landlord's Consent. Landlord hereby consents to the Sublease; provided, however, notwithstanding anything contained in the Sublease to the contrary, such consent is granted by Landlord only upon the terms and conditions set forth in this Agreement. The Sublease is subject and subordinate to the Lease. Landlord shall not be bound by any of the terms, covenants, conditions, provisions or agreements of the Sublease. Subtenant acknowledges for the benefit of Landlord that Landlord has made no representation or warranty to Subtenant as to the compliance of the Sublet Premises with any law, statute, ordinance, rule or regulation nor is Landlord obligated to provide, or pay for, any work or improvements relating to Subtenant's occupancy of the Sublet Premises except

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as specifically set forth in the Lease (as between Landlord and Tenant) or in the Subtenant Workletter (the "Workletter"), attached hereto as Exhibit B; provided that (i) the foregoing shall not modify Landlord's ongoing repair and maintenance obligations set forth in the Lease; (ii) Tenant and Subtenant acknowledge and agree that, as set forth in the Lease, including Section 13.4 of the Original Lease, as between Landlord and Tenant, Tenant shall be responsible to make all alterations or additions to the Property required by any and all Requirements (as defined in the Lease) because of Tenant's (including Subtenant's) construction of improvements (provided, that, nothing herein is waiving any rights Tenant may have with respect to latent defects, as referenced in Section 5.2 of the Original Lease); and (iii) Subtenant and Tenant acknowledge and agree that, as between Tenant and Subtenant, nothing herein shall modify or change the allocation of responsibility and costs set forth in the Sublease with respect to any such alterations or additions to the Property required by applicable Requirements. Tenant and Subtenant hereby represent and warrant to Landlord that the copy of the Sublease attached hereto is a full, complete and accurate copy of the Sublease, and that there are no other documents or instruments relating to the use of the Sublet Premises by Subtenant other than the Sublease. To the extent any terms or provisions of the Lease or the Sublease are inconsistent with the terms of this Agreement, the terms of this Agreement control.

2.Reimbursement of Landlord. Within thirty (30) days after invoice, Tenant shall reimburse Landlord all of Landlord's reasonable costs and expenses incurred in connection with its review and consent of the Sublease and preparation and negotiation of this Agreement.

3.Non-Release of Tenant; Further Transfers. Neither the Sublease nor this consent thereto shall release or discharge Tenant from any liability, whether past, present or future, under the Lease or alter the primary liability of the Tenant to pay the rent and perform and comply with all of the obligations of Tenant to be performed under the Lease (including the payment of all bills rendered by Landlord for charges incurred by Subtenant for services and materials supplied to the Sublet Premises during the Term of the Sublease). Neither the Sublease nor this consent thereto shall be construed as a waiver of Landlord's right to consent to any further subletting either by Tenant or by Subtenant, or to any assignment by Tenant of the Lease or assignment by Subtenant of the Sublease, or as a consent to any portion of the Sublet Premises being used or occupied by any other party. Without limiting the generality of the foregoing, nothing herein shall modify or amend Landlord's or Tenant's respective rights and obligations under the Lease with respect to any future assignments or subleases. Notwithstanding the preceding portion of this Section 3 or any provision to the contrary set forth in the Lease or the Sublease, Landlord's consent shall not be required in connection with any assignment or subleasing of Subtenant's interest in the Sublease that would constitute a "Permitted Transfer" pursuant to the terms of Section 15.1 of the Original Lease, if all references in Section 15.1 were deemed to refer to "Subtenant" instead of "Tenant" and to the "Sublease" instead of the "Lease". The foregoing shall not release Subtenant of any of Subtenant's obligations with respect to any transfer as set forth in Section 9.16 of the Sublease.

4.Relationship With Landlord. Tenant hereby assigns and transfers to Landlord Tenant's interest in the Sublease and all rentals and income arising therefrom, subject to the terms of this Section 4. Landlord, by consenting to the Sublease agrees that until an event of default beyond all applicable notice and cure periods shall occur in the performance of Tenant's obligations under the Lease, Tenant may receive, collect and enjoy the full benefits of such interest in the Sublease, including, without limitation, the rents and income arising therefrom. In the event Tenant shall be in default in the performance of its obligations to Landlord under Section 18.1 of the Original Lease (as amended)

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beyond all applicable notice and cure periods, Landlord may, at its option by notice to Tenant, elect to receive and collect, directly from Subtenant, all rent and any other sums owing and to be owed under the Sublease, as further set forth in Section 4.1, below. In the event that the Lease shall be terminated, Landlord may, at its option by notice to Tenant, either (i) terminate the Sublease, or (ii) elect to succeed to Tenant's interest in the Sublease and cause Subtenant to attorn to Landlord, as further set forth in Section 4.2, below.

4.1Landlord's Election to Receive Rents. Landlord shall not, by reason of the Sublease, or by reason of the collection of rents or any other sums from Subtenant pursuant to Section 4 above, be deemed liable to Subtenant for any failure of Tenant to perform and comply with any obligation of Tenant, and Tenant hereby irrevocably authorizes and directs Subtenant, upon receipt of any written notice from Landlord stating that an event of default exists in the performance of Tenant's obligations under the Lease beyond all applicable notice and cure periods, to pay to Landlord the rents and any other sums due and to become due under the Sublease. Tenant agrees that Subtenant shall have the right to rely upon any such statement and request from Landlord, and that Subtenant shall pay any such rents and any other sums to Landlord without any obligation or right to inquire as to whether such default exists and notwithstanding any notice from or claim from Tenant to the contrary. Tenant shall not have, and hereby waives, any right or claim against Subtenant for any such rents or any other sums so paid by Subtenant to Landlord. Landlord shall credit Tenant with any rent or other sums received by Landlord under such assignment but the acceptance of any payment on account of rent from Subtenant as the result of any such default shall in no manner whatsoever be deemed an attornment by the Landlord to Subtenant or by Subtenant to Landlord, be deemed a waiver by Landlord of any provision of the Lease, or serve to release Tenant from any liability under the terms, covenants, conditions, provisions or agreements under the Lease. Notwithstanding the foregoing, any other payment of rent from Subtenant directly to Landlord, regardless of the circumstances or reasons therefor, shall in no manner whatsoever be deemed an attornment by Subtenant to Landlord in the absence of a specific written agreement signed by Landlord to such an effect.

4.2Landlord's Election of Tenant's Attornment. In the event Landlord elects, at its option, to cause Subtenant to attorn to Landlord pursuant to Section 4 above, Landlord shall undertake the obligations of Tenant under the Sublease from the time of the termination by Landlord of the Lease, but Landlord shall not (i) be liable for any prepayment of more than one month's rent or any security deposit paid by Subtenant unless such prepayment or security deposit has been actually received by Landlord, (ii) be liable for any previous act or omission of Tenant under the Lease or for any other defaults of Tenant under the Sublease, except for any default of a continuing nature that continues after the date Landlord undertakes the obligations of Tenant under the Sublease, (iii) be subject to any defenses or offsets previously accrued which Subtenant may have against Tenant, or (iv) be bound by any changes or modifications made to the Sublease without the written consent of Landlord, which consent shall not be unreasonably withheld, conditioned, or delayed.

4.3Operational Matters. Notwithstanding Landlord's consent to the Sublease as set forth herein, Landlord shall not be obligated to accept from Subtenant any payments of the Minimum Rental, additional rent, and Tenant's Operating Cost Share due under the Lease, all of which shall be paid by Tenant as set forth in the Lease. Requests for services as provided under the Lease, including without limitation, repair and maintenance services of the Common Areas of the Center and structural portions of the roofs and Buildings, parking services, or any other services or obligations

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to be performed by Landlord under the terms of the Lease, may be made directly by Subtenant to Landlord with a copy of such request to be provided to Tenant. So long as a copy of any such request is also provided to Tenant, Landlord hereby agrees to respond to any such direct request of Subtenant. The right of Subtenant to request services directly from Landlord is granted for convenience only.

4.4No Waiver. The acceptance of any amounts by Landlord from Subtenant or any other party shall not be deemed a waiver by Landlord of the obligation of Tenant to pay any or all amount due and owing under the Lease. Landlord shall credit Tenant with such amounts received by Landlord, but the acceptance of any payment from Subtenant or any other party shall in no manner whatsoever be deemed an attornment by Landlord to Subtenant or by Subtenant to Landlord, be deemed a waiver by Landlord of any provision of the Lease, or serve to release Tenant from any liability under the terms, covenants, conditions, provisions or agreements under the Lease. The performance of any obligation required by Tenant under the Lease by Subtenant or any other party shall not be deemed a waiver by Landlord of the duty of Tenant to perform any other obligation as to which performance is or becomes due under the Lease.

4.5Acts of Subtenant. Any act or omission by Subtenant, or by any other person or entity for whose acts or omissions Tenant is liable or responsible under the terms of the Lease, that violates any of the provisions of the Lease, shall be deemed a violation of the Lease by Tenant, subject to any applicable notice and cure provisions contained in the Lease.

4.6Indemnification. Subtenant shall indemnify, defend and hold Landlord and its members, partners, shareholders, officers, directors, agents, employees and contractors harmless from any and all liability for bodily injury to or death of any person, or loss of or damage to the property of any person, and all actions, claims, demands, costs (including, but not limited to, reasonable attorneys' fees), damages or expenses of any kind arising therefrom which may be brought or made against Landlord or which Landlord may pay or incur by reason of the use, occupancy and enjoyment of the Sublet Premises by Subtenant or any invitees, sublessees, licensees, assignees, agents, employees or contractors of Subtenant or holding under Subtenant (including, but not limited to, any such matters arising out of or in connection with any early entry upon the Sublet Premises by Subtenant pursuant to the terms of the Sublease) from any cause whatsoever other than negligence or willful misconduct or omission by Landlord or its agents, employees or contractors. Landlord and its members, partners, shareholders, officers, directors, agents, employees and contractors shall not be liable for, and Subtenant hereby waives all claims against such persons for, damages to goods, wares and merchandise in or upon the Sublet Premises, or for injuries to Subtenant, its agents or third persons in or upon the Sublet Premises, from any cause whatsoever other than negligence or willful misconduct or omission by Landlord or its agents, employees or contractors. Subtenant shall give prompt notice to Landlord of any casualty or accident in, on or about the Sublet Premises. Tenant confirms that Subtenant's indemnity above is in addition to (and does not replace, modify, or negate) Tenant's indemnification obligations under the Lease, including, without limitation, Tenant's indemnification of Landlord set forth in Section 14.6(a) of the Original Lease. The provisions of this Section 4.6 shall survive the expiration or sooner termination of the Sublease with respect to any claims or liability arising in connection with any event occurring prior to such expiration or termination.

4.7Insurance. Prior to Subtenant's occupancy of the Sublet Premises, Subtenant shall provide Landlord with certificates of all of the insurance required to be carried by Subtenant by the terms of the Sublease, which shall show Landlord as being an additional insured thereunder. The

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waiver of subrogation contained in Section 14.4 of the Lease shall apply as between Landlord and Subtenant.

4.8No Consent to Alterations or Particular Use. Notwithstanding anything contained in the Sublease to the contrary, Landlord's consent to the Sublease as contained in this Agreement shall not be deemed to be a consent to (i) any alteration or work of improvement that Tenant or Subtenant may desire or intend in the Sublet Premises, except as set forth in the Workletter and this Section 4.8, (ii) any use of hazardous, radioactive or toxic materials in or about the Sublet Premises, except as expressly permitted in the Lease, including without limitation pursuant to Sections 13.1 and 13.6 of the Lease, or (iii) any signage proposed to be installed for the benefit of Subtenant, except as set forth in Section 4.10 below. Notwithstanding the foregoing, Subtenant shall not be required to obtain Landlord's consent for interior alterations costing less than One Hundred Thousand Dollars ($100,000.00) for any single project (i.e., any single item of alterations or set of related alterations in the Sublet Premises). Regardless of whether Landlord's consent would otherwise be required under the Sublease or this Agreement, Subtenant shall provide Landlord with prior written notice of any proposed alterations, additions or improvements having a cumulative estimated cost of more than Four Hundred Thousand Dollars ($400,000.00) in any twelve (12) month period. Notwithstanding any other provisions of this Section 4.8, under no circumstances shall Subtenant make any structural alterations or improvements, or any substantial changes to the roof or substantial equipment installations on the roof, or any substantial changes or alterations to building systems, without Landlord's prior written consent.

4.9Existing Improvements. Notwithstanding anything to the contrary set forth in the Lease, Landlord confirms and agrees that Landlord shall not require the removal or restoration of any of the Tenant Improvements (as defined in the Lease) or any other alterations, additions, or improvements existing in the Sublet Premises as of the date hereof. Upon expiration or earlier termination of the Lease, all such existing improvements (including the Tenant Improvements), alterations and additions shall be surrendered to Landlord in the condition required for such surrender set forth in the Lease.

4.10Signage. Pursuant to Section 11.5 of the Original Lease (x) Tenant has the right to display its corporate name, logo and/or insignia with lighted signage on the exterior of the Building and in front of the entrance to the Building, subject to (a) Landlord's prior approval as to location, size, design and composition (which approval shall not be unreasonably withheld, conditioned or delayed), (b) the sign criteria established for the Center (as defined in the Lease) from time to time and (c) all restrictions and requirements of applicable law and of any covenants, conditions and restrictions or other written agreements now or hereafter applicable to the Property, and (y) in the event Landlord installs at the Project (as defined in the Lease) any monument sign(s) on which identification signage for any individual tenants is included, Tenant shall be entitled to have identification signage on such monument sign(s) on a basis comparable to that made available to any other tenants ("Tenant's Signage Rights"). Pursuant to the Sublease, Tenant grants to Subtenant signage rights ("Subtenant's Signage Rights") that are substantially the same as Tenant's Signage Rights applicable to the Sublet Premises. Landlord agrees that Subtenant may exercise Subtenant's Signage Rights to the same extent as Tenant is permitted to exercise Tenant's Signage Rights applicable to the Sublet Premises so that during the Sublease Term, Tenant's Signage Rights shall apply to Subtenant as if the word "Subtenant" replaced the references to Tenant in Section 11.5 of the Original

750262.06/WLA 372423-00016/4-6-16/ctl/kmo -5- HCP BTC, LLC[Consent to Sublease]

Lease. Subtenant shall immediately repair any damage caused by installation and removal of signs under this Section 4.10 from time to time.

5.General Provisions.

5.1Consideration for Sublease. Tenant and Subtenant represent and warrant that there are no additional payments of rent or any other consideration of any type payable by Subtenant to Tenant with regard to the Sublet Premises other than as disclosed in the Sublease. Landlord acknowledges that the consideration payable by Subtenant under the Sublease is less than the amount payable by Tenant for the Sublet Premises under the Lease and, accordingly, no transfer premium is payable in connection with the Sublease.

5.2Brokerage Commission. Tenant and Subtenant covenant and agree that under no circumstances shall Landlord be liable for any brokerage commission or other charge or expense in connection with the Sublease and Tenant and Subtenant agree to protect, defend indemnify and hold Landlord harmless from and against the same and from any cost or expense (including, but not limited to, reasonable attorney's fees) incurred by Landlord in resisting any claim for any such brokerage commission.

5.3Controlling Law. The terms and provisions of this Agreement shall be construed in accordance with and governed by the laws of the State of California.

5.4Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto, their heirs, successors and permitted assigns. As used herein, the singular number includes the plural and the masculine gender includes the feminine and neuter.

5.5Captions. The paragraph captions utilized herein are in no way intended to interpret or limit the terms and conditions hereof; rather, they are intended for purposes of convenience only.

5.6Partial Invalidity. If any term, provision or condition contained in this Agreement shall, to any extent, be invalid or unenforceable, the remainder of this Agreement, or the application of such term, provision or condition to persons or circumstances other than those with respect to which it is invalid or unenforceable, shall not be affected thereby, and each and every other term, provision and condition of this Agreement shall be valid and enforceable to the fullest extent permitted by law.

5.7Attorneys' Fees. If any party or parties commence litigation against any other party or parties for the specific performance of this Agreement, for damages for the breach hereof or otherwise for enforcement of any remedy hereunder, the parties hereto agree to and hereby do waive any right to a trial by jury and, in the event of any such commencement of litigation, the prevailing party or parties shall be entitled to recover from the other party or parties such costs and reasonable attorneys' fees as may have been incurred.

5.8Notices. All notices, consents, waivers and other communications shall be delivered in accordance with Article 21 of the Original Lease to the parties at their respective addresses as set forth below (or such other notice addresses provided by any party to the other parties in accordance with the terms hereof. Further, in addition to the notice methods set forth in the Lease,

750262.06/WLA 372423-00016/4-6-16/ctl/kmo -6- HCP BTC, LLC[Consent to Sublease]

the parties may send notice by electronic mail with a hard copy to follow by one of the methods set forth in the Lease. Any notice sent by email shall be deemed delivered on the date that such email was sent, unless there is an automatic reply indicating that the recipient is out of the office or that the email was not delivered (in which event, delivery shall be determined based on delivery of the hard copy pursuant to one of the methods set forth in the Lease).

To Landlord: HCP, Inc.
1920 Main Street, Suite 1200
Irvine, CA 92614
Attention: Legal Department

Email: aplayle@hcpi.com

with a copy to

HCP Life Science Estates
950 Tower Lane, Suite 1650
Foster City, CA 94404
Attention: Jonathan M. Bergschneider

Email: jbergschneider@hcpi.com

and

Allen Matkins Leck Gamble Mallory & Natsis LLP
1901 Avenue of the Stars, Suite 1800
Los Angeles, California 90067

Attention: Anton N. Natsis, Esq.

Email: tnatsis@allenmatkins.com

To Tenant: Amgen Inc.

One Amgen Center Drive

Mail Stop: 28-1-A

Thousand Oaks, CA 91320-1799

Attention: Corporate Real Estate

Email: chbarry@amgen.com; and     jthaker@amgen.com

with a copy to

Amgen Inc.

One Amgen Center Drive

Mail Stop: 35-2-A

Thousand Oaks, CA 91320-1799

Attention: Operations Law Group

Email: gmintz@amgen.com

750262.06/WLA 372423-00016/4-6-16/ctl/kmo -7- HCP BTC, LLC[Consent to Sublease]

To Subtenant: Prothena Biosciences Inc.
650 Gateway Boulevard
South San Francisco, CA 94080
Attention: Chief Financial Officer
Email: tran.nguyen@prothena.com

with a copy to:
Prothena Biosciences Inc.
650 Gateway Boulevard
South San Francisco, CA 94080
Attention: Chief Legal Officer

Email: bill.homan@prothena.com

5.9SEC Filings. In the event either Tenant or Subtenant or any of its affiliates (such party, a "Filing Party") is required to file with the Securities and Exchange Commission or the securities regulators of any state or other jurisdiction a registration statement or any other disclosure document which describes or refers to the Sublease, this Agreement, or the Workletter under the Securities Act of 1933, as amended, the Securities Exchange Act, of 1934, as amended, any other applicable securities law or the rules of any national securities exchange, the Filing Party shall be entitled to file an unredacted copy of the Original Lease, the Sublease, this Agreement, and the Workletter, and a copy of the Fifth Amendment with those redactions of the Fifth Amendment reflected in the version attached to Exhibit A of the Sublease.

[Remainder of page left intentionally blank; signature pages follow.]

750262.06/WLA 372423-00016/4-6-16/ctl/kmo -8- HCP BTC, LLC[Consent to Sublease]

IN WITNESS WHEREOF, the parties have executed this Consent to Sublease Agreement as of the day and year first above written.

"Landlord"

HCP BTC, LLC,
a Delaware limited liability company

By: HCP Estates USA Inc.,
a Delaware corporation

By: /s/ Jonathan M. BergschneiderJonathan M. Bergschneider
Executive Vice President

"Tenant"

AMGEN INC.,

a Delaware corporation

By: /s/ David Meline

Name: David Meline

Title: Executive Vice President and

Chief Financial Officer

"Subtenant"

PROTHENA BIOSCIENCES INC,

a Delaware corporation

By: /s/ Tran Nguyen

Name: Tran Nguyen

Title: CFO

By: /s/ A. W. Homan

Name: A. W. Homan

Title: CLO & Secretary

750262.06/WLA 372423-00016/4-6-16/ctl/kmo -9- HCP BTC, LLC[Consent to Sublease]

EXHIBIT A

THE SUBLEASE

[See attached.]

750262.06/WLA 372423-00016/4-6-16/ctl/kmo A - 1 HCP BTC, LLC[Consent to Sublease]

EXHIBIT B

SUBTENANT WORKLETTER

[To be inserted]

750262.06/WLA 372423-00016/4-6-16/ctl/kmo B - 1 HCP BTC, LLC[Consent to Sublease]

WORKLETTER

This Workletter ("Workletter") is attached to and made part of that certain Consent to Sublease Agreement dated March 28, 2016 (the "Consent"), by and among HCP BTC, LLC, a Delaware limited liability company ("Landlord"), Amgen Inc., a Delaware corporation ("Tenant") and Prothena Biosciences Inc, a Delaware corporation ("Subtenant"), with reference to that certain Build-to-Suit Lease dated as of December 20, 2001 (the "Original Lease" and, as amended to date, the "Lease"), by and between Landlord (formerly known as Slough BTC, LLC) and Tenant (as successor in interest to Tularik Inc.) and that certain Sublease dated March 22, 2016 (the "Sublease"), by and between Tenant and Subtenant. The terms of this Workletter are incorporated in the Consent for all purposes. In the event of any conflict between the terms of the Lease (including Exhibit C attached to the Original Lease) or the Consent and this Workletter, this Workletter shall control (i) with respect to the Lease, for purposes of the Subtenant Improvements and Subtenant's Work (as such terms are defined below) only, and (ii) with respect to the Consent, for all purposes.

1.Defined Terms. As used in this Workletter, the following capitalized terms have the following meanings:

(a)Architect. Any architect selected by Subtenant with the written approval of Landlord and Tenant (which shall not be unreasonably withheld, conditioned or delayed) with respect to the Subtenant Improvements which Subtenant is to design pursuant to this Workletter. Landlord and Tenant hereby agree that DG Architects, Inc dba DGA is an architect reasonably acceptable to Landlord and Tenant and shall be deemed an approved architect pursuant to this Paragraph 1(a).

(b)Building. The building located at 331 Oyster Point Boulevard, South San Francisco, California.

(c)Business Days. Monday through Friday of each week in the calendar year, excluding nationally recognized holidays and any days during Tenant's Observed U.S. Winter and Summer Shutdowns.

(d)Calendar Days. All the days of the calendar year, including weekends and holidays, provided that, for purposes of this Workletter, Calendar Days shall not include any days during Tenant's Observed U.S. Winter and Summer Shutdowns.

(e)General Contractor. Any general contractor selected by Subtenant with the prior written approval of Landlord and Tenant (which shall not be unreasonably withheld, conditioned or delayed) with respect to Subtenant's Work. Landlord and Tenant hereby agree that App Landmark Builders is a general contractor reasonably acceptable to Landlord and Tenant and shall be deemed an approved general contractor pursuant to this Paragraph 1(e).

(f)Improvements. The construction of Subtenant Improvements and other improvements shown on the Approved Plans from time to time and to be constructed in the Building pursuant to this Workletter.

(g)Sublet Premises. The premises subleased by Subtenant pursuant to the Sublease, as more particularly described in the Sublease.

(h)Subtenant Improvements. The improvements within the Building, shown on the Approved Plans from time to time and to be constructed by Subtenant pursuant to the Sublease, Consent and this Workletter, including (but not limited to) the improvements described in Schedule 1 attached to this Workletter.

(i)Subtenant's Work. All of the Subtenant Improvements as Subtenant deems necessary or appropriate for Subtenant's use and occupancy of the Building pursuant to the Sublease.

(j)Tenant's Observed U.S. Winter and Summer Shutdowns. The observed dates during which Tenant shuts down its business operations in late December through early January and on and around the 4^th of July. Tenant confirms that Tenant's Observed U.S. Winter and Summer Shutdowns are currently scheduled through January 2019, as follows:

◦ July 2, 2016 through July 10, 2016

◦ December 23, 2016 through January 2, 2017

◦ July 1, 2017 through July 9, 2017

◦ December 22, 2017 through January 2, 2018

◦ June 30, 2018 through July 8, 2018

◦ December 22, 2018 through January 1, 2019

Upon request after they are scheduled, Tenant shall confirm the dates of Tenant's Observed U.S. Winter Summer Shutdowns for later dates.

(k)Unavoidable Delays. Delays due to acts of God, action or inaction of public agencies, labor disputes, strikes, fires, freight embargoes, rainy, stormy or other inclement weather (but only to the extent such weather prevents the affected party from conducting any substantial element of its construction work for a period of at least one full Business Day), inability to obtain supplies, materials, fuels or permits, delays of contractors or subcontractors, utility curtailments, or other causes or contingencies beyond the reasonable control of Tenant or Subtenant, as applicable.

(l)Cost of Improvements. The sum of the following (unless otherwise agreed in writing by the relevant parties with respect to any specific item or component or any category of items or components): (i) all sums paid to contractors or subcontractors for labor and materials furnished in connection with construction of such item or component; (ii) all costs, expenses, payments, fees, taxes, levies and charges (other than penalties) paid or incurred to or at the direction of any city, county or other governmental or quasi-governmental authority or agency which are required to be paid in order to obtain all necessary governmental permits, licenses, inspections and approvals relating to construction of such item or component; (iii) engineering and architectural fees for services rendered in connection with the design and construction of such item or component

751986.05/WLA 372423-00016/4-6-16/ctl/kmo -2- HCP BTC, LLC[Workletter]

(including, but not limited to, the Architect for such item or component and an electrical engineer, mechanical engineer and civil engineer); (iv) sales and use taxes; (v) testing and inspection costs; (vi) the cost of power, water and other utility facilities and the cost of collection and removal of debris required in connection with construction of such item or component; (vii) costs incurred for the management and administration of the construction of the Subtenant Improvements, including, without limitation, wages, labor burden, and expediting, procurement and administrative expenses; and (viii) all other "hard" costs incurred in the construction of such item or component in accordance with the applicable Approved Plans and this Workletter.

(m)Capitalized terms not otherwise defined in this Workletter shall have the definitions set forth in the Sublease (or the Lease, as incorporated therein).

2.Approved Plans. Landlord, Tenant and Subtenant shall comply with the procedures set forth in this Paragraph 2 in preparing, delivering and approving matters relating to the Subtenant Improvements.

(a)Approved Plans and Working Drawings for Subtenant's Work. Subtenant shall promptly and diligently cause to be prepared and delivered to Tenant, for approval, a space plan and detailed plans and specifications for the Subtenant Improvements constituting Subtenant's Work (the "Subtenant Plans"). Tenant shall approve or disapprove of the Subtenant Plans, within ten (10) Calendar Days of receipt thereof from Subtenant, which approval shall not be unreasonably withheld, conditioned or delayed; provided, however, that should Tenant fail to provide its written approval or disapproval of the Subtenant Plans within ten (10) Calendar Days following Subtenant's delivery thereof, then Subtenant shall, on or after such tenth (10^th) Calendar Day, send Tenant a second written request for approval, and if Tenant shall fail to provide its written approval or disapproval of the Subtenant Plans within two (2) Business Days following Subtenant's second request, then Tenant shall be deemed to have approved the Subtenant Plans. Upon Tenant's approval or deemed approval, Tenant shall submit the Subtenant Plans to Landlord for approval. Landlord shall approve or disapprove of the Subtenant Plans within ten (10) Calendar Days of receipt by Landlord of confirmation of Tenant's approval or deemed approval of such version of the Subtenant Plans. If either Landlord or Tenant disapproves the Subtenant Plans, such notice of disapproval shall include specific comments setting forth the basis for such disapproval. Following approval of the Subtenant Plans by both Landlord and Tenant (the Subtenant Plans as so approved, the "Approved Plans"), Subtenant shall then cause to be prepared and delivered to Tenant, for approval, final working drawings and specifications for the Subtenant Improvements constituting Subtenant's Work, including any applicable life safety, mechanical and electrical working drawings and final architectural drawings (collectively, the "Final Working Drawings"). The Final Working Drawings shall substantially conform to the Approved Plans. Tenant shall approve or disapprove of the Final Working Drawings within ten (10) Calendar Days of receipt thereof from Subtenant, which approval shall not be unreasonably withheld, conditioned or delayed; provided, however, that should Tenant fail to provide its written approval or disapproval of the Final Working Drawings within ten (10) Calendar Days following Subtenant's delivery thereof, then Subtenant shall, on or after such tenth (10^th) Calendar Day, send Tenant a second written request for approval, and if Tenant shall fail to provide its written approval or disapproval of the Final Working Drawings within two (2) Business Days following Subtenant's second request, then Tenant shall be deemed to have approved the Final

751986.05/WLA 372423-00016/4-6-16/ctl/kmo -3- HCP BTC, LLC[Workletter]

Working Drawings. Upon Tenant's approval or deemed approval, Tenant shall submit the Final Working Drawings to Landlord for approval. Landlord shall approve or disapprove of the Final Working Drawings within ten (10) Calendar Days of receipt by Landlord of confirmation of Tenant's approval or deemed approval of such version of the Final Working Drawings. Landlord and Tenant shall not unreasonably withhold their respective approval of the Final Working Drawings; provided, however, that Subtenant hereby agrees that it shall be deemed reasonable for Landlord or Tenant to withhold approval of the Final Working Drawings if a "Design Problem" exists or if the Final Working Drawings are not a logical extension of the Approved Plans. A "Design Problem" shall mean and refer to any design criteria which would (a) have an adverse effect on the Building Shell or Improvements; (b) be in non-compliance with any applicable law; (c) can be seen from the exterior of the Sublet Premises; (d) cause material interference with other tenants of the Project; or (e) adversely affect the certificate of occupancy issued for the Project. Upon approval of the Final Working Drawings by both Landlord and Tenant, the Final Working Drawings shall be deemed to be incorporated in and considered part of the Approved Plans, superseding (to the extent of any inconsistencies) any inconsistent features of the previously existing Approved Plans.

(b)Landlord Approval Rights; Subtenant Security System.Without limiting the breadth of the approval rights otherwise reserved to Landlord as set forth above, Landlord reserves the right, in reviewing Subtenant's proposed drawings and specifications pursuant to the terms of this Workletter, to require specific modifications to the proposed Subtenant Improvements, at no additional cost to Subtenant, in order to maintain or enhance flexibility with respect to other potential future uses of the Building ("Landlord's Required Changes"). Landlord has reviewed certain preliminary drawings dated January 7, 2016 (the "Preliminary Plans") for the sole purpose of identifying any Landlord's Required Changes. Landlord hereby notifies Subtenant that (i) the Subtenant Improvements shown in the Preliminary Plans do not require any Landlord's Required Changes, and (ii) to the extent the Subtenant Plans or Final Working Drawings contain Subtenant Improvements that are not a logical extension of, or are not otherwise clearly indicated in, the Preliminary Plans ("Newly Indicated SIs"), concurrently with Landlord's approval of the Subtenant Plans and Final Working Drawings, as applicable, Landlord shall notify Tenant whether any of the Newly Indicated SIs will require any Landlord's Required Changes. For the avoidance of doubt, Landlord has reviewed the Preliminary Plans solely for the purpose of identifying any Landlord's Required Changes, and reserves all rights to review and approve the Subtenant Plans and Final Working Drawings pursuant to the provisions of this Workletter. Landlord's and Tenant's review of the Subtenant Plans, the Approved Plans, and the Final Working Drawings (collectively, the "Construction Documents") as set forth in this Section 2, shall be for each of their respective sole purposes and shall not imply Landlord's or Tenant's review of the same, or obligate Landlord or Tenant to review the same, for quality, design, governmental or code compliance or other like matters. Accordingly, notwithstanding that any Construction Documents are reviewed by Landlord or Tenant, or their respective space planners, architects, engineers and consultants, and notwithstanding any advice or assistance which may be rendered to Subtenant by Landlord or Tenant or their respective space planners, architects, engineers, and consultants, neither Landlord nor Tenant shall have any liability whatsoever in connection therewith and shall not be responsible for any omissions or errors contained in the Construction Documents. In addition, Subtenant's waiver and indemnity set forth in Section 4.6 of the Consent shall specifically apply to the Construction Documents; provided, however, such waiver and indemnities shall not apply to any liability of

751986.05/WLA 372423-00016/4-6-16/ctl/kmo -4- HCP BTC, LLC[Workletter]

Landlord, or damage suffered by Landlord, resulting from the design of any of Landlord's Required Changes. Subtenant shall have the right to provide, install and maintain, at its sole cost and expense, a security system (including, without limitation, automatic door latches, card-key systems, etc.) ("Subtenant's Security System") in the Building. Subtenant shall provide Landlord, Landlord's property manager, and Tenant with copies of any card-keys or other required access devices in order to facilitate emergency entry by Landlord, Tenant or their respective agents during the term of the Sublease, subject to the provisions of Section 16.1 of the Original Lease, and Section 9.17 of the Sublease (as applicable).

(c)Changes. If Subtenant at any time desires to make any changes, alterations or additions to the Approved Plans, such changes, alterations or additions shall be subject to approval by Landlord and Tenant in the same manner as the original Approved Plans as provided above. Landlord shall bear all costs and expenses that Subtenant may incur in connection with any Landlord's Required Changes, and such amounts shall not be applied against any Allowance. Landlord shall reimburse Subtenant for such costs and expenses, including any cost of Improvements, within thirty (30) days after Landlord receives Subtenant's invoice therefore.

(d)Representatives and Responsibilities.

(i)Landlord's Representative. Tenant shall coordinate with Project Management Advisors, Inc. ("Landlord's Representative") (who shall have full authority and responsibility to act on behalf of Landlord pursuant to this Workletter) with regard to all approval and other rights of Landlord hereunder and any logistical or coordination matters arising in connection with the Subtenant Improvements or this Workletter. Landlord and Landlord's Representative will interact with Subtenant directly as and to the extent expressly set forth in this Workletter, but otherwise requests that all interaction and coordination with Landlord and the Landlord's Representative occur through the Tenant or Tenant's Representative. Landlord agrees to, and to cause Landlord's Representative to agree to, respond to any approval requests by Tenant (or Subtenant, when applicable) within the timeframes set forth herein. Neither Tenant nor Subtenant shall be obligated to pay Landlord in connection with Landlord's review and supervision of the Subtenant's Work or otherwise in connection with Landlord's performance of the above obligations.

(ii)Tenant's Representative. Tenant has designated Charles Barry ("Tenant's Representative") as its sole representative with respect to the matters set forth in this Workletter, who, until further notice to both Landlord and Subtenant, shall have full authority and responsibility to act on behalf of the Tenant as required in this Workletter. In addition, Tenant plans to hire Landlord's Representative, Project Management Advisors, Inc., to advise and consult with Tenant with regard to all matters covered by this Workletter and to simplify the approval of plans and coordination of Subtenant's Work. Tenant expressly acknowledges and agrees that, as between Tenant and Landlord, Tenant remains fully liable for any Improvements installed in the Sublet Premises (by Subtenant or otherwise) and Tenant's obligations under the Lease with respect thereto remain in full force and effect, except as expressly modified by this Workletter or the Consent. Tenant and/or Tenant's Representative agree to use commercially reasonable efforts to respond to any approval requests by Subtenant within the timeframes set forth herein. Subtenant shall not be

751986.05/WLA 372423-00016/4-6-16/ctl/kmo -5- HCP BTC, LLC[Workletter]

obligated to pay Tenant in connection with Tenant's performance of its obligations hereunder, including Tenant's review of the Subtenant's Work.

(iii)Subtenant's Representative. Subtenant has designated Kevin J. Hickey as its sole representative with respect to the matters set forth in this Workletter, who, until further notice to Landlord and Tenant, shall have full authority and responsibility to act on behalf of the Subtenant as required in this Workletter.

(iv)Notices. Notwithstanding the foregoing or anything to the contrary herein, requests for consent or approvals hereunder must be sent in accordance with the notice provisions set forth in the Consent to commence the time periods for review and response set forth herein (provided that Tenant hereby notifies Landlord and Subtenant that Tenant no longer maintains a fax number that can be used for notice purposes and notices sent to Tenant by fax will not constitute notice to Tenant). Without limiting the generality of the foregoing, it is expressly understood that, while representatives identified herein are authorized to provide approvals from the party they are representing, requests for approvals or other notices sent solely to a party's representative (without also sending such requests or notices in compliance with the notice provisions of the Consent) shall not constitute notice under this Workletter or commence the applicable time period for completing such party's review.

3.[Intentionally Omitted]

4.Payment of Costs; Allowances. The cost of construction of Subtenant's Work shall be borne by Subtenant at its sole cost and expense, including any costs or cost increases incurred as a result of Unavoidable Delays, governmental requirements or unanticipated conditions. Notwithstanding the foregoing, it is acknowledged that (a) Tenant is providing Subtenant an allowance (the "Subtenant Improvement Allowance") to apply towards Subtenant's costs to construct the Subtenant Improvements, as more particularly set forth in the Sublease (which shall govern the disbursement of the Subtenant Improvement Allowance for all purposes); and (b) Tenant has agreed to provide to Subtenant the benefit of, and shall be responsible to disburse to Subtenant pursuant to the terms of the Sublease and this Workletter, the remaining portion of the allowance funds available to Tenant under the Lease with respect to the Sublet Premises (the "Master Lease Allowance") on the terms set forth in Section 7 below.

5.Subtenant's Work. Subtenant shall construct and install in the Building the Subtenant's Work, substantially in accordance with the Approved Plans or, with respect to Subtenant's Work not otherwise shown on the Approved Plans, substantially in accordance with plans and specifications prepared by Subtenant and approved in writing by both Landlord and Tenant (which approval shall not be unreasonably withheld, conditioned or delayed). Subtenant's Work shall be performed in accordance with, and shall in all respects be subject to, the terms and conditions of the Lease other than the terms of Exhibit C thereto (to the extent not inconsistent with this Workletter), and shall also be subject to the following conditions:

(a)Contractor Requirements. The contractor engaged by Subtenant for Subtenant's Work, and any subcontractors, shall be duly licensed in California and shall be subject to Tenant's and Landlord's prior written approval, which approval shall not be unreasonably withheld,

751986.05/WLA 372423-00016/4-6-16/ctl/kmo -6- HCP BTC, LLC[Workletter]

conditioned or delayed. Subtenant shall engage only union contractors for the construction of Subtenant's Work and for the installation of Subtenant's fixtures and equipment in the Building, and shall require all such contractors engaged by Subtenant, and all of their subcontractors, to use only union labor on or in connection with such work, except to the extent Landlord determines, in its reasonable discretion, that the use of non-union labor would not create a material risk of labor disputes, picketing or work interruptions at the Property, in which event Landlord shall, to that extent, waive such union labor requirement. Landlord hereby waives the union labor requirement for Subtenant's contractors, App Landmark Builders, Howell Electric, and InsideSource, and for all subcontractors of such contractors, subject to Subtenant's compliance with any reasonable rules and regulations that Landlord may implement to minimize disruption as a result thereof, including, without limitation, requirements that non-union contractors and subcontractors use a different gate or access point to the Sublet Premises than union members.

(b)Costs and Expenses of Subtenant's Work. Without limiting (i) Tenant's obligation to fund the Subtenant Improvement Allowance and to disburse the Master Lease Allowance in accordance with the terms and conditions set forth in the Sublease and this Workletter, as applicable, or (ii) Landlord's obligation to fund to Tenant the Master Lease Allowance in accordance with the terms and conditions of the Lease, as modified by Section 7 below, Subtenant shall timely pay all costs and expenses arising out of the performance of Subtenant's Work (including the costs of permits) and shall furnish Tenant and Landlord with evidence of payment on request. Subtenant shall provide Landlord and Tenant with seven (7) Calendar Days' prior written notice before commencing any Subtenant's Work. On completion of Subtenant's Work, Subtenant shall deliver to each of Landlord and Tenant a release and unconditional lien waiver executed by (a) each contractor and subcontractor that performed any of Subtenant's Work, and (b) any materialman that has lien rights with respect to Subtenant's Work. If any lien is filed against the Property or any portion thereof or against Subtenant's leasehold interest as a result of the construction of any Subtenant Improvements or other actions taken by Subtenant or its agents, employees or contractor, Subtenant shall obtain, within ten (10) Calendar Days after Subtenant is notified of the filing, the release or discharge of that lien. If Subtenant fails to do so, Landlord and Tenant shall each have the right (but not the obligation) to obtain the release or discharge of the lien and Subtenant shall, within fifteen (15) Calendar Days after written demand by Landlord or Tenant (as applicable, and accompanied by reasonable documentation of the items claimed), reimburse Landlord or Tenant for all costs, including (but not limited to) reasonable attorneys' fees, incurred by Landlord or Tenant (as the case may be) in obtaining the release or discharge of such lien, together with interest from the date of demand at the interest rate set forth in Section 3.2 of the Original Lease.

(c)Indemnification. Subtenant shall indemnify, defend (with counsel satisfactory to Landlord or Tenant, as applicable) and hold Landlord and Tenant and their respective agents and employees harmless from all suits, claims, actions, losses, costs and expenses (including, but not limited to, claims for workers' compensation, attorneys' fees and costs) based on personal injury or property damage or contract claims (including, but not limited to, claims for breach of warranty) arising from the performance of Subtenant's Work, other than those resulting from the negligence or willful misconduct or omission by Landlord or Tenant or any of their agents, employees or contractors. Subtenant shall repair or replace (or, at the election of the party incurring the expense, reimburse Landlord or Tenant for the cost of repairing or replacing) any portion of the Building

751986.05/WLA 372423-00016/4-6-16/ctl/kmo -7- HCP BTC, LLC[Workletter]

and/or any of Landlord's or Tenant's real or personal property or equipment that is damaged, lost or destroyed in the course of or in connection with the performance of Subtenant's Work.

(d)Insurance. Subtenant's contractors shall obtain and provide to Tenant and Landlord certificates evidencing workers' compensation, public liability, property damage, and with respect to contractors providing construction workmanship or materials, "Builder's All Risk" insurance in amounts and forms and with companies reasonably satisfactory to Landlord and Tenant and shall name each of Landlord and its agents (specifically including HCP Life Science REIT, Inc., HCP, Inc., CBRE, Inc., Project Management Advisors, Inc., and HCP BTC, LLC) and Tenant as additional insureds. All such policies of insurance must contain a provision that the company writing said policy will give Landlord and Tenant thirty (30) Calendar Days' prior written notice of any cancellation or lapse of the effective date or any reduction in the amounts of such insurance. All insurance, except workers' compensation, maintained by Subtenant shall preclude subrogation claims by the insurer against anyone insured thereunder. Such insurance shall provide that it is primary insurance as respects Landlord and Tenant and that any other insurance maintained by Landlord or Tenant is excess and noncontributing with the insurance required of Subtenant hereunder.

(e)Rules and Regulations. Subtenant and Subtenant's contractors shall comply with Landlord's rules, regulations and requirements with respect to the performance of Subtenant's Work. Subtenant's agreement with Subtenant's contractors shall require each contractor to reasonably clean up, in accordance with industry standards applicable to construction projects at first-class buildings, the construction area to the extent that such cleanup is necessitated by the performance of Subtenant's Work. Commencing upon the execution of the Sublease, Subtenant shall hold regularly scheduled formal meetings with Architect and General Contractor regarding the progress of the preparation of Construction Documents and the construction of the Subtenant Improvements. Subtenant shall inform Landlord and Tenant of the time and location of such meetings and Landlord and Tenant shall have the right to attend any such meetings. Such meetings shall be held at 650 Gateway Boulevard, South San Francisco, California 94080, or at the Sublet Premises, but Subtenant shall also provide the option to participate in such meetings by phone. Subtenant shall provide customary meeting minutes of all such meetings to Landlord and Tenant.

(f)Risk of Loss. All materials, work, installations and decorations of any nature brought onto or installed in the Building, by or at the direction of Subtenant or in connection with the performance of Subtenant's Work shall be at Subtenant's risk, and neither Landlord, Tenant nor any party acting on Landlord's or Tenant's behalf shall be responsible for any damage, loss or destruction thereof. Each of Subtenant's agents and contractors providing construction workmanship or materials (including the General Contractor, but excluding the Architect) shall warrant to Subtenant and for the benefit of Landlord and Tenant that the portion of the Subtenant Improvements for which it is responsible shall be free from any defects in workmanship and materials for a period of not less than one (1) year from the date of substantial completion thereof. Each of Subtenant's agents and contractors providing construction workmanship or materials shall be responsible for the replacement or repair, without additional charge, of all work done or furnished in accordance with its contract if such contractor or subcontractor is notified that such work is defective within one (1) year after substantial completion of the work performed by such contractor or subcontractors. The

751986.05/WLA 372423-00016/4-6-16/ctl/kmo -8- HCP BTC, LLC[Workletter]

correction of such work shall include, without additional charge, all additional expenses and damages incurred in connection with such removal or replacement of all or any part of the Subtenant Improvements, and/or the Building and/or common areas that may be damaged or disturbed thereby. All such warranties or guarantees as to materials or workmanship of or with respect to the Subtenant Improvements shall be contained in each of Subtenant's agent's contracts or subcontracts and shall be written such that such guarantees or warranties shall inure to the benefit of Landlord, Tenant, and Subtenant, as their respective interests may appear, and can be directly enforced by any of them. Subtenant covenants to give to Landlord and Tenant, as applicable, any commercially reasonable assignment or other commercially reasonable assurances which may be necessary to effect such right of direct enforcement.

(g)    Condition of Subtenant's Work. All work performed by Subtenant shall be performed in a good and workmanlike manner, shall be free from defects in design, materials and workmanship, and shall be completed in compliance with the Approved Plans in all material respects and in compliance with all applicable governmental laws, ordinances, codes and regulations in force at the time such work is completed. Without limiting the generality of the foregoing, Subtenant shall be responsible for compliance of all Subtenant Improvements designed and constructed by Subtenant with the requirements of the Americans with Disabilities Act and all similar or related requirements pertaining to access by persons with disabilities. Landlord and Tenant shall each have the right to inspect the Subtenant Improvements subject to the terms of Section 16.1 of the Lease, as incorporated into the Sublease, provided however, that Landlord's or Tenant's failure to inspect the Subtenant Improvements shall in no event constitute a waiver of any of Landlord's or Tenant's rights hereunder nor shall Landlord's or Tenant's inspection of the Subtenant Improvements constitute Landlord's or Tenant's approval of the same. Should Landlord disapprove any portion of the Subtenant Improvements, Landlord shall notify Tenant (or, at Landlord's option, Landlord may directly notify Subtenant) in writing of such disapproval and shall specify the items disapproved. Should Tenant disapprove any portion of the Subtenant Improvements, or should Tenant receive notice of Landlord's disapproval pursuant to the previous sentence, Tenant shall notify Subtenant (on behalf of Landlord and/or Tenant, as applicable) in writing of such disapproval and shall specify the items disapproved. Notwithstanding anything to the contrary herein, however, Landlord and Tenant shall have the right to disapprove of the Subtenant Improvements only to the extent the Subtenant Improvements (i) do not materially comply with the Approved Plans, (ii) do not comply with applicable laws, rules or regulations, or (iii) were not completed in a good and workmanlike manner (any such notice, the "Disapproval Notice"). Following the receipt of a valid Disapproval Notice, Subtenant shall rectify such matters set forth in the Disapproval Notice meeting the above criteria at no expense to Landlord or Tenant, provided however, that should Subtenant fail to rectify such matters within thirty (30) Calendar Days following the receipt of a valid Disapproval Notice, then Landlord or Tenant may take such action as Landlord or Tenant deem reasonably necessary, at Subtenant's expense and without incurring any liability on Landlord's or Tenant's part, to correct such matters, including, without limitation, causing the cessation of performance of the construction of the Subtenant Improvements until such time as such matters are corrected.

6.[Intentionally Deleted].

751986.05/WLA 372423-00016/4-6-16/ctl/kmo -9- HCP BTC, LLC[Workletter]

7.Disbursement of Master Lease Allowance. Landlord and Tenant acknowledge and agree that the remaining Master Lease Allowance (which the parties agree is an amount equal to $2,204,830.49 as of the date hereof) may be used for improvements in the Sublet Premises, including the Subtenant Improvements, in accordance with the terms of the Lease. Tenant shall have the right to receive reimbursement directly from Landlord (as opposed to Landlord directly paying Subtenant or any applicable contractors, subcontractors, materialmen or agents of Tenant or Subtenant) for funds actually disbursed by Tenant to Subtenant for the Cost of Improvement (as defined in the Lease) incurred in connection with the Subtenant Improvements and otherwise subject to, and in accordance with, the requirements of the Lease, up to the remaining amount of the Master Lease Allowance.

8.Removable Property. Section 11.2 of the Original Lease shall apply with respect to Subtenant's rights and obligations with respect to the removal of the Subtenant Improvements and restoration of the Sublet Premises. Notwithstanding the foregoing, Subtenant shall not be required to remove Subtenant's Security System from the Sublet Premises upon expiration or earlier termination of the Sublease. Subtenant's Security System shall be surrendered to Landlord in the condition required for such surrender set forth in the Lease. Subtenant shall not be obligated to install or construct any Subtenant Improvements on the second (2^nd) floor of the Sublet Premises; provided, however, that if construction of any Subtenant Improvements on the second (2^nd) floor of the Sublet Premises is commenced (excluding any Subtenant Improvements that are on or within the second (2^nd) floor of the Sublet Premises, but required solely in connection with, or otherwise relate to, Subtenant Improvements on other floors of the Sublet Premises, such as HVAC or electrical work), such Subtenant Improvements shall be diligently pursued to completion. For the avoidance of doubt, the foregoing shall not limit Tenant's (or Subtenant's) obligations on the second (2^nd) floor of the Sublet Premises with respect to repair, maintenance, compliance with laws and similar obligations under the Lease (and Sublease).

9.Notice of Completion. Within ten (10) Calendar Days after the final completion of construction of the Subtenant Improvements, including, without limitation, the completion of any punch list items, Subtenant shall cause a Notice of Completion to be recorded in the office of the Recorder of the County of San Mateo in accordance with Section 8182 of the Civil Code of the State of California or any successor statute, and shall furnish a copy thereof to Landlord and Tenant upon such recordation. If Subtenant fails to do so, either Landlord or Tenant may execute and file the same on behalf of Subtenant as Subtenant's agent for such purpose, at Subtenant's sole cost and expense.

10.No Agency. Nothing contained in this Workletter shall make or constitute Subtenant as the agent of Landlord or Tenant. Nothing contained in this Workletter shall make or constitute Tenant as the agent of Landlord.

11.Survival. Without limiting survival provisions which would otherwise be implied or construed under applicable law, the provisions of Paragraph 5(c) of this Workletter shall survive the termination of the Lease, Sublease, and Consent with respect to matters occurring prior to expiration of the Lease, Sublease or Consent, as the case may be.

751986.05/WLA 372423-00016/4-6-16/ctl/kmo -10- HCP BTC, LLC[Workletter]

12.Time Is Of Essence. Time is of essence in respect of each and every term, covenant and condition of this Workletter.

13.Miscellaneous. All references in this Workletter to a number of days shall be construed to refer to Calendar Days, unless otherwise specified herein.

[SIGNATURES ARE ON NEXT PAGE]

751986.05/WLA 372423-00016/4-6-16/ctl/kmo -11- HCP BTC, LLC[Workletter]

IN WITNESS WHEREOF, the parties have executed this Workletter concurrently with and as of the date of the Consent.

LANDLORD:	HCP BTC, LLC, a Delaware limited liability company By: HCP Estates USA Inc.,           a Delaware corporation           By: /s/ Jonathan Mr. Bergschneider                       Jonathan M. Bergschneider                       Executive Vice President
TENANT:	AMGEN INC., a Delaware corporation By: /s/ David Meline Name: David Meline Its: Executive Vice President and        Chief Financial Officer
SUBTENANT:	PROTHENA BIOSCIENCES INC,  a Delaware corporation By: /s/ Tran Nguyen Name: Tran Nguyen Its: CFO By: /s/ A. W. Homan Name: A. W. Homan Its: CLO & Secretary

751986.05/WLA 372423-00016/4-6-16/ctl/kmo -12- HCP BTC, LLC[Workletter]

Schedule l to Workletter

SUBTENANT IMPROVEMENTS DESCRIPTION

The "Subtenant Improvements" as defined in the Workletter to which this Schedule 1 is attached and in the Workletter described therein shall include, but not necessarily be limited to, the following:

All tenant construction, fixtures, furnishings, etc. to support tenant operations, including, without limitation, use space, offices, lobbies, circulation, restrooms, and all other features, including security systems, not specifically identified as being part of the Warm Shell Condition described in Exhibit C attached to the Sublease.

"Subtenant Improvements" shall not include the design and/or construction of infrastructure, landscaping or other site improvements unless specifically requested by Subtenant or as a result of Subtenant Improvements or Subtenant's requested modifications to existing improvements.

751986.05/WLA 372423-00016/4-6-16/ctl/kmo -1- HCP BTC, LLC[Workletter]

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Dale B. Schenk, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Prothena Corporation plc;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	May 3, 2016	/s/ Dale B. Schenk
		Dale B. Schenk
		President and Chief Executive Officer
		(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Tran B. Nguyen, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Prothena Corporation plc;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	May 3, 2016	/s/ Tran B. Nguyen
		Tran B. Nguyen
		Chief Financial Officer
		(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

AND PRINCIPAL FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to the requirement set forth in Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350), Dale B. Schenk, President and Chief Executive Officer of Prothena Corporation plc (the “Company”) and Tran B. Nguyen, Chief Financial Officer of the Company, each hereby certify that, to the best of his knowledge:

1. The Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2016, to which this Certification is attached as Exhibit 32.1 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	May 3, 2016	/s/ Dale B. Schenk
		Dale B. Schenk
		President and Chief Executive Officer
		(Principal Executive Officer)
		/s/ Tran B. Nguyen
		Tran B. Nguyen
		Chief Financial Officer
		(Principal Financial Officer)

A signed original of this written statement required by Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request.

This certification accompanies the Form 10-K to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Registrant under the Securities Act of 1933 or the Securities Exchange Act of 1934 (whether made before or after the date of the Form 10-K), irrespective of any general incorporation language contained in such filing.

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2016	Apr. 22, 2016
Document Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q1
Trading Symbol	PRTA
Entity Registrant Name	Prothena Corp plc
Entity Central Index Key	0001559053
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Ordinary Shares Outstanding		34,349,208

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 474,252	$ 370,586
Receivable from Roche	1,003	509
Prepaid expenses and other current assets	6,837	6,308
Total current assets	482,092	377,403
Non-current assets:
Property and equipment, net	3,924	3,862
Deferred tax assets	3,294	2,850
Other non-current assets	1,998	1,121
Total non-current assets	9,216	7,833
Total assets	491,308	385,236
Current liabilities:
Accounts payable	7,897	4,519
Accrued research and development	10,970	12,794
Income taxes payable	530	0
Other current liabilities	3,837	4,903
Total current liabilities	23,234	22,216
Non-current liabilities:
Income taxes payable, non-current	98	98
Deferred rent	2,070	2,127
Other liabilities	126	126
Total non-current liabilities	2,294	2,351
Total liabilities	$ 25,528	$ 24,567
Commitments and contingencies (Note 6)
Shareholders’ equity:
Euro deferred shares, €22 nominal value: Authorized shares - 10,000 at March 31, 2016 and December 31, 2015 Issued and outstanding shares - none at March 31, 2016 and December 31, 2015	$ 0	$ 0
Ordinary shares, $0.01 par value: Authorized shares - 100,000,000 at March 31, 2016 and December 31, 2015 Issued and outstanding shares - 34,340,208 and 31,744,102 at March 31, 2016 and December 31, 2015, respectively	343	317
Additional paid-in capital	622,061	489,455
Accumulated deficit	(156,624)	(129,103)
Total shareholders’ equity	465,780	360,669
Total liabilities and shareholders’ equity	$ 491,308	$ 385,236

XML

Condensed Consolidated Balance Sheets (Parenthetical)	Mar. 31, 2016 $ / shares shares	Mar. 31, 2016 € / shares shares	Dec. 31, 2015 $ / shares shares	Dec. 31, 2015 € / shares shares
Statement of Financial Position [Abstract]
Euro deferred shares, nominal value (in euros per share) | € / shares		€ 22		€ 22
Euro deferred shares, number of shares authorized	10,000	10,000	10,000	10,000
Euro deferred shares, number of issued shares	0	0	0	0
Euro deferred shares, number of outstanding shares	0	0	0	0
Ordinary shares, par value (in dollars per share) | $ / shares	$ 0.01		$ 0.01
Ordinary shares, number of authorized shares	100,000,000	100,000,000	100,000,000	100,000,000
Ordinary shares, number of issued shares	34,340,208	34,340,208	31,744,102	31,744,102
Ordinary shares, number of outstanding shares	34,340,208	34,340,208	31,744,102	31,744,102

XML

Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Income Statement [Abstract]
Collaboration revenue	$ 265	$ 593
Total revenue	265	593
Operating expenses:
Research and development	20,493	10,573
General and administrative	7,182	5,049
Total operating expenses	27,675	15,622
Loss from operations	(27,410)	(15,029)
Other income (expense):
Interest income	277	26
Other income (expense), net	(207)	67
Total other income (expense)	70	93
Loss before income taxes	(27,340)	(14,936)
Provision for income taxes	181	266
Net loss	$ (27,521)	$ (15,202)
Basic and diluted net loss per share	$ (0.81)	$ (0.55)
Shares used to compute basic and diluted net loss per share	34,026	27,401

XML

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Operating activities
Net loss	$ (27,521)	$ (15,202)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization	251	193
Share-based compensation	3,724	1,703
Excess tax benefit from share-based award exercises	(96)	(390)
Deferred income taxes	(445)	(369)
Loss on sublease	0	261
Changes in operating assets and liabilities:
Receivable from Roche	(494)	372
Other assets	(1,181)	933
Accounts payable, accruals and other liabilities	609	(2,221)
Net cash used in operating activities	(25,153)	(14,720)
Investing activities
Purchases of property and equipment	(238)	(28)
Net cash used in investing activities	(238)	(28)
Financing activities
Proceeds from issuance of ordinary shares in public offering, net	128,785	0
Proceeds from issuance of ordinary shares upon exercise of stock options	176	636
Excess tax benefit from share-based award exercises	96	390
Net cash provided by financing activities	129,057	1,026
Net increase in cash and cash equivalents	103,666	(13,722)
Cash and cash equivalents, beginning of the year	370,586	293,579
Cash and cash equivalents, end of the period	474,252	279,857
Supplemental disclosures of cash flow information
Cash paid for income taxes, net of refunds	(383)	442
Supplemental disclosures of non-cash investing and financing activities
Acquisition of property and equipment included in accounts payable and accrued liabilities	260	0
Offering costs included in accounts payable and accrued liabilities	8	117
Receivable from stock option exercises	$ 0	$ 16

XML

Organization

3 Months Ended

Mar. 31, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization

Organization

Description of Business

Prothena Corporation plc and its subsidiaries (“Prothena” or the “Company”) is a global, late-stage clinical biotechnology company seeking to fundamentally change the course of progressive diseases, with its clinical pipeline of novel therapeutic antibodies. The Company's clinical pipeline of antibody-based product candidates target a number of potential indications including AL amyloidosis (NEOD001), Parkinson’s disease and other related synucleinopathies (PRX002) and inflammatory diseases including psoriasis (PRX003).

The Company is a public limited company formed under the laws of Ireland. The Company separated from Elan Corporation, plc (“Elan”) on December 20, 2012. After the separation from Elan, and the related distribution of the Company's ordinary shares to Elan’s shareholders, the Company's ordinary shares commenced trading on The Nasdaq Global Market under the symbol “PRTA” on December 21, 2012 and currently trade on The Nasdaq Global Select Market.

Liquidity and Business Risks

As of March 31, 2016, the Company had an accumulated deficit of $156.6 million and cash and cash equivalents of $474.3 million.

Based on the Company's business plans, management believes that the Company's cash and cash equivalents at March 31, 2016 are sufficient to meet its obligations for at least the next twelve months. To operate beyond such period, or if the Company elects to increase its spending on development programs significantly above current long-term plans or enters into potential licenses and or other acquisitions of complementary technologies, products or companies, the Company may need additional capital. The Company expects to continue to finance future cash needs that exceed its cash from operating activities primarily through its current cash and cash equivalents, its collaboration with Roche, and to the extent necessary, through proceeds from public or private equity or debt financings, loans and other collaborative agreements with corporate partners or other arrangements.

The Company is subject to a number of risks, including but not limited to: the uncertainty of the Company's research and development (“R&D”) efforts resulting in future successful commercial products; obtaining regulatory approval for its product candidates; its ability to successfully commercialize its product candidates, if approved; significant competition from larger organizations; reliance on the proprietary technology of others; dependence on key personnel; uncertain patent protection; dependence on corporate partners and collaborators; and possible restrictions on reimbursement from governmental agencies and healthcare organizations, as well as other changes in the healthcare industry.

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Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2016

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Basis of Preparation and Presentation of Financial Information

These accompanying interim Condensed Consolidated Financial Statements have been prepared in accordance with the accounting principles generally accepted in the U.S. (“GAAP”) and with the instructions for Form 10-Q and Regulations S-X statements. Accordingly, they do not include all of the information and notes required for complete financial statements. These interim Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto contained in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 25, 2016 (the "2015 Form 10-K"). These Condensed Consolidated Financial Statements are presented in U.S. dollars, which is the functional currency of the Company and its consolidated subsidiaries. These unaudited condensed consolidated financial statements include the accounts of the Company and its consolidated subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Unaudited Interim Financial Information

The accompanying interim Condensed Consolidated Financial Statements and related disclosures are unaudited, have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for a fair presentation of the results of operations for the periods presented. The year-end condensed balance sheet data was derived from audited financial statements, however certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. The condensed consolidated results of operations for any interim period are not necessarily indicative of the results to be expected for the full year or for any other future year or interim period.

Use of Estimates

The preparation of the Condensed Consolidated Financial Statements in conformity with GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures. On an ongoing basis, management evaluates its estimates, including critical accounting policies or estimates related to revenue recognition, share-based compensation and research and development expenses. The Company bases its estimates on historical experience and on various other market specific and other relevant assumptions that management believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Because of the uncertainties inherent in such estimates, actual results may differ materially from these estimates.

Significant Accounting Policies

There were no significant changes to the accounting policies during the three months ended March 31, 2016, from the significant accounting policies described in Note 2 of the "Notes to Consolidated Financial Statements" in the 2015 Form 10-K.

Segment and Concentration of Risks

The Company operates in one segment. The Company’s chief operating decision maker (the “CODM”), its Chief Executive Officer, manages the Company’s operations on a consolidated basis for purposes of allocating resources. When evaluating the Company’s financial performance, the CODM reviews all financial information on a consolidated basis.

Financial instruments that potentially subject the Company to concentration of credit risk consist of cash and cash equivalents and accounts receivable. The Company places its cash equivalents with high credit quality financial institutions and by policy, limits the amount of credit exposure with any one financial institution. Deposits held with banks may exceed the amount of insurance provided on such deposits. The Company has not experienced any losses on its deposits of cash and cash equivalents and its credit risk exposure is up to the extent recorded on the Company's consolidated balance sheet.

Receivable from Roche as of March 31, 2016 and December 31, 2015 are amounts due from Roche entities located in the U.S. and Switzerland under the License Agreement that became effective January 22, 2014. Revenue recorded in the Statements of Operations consists of reimbursement from Roche for research and development services. Credit risk exposure is up to the extent of amounts recorded on the Company's Consolidated Balance Sheet.

As of March 31, 2016, $3.1 million of the Company's long-lived assets were held in the U.S. and $0.8 million were held in Ireland.

The Company does not own or operate facilities for the manufacture, storage, testing or distribution of preclinical or clinical supplies of any of its drug candidates. The Company instead contracted with and relies on third-parties to manufacture, store, test and distribute all preclinical development and clinical supplies of its drug candidates, and the Company plans to continue to do so for the foreseeable future. Currently, the Company has a single source of preclinical or clinical supplies for each of its drug candidates. A delay or inability to obtain such supply could have an adverse effect on the Company's business, financial condition and results of operations.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2014-09 (ASU 2014-09), Revenue from Contracts with Customers. ASU 2014-09 supersedes the revenue recognition requirements in Revenue Recognition (Topic 605), and requires entities to recognize revenue in a way that depicts the transfer of promised goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, which for the Company is January 1, 2018. Early adoption is permitted after January 1, 2017. The standard permits the use of either retrospective or cumulative effect transition method. The Company is currently evaluating the potential impact the adoption of ASU 2014-09 will have on its consolidated financial statements. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting.

In February 2016, the FASB issued Accounting Standards Update 2016-02 (ASU 2016-02), Leases (ASC Topic 842), which will require lessees to recognize assets and liabilities for leases with lease terms of more than 12 months. Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. However, unlike current GAAP, which requires only capital leases to be recognized on the balance sheet, the new guidance will require both types of leases to be recognized on the balance sheet. ASU 2016-02 is effective for annual periods beginning after December 15, 2018, and interim periods within those years. Early adoption is permitted for all entities. The standard requires that entities use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. Entities have the option to use certain relief. Full retrospective application is prohibited. The Company is evaluating the potential impact the adoption of ASU 2016-02 will have on its consolidated financial statements.

In March 2016, the FASB issued Accounting Standards Update 2016-09 (ASU 2016-09), Improvements to Employee Share-Based Payment Accounting. Under the new guidance, APIC pools will be eliminated and entities will be required to recognize the income tax effects of share-based awards in the income statement when share-based awards vest or are settled. ASU 2016-09 also changes the classification of excess tax benefits on the statement of cash flows. It also will allow an employer to repurchase more of an employee's shares than it can currently for tax withholding purposes without triggering liability accounting and to make a policy election to either account for forfeitures as they occur or to continue the current practice of estimating forfeitures at the time of grant. ASU 2016-09 is effective prospectively for fiscal years beginning after December 15, 2016, and interim periods within those years. Early adoption is permitted, but all of the guidance must be adopted in the same period. The Company is evaluating the impact the adoption of ASU 2016-09 will have on its consolidated financial statements.

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Fair Value Measurements

3 Months Ended

Mar. 31, 2016

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

The Company measures certain financial assets and liabilities at fair value on a recurring basis, including cash equivalents. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. A three-tier fair value hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value:

Level 1 —    Observable inputs such as quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 — Include other inputs that are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant inputs are observable in the market or can be derived from observable market data. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest rate curves, foreign exchange rates, and credit ratings.

Level 3 — Unobservable inputs that are supported by little or no market activities, which would require the Company to develop its own assumptions.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The carrying amounts of certain financial instruments, such as cash equivalents, accounts receivable, accounts payable and accrued liabilities, approximate fair value due to their relatively short maturities, and low market interest rates, if applicable.

Based on the fair value hierarchy, the Company classifies its cash equivalents within Level 1. This is because the Company values its cash equivalents using quoted market prices. The Company’s Level 1 securities consist of $425.6 million and $320.5 million in money market funds included in cash and cash equivalents at March 31, 2016 and December 31, 2015, respectively.

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Composition of Certain Balance Sheet Items

3 Months Ended

Mar. 31, 2016

Composition of Certain Balance Sheet Items [Abstract]

Composition of Certain Balance Sheet Items

Composition of Certain Balance Sheet Items

Property and Equipment, net

Property and equipment, net consisted of the following (in thousands):

	March 31,			December 31,
	2016			2015
Machinery and equipment	$	6,311		$	6,210
Leasehold improvements	3,040			2,828
Purchased computer software	167			167
	9,518			9,205
Less: accumulated depreciation and amortization	(5,594		)	(5,343		)
Property and equipment, net	$	3,924		$	3,862

Depreciation expense was $0.3 million, and $0.2 million for the three months ended March 31,2016 and 2015, respectively.

Other Current Liabilities

Other current liabilities consisted of the following (in thousands):

	March 31,		December 31,
	2016		2015
Payroll and related expenses	$	2,083	$	3,774
Professional services	934		325
Deferred rent	304		284
Other	516		520
Other current liabilities	$	3,837	$	4,903

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Net Income (Loss) Per Ordinary Share

3 Months Ended

Mar. 31, 2016

Earnings Per Share [Abstract]

Net Income (Loss) Per Ordinary Share

Net income (loss) Per Ordinary Share

Basic net income (loss) per ordinary share is calculated by dividing net income (loss) by the weighted-average number of ordinary shares outstanding during the period. Shares used in diluted net income per ordinary share would include the dilutive effect of ordinary shares potentially issuable upon the exercise of stock options outstanding. However, potentially issuable ordinary shares are not used in computing diluted net loss per ordinary share as their effect would be anti-dilutive due to the loss recorded during the three months endedMarch 31, 2016 and 2015, and therefore diluted net loss per share is equal to basic net loss per share.

Net income (loss) per ordinary share was determined as follows (in thousands, except per share amounts):

	Three Months Ended March 31,
	2016			2015
Numerator:
Net loss	$	(27,521	)	$	(15,202	)
Denominator:
Weighted-average ordinary shares outstanding	34,026			27,401
Net loss per share:
Basic and diluted net loss per share	$	(0.81	)	$	(0.55	)

The equivalent ordinary shares not included in diluted net income (loss) per share because their effect would be anti-dilutive are as follows (in thousands):

	Three Months Ended March 31,
	2016	2015
Stock options to purchase ordinary shares	4,097	3,312

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Commitment and Contingencies

3 Months Ended

Mar. 31, 2016

Commitments and Contingencies Disclosure [Abstract]

Commitment and Contingencies

Commitments and Contingencies

Operating Leases

The Company currently leases 50,400 square feet of office and research and development space located South San Francisco, California (the “Current Facility”), which lease expires on November 30, 2020.

In March 2016, the Company entered into a noncancelable operating sublease (the "Lease") to lease 128,751 square feet of office and laboratory space in South San Francisco, California (the “New Facility”) from Amgen Inc. (the "Landlord"). The Lease became effective on March 28, 2016. The Lease includes a free rent period and escalating rent payments and has a term that expires on December 31, 2023, unless terminated earlier. The Lease provides that the Company's obligation to pay rent shall commence on the earlier of (i) the date that certain improvements to the New Facility are completed and (ii) August 1, 2016 (the “Rent Commencement Date”). The Company is obligated to make lease payments totaling approximately $39.2 million over the lease term. The Lease further provides that the Company is obligated to pay to the Landlord certain costs, including taxes and operating expenses.

The Company will be entitled to an improvement allowance of up to $14.2 million, to be used for costs incurred by the Company to construct certain improvements to the New Facility and to prepare for the Company's occupancy of the New Facility.

The Company obtained a standby letter of credit in April 2016 in the initial amount of $4.1 million, which may be drawn down by the Landlord in the event the Company fails to fully and faithfully perform all of its obligations under the Lease and to compensate the Landlord for all losses and damages the Landlord may suffer as a result of the occurrence of any default on the part of Company not cured within the applicable cure period.

As of March 31, 2016, the lease term has not commenced as the Company did not have the right to use or control physical access to the New Facility and therefore no accounting relating to the Lease has been recorded in the Balance Sheet as of March 31, 2016. Subsequently, in April 2016, the Company took possession of the New Facility.

The operating lease for the Current Facility has an estimated annual rent payment of approximately $2.1 million. In December 2014, the Company entered into a noncancelable operating sublease (the "Sublease") with a third party to sublease a portion of its current facility to that party. This Sublease has a three-year term which commenced in January 2015 (with options to extend for another year). The Company recognized a loss of $0.4 million in the three months ended March 31, 2015 for the cash difference between the total payments associated with the Sublease, including executory costs, and the amount of Sublease rental receipts over the Sublease term. The Company expects to receive future minimum payments from this Sublease of $0.4 million and $0.3 million in 2016 and 2017, respectively, which is an offset to the lease payments below.

In August 2015, the Company entered into an agreement to lease 6,258 square feet of office space in Dublin, Ireland. This lease has a term of 10 years from commencement and provides for an option to terminate the lease at the end of the fifth year of the term. It is also subject to a rent review every five years. As a result of this noncancelable operating lease, the Company is obligated to make lease payments totaling approximately €2.0 million, or $2.3 million as converted using exchange rate as of March 31, 2016, over the term of the lease, assuming current lease payments. Of this obligation, approximately $2.2 million remain outstanding as of March 31, 2016.

Future minimum payments under noncancelable operating leases (including the Lease) and future minimum rentals to be received under the Sublease as of March 31, 2016, are as follows (in thousands):

Year Ended December 31,	Operating Lease		Sublease Rental
2016 (nine months)	$	1,633	$	(392	)
2017	5,527		(316		)
2018	7,246		—
2019	8,218		—
2020	8,271		—
Thereafter	20,147		—
Total	$	51,042	$	(708	)

The Company recognizes rent expense on a straight-line basis over the noncancelable lease term and records the difference between cash rent payments and the recognition of rent expense as a deferred rent liability. Where leases contain escalation clauses, rent abatements, and/or concessions, such as rent holidays and landlord or tenant incentives or allowances, the Company applies them in the determination of straight-line rent expense over the lease term. The Company records the tenant improvement allowance as deferred rent and associated expenditures as leasehold improvements that are being amortized over the shorter of their estimated useful life or the term of the lease. The Company records payments received from the Sublease as offset against the current period rent expense.

Commitments

In the normal course of business, the Company enters into various firm purchase commitments primarily related to research and development activities. As of March 31, 2016, the Company had non-cancelable purchase commitments to suppliers for $12.7 million of which $4.0 million is included in accrued current liabilities, and contractual obligations under license agreements of $1.4 million of which $0.1 million is included in accrued current liabilities. The following is a summary of the Company's non-cancelable purchase commitments and contractual obligations as of March 31, 2016 (in thousands):

	Total		2016		2017		2018		2019		2020		Thereafter
Purchase Obligations	$	12,672	$	12,504	$	70	$	36	$	30	$	32	$	—
Contractual obligations under license agreements (1)	1,440		190		120		120		120		90		800
Total	$	14,112	$	12,694	$	190	$	156	$	150	$	122	$	800

⁽¹⁾ Excludes future obligations pursuant to the cost-sharing arrangement under the Company's License Agreement with Roche. Amounts of such obligations, if any, cannot be determined at this time.

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Roche License Agreement

3 Months Ended

Mar. 31, 2016

Collaborative Agreement [Abstract]

Roche License Agreements

Roche License Agreement

In December 2013, the Company entered into the License Agreement with Roche to develop and commercialize certain antibodies that target α-synuclein, including PRX002. The License Agreement was evaluated under ASC 605-25, "Multiple Element Arrangements". Under this agreement, the Company recognizes research reimbursement as collaboration revenue as earned. The Company recognized $0.3 million as collaboration revenue for research reimbursement from Roche for the three months ended March 31, 2016, as compared to $0.4 million for the three months ended March 31, 2015. Cost sharing payments to Roche are recorded as R&D expenses. The Company recognized $0.5 million in R&D expenses for payments made to Roche during the three months ended March 31, 2016, as compared to $0.5 million for the three months ended March 31, 2015. Reimbursement for development costs from Roche under the cost-sharing arrangement were allocated between license revenue and an offset to R&D expenses based on the relative selling price method until the full allocated consideration of $35.6 million was recognized as license revenue, after which the full reimbursement is recorded as an offset to R&D expenses. In the year ended December 31, 2015, the Company reached the full allocated consideration of $35.6 million recognized as license revenue; accordingly, future development revenue will be recorded as an offset to R&D expenses. Reimbursement for development costs from Roche during the three months ended March 31, 2016 was $1.2 million, of which $nil, was recognized as collaboration license revenue and $1.2 million, was recognized as an offset to R&D expenses. Reimbursement for development costs from Roche during the three months endedMarch 31, 2015 was $1.5 million, of which $0.2 million was recognized as collaboration license revenue and $1.3 million, respectively were recognized as an offset to R&D expenses.

The License Agreement provides that Roche would make an upfront payment to the Company of $30.0 million, which was received in February 2014, and the clinical milestone payment of $15.0 million triggered by the initiation of the Phase 1 study for PRX002 in the clinic, which was received in May 2014. The Company recognized the $30.0 million upfront payment from Roche as collaboration license revenue in 2014 and concluded that the $15.0 million clinical milestone is consistent with the definition of a substantive milestone included in ASU No. 2010-17, "Milestone Method of Revenue Recognition". Factors considered in this determination included scientific and regulatory risk that must be overcome to achieve each milestone, the level of effort and investment required to achieve the milestone, and the monetary value attributed to the milestone.

Accordingly, the Company recognized payments related to the achievement of this milestone when the milestone was achieved. The milestone payment was allocated to the units of accounting based on the relative selling price method for income statement classification purposes. The Company did not achieve any of the clinical and regulatory milestones under the License Agreement during the three months endedMarch 31, 2016 and 2015.

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Shareholders' Equity

3 Months Ended

Mar. 31, 2016

Equity [Abstract]

Shareholders' Equity

Shareholders' Equity

Ordinary Shares

As of March 31, 2016, the Company had 100,000,000 ordinary shares authorized for issuance with a par value of $0.01 per ordinary share and 34,340,208 ordinary shares issued and outstanding. Each ordinary share is entitled to one vote and, on a pro rata basis, to dividends when declared and the remaining assets of the Company in the event of a winding up.

Euro Deferred Shares

As of March 31, 2016, the Company had 10,000 Euro Deferred Shares authorized for issuance with a nominal value of €22 per share. No Euro Deferred Shares are outstanding at March 31, 2016. The rights and restrictions attaching to the Euro Deferred Shares rank pari passu with the ordinary shares and are treated as a single class in all respects.

January 2016 Offering

In January 2016, the Company completed an underwritten public offering of an aggregate of 2,587,500 of its ordinary shares at a public offering price of $53.00 per ordinary share. The Company received aggregate net proceeds of approximately $128.6 million, after deducting the underwriting discount and estimated offering costs.

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Share-Based Compensation

3 Months Ended

Mar. 31, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation

Share-Based Compensation

Amended and Restated 2012 Long Term Incentive Plan (“LTIP”)

Employees and consultants of the Company, its subsidiaries and affiliates, as well as members of the Board, are eligible to receive equity awards under the LTIP. The LTIP provides for the grant of stock options, including incentive stock options and nonqualified stock options, stock appreciation rights (“SARS”), restricted shares, restricted share units ("RSUs"), cash or stock-based performance awards and other share-based awards to eligible individuals. Options under the LTIP may be granted for periods up to ten years. All options issued to date have had a ten year life.

The Company granted 1,008,475 and 785,550 share options during the three months endedMarch 31, 2016 and 2015, respectively, under the LTIP. The Company's option awards generally vest over four years. The aggregate number of ordinary shares authorized for issuance under the LTIP is 5,550,000 ordinary shares and as of March 31, 2016, 813,820 ordinary shares remain available for grant and options to purchase 4,097,233 ordinary shares granted from the LTIP were outstanding with a weighted-average exercise price of approximately $24.38 per share. In February 2016, our Board approved an increase of 1,850,000 additional ordinary shares authorized for issuance under the LTIP, subject to shareholder approval.

Share-based Compensation Expense

The Company estimates the fair value of share-based compensation on the date of grant using an option-pricing model. The Company uses the Black-Scholes model to value share-based compensation, excluding RSUs, which the Company values using the fair market value of its ordinary shares on the date of grant. The Black-Scholes option-pricing model determines the fair value of share-based payment awards based on the share price on the date of grant and is affected by assumptions regarding a number of complex and subjective variables. These variables include, but are not limited to, the Company’s share price, volatility over the expected life of the awards and actual and projected employee stock option exercise behaviors. Since the Company does not have sufficient historical employee share option exercise data, the simplified method has been used to estimate the expected life of all options. The expected volatility was based on a combination of historical volatility for the Company's stock and the historical volatilities of several of the Company's publicly traded comparable companies. Although the fair value of share options granted by the Company is estimated by the Black-Scholes model, the estimated fair value may not be indicative of the fair value observed in a willing buyer and seller market transaction.

As share-based compensation expense recognized in the Condensed Consolidated Financial Statements is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from estimates. Forfeitures were estimated based on estimated future turnover and historical experience.

Share-based compensation expense will continue to have an adverse impact on the Company’s results of operations, although it will have no impact on its overall financial position. The amount of unearned share-based compensation currently estimated to be expensed from now through the year 2019 related to unvested share-based payment awards at March 31, 2016 is $49.1 million. The weighted-average period over which the unearned share-based compensation is expected to be recognized is 2.8 years. If there are any modifications or cancellations of the underlying unvested securities, the Company may be required to accelerate and/or increase any remaining unearned share-based compensation expense. Future share-based compensation expense and unearned share-based compensation will increase to the extent that the Company grants additional equity awards.

Share-based compensation expense recorded in these Condensed Consolidated Financial Statements for the three months endedMarch 31, 2016 and 2015 was based on awards granted under the LTIP. The following table summarizes share-based compensation expense for the periods presented (in thousands):

	Three Months Ended March 31,
	2016		2015
Research and development(1)	$	1,419	$	758
General and administrative	2,305		945
Total share-based compensation expense	$	3,724	$	1,703

_________________

⁽¹⁾  Includes $nil and $42,000 for the three months endedMarch 31, 2016 and 2015, respectively, of share-based compensation expense related to options granted to a consultant.

The fair value of the options granted to employees and non-employee directors during the three months endedMarch 31, 2016 and 2015 was estimated as of the grant date using the Black-Scholes option-pricing model assuming the weighted-average assumptions listed in the following table:

	Three Months Ended March 31,
	2016	2015
Expected volatility	74.8%	76.2%
Risk-free interest rate	1.4%	1.8%
Expected dividend yield	—%	—%
Expected life (in years)	6.0	6.0
Weighted average grant date fair value	$22.94	$18.48

The fair value of employee stock options is being amortized on a straight-line basis over the requisite service period for each award. Each of the inputs discussed above is subjective and generally requires significant management judgment to determine.

The following table summarizes the Company’s share option activity during the three months ended March 31, 2016:

	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2015	3,142,364		$	21.36	8.14	$	146,917
Granted	1,008,475		35.03
Exercised	(8,606	)	20.65
Canceled	(45,000	)	52.20
Outstanding at March 31, 2016	4,097,233		$	24.38	8.29	$	71,988
Vested and expected to vest at March 31, 2016	3,912,442		$	23.97	8.25	$	70,254
Vested at March 31, 2016	1,491,495		$	13.87	7.32	$	40,696

During the three months ended March 31, 2016 and 2015, the total intrinsic value of options exercised was $0.3 million and $2.2 million, respectively, determined as of the date of exercise.

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Income Taxes

3 Months Ended

Mar. 31, 2016

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The major taxing jurisdictions for the Company are Ireland and the U.S. The Company's income tax provision was $181,000 and $266,000 for the three months ended March 31, 2016 and 2015, respectively. The provision for income taxes differs from the statutory tax rate of 12.5% applicable to Ireland primarily due to Irish net operating losses for which a tax provision benefit is not recognized and due to U.S. income taxed at different rates. The income tax provision reflects the estimate of the effective tax rate expected to be applicable for the full year and the Company re-evaluates this estimate each quarter based on its forecasted tax expense for the full year. Jurisdictions with a projected loss for the year where no tax benefit can be recognized are excluded from the estimated annual effective tax rate.

The Company's deferred tax assets are composed primarily of its Irish subsidiaries' net operating loss carryovers, state net operating loss carryforwards available to reduce future taxable income of the Company's U.S. subsidiary, federal and California research and development credit carryforward, shared-based compensation and other temporary differences. The Company maintains a valuation allowance against certain U.S. federal and state and Irish deferred tax assets. Each reporting period, the Company evaluates the need for a valuation allowance on its deferred tax assets by jurisdiction.

No provision for income tax in Ireland has been recognized on undistributed earnings of the Company's foreign subsidiaries because the Company considers such earnings to be indefinitely reinvested.

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2016

Accounting Policies [Abstract]

Basis of Preparation and Presentation of Financial Information

Basis of Preparation and Presentation of Financial Information

These accompanying interim Condensed Consolidated Financial Statements have been prepared in accordance with the accounting principles generally accepted in the U.S. (“GAAP”) and with the instructions for Form 10-Q and Regulations S-X statements. Accordingly, they do not include all of the information and notes required for complete financial statements. These interim Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto contained in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 25, 2016 (the "2015 Form 10-K"). These Condensed Consolidated Financial Statements are presented in U.S. dollars, which is the functional currency of the Company and its consolidated subsidiaries. These unaudited condensed consolidated financial statements include the accounts of the Company and its consolidated subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Unaudited Interim Financial Information

The accompanying interim Condensed Consolidated Financial Statements and related disclosures are unaudited, have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for a fair presentation of the results of operations for the periods presented. The year-end condensed balance sheet data was derived from audited financial statements, however certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. The condensed consolidated results of operations for any interim period are not necessarily indicative of the results to be expected for the full year or for any other future year or interim period.

Use of Estimates

Use of Estimates

The preparation of the Condensed Consolidated Financial Statements in conformity with GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures. On an ongoing basis, management evaluates its estimates, including critical accounting policies or estimates related to revenue recognition, share-based compensation and research and development expenses. The Company bases its estimates on historical experience and on various other market specific and other relevant assumptions that management believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Because of the uncertainties inherent in such estimates, actual results may differ materially from these estimates.

Segment and Concentration of Risks

Segment and Concentration of Risks

The Company operates in one segment. The Company’s chief operating decision maker (the “CODM”), its Chief Executive Officer, manages the Company’s operations on a consolidated basis for purposes of allocating resources. When evaluating the Company’s financial performance, the CODM reviews all financial information on a consolidated basis.

Financial instruments that potentially subject the Company to concentration of credit risk consist of cash and cash equivalents and accounts receivable. The Company places its cash equivalents with high credit quality financial institutions and by policy, limits the amount of credit exposure with any one financial institution. Deposits held with banks may exceed the amount of insurance provided on such deposits. The Company has not experienced any losses on its deposits of cash and cash equivalents and its credit risk exposure is up to the extent recorded on the Company's consolidated balance sheet.

Receivable from Roche as of March 31, 2016 and December 31, 2015 are amounts due from Roche entities located in the U.S. and Switzerland under the License Agreement that became effective January 22, 2014. Revenue recorded in the Statements of Operations consists of reimbursement from Roche for research and development services. Credit risk exposure is up to the extent of amounts recorded on the Company's Consolidated Balance Sheet.

As of March 31, 2016, $3.1 million of the Company's long-lived assets were held in the U.S. and $0.8 million were held in Ireland.

The Company does not own or operate facilities for the manufacture, storage, testing or distribution of preclinical or clinical supplies of any of its drug candidates. The Company instead contracted with and relies on third-parties to manufacture, store, test and distribute all preclinical development and clinical supplies of its drug candidates, and the Company plans to continue to do so for the foreseeable future. Currently, the Company has a single source of preclinical or clinical supplies for each of its drug candidates. A delay or inability to obtain such supply could have an adverse effect on the Company's business, financial condition and results of operations.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2014-09 (ASU 2014-09), Revenue from Contracts with Customers. ASU 2014-09 supersedes the revenue recognition requirements in Revenue Recognition (Topic 605), and requires entities to recognize revenue in a way that depicts the transfer of promised goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, which for the Company is January 1, 2018. Early adoption is permitted after January 1, 2017. The standard permits the use of either retrospective or cumulative effect transition method. The Company is currently evaluating the potential impact the adoption of ASU 2014-09 will have on its consolidated financial statements. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting.

In February 2016, the FASB issued Accounting Standards Update 2016-02 (ASU 2016-02), Leases (ASC Topic 842), which will require lessees to recognize assets and liabilities for leases with lease terms of more than 12 months. Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. However, unlike current GAAP, which requires only capital leases to be recognized on the balance sheet, the new guidance will require both types of leases to be recognized on the balance sheet. ASU 2016-02 is effective for annual periods beginning after December 15, 2018, and interim periods within those years. Early adoption is permitted for all entities. The standard requires that entities use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. Entities have the option to use certain relief. Full retrospective application is prohibited. The Company is evaluating the potential impact the adoption of ASU 2016-02 will have on its consolidated financial statements.

In March 2016, the FASB issued Accounting Standards Update 2016-09 (ASU 2016-09), Improvements to Employee Share-Based Payment Accounting. Under the new guidance, APIC pools will be eliminated and entities will be required to recognize the income tax effects of share-based awards in the income statement when share-based awards vest or are settled. ASU 2016-09 also changes the classification of excess tax benefits on the statement of cash flows. It also will allow an employer to repurchase more of an employee's shares than it can currently for tax withholding purposes without triggering liability accounting and to make a policy election to either account for forfeitures as they occur or to continue the current practice of estimating forfeitures at the time of grant. ASU 2016-09 is effective prospectively for fiscal years beginning after December 15, 2016, and interim periods within those years. Early adoption is permitted, but all of the guidance must be adopted in the same period. The Company is evaluating the impact the adoption of ASU 2016-09 will have on its consolidated financial statements.

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Composition of Certain Balance Sheet Items (Tables)

3 Months Ended

Mar. 31, 2016

Composition of Certain Balance Sheet Items [Abstract]

Schedule of Property and Equipment

Property and Equipment, net

Property and equipment, net consisted of the following (in thousands):

	March 31,			December 31,
	2016			2015
Machinery and equipment	$	6,311		$	6,210
Leasehold improvements	3,040			2,828
Purchased computer software	167			167
	9,518			9,205
Less: accumulated depreciation and amortization	(5,594		)	(5,343		)
Property and equipment, net	$	3,924		$	3,862

Depreciation expense was $0.3 million, and $0.2 million for the three months ended March 31,2016 and 2015, respectively.

Schedule of Other Current Liabilities

Other Current Liabilities

Other current liabilities consisted of the following (in thousands):

	March 31,		December 31,
	2016		2015
Payroll and related expenses	$	2,083	$	3,774
Professional services	934		325
Deferred rent	304		284
Other	516		520
Other current liabilities	$	3,837	$	4,903

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Net Income (Loss) Per Ordinary Share (Tables)

3 Months Ended

Mar. 31, 2016

Earnings Per Share [Abstract]

Calculation of Basic and Diluted Net Income or Loss Per Ordinary Share

Net income (loss) per ordinary share was determined as follows (in thousands, except per share amounts):

	Three Months Ended March 31,
	2016			2015
Numerator:
Net loss	$	(27,521	)	$	(15,202	)
Denominator:
Weighted-average ordinary shares outstanding	34,026			27,401
Net loss per share:
Basic and diluted net loss per share	$	(0.81	)	$	(0.55	)

Ordinary Shares Equivalent Not Included in Diluted Net Loss Per Share

The equivalent ordinary shares not included in diluted net income (loss) per share because their effect would be anti-dilutive are as follows (in thousands):

	Three Months Ended March 31,
	2016	2015
Stock options to purchase ordinary shares	4,097	3,312

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Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2016

Commitments and Contingencies Disclosure [Abstract]

Schedule of Future Minimum Rental Payments for Operating Leases

Future minimum payments under noncancelable operating leases (including the Lease) and future minimum rentals to be received under the Sublease as of March 31, 2016, are as follows (in thousands):

Year Ended December 31,	Operating Lease		Sublease Rental
2016 (nine months)	$	1,633	$	(392	)
2017	5,527		(316		)
2018	7,246		—
2019	8,218		—
2020	8,271		—
Thereafter	20,147		—
Total	$	51,042	$	(708	)

Contractual Obligation, Fiscal Year Maturity Schedule

The following is a summary of the Company's non-cancelable purchase commitments and contractual obligations as of March 31, 2016 (in thousands):

	Total		2016		2017		2018		2019		2020		Thereafter
Purchase Obligations	$	12,672	$	12,504	$	70	$	36	$	30	$	32	$	—
Contractual obligations under license agreements (1)	1,440		190		120		120		120		90		800
Total	$	14,112	$	12,694	$	190	$	156	$	150	$	122	$	800

⁽¹⁾ Excludes future obligations pursuant to the cost-sharing arrangement under the Company's License Agreement with Roche. Amounts of such obligations, if any, cannot be determined at this time.

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Share-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2016

Summary of Share-Based Compensation Expense

The following table summarizes share-based compensation expense for the periods presented (in thousands):

	Three Months Ended March 31,
	2016		2015
Research and development(1)	$	1,419	$	758
General and administrative	2,305		945
Total share-based compensation expense	$	3,724	$	1,703

_________________

⁽¹⁾  Includes $nil and $42,000 for the three months endedMarch 31, 2016 and 2015, respectively, of share-based compensation expense related to options granted to a consultant.

Amended and Restated 2012 Long Term Incentive Plan [Member]

Fair Value of Options Granted

The fair value of the options granted to employees and non-employee directors during the three months endedMarch 31, 2016 and 2015 was estimated as of the grant date using the Black-Scholes option-pricing model assuming the weighted-average assumptions listed in the following table:

	Three Months Ended March 31,
	2016	2015
Expected volatility	74.8%	76.2%
Risk-free interest rate	1.4%	1.8%
Expected dividend yield	—%	—%
Expected life (in years)	6.0	6.0
Weighted average grant date fair value	$22.94	$18.48

Summary of Company's Share Option Activity

The following table summarizes the Company’s share option activity during the three months ended March 31, 2016:

	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2015	3,142,364		$	21.36	8.14	$	146,917
Granted	1,008,475		35.03
Exercised	(8,606	)	20.65
Canceled	(45,000	)	52.20
Outstanding at March 31, 2016	4,097,233		$	24.38	8.29	$	71,988
Vested and expected to vest at March 31, 2016	3,912,442		$	23.97	8.25	$	70,254
Vested at March 31, 2016	1,491,495		$	13.87	7.32	$	40,696

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Organization - Additional Information (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015	Mar. 31, 2015	Dec. 31, 2014
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Accumulated deficit	$ 156,624	$ 129,103
Cash and cash equivalents	$ 474,252	$ 370,586	$ 279,857	$ 293,579

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Summary of Significant Accounting Policies Summary of Significant Accounting Policies (Details) $ in Millions	3 Months Ended
	Mar. 31, 2016 USD ($) segment
Concentration Risk [Line Items]
Number of operating segments | segment	1
UNITED STATES
Concentration Risk [Line Items]
Long-lived assets	$ 3.1
IRELAND
Concentration Risk [Line Items]
Long-lived assets	$ 0.8

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Fair Value Measurements - Additional Information (Details) - USD ($) $ in Millions	Mar. 31, 2016	Dec. 31, 2015
Level 1 [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Money market funds at carrying value	$ 425.6	$ 320.5

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Composition of Certain Balance Sheet Items - Schedule of Property and Equipment (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Composition of Certain Balance Sheet Items [Abstract]
Machinery and equipment	$ 6,311	$ 6,210
Leasehold improvements	3,040	2,828
Purchased computer software	167	167
Property and equipment, gross	9,518	9,205
Less: accumulated depreciation and amortization	(5,594)	(5,343)
Property and equipment, net	$ 3,924	$ 3,862

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Composition of Certain Balance Sheet Items - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Composition of Certain Balance Sheet Items [Abstract]
Depreciation expense	$ 0.3	$ 0.2

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Composition of Certain Balance Sheet Items - Schedule of Other Current Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Composition of Certain Balance Sheet Items [Abstract]
Payroll and related expenses	$ 2,083	$ 3,774
Professional services	934	325
Deferred rent	304	284
Other	516	520
Other current liabilities	$ 3,837	$ 4,903

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Net Income (Loss) Per Ordinary Share - Calculation of Basic and Diluted Net Income or Loss Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Numerator:
Net loss	$ (27,521)	$ (15,202)
Denominator:
Weighted-average ordinary shares outstanding (in shares)	34,026	27,401
Net loss per share:
Basic and diluted net loss per share (in dollars per share)	$ (0.81)	$ (0.55)

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Net Income (Loss) Per Ordinary Share - Ordinary Shares Equivalent Not Included in Diluted Net Loss Per Share (Details) - shares shares in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Options to purchase ordinary shares [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Equivalent ordinary shares not included in diluted net Income (loss) per share	4,097	3,312

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Commitment and Contingencies - Lease Narrative (Details) $ in Thousands, € in Millions	1 Months Ended			3 Months Ended
	Mar. 31, 2016 USD ($) ft²	Aug. 31, 2015 EUR (€) ft²	Jan. 31, 2015	Mar. 31, 2016 USD ($) ft²	Mar. 31, 2015 USD ($)	Apr. 30, 2016 USD ($)	Aug. 31, 2015 USD ($)
Loss Contingencies [Line Items]
Operating Leases, Future Minimum Payments Due	$ 51,042			$ 51,042
Operating Leases, Annual Rent Expense				2,100
Sublease Leases, Term			3 years
Sublease optional extension term			1 year
Loss on sublease					$ 400
2016 (nine months)	392			392
Future Minimum Sublease Rentals Year Two	316			316
Dublin, Ireland [Member]
Loss Contingencies [Line Items]
Operating Leases, Future Minimum Payments Due	$ 2,200	€ 2.0		$ 2,200			$ 2,300
Lessee Leasing Arrangement, Operating Leases, Area of Office Space | ft²		6,258
Lessee Leasing Arrangements, Operating Leases, Term of Contract		10 years
Lessee Leasing Arrangements, Operating Leases, Rent Review Term		5 years
Lessee Leasing Arrangements, Operating Leases, Option to Terminate, Date		Aug. 31, 2020
Current Facility Sublease [Member]
Loss Contingencies [Line Items]
Area of Real Estate Property | ft²	50,400			50,400
Lease Expiration Date				Nov. 30, 2020
New Facility Sublease [Member]
Loss Contingencies [Line Items]
Area of Real Estate Property | ft²	128,751			128,751
Lease Expiration Date				Dec. 31, 2023
Operating Leases, Future Minimum Payments Due	$ 39,200			$ 39,200
Operating Leases, Improvement Allowance	$ 14,200
Lessee Leasing Arrangements, Operating Leases, Term of Contract				7 years 8 months
New Facility Sublease [Member] | Subsequent Event [Member]
Loss Contingencies [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity						$ 4,100

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Commitment and Contingencies Commitment and Contingencies - Schedule of Future Minimum Lease Payments (Details) $ in Thousands	Mar. 31, 2016 USD ($)
Operating Lease
2016 (nine months)	$ 1,633
2017	5,527
2018	7,246
2019	8,218
2020	8,271
Thereafter	20,147
Total	51,042
Sublease Rental
2016 (nine months)	392
2017	316
2018	0
2019	0
2020	0
Thereafter	0
Total	$ 708

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Commitment and Contingencies - Commitment Narrative (Details) $ in Thousands	Mar. 31, 2016 USD ($)
Long-term Purchase Commitment [Line Items]
Purchase obligation	$ 12,672
Contractual obligations under license agreements	1,440	[1]
Accrued current liabilities [Member]
Long-term Purchase Commitment [Line Items]
Commitment to suppliers included in accrued current liabilities	4,000
Contractual obligations under license agreements included in accrued current liabilities	100
License agreements [Member]
Long-term Purchase Commitment [Line Items]
Contractual obligations under license agreements	$ 1,400

[1] Excludes future obligations pursuant to the cost-sharing arrangement under the Company's License Agreement with Roche. Amounts of such obligations, if any, cannot be determined at this time.

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Commitment and Contingencies - Contractual Obligations (Details) $ in Thousands	Mar. 31, 2016 USD ($)
Purchase Obligations
Total	$ 12,672
2016	12,504
2017	70
2018	36
2019	30
2020	32
Thereafter	0
Contractual obligations under license agreements
Total	1,440	[1]
2016	190	[1]
2017	120	[1]
2018	120	[1]
2019	120	[1]
2020	90	[1]
Thereafter	800	[1]
Purchase and Contractual Obligations, Fiscal Year Maturity
Total	14,112
2016	12,694
2017	190
2018	156
2019	150
2020	122
Thereafter	$ 800

[1] Excludes future obligations pursuant to the cost-sharing arrangement under the Company's License Agreement with Roche. Amounts of such obligations, if any, cannot be determined at this time.

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Roche License Agreement (Details) - Roche [Member] - USD ($) $ in Millions	1 Months Ended		3 Months Ended
	May. 31, 2014	Feb. 28, 2014	Mar. 31, 2016	Mar. 31, 2015
Collaborative Arrangement [Member]
License Agreement [Line Items]
Cost sharing payments recognized as research and development expense			$ 0.5	$ 0.5
Multiple element consideration, relative sales price method, amt allocable to license			35.6
Development reimbursement			1.2	1.5
Milestone payment received, clinical milestone	$ 15.0
Research Reimbursement [Member]
License Agreement [Line Items]
Collaboration service revenue, research services			0.3	0.4
Development Costs Reimbursement [Member]
License Agreement [Line Items]
Development reimbursement recognized as collaboration license revenue			0.0	0.2
Development reimbursement recognized as offset to research and development expense			$ 1.2	$ 1.3
License [Member]
License Agreement [Line Items]
Upfront payment pursuant to license agreement		$ 30.0

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Shareholders' Equity (Ordinary Shares/Euro Deferred Shares) (Details)	3 Months Ended
	Mar. 31, 2016 vote $ / shares shares	Mar. 31, 2016 € / shares shares	Dec. 31, 2015 $ / shares shares	Dec. 31, 2015 € / shares shares
Equity [Abstract]
Ordinary shares, number of authorized shares	100,000,000	100,000,000	100,000,000	100,000,000
Ordinary shares, par value (in dollars per share) | $ / shares	$ 0.01		$ 0.01
Ordinary shares, number of issued shares	34,340,208	34,340,208	31,744,102	31,744,102
Ordinary shares, number of outstanding shares	34,340,208	34,340,208	31,744,102	31,744,102
Votes per share | vote	1
Euro deferred shares, number of shares authorized	10,000	10,000	10,000	10,000
Euro deferred shares, nominal value (in euros per share) | € / shares		€ 22		€ 22
Euro deferred shares, number of outstanding shares	0	0	0	0

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Shareholders' Equity Shareholders' Equity (Issuance of Ordinary Shares) (Details) - Underwritten Public And Over-Allotment Offering [Member] $ / shares in Units, $ in Millions	1 Months Ended
	Jan. 31, 2016 USD ($) $ / shares shares
Shareholders Equity [Line Items]
Ordinary shares sold (in dollars per share) | $ / shares	$ 53.00
Net proceeds from issuance of ordinary shares in underwritten public offering | $	$ 128.6
Ordinary Shares
Shareholders Equity [Line Items]
Number of shares issued in transaction | shares	2,587,500

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Share-Based Compensation - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions	1 Months Ended	3 Months Ended
	Feb. 29, 2016	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Additional Shares Authorized	1,850,000
Stock Option [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Intrinsic value of options exercised		$ 0.3	$ 2.2
Amended and Restated 2012 Long Term Incentive Plan [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Grant period		10 years
Number of stock options granted to employees		1,008,475	785,550
Vesting period		4 years
Authorized shares for issuance		5,550,000
Number of shares available for grant		813,820
Options outstanding		4,097,233		3,142,364
Weighted average exercise price		$ 24.38		$ 21.36
Unearned share-based compensation expected to be expensed through 2019, stock options		$ 49.1
Expected recognition period of unearned share-based compensation		2 years 10 months 2 days

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Share-Based Compensation - Summary of Share-Based Compensation Expense (Details) - USD ($)		3 Months Ended
		Mar. 31, 2016	Mar. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense		$ 3,724,000	$ 1,703,000
Consultant [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense on option		0	42,000
Research and development [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense	[1]	1,419,000	758,000
General and administrative [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense		$ 2,305,000	$ 945,000

[1] Includes $nil and $42,000 for the three months ended March 31, 2016 and 2015, respectively, of share-based compensation expense related to options granted to a consultant.

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Share-Based Compensation - Fair Value of Options Granted (Details) - Amended and Restated 2012 Long Term Incentive Plan [Member] - $ / shares	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility	74.80%	76.20%
Risk-free interest rate	1.40%	1.80%
Expected dividend yield	0.00%	0.00%
Expected life	6 years	6 years
Weighted average fair value	$ 22.94	$ 18.48

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Share-based Compensation - Share-based Compensation Plan - Option Activity (Details) - Amended and Restated 2012 Long Term Incentive Plan [Member] - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Options, Outstanding beginning balance	3,142,364
Options, granted	1,008,475	785,550
Options Exercised	(8,606)
Options, canceled	(45,000)
Options, Outstanding ending balance	4,097,233		3,142,364
Options, Vested and expected to vest ending balance	3,912,442
Options Vested Outstanding Number	1,491,495
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract]
Weighted Average Exercise Price, Outstanding beginning balance	$ 21.36
Weighted Average Exercise Price, Granted	35.03
Weighted Average Exercise Price, Exercised	20.65
Weighted Average Exercise Price, Canceled	52.20
Weighted Average Exercise Price, Outstanding ending balance	24.38		$ 21.36
Weighted Average Exercise Price, Vested and expected to vest ending balance	23.97
Weighted Average Exercise Price, Options Vested	$ 13.87
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
Weighted Average Remaining Contractual Life (Years), Outstanding ending balance	8 years 3 months 15 days		8 years 1 month 21 days
Weighted Average Remaining Contractual Life (Years), Vested and expected to vest ending balance	8 years 3 months
Weighted Average Remaining Contractual Term, Vested Outstanding	7 years 3 months 26 days
Aggregate Intrinsic Value, Outstanding ending balance	$ 71,988		$ 146,917
Aggregate Intrinsic Value, Vested and expected to vest ending balance	70,254
Aggregate Intrinsic Value, Options Vested	$ 40,696

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Income Taxes - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Income Taxes [Line Items]
Provision for income taxes	$ 181	$ 266
Revenue Commissioners, Ireland [Member]
Income Taxes [Line Items]
Effective Income Tax Rate, Ireland Statutory, percent	12.50%	12.50%