C O N FI D E N T I AL

In consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Lilly and Amylin agree as follows:

1.             Defined Terms.  Capitalized terms used but not otherwise defined herein shall have the meanings provided in the Agreement.  Any reference herein to a numbered “Section” shall be deemed to refer to such numbered Section of the Agreement, and any reference herein to a numbered “paragraph” shall be deemed to refer to such numbered paragraph of this Amendment.  The following terms shall have the meanings set forth below:

(a)           “BID Product” shall mean the Product sold under the Product Trademark “BYETTA®” (or such other Trademark if BYETTA is unavailable as a Trademark in a given country) as a fixed-dose injection of exenatide administered twice per day for any indication provided for in the first Marketing Approval received in a relevant country (included in such indication would be any subsequent label expansion(s) relating to use of the BID Product for the same indication, e.g., new indication for combination use with TZDs for treatment of the same indication as provided for in the first Marketing Approval). For the avoidance of doubt, it is understood that any subsequent indication relating to any disease or condition not included in the first Marketing Approval shall be regarded as a Non-BID Product (e.g., a Product indicated for treatment of obesity or Type I diabetes is a Non-BID Product).

(b)           “BID Study” shall mean a clinical trial of a BID Product; but excluding any Non-BID Study.

(c)           “Cost of Product Sold (OUS)” shall mean, solely for purposes of calculation of Gross Margin (OUS) and for no other purpose, the Cost of Product Sold for Product sold outside the U.S., determined in accordance with Section 1.33 of the Agreement, plus Lilly’s manufacturing costs for labeling, packaging, or other manufacturing-related activity that may be undertaken by Lilly for Product sold outside the U.S.  Lilly’s manufacturing costs included in Cost of Product Sold (OUS) shall include, without limitation, the standard cost of product sold expensed by Lilly for Product sold outside the U.S. plus manufacturing variances expensed by Lilly for Product sold outside the U.S., in each case, determined in accordance with U.S. GAAP.   It is understood that Lilly’s Cost of Product Sold (OUS) may or may not be the same as Lilly’s internal transfer pricing to its Affiliates for Product sold outside of the U.S. and Lilly’s Cost of Product Sold (OUS) shall not include any mark-up or profit margin in addition to actual Product cost.

Lilly’s standard cost of product sold may include, without limitation, the following components:

(i)               the total invoice price, outside processing costs, freight, duties, taxes, and brokers fees, with any volume or trade discounts being reflected in the calculation and purchase of inventory from either Amylin or Third Party suppliers being considered a Third Party cost;

(ii)             conversion costs (including, without limitation, direct labor and direct overhead) directly associated with the manufacturing of Product;

(iii)            replacement costs for Products that are determined to be defective or recalled or for Products that are returned to Lilly from the customer;

(iv)             an allocation of service and administrative departments performing functions which support Manufacturing operations directly associated with the Manufacturing of Products;

(v)              depreciation of Product-specific capital investments for equipment;

(vi)             depreciation of general manufacturing equipment and facilities directly associated with Manufacturing of Products, in the case of equipment, to the extent used specifically for Product, based on a percentage of throughput/utilization (hours of utilization) and, in the case of facilities, based upon percentage of square footage utilized.

(vii)            Product breakage;

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(viii)          obsolete Products; and

(ix)             to the extent attributable to the Manufacture of Products, any other costs considered inventory costs or costs of products sold under U.S. Generally Accepted Accounting Principles.

  All of these costs, and the methodology to be used in allocating indirect or overhead costs among Manufacturing operations hereunder and other Lilly manufacturing operations, shall be determined in a manner consistent with Generally Accepted Accounting Principles in the U.S., and Lilly shall share with Amylin such details relating to the allocation relating to operations outside the U.S. used by Lilly as Amylin may reasonably request.  In the event that Lilly does not use Dedicated Capacity for primary equipment for the Manufacture of Products, an appropriate allocation of costs associated with the Manufacture of Products shall be determined in a manner consistent with Generally Accepted Accounting Principles in the U.S.  It is understood and agreed by the Parties that Lilly will report all costs using its then current systems and procedures, subject to audit and adjustment as required to be consistent with this Amendment.

(d)           “Cumulative Gross Margin (OUS)” shall mean the cumulative Gross Margin (OUS) calculated beginning upon the first Product Launch for Product outside the U.S.

(e)           “Gross Margin (OUS)” shall mean Net Sales of Products outside the U.S., less: (i) Cost of Product Sold (OUS) and (ii) Product Sample Costs for Product Samples supplied for distribution outside the U.S.  Notwithstanding the foregoing, for purposes of calculating Gross Margin (OUS), in no event shall Product Sample Costs for Product Samples distributed outside the U.S. exceed commercially reasonable sample quantities.

(f)            “Major OUS Market” shall mean the following countries:  France, Germany, Italy, Spain, United Kingdom, and Japan.

(g)           “Non-BID Product” shall mean a Product other than BID Product.

(h)           “Non-BID Study” shall mean a clinical trial of a BID Product that compares a Non-BID Product to a BID Product or that includes a Non-BID Product.

(i)            “Non-Major OUS Market” shall mean any country outside the U.S. that is not a Major OUS Market.

(j)            “OUS BID Development Trial Costs” shall mean Development Costs specifically attributable to all BID Studies (excluding BID Studies that are not required for Marketing Approval such as Phase 3B Clinical Trials and Phase 4 Clinical Trials), other than any such BID Study that is required to be undertaken to obtain Marketing Approval of BID Product in the U.S.

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(k)           “OUS BID Commercialization Trial Costs” shall mean Commercialization Costs specifically attributable to all BID Studies undertaken to support Commercialization outside the U.S. that are not required for Marketing Approval such as Phase 3B Clinical Trials and Phase 4 Clinical Trials.

(l)            “OUS Non-BID Development Trial Costs” shall mean Development Costs specifically attributable to all Non-BID Studies (excluding Non-BID Studies that are not required for Marketing Approval such as Phase 3B Clinical Trials and Phase 4 Clinical Trials), other than any such Non-BID Study that is required to be undertaken to obtain Marketing Approval of Non-BID Product in the U.S.

(m)          “OUS Non-BID Commercialization Trial Costs” shall mean Commercialization Costs specifically attributable to all Non-BID Studies  undertaken to support Commercialization outside the U.S. that are not required for Marketing Approval such as Phase 3B Clinical Trials and Phase 4 Clinical Trials.

(n)           “Product Plan” shall mean, for a particular Major OUS Market, the strategic and tactical medical, marketing and sales plans for Product(s) of the type and format used from time to time by Lilly for its own products. For the avoidance of doubt, as of the Amendment Date, the referenced plans are known internally as “Lilly Affiliate Brand Plans.”

(o)           “Product Sample” shall mean a sample (or a voucher for a sample) of Product supplied for distribution to health care professionals without charge for promotional, patient initiation, or familiarization purposes.

(p)           “Product Sample Costs” shall mean the standard unit cost plus variances of Product Samples actually distributed in a country after Marketing Approval in such country, calculated in accordance with GAAP samples  accounting methods, consistently applied.    Distribution costs shall be excluded from the standard unit cost.  However, Product Sample Costs will be included in the Cost of Product Sold (OUS) (rather than in the marketing and selling expense line), and shall reflect the standard Cost of Product Sold plus variances.

2.             Allocation of OUS Revenues.  Effective for OUS revenues accrued on or after January 1, 2007, Section 4.5(b) of the Agreement shall be eliminated in its entirety and replaced with the royalty-based structure set forth in this paragraph 2, pursuant to which Lilly will retain all revenues from sales of Product in the Territory outside the U.S. and pay a royalty to Amylin based upon a percentage of Gross Margin (OUS).  Commencing on the date when Cumulative Gross Margin (OUS) exceeds $[***] and continuing during the term of the Agreement, Lilly shall pay to Amylin royalties based on the aggregate annual Gross Margin (OUS) (without adjustment for partial calendar years) at the rates set forth below:

(a)           [***]% of the portion of aggregate Gross Margin (OUS) during a calendar year that is equal to or less than $[***];

(b)           [***]% of the portion of aggregate Gross Margin (OUS) during a

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calendar year that is greater than $[***] but equal to or less than $[***]; and

(c)           [***]% of the portion of aggregate Gross Margin (OUS) during a calendar year that is greater than $[***] but equal to or less than $[***]; and

(d)           [***]% of the portion of aggregate Gross Margin (OUS) during a calendar year that is greater than $[***].

For the avoidance of doubt, the Parties acknowledge and agree that no royalty shall be due on the first $[***] of Cumulative Gross Margin (OUS), nor shall such amount be included in determining the applicable royalty rates set forth above.  The exclusion of the first $[***] in Cumulative Gross Margin (OUS) is to be applied one time and not on a product-by-product or country-by-country basis.  The following sample calculation is provided for purposes of illustration and clarification only:

(1)During [***], Cumulative Gross Margin (OUS) first exceeds $[***], and calculation of royalties payable with respect to Gross Margin (OUS) in excess of $[***] (i.e., $[***]) begins. The royalty for [***] would therefore equal $[***] x [***]%, or $[***].

(2)For [***] (the year after Cumulative Gross Margin (OUS) first exceeds $[***]), the royalty payable would be calculated as follows: ($[***] x [***]%) + ($[***] x [***]%) = $[***].

Also effective as of January 1, 2007, all references to “Adjusted OUS Operating Profit/Loss” in Section 4.9 (a) shall be deleted, and the “OUS Operating Profit Sharing” example calculations found in Schedule 4.5 shall be deleted in their entirety.  Royalties due under this paragraph 2 shall be paid by Lilly to Amylin on a [***] basis within [***] ([***]) days after the end of [***] for Products sold outside of the U.S. during such [***].  At Lilly’s option, such payment may be made by providing Amylin a credit in the amount of the royalty due as part of the calculation of periodic settlement payments between the Parties contemplated by Section 4.9(a).  Royalties due each [***] under this paragraph 2 shall be subject to simple interest as follows:  royalties due from Product sales from the [***] of each [***] shall be increased by an amount equal to simple interest for a period of [***], and royalties due from Product sales from the [***] of each [***] shall be increased by an amount equal to simple interest for a period of [***].  The interest factor used for a particular [***] shall be equal to the rate specified in the Agreement for calculating amounts owed under Section 4.9(a) (as described in the letter agreement between the Parties dated June 12, 2006.)

3.             Allocation of OUS Development and Commercialization Costs.  In partial

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consideration of Amylin foregoing its right to receive any share of the first $[***] of Cumulative Gross Margin (OUS), the Parties hereby agree to the following allocations with respect to costs outside the U.S.:

(a)           BID Products.  Lilly shall be solely responsible for 100% of BID Product Commercialization Costs relating to the Commercialization of BID Products outside of the U.S. (including without limitation OUS BID Commercialization Trial Costs), and regardless of whether such Commercialization Costs were incurred before or after the Amendment Date. Effective as to expenses accrued on or after January 1, 2007, Lilly shall also be solely responsible for 100% of BID Product Development Costs relating to Development of BID Product for sale outside of the U.S. (including without limitation OUS BID Development Trial Costs).  Accordingly, BID Product Commercialization Costs relating specifically to sale of Product outside of the U.S., and effective January 1, 2007, BID Product Development Costs specifically relating to development of BID Product for sale outside of the U.S., shall not be included in the calculation of the periodic settlement payments between the Parties contemplated by Section 4.9(a) of the Agreement.  Exhibit C sets forth those clinical trials or other development activities underway as of the Amendment Date and indicates how the expenses thereof shall be shared by the Parties, subject to potential adjustment as provided in Paragraph 3(c).   For the avoidance of doubt, it is understood that any Development Costs related to development of Non-BID Product for sale outside the US shall continue to be allocated 80% to Lilly and 20% to Amylin as contemplated by Section 4.3(a)(ii) of the Agreement.  It is also understood that Amylin shall not be entitled to reimbursement of any OUS BID Product Commercialization Costs unless reimbursement is approved in advance by Lilly.

(b)           Non-BID Products.  Section 4.4(a)(ii) of the Agreement is amended in its entirety, effective January 1, 2007, to read as follows:

“(ii)   Rest of World.  Lilly shall pay one hundred percent (100%) of the Commercialization Costs for Commercialization of Products in all countries in the Territory outside the U.S. and Amylin shall pay 0% of such Commercialization Costs, with the sole exception of OUS Non-BID Commercialization Trial Costs which shall be allocated 80% to Lilly and 20% to Amylin.”

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Lilly will prepare and deliver to Amylin, in addition to and concurrently with the [***] composite reports due pursuant to Section 4.9(a), a separate composite report of OUS Non-BID Commercialization Trial Costs substantially the same in scope, content and format to the [***] reports of Development Costs due pursuant to Section 4.3(b), and the amounts reported in such composite report of OUS Non-BID Commercialization Trial Costs shall be aggregated with the amounts reported in the composite reports specified in Section 4.9(a) and included in the calculation of periodic settlement payments between the Parties contemplated by Section 4.9(a).  The parties recognize that Lilly does not formally track time spent by OUS FTE’s on Development matters versus time spent by the same individuals on Commercialization matters so that good faith allocations of FTEs between the categories of Non-BID Commercial Trial Costs and Non-BID Development Trial Costs may be necessary.

(c)           Costs for OUS Studies Utilized in U.S.

(i)                                    The Parties recognize that data from certain clinical, health outcomes or other studies undertaken for Development or Commercialization purposes relating to countries outside the U.S. (an “OUS Study”) may generate data that could also be utilized for U.S. purposes.  Accordingly, the Parties agree as follows:

a.               Except with respect to any Required Study, the Global Development and Commercialization Committee (“GDCC”) shall, prior to the initiation of any OUS Study, review whether such OUS Study is also expected to generate data that will be utilized for U.S. purposes.  If the GDCC agrees that the OUS Study will also be used for U.S. purposes, (a “Dual Use Study”) then the expense of such Dual Use Study shall be shared in accordance with the Dual Use Cost Allocation. In all other cases, the expenses of the OUS Study shall be shared in accordance with the OUS Study Cost Allocation, but shall be subject to possible later recharacterization as provided in paragraph (d) below. The Parties agree that their respective representatives to the GDCC will act in a reasonable manner with respect to any proposal that an OUS Study be regarded as a Dual Use Study.

b.              Except as provided in paragraph (c) below, if the OUS Study is a Required Study, the expenses thereof shall be shared in accordance with the OUS Study Cost Allocation regardless of whether such OUS Study is also used in the U.S., and the provisions of paragraph (d) below shall not apply.

c.               Notwithstanding paragraph (b) above, any OUS Study relating to Non-BID Product that is a Required Study for Marketing Approval in the European Union (“Europe Non-BID Product Registration Study”) shall be prospectively reviewed by the GDCC upon request of either Party to determine whether data from such Europe Non-BID Product Registration Study is also expected to be used for U.S. purposes.  If the GDCC agrees

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that data from such Europe Non-BID Product Registration Study will be used for U.S. purposes, then such study shall be deemed a Dual Use Study and the expenses thereof shall be shared in accordance with the Dual Use Cost Allocation.  In all other cases, the expense of the Europe Non-BID Product Registration Study shall be shared in accordance with the OUS Study Cost Allocation, but shall be subject to possible later recharacterization as provided in paragraph (d) below.  The Parties agree that their respective representatives to the GDCC will act in a reasonable manner with respect to any proposal that an OUS Study be regarded as a Dual Use Study.

d.              With respect to (i) any OUS Study that is not a Required Study and that has not previously been determined to be a Dual Use Study and (ii) any Europe Non- BID Product Registration Study that has not previously been determined to be a Dual Use Study, either Party shall have the right to request that the allocation of costs of any such study be reviewed based upon actual or intended use or non-use (as defined below in (c) (iii)) of the data therefrom.  In the event either party requests such a review, the GDCC shall review such issue in good faith, and if it concludes that the study is a Dual Use Study the expenses of such study previously incurred shall be reallocated as appropriate in accordance with the Dual Use Study Cost Allocation. If necessary, an appropriate adjustment shall be made in the next [***] settlement contemplated by Section 4.9 of the Agreement.  Thereafter, any future expenses of such study shall be shared in accordance with the Dual Use Cost Allocation, and appropriately reflected in the [***] settlement.  The Parties agree that their respective representatives to the GDCC will act in a reasonable manner with respect to any proposal that data from an OUS Study be used in the U.S. In the event the GDCC is unable to agree upon proposed U.S. use of data from an OUS Study, Lilly may if applicable exercise its right under of Section 3.1(e) (ii) to require that data from an OUS Study be utilized in the U.S., but if Lilly exercises such right, the fact that such data was used in the U.S. shall not be a basis for recharacterization of the expenses of such OUS Study.

(ii)                                As used herein:

a.               “OUS Study Cost Allocation” shall mean (i) in the event such expenses are related to a BID Product and incurred prior to January 1, 2007, the expenses shall be borne 80% by Lilly and 20% by Amylin, (ii) in the event such expenses are related to a BID Product and incurred on or after January 1, 2007, the expenses shall be borne 100% by Lilly, and (iii) in the event such expenses are related to Non-BID Product (regardless of whether such expenses are incurred before or after January 1, 2007), the expenses shall be borne 80% by Lilly and 20% by Amylin.

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