Exhibit 10.5

THIRD LEASE EXTENSION AGREEMENT

Building #6

1360 O’Brien Drive

Menlo Park, California 94025

THIS THIRD LEASE EXTENSION AGREEMENT (this “Agreement”) is made and entered into on March 18, 2008 by and between MENLO BUSINESS PARK, LLC, a California limited liability company (“Lessor”), and DEPOMED, INC., a California corporation (“Lessee”).

RECITALS

A.            Lessor and Lessee entered into a Lease dated February 4, 2000, the Lease Extension Agreement dated April 30, 2003 and the Second Lease Extension Agreement dated July 28, 2006 (the “Lease”) of the premises referred to as Building #6 located at 1360 O’Brien Drive, Menlo Park, California 94025, more particularly described on Exhibit “A” attached to the Lease and incorporated by reference herein (the “Premises”).  The Premises contain approximately 20,624 rentable square feet of space.

B.            The expiration date of the Second Extension Term of the Lease is June 30, 2009. Lessor and Lessee wish to extend the expiration date of the Second Extension Term of the Lease, subject to the terms and conditions set forth herein.

AGREEMENT

NOW THEREFORE, in consideration of the mutual covenants contained herein, the parties agree as follows:

1.             Defined Terms.  Terms defined in the Lease and used in this Agreement shall have the meaning ascribed to them in the Lease.

2.             Extension of Term.

(a)           The term of the Lease is hereby extended for a period of thirty-one (31) calendar months commencing on July 1, 2009 and ending on January 31, 2012 (the “Third Extension Term”).  The Third Extension Term shall be upon all of the same terms and conditions of the Lease, except that the Monthly Base Rent payable by Lessee to Lessor during the Third Extension Term shall be as set forth in Paragraph 3 hereof.

(b)           The option to extend provided for in Paragraph 3 of the Lease shall be for one (1`) period of sixty (60) calendar months immediately following the expiration of the Third Extension Term and shall otherwise be upon the same terms and conditions as set forth in Paragraph 3 of the Lease.

3.             Monthly Base Rent.  Lessee shall pay to Lessor Monthly Base Rent during the Third Extension Term, in monthly installments in advance on a triple net basis in lawful money of the United States, as follows:

(a)           Under the terms of the Second Lease Extension Agreement, the next Rental Adjustment Date is scheduled to occur on May 1, 2008, resulting in a new Monthly Base Rent of Fifty-Four Thousand Six Hundred Fifty-Three and Sixty Hundredths Dollars ($54,653.60) per month ($2.65/square foot/NNN).

(b)           Commencing on May 1, 2009,  (the “Rental Adjustment Date”), and on each anniversary date of this commencement, the Monthly Base Rent shall be adjusted to reflect any increase in the cost of living.  The adjustment shall be calculated upon the basis of the United States Department of Labor, Bureau of Labor Statistics Consumer Price Index, all items, for all Urban Consumers - San Francisco-Oakland-San Jose (1982-84=100), hereafter referred to as the “Index.”  The Index for said subgroup published most recently as of the end of the calendar month immediately preceding the month in which the commencement date of the Third Extension Term occurs shall be considered the “Base Index.”

(b)   The Monthly Base Rent shall be adjusted as of the Rental Adjustment Date to an amount equal to the product obtained by multiplying the Monthly Base Rent for the Premises commencing on May 1, 2009 referred to in Paragraph 3(a) above), by a fraction, the numerator of which is the Index most recently published as of the end of the calendar month immediately preceding the Rental Adjustment Date and the denominator of which is the base Index; provided that in no event shall the Monthly Base Rent be increased on the Rental Adjustment Date to an amount less than three percent (3%) per annum or more than six percent (6%) per annum of the Monthly Base Rent payable immediately before the Rental Adjustment Date.  The Monthly Base Rent as so adjusted shall continue through January 31, 2012, the expiration date of the Third Extension Term.

(d)           When the new Monthly Base Rent is determined for the Rental Adjustment Date, Lessor shall give Lessee written notice of the amount of the new Monthly Base Rent and how the new Monthly Base Rent figure was computed in accordance with subparagraphs 3(b) and 3(c) above.  Lessee shall pay to Lessor retroactively any unpaid increase in Monthly Base Rent due from and after the Rental Adjustment Date.  If the Index does not exist on the Rental Adjustment Date in the same

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format as referred to in subparagraph 3(b) above, Lessor shall substitute in lieu thereof an index reasonably comparable to the Index referred to above which is acceptable to Lessee and which is then published by the Bureau of Labor Statistics, or successor or similar governmental agency, or if no governmental agency then publishes an index, Lessor shall substitute therefor any index commonly accepted which is published by a reputable private organization.

(e)           Monthly Base Rent for any partial month shall be prorated on the basis of the number of calendar days in such month.

4.             Additional Rent; Operating Expenses and Taxes.  In addition to the Monthly Base Rent payable by Lessee pursuant to Paragraph 3 above, Lessee shall pay to Lessor during the Third Extension Term, as Additional Rent, Operating Expenses and Taxes pursuant to Paragraph 5 of the Lease.

5.             Condition of the Premises.  Lessee is currently in possession of the Premises and is conducting business thereon pursuant to the Lease.  Lessee agrees to accept the Premises in its “as is” condition at the commencement of the Second Extension Term, subject to the performance by Lessor of Lessor’s obligations under Paragraph 14(a) of the Lease.  Lessee acknowledges that Lessor has not inspected the Premises as a condition to entering into this Agreement. Accordingly, Lessee agrees that the execution and delivery of this Agreement by Lessor shall not constitute the approval by Lessor of any alternations to the Premises of which Lessor lacks actual knowledge, or the waiver by Lessor of any provisions of the Lease relating to alternations.

6.             Security Deposit.  Lessor acknowledges that Lessor has received from Lessee and is currently holding the sum of One Hundred Forty-five Thousand Four Hundred and Forty Hundredths Dollars ($145,400.40) in cash (the “Security Deposit”), as security for Lessee’s faithful performance of Lessee’s obligations under the Lease.  Lessor shall continue to hold the Security Deposit during the remainder of the initial term and during the Third Extension Term pursuant to Paragraph 7 of the Lease.

7.             Real Estate Brokers.  Lessor shall pay a leasing commission to Tarlton Properties, Inc., who has acted as exclusive leasing agent for Lessor in connection with this Agreement, pursuant to a separate agreement between Lessor and said broker.  Lessor shall also pay leasing commissions to GVA Kidder Mathews, who have acted as leasing agents for Lessee in connection with this Agreement, pursuant to an agreement between Lessor and said brokers.  Each party represents and warrants to the other party that it has not had any dealings with any real estate broker, finder, or other person with respect to this Agreement other than the above named brokers.  Each party shall hold harmless the other party from all damages, expenses, and liabilities resulting from any claims that may be asserted against the other party by any broker, finder, or other person with whom the other party has or purportedly has dealt, other than the above named brokers.

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8.             Notices.  Paragraph 24, Notices, of the Lease is amended to read as follows:

“24.         Notices.  All notices, statements, demands, requests, or consents given hereunder by either party to the other shall be in writing and shall be personally delivered or sent by United States mail, registered or certified, return receipt requested, postage prepaid, and addressed to the parties as follows:

All such notices or other communications given hereunder shall be addressed to the parties to such other address as either party may have furnished to the other as a place for the service of notice.  Notices shall be deemed given upon receipt or attempted delivery where delivery is not accepted.”

9.             Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

10.           Continuing Effect.  The parties acknowledge that the Lease remains in full force and effect as amended hereby, and with the initial term further extended as provided herein.

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set forth above.

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