LEASE EXTENSION AND MODIFICATION AGREEMENT

Exhibit 10.53

LEASE EXTENSION AND MODIFICATION AGREEMENT

This Lease Extension and Modification Agreement (“Agreement” is entered into and effective as of the 1^st day of September, 1996, by and between Research Way Investments, a California limited partnership (“Landlord”) and AntiVirals, Inc. (“Tenant”).

Recitals:

A. Landlord and Tenant are parties to a Commercial Lease with an execution date of June 18, 1992 (“Lease”); and

B. Landlord and Tenant now desire to extend and modify the Lease on the terms set forth below.

Now, therefore, the parties agree as follows:

1. The Premises shall increase by 5,227 square feet of Net Rentable Area, to include the area outlined on the floor plan attached hereto. For purposes of computing Fixed Rent, the Premises shall be deemed to be 18,407 square feet of Net Rentable Area. For purposes of computing Tenant’s percentage share of Operating Costs and Taxes, the Premises shall be deemed to be 18,568 square feet of Net Rentable Area; the Building shall be deemed to have a Net Rentable Area of 90,600 square feet; and Tenant’s Percentage Share of Operating Costs and Taxes shall be 20.494%.

2. Fixed Rent on 13,180 square feet of Net Rentable Area shall be $.52 per square foot per month; Fixed Rent on the remaining 5,227 square feet of Net Rentable Area shall be $.75 per square foot per month. On December 15, 1996, Fixed Rent on the entire 18,407 square feet of Net Rentable Area shall be $.75 per square foot per month. Fixed Rent shall increase by three percent (3%) on September 15, 1998, and on each September 15^th thereafter (including during each extended term, if Tenant exercises its options to extend the Lease), Fixed Rent shall increase by three percent (3%) of the immediately preceding Fixed Rent. Paragraphs 3.2 and 3.3 of the Lease are deleted.

3. The Lease shall terminate on December 15, 2004. In lieu of the option set forth in paragraph 7 of Addendum 1, Tenant shall have two (2) options to extend the Lease for five years each; provided, that Tenant, each time, shall give Landlord at least twelve (12) months prior written notice of its intent to extend the Lease, which notice, each time, shall be accompanied by a nonrefundable payment of $20,000 to be applied toward the Fixed Rent next and payable during the extended term; and, provided further, that Tenant shall not be entitled to extend the Lease if Tenant is in default. Paragraph 4 of Addendum 1 is deleted.

4. Paragraph 5.1(a) of the Lease is amended as set forth below:

(a) Operating Costs. All cost and expenses of management, ownership, operation and maintenance of the Building and Property, including by way of illustration but not limited to, utilities; waste disposal; materials and supplies; Insurance Premiums (unless otherwise paid for by Tenant pursuant to the provisions of Section 13.1 below); cost of services of independent contractors and employees (including, without limitation, wages, salaries, employment taxes and fringe benefits of such persons but excluding persons performing services not uniformly available to all Building tenants); day-to-day operation; maintenance and repair of the Premises, Building, its equipment, and the common areas, parking areas, walkways, access ways, and landscaped areas, including, without limitation, janitorial, gardening, security, elevator servicing, painting, plumbing, electrical, carpentry, heating, ventilation, air conditioning, window washing; signing and advertising; rental expense or depreciation of personal property used in the maintenance, operation, and repair of the Building; the cost of capital improvements to the Building (amortized in accordance with generally accepted accounting principles together with interest at the prevailing annual rate on the unamortized portion of such cost) made after the date of the Lease which reduce other items of Operating Costs or are required under any governmental law or regulation; reserves for future maintenance, repair or replacement of components of the improvements on the Property such as, by way of illustration, roof of the Building, surfaces of parking areas, and repainting or resurfacing of Building walls, reasonably based on the anticipated cost and estimated useful life of such items. Operating Costs shall not included Real Property Taxes (as defined in Section 5.1(b) below) or the taxes referred to in Section 5.3 below; debt service, if any, on the Building; depreciation on the Building other than depreciation on exterior window draperies provided by Landlord and carpeting in public corridors; costs of Tenant’s improvements; real estate brokers’ commissions; capital improvements other than the reserves and capital improvements included in Operating Costs above; and the cost of repairs, utilities, or extra services furnished to, billed to and payable separately by, Tenant or any other lessee of the Building.

5. The next to the last sentence of Paragraph 9 of the Lease is amended as follows:

Unless removed by Tenant prior to or on the Expiration Date or earlier date of termination of this Lease, any equipment, trade fixtures, machinery, cabinetwork, movable furniture, or other personal property remaining on the Premises at the expiration or sooner termination of this Lease shall, in the sole option of Landlord, either (I) become the property of Landlord; or (ii) be removed from the Premises and discarded at Tenant’s sole cost and expense.

6. The last three sentences of the second paragraph of Paragraph 12 of the Lease are amended as follows:

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Tenant agrees to hold Landlord harmless from and to indemnify and defend Landlord against all claims, liability, damage, or loss and against all costs and expenses, including, without limitation, attorneys’ and paralegals’ fees and costs and court costs in connection therewith, arising out of any injury or death of any person using the exercise equipment or facilities (if any) through said person’s association with Tenant. Tenant further acknowledges that said exercise equipment and/or facilities (if any) may only be used by Tenant and its employees in common with other tenants and their employees. Tenant shall not permit use of the exercise equipment or facilities (if any) by Tenant’s vendors, or the family members or friends of Tenant and its employees.

7. The fourth sentence of Paragraph 13.3 of the Lease is amended as follows:

The aforesaid insurance shall name Landlord and its partners, employees, agents, and co-owners of the Building as an additional insured (and, at Landlord’s option, the property manager and the holder of any mortgage or deed of trust on the Building, or any part thereof or interest therein, as an additional insured, and shall be with companies having a rating or not less than AAA in “Best’s Insurance Guide” or another comparable rating or publication of Best’s Insurance Guide” or another comparable rating or publication if Best’s Insurance Guide is no longer published or produced.

8. In Paragraphs 14.1, 14.2, and 14.4, the terms “Tenant’s Proportionate Share of Operating and Costs and Taxes” and “Tenant’s Proportionate Share of Building Operating Costs and Taxes” shall be changed to “Tenant’s Percentage Share of Operating Costs and Taxes”.

9. The following paragraph is added after Paragraph 19(a) of the Lease:

Nothing contained in this Lease shall, however, limit or prejudice the right of Landlord to prove for and obtain in proceedings for bankruptcy or insolvency by reason of the termination of the Lease, an amount equal to the maximum allowed by any statute or rule of law in effect at the time when, and governing the proceedings in which, the damages are to be proved, whether or not the amount be greater, equal to, or less than the amount of the loss or damages referred to above.

10. The following paragraphs are added to the Lease:

20.27 Landlord’s Consent. Except where otherwise provided herein, an any instance where the approval or consent of the Landlord is required, the granting or denying of such approval or consent shall be within the sole and unfettered discretion of the Landlord, and the Landlord shall not for any reason or to any extent by required to grant such approval or consent.

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20.28 Common Areas and Facilities. Landlord may make available to Tenants or tenants, from time to time, exercise facilities, sport courts, lunch rooms, or similar areas. Tenant acknowledges that such facilities may only be used by Tenant and its employees; Tenant shall not permit the facilities to be used by Tenant’s vendors, customers, family members, friends, or other persons. All persons using such facilities shall use the facilities at their own risk, and Landlord shall not be responsible for damage or injury. Landlord reserves the right to modify, move or eliminate any common area or facility at any time if Landlord deems it appropriate for reasons or health or safety or for purposes of expanding or contracting existing or future tenant’s premises.

11. Tenant shall have a first right of refusal to lease other space in the Building on the terms and conditions set forth in paragraph 8 of Addendum 1; the parties acknowledge CH2M Hill no longer has a prior right of refusal.

12. Tenant acknowledges and agrees to be bound by the Rules and Regulations attached hereto, which Rules and Regulations may be revised and amended by Landlord from time to time pursuant to Section 20.14 of the Lease. Notwithstanding the foregoing, Tenant shall be allowed to keep small animals such as mice, rats, and rabbits on the Premises for scientific experimental purposes. Tenant shall at all times keep the animals in cages or under control, and Tenant shall indemnify, defend, and hold harmless Landlord from any damage (including but not limited to vandalism and other damage caused by third persons) caused by or arising from Tenant’s keeping or use of the animals on the Premises.

13. Tenant acknowledges and agrees that Tenant is leasing the additional 5,227 square feet in its existing condition, “as is”. Landlord shall have no obligation and shall bear no expense with respect thereto.

14. No additional Security Deposit is required of Tenant.

15. Except as set forth in this Agreement, the terms and provisions of the Lease remain unchanged and in full force and effect.

In witness whereof, the parties have executed this Agreement in duplicate as of September 1, 1996.

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EXHIBIT B

RULES AND REGULATIONS

Landlord reserves the right to inspect all freight to be brought into the Premises and to exclude from the Premises all freight which violates any of these rules and regulations of the provisions of such Tenant’s Lease.

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EXHIBIT B

RULES AND REGULATIONS

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EXHIBIT B

RULES AND REGULATIONS

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