Item 1.02 Termination of a Material Definitive Agreement.

On December 11, 2007, Anadys Pharmaceuticals, Inc. ("Anadys") and Novartis International Pharmaceutical Ltd. ("Novartis") entered into an agreement terminating the License and Co-Development Agreement by and between Novartis and Anadys dated June 1, 2005 (the "Collaboration Agreement"). This mutual termination of the Collaboration Agreement followed the parties' joint decision, announced on July 26, 2007, to discontinue the development of ANA975, a phase 1b compound for the treatment of hepatitis C virus infection. Novartis and Anadys had been jointly developing ANA975 under the Collaboration Agreement since June 2005. The material terms of the Collaboration Agreement are described in Anadys' Current Report on Form 8-K filed with the Securities and Exchange Commission on June 2, 2005 and are incorporated herein by reference. As a result of the termination of the Collaboration Agreement, the licenses granted by Anadys to Novartis have terminated. Neither party owes an early termination penalty to the other.

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