separation agreement

Exhibit 10.68

September 2, 2008

John Regan

Dear John:

As discussed, your employment position is being eliminated as part of a reduction-in-force, and your employment will terminate as a result. This letter sets forth the substance of the separation agreement (the "Agreement") that Anesiva Inc. (the "Company") is offering to you to aid in your employment transition.

1. Separation. Your last day of work with the Company and your employment termination date will be September 2, 2008 (the "Separation Date").

2. Accrued Salary And Paid Time Off. On the Separation Date, the Company will pay you all accrued salary, and all accrued and unused vacation earned through the Separation Date, and an additional six (6) weeks of base salary as your accrued but unused sabbatical benefit, all subject to standard payroll deductions and withholdings.

3. Consulting Agreement. In exchange for your entering into and complying with this Agreement, the Company agrees to retain you as a consultant under the terms specified below.

(a) Consulting Period. The consulting relationship will commence on the Separation Date and will continue for up to three (3) months ("Consulting Period") terminating at the latest on December 2, 2008, unless terminated earlier by either you or by the Company. The Consulting Period shall terminate earlier than December 2, 2008 upon the occurrence of any of the following: (a) on the date that you revoke this Agreement as permitted under paragraph 17 below; (b) on October 17, 2008 if you have not delivered an executed copy of this Agreement to the Company by that date; (c) your notice to the Company of termination of the Consulting Period at any time; or (d) the Company’s written notice to you of its good faith belief that you have materially breached this Agreement, and the basis for its good faith belief.

(b) Consulting Services. You agree to provide consulting services to the Company in any area of your expertise upon request by the Chief Executive Officer ("CEO") of the Company. Your services will include but not be limited to assistance with the Company’s joint venture, Wanbang Anesiva (Jiangsu) Biotech Co., Ltd., personal attendance at joint venture

meetings in Jiangsu, China and manufacturing team meetings in South San Francisco, and generation of a summary memo regarding Zingo manufacturing issues. During the Consulting Period, you will report directly to the CEO, or as otherwise specified by the CEO. You agree to exercise the highest degree of professionalism and utilize your expertise and creative talents in performing these services. You agree to make yourself available to perform such consulting services throughout the Consulting Period, up to a maximum of eighty (80) hours per month. You will not be required to report to the Company’s offices during the Consulting Period, except as specifically requested by the Company. You agree that, during the Consulting Period, you will not enter or use the Company’s offices except as requested by the Company.

(c) Independent Contractor Relationship. Your relationship with the Company will be that of an independent contractor, and nothing in this Agreement is intended to, or should be construed to, create a partnership, agency, joint venture or employment relationship after the Separation Date. You will not be entitled to any of the benefits which the Company may make available to its employees, including, but not limited to, group health or life insurance, profit-sharing or retirement benefits.

(d) Consulting Fees. Provided that you remain in compliance with this Agreement, you will be paid consulting fees in the amount of $25,167 per month ("Consulting Fees"), during the Consulting Period.

(e) Taxes and Withholding. You are solely responsible for, and will file, on a timely basis, all tax returns and payments required to be filed with, or made to, any federal, state or local tax authority with respect to the performance of services and receipt of Consulting Fees. You are solely responsible for, and must maintain adequate records of, expenses incurred in the course of performing services under this Agreement. The Company will not withhold from the Consulting Fees any amount for taxes, social security or other payroll deductions. The Company will report amounts paid to you as Consulting Fees by filing Form 1099-MISC with the Internal Revenue Service as required by law. You acknowledge that you will be entirely responsible for payment of any such taxes, and you hereby indemnify, defend and save harmless the Company, and its officers and directors in their individual capacity, from any liability for any taxes, penalties or interest that may be assessed by any taxing authority with respect to all compensation you receive under this Agreement, with the exception of the employer’s share of social security, if any.

(f) Limitations on Authority. You will have no responsibilities or authority as a consultant to the Company other than as provided above. After the Separation Date, you will have no authority to bind the Company to any contractual obligations, whether written, oral or implied, except with the written authorization of the CEO. You agree that after the Separation Date, you will not represent or purport to represent the Company in any manner whatsoever to any third party unless authorized to do so in writing by the Company.

(g) Other Work Activities. Throughout the Consulting Period, you retain the right to engage in employment, consulting, or other work relationships in addition to your work for the Company. The Company will make reasonable arrangements to enable you to perform your work for the Company at such times and in such a manner so that it will not interfere with other activities in which you may engage. In order to protect the trade secrets and confidential

and proprietary information of the Company, you agree that, during the Consulting Period, you will notify the Company, in writing, before you obtain competitive employment, perform competitive work for any business entity, or engage in any other work activity that is competitive with the Company. If you engage in such competitive activity without the Company’s express written consent, or otherwise materially breach this Agreement, then (in addition to any other rights and remedies available to the Company at law, in equity or by contract) the Company’s obligation to pay you Consulting Fees, to pay COBRA Premiums (as defined below), and after the Consulting Period, its obligation to pay Severance (as defined below), will cease immediately.

(h) No Conflicting Interests. You agree that during the Consulting Period, you shall not directly or indirectly own, manage, operate, conduct, control, be employed by or be connected in any manner with the ownership, management, operation or control of any business that competes with the Company, provided, however, that the foregoing shall not be deemed to prohibit your ownership of stock in any publicly owned company so long as such ownership, directly or indirectly, does not exceed two percent (2%) of the total outstanding stock of such publicly owned company.

4. Severance Benefits. Although the Company otherwise has no obligation to do so, if you enter this Agreement and remain in compliance with its terms, the Company will provide you the following severance benefits, pursuant to the Company’s Severance Benefit Plan (the "Severance Plan", a copy of which is attached as Exhibit A ):

(a) Severance Payments. The Company will make severance payments to you in the form of continuation of your base salary in effect on the Separation Date for two and one-half (2  ¹ / 2 ) months following the Consulting Period ("Severance Payments"). The Severance Payments will be made on the Company’s regular pay schedule, and will be subject to standard payroll deductions and withholdings.

(b) Health Insurance. To the extent provided by federal COBRA law or, if applicable, state insurance laws, and by the Company’s current group health insurance policies, you will be eligible to continue your group health insurance benefits at your own expense following the Separation Date. Later, you may be able to convert to an individual policy through the provider of the Company’s health insurance, if you wish. You will be provided with a separate notice describing your rights and obligations under COBRA. If you timely elect continued coverage under COBRA, the Company, as an additional severance benefit under this Agreement, will pay your COBRA premiums to continue your group health insurance coverage at the level in effect as of the Separation Date for six (6) calendar months after the Separation Date ("COBRA Premiums"). The Company’s obligation to pay COBRA Premiums shall commence when you execute this Agreement.

5. Stock Options. As part of this Agreement, the Company agrees that the Consulting Period shall constitute Continuous Service for purposes of calculating the exercise period for vested options and restricted stock units under your restricted stock agreements and stock option agreements. You and the Company agree that you will receive no additional vesting of stock options or restricted stock units during the Consulting Period, and you hereby waive any

such additional vesting. You and the Company acknowledge that you have received the following grants:

Under the terms of your option and restricted stock unit grants listed above, you will have three months following the termination