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                                                                   EXHIBIT 10.35

                                            ***TEXT OMITTED AND FILED SEPARATELY
                                    WITH THE SECURITIES AND EXCHANGE COMMISSION.
                                                CONFIDENTIAL TREATMENT REQUESTED
                                           UNDER 17 C.F.R. SECTIONS 200.80(b)(4)
                                                                  AND 240.24b-2.

                                                                  EXECUTION COPY


                       ASSIGNMENT AND ASSUMPTION AGREEMENT

                                      AMONG

                          METABASIS THERAPEUTICS, INC.

                                       AND

                              SCHERING CORPORATION

                                       AND

                         VALEANT RESEARCH & DEVELOPMENT

                          Dated as of December 13, 2006

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     This Assignment and Assumption Agreement (this Agreement) is made by and
among Metabasis Therapeutics, Inc., a corporation organized and existing under
the laws of Delaware (Metabasis), Schering Corporation, a New Jersey corporation
(Schering), and Valeant Research & Development, a Delaware corporation (Valeant)
and is effective as of the Effective Date.

                                    RECITALS

     A. Valeant has been developing the compound pradefovir for treatment of
human diseases pursuant to the terms of a Development and License Agreement of
October 1, 2001 between Metabasis and Valeant, as successor in interest to ICN
Pharmaceuticals, Inc., (the "ORIGINAL AGREEMENT") and has generated intellectual
property including data and other know-how.

     C. Schering has expertise in researching, developing, manufacturing and
marketing pharmaceutical products for the treatment of human and animal diseases
and wishes to develop, manufacture, and market Products based on pradefovir in
accordance with this Agreement.

     D. Valeant wishes to assign its rights, interests, and obligations under
the Original Agreement to Schering and Schering wishes to acquire Valeant's
rights and interests and assume Valeant's obligations under the Original
Agreement in order to continue development and to manufacture and market
Products.

     E. Metabasis wishes Valeant to assign Valeant's rights, interests, and
obligations under the Original Agreement to Schering and that Schering acquire
and those rights and interests and assume those obligations.

     F. To effect these ends, (1) Schering and Metabasis have entered into an
Amended and Restated Development and License Agreement (the "AMENDED METABASIS
AGREEMENT"), and (2) Schering and Valeant have entered into a Development and
License Agreement (the "VALEANT SCHERING AGREEMENT"). Terms not otherwise
defined herein shall have the meanings set forth in the Amended Metabasis
Agreement and the Valeant Schering Agreement.

                                    AGREEMENT

          1. Valeant hereby irrevocably sells and assigns to Schering without
recourse to Valeant, and Schering hereby irrevocably purchases and assumes from

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Valeant without recourse to Valeant, as of the Effective Date (as defined
below), all of Valeant's rights, title and interests and assumes Valeant's
obligations under the Original Agreement (the "ASSIGNED INTEREST") and Metabasis
hereby irrevocably consents to such assignment and assumption without recourse
to Valeant.

          2. Valeant makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Amended Metabasis Agreement.

          3. Metabasis makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Valeant Schering Agreement.

          4. Metabasis and Valeant agree that they will continue to indemnify
the other in accordance with the terms of the Original Agreement for any claim
arising out of facts and circumstances occurring before the Effective Date
hereof.

          5. Schering agrees that it will be bound by the provisions of the
Amended Metabasis Agreement and the Valeant Schering Agreement and will perform
in accordance with the terms and obligations of those agreements.

          6. Metabasis agrees that it will be bound by the provisions of the
Amended Metabasis Agreement and will perform in accordance with the terms and
obligations of that agreement.

          7. Valeant agrees that it will be bound by the provisions of the
Valeant Schering Agreement and will perform in accordance with the terms and
obligations of that agreement.

          8. Schering and Metabasis agree that they may not amend the Amended
Metabasis Agreement in any way that will materially affect Valeant's rights
under the Valeant Schering Agreement, such rights including but not limited to
Valeant's rights to receive milestone payments and royalty payments in the
amounts and for the periods set forth in the Valeant Schering Agreement.

          9. Schering and Valeant agree that they may not amend the Valeant
Schering Agreement in any way that will materially affect Metabasis's rights
under the Amended Metabasis Agreement, such rights including but not limited to
Metabasis's rights to receive milestone payments and royalty payments in the
amounts and for the periods set forth in the Amended Metabasis Agreement.

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          10. Valeant and Metabasis agree that the aggregate royalties owed by
Schering under the Amended Metabasis Agreement and the Valeant Schering
Agreement will be divided between Metabasis and Valeant and invoiced to Schering
according to the Royalty Calculation Exhibit attached hereto.

          11. Metabasis and Valeant agree that in the event the Amended
Metabasis Agreement terminates in whole or in part of its Territory and the
rights to develop and commercialize compounds and products in the whole or in
such terminated parts of the Territory revert to Metabasis, then subject to
Section 12 hereof, Metabasis will automatically assume Schering's rights and
obligations under the Valeant Schering Agreement in whole or in respect of such
terminated part of the Territory, as applicable.

          12. Valeant and Metabasis agree that in the event the Amended
Metabasis Agreement terminates in whole or in part of the Territory and the
rights to develop and commercialize Licensed Compounds and Products in the whole
or in such terminated parts of the Territory revert to Metabasis, then:

               (a) if Metabasis advances the development or commercializes a
Product in such terminated whole or part of the Territory substantially on its
own, then (i) Metabasis will pay to Valeant the full royalties that would have
been payable by Schering under the Valeant Schering Agreement for the terminated
whole or part of the Territory, which royalties shall be reduced by [...***...]
of any amount of royalties owed by Metabasis to Schering under the Amended
Metabasis Agreement, provided that any such reduction shall not reduce the
royalties owed to Valeant by Metabasis to [...***...] of the royalties owed in
the absence of such reduction, and further provided that in the event that
Metabasis is not able to reduce Valeant's royalties by the [...***...] of any
such royalties owed to Schering, the amount of the royalty reduction not taken
may be used by Metabasis in another market or at a later date to offset other
royalties or milestone payments due Valeant; and (ii) Metabasis and Valeant
agree that the remaining schedule of milestone payments due to Valeant upon
achievement by Metabasis of events related to the terminated whole or part of
the Territory under the assumed Valeant Schering Agreement shall be modified as
necessary to [...***...], provided that any postponed milestone or part thereof
would begin accruing interest at the [...***...] rate on the date payment was
due under the assumed Valeant Schering Agreement, plus [...***...], and further
provided that in the event of a postponement by such modification of part or all
of one or more milestone payments, Metabasis shall, at a minimum, pay to Valeant
on a quarterly basis [...***...] of (i) the Net Sales of Products less (ii) the
[...***...] paid by Metabasis to Schering, Valeant, or any third party on sales
of such Products ("NET NET SALES") under the assumed Valeant Schering Agreement
toward payment of such postponed milestone payment(s) and the interest due
thereon, unless the remaining amount due from all postponed payments and
interest is [...***...] of such Net Net Sales, in which case Metabasis shall pay
all remaining postponed payments and interest at the end of the quarter in which
the remaining amount is [...***...] of Net Net Sales; or

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               (b) if, following Metabasis' assumption of Schering's rights and
obligations under the Valeant Schering Agreement pursuant to Section 11 hereof,
Metabasis sublicenses the development and commercialization of Licensed Compound
or Product under such Agreement, through a sublicense to a third party which
third party becomes responsible for all or substantially all of the activities
required to develop or commercialize the Licensed Compound or Product, then (i)
Metabasis will pay to Valeant the full royalties that would otherwise have been
payable by Schering under the Valeant Schering Agreement for the terminated
whole or part of the Territory, which royalties shall be reduced by [...***...]
of any amount of royalties owed by Metabasis to Schering, provided that any such
reduction shall not reduce the royalties owed to Valeant by Metabasis to
[...***...] of the royalties otherwise owed, and further provided that in the
event that Metabasis is not able to reduce Valeant's royalties by the
[...***...] of any royalties owed by Metabasis to Schering, the amount of the
royalty reduction not taken may be used by Metabasis in another market or at a
later date to offset other royalties or milestone payments due Valeant; and (ii)
Metabasis will make the milestone payments due to Valeant related to events in
the terminated whole or part of the Territory under the assumed Valeant Schering
Agreement in accordance with the terms of that agreement applicable to the
terminated whole or part of the Territory.

          13. Schering and Metabasis agree that Schering may disclose
confidential information to Valeant which information was received pursuant to
the terms of the Amended Metabasis Agreement and for which the disclosure of
such information is necessary for Schering to fulfill its obligations under the
Valeant Schering Agreement, and that such disclosure to Valeant will not
constitute a breach of any confidentiality obligation under the Amended
Metabasis Agreement.

          14. Schering and Valeant agree that Schering may disclose confidential
information to Metabasis which information was received pursuant to the terms of
the Valeant Schering Agreement and for which the disclosure of such information
is necessary for Schering to fulfill its obligations under the Amended Metabasis
Agreement, and that such disclosure to Metabasis will not constitute a breach of
any confidentiality obligation under the Valeant Schering Agreement.

          15. The effective date of this Agreement shall be the date of the last
to occur of the execution by all parties thereto of (i) the Amended Metabasis
Agreement; and (ii) the Valeant Schering Agreement (the "EFFECTIVE DATE");
provided that this Agreement will become effective only upon the expiration or
termination of the applicable waiting period under the Hart-Scott Rodino (HSR)
Act and other antitrust requirements relating to this Agreement and the
agreements identified in the foregoing (i) and (ii) (the "OTHER AGREEMENTS") and
the transactions contemplated thereby. Valeant and Metabasis and Schering
acknowledge that the complete execution of the Other Agreements is a condition
precedent to the effectiveness of this Agreement and that failure of either or
both of those separate agreements to be fully executed will render this
Agreement null and void.

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          16. From and after the Effective Date, (a) Schering shall be a party
to the Amended Metabasis Agreement and, to the extent provided in this
Agreement, have the rights and obligations thereunder and shall be bound by the
provisions thereof and (b) Valeant shall, to the extent provided in this
Agreement, relinquish its rights and be released from its obligations under the
Original Agreement.

          17. Dispute Resolution.

               (a) Subject to Section 17(b) hereof, any dispute, controversy or
claim arising under, out of or in connection with this Agreement, or the breach
thereof, including any subsequent amendments, may be referred to and finally
settled by arbitration in accordance with the commercial rules of [...***...] in
force on the date of commencement of the arbitration. The arbitration will be
final binding and judgment upon the award rendered by the arbitrators may be
entered in any court having jurisdiction thereof. There will be three
arbitrators, one arbitrator selected by Metabasis and one arbitrator selected by
Schering, which arbitrators will then jointly select the third arbitrator,
provided, however, that to the extent Schering is not a party to such dispute,
the second arbitrator shall be selected by Valeant and Schering shall not be
required to become a party to any arbitration proceedings regarding such
dispute. If the relevant Party fails to nominate an arbitrator within thirty
(30) days from the date of notification made to it of the other Party's request
for arbitration, then the third arbitrator will be appointed in accordance with
[...***...] The place of the arbitration will be New York, USA and the laws of
the State of New York will be applied. Each of the arbitrators will have at
least 10 years experience in commercial transactions. The arbitration will
commence within [...***...] days after appointment of the arbitrators and will
continue uninterrupted, unless otherwise suspended by the arbitrators for good
cause, for not longer than [...***...] (including without limitation any
discovery permitted by the arbitrators). The arbitrators will, within such
[...***...] period, render a written decision with findings of fact and
conclusions of law and deliver such decision to the Parties. No arbitrator (nor
the panel of arbitrators) shall have the power to award punitive damages under
this Agreement and such award is expressly prohibited. The decision of the
arbitrators will be final and non-appealable and binding upon the Parties, and
may be entered and enforced in any court having jurisdiction. The Parties among
whom the dispute exists shall share the costs of the arbitration equally,
provided, however, that in the event of a dispute solely between any two
Parties, the other Party that is not involved in the dispute shall not be
required to share in the costs of such arbitration.

               (b) No dispute under this Agreement will be referred to
arbitration under Section 17(a) hereof until the following procedures have been
satisfied. The [...***...] of Metabasis, the [...***...] of Valeant, and
depending on whether the dispute is one which relates to a pre-approval or
post-approval matter, the [...***...] of Schering (or designees with similar
authority to resolve such dispute) will meet to review any dispute with respect
to the interpretation of any provision of this Agreement or with respect to the
performance of any Party under this Agreement. Such review will be initiated by
one Party sending written notice of the dispute to the other Parties, and as
soon as practicable, but in any event within [...***...]

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[...***...] of such notice, the designated representatives of the Parties will
meet for attempted resolution by good faith negotiations. If such
representatives are unable to resolve such dispute within [...***...] after a
meeting to discuss the dispute, any Party may at any time provide written notice
to the other Parties specifying the terms of the dispute in reasonable detail
and notifying the other Party of its decision to institute arbitration
proceedings under Section 17(a).

               (c) Nothing in this Agreement limits the right of either Party to
seek to obtain in any court of competent jurisdiction any interim relief or
provisional remedy, including injunctive relief. Seeking or obtaining any
interim relief or provisional remedy in a court will not be deemed a breach or
waiver of this agreement to arbitrate.

          18. This Agreement will be governed by and construed in accordance
with the laws of the State of New York, USA, without regard to its principles
regarding conflicts of law.

          19. All notices, consents, requests, waivers and other communications
required or permitted under this Agreement:

     (a) must be in writing, signed by an authorized officer of the sender, and
sent by personal delivery, fax (with confirmation copy), internationally
recognized courier, or certified or registered mail, postage prepaid (airmail
where applicable);

     (b) will be deemed to be given when actually received; and

     (c) must be sent to the receiving Party at the address or fax number, as
applicable, set forth below, or any replacement address or fax number notified
to the sender by notice actually received by the sender:

          if to Metabasis, to:

          Metabasis Therapeutics, Inc.
          9390 Towne Centre Drive
          San Diego, California 92122
          Attention: Chief Executive Officer

          with a copy to:

          Michael J. O'Donnell
          Wilson Sonsini Goodrich & Rosati P.C.
          650 Page Mill Road
          Palo Alto, CA 94304-1050

          if to Schering, to:

          Schering Corporation
          2000 Galloping Hill Road

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          Kenilworth, NJ 07033-0530
          Attention: Vice President, Global Licensing and Strategic Alliances
          Fax No.: 908-298-7366

          with a copy to:

          Senior Legal Director, Licensing
          Fax No.: 908-298-2739

          with a copy to:

          if to Valeant, to:

          Valeant Research & Development
          3300 Hyland Avenue
          Costa Mesa, California 92626
          Attention: General Counsel
          Fax No.: 714-641-7206

          with a copy to:

          Skadden, Arps, Slate, Meagher & Flom LLP
          Four Times Square
          New York, New York  10036
          Attention: Bruce J. Goldner, Esq.
          Fax No.: 917-777-2972

          20. Except as expressly provided otherwise in this Agreement, all
legal and other costs and expenses incurred in connection with the negotiation
and entering into of this Agreement and the transactions contemplated by this
Agreement will be paid by the Party incurring such costs or expenses.

          21. Except as expressly provided elsewhere in this Agreement, each
Party will at its expense promptly execute and deliver any further instruments
and documents and take any further action as the other Party may reasonably
request in order to give effect to the transactions contemplated by this
Agreement.

          22. This Agreement may not be altered or otherwise amended except by
an instrument in writing signed by each of the Parties.

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          23. A Party may, by written instrument executed by such Party, extend
the time for the performance of any obligations of the other Party, waive any
inaccuracies and representations by the other Party in this Agreement or in any
document delivered pursuant to this Agreement or waive compliance by the other
Party with any of the covenants, conditions or performance of any of its
obligations under this Agreement. Any such waiver or failure to insist upon
strict compliance with such covenant, condition or obligation will not operate
as a waiver of, or estoppel with respect to, any subsequent or other failure.

          24. This Agreement does not confer any rights, remedies, agreements,
undertakings, obligations or liabilities on any person other than the
successors-in-interest and permitted assigns of each Party.

          25. This Agreement, along with the Other Agreements, constitutes the
entire agreement between the Parties with respect to its subject matter and,
upon the Effective Date, supersedes all prior discussions, negotiations,
correspondence, agreements, and understandings, both oral and written, between
the Parties with respect to its subject matter, including without limitation the
Original Agreement.

          26. The Parties have participated jointly in the negotiation and
drafting of this Agreement. If a question of intent or interpretation arises,
this Agreement will be construed as if drafted jointly by the Parties and no
presumption or burden of proof will arise favoring or disfavoring a party
because of the authorship of any provision of this Agreement.

          27. All Exhibits identified in this Agreement are incorporated by
reference and made a part of this Agreement.

          28. This Agreement may be executed in any number of counterparts and
by facsimile, each of which will be deemed to be an original and all of which
together will constitute one and the same agreement.

          29. If any provision of this Agreement is finally determined to be
invalid, unlawful or incapable of being enforced in a jurisdiction, (i) it will
be deemed to be severed from this Agreement in such jurisdiction, (ii) every
other provision of this Agreement will remain in full force and effect in such
jurisdiction, (iii) the Parties will negotiate in good faith to modify this
Agreement so as to achieve the original intent of the Parties as closely as
possible in an acceptable manner with respect to such jurisdiction and (iv) such
invalidity, unlawfulness or unenforceability will not affect the interpretation
or enforcement of this Agreement in any other jurisdiction.

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          30. All rights and licenses granted under or pursuant to this
Agreement are, and will otherwise be deemed to be, for purposes of Section
365(n) of the Bankruptcy Code, licenses of rights to "intellectual property" as
defined under Section 101(35A) of the Bankruptcy Code. Any licensee of such
rights under this Agreement, will retain and may fully exercise all of its
rights and elections under the Bankruptcy Code.

          31. The rights and remedies of the Parties under this Agreement are in
addition to any other rights available to them at law or in equity. The use of
any right or remedy by a Party does not preclude or waive the right to use any
other remedies. This Section 31 does not limit the obligations of the Parties
under Section 17(a) and Section 17(b).

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          IN WITNESS WHEREOF, the Parties have executed this Agreement by their
duly authorized representatives as of the date set forth above.

                                        METABASIS THERAPEUTICS, INC.


                                        By: /s/ [Illegible]
                                            ------------------------------------
                                        Name: Paul [Illegible]
                                        Title: President & CEO


                                        SCHERING CORPORATION


                                        By: /s/ Michael J. DuBois
                                            ------------------------------------
                                        Name: Michael J. DuBois
                                        Title: Vice President


                                        VALEANT RESEARCH & DEVELOPMENT


                                        By /s/ Wesley P. Wheeler
                                           -------------------------------------
                                        Name: Wesley P. Wheeler
                                        Title: Executive Vice President,
                                               Development

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[...***...]

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[...***...]

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                                       16.