**Exhibit10.4**

** **

*****TextOmitted and Filed Separately**

**with theSecurities and Exchange Commission.**

**ConfidentialTreatment Requested**

**Under 17C.F.R. Sections 200.80(b)(4)**

**and240.24b-2.**

 

April 16, 2008

 

Merck & Co., Inc.One Merck Drive P.O. Box 100Whitehouse Station, NJ  08889-0100

Attention:                 Office of the Secretary, WS3A-65

Chief Licensing Officer, WS2A-30

 

**Re:****                            ****License and CollaborationAgreement dated as of June 22, 2005 (the****“Collaboration Agreement”)between Merck & Co., Inc. (“Merck”) and Metabasis Therapeutics, Inc.(“Metabasis”)**

 

Ladies and Gentlemen:

 

This Letter (this **“Letter”**)confirms the understanding of Merck and Metabasis regarding certain mattersrelating to the Collaboration Agreement and is intended to be legally bindingon both parties.  Capitalized terms usedbut not otherwise defined in this Lettershall have the meanings provided in the Collaboration Agreement.  The parties agree to extend the ResearchTerm, which is currently scheduled to terminate on June 21, 2008, on theterms and conditions specified in this Letter.

 

The parties hereby acknowledge and agree that (a) ascontemplated by [...***...] of the Collaboration Agreement, the Research Term ishereby extended for one additional year from June 21, 2008 through June 21,2009 (such extended time period being referred to herein as the **“Extension Period”**), and (b) notwithstanding anythingto the contrary in [...***...] of the Collaboration Agreement, (i) unlessotherwise agreed to by the parties in writing, Metabasis shall dedicate [...***...]FTEs to the Collaboration during the Extension Period, which FTEs shall befunded by Merck in accordance with [...***...] of the Collaboration Agreement, and (ii) theprovisions in [...***...] of the Collaboration Agreement regarding Aggregate FTEsand Additional Metabasis FTEs shall be inapplicable during the ExtensionPeriod.  The parties further agree that,pursuant to [...***...] of the Collaboration Agreement, the JRC will amend theResearch Plan to reflect activities to be conducted during the ExtensionPeriod.  It is the intent of the partiesthat for the duration of the Extension Period, to the extent reasonablypossible, [...***...].

 

Except as amended by this Letter, the terms andconditions of the Collaboration Agreement shall remain in full force and effectin all other respects, unless further amended by written agreement inaccordance with Section 13.3 of the Collaboration Agreement.  On and after the effectiveness of thisLetter, each reference in the Collaboration Agreement to “this Agreement”, “hereunder”,“hereof”, “herein” or words of like import referring to the CollaborationAgreement shall mean and be a reference to the Collaboration Agreement asamended by this Letter.  The partieshereby further agree

 

*****Confidential TreatmentRequested**

 

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that the Dispute Resolution provisions of Article 12 of theCollaboration Agreement and the terms and conditions set forth in Article 13of the Collaboration Agreement, including without limitation, the Governing Lawprovisions of Section 13.2 and the Assignment and Change of Controlprovisions of Section 13.6, shall apply to this Letter as if fully setforth herein.

 

This Letter may be executed (including, without limitation, byfacsimile signature) in two counterparts, each of which shall be deemed anoriginal, but both of which together shall constitute one and the sameinstrument.

 

If the foregoing is acceptable to you, please sign this Letter in the space provided belowand return it to me.

 
|   | Sincerely,                       |
|--------|----------------------------------|
|   | ** **                       |
|   | **METABASIS THERAPEUTICS, INC.** |
|   |                             |
|   |                             |
|   | By:                              |      /s/  Paul Laikind, Ph.D. |
|   | Name:                            |  Paul Laikind,  Ph.D. |
|   | Title:                           |    President  and CEO |
|        |                                  |  |  |  |

 

 

*Agreed to and accepted as of thedate first set forth above:*

 

**MERCK & CO., INC.**

 

 
| By:    |       /s/  Mervyn Turner, PhD |   |
|--------|------------------------------------------------------------------|--------|
|   |                                                             |
| Name:  | Mervyn Turner, PhD                                          |   |
|   |                                                             |   |
| Title: | Senior Vice President,  Worldwide                                |   |
|   | Licensing and Exmternal  Research                                |   |
|        |                                                                  |        |  |

 

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