**Exhibit 10.4**

**METABASIS THERAPEUTICS, INC.**

**2004 EMPLOYEE STOCK PURCHASE PLAN**

**Adoptedby Board on May 6, 2004**

**Approvedby Stockholders on May 10, 2004**

**AmendmentAdopted by Board on January 17, 2007**

**1.             PURPOSE.**

**(a)          **The purpose of thePlan is to provide a means by which Employees of the Company and certaindesignated Related Corporations may be given an opportunity to purchase sharesof the Common Stock of the Company.

**(b)          **The Company, bymeans of the Plan, seeks to retain the services of such Employees, to secureand retain the services of new Employees and to provide incentives for suchpersons to exert maximum efforts for the success of the Company and its RelatedCorporations.

**(c)          **The Company intendsthat the Purchase Rights be considered options issued under an Employee StockPurchase Plan.

**2.             DEFINITIONS.**

As used in thePlan and any Offering, unless otherwise specified, the following terms have themeanings set forth below:

**(a)           *“Board”*****means the Board of Directors of the Company.

**(b)           *“Code”*****means the Internal Revenue Code of 1986, as amended*.*

**(c)           *“Committee”*****means a committee appointed by the Board in accordance withSection 3(c) of the Plan.

**(d)           *“Common Stock”***means the common stock of the Company.

**(e)           *“Company”***means Metabasis Therapeutics, Inc., a Delaware corporation.

**(f)            *“Contributions”***means the payroll deductions and other additional payments that a Participantcontributes to fund the exercise of a Purchase Right. A Participant may makepayments not through payroll deductions only if specifically provided for inthe Offering, and then only if the Participant has not already had the maximumpermitted amount withheld through payroll deductions during the Offering.

**(g)           *“Corporate Transaction”***means the occurrence, in a single transaction or in a series of relatedtransactions, of any one or more of the following events:

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**(i)           **a sale, lease,license or other disposition of all or substantially all of the consolidatedassets of the Company;

**(ii)          **a sale or otherdisposition of at least 90% of the outstanding securities of the Company;

**(iii)        **a merger,consolidation or similar transaction following which the Company is not thesurviving corporation; or

**(iv)         **a merger,consolidation or similar transaction following which the Company is thesurviving corporation but the shares of Common Stock outstanding immediatelypreceding the merger, consolidation or similar transaction are converted orexchanged by virtue of the merger, consolidation or similar transaction intoother property, whether in the form of securities, cash or otherwise.

**(h)           *“Director”*****means a member of the Board.

**(i)            *“Eligible Employee”*****means an Employee who meets the requirements set forth inthe Offering for eligibility to participate in the Offering, provided that suchEmployee also meets the requirements for eligibility to participate set forthin the Plan.

**(j)            *“Employee”*****means any person, including Officers and Directors, who isemployed for purposes of Section 423(b)(4) of the Code by the Company or aRelated Corporation.  Neither service asa Director nor payment of a director’s fee shall be sufficient to make anindividual an Employee of the Company or a Related Corporation.

**(k)           *“Employee Stock PurchasePlan”*****means a planthat grants Purchase Rights intended to be options issued under an “employeestock purchase plan,” as that term is defined in Section 423(b) of the Code.

**(l)            *“Exchange Act”*****means the Securities Exchange Act of 1934, as amended.

**(m)          *“Fair Market Value”*****means, as of any date, the value of a security determinedas follows:

**(i)           **If the security islisted on any established stock exchange, the Fair Market Value of the securityshall be the closing sales price for such security (or the closing bid, if nosales were reported, and in each case rounded up where necessary to the nearestwhole cent) as quoted on such exchange (or the exchange with the greatestvolume of trading in the relevant security of the Company) on the day ofdetermination, as reported in *The WallStreet Journal* or such other source as the Board deemsreliable.  Unless otherwise provided bythe Board, if there is no closing sales price (or closing bid, if no sales werereported) for the relevant security on the day of determination, then the FairMarket Value shall be the closing sales price (or the closing bid, if no saleswere reported, and in each case rounded up where necessary to the nearest wholecent) on the last preceding date for which such quotation exists.

**(ii)          **In the absence ofsuch market for a security, the Fair Market Value shall be determined in goodfaith by the Board.

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**(n)           *“Offering”*****means the grant of Purchase Rights to purchase shares ofCommon Stock under the Plan to Eligible Employees.

**(o)           *“Offering Date”***means a date selected by the Board for an Offering to commence.

**(p)           “*Officer*”**means****a person who is an officer of the Company within themeaning of Section 16 of the Exchange Act and the rules and regulationspromulgated thereunder.

**(q)           *“Participant”*****means an Eligible Employee who holds an outstandingPurchase Right granted pursuant to the Plan.

**(r)           *“Plan”*****means this Metabasis Therapeutics, Inc. 2004 Employee StockPurchase Plan.

**(s)           *“Purchase Date”*****means one or more dates during an Offering established bythe Board on which Purchase Rights shall be exercised and as of which purchasesof shares of Common Stock shall be carried out in accordance with suchOffering.

**(t)            *“Purchase Period”***means a period of time specified within an Offering beginning on the OfferingDate or on the next day following a Purchase Date within an Offering and endingon a Purchase Date.  An Offering mayconsist of one or more Purchase Periods.

**(u)           *“Purchase Right”*****means an option to purchase shares of Common Stock grantedpursuant to the Plan.

**(v)            *“Related Corporation”*****means any parent corporation or subsidiary corporation,whether now or hereafter existing, as those terms are defined in Sections424(e) and (f), respectively, of the Code.

**(w)           *“Securities Act”*****means the Securities Act of 1933, as amended.

**(x)           “*Trading Day*”**meansany day on which the exchange on which shares of Common Stock are listed isopen for trading.

**3.             ADMINISTRATION.**

**(a)          **The Board shalladminister the Plan unless and until the Board delegates administration to aCommittee, as provided in Section 3(c). Whether or not the Board has delegated administration, the Board shallhave the final power to determine all questions of policy and expediency thatmay arise in the administration of the Plan.

**(b)          **The Board (or theCommittee) shall have the power, subject to, and within the limitations of, theexpress provisions of the Plan:

**(i)           **To determine whenand how Purchase Rights to purchase shares of Common Stock shall be granted andthe provisions of each Offering of such Purchase Rights (which need not beidentical).

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**(ii)          **To designate fromtime to time which Related Corporations of the Company shall be eligible toparticipate in the Plan.

**(iii)        **To construe andinterpret the Plan and Purchase Rights, and to establish, amend and revokerules and regulations for the administration of the Plan.  The Board, in the exercise of this power, maycorrect any defect, omission or inconsistency in the Plan, in a manner and tothe extent it shall deem necessary or expedient to make the Plan fullyeffective.

**(iv)         **To amend the Plan asprovided in Section 15.

**(v)           **Generally, toexercise such powers and to perform such acts as it deems necessary orexpedient to promote the best interests of the Company and its RelatedCorporations and to carry out the intent that the Plan be treated as anEmployee Stock Purchase Plan.

**(c)          **The Board maydelegate administration of the Plan to a Committee of the Board composed of oneor more members of the Board.  Ifadministration is delegated to a Committee, the Committee shall have, inconnection with the administration of the Plan, the powers theretofore possessedby the Board, subject, however, to such resolutions, not inconsistent with theprovisions of the Plan, as may be adopted from time to time by the Board.  The Board may abolish the Committee at anytime and revest in the Board the administration of the Plan.  If administration is delegated to aCommittee, references to the Board in this Plan and in the Offering documentshall thereafter be deemed to be to the Board or the Committee, as the case maybe.

**(d)          **All determinations,interpretations and constructions made by the Board in good faith shall not besubject to review by any person and shall be final, binding and conclusive onall persons.

**4.             SHARES OF COMMONSTOCK SUBJECT TO THE PLAN.**

Subject to the provisionsof paragraph 14 relating to adjustments upon changes in stock, the stock thatmay be sold pursuant to Purchase Rights granted under the Plan shall not exceedin the aggregate 500,000 shares of the Common Stock, plus an annual increase tobe added on the first day of the fiscal year of the Company for a periodcommencing on the first day of the fiscal year that begins on January 1, 2005and ending on (and including) the first day of the fiscal year that begins onJanuary 1, 2014 (each such day, a “Calculation Date”), equal to the lesser of(i) 1% of the fully diluted (i.e. assuming exercise for or conversion intoCommon Stock of all then outstanding options, warrants and convertiblesecurities of the Company) shares of Common Stock outstanding on each suchCalculation Date (rounded down to the nearest whole share); or (ii) 500,000shares of Common Stock.  Notwithstandingthe foregoing, the Board may act, prior to the first day of any fiscal year ofthe Company, to increase the share reserve by such number of shares of CommonStock as the Board shall determine, which number shall be less than each of (i)and (ii).  If any Purchase Right grantedunder the Plan shall for any reason terminate without having been exercised,the shares of Common Stock not purchased under such Purchase Right shall againbecome available for issuance under the Plan.

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**5.             GRANT OF PURCHASERIGHTS; OFFERING.**

**(a)          **The Board may fromtime to time grant or provide for the grant of Purchase Rights to purchaseshares of Common Stock under the Plan to Eligible Employees in an Offering(consisting of one or more Purchase Periods) on an Offering Date or OfferingDates selected by the Board.  EachOffering shall be in such form and shall contain such terms and conditions asthe Board shall deem appropriate, which shall comply with the requirement ofSection 423(b)(5) of the Code that all Employees granted Purchase Rights shallhave the same rights and privileges.  Theterms and conditions of an Offering shall be incorporated by reference into thePlan and treated as part of the Plan. The provisions of separate Offerings need not be identical, but eachOffering shall include (through incorporation of the provisions of this Plan byreference in the document comprising the Offering or otherwise) the periodduring which the Offering shall be effective, which period shall not exceed 27months beginning with the Offering Date, and the substance of the provisionscontained in Sections 6 through 9, inclusive.

**(b)          **If a Participanthas more than one Purchase Right outstanding under the Plan, unless he or sheotherwise indicates in agreements or notices delivered hereunder:  (i) each agreement or notice delivered bythat Participant shall be deemed to apply to all of his or her Purchase Rightsunder the Plan, and (ii) a Purchase Right with a lower exercise price (or anearlier-granted Purchase Right, if different Purchase Rights have identicalexercise prices) shall be exercised to the fullest possible extent before aPurchase Right with a higher exercise price (or a later-granted Purchase Rightif different Purchase Rights have identical exercise prices) shall beexercised.

**6.             ELIGIBILITY.**

**(a)          **Purchase Rights maybe granted only to Employees of the Company or, as the Board may designate asprovided in Section 3(b), to Employees of a Related Corporation.  Except as provided in Section 6(b), anEmployee shall not be eligible to be granted Purchase Rights under the Planunless, on the Offering Date, such Employee has been in the employ of theCompany or the Related Corporation, as the case may be, for such continuousperiod preceding such Offering Date as the Board may require, but in no eventshall the required period of continuous employment be greater than twoyears.  In addition, the Board mayprovide that no Employee shall be eligible to be granted Purchase Rights underthe Plan unless, on the Offering Date, such Employee’s customary employmentwith the Company or the Related Corporation is more than 20 hours per weekand/or more than five months per calendar year.

**(b)          **The Board mayprovide that each person who, during the course of an Offering, first becomesan Eligible Employee shall, on a date or dates specified in the Offering whichcoincides with the day on which such person becomes an Eligible Employee orwhich occurs thereafter, receive a Purchase Right under that Offering, whichPurchase Right shall thereafter be deemed to be a part of that Offering.  Such Purchase Right shall have the samecharacteristics as any Purchase Rights originally granted under that Offering,as described herein, except that:

**(i)           **the date on whichsuch Purchase Right is granted shall be the “Offering Date” of such PurchaseRight for all purposes, including determination of the exercise price of suchPurchase Right;

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**(ii)          **the period of theOffering with respect to such Purchase Right shall begin on its Offering Dateand end coincident with the end of such Offering; and

**(iii)        **the Board may providethat if such person first becomes an Eligible Employee within a specifiedperiod of time before the end of the Offering, he or she shall not receive anyPurchase Right under that Offering.

**(c)          **No Employee shallbe eligible for the grant of any Purchase Rights under the Plan if, immediatelyafter any such Purchase Rights are granted, such Employee owns stock possessing5% or more of the total combined voting power or value of all classes of stockof the Company or of any Related Corporation. For purposes of this Section 6(c), the rules of Section 424(d) of theCode shall apply in determining the stock ownership of any Employee, and stockwhich such Employee may purchase under all outstanding Purchase Rights andoptions shall be treated as stock owned by such Employee.

**(d)          **As specified bySection 423(b)(8) of the Code, an Eligible Employee may be granted PurchaseRights under the Plan only if such Purchase Rights, together with any otherrights granted under all Employee Stock Purchase Plans of the Company and anyRelated Corporations, do not permit such Eligible Employee’s rights to purchasestock of the Company or any Related Corporation to accrue at a rate whichexceeds $25,000 of Fair Market Value of such stock (determined at the time suchrights are granted, and which, with respect to the Plan, shall be determined asof their respective Offering Dates) for each calendar year in which such rightsare outstanding at any time.

**(e)          **Officers of theCompany and any designated Related Corporation, if they are otherwise EligibleEmployees, shall be eligible to participate in Offerings under the Plan.  Notwithstanding the foregoing, the Board mayprovide in an Offering that Employees who are highly compensated Employeeswithin the meaning of Section 423(b)(4)(D) of the Code shall not be eligible toparticipate.

**7.             PURCHASE RIGHTS;PURCHASE PRICE.**

**(a)          **On each OfferingDate, each Eligible Employee, pursuant to an Offering made under the Plan,shall be granted a Purchase Right to purchase up to that number of shares ofCommon Stock purchasable either with a percentage or with a maximum dollaramount, as designated by the Board, but in either case not exceeding 15%, of such Employee’s Earnings (asdefined by the Board in each Offering) during the period that begins on theOffering Date (or such later date as the Board determines for a particularOffering) and ends on the date stated in the Offering, which date shall be nolater than the end of the Offering.

**(b)          **The Board shallestablish one or more Purchase Dates during an Offering as of which PurchaseRights granted pursuant to that Offering shall be exercised and purchases ofshares of Common Stock shall be carried out in accordance with such Offering.

**(c)          **In connection witheach Offering made under the Plan, the Board may specify a maximum number ofshares of Common Stock that may be purchased by any Participant on any PurchaseDate during such Offering.  In connectionwith each Offering made under the Plan, the Board may specify a maximumaggregate number of shares of Common Stock that may be 

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purchased by all Participants pursuant to suchOffering.  In addition, in connectionwith each Offering that contains more than one Purchase Date, the Board mayspecify a maximum aggregate number of shares of Common Stock that may bepurchased by all Participants on any Purchase Date under the Offering.  If the aggregate purchase of shares of CommonStock issuable upon exercise of Purchase Rights granted under the Offeringwould exceed any such maximum aggregate number, then, in the absence of anyBoard action otherwise, a pro rata allocation of the shares of Common Stockavailable shall be made in as nearly a uniform manner as shall be practicableand equitable.

**(d)          **The purchase priceof shares of Common Stock acquired pursuant to Purchase Rights shall be notless than the lesser of:

**(i)           **an amount equal to85% of the Fair Market Value of the shares of Common Stock on the OfferingDate; or

**(ii)          **an amount equal to85% of the Fair Market Value of the shares of Common Stock on the applicablePurchase Date.

**8.             PARTICIPATION;WITHDRAWAL; TERMINATION.**

**(a)          **A Participant mayelect to authorize payroll deductions pursuant to an Offering under the Plan bycompleting and delivering to the Company, within the time specified in theOffering, an enrollment form (in such form as the Company may provide). Eachsuch enrollment form shall authorize an amount of Contributions expressed as apercentage of the submitting Participant’s Earnings (as defined in eachOffering) during the Offering (not to exceed the maximum percentage specifiedby the Board). Each Participant’s Contributions shall remain the property ofthe Participant at all times prior to the purchase of Common Stock, but suchContributions may be commingled with the assets of the Company and used forgeneral corporate purposes except where applicable law requires thatContributions be deposited with an independent third party. To the extentprovided in the Offering, a Participant may begin making Contributions afterthe beginning of the Offering.  To theextent provided in the Offering, a Participant may thereafter reduce (includingto zero) or increase his or her Contributions. To the extent specifically provided in the Offering, in addition tomaking Contributions by payroll deductions, a Participant may makeContributions through the payment by cash or check prior to each Purchase Dateof the Offering.

**(b)          **During an Offering,a Participant may cease making Contributions and withdraw from the Offering bydelivering to the Company a notice of withdrawal in such form as the Companymay provide.  Such withdrawal may beelected at any time prior to the end of the Offering, except as providedotherwise in the Offering.  Upon suchwithdrawal from the Offering by a Participant, the Company shall distribute tosuch Participant all of his or her accumulated Contributions (reduced to theextent, if any, such Contributions have been used to acquire shares of CommonStock for the Participant) under the Offering, and such Participant’s PurchaseRight in that Offering shall thereupon terminate.  A Participant’s withdrawal from an Offeringshall have no effect upon such Participant’s eligibility to participate in anyother Offerings under the Plan, but such Participant shall be required todeliver a new enrollment form in order to participate in subsequent Offerings.

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**(c)          **Purchase Rightsgranted pursuant to any Offering under the Plan shall terminate immediatelyupon a Participant ceasing to be an Employee for any reason or for no reason(subject to any post-employment participation period required by law) or otherlack of eligibility. The Company shall distribute to such terminated or otherwiseineligible Employee all of his or her accumulated Contributions (reduced to theextent, if any, such Contributions have been used to acquire shares of CommonStock for the terminated or otherwise ineligible Employee) under the Offering.

**(d)          **Purchase Rightsshall not be transferable by a Participant otherwise than by will, the laws ofdescent and distribution, or a beneficiary designation as provided in Section13.  During a Participant’s lifetime,Purchase Rights shall be exercisable only by such Participant.

**(e)          **Unless otherwisespecified in an Offering, the Company shall have no obligation to pay intereston Contributions.

**9.             EXERCISE.**

**(a)          **On each PurchaseDate during an Offering, each Participant’s accumulated Contributions shall beapplied to the purchase of shares of Common Stock up to the maximum number ofshares of Common Stock permitted pursuant to the terms of the Plan and theapplicable Offering, at the purchase price specified in the Offering.  No fractional shares shall be issued upon theexercise of Purchase Rights unless specifically provided for in the Offering.

**(b)          **If any amount ofaccumulated Contributions remains in a Participant’s account after the purchaseof shares of Common Stock and such remaining amount is less than the amountrequired to purchase one share of Common Stock on the final Purchase Date of anOffering, then such remaining amount shall be held in such Participant’saccount for the purchase of shares of Common Stock under the next Offeringunder the Plan, unless such Participant withdraws from such next Offering, asprovided in Section 8(b), or is not eligible to participate in such Offering,as provided in Section 6, in which case such amount shall be distributed tosuch Participant after the final Purchase Date, without interest.  If the amount of Contributions remaining in aParticipant’s account after the purchase of shares of Common Stock is at leastequal to the amount required to purchase one whole share of Common Stock on thefinal Purchase Date of the Offering, then such remaining amount shall bedistributed in full to such Participant at the end of the Offering.

**(c)          **No Purchase Rightsmay be exercised to any extent unless the shares of Common Stock to be issuedupon such exercise under the Plan are covered by an effective registrationstatement pursuant to the Securities Act and the Plan is in material compliancewith all laws applicable to the Plan.  Ifon a Purchase Date during any Offering hereunder the shares of Common Stock arenot so registered or the Plan is not in such compliance, no Purchase Rights orany Offering shall be exercised on such Purchase Date, and the Purchase Dateshall be delayed until the shares of Common Stock are subject to such aneffective registration statement and the Plan is in such compliance, exceptthat the Purchase Date shall not be delayed more than 12 months and thePurchase Date shall in no event be more than 27 months from the OfferingDate.  If, on the Purchase Date under anyOffering hereunder, as delayed to the maximum extent permissible, the shares ofCommon Stock are not registered and the Plan is not in such 

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compliance, no Purchase Rights or any Offering shallbe exercised and all Contributions accumulated during the Offering (reduced tothe extent, if any, such Contributions have been used to acquire shares ofCommon Stock) shall be distributed to the Participants.

**10.          COVENANTS OF THECOMPANY.**

The Company shall seek to obtain from each federal,state, foreign or other regulatory commission or agency having jurisdiction overthe Plan such authority as may be required to issue and sell shares of CommonStock upon exercise of the Purchase Rights. If, after commercially reasonable efforts, the Company is unable toobtain from any such regulatory commission or agency the authority that counselfor the Company deems necessary for the lawful issuance and sale of shares ofCommon Stock under the Plan, the Company shall be relieved from any liabilityfor failure to issue and sell shares of Common Stock upon exercise of suchPurchase Rights unless and until such authority is obtained.

**11.          USE OF PROCEEDS FROMSHARES OF COMMON STOCK.**

Proceeds from the sale of shares of Common Stockpursuant to Purchase Rights shall constitute general funds of the Company.

**12.          RIGHTS AS ASTOCKHOLDER.**

A Participant shall not be deemed to be the holder of,or to have any of the rights of a holder with respect to, shares of CommonStock subject to Purchase Rights unless and until the Participant’s shares ofCommon Stock acquired upon exercise of Purchase Rights are recorded in thebooks of the Company (or its transfer agent).

**13.          DESIGNATION OFBENEFICIARY.**

**(a)          **A Participant mayfile a written designation of a beneficiary who is to receive any shares ofCommon Stock and/or cash, if any, from the Participant’s account under the Planin the event of such Participant’s death subsequent to the end of an Offeringbut prior to delivery to the Participant of such shares of Common Stock orcash.  In addition, a Participant mayfile a written designation of a beneficiary who is to receive any cash from theParticipant’s account under the Plan in the event of such Participant’s deathduring an Offering.  Any such designationshall be on a form provided by or otherwise acceptable to the Company.

**(b)          **The Participant maychange such designation of beneficiary at any time by written notice to theCompany.  In the event of the death of aParticipant and in the absence of a beneficiary validly designated under thePlan who is living at the time of such Participant’s death, the Company shalldeliver such shares of Common Stock and/or cash to the executor oradministrator of the estate of the Participant, or if no such executor oradministrator has been appointed (to the knowledge of the Company), theCompany, in its sole discretion, may deliver such shares of Common Stock and/orcash to the spouse or to any one or more dependents or relatives of theParticipant, or if no spouse, dependent or relative is known to the Company,then to such other person as the Company may designate.

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**14.          ADJUSTMENTS UPONCHANGES IN SECURITIES; CORPORATE TRANSACTIONS.**

**(a)          **If any change ismade in the shares of Common Stock, subject to the Plan, or subject to anyPurchase Right, without the receipt of consideration by the Company (throughmerger, consolidation, reorganization, recapitalization, reincorporation, stockdividend, dividend in property other than cash, stock split, liquidatingdividend, combination of shares, exchange of shares, change in corporatestructure or other transaction not involving the receipt of consideration bythe Company), the Plan shall be appropriately adjusted in the type(s),class(es) and maximum number of shares of Common Stock subject to the Planpursuant to Section 4(a), and the outstanding Purchase Rights shall be appropriatelyadjusted in the type(s), class(es), number of shares and purchase limits ofsuch outstanding Purchase Rights.  TheBoard shall make such adjustments, and its determination shall be final,binding and conclusive.  (The conversionof any convertible securities of the Company shall not be treated as a “transactionnot involving the receipt of consideration by the Company.”)

**(b)          **In the event of aCorporate Transaction, then: (i) any surviving or acquiring corporation maycontinue or assume Purchase Rights outstanding under the Plan or may substitutesimilar rights (including a right to acquire the same consideration paid tostockholders in the Corporate Transaction) for those outstanding under thePlan, or (ii) if any surviving or acquiring corporation does not continue orassume such Purchase Rights or does not substitute similar rights for PurchaseRights outstanding under the Plan, then, the Participants’ accumulatedContributions shall be used to purchase shares of Common Stock within tenbusiness days prior to the Corporate Transaction under the ongoing Offering,and the Participants’ Purchase Rights under the ongoing Offering shallterminate immediately after such purchase.

**15.          AMENDMENT OF THEPLAN.**

**(a)          **The Board at anytime, and from time to time, may amend the Plan.  However, except as provided in Section 14relating to adjustments upon changes in securities and except as to amendmentssolely to benefit the administration of the Plan, to take account of a changein legislation or to obtain or maintain favorable tax, exchange control orregulatory treatment for Participants or the Company or any RelatedCorporation, no amendment shall be effective unless approved by thestockholders of the Company to the extent stockholder approval is necessary forthe Plan to satisfy the requirements of Section 423 of the Code or otherapplicable laws or regulations.

**(b)          **It is expresslycontemplated that the Board may amend the Plan in any respect the Board deemsnecessary or advisable to provide Employees with the maximum benefits providedor to be provided under the provisions of the Code and the regulationspromulgated thereunder relating to Employee Stock Purchase Plans or to bringthe Plan and/or Purchase Rights into compliance therewith.

**(c)          **The rights and obligationsunder any Purchase Rights granted before amendment of the Plan shall not beimpaired by any amendment of the Plan except: (i) with the consent of theperson to whom such Purchase Rights were granted, or (ii) as necessary tocomply with any laws or governmental regulations (including, withoutlimitation, the provisions of the Code and the regulations promulgatedthereunder relating to Employee Stock Purchase Plans).

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**16.          TERMINATION ORSUSPENSION OF THE PLAN.**

**(a)          **The Board in itsdiscretion may suspend or terminate the Plan at any time.  Unless sooner terminated, the Plan shallterminate at the time that all of the shares of Common Stock reserved forissuance under the Plan, as increased and/or adjusted from time to time, havebeen issued under the terms of the Plan. No Purchase Rights may be granted under the Plan while the Plan issuspended or after it is terminated.

**(b)          **Any benefits,privileges, entitlements and obligations under any Purchase Rights while thePlan is in effect shall not be impaired by suspension or termination of thePlan except (i) as expressly provided in the Plan or with the consent of theperson to whom such Purchase Rights were granted, (ii) as necessary to complywith any laws,  regulations, or listingrequirements, or (iii) as necessary to ensure that the Plan and/or PurchaseRights comply with the requirements of Section 423 of the Code.

**17.          EFFECTIVE DATE OFPLAN.**

The Plan shall become effective as determined by theBoard, but no Purchase Rights shall be exercised unless and until the Plan hasbeen approved by the stockholders of the Company within 12 months before orafter the date the Plan is adopted by the Board.

**18.          MISCELLANEOUS PROVISIONS.**

**(a)          **The Plan andOffering do not constitute an employment contract.  Nothing in the Plan or in the Offering shallin any way alter the at will nature of a Participant’s employment or  be deemed to create in any way whatsoever anyobligation on the part of any Participant to continue in the employ of theCompany or a Related Corporation, or on the part of the Company or a RelatedCorporation to continue the employment of a Participant.

**(b)          **The provisions ofthe Plan shall be governed by the laws of the State of California withoutresort to that state’s conflicts of laws rules.

 

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**METABASIS THERAPEUTICS, INC.**

**AMENDED AND RESTATED**

**2004 EMPLOYEE STOCK PURCHASE PLANOFFERING DOCUMENT**

In this document,capitalized terms not otherwise defined shall have the same definitions of suchterms as in the Metabasis Therapeutics, Inc. 2004 Employee Stock Purchase Plan.

**1.             GRANT; OFFERINGDATE.**

**(a)          **The Board herebyauthorizes a series of Offerings pursuant to the terms of this Offeringdocument.

**(b)          **The first Offeringhereunder (the ***“InitialOffering”***) shall begin on the date the Company’s Common Stock isfirst offered to the public under a registration statement declared effectiveunder the Securities Act (the ***“IPO Date”***) and shall end on June 30, 2006, unlessterminated earlier as provided below. After the Initial Offering, an additional new Offering shall begin onthe day after the first Purchase Date of the immediately precedingOffering.  The first day of an Offeringis that Offering’s “Offering Date.” Except as provided below, each Offering shall be approximately 24 monthsin duration, with four Purchase Periods which, except for the first PurchasePeriod of the Initial Offering (which may be longer or shorter than 6 months)shall be approximately 6 months in length. Except as provided below, a Purchase Date is the last day of a PurchasePeriod or of an Offering, as the case may be. The Initial Offering shall consist of four Purchase Periods with thefirst Purchase Period of the Initial Offering ending on December 31, 2004.

**(c)          **Notwithstanding theforegoing: (i) if any Offering Date falls on a day that is not a Trading Day,then such Offering Date shall instead fall on the next subsequent Trading Day,and (ii) if any Purchase Date falls on a day that is not a Trading Day, thensuch Purchase Date shall instead fall on the immediately preceding Trading Day.

**(d)          **Prior to thecommencement of any Offering, the Board may change any or all terms of suchOffering and any subsequent Offerings. The granting of Purchase Rights pursuant to each Offering hereundershall occur on each respective Offering Date unless prior to such date(i) the Board determines that such Offering shall not occur, or(ii) no shares of Common Stock remain available for issuance under thePlan in connection with the Offering.

**(e)          **If the Company’saccountants advise the Company that the accounting treatment of purchases underthe Plan will change or has changed in a manner that the Company determines isdetrimental to its best interests, then the Company may, in its discretion,take any or all of the following actions: (i) terminate each ongoing Offering as of the next Purchase Date (afterthe purchase of stock on such Purchase Date) under such Offering; (ii) set anew Purchase Date for each ongoing Offering and terminate each such Offeringafter the purchase of stock on such Purchase Date; (iii) amend the Plan and oneor more of the ongoing Offerings to reduce or

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eliminate an accounting treatment that is detrimentalto the Company’s best interests and (iv) terminate each ongoing Offering and refund any money contributedto the participants.

**(f)           **Notwithstandinganything in this Section 1 to the contrary, if on the first day of a newPurchase Period during an Offering the Fair Market Value of a share of CommonStock is less than it was on the Offering Date for that Offering, then theOffering shall immediately terminate and that day shall become the OfferingDate, and the Participants who were enrolled in the terminated Offering shallautomatically be enrolled in the new Offering that starts on such day.

**2.             ELIGIBLEEMPLOYEES.**

**(a)          **Each EligibleEmployee who, on the Offering Date of an Offering hereunder, is (i) an employeeof the Company; (ii) an employee of a Subsidiary incorporated in the UnitedStates; or (iii) an employee of a Subsidiary that is not incorporated in theUnited States, provided that the Board or Committee has designated theemployees of such Subsidiary as eligible to participate in the Offering, shallbe granted a Purchase Right on the Offering Date of such Offering.

**(b)          **Notwithstanding theforegoing, the following Employees shall not be Eligible Employees or begranted Purchase Rights under an Offering:

**(i)           **part-time orseasonal Employees whose customary employment is 20 hours per week or less orfive months per calendar year or less;

**(ii)          **5% stockholders(including ownership through unexercised and/or unvested stock options) asdescribed in Section 6(c) of the Plan; or

**(iii)        **Employees injurisdictions outside of the United States if, as of the Offering Date of theOffering, the grant of such Purchase Rights would not be in compliance with theapplicable laws of any jurisdiction in which the Employee resides or isemployed.

**(c)          **Notwithstanding theforegoing, each person who first becomes an Eligible Employee during an ongoingOffering shall not be able to participate in such Offering.

**3.             PURCHASE RIGHTS.**

**(a)          **Subject to thelimitations herein and in the Plan, a Participant’s Purchase Right shall permitthe purchase of the number of shares of Common Stock purchasable with up to 15%of such Participant’s Earnings paid during the period of such Offeringbeginning immediately after such Participant first commences participation; *provided, however*, that no Participant may have more than15% of such Participant’s Earnings applied to purchase shares of  Common Stock under all ongoing Offeringsunder the Plan and all other plans of the Company and Related Corporations thatare intended to qualify as Employee Stock Purchase Plans.

**(b)          **For Offeringshereunder, “Earnings” means the base compensation paid to a Participant,including all salary, wages (including amounts elected to be deferred by theParticipant, that would otherwise have been paid, under any cash or deferredarrangement or

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other deferred compensation program established by theCompany or a Related Corporation), but excluding all overtime pay, commissions,bonuses, and other remuneration paid directly to such Participant,  profit sharing, the cost of employee benefitspaid for by the Company or a Related Corporation, education or tuitionreimbursements, imputed income arising under any Company or Related Corporationgroup insurance or benefit program, traveling expenses, business and movingexpense reimbursements, income received in connection with stock options,contributions made by the Company or a Related Corporation under any employeebenefit plan, and similar items of compensation.

**(c)          **Notwithstanding theforegoing, the maximum number of shares of Common Stock that a Participant maypurchase on any Purchase Date in an Offering shall be such number of shares ashas a Fair Market Value (determined as of the Offering Date for such Offering)equal to (x) $25,000 multiplied by the number of calendar years in which thePurchase Right under such Offering has been outstanding at any time, minus (y)the Fair Market Value of any other shares of Common Stock (determined as of the relevant Offering Date with respectto such shares) that, for purposes of the limitation of Section 423(b)(8) ofthe Code, are attributed to any of such calendar years in which the PurchaseRight is outstanding. The amount in clause (y) of the previous sentence shallbe determined in accordance with regulations applicable under Section 423(b)(8)of the Code based on (i) the number of shares previously purchased with respectto such calendar years pursuant to such Offering or any other Offering underthe Plan, or pursuant to any other Company or Related Corporation plansintended to qualify as Employee Stock Purchase Plans, and (ii) the number ofshares subject to other Purchase Rights outstanding on the Offering Date forsuch Offering pursuant to the Plan or any other such Company or RelatedCorporation Employee Stock Purchase Plan.

**(d)          **The maximumaggregate number of shares of Common Stock available to be purchased by allParticipants on a Purchase Date shall be the number of shares of Common Stockthen remaining available under the Plan. If the aggregate purchase of shares of Common Stock upon exercise ofPurchase Rights granted under the Offering would exceed the maximum aggregatenumber of shares available, the Board shall make a pro rata allocation of theshares available in a uniform and equitable manner.

**(e)          **Notwithstanding theforegoing, the maximum number of shares of Common Stock that an EligibleEmployee may purchase on any Purchase Date during any Offering shall not exceed2,500 shares.

**4.             PURCHASE PRICE.**

The purchase price of shares of Common Stock under anOffering shall be the lesser of: (i) 85% of the Fair Market Value of suchshares of Common Stock on the applicable Offering Date, or (ii) 85% of the FairMarket Value of such shares of  CommonStock on the applicable Purchase Date, in each case rounded up to the nearestwhole cent per share.  For the InitialOffering, the Fair Market Value of the shares of Common Stock at the time whenthe Offering commences shall be the price per share at which shares are firstsold to the public in the Company’s initial public offering as specified in thefinal prospectus for that initial public offering.

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**5.             PARTICIPATION.**

**(a)          **An EligibleEmployee may elect to participate in an Offering on the Offering Date. AnEligible Employee shall elect his or her payroll deduction percentage on suchenrollment form as the Company provides. The completed enrollment form must bedelivered to the Company prior to the date participation is to be effective,unless a later time for filing the enrollment form is set by the Company forall Eligible Employees with respect to a given Offering. Payroll deductionpercentages must be expressed in whole percentages of Earnings, with a minimumpercentage of 1% and a maximum percentage of 15%.  Except as provided in paragraph (e) belowwith respect to the Initial Offering, Contributions may be made only by way ofpayroll deductions.

**(b)          **A Participant maydecrease his or her participation level twice during a Purchase Period.  In addition, (i) a Participant may decreaseto 0% his or her participation level only once during a Purchase Period and(ii) a Participant may increase his or her participation level during aPurchase Period, to be effective upon the commencement of the next PurchasePeriod.  Any such increase or decrease inparticipation level shall be made by delivering a notice to the Company or adesignated Subsidiary in such form as the Company provides prior to the ten dayperiod (or such shorter period of time as determined by the Company andcommunicated to Participants) immediately preceding the next Purchase Date ofthe Purchase Period for which it is to be effective.

**(c)          **A Participant maywithdraw from an Offering and receive a refund of his or her Contributions(reduced to the extent, if any, such Contributions have been used to acquireshares of  Common Stock for theParticipant on any prior Purchase Date) without interest, at any time prior tothe end of the Offering, excluding only each ten day period immediatelypreceding a Purchase Date (or such shorter period of time determined by theCompany and communicated to Participants), by delivering a withdrawal notice tothe Company or a designated Subsidiary in such form as the Companyprovides.  A Participant who haswithdrawn from an Offering shall not again participate in such Offering, butmay participate in subsequent Offerings under the Plan in accordance with theterms of the Plan and the terms of such subsequent Offerings.

**(d)          ** Notwithstandingthe foregoing or any other provision of this Offering document or of the Planto the contrary, neither the enrollment of any Eligible Employee in the Plannor any forms relating to participation in the Plan shall be given effect untilsuch time as a registration statement covering the registration of the sharesunder the Plan that are subject to the Offering has been filed by the Companyand has become effective.

**(e)          **Notwithstanding theforegoing or any other provision of this Offering document or of the Plan tothe contrary, with respect to the Initial Offering only, each Eligible Employeewho is employed on the IPO Date automatically shall be enrolled in the InitialOffering, with a Purchase Right to purchase up to the number of shares ofCommon Stock that are purchasable with 15% of the Eligible Employee’s Earnings,subject to the limitations set forth in Section 3(c)-(e) above.  Following the filing of an effectiveregistration statement pursuant to a Form S-8, such Eligible Employee shall beprovided a certain period of time, as determined by the Company in its solediscretion, within which to elect to authorize payroll deductions for thepurchase of shares during the Initial Offering (which may be for a percentagethat is less than

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15% of the Eligible Employee’s Earnings).  If such Eligible Employee elects not toauthorize such payroll deductions, the Eligible Employee instead may purchaseshares of Common Stock under the Plan by delivering a single cash payment forthe purchase of such shares to the Company or a designated Subsidiary prior tothe ten day period (or such shorter period of time as determined by the Companyand communicated to Participants) immediately preceding the Purchase Date underthe Initial Offering.  If an EligibleEmployee neither elects to authorize payroll deductions nor chooses to make acash payment in accordance with the foregoing sentence, then the EligibleEmployee shall not purchase any shares of Common Stock during the InitialOffering.  After the end of the InitialOffering, in order to participate in any subsequent Offerings, an EligibleEmployee must enroll and authorize payroll deductions prior to the commencementof the Offering, in accordance with paragraph (a) above; *provided, however,* that once an EligibleEmployee enrolls in an Offering and authorizes payroll deductions (including inconnection with the Initial Offering), the Eligible Employee automaticallyshall be enrolled for all subsequent Offerings until he or she elects towithdraw from an Offering pursuant to paragraph (c) above or terminates his orher participation in the Plan.

**6.             PURCHASES.**

Subject to the limitations contained herein, on eachPurchase Date, each Participant’s Contributions (without any increase forinterest) shall be applied to the purchase of whole shares, up to the maximumnumber of shares permitted under the Plan and the Offering.

**7.             NOTICES ANDAGREEMENTS.**

Any notices or agreements provided for in an Offeringor the Plan shall be given in writing, in a form provided by the Company, andunless specifically provided for in the Plan or this Offering, shall be deemedeffectively given upon receipt or, in the case of notices and agreementsdelivered by the Company, five days after deposit in the United Statesmail, postage prepaid.

**8.             EXERCISE CONTINGENT ON STOCKHOLDER APPROVAL.**

The Purchase Rights granted under an Offering aresubject to the approval of the Plan by the stockholders of the Company asrequired for the Plan to obtain treatment as an Employee Stock Purchase Plan.

**9.             OFFERING SUBJECT TO PLAN.**

Each Offering is subject to all the provisions of thePlan, and the provisions of the Plan are hereby made a part of theOffering.  The Offering is furthersubject to all interpretations, amendments, rules and regulations which mayfrom time to time be promulgated and adopted pursuant to the Plan.  In the event of any conflict between theprovisions of an Offering and those of the Plan (including interpretations,amendments, rules and regulations which may from time to time be promulgatedand adopted pursuant to the Plan), the provisions of the Plan shall control.

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