Exhibit 10.1


 


EXECUTION
COPY




***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


 


COLLABORATION AND LICENSE AGREEMENT


 


THIS
COLLABORATION AND LICENSE AGREEMENT (the “Agreement”) is entered into
as of August 7, 2008 (the “Effective Date”)
by and among HOFFMANN-LA ROCHE INC., a New
Jersey corporation located at 340 Kingsland Street, Nutley, New Jersey 07110 (“Roche Nutley”), ROCHE PALO ALTO LLC, a Delaware limited
liability company located at 3431 Hillview Avenue, Palo Alto, California
94304-1397 (“Roche Palo Alto”), and F.HOFFMANN-LA ROCHE LTD, a Swiss corporation located at
Grenzacherstrasse 124, CH-4070, Basel, Switzerland (“Roche
Basel” and, collectively with Roche Nutley and Roche Palo Alto,  “Roche”), and METABASIS THERAPEUTICS, INC., a Delaware corporation located
at 11119 North Torrey Pines Road, La Jolla, CA 92037 (“Metabasis”).


 


RECITALS


 


WHEREAS, Metabasis has developed Metabasis Technology
(as hereinafter defined) for the discovery and optimization of liver targeted
compounds and Roche owns Roche Nucleosides (as hereinafter defined);


 


WHEREAS, Roche and Metabasis desire to enter into a
research collaboration to apply Metabasis Technology to Roche Nucleosides to
develop the Collaboration Compounds (as hereinafter defined) upon the terms and
conditions set forth herein; and


 


WHEREAS, Roche desires
to obtain licenses under the Metabasis Technology and Metabasis’ interest in
the Joint Technology (as each such term is hereinafter defined) to develop and
commercialize Products in the Field (as hereinafter defined), and Metabasis
desires to grant such licenses, in each case upon the terms and conditions set
forth herein.


 


AGREEMENT


 


NOW,
THEREFORE, in
consideration of the foregoing premises and the mutual covenants herein
contained, the parties hereby agree as follows:


 


1.                                      DEFINITIONS


 


Unless
specifically set forth to the contrary herein, the following terms, whether
used in the singular or plural, shall have the respective meanings set forth
below. References to “Articles”, “Sections” and “subsections” in this Agreement
shall be to Articles, Sections and subsections respectively, of this Agreement
unless otherwise specifically provided: 


 


1

















 


1.1                               “AAA” shall have the meaning
provided in Section 12.6(a).


 


1.2                               “Affiliate”
shall mean any company or entity controlled by, controlling, or under
common control with a party hereto.  For
the purposes of this definition, the term “control” (including, with
correlative meanings, the terms “controlled by” and “under common control with”)
as used with respect to a party shall mean the possession, directly or
indirectly, of more than 50% of the outstanding voting securities of a
corporation or comparable equity interest in any other type of entity, or
otherwise having the power to govern the financial and the operating policies
or to appoint the management of such entity. 
With regard to Roche, the term “Affiliate” shall not include: (a) Genentech
Inc., 1 DNA Way, South San Francisco, California 94080-4990, unless and
until such time as Roche opts for such inclusion by written notice to
Metabasis; or (b) Chugai Pharmaceutical Co., Ltd, 1-9,
Kyobashi 2-chome, Chuo-ku, Tokyo, 104-8301, Japan, unless and until such
time as Roche opts for such inclusion by written notice to Metabasis.


 


1.3                               “Collaboration
Compound” shall mean a chemical entity that is invented solely by a party
or jointly by the parties (or on behalf of a party or the parties) prior to or
during the Research Term that covalently incorporates Metabasis Prodrug
Technology and is converted into a Roche Nucleoside (including any
monophosphate, diphosphate or triphosphate thereof) in the body.


 


1.4                               “Combination
Product” shall mean a Product that is a single pharmaceutical formulation
containing as its active ingredients both a Licensed Compound and one or more
other ingredients that are therapeutically or prophylactically active in the
Field.


 


1.5                               “Confidential Information” shall
have the meaning given such term in Section 7.1.


 


1.6                               “Confidentiality Agreement” shall
mean the confidentiality agreement, dated January 21, 2008, between the
parties.


 


1.7                               “Control”
shall mean, with respect to any Information, Patent or other intellectual
property right, possession by a party of the ability (whether by ownership,
license or otherwise) to grant access, a license or a sublicense to such
Information or intellectual property right without violating the terms of any
agreement or other arrangement with any Third Party (before taking into account
the effect of any licenses granted by such party to the other party under this
Agreement but after taking into account the effect of Section 9.1(a)).


 


1.8                               “EMEA” shall mean the European Medicines
Agency and any successor entity thereto.


 


1.9                               “FDA” shall mean the U.S. Food and Drug
Administration and any successor entity thereto.


 


2

















 


1.10                        “Field”
shall mean the prevention and treatment of chronic hepatitis C viral infections
in humans.


 


1.11                        “First Commercial Sale” shall
mean, with respect to any Product, on a country-by-country basis, the first
sale in a country after the governing health regulatory authority of such
country has granted Regulatory Approval.  For purposes of clarification, the first sale
for end use or consumption of a Product in a country after conditional approval
has been granted will constitute a First Commercial Sale for purposes of this
Agreement.


 


1.12                        “FTE”
shall mean the equivalent of a full-time scientist’s work time over a
twelve-month period (including normal vacations, sick days and holidays).  One FTE shall mean a minimum of [***], and no
single person can perform the work of more than one FTE per year.


 


1.13                        “Generic Competition” shall have
the meaning provided in Section 5.5(c).


 


1.14                        “Generic Product” shall have the
meaning provided in Section 5.5(c).


 


1.15                        “IND” shall
mean an investigational new drug application, clinical study application,
clinical trial exemption, or similar application or submission for approval to
conduct human clinical investigations filed with or submitted to a Regulatory
Authority in conformance with the requirements of such Regulatory Authority.


 


1.16                        “Information”
shall mean all tangible and intangible (a) techniques, technology,
practices, trade secrets, inventions (whether patentable or not), methods,
processes of manufacture, intermediates, dosing regimens, formulations,
knowledge, know-how, skill, experience, test data and results (including
pharmacological, toxicological and preclinical and clinical test data and
results), analytical and quality control data, results or descriptions,
software and algorithms and (b) compositions of matter, cells, cell lines,
assays, animal models and physical, biological or chemical material.


 


1.17                        “Invention”
shall mean any invention, conception, actual or constructive reduction to
practice, process, method, use, composition of matter, article of manufacture,
discovery or finding, whether or not patentable.


 


1.18                        “Joint Invention” shall mean any
Invention conceived jointly by the parties (or on their behalf) in the course
of the Research Program.


 


1.19                        “Joint Patents” shall mean Patents
claiming any Joint Invention.


 


1.20                        “Joint Product Patents” shall mean Joint Patents claiming a
Collaboration Compound or Product or a method of making or using a
Collaboration Compound or Product.


 


1.21                        “Joint Technology” shall mean
Joint Inventions and Joint Patents.


 


1.22                        “JRC”
shall mean the joint research committee established to facilitate the Research
Program as more fully described in Section 2.1.


 


*** Confidential
Treatment Requested


 


3

















 


1.23                        “Licensed
Compound” shall mean any Collaboration Compound that is deemed a “Licensed
Compound” in accordance with Section 4.1 hereof.


 


1.24                        “Losses”
shall have the meaning provided in Section 11.1.


 


1.25                        “Major
European Market” shall mean: (a) any one of the following countries:
the United Kingdom, France, Germany, Italy or Spain; or (b) the European
Union as a whole.


 


1.26                        “Major Market” shall mean the
United States of America, the European Union or Japan.


 


1.27                        “Major
Pharma Company” shall mean any pharmaceutical company with:  (i) a product in the [***] or (ii) a
product in the [***] or (iii) annual sales of [***] in its most recently
completed fiscal year for which such information is available of [***] (as
measured by IMS Health or its successor).


 


1.28                        “Materials”
shall have the meaning provided in Section 3.8.


 


1.29                        “Metabasis
Indemnitee” shall have the meaning provided in Section 11.1.


 


1.30                        “Metabasis Know-How” shall mean
any Information or Invention to the extent directed to Metabasis Prodrug
Technology or any Collaboration Compound or Product or a method of making or using
Metabasis Prodrug Technology or any Collaboration Compound or Product, which
Information or Invention is Controlled by Metabasis as of the Effective Date or
first becomes Controlled by Metabasis during the Research Term.  For purposes of clarity, Metabasis Know-How
does not include Roche Know-How.


 


1.31                        “Metabasis Patents” shall mean
Metabasis Platform Patents and Metabasis Product Patents.


 


1.32                        “Metabasis
Platform Patents” shall mean Patents to the extent of claims or portions of
claims therein directed to any Invention that is Metabasis Prodrug Technology
or a method of making or using Metabasis Prodrug Technology, which Patents are
Controlled by Metabasis as of the Effective Date or first become Controlled by
Metabasis during the Research Term.  For purposes
of clarity, Metabasis Platform Patents do not include Metabasis Product Patents
or Roche Patents.  The Metabasis Platform
Patents existing on the Effective Date are listed on Schedule I
to the Research Plan.


 


1.33                        “Metabasis
Prodrug Technology” shall mean (a) any and all cyclic 1,3-propanyl
esters or amides of phosphates, phosphoramidates and/or phosphonates that are
activated by any P450 enzyme and/or any method of making or using any of the
foregoing, and/or (b) any and all compounds containing or producing after
administration to an animal a cyclic carbonate functional group spanning the 2’-
and 3’-hydroxyl groups of a nucleoside or analog or derivative thereof and/or
any method of making and using such compounds; in each case, to the extent any of
the foregoing is either Controlled by Metabasis or constitutes Confidential
Information of Metabasis (but is not Joint Technology).


 


*** Confidential
Treatment Requested


 


4

















 


1.34                        “Metabasis
Product Patents” shall mean Patents to the extent of claims or portions of
claims therein directed to any Invention that is a Collaboration Compound or
Product or a method of making or using a Collaboration Compound or Product,
which Patents are Controlled by Metabasis as of the Effective Date or first
become Controlled by Metabasis during the Research Term.  For purposes of clarity, Metabasis Product
Patents do not include Roche Patents. 
The Metabasis Product Patents existing on the Effective Date are listed on Schedule I to the Research Plan.


 


1.35                        “Metabasis
Technology” shall mean the Metabasis Know-How and Metabasis Patents.


 


1.36                        “NDA” shall mean a new drug application (as
more fully defined in 21 C.F.R. 314.5 et
seq.) and all amendments and supplements thereto filed by Roche, its
Affiliates or sublicensees with the FDA, or the equivalent application filed by
Roche, its Affiliates or sublicensees with any equivalent agency or
governmental authority outside the United States of America (including any
supra-national agency such as in the European Union), including all documents,
data, and other information concerning a pharmaceutical product which are
necessary for gaining Regulatory Approval to market and sell such
pharmaceutical product.


 


1.37                        Net Sales” shall mean the amount remaining after
deducting from Adjusted Gross Sales [***] of [***] of
[***] of those [***] which are not [***] by [***] or [***]
(which, solely for purposes of this
definition, and [***] the [***] of [***], shall [***])
or [***] on a [***] basis (e.g. [***], [***], [***], [***] for [***] of [***], [***], [***], and [***]
than the [***]).  As used herein, the [***] shall mean
the [***] of any [***] or [***] and [***]
and [***] to [***] that are [***] or [***] of
[***] or [***] or [***], [***] of [***] and [***] (including [***]
for [***], [***], [***], [***], [***], [***] and [***]),
[***] and [***] (including [***], [***] to [***] and
[***], [***] or [***] for
[***], [***], [***], [***] and [***] of [***],
e.g. [***], [***]), [***], and [***]
(including [***] or [***], [***] and [***] to
the [***]).  Notwithstanding the foregoing, amounts
received by [***] or [***] for the [***] of [***] and
[***] or [***] for [***] shall [***]
in the [***] of [***] hereunder.


 


With
respect to [***], [***] shall [***] the [***] of such [***] by the [***] is the
[***] ([***]) [***] of the [***] in the [***] in the [***] in [***] the [***], and [***] is the [***] of the [***] in the [***] in the [***]
when [***] in [***] in the [***].  If
[***] be [***] for the [***] or the [***] are [***] in a [***] then [***] for
[***] of [***] shall [***] the [***] in [***] the [***] by [***], such [***].


 


1.38                        “Notice Date” shall [***] the [***] in [***].


 


1.39                        “Patents” shall
mean (a) all patents, certificates of invention, applications for
certificates of invention, priority patent filings and patent applications,
including without limitation patent applications under the Patent Cooperation
and the European Patent Convention, together with (b) any renewal,
division, continuation (in whole or in part), or request for continued
examination of any of such patents, certificates of invention and patent
applications, and any and all patents or certificates of invention issuing
thereon, and any and all reissues, reexaminations, extensions, divisions,
renewals, substitutions, confirmations, registrations, 


 


*** Confidential
Treatment Requested


 


5

















 


revalidations, revisions,
and additions of or to any of the foregoing, and any foreign counterparts of
any of the foregoing and any other patents and patent applications claiming
priority back to any of the foregoing.


 


1.40                        “Phase 1
Clinical Trial” shall mean a human clinical trial in any country that would
satisfy the requirements of 21 CFR 312.21(a), as it may be amended.


 


1.41                        “Phase 2
Clinical Trial” shall mean a human clinical trial in any country that: (a) would
satisfy the requirements of 21 CFR 312.21(b), as it may be amended; (b) is
of [***] and [***] (e.g., [***]) to
[***] to [***] in the [***]; and (c) [***] as an [***].  For purposes of clarification, but solely by
way of example, the term Phase 2 Clinical Trial will not include a trial
that, [***] the [***] of [***], is [***], the [***] is to [***] for [***], such
as a [***] with [***] and [***].


 


1.42                        “Phase 3
Clinical Trial” shall mean a pivotal human clinical trial in any country
that would satisfy the requirements of 21 CFR 312.21(c), as it may be amended.


 


1.43                        “Prodrug
Improvement” shall mean any Invention to the extent directed to the Metabasis
Prodrug Technology or a method of making or using Metabasis Prodrug Technology,
but not directed to any Collaboration Compound or Product or a method of making
or using a Collaboration Compound or Product, which Invention is conceived
solely by a party (or on its behalf) or jointly by the parties.  Any Prodrug Improvement shall be included in
the term Metabasis Prodrug Technology.


 


1.44                        “Product”
shall mean any preparation in final form containing a Licensed Compound for
sale or disposition by prescription, over-the-counter or any other method.


 


1.45                        “Project
Leader” shall have the meaning provided in Section 2.5.


 


1.46                        “Regulatory
Approval” shall mean any and all approvals (including price and
reimbursement approvals, if required), licenses, registrations, or
authorizations of any Regulatory Authority in a particular jurisdiction that
are necessary for the manufacture, use, storage, import, transport and/or sale
of a Product in such jurisdiction in accordance with applicable laws.


 


1.47                        “Regulatory
Authority” shall mean any national or supranational governmental authority,
including the FDA and the EMEA, that has responsibility in any country or other
regulatory jurisdiction over the development and/or commercialization of
Products.


 


1.48                        “Research
Plan” means the plan (the initial form of which has been agreed upon in
writing by the parties by letter agreement dated concurrently herewith) that
sets out the research work to be performed by Metabasis and Roche in conducting
the Research Program, as such plan may be amended or modified by the JRC or by
mutual written agreement of the parties as contemplated under this Agreement.


 


1.49                        “Research
Program” shall mean the research activities undertaken by either or both of
the parties hereto as set forth in Article 3 and the Research Plan.


 


*** Confidential
Treatment Requested


 


6

















 


1.50                        “Research
Term” shall have the meaning provided in Section 3.6.


 


1.51                        “Roche Know-How” shall mean any
Information or Invention to the extent directed to a Roche Nucleoside or a
Collaboration Compound or Product or a method of making or using a Roche
Nucleoside or a Collaboration Compound or Product, which Information or
Invention is Controlled by Roche as of the Effective Date or during the
Term.  For purposes of clarity, Roche
Know-How does not include Metabasis Know-How.


 


1.52                        “Roche
Indemnitee” shall have the meaning provided in Section 11.2.


 


1.53                        “Roche
Nucleoside” shall mean [***].  One or
more additional nucleosides may be added as “Roche Nucleosides” during the
Research Term by [***] of the [***].


 


1.54                        “Roche
Nucleoside Improvement” shall mean any Invention directed to a Roche
Nucleoside or a method of making or using such Roche Nucleoside, but not
directed to any Collaboration Compound or Product or a method of making or
using a Collaboration Compound or Product, which Invention is conceived solely
by a party (or on its behalf) or jointly by the parties.  Any Roche Nucleoside Improvement shall be
included in the term Roche Nucleoside.


 


1.55                        “Roche Patents” shall mean Patents
to the extent of claims or portions of claims therein directed to any Invention
that is a Collaboration Compound or Product or a method of making or using a
Collaboration Compound or Product, which Patents are Controlled by Roche as of
the Effective Date or during the Term. 
For purposes of clarity, Roche Patents do not include Metabasis Patents
or Joint Patents.  The Roche Patents
existing on the Effective Date are listed on
Schedule II to
the Research Plan.  For purposes
of clarity, Roche Patents do not include Metabasis Patents or any [***] the [***] of [***], or
any [***] of [***] or [***], a [***]
itself (i.e., without [***]).


 


1.56                        “Roche
Technology” shall mean the Roche Know-How and Roche Patents.


 


1.57                        “Royalty
Term” shall mean, in the case of any Product in any country, the period of
time commencing on the First Commercial Sale of such Product in such country
and ending upon the later of (a) 10 years after the date of First
Commercial Sale of such Product in such country, and (b) the expiration of
the last to expire of any of the Metabasis Patents, Roche Patents or Joint
Patents containing a Valid Claim [***]
the [***] of [***] of the [***] which is the active ingredient of the Product.


 


1.58                        “Section 3.5
Information” shall have the meaning provided in Section 3.5.


 


1.59                        “Selected
Metabasis Patents” shall have the meaning provided in Section 9.2(b)(ii).


 


1.60                        “Target
Profile” shall mean the targeted pharmacological properties specified in
the section entitled “Clinical Candidate Target Profile” in the Research Plan.


 


1.61                        “Term” shall
have the meaning provided in Section 10.1.


 


*** Confidential
Treatment Requested


 


7

















 


1.62                        “Third
Party” shall mean an entity other than Roche and its Affiliates, and
Metabasis and its Affiliates.


 


1.63                        “Title 11”
shall have the meaning provided in Section 10.7.


 


1.64                        “Toxicology Studies” shall mean IND-enabling good
laboratory practices toxicology studies.


 


1.65                        “Valid
Claim” shall mean a claim of (a) an issued and unexpired patent or a
supplementary protection certificate, which claim has not been held invalid or
unenforceable by a court or other government agency of competent jurisdiction
from which no appeal can be or has been taken and has not been held or admitted
to be invalid or unenforceable through re-examination or disclaimer, opposition
procedure, nullity suit or otherwise, or (b) a pending patent application;
provided, however, that if a claim of a
pending patent application shall not have issued within [***] after the
earliest filing date from which such claim takes priority, such claim shall not
constitute a Valid Claim for the purposes of this Agreement unless and until a
patent issues with such claim.


 


2.                                      RESEARCH PROGRAM
GOVERNANCE


 


2.1                               Joint Research Committee.  Promptly after the Effective Date, the
parties will form a joint research committee (the “JRC”) composed of an equal number of
representatives of each of Roche and Metabasis. 
One member of the JRC shall be selected to act as the chairperson of the
JRC, with each chairperson acting for a term of 12 months.  The chairperson shall be selected alternately
by Metabasis and Roche, and Roche shall designate the first chairperson.  The JRC shall be responsible for:


 


(a)                                  overseeing
the conduct of the Research Program and making decisions regarding scientific
and technical matters related to the Research Program, including, approving
amendments to the Research Plan (subject to the limitations set forth in Section 2.4);


 


(b)                                  maintaining
a current list of all Collaboration Compounds, which shall be updated at each
JRC meeting (or more frequently as agreed by the parties);


 


(c)                                  during
the [***] of the [***], [***] in [***] regarding (i) [***] for [***] as
[***] to any [***] that is [***] by the [***] or by [***] for [***] as a [***]
or that has been [***] a [***] in accordance with [***], and (ii) a [***]
for [***] and [***] of such [***];


 


(d)                                  during
the [***] of the [***], [***] in [***] regarding the [***], in addition to
[***], that [***] may wish to
[***] in the [***] as [***].  The parties
[***] that [***] shall have [***] with respect to the [***] of any such [***]; provided, however, that if [***] to select, as a
[***] a particular [***] (other than [***]) with respect to which [***] is [***], under a [***] with a [***], from [***] a [***] under [***], [***] shall so [***] in [***]
within [***] after [***] to [***] in [***] the identity
of such [***], and in such
event, such [***] will not be [***] for [***] as a [***]
hereunder.  For the avoidance of doubt,
in [***] shall [***] be [***] to [***] to [***] the [***] of any such [***], any [***] of the [***] and any such [***], or
any 


 


*** Confidential
Treatment Requested


 


8

















 


[***] of such [***]
relating to the [***], but [***] notice to [***] under this [***] regarding a
particular [***] shall be deemed a [***] by [***] to [***] that [***] is
subject to such [***] under its [***] with such [***]; and


 


(e)                                  during
the [***] of the [***], using [***] to [***] a [***] for the [***] of the
[***], if appropriate.


 


2.2                               Meetings.
 The JRC shall meet at least four
times per year during the Research Term or at such greater frequency as the JRC
agrees.  Such meetings may be conducted
by videoconference, teleconference or in person, as agreed by the parties, and
the parties shall agree upon the time of meetings.  In-person meetings shall alternate between
the facilities of Roche in California, and the facilities of Metabasis in La Jolla,
California.  No JRC meeting may be conducted unless at least one representative of
each party is participating.  Each party
shall bear its own expenses related to the attendance of such meetings by its
representatives.  A reasonable
number of additional representatives of a party may attend meetings of the JRC
in a non-voting capacity.


 


2.3                               Minutes.  The hosting party shall have
responsibility for preparing definitive minutes of each JRC meeting, a draft of
which shall be circulated for comment to all members of the JRC within
10 business days after the relevant meeting.  Such minutes shall provide a description, in
reasonable detail, of the Research Program progress to date, and of the
discussions at the meeting, a list of material actions or determination
approved by the JRC and material disagreements not resolved by the JRC.  The Project Leaders shall discuss any
comments on such minutes and finalize the minutes by no later than
30 business days after the meeting.


 


2.4                               JRC Decision-Making.  All decisions of the JRC shall be unanimous,
with the representatives of Metabasis on the JRC collectively having one vote
and the representatives of Roche on the JRC collectively having one vote.  If the JRC is unable to decide or resolve
unanimously any matter properly presented to it for action, then at the written
request of either party, the issue shall be referred to Metabasis’ head of
research and development and Roche’s [***] who shall attempt in good faith to
resolve such issue as promptly as practicable. 
If such officers are unable to resolve such issue within [***], then at
the written request of either party, the issue shall be referred to the Chief
Executive Officer of Metabasis and Roche’s [***].  If such officers are unable to resolve such
issue within [***] of commencing such negotiations, then, except as provided in
Section 1.3, the resolution and/or course of conduct shall be determined
by [***].  However, [***] will give [***]
to [***], and [***] to [***] in [***] or [***]. 
Notwithstanding the foregoing or any other provision of this Agreement
to the contrary, [***] the [***] with [***] this [***] shall [***]:


 


(a)                                  [***]
the [***] of this [***] the [***];


 


(b)                                  [***]
which [***] of a [***] or [***] on the [***];


 


(c)                                  [***]
the [***] by which [***] the [***] under the [***];


 


*** Confidential
Treatment Requested


 


9
















 


(d)                                  [***]
a [***] with the [***] and/or that [***] to the [***] or [***];


 


(e)                                  [***]
the [***] in any [***] to [***] the [***] or that would [***] to [***] by
[***];


 


(f)                                    [***]
the [***] to be [***] to [***] of the [***] by [***]; or


 


(g)                                 [***]
in a [***] with the [***] and[***] of this [***].


 


In addition,
[***] the [***] of any [***] (e.g.,
[***]) to be [***] to the [***] the [***] of [***] on the [***].


 


2.5                               Project
Leaders.  Roche and Metabasis each
shall appoint a person (a “Project
Leader”) from the JRC to coordinate its part of the Research
Program.  The Project Leaders shall be
the primary contact between the parties with respect to the Research
Program.  Each party shall notify the
other party as soon as practicable upon changing this appointment.


 


3.                                      RESEARCH
PROGRAM


 


3.1                               General.  Metabasis and Roche shall engage in the
Research Program upon the terms and conditions set forth in this
Agreement.  The activities to be
undertaken in the course of Research Program are set forth in the Research Plan
which may be amended from time to time upon approval of the JRC, subject to Section 2.4.


 


3.2                               Conduct
of Research.  Subject to the terms
and conditions of this Agreement, each party shall be responsible for managing
and controlling its respective research obligations under the Research
Plan.  Each party shall conduct the
Research Program in good scientific manner, and in compliance in all material
respects with all requirements of applicable laws, rules and
regulations.  Each party hereby certifies
that it will not and has not employed or otherwise used in any capacity the
services of any person debarred under Section 21 USC 335a in performing
any services hereunder.  Each party shall
[***] and in a [***] with the [***] in the [***] by using [***] to [***], [***],
[***] to the [***] and to use [***] and [***] to [***] the [***] with the [***]
of this [***].


 


3.3                               Research
Commitment; Metabasis FTEs.  During
the Research Term, each party shall use [***] to [***] under the [***] in
accordance with such plan and the terms and conditions of this Agreement.  Without limiting the generality of the
foregoing:


 


(a)                                  Metabasis
Year 1 FTEs.  Metabasis shall
devote to the performance of its responsibilities under the Research Plan [***]
FTEs during the first year of the Research Term, all of whom shall be funded by
Metabasis.  Notwithstanding the
foregoing, if [***] after the [***], [***] has [***] a [***] for [***] of [***]
as [***] and [***] has [***], in addition to [***], as a [***] hereunder, then
[***] shall [***] its [***] under the [***] on [***] and [***] with respect to
the [***] (or [***] if no [***] has yet been [***]), and the [***] shall [***]
in [***] on a [***] and [***] to the [***] of [***] that [***] is [***] to
devote to the [***] of its 


 


*** Confidential Treatment Requested


 


10

















 


[***] under
the [***] during the [***] of the [***] of the [***], unless and until [***] as
[***] has [***] such [***] and [***] has [***], in addition to [***], as a
[***] hereunder.


 


(b)                                  Metabasis
Year 2 FTEs.  No later [***] to
the [***] of the [***] of the [***] (unless Roche has previously notified
Metabasis in writing pursuant to Section 3.6 of Roche’s election to
terminate the Research Term effective as of the first anniversary of the
Effective Date), Metabasis shall notify Roche in writing of the number of
Metabasis FTEs (which shall not exceed [***] FTEs) that Metabasis believes are
reasonably required for performance of Research Plan activities in the second
year of the Research Term.  Metabasis and
Roche [***], through the [***], on the [***] of the [***] and the [***] upon
the [***] after Metabasis provides such notice. 
If the parties so agree, then the Research Term shall continue for the
second year, and Roche shall make the payment to Metabasis required under Section 5.2.
If Metabasis does not timely provide such notice, or [***] to the [***] for the
[***] of the [***] and on the [***], then the Research Term shall expire at the
end of the first year of the Research Term.


 


3.4                               Exchange
of Information.  Upon execution of
this Agreement, and from time to time as necessary during the Research Term,
Metabasis shall disclose to Roche such Metabasis Know-How needed for the
performance by Roche of its responsibilities under the Research Program.  Following designation of a Collaboration
Compound as a Licensed Compound, Metabasis shall disclose to Roche such
Metabasis Know-How needed for the manufacture, use or sale of such Licensed
Compound and Product containing such Licensed Compound in the Field.  Upon execution of this Agreement, and from
time to time as necessary during the Research Term, Roche shall disclose to
Metabasis such Roche Know-How needed for the performance by Metabasis of its
responsibilities under the Research Program. 
In addition to the foregoing obligations, each party shall promptly
disclose to the other party any and all Collaboration Compounds invented in
whole or in part by such party.  Nothing
herein shall require either party to disclose information that is subject to bona fide confidentiality obligations to a
Third Party.


 


3.5                               Records
and Reports.  Metabasis and Roche
shall each maintain records, in sufficient detail and in good scientific manner
appropriate for patent and regulatory purposes, which shall fully and properly
reflect all work done and results achieved in the performance of the Research
Program by such party.  [***] the [***]
of the [***], [***] to the [***] for [***] and/or [***], [***] for the [***] to
[***].  In addition, after the Research
Term, upon Metabasis’ reasonable request, [***] its [***] to [***] (but [***]),
whether [***] were [***] or [***] or [***] (hereinafter, [***]), available to [***] either at [***] or
[***], at [***].  Metabasis acknowledges
and agrees that all Section 3.5 Information made available to Metabasis
shall be Confidential Information of Roche. 
The provisions of this Section 3.5 shall survive expiration or
termination of the Research Term for so long as any license granted to Roche
under Section 4.2(a) remains in effect.


 


3.6                               Research
Term.  Except as otherwise provided
in Section 3.3, the Research Term shall commence on the Effective Date  and continue for a period of two years
(the “Research Term”).  Notwithstanding anything to the contrary in
this Section 3.6, Roche may, with or without cause and in its sole
discretion, terminate the Research Term, effective as of the first 


 


*** Confidential Treatment Requested


 


11

















 


anniversary of
the Effective Date, upon written notice to Metabasis given no later than
90 days [***] the [***] of the [***].


 


3.7                               Use
of Subcontractors.  Each party shall
be entitled to utilize the service of Third Parties to perform their respective
Research Program activities [***] the [***] of the [***] or as [***] set forth
in the [***].  Notwithstanding any [***],
each [***] at [***] for the [***] of its [***] under the [***] and [***] of
each [***], [***], to [***] of [***] in the [***] to [***], and [***] of such
[***] as [***] under [***] hereof.


 


3.8                               Materials.  In order to facilitate the Research
Program, either party may, in its discretion, provide to the other party
certain biological materials or chemical compounds Controlled by the supplying
party, including, but not limited to, Collaboration Compounds (collectively, “Materials”) for use
by the other party in furtherance of the Research Program; provided, however, that each party shall
provide Materials to the other party to the extent required or contemplated by
the Research Plan.  Except as otherwise
provided under this Agreement, all such Materials delivered to the other party
will remain the sole property of the supplying party, will be used only in
furtherance of the Research Program and, if applicable, development,
manufacture or commercialization of Products in accordance with this Agreement,
will not be used or delivered to or for the benefit of any Third Party without
the prior written consent of the supplying party, and will be used in
compliance with all applicable laws, rules and regulations.  The Materials supplied under this Agreement
must be used with prudence and appropriate caution in any experimental work
because not all of their characteristics may be known.  Except as expressly set forth herein, THE
MATERIALS ARE PROVIDED “AS IS” AND WITHOUT ANY REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR OF FITNESS FOR ANY PARTICULAR PURPOSE OR ANY WARRANTY THAT
THE USE OF THE MATERIALS WILL NOT INFRINGE OR VIOLATE ANY PATENT OR OTHER
PROPRIETARY RIGHTS OF ANY THIRD PARTY.


 


4.                                      DESIGNATION
OF LICENSED COMPOUNDS; LICENSE GRANTS; DEVELOPMENT AND COMMERCIALIZATION


 


4.1                               Designation
of Licensed Compounds.  At any time
during the Research Term or within 90 days after its expiration or its
termination pursuant to Section 3.6 (but not any other termination of the
Research Term or this Agreement), [***] in [***] of [***] upon which [***] or
[***] to [***].  If [***] such [***],
then within [***] or [***] of the [***], [***] ([***], as applicable) shall
[***] of [***].  [***] of [***], such
[***] shall [***] of [***].  The [***]
with respect to [***] may be [***], but each [***] with respect to [***] initiated
shall be subject to milestone and royalty payment obligations under Article 5
hereof.


 


4.2                               License
Grants.


 


(a)                                  By
Metabasis.


 


(i)                        Research
License. Subject to the terms and conditions of this Agreement, Metabasis
hereby grants to Roche a non-exclusive, worldwide, royalty-free license, 


 


*** Confidential Treatment Requested


 


12

















 


without the
right to sublicense, under such Metabasis Technology as is necessary to perform
Roche’s obligations under the Research Program, solely to perform such
obligations under the Research Program during the Research Term.


 


(ii)                    Development
and Commercialization License. 
Subject to the terms and conditions of this Agreement, and on a Licensed
Compound-by-Licensed Compound basis, effective only upon payment in full of the
development event payment under Section 5.3 for Development Event I
or Development Event II (as applicable) with respect to such Licensed
Compound, Metabasis hereby grants to Roche: (A) a non-exclusive,
worldwide, royalty-bearing license, with the right to sublicense as described below,
under the Metabasis Platform Patents and associated Metabasis Know-How, solely
to make, have made, use, sell, have sold, offer for sale and import such
Licensed Compound and Products containing such Licensed Compound in the Field
during the Term; and (B) a sole and exclusive (even as to Metabasis),
worldwide, royalty-bearing license, with the right to sublicense as described
below, under the Metabasis Product Patents and associated Metabasis Know-How
and under Metabasis’ interest in Joint Technology, solely to make, have made,
use, sell, have sold, offer for sale and import such Licensed Compound and
Products containing such Licensed Compound in the Field during the Term; provided, however, that Metabasis shall
retain such rights under the Metabasis Product Patents, associated Metabasis
Know-How and Joint Technology as are necessary to perform its obligations under
the Research Program.


 


(iii)                Sublicensing.  Roche shall have the right to grant
sublicenses through multiple tiers of sublicense of the rights granted to Roche
under Section 4.2(a)(ii).  Within 30
days after the grant of a sublicense to [***] in the [***], [***] or a [***],
[***] shall [***] in [***] of [***], [***] of the [***] and [***] of the
[***].  Except to the extent the parties
otherwise agree in writing, any sublicense agreement must be fully consistent
with the terms and conditions of this Agreement.  Roche shall [***] the [***] of the [***] to
[***], but may subcontract activities to be performed by Roche under the
Research Program pursuant to Section 3.7.


 


(b)                                  By
Roche.  Subject to the terms and
conditions of this Agreement, Roche hereby grants to Metabasis a non-exclusive,
worldwide, royalty-free license, without the right to sublicense, under such
Roche Technology and other Patents Controlled by Roche as are necessary to
perform Metabasis’ obligations under the Research Program solely to perform
such obligations under the Research Program during the Research Term.


 


4.3                               Development
and Commercialization.  Subject to
the terms and conditions of this Agreement, Roche shall control, and be solely
responsible for the costs associated with, the worldwide preclinical and
clinical development, registration and commercialization of Licensed Compounds
and Products.  Without limiting the
generality of the foregoing, except as otherwise set forth in the Research
Plan, Roche shall be responsible for the worldwide supply of all Licensed
Compounds and Products necessary for the foregoing activities.


 


4.4                               Diligence
Obligations. 
Roche agrees to use commercially reasonable efforts
(directly and/or through one or more Affiliates and/or sublicensees) to develop
and commercialize at least one Product in the Field in each of the Major
Markets.


 


*** Confidential Treatment Requested


 


13

















 


(a)                                  In
the event that Roche: (i) is not conducting development or
commercialization of at least one Licensed Compound or Product in the Field in
a particular Major Market, or (ii) decides that it will not develop or
commercialize at least one Licensed Compound or Product in the Field in a
particular Major Market, [***] shall [***] with [***] within [***] thereof, and
[***] to it, [***] under [***].


 


(b)                                  In
addition, if Metabasis in good faith believes that Roche is not using its commercially
reasonable efforts to develop or commercialize at least one Licensed Compound
or Product in the Field in a particular Major Market, Metabasis may provide
Roche with written notice thereof, in which event Roche will have 60 days
from the date of such notice in which to reasonably demonstrate to Metabasis
that Roche is meeting such diligence obligation.  Any dispute related to this Section 4.4
shall be resolved pursuant to the provisions of Section 12.6.   Neither Party shall have the right to terminate
this Agreement or any portion thereof for any reason (including but not limited
to Section 10.2) unless and until the dispute has been finally resolved
pursuant to Section 12.6.


 


4.5                               Disclosure
Regarding Roche Efforts.  Roche will
keep Metabasis appropriately informed about Roche’s progress with respect to
Licensed Compounds and Products through the JRC during the Research Term and in
writing thereafter.  Without limiting the
generality of the foregoing, Roche shall provide Metabasis with written notice
of the following within [***] after the occurrence of the following:


 


(a)                                  [***]
of [***] on any [***];


 


(b)                                  [***]
for a [***];


 


(c)                                  [***]
of a [***], [***] or [***] of a [***];


 


(d)                                  the
[***] of the [***], [***] or [***] of a [***] or [***]; [***] shall [***] as
[***] for purposes of [***];


 


(e)                                  [***]
of [***] for [***] with respect to [***] in [***]; and


 


(f)                                    [***]
of [***] for any [***].


 


The provisions
of this Section 4.5 shall survive expiration or termination of the
Research Term for so long as any license granted to Roche under Section 4.2(a) remains
in effect.


 


4.6                               Agreements;
No Implied Licenses.


 


(a)                                  Roche
and its Affiliates shall not, and shall not grant to any Third Party any rights
to, conduct clinical development or commercialization activities with respect
to any Collaboration Compound that has not been designated or deemed a Licensed
Compound pursuant to this Agreement, and Roche further acknowledges and agrees
that it has no right or license under any Metabasis Technology or Metabasis’ interest
in any Joint Technology to do


 


*** Confidential Treatment Requested


 


14

















 


any of the
foregoing.  In addition, Roche agrees
that it does not have as a result of this Agreement, any right to license, directly
or indirectly (including through any Affiliate or sublicensee), to use or
practice any Metabasis Technology from or after the expiration or termination
of the Research Term, except as expressly set forth in Section 4.2(a) for
so long as the license granted under Section 4.2(a) remains in
effect.  In no event shall Roche as a
result of this Agreement have any right or license from Metabasis to:


 


(i)                        [***],
or [***] or [***] ([***] or [***] or [***]), during the [***] any [***] that
[***] and is [***] a [***] ([***], [***] or [***] thereof) in the [***],
except, in [***], as part of the[***]; or


 


(ii)                    [***], or
[***] or [***] ([***] or [***] or [***]), after [***] of the [***] any [***]
that [***] and is [***] a [***] ([***], [***] or [***] thereof) in the [***]; provided, however, that the [***] to the
[***] for [***] to [***] with respect to [***].


 


Except as
expressly set forth in [***] for [***]
the [***] in [***], [***] to use any [***]
or any [***] ([***] of [***]) to [***] in
any of the [***] or to [***] or [***].


 


Notwithstanding
any other provision of this Agreement to the contrary, Roche at all times
reserves the exclusive and unrestricted right to use or practice, and to grant
its Affiliates and Third Parties the right to use or practice, the Roche
Technology for any purpose other than [***], [***] or [***] of
the [***], [***] or [***].


 


(b)                                  Except
to the extent necessary to fulfill Metabasis’ obligations under the Research
Plan during the Research Term:


 


(i)                        [***],
and [***] to [***] to, [***] or [***] the [***] with respect to [***], [***],
[***] during the [***]; and


 


(ii)                    [***] to
[***], nor [***] of [***] the [***], [***], any [***] (subject, [***]) during
the [***].


 


In addition, [***] that [***] or [***]
under the [***], [***] set forth in [***] and, if applicable, [***], and [***] of [***] or
[***] of the [***] for any [***] of [***]
under the [***] during [***]. 
[***] of [***] to the [***], [***] at [***] the [***] and [***] to
[***], and to [***] and [***] the [***] or
[***], the [***] ([***]) for [***]
other than the [***], [***] or [***] of the [***]
or [***].


 


(c)                                  No
right or license under any Patents or Information of either party is granted or
shall be granted by implication.  All
such rights or licenses are or shall be granted only as expressly provided in
the terms of this Agreement.


 


5.                                      PAYMENTS


 


5.1                               Upfront
Fee.  Roche shall make a one-time,
non-refundable, non-creditable payment to Metabasis of $10,000,000 within
15 days after the Effective Date and receipt of an invoice from Metabasis.


 


*** Confidential Treatment Requested


 


15
















 


5.2                               Additional
Payment.  If the Research Term
continues beyond the first anniversary of the Effective Date, Roche shall make
a one-time, non-refundable, non-creditable payment to Metabasis of [***] per
Metabasis FTE for the number of FTEs agreed upon by the parties pursuant to Section 3.3(b),
within [***] after the first anniversary of the Effective Date and receipt of
an invoice from Metabasis.


 


5.3                               Development
Event Payments.  Roche shall pay to
Metabasis each of the non-refundable, non-creditable (except as expressly set
forth in this Section 5.3) development event payments set forth below
(whether such development event is achieved by Roche, its Affiliate or a
sublicensee):


 


	
  Development Event

  	
   

  	
  Event Payment

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  I.

  	
  [***] of [***] of the [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  II.

  	
  [***] of [***] of each [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  III.

  	
  [***] to [***] of: (a) [***] by the [***] of a [***],
  [***] or [***]; or (b) allowance by the [***] of a [***], [***] or
  [***] and [***] of the [***]for [***]
  (or, if [***], [***] of the [***]); wherein, in each case, such [***] or [***],
  [***] or [***] includes a [***] that [***] the [***]
  of [***] of a [***] that is in [***] by or on behalf of [***] or [***] of [***] or
  [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IV.

  	
  [***] of [***]of each [***]or [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  V.

  	
  [***] of [***] of each [***] or [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VI.

  	
  [***] of [***] of each [***] or [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VII.

  	
  [***] of [***] for each [***] in any [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VIII. 

  	
  [***] of [***] for each[***]in the [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IX.

  	
  [***] of [***] for each [***] in the [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  X.

  	
  [***] of [***] for each [***]in [***]

  	
   

  	
  [***]

  	
   

  



 






(1)                                  Such
development event payment shall be paid only after a Licensed Compound is in
clinical development by or on behalf of Roche or any of its Affiliates or
sublicenses.


 


(2)                                  Initiation
of a clinical trial [***] of the [***] in [***] by or on behalf of Roche, its
Affiliates or sublicensees.


 


With the
exception of the payment with respect to Development Event I in the table
above (which shall be [***] for the [***]
on which [***] are [***]) and the payment with respect to
Development Event II in the table above (which shall be [***] the [***] on which [***]),
each of 


 


*** Confidential Treatment Requested


 


16

















 


the foregoing
development event payments shall be payable upon achievement of the applicable
development event by each Licensed Compound or Product (as applicable) and [***]. 
Roche shall notify Metabasis in writing within [***] after the achievement of each development event, and shall
make the appropriate development event payment to Metabasis within [***] after receipt of an invoice from
Metabasis.  If, for any reason, [***] or [***] a [***]
without having [***] or [***], then [***] of [***], [***] to [***] and [***] to
[***] within [***] after the [***] of [***].


 


5.4                               Commercial
Event Payments.  Roche shall pay to
Metabasis each of the non-refundable, non-creditable commercial event payments
set forth below (whether such commercial event is achieved by Roche, its
Affiliate or a sublicensee):


 


	
  Commercial Event

  	
   

  	
  Event Payment

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [***] than [***] in [***] in a [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [***] than [***] in [***] in a [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [***] than [***] in [***] in a [***]

  	
   

  	
  [***]

  	
   

  



 


Each of the
commercial event payments described in this Section 5.4 shall be payable
only one time for each Product and only for the first calendar year in which
such commercial event is achieved by such Product.  Roche shall notify Metabasis in writing
within [***] after the achievement of each commercial event, and shall make the
appropriate event payment to Metabasis within [***] after receipt of an invoice
from Metabasis.


 


5.5                               Royalties.


 


(a)                                  Roche
shall pay to Metabasis royalties on worldwide annual Net Sales of Products by
Roche, its Affiliates and its sublicensees at the following rates:


 


	
  Annual Net Sales

  	
   

  	
  Royalty Rate

  	
   

  
	
  Portion of calendar year Net Sales <
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Portion of calendar year Net Sales >
  [***]

  	
   

  	
  [***]

  	
   

  



 


Notwithstanding
the foregoing, when aggregate annual Net Sales for a given Product during any
calendar year are greater than [***], Roche will pay Metabasis
royalties of [***] on
aggregate Net Sales for that Product by Roche, its Affiliates and its
sublicensees for that calendar year.


 


(b)                                  Royalties
under this Section 5.5 shall be payable on a Product-by-Product and
country-by-country basis for a period equal to the Royalty Term for such
Product in such country.


 


(c)                                  On
a [***] and [***], in the event that there is [***] with respect to such [***]
in such [***], then [***] by [***] to [***] pursuant to [***] on [***] of any
[***] during any portion of [***] shall be [***] by [***]; provided, however, that in [***] shall any
[***] for 


 


*** Confidential Treatment Requested


 


17

















 


any [***] in
any [***] in [***] be [***] to [***] of the [***] by [***] to [***] pursuant to
[***].  [***] shall mean, with respect to
a [***] in a [***], the situation in which [***] takes, in [***] than a [***]
of the [***] for such [***] in such [***] based on [***] (as [***] in [***] by
[***] or a similar [***] to be [***] to [***] the [***]) for any [***].  [***] shall mean, with respect to a [***],
any [***] that is [***] in a [***] by [***] other than [***] or [***] or [***]
the same or [***] (by [***] or other [***], on a [***]) [***] as [***] in a
given [***], including, without limitation, any such [***] that is [***] or
determined to be [***] to a [***] by the [***], or similarly [***] by other
[***] outside the [***], on a [***].


 


(d)                                  Regardless
of patent coverage, each Product shall be royalty bearing at the rate set forth
in Section 5.5(a), subject to adjustment as provided as provided elsewhere
under this Agreement, for the first [***] years following First Commercial Sale
in each country.  If following such
[***]-year period there is no Metabasis Patents, Roche Patents or Joint Patents
containing a Valid Claim [***] the [***] of [***] of the [***] which is the
[***] of the [***], then sales of such Product shall thereafter be royalty-free
in that country.


 


6.                                      PAYMENT;
RECORDS; AUDITS


 


6.1                               Payment;
Reports.  Royalties shall be
calculated and reported for each calendar quarter.  All payments due to Metabasis under this
Agreement shall be paid within [***] after the end of each calendar quarter,
unless otherwise specifically provided herein. 
Each payment shall be accompanied by a report of Net Sales of Products
by Roche and its Affiliates and sublicensees in sufficient detail [***] of the
[***] of the [***], [***], [***] and [***], the [***], the [***], the [***],
the [***], and the [***].


 


6.2                               Exchange
Rate; Manner and Place of Payment.  All
payments hereunder shall be payable in U.S. dollars.  When conversion of payments from any currency
other than Swiss Francs or U.S. dollars is required, such conversion shall be
made by conversion of the amount of such sales into Swiss Francs using Roche’s
then current standard practices actually used on a consistent basis in
preparing its audited financial statements and then converting to United States
dollars using the average quarterly rate (Reuters) for the applicable
period.  All payments owed under this
Agreement shall be made by wire transfer in immediately available funds to a
bank and account designated in writing by Metabasis, unless otherwise specified
in writing by Metabasis.


 


6.3                               Income
Tax Withholding.  Metabasis will pay
any and all taxes levied on account of any payments made to it under this
Agreement.  If any taxes are required to
be withheld by Roche, Roche will (a) deduct such taxes from the payment
made to Metabasis, (b) timely pay the taxes to the proper taxing
authority, and (c) send proof of payment to Metabasis and certify its
receipt by the taxing authority within 30 days following such payment.


 


6.4                               Audits.  During the Term and for a period of three
years thereafter, Roche shall keep (and shall cause its Affiliates and
sublicensees to keep) complete and accurate records pertaining to the sale or
other disposition of Products in sufficient detail to permit Metabasis to confirm
the accuracy of all royalties due hereunder. 
[***] the [***], [***] to [***] to [***], [***] than the [***].  [***] may be [***] upon [***] to [***].  Prompt adjustments shall be 


 


*** Confidential Treatment Requested


 


18

















 


made by the
parties to reflect the results of such audit. 
Metabasis shall bear the full cost of such audit unless such audit
discloses an underpayment by Roche of more than [***] of the aggregate amount
of royalties or other payments due under this Agreement, in which case, Roche
shall bear the full cost of such audit and shall remit to Metabasis the amount
of any underpayment within [***] after receipt of an invoice from Metabasis.


 


6.5                               Late
Payments.  In the event that any
payment due under this Agreement is not made when due, the payment shall accrue
interest from the date due at the rate of [***]; provided, however, that in no event shall such rate exceed
the maximum legal annual interest rate. 
The [***] of [***] shall [***] any [***] as a [***] of the [***].


 


7.                                      CONFIDENTIALITY
AND PUBLICATION


 


7.1                               Confidential
Information.  Except to the extent
expressly authorized by this Agreement or otherwise agreed in writing by the
parties, the parties agree that, during the Term and for five years thereafter,
the receiving party shall keep confidential and shall not publish or otherwise
disclose and shall not use for any purpose other than as expressly provided for
in this Agreement any Information furnished to it by the other party pursuant
to this Agreement or pursuant to the Confidentiality Agreement or owned by such
other party as provided herein (collectively, “Confidential Information”).  For clarification, Metabasis Technology is
Confidential Information of Metabasis, and Roche Technology is Confidential
Information of Roche, and Joint Technology shall be deemed Confidential
Information of both parties. 
Notwithstanding the foregoing, Section 3.5 Information and any data
and information related to Licensed Product that is generated after the Term of
the Research Program shall be Confidential Information of Roche.  Each party may use such Confidential
Information only as permitted by this Agreement.  Each party will use at least the same
standard of care as it uses to protect proprietary or confidential information
of its own (but no less than reasonable care) to ensure that its employees,
agents, consultants and other representatives do not disclose or make any
unauthorized use of the Confidential Information.  Each party will promptly notify the other
upon discovery of any unauthorized use or disclosure of the Confidential
Information.


 


7.2                               Exceptions.  Confidential Information shall not
include any information which the receiving party can prove by competent
evidence: (a) is now, or hereafter becomes, through no act or failure to
act on the part of the receiving party, generally known or available; (b) is
known by the receiving party or its Affiliates at the time of receiving such
information, as evidenced by its records; (c) is hereafter furnished to
the receiving party or its Affiliates by a Third Party, as a matter of right
and without restriction on disclosure; (d) is independently discovered or
developed by the receiving party or its Affiliates without the use of
Confidential Information belonging to the disclosing party; or (e) is the
subject of a written permission to disclose provided by the disclosing party.


 


7.3                               Authorized
Disclosure.  Each party may disclose
Confidential Information belonging to the other party as expressly permitted by
this Agreement or if and to the extent such disclosure is reasonably necessary
in the following instances:


 


*** Confidential Treatment Requested


 


19

















 


(a)                                  filing
or prosecuting Patents as permitted by this Agreement with the written
permission of such other party;


 


(b)                                  regulatory
filings for Products such party has a license or right to develop hereunder;


 


(c)                                  prosecuting
or defending litigation as permitted by this Agreement;


 


(d)                                  complying
with applicable court orders or governmental regulations;


 


(e)                                  disclosure
to Affiliates, licensees, sublicensees, employees, consultants or agents of the
receiving party who have a need to know such information in order for the
receiving party to exercise its rights or fulfill its obligations under this
Agreement, provided, in each case, that any such Affiliate, licensee,
sublicensee, employee, consultant or agent agrees to be bound by terms of
confidentiality and non-use comparable in scope to those set forth in this Article 7;
and


 


(f)                                    [***]
to [***] and [***] on a [***] with [***] or [***] by [***] and/or in [***], in
[***], to the [***] for such [***] to [***] with respect to [***]; provided, however, in each case, that: (i) [***]
to [***] or [***]; and (ii) [***] of [***], or of [***], to [***] or [***]
that is a [***] (or is [***] by a [***]) will [***].


 


Notwithstanding
the foregoing, in the event a party is required to make a disclosure of the
other party’s Confidential Information pursuant to Section 7.3(b) through
(d), it will, except where impracticable, give reasonable advance notice to the
other party of such disclosure and use efforts to secure confidential treatment
of such information at least as diligent as such party would use to protect its
own confidential information, but in no event less than reasonable
efforts.  In any event, the parties agree
to take all reasonable action to avoid disclosure of Confidential Information
hereunder.  The parties will consult with
each other on the provisions of this Agreement to be redacted in any filings
made by the parties with the Securities and Exchange Commission or as otherwise
required by law.


 


7.4                               Publication.  The parties acknowledge their mutual
interest in publishing the results of the parties’ efforts hereunder in order
to obtain recognition within the scientific and investment communities and
expect that data generated in the course of the Research Program may be
published jointly. The parties further agree that clinical trial results
regarding Products may be presented at appropriate scientific conferences in a
timely fashion, consistent with Roche’s standard practices.  Each party also recognizes the mutual
interest in obtaining valid patent protection and in protecting business
interests and trade secret information and, in particular, it is the intent of
the parties to maintain the confidentiality of Confidential Information
included in any patent application until such time as such patent application
has been published.  Accordingly:


 


(a)                                  each
party shall have the right to review and comment on any material proposed for
disclosure or publication by the other party, such as by oral presentation, 


 


*** Confidential Treatment Requested


 


20

















 


manuscript or
abstract, which includes Confidential Information of the other party (excluding
Confidential Information of both parties) and/or any results of the Research
Program; and


 


(b)                                  Roche
shall have the right to review and comment on any material proposed for
disclosure or publication by Metabasis, such as by oral presentation,
manuscript or abstract, which includes any Confidential Information of both
parties, Joint Technology and/or data directed to any Roche Nucleoside,
Collaboration Compound or Product.


 


Before any such
material is submitted for publication, the party proposing publication shall
deliver a complete copy to the other party at least [***] prior to submitting the material
to a publisher or initiating any other disclosure.  Such other party shall review any such
material and give its comments to the party proposing publication within [***] after the delivery of such
material to such other party.  With
respect to oral presentation materials and abstracts, such other party shall
make reasonable efforts to expedite review of such materials and abstracts, and
shall return such items as soon as practicable to the party proposing
publication with appropriate comments, if any, but in no event later than [***] from the date of delivery to the
non-publishing party.  The publishing
party: (a) shall comply with the other party’s request to delete
references to the other party’s Confidential Information in any such material; (b) where
Metabasis is the publishing party and the proposed publication contains
Confidential Information of both parties, Joint Technology and/or data directed
to any Roche Nucleoside, Collaboration Compound or Product, Metabasis shall
delete any such Confidential Information of both parties, Joint Technology
and/or data directed to any Roche Nucleoside Collaboration Compound, or Product
at Roche’s request; and (c) agrees to delay any submission for publication
or other public disclosure for the purpose of preparing and filing appropriate
patent applications.  Notwithstanding the
above, but subject to Sections 7.3(d) and 7.3(e), any data and
information related to Toxicology Studies conducted during the Research Program
shall not be disclosed by Metabasis without the prior written consent of
Roche.  Subject to Section 7.5, any
data and information related to Licensed Product that is generated after the
Term of the Research Program shall be solely owned by Roche and shall not be
disclosed by Metabasis without the prior written consent of Roche.


 


7.5                               Publicity.  It is understood that each party may desire
or be required to issue press releases relating to this Agreement or activities
hereunder.  Without limiting the
generality of the foregoing, but subject to the other provisions of this Section 7.5,
[***] or [***] for which a [***] or [***], Metabasis shall have the right to:


 


(a)                                  issue
a press release announcing such achievement, if and only if such press release
or publication has been approved by Roche in writing, which approval shall not
be unreasonably withheld or delayed; and


 


(b)                                  [***]
or [***] (i.e., [***] and [***]
of the [***] and [***]) of any [***] of a [***], [***] has [***] or [***] or
[***] or [***] by [***], which [***] shall [***].  For [***], if [***] or [***] under this [***]
from [***] at an [***] at which [***] to [***] or to [***] in a [***], then
[***] of [***] or [***] have [***] or [***], and [***].


 


*** Confidential Treatment Requested


 


21
















 


Metabasis shall provide a copy thereof to Roche at least [***] before
the proposed date of issuance for Roche’s review, comment and approval.  During such review period, the parties agree
to consult with each other reasonably and in good faith with respect to the
text and timing of any such press release. 
If Roche proposes to issue a press release relating to this Agreement or
activities hereunder, Roche shall deliver a copy of such press release to
Metabasis on or before the time such press release is issued.  Notwithstanding the foregoing, a party may
issue such press releases and make such disclosures as it determines, based on
advice of counsel, are reasonably necessary to comply with applicable laws or
regulations, including without limitation the rules or regulations of the
United States Securities and Exchange Commission or a similar regulatory agency
in a country other than the United States or of any stock exchange on which
such party’s securities are traded; provided, however,
that the party seeking to make the disclosure in order to comply with
applicable laws or regulations shall endeavor to provide a copy of the proposed
disclosure to the other party at least [***] prior to [***], or if [***] is
[***] the [***], then with [***] as [***]. 
In addition, following the initial press release announcing this
Agreement, each party, [***] (as [***] by [***]), shall [***], without the
[***], the [***], the [***] of the [***] and [***] of [***] which have already
[***] in [***].


 


8.                                      REPRESENTATIONS
AND WARRANTIES; LIMITATION OF LIABILITY


 


8.1                               Mutual
Representations and Warranties.  Each
party represents and warrants to the other that: (a) it is duly organized
and validly existing under the laws of its jurisdiction of incorporation or
formation, and has full corporate or other power and authority to enter into
this Agreement and to carry out the provisions hereof; (b) it is duly
authorized to execute and deliver this Agreement and to perform its obligations
hereunder, and the person or persons executing this Agreement on its behalf has
been duly authorized to do so by all requisite corporate or partnership action;
(c) this Agreement is legally binding upon it, enforceable in accordance
with its terms; and (d) neither this Agreement nor such party’s
performance of its obligations hereunder conflicts with any agreement,
instrument or understanding, oral or written, to which it is a party or by
which it may be bound, or violates any material law or regulation of any court,
governmental body or administrative or other agency having jurisdiction over
it.


 


8.2                               Metabasis
Representations and Warranties. 
Metabasis represents and warrants to Roche that: (a) Metabasis
Controls the Metabasis Technology; and (b) as of the Effective Date,
Metabasis has not received any written communication challenging the validity
or enforceability of any Metabasis Product Patent.  In addition, Metabasis represents and
warrants to Roche that, as of the Effective Date, there are no pending legal
actions of which Metabasis has received written notice with respect to the
Metabasis Technology, and Metabasis has not received written notice of any
pending or threatened claims or litigation seeking to invalidate any Metabasis
Patents or claiming that the practice of the Metabasis Technology infringes the
intellectual property rights of any Third Party.


 


8.3                               Roche
Representations and Warranties. 
Roche represents and warrants to Metabasis that: (a) Roche Controls
the Roche Nucleosides; and (b) [***], to the [***] of [***] at [***],
[***] listed on [***] to the [***]
and [***] only the [***] of [***] of, or [***] of [***], a [***] itself (i.e.,
[***]), [***] any [***] the [***] of [***]. 
[***] and [***] to [***] that, as of


 


*** Confidential
Treatment Requested


 


22

















 


the [***], there [***] of which [***] with [***] to the [***], and
[***] of any [***] or [***] or [***] to [***] or [***] the [***] the [***] of
any [***].


 


8.4                               Disclaimer.  Except
as expressly set forth herein, THE TECHNOLOGY AND INTELLECTUAL PROPERTY
RIGHTS PROVIDED BY EACH PARTY HEREUNDER ARE PROVIDED “AS IS” AND EACH PARTY
EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED,
INCLUDING WITHOUT LIMITATION THE WARRANTIES OF DESIGN, MERCHANTABILITY, FITNESS
FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS
OF THIRD PARTIES, OR ARISING FROM A COURSE OF DEALING, USAGE OR TRADE
PRACTICES, IN ALL CASES WITH RESPECT THERETO. 
Without limiting the generality of the foregoing, each party expressly does
not warrant (a) the success of any study or test commenced under the
Research Program or (b) the safety or usefulness for any purpose of the
technology it provides hereunder.


 


8.5                               Limitation
of Liability.  EXCEPT FOR PAYMENTS
UNDER ARTICLE 5 OR LIABILITY FOR BREACH OF ARTICLE 7, NEITHER PARTY
SHALL BE ENTITLED TO RECOVER FROM THE OTHER PARTY ANY SPECIAL, INCIDENTAL,
CONSEQUENTIAL OR PUNITIVE DAMAGES IN CONNECTION WITH THIS AGREEMENT OR ANY
LICENSE GRANTED HEREUNDER; provided,
however, that this Section 8.5 shall not be construed to limit
either party’s indemnification obligations under Article 11.


 


9.                                      INTELLECTUAL
PROPERTY


 


9.1                               Ownership.  Inventorship of Inventions shall be determined in accordance with the rules of
inventorship under United States patent laws. 
Except as expressly set forth below, a party shall own all Inventions
invented solely by one or more employees or contractors of such party, and the
parties shall jointly own all Joint Inventions. 
Notwithstanding the foregoing:


 


(a)                                  All
right, title, and interest in and to Roche Technology shall, as between the
parties, be solely owned by Roche. 
Metabasis hereby assigns to Roche all right, title and interest it may
have in any Roche Nucleoside Improvements (including, without limitation,
Patents claiming such Roche Nucleoside Improvements).


 


(b)                                  All
right, title, and interest in and to Metabasis Technology shall, as between the
parties, be solely owned by Metabasis. 
Roche hereby assigns to Metabasis all right, title and interest it may
have in any Prodrug Improvements (including, without limitation, Patents
claiming such Prodrug Improvements).


 


Each party shall promptly disclose to the other inventions within the
Joint Technology made in connection with this Agreement.  In addition, Roche shall promptly disclose
all Prodrug Improvements to Metabasis, and Metabasis shall promptly disclose
all Roche Nucleoside Improvements.  Each
party shall promptly execute all papers and instruments, and/or require its
employees or contractors to execute such papers and instruments, as applicable,
so as to


 


*** Confidential
Treatment Requested


 


23

















 


effectuate the ownership of technology set forth in this Section 9.1
and to enable the other party to apply for and to prosecute Patents as
contemplated by Section 9.2.


 


(c)                                  Limitations.  Subject to the terms of this Agreement,
including, without limitation, the license grants set forth in Section 4.2
and the agreements set forth in Section 4.6 and subject to the provisions
of Section 12.2 regarding assignment, [***] shall [***] to [***], and
[***], [***] or [***] to its [***] or [***], its [***] without the [***], and
[***] to, the [***].


 


9.2                               Patent
Prosecution.


 


(a)                                  Roche
Patents.  Roche shall have the sole
right to control the preparation, filing, prosecution and maintenance of Roche
Patents using patent counsel of Roche’s choice. 
Roche shall promptly notify Metabasis in writing of the filing of any
Roche Patent.  [***], with [***] to the
[***] on [***], the [***] and [***] in [***] (which [***], include the [***] by
[***] to the [***]) that [***] with [***], and [***] and [***], [***], [***]
of, those [***] that are [***] other than [***].


 


(b)                                  Metabasis
Patents.


 


(i)                                    Metabasis
shall have the sole right to control the preparation, filing, prosecution and
maintenance of Metabasis Platform Patents using
patent counsel of Metabasis’ choice. 
Metabasis shall have the first right to control the preparation, filing,
prosecution and maintenance of Metabasis Product Patents using patent counsel of Metabasis’ choice.  Metabasis
shall promptly notify Roche in writing of the filing of any Metabasis Product
Patent.


 


(ii)                                Metabasis
shall give timely notice to Roche of any decision not to file applications for,
or to cease prosecution and/or maintenance of, or not to continue to pay the
expenses of prosecution and/or maintenance of, any Metabasis Product Patent on
a country-by-country and patent-by-patent basis and, in such case, shall permit
Roche, at its sole discretion and expense, to file or to continue prosecution
or maintenance of such Metabasis Product Patent, in which event Metabasis shall
in a timely manner execute such documents and perform such acts at its expense
as may be reasonably necessary to enable Roche to take such actions.  [***], any [***] by [***] (including the
[***]) with respect to [***], to the [***] that it [***] or [***] be [***] any
[***] of a [***] that has [***] or [***] or that has [***] by [***], shall
[***] (such [***] to be [***] and [***] to be [***] with [***] to [***]),
[***].


 


(c)                                  Joint
Patents.


 


(i)                                    Roche
shall have the first right, but not the obligation, to prepare, file, prosecute
and maintain: (A) Joint Product Patents, using outside counsel and/or
Roche’s in-house counsel, at Roche’s election; and (B) other Joint
Patents, [***] to [***] or, upon [***], [***]; provided,
however, that [***] to [***] of [***] with [***] to [***] (other
than [***]), then [***] of [***] with [***] to [***].  Roche shall consult with
Metabasis in good faith as to the preparation, filing, prosecution and
maintenance of each Joint Patent reasonably prior to any deadline or action
with the U.S. Patent & Trademark Office or any foreign patent office,
and shall furnish to Metabasis copies of all relevant documents reasonably in
advance of such consultation.


 


*** Confidential
Treatment Requested


 


24

















 


The parties shall mutually agree which jurisdictions to make Joint
Patent filings in, and how to proceed in response to any request for, or filing
or declaration of, any interference, opposition or reexamination relating to
any Joint Patent, provided that if the parties disagree as to whether to do any
of the foregoing, then the party wishing to do so may do so at its own expense.


 


(ii)                                Roche
shall give timely notice to Metabasis of any decision not to file applications
for, or to cease prosecution and/or maintenance of, or not to continue to pay
the expenses of prosecution and/or maintenance of, any Joint Patents on a
country-by-country and patent-by-patent basis and, in such case, shall permit
Metabasis, at its sole discretion and expense, to file or to continue
prosecution or maintenance of such Joint Patents, in which event Roche shall in
a timely manner execute such documents and perform such acts at its expense as
may be reasonably necessary to enable Metabasis to take such actions.  [***] the [***], any [***] by [***] ([***])
with [***], to the [***] or [***] any [***] of a [***] that has [***] or [***]
or that [***] by [***], shall [***] (such [***] and [***] in [***] with all
[***]), [***].


 


(iii)                            Neither
party shall file any Joint Patent that claims Roche Know-How or Metabasis
Know-How, except upon the other party’s prior written consent.


 


(d)                                  Patent
Fees.


 


(i)                                    All
costs associated with filing, prosecuting, issuing and maintaining Joint
Patents, including interference, opposition, reexamination and reissue actions,
shall be borne by Roche.


 


(ii)                                All
costs associated with filing, prosecuting, issuing and maintaining Metabasis
Platform Patents, including interference, opposition, reexamination and reissue
actions, shall be borne by Metabasis; and all costs associated with filing,
prosecuting, issuing and maintaining Metabasis Product Patents, including
interference, opposition, reexamination and reissue actions, shall be borne by
the party that is responsible for such activities with respect to the
applicable Metabasis Product Patents under Section 9.2(b).


 


9.3                               Enforcement
and Defense.


 


(a)                                  Response
to Alleged Infringement, Misappropriation or Misuse.  If either party learns of any infringement of
Roche Patents, Metabasis Patents or Joint Patents, or any misappropriation or
misuse of Roche Know-How, Metabasis Know-How or Joint Inventions, such party
shall promptly notify the other party of such infringement, misappropriation or
misuse.


 


(i)                                    Roche
shall have the sole right to initiate and prosecute any legal action to enforce
Roche Technology at its own expense and in the name of Roche, to control the
defense of any declaratory judgment action relating to Roche Technology, and to
retain any recovery obtained by it as a result of any such legal action or
settlement thereof.


 


(ii)                                Metabasis
shall have the sole right to initiate and prosecute any legal action to enforce
Metabasis Platform Patents and Metabasis Know-How at its own expense and in


 


*** Confidential
Treatment Requested


 


25

















 


the name of Metabasis, to control the defense of any declaratory
judgment action relating to Metabasis Platform Patents and Metabasis Know-How,
and to retain any recovery obtained by it as a result of any such legal action
or settlement thereof.  Roche shall have
the first right to initiate and prosecute any legal action to enforce Metabasis
Product Patents and to control the defense of any declaratory judgment action
relating to Metabasis Product Patents. 
Any recovery obtained by Roche in connection with or as a result of any
such action relating to the Metabasis Product Patents, whether by settlement or
otherwise, [***] to [***] and [***] in connection with [***] and [***] and
[***] in connection with [***].  The
[***] of any [***] by [***] shall [***] for purposes of [***] (including,
[***], the [***]).  If, within
90 days following a request by Metabasis to Roche to initiate and
prosecute such legal action with respect to, or to control the defense of any
declaratory judgment action relating to, any Metabasis Product Patent, Roche
fails to take such action, or if Roche informs Metabasis that it elects not to
take such action with respect to any Metabasis Product Patent, Metabasis (or
its designee) thereafter shall have the right either to initiate and prosecute
such action or to control the defense of such declaratory judgment with respect
to such Metabasis Product Patent in the name of Metabasis and, if necessary,
Roche, at Metabasis’ expense.  [***] by
[***] in connection with [***] of [***] to the [***], whether by [***], shall
[***].  Neither party shall settle any
action regarding Metabasis Product Patents without the prior written consent of
the other party (which shall not be unreasonably withheld).


 


(iii)                            With
respect to Joint Patents that are not Joint Product Patents, the parties shall
mutually agree on a case-by-case basis whether to initiate and prosecute any
legal action to enforce any such Joint Patent or to defend any declaratory
judgment action relating to any such Joint Patent, and, if the parties agree to
initiate and prosecute, or to defend (as applicable), any such action, which
party will be responsible for initiating and prosecuting, or defending (as
applicable), such action.  Any recovery
obtained by either party in connection with or as a result of any action with
respect to any such Joint Patent, whether by settlement or otherwise, [***] to
[***] and [***] of the [***] in connection with [***] and then to [***] and
[***] in connection with [***].  The
[***] by [***] that [***] shall [***] by [***]. 
Roche shall have the first right to initiate and prosecute any legal
action to enforce Joint Product Patents or to control the defense of any
declaratory judgment action relating to Joint Product Patents.  [***] by [***] in connection with [***] with
respect to [***], whether [***] or [***], shall [***] and [***] in connection
with [***] and [***] and [***] in connection with [***].  The [***] of any [***] by [***] after [***]
shall [***] for [***] (including, [***], the [***].  If, within 90 days following a request by
Metabasis to Roche to initiate and prosecute, or to defend (as applicable),
such legal action with respect to any Joint Product Patent, Roche fails to take
such action, or if Roche informs Metabasis that it elects not to take such
action with respect to any Joint Product Patent, Metabasis (or its designee)
thereafter shall have the right to initiate and prosecute, or to control the
defense of (as applicable), such action with respect to such Joint Product
Patent in the name of Metabasis and, if necessary, Roche, at Metabasis’
expense.  [***] by [***] in connection
with or [***] of [***] to [***], [***] or [***], [***] to [***].  Neither party shall settle any action
regarding Joint Technology without the prior written consent of the other party
(which shall not be unreasonably withheld).


 


(b)                                  Notice
of Certification.  Each party shall
inform the other party of any certification regarding any Metabasis Patents,
Roche Patents or Joint Patents it has received


 


*** Confidential
Treatment Requested


 


26

















 


pursuant to either 21 U.S.C. §§ 355(b)(2)(A)(iv) or (j)(2)(A)(vii)(IV) or
its successor provisions, or Canada’s Patented Medicines (Notice of Compliance)
Regulations Article 5, or any similar provisions in a country other than
the United States and Canada, and shall provide the other party with a copy of
such certification within [***] of receipt by such party.  Metabasis’ and Roche’s rights with respect to
the initiation and prosecution of any legal action as a result of such
certification or any recovery obtained as a result of such legal action shall
be as defined in Section 9.3(a).


 


9.4                               Patent Term Restoration.  The parties shall cooperate in obtaining
patent term restoration or supplemental protection certificates or their
equivalents in any country where applicable to Joint Patents.  If elections with respect to obtaining such
patent term restoration for a Joint Patent are to be made, Metabasis shall have
the right to make the election to seek patent term restoration or supplemental
protection and Roche shall abide by such election.  For the purposes of clarity, the decision of
whether to seek patent term restoration or supplemental protection for any
Metabasis Patent shall be made solely by Metabasis at Metabasis’ sole
discretion, and the decision of whether to seek patent term restoration or supplemental
protection for any Roche Patent shall be made solely by Roche at Roche’s sole
discretion.


 


9.5                               Infringement
of Third Party Rights.  Each party
shall promptly notify the other in writing of any allegation by a Third Party
that the activity of either of the parties pursuant to this Agreement infringes
or may infringe the intellectual property rights of such Third Party.  Roche shall have the sole right to control
any defense of any such claim involving alleged infringement of Third Party
rights by Roche’s activities at its own expense and by counsel of its own
choice, and Metabasis shall have the right, at its own expense, to be
represented in any such action by counsel of its own choice.  Metabasis shall have the sole right to
control any defense of any such claim involving alleged infringement of Third
Party rights by Metabasis’ activities at its own expense and by counsel of its
own choice, and Roche shall have the right, at its own expense, to be
represented in any such action by counsel of its own choice.  Neither party shall have the right [***]
under [***] in a [***] the [***] of the [***] the [***] of such [***] ([***] be
[***]).


 


10.                               TERM;
TERMINATION


 


10.1                        Term.  The term of this Agreement (the “Term”) shall commence on the
Effective Date and continue until the expiration of the last Royalty Term for
any Product with respect to which Roche has a license under this Agreement,
unless earlier terminated pursuant to Section 10.2 or 10.3; provided, however, that [***] upon which [***] to [***] by the
[***] of the [***] or [***] pursuant to [***], or if [***] upon any [***] by
[***] or [***] of the [***], then this Agreement shall expire at such
time.  Upon expiration (but not early
termination) of the Royalty Term, on a Product-by-Product and country-by-country
basis, the licenses granted by Metabasis to Roche under Section 4.2(a) with
respect to such Product and country shall remain in effect on a perpetual,
non-exclusive, sublicensable and fully paid basis; provided, however, that if Roche does not make any payment owed
pursuant to Section 5 with respect to such Product and country within the
relevant timeframe for such payment, then such license shall lapse until such
payment is made.


 


*** Confidential
Treatment Requested


 


27

















 


10.2                        Termination
for Cause.


 


(a)                                  Material
Breach.  Each party shall have the
right to terminate the Research Program and/or this Agreement upon 60 days’
prior written notice to the other upon the occurrence of any of the following:


 


(i)                                    Upon
or after the bankruptcy, insolvency, dissolution, or winding up of the other
party (other than a dissolution or winding up for the purpose of reconstruction
or amalgamation); or


 


(ii)                                Upon
or after the breach of any material provision of this Agreement by the other
party if the breaching party has not cured such breach within the 60-day period
following written notice of material breach by the non-breaching party.


 


(b)                                  Patent
Challenge.


 


(i)                                    Metabasis
shall have the right to terminate this Agreement effective [***] after
Metabasis provides written notice to Roche if Roche or any of its Affiliates or
sublicensees directly, or indirectly through any Third Party, commences any
opposition proceeding with respect to, challenges the validity or enforceability
of, or opposes any extension of or the grant of a supplementary protection
certificate with respect to, any Metabasis Patent that has issued or been
published or that has been disclosed by Metabasis to Roche (a “Patent Challenge”);
provided, however, that if such Patent Challenge is terminated during such
[***] period, then Metabasis shall not have the right to terminate this
Agreement.  For the avoidance of doubt,
any action commenced by the U.S. Patent and Trademark Office or any foreign
patent office on its own initiative and without any attempt by a party to cause
such action to be commenced shall not be considered a Patent Challenge for
purposes of this Section 10.2(b).


 


(ii)                                Roche
shall have the right to terminate this Agreement effective [***] after Roche
provides written notice to Metabasis if Metabasis or any of its Affiliates or
sublicensees directly, or indirectly through any Third Party, commences any
Patent Challenge with respect to, any Roche Patent that has issued or been
published or that has been disclosed by Roche to Metabasis; provided however,
that if such Patent Challenge is terminated during such [***] period, then
Roche shall not have the right to terminate this Agreement.


 


(c)                                  Failure
to Initiate Toxicology Studies.  Metabasis
shall have the right to terminate this Agreement effective upon written notice
to Roche if Roche timely notifies Metabasis in writing pursuant to Section 4.1
of at least one Collaboration Compound upon
which Roche or any of its Affiliates or sublicensees intends to initiate [***], but Roche (or its Affiliate, as
applicable) does not initiate [***] of [***] after [***] of the [***].


 


10.3                        Termination
by Roche.


 


(a)                                  Roche
shall have the right to terminate this Agreement in its entirety for any reason
or for no reason at any time after the expiration of the Research Term upon
60 days’ prior written notice to Metabasis.


 


*** Confidential
Treatment Requested


 


28

















 


(b)                                 Roche
shall have the right to terminate the licenses granted to it under Section 4.2(a)(ii),
on a Major Market-by-Major Market basis (or in the case of markets other than
the Major Markets, on a country-by-country basis), Product-by-Product or
patent-by-patent basis, for any reason or for no reason at any time after the
expiration of the Research Term upon 60 days’ prior written notice to
Metabasis.  In the event of any such
termination, this Agreement, except for the terminated license, shall remain in
full force and effect in accordance with its terms.


 


10.4                        Effect of
Termination or Expiration; Surviving Obligations.


 


(a)                                 Upon
termination of this Agreement by Roche pursuant to Section 10.2(a) or
Section 10.2(b)(ii):


 


(i)                                    the
license granted under Section 4.2(b), if then in effect, shall
automatically terminate and revert to Roche;


 


(ii)                                the
license granted under Section 4.2(a)(i), if then in effect, shall
automatically terminate and revert to Metabasis; and


 


(iii)                            any
license granted by Metabasis to Roche under Section 4.2(a)(ii) shall
remain in effect in accordance with its terms, subject to compliance by Roche
with all applicable provisions of this Agreement (including, without
limitation, the payment obligations set forth in Articles 5 and 6).


 


(b)                                 Upon
termination of this Agreement by Roche pursuant to Section 10.3(a) or
by Metabasis pursuant to Section 10.2(c):


 


(i)                                    all
licenses granted under Sections 4.2, if then in effect, shall
automatically terminate and revert to the granting party;


 


(ii)                                effective
upon such termination, Roche shall, and it hereby does, grant to Metabasis a
non-exclusive, worldwide, royalty-bearing (as set forth below) license, with
the right to sublicense through multiple tiers of sublicense except as
expressly set forth below, [***].  [***]
shall [***] a [***] of [***] of [***] (as defined herein but applied to [***],
[***]) of [***] and [***] by [***], its [***] and permitted [***] in accordance
with [***], [***] and [***], as applied to [***], [***].  Notwithstanding the [***], if (A)  a
[***] or [***] has achieved [***] prior to such [***] and (B) such [***] or [***] is [***] or [***] in a [***] or requires any other [***] from [***], then the [***] set forth in this clause (ii) [***] be [***] or [***] (including
pursuant to [***]) without [***], which [***] may [***] for any reason.  [***] acknowledges that the foregoing [***], if [***], will not [***] any [***] or [***] under any
other [***], including any [***] or [***] under any [***] of [***]
of, or any [***] of [***] or [***], a [***] itself (i.e.,
without [***]).  Metabasis further acknowledges that the
foregoing license, if granted, will not include any right or license with
respect to any [***] that [***] a [***] at the time of such termination;


 


*** Confidential
Treatment Requested


 


29

















 


(iii)                            Roche
shall promptly, to the extent permitted by applicable laws, (A) transfer
to Metabasis all non-clinical and clinical data with respect to Licensed
Compound(s) and Products; (B) transfer and assign to Metabasis all
IND filings and Regulatory Approvals with respect to Licensed Compound(s) and
Products, together with copies of all related regulatory correspondence; and (C) at
Metabasis’ request, sell and transfer to Metabasis Roche’s existing inventory
of Licensed Compound(s) and Products and a transfer price equal to Roche’s
cost; in each case, to the extent the foregoing are within Roche’s Control as
of the date of such termination. 
Metabasis may use such transferred and/or assigned data and documents
solely for the purpose of developing and commercializing Licensed Compounds and
Products in the Field; and


 


(iv)                               [***],
and [***], [***], from and [***] and [***], [***], [***] or [***] ([***] or
[***]), [***] or [***] or [***].


 


(c)                                  Upon
termination of this Agreement by Metabasis pursuant to Section 10.2(a) or
Section 10.2(b)(i):


 


(i)                                    all
licenses granted under Sections 4.2, if then in effect, shall
automatically terminate and revert to the granting party;


 


(ii)                                effective
upon such termination, Roche shall, and it hereby does, grant to Metabasis an
exclu effective upon such termination, Roche shall, and it hereby does, grant
to Metabasis an exclusive (even as to Roche), worldwide, royalty-bearing (as
set forth below)  license, with the right
to sublicense through multiple tiers of sublicense except as expressly set
forth below, under [***] and [***] interest in [***], solely to [***], [***],
[***], [***], [***], [***], have [***] and [***] and [***] in [***].  [***] shall [***] a [***] of [***] of [***]
(as defined herein but applied to [***], [***]) of [***] and [***] by [***],
its [***] and permitted [***] in accordance with [***], as [***] to [***],
[***].  Notwithstanding the [***], if (A) a
[***] or [***] has [***] prior to such [***] and
(B) such [***] or [***] is [***] or [***] in a [***] or requires any other [***] from [***], then the [***] set
forth in this clause (ii) shall [***] or [***] (including
pursuant to [***]) without [***] prior [***], which [***] may [***]
for any [***]. 
Metabasis acknowledges that the foregoing license, if granted, will not
include any right or license with respect to any Collaboration Compound that
was not a Licensed Compound at the time of such termination;


 


(iii)                            Roche
shall promptly, to the extent permitted by applicable laws, (A) transfer
to Metabasis all non-clinical and clinical data with respect to Licensed
Compound(s) and Products; (B) transfer and assign to Metabasis all
IND filings and Regulatory Approvals with respect to Licensed Compound(s) and
Products, together with copies of all related regulatory correspondence; and (C) at
Metabasis’ request, sell and transfer to Metabasis Roche’s existing inventory
of Licensed Compound(s) and Products and a transfer price equal to Roche’s
cost; in each case, to the extent the foregoing are within Roche’s Control as
of the date of such termination. 
Metabasis may use such transferred and/or assigned data and documents
solely for the purpose of developing and commercializing Licensed Compounds and
Products in the Field; and


 


*** Confidential
Treatment Requested


 


30
















 


(iv)                   [***] by
[***] with [***], [***], and it [***], [***], [***], [***], [***] ([***] or
[***]), [***] or [***] any [***] that [***] at [***] of [***], [***] as [***]: (A) [***]
of the [***], the [***] or the [***]; and (B) [***] of the [***].


 


(d)                                  In
the event of any expiration or termination of this Agreement:


 


(i)                        all
Joint Technology shall continue to be owned jointly by the parties in equal,
undivided shares, and, except as expressly set forth in Sections 10.4(c)(ii) (including,
without limitation, any surviving provision listed herein), each party shall be
free to practice and grant licenses under its interest in Joint Technology
without the other party’s consent and without accounting to the other party;
and


 


(ii)                    [***], and
it [***], [***], [***] or [***], [***] to [***] of [***] or any [***] ([***] of
[***] and [***]) to [***] or [***], or [***] to [***] or [***] ([***] or [***]
or [***]), any [***] and is [***] a [***] ([***], [***] or [***]) in the [***].


 


(e)                                  Expiration
or termination of this Agreement shall not relieve the parties of any
obligation accruing prior to such expiration or termination.  Except as set forth below or elsewhere in
this Agreement, the obligations and rights of the parties under the following
provisions of this Agreement shall survive expiration or termination of this
Agreement:


 


Section 3.8 – Materials Transfer (last sentence only)


Section 6.4 – Audits


Section 6.5 – Late Payments


Section 7.1 – Confidential Information


Section 7.2 – Exceptions


Section 7.3 – Authorized Disclosure


Section 7.4 – Publications


Section 8.4 – Disclaimer


Section 8.5 – Limitation of Liability


Section 9.1 – Ownership of Inventions


Section 9.2 – Patent Prosecution and Maintenance (so long as Roche
retains a license from Metabasis under Section 10.4)


Section 9.3 – Cooperation of the Parties (so long as Roche retains
a license from Metabasis under Section 10.4)


Section 9.4 – Infringement by Third Parties (so long as Roche
retains a license from Metabasis under Section 10.4)


Section 9.5 – Infringement of Third Party Rights (so long as Roche
retains a license from Metabasis under Section 10.4)


Section 10.1 – Term (so long as Roche retains a license from
Metabasis under Section 10.4)


Section 10.2 – Termination for Cause (so long as Roche retains a
license from Metabasis under Section 10.4)


Section 10.1 – Termination by Roche (so long as Roche retains a
license from Metabasis under Section 10.4)


Section 10.4
– Effect of Termination; Surviving Obligations


 


*** Confidential Treatment Requested


 


31

















 


Section 10.5 – Exercise of Right to Terminate


Section 10.6 – Damages; Relief


Section 10.7 – Rights in Bankruptcy (so long as Roche retains a
license from Metabasis under Section 10.4)


Article 11 – Indemnification


Article 12 – Miscellaneous


 


(f)                                    Within
90 days following the expiration or termination of this Agreement, except
to the extent and for so long as a party retains license rights under Section 10.4(a),  10.4(b) or 10.4(c), each party shall
deliver to the other party or destroy (and certify in writing the destruction
of) any and all Confidential Information of the other party in its possession.


 


10.5                        Exercise
of Right to Terminate.  The exercise
by either party of a termination right provided for under this Agreement shall
not give rise to the payment of damages or any other form of compensation or
relief to the other party with respect thereto.


 


10.6                        Damages;
Relief.  Subject to Section 10.5
above, termination of this Agreement shall not preclude either party from
claiming any other damages, compensation or relief that it may be entitled to
upon such termination.


 


10.7                        Rights in
Bankruptcy.  The Parties agree that
in the event a party becomes a debtor under Title 11 of the U.S. Code (“Title 11”), this
Agreement shall be deemed to be, for purposes of Section 365(n) of
Title 11, a license to rights to “intellectual property” as defined
therein.  Each party as a licensee
hereunder shall have the rights and elections as specified in
Title 11.  Any agreements
supplemental hereto shall be deemed to be “agreements supplementary to” this
Agreement for purposes of Section 365(n) of Title 11.


 


11.                               INDEMNIFICATION


 


11.1                        Indemnification
by Roche.  Roche hereby agrees to
save, defend and hold Metabasis and its Affiliates and their respective
directors, officers, employees and agents (each, a “Metabasis Indemnitee”)
harmless from and against any and all claims, suits, actions, demands,
liabilities, expenses and/or loss, including reasonable legal expense and
attorneys’ fees (collectively, “Losses”), to which any Metabasis Indemnitee may become
subject as a result of any claim, demand, action or other proceeding by any
person or entity other than a party or its Affiliates to the extent such Losses
arise directly or indirectly out of: (i) the practice by Roche or its
Affiliate or sublicensee of any license granted to it hereunder, (ii) the
manufacture, use, handling, storage, sale or other disposition of any Licensed
Compound or Product by Roche or its Affiliate or sublicensee, or (iii) the
breach by Roche of any warranty, representation, covenant or agreement made by
Roche in this Agreement; except, in each case, to the extent such Losses result
from the negligence or willful misconduct of any Metabasis Indemnitee or the
breach by Metabasis of any warranty, representation, covenant or agreement made
by Metabasis in this Agreement.


 


11.2                        Indemnification
by Metabasis.  Metabasis hereby
agrees to save, defend and hold Roche and its Affiliates and their respective
directors, officers, employees and agents (each, an “Roche Indemnitee”)
harmless from and against any and all Losses to which any Roche


 


32

















 


Indemnitee may
become subject as a result of any claim, demand, action or other proceeding by
any person or entity other than a party or its Affiliates to the extent such
Losses arise directly or indirectly out of: (i) the practice by Metabasis,
its Affiliates or sublicensees (excluding Roche and its Affiliates and
sublicensees) of any license granted to it hereunder, (ii) the
manufacture, use, handling, storage, sale or other disposition of any product
by Metabasis, its Affiliates or sublicensees (excluding Roche and its
Affiliates and sublicensees) pursuant to rights granted by Roche to Metabasis
under this Agreement, or (iii) the breach by Metabasis of any warranty,
representation, covenant or agreement made by Metabasis in this Agreement;
except, in each case, to the extent such Losses result from the negligence or
willful misconduct of any Roche Indemnitee or the breach by Roche of any
warranty, representation, covenant or agreement made by Roche in this
Agreement.


 


11.3                        Control of
Defense.  Any entity entitled to
indemnification under this Article 11 shall give notice to the
indemnifying party of any Losses that may be subject to indemnification,
promptly after learning of such Losses, and the indemnifying party shall assume
the defense of such Losses with counsel reasonably satisfactory to the
indemnified party.  If such defense is
assumed by the indemnifying party with counsel so selected, the indemnifying
party will not be subject to any liability for any settlement of such Losses
made by the indemnified party without its consent (but such consent will not be
unreasonably withheld or delayed), and will not be obligated to pay the fees
and expenses of any separate counsel retained by the indemnified party with
respect to such Losses.  The indemnified
party shall provide the indemnifying party with all information in its
possession and all assistance reasonably necessary to enable the indemnifying
party to carry on the defense of any such Losses.  Without the prior written consent of the
other party, neither the indemnified party nor the indemnifying party shall
agree to any settlement that does not include a complete release of such other
party from all liability with respect thereto or that imposes any liability,
obligation or restriction on such other party.


 


11.4                        Insurance.  Each party, at its own expense, shall
maintain product liability insurance (or self-insure) in an amount consistent
with industry standards during the Term.


 


12.                               MISCELLANEOUS


 


12.1                        Force
Majeure.  Neither party shall be held
liable to the other party nor be deemed to have defaulted under or breached
this Agreement for failure or delay in performing any obligation under this
Agreement (other than failure to make payment when due) when such failure or
delay is caused by or results from causes beyond the reasonable control of the
affected party including, but not limited to, embargoes, war, acts of war
(whether war be declared or not), insurrections, riots, civil commotions,
strikes, lockouts or other labor disturbances, fire, floods, or other acts of
God, or acts, omissions or delays in acting by any governmental authority or the
other party.  The affected party shall
notify the other party of such force majeure circumstances as soon as
reasonably practical, and shall promptly undertake all reasonable efforts
necessary to cure such force majeure circumstances.  Such excuse from liability shall be effective
only to the extent and duration of the event(s) causing the failure or
delay in performance and provided that the party has not caused such event(s) to
occur.


 


12.2                        Assignment.  Except as expressly provided hereunder,
neither this Agreement nor any rights or obligations hereunder may be assigned
or otherwise transferred by either party


 


33

















 


12.3                        without
the prior written consent of the
other party (which consent shall not be unreasonably withheld).  Notwithstanding the foregoing, either party
may assign this Agreement and its rights and obligations hereunder without the
other party’s consent:


 


(a)                                  [***]
with the [***] or [***] or [***] of the [***] of [***] to [***] to a [***],
whether [***], [***], [***] or [***]; provided,
however, [***] of any [***] (whether [***] is [***] or [***] by the
[***] by [***] (e.g., [***] of a
[***])), [***] of the [***] to [***] ([***] of the [***] to this [***]) [***]
in the [***]; and provided, further,
[***] of [***] to [***] that [***] the [***] and [***] is the [***], [***]: (i) [***]
([***]) hereof, [***] by [***] the [***] of such [***]; (ii) [***] to
[***] of this [***] ([***], [***], [***]), which [***] by [***] to [***] the
[***] of [***] ([***]); and (iii) to [***], [***], [***] and [***], in
which [***] and [***] as are [***] to [***]; or


 


(b)                                  to
an Affiliate, provided that the assigning party shall remain liable and
responsible to the non-assigning party hereto for the performance and observance
of all such duties and obligations by such Affiliate.


 


The rights and
obligations of the parties under this Agreement shall be binding upon and inure
to the benefit of the successors and permitted assigns of the parties.  Any assignment not in accordance with this
Agreement shall be void.


 


12.4                        Severability  If any one or more of the provisions
contained in this Agreement is held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby, unless
the absence of the invalidated provision(s) adversely affects the
substantive rights of the parties.  The
parties shall in such an instance use their best efforts to replace the invalid,
illegal or unenforceable provision(s) with valid, legal and enforceable
provision(s) which, insofar as practical, implement the purposes of this
Agreement.


 


12.5                        Notices.  All notices which are required or
permitted hereunder shall be in writing and sufficient if delivered personally,
sent by facsimile (and promptly confirmed by personal delivery, registered or
certified mail or overnight courier), sent by nationally-recognized overnight
courier or sent by registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:


 


	
  if to
  Metabasis, to:

  	
   

  	
  Metabasis
  Therapeutics, Inc.

  
	
   

  	
   

  	
  11119 North
  Torrey Pines Road

  
	
   

  	
   

  	
  La Jolla, CA
  92037

  
	
   

  	
   

  	
  Attention:
  Chief Executive Officer

  
	
   

  	
   

  	
  Facsimile
  No.: (858) 587-2770

  
	
   

  	
   

  	
   

  
	
  with a copy
  to:

  	
   

  	
  Cooley Godward
  Kronish LLP

  
	
   

  	
   

  	
  4401
  Eastgate Mall

  
	
   

  	
   

  	
  San Diego,
  CA 92121

  
	
   

  	
   

  	
  Attention:
  Kay Chandler

  
	
   

  	
   

  	
  Facsimile
  No.: (858) 550-6420

  



 


*** Confidential Treatment Requested


 


34

















 


	
  if to Roche,
  to:

  	
   

  	
  Hoffmann-La Roche Inc.

  
	
   

  	
   

  	
  340 Kingsland Street

  
	
   

  	
   

  	
  Nutley, New
  Jersey 07110

  
	
   

  	
   

  	
  Attention:
  Corporate Secretary

  
	
   

  	
   

  	
  Facsimile
  No.: +1 (973) 235-3500

  
	
   

  	
   

  	
   

  
	
  with copies
  to:

  	
   

  	
  F.Hoffmann-La Roche Ltd

  
	
   

  	
   

  	
  Grenzacherstrasse 124

  
	
   

  	
   

  	
  CH-4070

  
	
   

  	
   

  	
  Basel,
  Switzerland

  
	
   

  	
   

  	
  Attention:
  Corporate Law

  
	
   

  	
   

  	
  Facsimile
  No.: +41 61 688 13 96

  
	
   

  	
   

  	
   

  
	
  and to:

  	
   

  	
  Roche Palo Alto LLC

  
	
   

  	
   

  	
  3431 Hillview Avenue

  
	
   

  	
   

  	
  Palo Alto, CA 94304

  
	
   

  	
   

  	
  USA  Attention: General Counsel

  
	
   

  	
   

  	
  Facsimile: 650-852-1338

  



 


or to such
other address as the party to whom notice is to be given may have furnished to
the other party in writing in accordance herewith.  Any such notice shall be deemed to have been
given: (a) when delivered if personally delivered or sent by facsimile on
a business day; (b) on the business day after dispatch if sent by nationally-recognized
overnight courier; and/or (c) on the fifth business day following the date
of mailing if sent by mail.


 


12.6                        Applicable
Law.  This Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware,
and the patent laws of the United States without reference to any rules of
conflict of laws.  The United Nations
Convention on the Sale of Goods shall not apply.


 


12.7                        Dispute
Resolution.


 


(a)                                  The
parties shall negotiate in good faith and use reasonable efforts to settle any
dispute, controversy or claim arising from or related to this Agreement or the
breach thereof.  If the parties cannot
resolve the dispute, controversy or claim (other than any such matter to be
resolved by the JRC, which shall not be subject to this Section 12.6 but
shall be resolved solely pursuant to the procedures set forth in Section 2.4)
within [***] of a written request by either party to the other party, the
parties agree to hold a meeting, attended by the Chief Executive Officer of
Metabasis and the [***], as appropriate in light of the subject matter of the
dispute, to attempt in good faith to negotiate a resolution of the dispute
prior to pursuing other available remedies. 
If, within [***] after such written request, the parties have not
succeeded in negotiating a resolution of the dispute, and a party wishes to
pursue the matter, each such dispute, controversy or claim that is not an “Excluded
Claim” shall be resolved by binding arbitration in accordance with the
Commercial Arbitration Rules and Supplementary Procedures for Large
Complex Disputes of the American Arbitration Association (“AAA”) as then in
effect,


 


*** Confidential Treatment Requested


 


35

















 


and judgment
on the arbitration award may be entered in any court having jurisdiction
thereof.  The decision rendered in any
such arbitration will be final and not appealable.  If either party intends to commence binding
arbitration of such dispute, controversy or claim, such party will provide
written notice to the other party informing the other party of such intention
and the issues to be resolved.  Within
30 days after the receipt of such notice, the other party may by written
notice to the party initiating binding arbitration, add additional issues to be
resolved.


 


(b)                                  The
arbitration shall be conducted by a panel of three persons experienced in the
pharmaceutical business, none of whom shall be a current or former employee or
director, or a then-current stockholder, of either party, their respective
Affiliates or any Roche sublicensee. 
Within [***] after receipt of the original notice of binding arbitration
(the “Notice Date”),
each party shall select one person to act as arbitrator and the two
party-selected arbitrators shall select a third arbitrator within [***] of
their appointment.  If the arbitrators
selected by the parties are unable or fail to agree upon the third arbitrator,
the third arbitrator shall be appointed by the AAA.  The place of arbitration shall be [***] and
all proceedings and communications shall be in English.


 


(c)                                  [***]
the [***] of the [***], [***], will be [***] in [***].  The [***] such [***] for an [***] of any
[***] in the [***], [***].  [***] after
selection of the third arbitrator, the parties and their representatives shall
hold a preliminary meeting with the arbitrators, to mutually agree upon and
thereafter follow procedures seeking to assure that the arbitration will be
concluded within six (6) months from such meeting.  Failing any such mutual agreement, the
arbitrators will design and the parties shall follow procedures to such effect.


 


(d)                                  The
arbitrators will, in rendering their decision, apply the substantive law of the
State of Delaware, without giving effect to its principles of conflicts of law,
and without giving effect to any rules or laws relating to arbitration.


 


(e)                                  Either
party may apply to the arbitrators for interim injunctive relief until the
arbitration award is rendered or the controversy is otherwise resolved.  Either party also may, without waiving any
remedy under this Agreement, seek from any court having jurisdiction any
injunctive or provisional relief necessary to protect the rights or property of
that party pending the arbitration award. 
[***] shall [***] to [***] or [***], [***] as may be [***].  Each party shall bear its own costs and
expenses and attorneys’ fees and an equal share of the arbitrators’ and any
administrative fees of arbitration.


 


(f)                                    Except
to the extent necessary to confirm or enforce an award or as may be required by
law, neither a party nor an arbitrator may disclose the existence, content, or
results of an arbitration without the prior written consent of both
parties.  In no event shall an
arbitration be initiated after the date when commencement of a legal or equitable
proceeding based on the dispute, controversy or claim would be barred by the
applicable  statute of limitations.


 


(g)                                 As used in this Section, the term “Excluded Claim”
shall mean a dispute, controversy or claim that concerns (i) [***], [***]
of a [***] or [***]; or (ii) [***], [***] or [***] or [***], [***] or
[***].


 


*** Confidential Treatment Requested


 


36

















 


12.8                        Entire
Agreement; Amendments.  This
Agreement, together with the exhibit hereto, contains the entire understanding
of the parties with respect to the subject matter hereof and supersedes and
cancels all previous express or implied agreements and understandings,
negotiations, writings and commitments, either oral or written, in respect to
the subject matter hereof, except that the letter agreement between the parties
dated concurrently herewith (including the Research Plan and the Schedules
attached thereto) shall continue in full force and effect during the Term.  This Agreement may be amended, or any term
hereof modified, only by a written instrument duly executed by authorized
representatives of both parties hereto.


 


12.9                        Headings.  The captions to the several Articles and
Sections hereof are not a part of this Agreement, but are merely for convenience
to assist in locating and reading the several Articles and Sections hereof.


 


12.10                 Independent
Contractors.  It is expressly agreed
that Metabasis and Roche shall be independent contractors and that the
relationship between the two parties shall not constitute a partnership, joint
venture or agency.  Neither Metabasis nor
Roche shall have the authority to make any statements, representations or
commitments of any kind, or to take any action, which shall be binding on the
other party, without the prior written consent of the other party.


 


12.11                 Waiver.  The waiver by either party hereto of any
right hereunder, or the failure of the other party to perform, or a breach by
the other party, shall not be deemed a waiver of any other right hereunder or of
any other breach or failure by such other party whether of a similar nature or
otherwise.


 


12.12                 Cumulative
Remedies.  No remedy referred to in
this Agreement is intended to be exclusive, but each shall be cumulative and in
addition to any other remedy referred to in this Agreement or otherwise
available under law.


 


12.13                 Waiver of Rule of
Construction.  Each party has had the
opportunity to consult with counsel in connection with the review, drafting and
negotiation of this Agreement. 
Accordingly, the rule of construction that any ambiguity in this
Agreement shall be construed against the drafting party shall not apply.


 


12.14                 Interpretation.  All references in this Agreement to an
Article, Section or Exhibit shall refer to an Article, Section or
Exhibit in or to this Agreement, unless otherwise stated.  Any reference to any federal, national,
state, local, or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise.  The word “including” and similar words means
including without limitation.  The words “herein,”
“hereof” and “hereunder” and other words of similar import refer to this
Agreement as a whole and not to any particular Article, Section or other
subdivision.  All references to days,
months, quarters or years are references to calendar days, calendar months,
calendar quarters, or calendar years, unless stated otherwise.  References to the singular include the
plural.


 


12.15                 No Third Party
Beneficiaries.  This Agreement is
neither expressly or impliedly made for the benefit of any party other than
Metabasis and Roche, except for the persons expressly entitled to
indemnification as provided in Article 11.


 


37

















 


12.16                 English Language.  This Agreement is in the English language,
and the English language shall control their interpretation.  In addition, all notices required or
permitted to be given under this Agreement, and all written, electronic, oral
or other communications between the parties regarding this Agreement, shall be
in the English language.


 


12.17                 Counterparts.  This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.


 


38

















 


IN
WITNESS WHEREOF, the parties hereto have duly executed
this COLLABORATION AND LICENSE AGREEMENT
as of the Effective Date.


 


	
  HOFFMANN-LA ROCHE INC.

  	
   

  	
  METABASIS THERAPEUTICS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
     /S/FREDERICK
  C. KENTZ, III

  	
   

  	
  By:

  	
     /S/
  PAUL LAIKIND, PH.D.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
     Frederick
  C. Kentz, III

  	
   

  	
  Name:

  	
     Paul
  Laikind, Ph.D.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
     Vice
  President

  	
   

  	
  Title:

  	
     President
  and CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  F. HOFFMANN-LA ROCHE LTD

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
     /S/ STEFAN ARNOLD

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Name: 

  	
     Stefan Arnold

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Title: 

  	
       Stv. Direktor

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By: 

  	
     /S/ DAN ZABROWSKI

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Name: 

  	
     Dan Zabrowski

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Title: 

  	
     Global Head of Pharma Partnering

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ROCHE PALO ALTO LLC

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By: 

  	
     /S/
  KEVIN A. MARKS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Name: 

  	
     Kevin
  A. Marks

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Title: 

  	
       Vice
  President

  	
   

  	
   

  
																



 


39
















 


August 7,
2008


 


Hoffmann-La
Roche Inc.


340 Kingsland
Street


Nutley, New
Jersey 07110


USA


Attention:  Corporate Secretary


 


F.Hoffmann-La
Roche Ltd


Grenzacherstrasse
124


CH-4070


Basel,
Switzerland


 


Roche Palo
Alto LLC


3431 Hillview
Avenue


Palo Alto, CA
94304


USA


 


	
  Re:

  	
  Collaboration and License Agreement dated as of August 7, 2008
  (the “Agreement”) between Hoffmann-La Roche Inc. and F.Hoffmann-La Roche Ltd
  (collectively, “Roche”), and Metabasis Therapeutics, Inc. (“Metabasis”)

  



 


Ladies and
Gentlemen:


 


This letter
agreement (the “Letter
Agreement”) will confirm the understanding of Roche and
Metabasis regarding certain matters relating to the Agreement and is intended
to be legally binding on both parties. 
Capitalized terms used but not otherwise defined in this Letter
Agreement shall have the meanings provided in the Agreement.  The parties hereby agree, for purposes of the
Agreement, as follows:


 


1.                                      The
Research Plan as of the Effective Date shall be as set forth in Exhibit A to
this Letter Agreement (the “Research
Plan”).


 


2.                                      The
Metabasis Patents as of the Effective Date are listed in Schedule I to
the Research Plan.


 


3.                                      The
Roche Patents as of the Effective Date are listed in Schedule II to
the Research Plan.


 


4.                                      The
parties hereby agree that this Letter Agreement, together with the Schedules
and Exhibits attached hereto, shall be subject to the terms and conditions of
the Agreement.  In the event that any
conflict exists between the terms of this Letter Agreement and the terms of the
Agreement, the terms of the Agreement shall control.


 


1

















 


5.                                      This
Letter Agreement may be executed (including, without limitation, by facsimile
signature) in two counterparts, each of which shall be deemed an original, but
both of which together shall constitute one and the same instrument.


 


If the
foregoing is acceptable to you, please sign this Letter Agreement in the space
provided below and 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 the Effective Date:


 


HOFFMANN-LA
ROCHE INC.


 


 


	
  By:

  	
     /S/FREDERICK
  C. KENTZ, III

  	
   

  
	
  Name:

  	
     Frederick
  C. Kentz, III

  	
   

  
	
  Title:

  	
        Vice President

  	
   

  
					



 


 


F.
HOFFMANN-LA ROCHE LTD


 


 


	
  By:

  	
     /S/ STEFAN ARNOLD

  	
   

  
	
  Name:

  	
     Stefan Arnold

  	
   

  
	
  Title:

  	
        Stv. Direktor

  	
   

  
					



 


	
  By:

  	
     /S/ DAN ZABROWSKI

  	
   

  
	
  Name:

  	
     Dan Zabrowski

  	
   

  
	
  Title:

  	
     Global Head of Pharma Partnering

  	
   

  
					



 


 


ROCHE PALO ALTO LLC


 


 


	
  By:

  	
     /S/
  KEVIN A. MARKS

  	
   

  
	
  Name:

  	
     Kevin
  A. Marks

  	
   

  
	
  Title:

  	
        Vice
  President

  	
   

  
					



 


2

















 


EXHIBIT A


 


Research Plan


 


Clinical
Candidate Target Profile


 


[***]


 


Responsibilities


Metabasis


 


[***]


 


Roche


 


[***]


 


Research
Plan


 


General workplan:


 


[***]


 


Resources:


 


[***]


 


*** Confidential Treatment Requested


 


A-1

















 


Schedule I


Metabasis Patents


 


METABASIS
PLATFORM PATENTS:


 


[***]


 


*** Confidential Treatment Requested


 


1-1

















 


METABASIS
PRODUCT PATENTS:


 


[***]


 


*** Confidential Treatment Requested


 


I-2

















 


Schedule II


Roche Patents


 


[***]


 


*** Confidential Treatment Requested


 


II-1