Amended & Restated Loan Agreement



 Exhibit 10.2 
 AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT 
 THIS AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT (this “Agreement”) dated as of May 28, 2009 (the “Effective Date”) among OXFORD FINANCE CORPORATION, a Delaware corporation with an office located at 133 N. Fairfax Street, Alexandria, VA
22314 (“Lender”) and METABASIS THERAPEUTICS, INC. a Delaware corporation with an office located at 11119 North Torrey Pines Road, La Jolla, CA 92037 and ARAMED, INC. a Delaware corporation with an office
located at 11119 North Torrey Pines Road, La Jolla, CA 92037 (jointly and severally, individually and collectively, the “Borrower”), provides the terms on which Lender shall lend to Borrower and Borrower shall repay Lender. The
parties agree as follows: 
 WHEREAS, Borrower has prepaid outstanding principal of Three Million Nine Hundred Forty Thousand Three Hundred
Fifteen Dollars and twenty three cents and all interest accrued through May 26, 2009 in the amount of Twenty Six Thousand Eight Hundred Ninety Eight Dollars and twelve cents ($26,898.12) pursuant to that certain Loan and Security Agreement
among Oxford Finance Corporation, Metabasis Therapeutics, Inc., and Aramed, Inc., dated as of March 14, 2008 (“Original Loan”); in connection therewith, Lender has waived any Prepayment Fee; 
 WHEREAS, Borrower has satisfied or otherwise paid in full all other Obligations under the Original Loan, with the exception of the sum of $200,000 which
remains unpaid under the Original Loan; 
 WHEREAS, the parties wish to amend the terms of the Original Loan and to provide for the repayment
of the remaining $200,000 which remains outstanding; 
 The Parties hereby agree to the following amended and restated terms: 
 1 ACCOUNTING AND OTHER TERMS 
 Accounting terms not defined in this Agreement shall be construed following GAAP. Calculations and determinations must be made following GAAP (except for non-compliance with FAS 123R in monthly reporting). Capitalized terms not otherwise
defined in this Agreement shall have the meanings set forth in Section 13. All other terms contained in this Agreement, unless otherwise indicated, shall have the meaning provided by the Code to the extent such terms are defined therein.

 2 LOAN AND TERMS OF PAYMENT 
 2.1 Promise to Pay. Borrower hereby unconditionally promises to pay Lender the outstanding principal amount of all Credit Extensions and accrued and unpaid interest thereon as and when due in accordance with
this Agreement. 
 2.1.1 Term Loan. 
 (a) Existing Term Loan. Subject to the terms and conditions of this Agreement, Lender has made , and Borrower acknowledges receipt of the proceeds from one (1) Term Loan (the “Term Loan”)
made available to Borrower in an amount of Two Hundred Thousand Dollars ($200,000.00). After repayment, the Term Loan may not be re-borrowed. 
 (b) Repayment. On the Term Loan Maturity date, Borrower shall make one (1) payment of principal in the amount of the Term Loan, plus payment of all accrued and unpaid interest at the effective rate of interest as set forth in
Section 2.2(a). All unpaid principal and accrued interest with respect to the Term Loan is due and payable in full on the Term Loan Maturity Date with respect to such Term Loan. Payments received after 12:00 noon Eastern time are considered
received at the opening of business on the next Business Day. A Term Loan may only be prepaid in accordance with Section 2.1.1(d). 
  

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 (c) Mandatory Prepayment Upon an Acceleration. If a Term Loan is accelerated following the
occurrence of an Event of Default, Borrower shall immediately pay to Lender an amount equal to the sum of: (i) all outstanding principal plus accrued and unpaid interest, and (ii) all other sums, that shall have become due and payable,
including interest at the Default Rate with respect to any past due amounts. 
 (d) Permitted Prepayment of Loans. Borrower shall have
the option to prepay all or any portion of the Term Loan advanced by Lender under this Agreement without penalty or premium, provided Borrower provides written notice to Lender of its election to prepay the Term Loan at least two (2) days prior
to such prepayment Borrower may terminate this Agreement upon no less than two (2) days’ prior written notice to Lenders and indefeasible payment in full of all Obligations (other than inchoate indemnity obligations), and Lenders’
obligations to lend hereunder shall terminate upon receipt of such payment. 
 2.2 Payment of Interest on the Credit Extensions.

 (a) Interest Rate. Subject to Section 2.2(b), the principal amount outstanding under the Term Loan shall accrue interest at
a fixed per annum rate equal to fourteen and eighty-three one-hundredths percent (14.83%), which interest shall be payable in accordance with Section 2.2(d). 
 (b) Default Rate. Immediately upon the occurrence and during the continuance of an Event of Default, Obligations shall bear interest at a rate per annum which is equal to 19.83% (the “Default
Rate”). Payment or acceptance of the increased interest rate provided in this Section 2.2(b) is not a permitted alternative to timely payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any
rights or remedies of Lender. 
 (c) 360-Day Year. Interest shall be computed on the basis of a 360-day year comprising twelve
(12) months consisting of thirty (30) days. 
 (d) Payments. Payments of principal and/or interest received after 12:00 noon
Eastern time are considered received at the opening of business on the next Business Day. When a payment is due on a day that is not a Business Day, the payment is due the next Business Day and additional fees or interest, as applicable, shall
continue to accrue. 
 2.3 Secured Promissory Note. The Term Loan shall be evidenced by a Secured Promissory Note in the form
attached as Exhibit D hereto (each a “Secured Promissory Note”), and shall be repayable as set forth herein. The Borrower acknowledges that Lender has previously made the Term Loan. The outstanding amount of the Term
Loan set forth on Lender’s Secured Promissory Note Record shall be prima facie evidence of the principal amount thereof owing and unpaid to Lender, but the failure to record, or any error in so recording, any such amount on Lender’s
Secured Promissory Note Record shall not limit or otherwise affect the obligations of the Borrower hereunder or under the Secured Promissory Note to make payments of principal of or interest on the Secured Promissory Note when due. Upon receipt of
an affidavit of an officer of a Lender as to the loss, theft, destruction, or mutilation of the Secured Promissory Note, the Borrower shall issue, in lieu thereof, a replacement Secured Promissory Note in the same principal amount thereof and of
like tenor. 
 2.4 [INTENTIONALLY LEFT BLANK] 
 2.5 Additional Costs. If any new law or regulation increases Lender’s cost of capital or reduces its income for any loan, Borrower shall pay the increase in cost or reduction in income or additional
expense; provided, however, that Borrower shall not be liable for any amount attributable to any period before 180 days prior to the date Lender notifies Borrower of such increased costs. Lender shall allocate any increased costs among its customers
similarly affected in good faith and in a manner consistent with Lender’s customary practice. 
  

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 3 CONDITIONS OF LOANS 
 3.1 Conditions Precedent to Restructured Credit Extension. Lender’s obligation to make the restructured Credit Extension is subject to the
condition precedent that Lender shall have received, in form and substance satisfactory to Lender, such documents, and completion of such other matters, as Lender may reasonably deem necessary or appropriate, including, without limitation:

 (a) duly executed original signatures to the Loan Documents to which Borrower is a party; 
 (b) duly executed original Secured Promissory Notes in favor of Lender in an amount not to exceed the Term Loan; 
 3.2 [INTENTIONALLY LEFT BLANK] 
 3.3 Covenant to Deliver. Borrower agrees to deliver to Lender each item required to be delivered to Lender under this Agreement as a condition to any Credit Extension. Borrower expressly agrees that the extension of a Credit
Extension prior to the receipt by Lender of any such item shall not constitute a waiver by Lender of Borrower’s obligation to deliver such item, and any such extension in the absence of a required item shall be in Lender’s sole discretion.

 4 CREATION OF SECURITY INTEREST 
 4.1 Grant of Security Interest. Borrower hereby grants Lender, to secure the payment and performance in full of all of the Obligations, a continuing security interest in, and pledges to Lender, the Collateral,
wherever located, whether now owned or hereafter acquired or arising, and all proceeds and products thereof. Borrower represents, warrants, and covenants that the security interest granted herein is and shall at all times continue to be a first
priority perfected security interest in the Collateral (subject only to Permitted Liens that may have superior priority under this Agreement). If Borrower shall acquire a commercial tort claim (as defined in the Code), Borrower shall promptly notify
Lender in a writing signed by Borrower of the general details thereof (and further details as may be required by Lender) and grant to Lender, in such writing a security interest therein and in the proceeds thereof, all upon the terms of this
Agreement, with such writing to be in form and substance reasonably satisfactory to Lender. 
 If this Agreement is terminated, Lender’s
Lien in the Collateral shall continue until the Obligations (other than inchoate indemnity obligations) are repaid in full in cash. Upon payment in full in cash of the Obligations (other than inchoate indemnity obligations) and at such time as the
Lender’s obligation to make Credit Extensions has terminated, the Lender shall, at Borrower’s sole cost and expense, release its Liens in the Collateral and all rights therein shall revert to Borrower. 
 4.2 Authorization to File Financing Statements. Borrower hereby authorizes Lender to file financing statements, without notice to Borrower, with
all appropriate jurisdictions to perfect or protect Lender’s interest or rights hereunder, including a notice that any disposition of the Collateral other than as permitted under this Agreement, by either Borrower or any other Person, shall be
deemed to violate the rights of the Lender under the Code. 
 5 REPRESENTATIONS AND WARRANTIES 
 Borrower represents and warrants as follows: 
 5.1 Due Organization, Authorization: Power and Authority. Borrower and each of its Subsidiaries, if any, are duly existing and in good standing, as Registered Organizations in their respective jurisdictions of formation and are
qualified and licensed to do business and are in good standing in any jurisdiction in which the conduct of their business or their ownership of property requires that they be qualified except where the failure to do so could not reasonably be
expected to have a material adverse effect on Borrower’s business. 
  

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 The execution, delivery and performance by Borrower of the Loan Documents to which it is a party have
been duly authorized, and do not (i) conflict with any of Borrower’s organizational documents, (ii) contravene, conflict with, constitute a default under or violate any material Requirement of Law, (iii) contravene, conflict or
violate any applicable order, writ, judgment, injunction, decree, determination or award of any Governmental Authority by which Borrower or any of its Subsidiaries or any of their property or assets may be bound or affected, (iv) require any
action by, filing, registration, or qualification with, or Governmental Approval from, any Governmental Authority (except such Governmental Approvals which have already been obtained and are in full force and effect) or are being obtained pursuant
to Section 6.1(b), or (v) constitute an event of default under any material agreement by which Borrower is bound. Borrower is not in default under any agreement to which it is a party or by which it is bound in which the default could
reasonably be expected to have a material adverse effect on Borrower’s business. 
 5.2 Collateral. Borrower has good title to,
has rights in, and the power to transfer each item of the Collateral upon which it purports to grant a Lien hereunder, free and clear of any and all Liens except Permitted Liens. 
 All Inventory is in all material respects of good and marketable quality, free from material defects. 
 Borrower is not a party to, nor is bound by, any material license or other agreement with respect to which Borrower is a licensee that (a) prohibits
or otherwise restricts Borrower from granting a security interest in Borrower’s interest in such license or agreement or any other property, or (b) for which a default under or termination of could interfere with Lender’s right to
sell any Collateral. Borrower shall provide written notice to Lender within ten (10) days of entering or becoming bound by any such license or agreement which is reasonably likely to have a material impact on Borrower’s business or
financial condition (other than over-the-counter software that is commercially available to the public). Borrower shall take such steps as Lender requests to obtain the consent of, or waiver by, any person whose consent or waiver is necessary for
(x) all such licenses or agreements to be deemed “Collateral” and for Lender and each Lender to have a security interest in it that might otherwise be restricted or prohibited by law or by the terms of any such license or, whether now
existing or entered into in the future, and (y) Lender shall have the ability in the event of a liquidation of any Collateral to dispose of such Collateral in accordance with Lender’s rights and remedies under this Agreement and the other
Loan Documents. 
 5.3 Litigation. There are no actions or proceedings pending or, to the knowledge of the Responsible Officers,
threatened in writing by or against Borrower or any of its Subsidiaries involving more than Two Hundred Fifty Thousand Dollars ($250,000.00). 
 5.4 No Material Deviation in Financial Statements. All consolidated financial statements for Borrower and any of its Subsidiaries delivered to Lender fairly present, in conformity with GAAP, in all material respects Borrower’s
consolidated financial condition and Borrower’s consolidated results of operations. There has not been any material deterioration in Borrower’s consolidated financial condition since the date of the most recent financial statements
submitted to Lender. 
 5.5 Regulatory Compliance. Borrower is not an “investment company” or a company
“controlled” by an “investment company” or a “subsidiary” of an “investment company” under the Investment Company Act of 1940. Borrower is not engaged in extending credit for margin stock (under Regulations T
and U of the Federal Reserve Board of Governors). Borrower has complied in all material respects with the Federal Fair Labor Standards Act. Neither Borrower nor any of its Subsidiaries is a “holding company” or an “affiliate” of
a “holding company” or a “subsidiary company” of a “holding company” as each term is defined and used in the Public Utility Holding Company Act of 2005. Borrower has not violated any laws, ordinances or rules, the
violation of which could reasonably be expected to have a material adverse effect on its business. None of Borrower’s or any of its Subsidiaries’ properties or assets has been used by Borrower or any Subsidiary or, to the best of
Borrower’s knowledge, by previous Persons, in disposing, producing, storing, treating, or transporting any hazardous substance other than legally. Borrower and each of its Subsidiaries have obtained all consents, approvals and authorizations
of, made all declarations or filings with, and given all notices to, all Governmental Authorities that are necessary to continue their respective businesses as currently conducted. 
  

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 5.6 Subsidiaries; Investments. Borrower does not own any stock, partnership interest or other
equity securities except for Permitted Investments. 
 5.7 Tax Returns and Payments; Pension Contributions. Borrower has timely filed
all required tax returns and reports (including those relating to employee tax withholding, social security and unemployment taxes), and Borrower and its Subsidiaries have timely paid all foreign, federal, state and local taxes, assessments,
deposits and contributions owed by Borrower. Borrower may defer payment of any contested taxes, provided that Borrower (a) in good faith contests its obligation to pay the taxes by appropriate proceedings promptly and diligently instituted and
conducted, (b) notifies Lender in writing of the commencement of, and any material development in, the proceedings, (c) posts bonds or takes any other steps required to prevent the governmental authority levying such contested taxes from
obtaining a Lien upon any of the Collateral that is other than a “Permitted Lien”. Borrower is unaware of any claims or adjustments proposed for any of Borrower’s prior tax years which could result in additional taxes becoming due and
payable by Borrower. Borrower has paid all amounts necessary to fund all present pension, profit sharing and deferred compensation plans in accordance with their terms, and Borrower has not withdrawn from participation in, and has not permitted
partial or complete termination of, or permitted the occurrence of any other event with respect to, any such plan which could reasonably be expected to result in any liability of Borrower, including any liability to the Pension Benefit Guaranty
Corporation or its successors or any other governmental agency. 
 5.8 Use of Proceeds. Borrower shall use the proceeds of the Credit
Extensions solely as working capital and to fund its general business requirements and not for personal, family, household or agricultural purposes. 
 5.9 Full Disclosure. No written representation, warranty or other statement of Borrower in any certificate or written statement given to Lender, as of the date such representation, warranty, or other statement
was made, taken together with all such written certificates and written statements given to Lender, contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained in the certificates or
statements not misleading (it being recognized that the projections and forecasts provided by Borrower in good faith and based upon reasonable assumptions are not viewed as facts and that actual results during the period or periods covered by such
projections and forecasts may differ from the projected or forecasted results). 
 6 AFFIRMATIVE COVENANTS 
 Borrower shall do all of the following: 
 6.1 Government Compliance. 
 (a) Maintain its and all its Subsidiaries’ legal existence and good standing in
their respective jurisdictions of formation and maintain qualification in each jurisdiction in which the failure to so qualify would reasonably be expected to have a material adverse effect on Borrower’s business or operations. Borrower shall
comply, and have each Subsidiary comply, with all laws, ordinances and regulations to which it is subject, the noncompliance with which could reasonably be expected to have a material adverse effect on Borrower’s business. 
 (b) Obtain all of the Governmental Approvals necessary for the performance by Borrower of its obligations under the Loan Documents to which it is a party
and the grant of a security interest to Lender in all of the Collateral. Borrower shall promptly provide copies of any such obtained Governmental Approvals to Lender. 
 6.2 Financial Statements, Reports, Certificates. 
 (a) Deliver to Lender:
(i) within five (5) days of delivery, copies of all statements, reports and notices made available to all of Borrower’s security holders or to any holders of Subordinated Debt; and (ii) within five (5) days of filing, all
reports on Form 10-K, 10-Q and 8-K filed with the Securities and Exchange Commission or a link thereto on Borrower’s or another website on the Internet; (iii) a prompt report of any legal actions pending or threatened against Borrower or
any of its Subsidiaries that could result in damages or costs to Borrower or any of its Subsidiaries of Two Hundred Fifty Thousand Dollars ($250,000) or more; and (iv) other financial information reasonably requested by Lender.

  

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 (b) Within forty-five (45) days after the last day of each calendar quarter, deliver to Lender, a
duly completed Compliance Certificate signed by a Responsible Officer. 
 6.3 Inventory; Returns. Keep all Inventory in good and
marketable condition, free from material defects. Returns and allowances between Borrower and its Account Debtors shall follow Borrower’s customary practices as they exist at the Effective Date. Borrower must promptly notify Lender of all
returns, recoveries, disputes and claims that involve more than Two Hundred Fifty Thousand Dollars ($250,000). 
 6.4 Taxes; Pensions.
Make, and cause each of its Subsidiaries to make, timely payment of all foreign, federal, state, and local taxes or assessments (other than taxes and assessments which Borrower is contesting pursuant to the terms of Section 5.8 hereof) and
shall deliver to Lender, on demand, appropriate certificates attesting to such payments, and pay all amounts necessary to fund all present pension, profit sharing and deferred compensation plans in accordance with their terms. 
 6.5 Insurance. Keep its business and the Collateral insured for risks and in amounts standard for companies in Borrower’s industry and
location and as Lender may reasonably request. Insurance policies shall be in a form, with companies, and in amounts that are satisfactory to Lender. All property policies shall have a lender’s loss payable endorsement showing Lender as lender
loss payee and waive subrogation against Lender, and all liability policies shall show, or have endorsements showing, the Lender, as an additional insured. All policies (or the loss payable and additional insured endorsements) shall provide that the
insurer must give Lender at least twenty (20) days notice before canceling, amending, or declining to renew its policy. At Lender’s request, Borrower shall deliver certified copies of policies and evidence of all premium payments. Proceeds
payable under any policy shall, at Lender’s option, be payable to Lender on behalf of the Lender on account of the Obligations. Notwithstanding the foregoing, (a) so long as no Event of Default has occurred and is continuing, Borrower
shall have the option of applying the proceeds of any casualty policy up Two Hundred Fifty Thousand Dollars ($250,000), in the aggregate for all losses under all casualty policies in any one year, toward the replacement or repair of destroyed or
damaged property; provided that any such replaced or repaired property (i) shall be of equal or like value as the replaced or repaired Collateral and (ii) shall be deemed Collateral in which Lender has been granted a first priority
security interest (subject to Permitted Liens), and (b) after the occurrence and during the continuance of an Event of Default, all proceeds payable under such casualty policy shall, at the option of Lender, be payable to Lender, on account of
the Obligations. If Borrower fails to obtain insurance as required under this Section 6.5 or to pay any amount or furnish any required proof of payment to third persons and Lender, Lender may make all or part of such payment or obtain such
insurance policies required in this Section 6.5, and take any action under the policies Lender reasonably deems prudent. 
 6.6
Protection of Intellectual Property Rights. Borrower shall: (a) use commercially reasonable efforts to protect, defend and maintain the validity and enforceability of its intellectual property; (b) promptly advise Lenders in writing of
material infringements of its intellectual property; and (c) not allow any intellectual property necessary for the conduct of Borrower’s business to be abandoned, forfeited or dedicated to the public without Lenders’ written consent.

 6.7 Litigation Cooperation. From the date hereof and continuing through the termination of this Agreement, make available to
Lender, without expense to Lender, Borrower and its officers, employees and agents and Borrower’s books and records, to the extent that Lender may deem them reasonably necessary to prosecute or defend any third-party suit or proceeding
instituted by or against Lender with respect to any Collateral or relating to Borrower. 
 6.8 Further Assurances. Execute any further
instruments and take further action as Lender reasonably requests to perfect or continue Lender’s Lien in the Collateral or to effect the purposes of this Agreement. Deliver to Lender, within five (5) days after the same are sent or
received, copies of all correspondence, reports, documents and other filings with any Governmental Authority regarding compliance with or maintenance of Governmental Approvals or Requirements of Law or that could reasonably be expected to have a
material effect on any of the Governmental Approvals or otherwise on the operations of or any of its Subsidiaries. 
  

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 6.9 Notices of Litigation and Default. Borrower will give prompt written notice to Lender
of any litigation or governmental proceedings pending or threatened (in writing) against Borrower which would reasonably be expected to have a material adverse effect with respect to Borrower. Without limiting or contradicting any other more
specific provision of this Agreement, promptly (and in any event within three (3) Business Days) upon Borrower becoming aware of the existence of any Event of Default or event which, with the giving of notice or passage of time, or both, would
constitute an Event of Default, Borrower shall give written notice to Lender of such occurrence, which such notice shall include a reasonably detailed description of such Event of Default or event which, with the giving of notice or passage of time,
or both, would constitute an Event of Default. 
 6.10 Creation/Acquisition of Subsidiaries. In the event Borrower or any
Subsidiary creates or acquires any Subsidiary, Borrower and such Subsidiary shall promptly notify Lender of the creation or acquisition of such new Subsidiary and take all such action as may be reasonably required by Lender to cause each such
domestic Subsidiary to guarantee the Obligations of Borrower under the Loan Documents and grant a continuing pledge and security interest in and to the assets of such domestic Subsidiary (substantially as described on Exhibit A hereto); and
Borrower shall grant and pledge to Lender a perfected security interest in the stock, units or other evidence of ownership of each Subsidiary (in the case of a foreign Subsidiary, such pledge shall not exceed 65% of such stock units or other
evidence of ownership). 
 7 NEGATIVE COVENANTS 
 Borrower shall not do any of the following without Lender’s prior written consent: 
 7.1
Dispositions. Convey, sell, lease, transfer, assign, or otherwise dispose of (collectively, “Transfer”), or permit any of its Subsidiaries to Transfer, all or any part of its business or property, except for Transfers
(a) of Inventory in the ordinary course of business; (b) of worn-out or obsolete Equipment; and (c) in connection with Permitted Liens and Permitted Investments; and (d) of non-exclusive and exclusive licenses, partnerships or
joint ventures for the use of the property, of Borrower or its Subsidiaries in the ordinary course of business and approved by Borrower’s Board. Notwithstanding the foregoing, Borrower may effect any Transfer not permitted by this section
7.1(a) – (d), provided that Borrower immediately remits the lesser of either: (a) all proceeds received from any such Transfer, and (b) proceeds received from any such Transfer sufficient to repay all outstanding principal, plus all
accrued and unpaid interest, on the Term Loan. For the avoidance of doubt, Lenders acknowledge and agree that Borrower shall be permitted to license its intellectual property to third parties (on an exclusive basis) consistent with Borrower’s
current business model and existing practice in the biotech industry. 
 7.2 Changes in Business, Management, Ownership, or Business
Locations. (a) Engage in or permit any of its Subsidiaries to engage in any business other than the businesses currently engaged in by Borrower and such Subsidiary, as applicable, or reasonably related thereto; (b) liquidate or
dissolve; or (c) (i) replace its chief executive officer, chief financial officer, or chief scientific officer unless Borrower promptly notifies Lender after the replacement of such officer. or (ii) enter into any transaction or
series of related transactions in which the stockholders of Borrower immediately prior to the first such transaction own less than 60% of the voting stock of Borrower immediately after giving effect to such transaction or related series of such
transactions (other than by the sale of Borrower’s equity securities in a public offering or to venture capital investors). Borrower shall not, without at least fifteen (15) days prior written notice to Lender: (1) add any new offices
or business locations, including warehouses (unless such new offices or business locations contain less than Twenty-Five Thousand Dollars ($25,000) in Borrower’s assets or property), (2) change its jurisdiction of organization,
(3) change its organizational structure or type, (4) change its legal name, or (5) change any organizational number (if any) assigned by its jurisdiction of organization. 
  

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 7.3 Mergers or Acquisitions. Merge or consolidate, or permit any of its Subsidiaries to merge or
consolidate, with any other Person, or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another Person except where Borrower immediately remits proceeds received from any such
transaction sufficient to repay all outstanding principal, plus all accrued and unpaid interest, on the Term Loan. 
 7.4
Indebtedness. Create, incur, assume, or be liable for any Indebtedness, or permit any Subsidiary to do so, other than Permitted Indebtedness. 
 7.5 Encumbrance. Create, incur, allow, or suffer any Lien on any of its property, or assign or convey any right to receive income, including the sale of any Accounts, or permit any of its Subsidiaries to do so, except for Permitted
Liens, or permit any Collateral not to be subject to the first priority security interest granted herein (subject to Permitted Liens), or enter into any agreement, document, instrument or other arrangement (except with or in favor of Lender) with
any Person which directly or indirectly prohibits or has the effect of prohibiting Borrower or any Subsidiary from assigning, mortgaging, pledging, granting a security interest in or upon, or encumbering any of Borrower’s or any
Subsidiary’s intellectual property, except as is otherwise permitted in Section 7.1 hereof and the definition of “Permitted Liens” herein. 
 7.6 Distributions; Investments. (a) Pay any dividends or make any distribution or payment or redeem, retire or purchase any capital stock provided that (i) Borrower may convert any of its convertible
securities into other securities pursuant to the terms of such convertible securities or otherwise in exchange thereof, (ii) Borrower may pay dividends solely in common stock; and (iii) Borrower may repurchase the stock of former employees
or consultants pursuant to stock repurchase agreements so long as an Event of Default does not exist at the time of such repurchase and would not exist after giving effect to such repurchase, provided such repurchase does not exceed in the aggregate
of One Hundred Thousand Dollars ($100,000) per fiscal year, or (b) except as permitted in Section 7.3, directly or indirectly make any Investment other than Permitted Investments, or permit any of its Subsidiaries to do so. 
 7.7 Transactions with Affiliates. Directly or indirectly enter into or permit to exist any material transaction with any Affiliate of Borrower,
except for sales of equity securities to existing investors and transactions that are in the ordinary course of Borrower’s business, in any case, upon fair and reasonable terms that are no less favorable to Borrower than would be obtained in an
arm’s length transaction with a non-affiliated Person. 
 7.8 Subordinated Debt. (a) Make or permit any payment on any
Subordinated Debt, except under the terms of the subordination, intercreditor, or other similar agreement to which such Subordinated Debt is subject, or (b) amend any provision in any document relating to the Subordinated Debt which would
increase the amount thereof or adversely affect the subordination thereof to Obligations owed to the Lender. 
 7.9 Compliance. Become
an “investment company” or a company controlled by an “investment company”, under the Investment Company Act of 1940 or undertake as one of its important activities extending credit to purchase or carry margin stock (as defined
in Regulation U of the Board of Governors of the Federal Reserve System), or use the proceeds of any Credit Extension for that purpose; fail to meet the minimum funding requirements of ERISA, permit a Reportable Event or Prohibited Transaction, as
defined in ERISA, to occur; fail to comply with the Federal Fair Labor Standards Act or violate any other law or regulation, if the violation could reasonably be expected to have a material adverse effect on Borrower’s business, or permit any
of its Subsidiaries to do so; withdraw or permit any Subsidiary to withdraw from participation in, permit partial or complete termination of, or permit the occurrence of any other event with respect to, any present pension, profit sharing and
deferred compensation plan which could reasonably be expected to result in any liability of Borrower, including any liability to the Pension Benefit Guaranty Corporation or its successors or any other governmental agency. 
 7.10 Paydown of Loans Resulting from Receipt of Milestone Payments. Fail to make payment to Lender within two (2) Business Days
after receipt of any proceeds from any future milestone payments received by Borrower, directly, or indirectly, from Merck & Co. (“Merck”) or Hoffmann-La Roche Inc., F. Hoffmann-La Roche LTD and Roche Palo Alto LLC (collectively,
“Roche”) as the result of existing collaboration agreements between Borrower and Merck and Roche, respectively, in an amount equal to the lesser of: (a) all amounts of principal outstanding, plus accrued and unpaid interest, on the
Term Loan and (b) 3.828% of the aggregate of such amounts received from Merck or Roche as the result of such existing collaboration agreements, up to 3.828% times $4,000,000 in the case of Merck and up to 3.828% times $2,000,000 in the case of
Roche. 
  

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 8 EVENTS OF DEFAULT 
 Any one of the following shall constitute an event of default (an “Event of Default”) under this Agreement: 
 8.1 Payment Default. Borrower fails to (a) make any payment of principal or interest on any Credit Extension on its due date, or (b) pay
any other Obligations within three (3) Business Days after such Obligations are due and payable (which three (3) Business Day grace period shall not apply to payments due on the Term Loan Maturity Date). No Event of Default shall be deemed
to have occurred and no interest at the Default Rate shall be charged in the event that a Lender shall fail to debit Borrower’s Designated Deposit Account while amounts necessary to make full payment of the amounts then due hereunder are
available in such account. During the cure period, the failure to cure the payment default is not an Event of Default (but no Credit Extension will be made during the cure period); 
 8.2 Covenant Default. 
 (a)
Borrower fails or neglects to perform any obligation in Sections 6.2, 6.4, 6.5, 6.6, or violates any covenant in Section 7; or 
 (b)
Borrower fails or neglects to perform, keep, or observe any other term, provision, condition, covenant or agreement contained in this Agreement or any Loan Documents, and as to any default (other than those specified in this Section 8) under
such other term, provision, condition, covenant or agreement that can be cured, has failed to cure the default within ten (10) days after the occurrence thereof; provided, however, that if the default cannot by its nature be cured within the
ten (10) day period or cannot after diligent attempts by Borrower be cured within such ten (10) day period, and such default is likely to be cured within a reasonable time, then Borrower shall have an additional period (which shall not in
any case exceed thirty (30) days) to attempt to cure such default, and within such reasonable time period the failure to cure the default shall not be deemed an Event of Default (but no Credit Extensions shall be made during such cure period).
Grace periods provided under this Section shall not apply, among other things, to financial covenants or any other covenants set forth in subsection (a) above; 
 8.3 Material Adverse Change. A Material Adverse Change occurs; 
 8.4 Attachment. (a) Any
material portion of Borrower’s assets is attached, seized, levied on, or comes into possession of a trustee or receiver and the attachment, seizure or levy is not removed in ten (10) days; (b) the service of process seeking to attach,
by trustee or similar process, any funds of Borrower, or of any entity under control of Borrower (including a Subsidiary), on deposit with the Lender or an Affiliate; (c) Borrower is enjoined, restrained, or prevented by court order from
conducting a material part of its business; (d) a judgment or other claim in excess of Fifty Thousand Dollars ($50,000.00) becomes a Lien on any of Borrower’s assets; or (e) a notice of lien, levy, or assessment is filed against any
of Borrower’s assets by any government agency and not paid within ten (10) days after Borrower receives notice. These are not Events of Default if stayed or if a bond is posted pending contest by Borrower (but no Credit Extensions shall be
made during the cure period); 
 8.5 Insolvency (a) Borrower is unable to pay its debts (including trade debts) as they become
due or otherwise becomes insolvent (excluding the effect of derivative liabilities); (b) Borrower begins an Insolvency Proceeding; or (c) an Insolvency Proceeding is begun against Borrower and not dismissed or stayed within forty-five
(45) days (but no Credit Extensions shall be made while of any of the conditions described in clause (a) exist and/or until any Insolvency Proceeding is dismissed); 
 8.6 Other Agreements. There is a default in any agreement to which Borrower is a party with a third party or parties resulting in a right by such
third party or parties, whether or not exercised, to accelerate the maturity of any Indebtedness in an amount in excess of Two Hundred Fifty Thousand Dollars ($250,000) or that could have a material adverse effect on Borrower’s business.

  

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 8.7 Judgments. A judgment or judgments for the payment of money in an amount, individually or in
the aggregate, of at least Two Hundred Fifty Thousand Dollars ($250,000) (not covered by independent third-party insurance) shall be rendered against Borrower and shall remain unsatisfied, or unstayed for a period of ten (10) days after the
entry thereof (provided that no Credit Extensions will be made prior to the satisfaction, or stay of such judgment, order, or decree); 
 8.8 Misrepresentations. Borrower or any Person acting for Borrower makes any representation, warranty, or other statement now or later in this Agreement, any Loan Document or in any writing delivered to Lender or to induce Lender to
enter this Agreement or any Loan Document, and such representation, warranty, or other statement is incorrect in any material respect when made; or 
 8.9 Subordinated Debt. A default or breach occurs under any agreement between Borrower and any creditor of Borrower that signed a subordination, intercreditor, or other similar agreement with Lender, or any creditor that has signed
such an agreement with Lender breaches any terms of such agreement. 
 8.10 Governmental Approvals. Any Governmental Approval
shall have been (a) revoked, rescinded, suspended, modified in an adverse manner or not renewed in the ordinary course for a full term or (b) subject to any decision by a Governmental Authority that designates a hearing with respect to any
applications for renewal of any of such Governmental Approval or that could result in the Governmental Authority taking any of the actions described in clause (a) above, and such decision or such revocation, rescission, suspension, modification
or non-renewal (i) has, or could reasonably be expected to have, a Material Adverse Change, or (ii) adversely affects the legal qualifications of Borrower or any of its Subsidiaries to hold such Governmental Approval in any applicable
jurisdiction and such revocation, rescission, suspension, modification or non-renewal could reasonably be expected to affect the status of or legal qualifications of Borrower or any of its Subsidiaries to hold any Governmental Approval in any other
jurisdiction. 
 9 RIGHTS AND REMEDIES 
 9.1 Rights and Remedies. While an Event of Default occurs and continues Lender may, without notice or demand, do any or all of the following: 
 (a) declare all Obligations immediately due and payable (but if an Event of Default described in Section 8.5 occurs all Obligations are immediately
due and payable); 
 (b) stop advancing money or extending credit for Borrower’s benefit under this Agreement or under any other
agreement between Borrower and Lender; 
 (c) settle or adjust disputes and claims directly with Account Debtors for amounts on terms and in
any order that Lender considers advisable, notify any Person owing Borrower money of Lender’s security interest in such funds, and verify the amount of such account; 
 (d) make any payments and do any acts it considers necessary or reasonable to protect the Collateral and/or its security interest in the Collateral. Borrower shall assemble the Collateral if Lender requests and make
it available as Lender designates. Lender may enter premises where the Collateral is located, take and maintain possession of any part of the Collateral, and pay, purchase, contest, or compromise any Lien which appears to be prior or superior to its
security interest and pay all expenses incurred. Borrower grants Lender a license to enter and occupy any of its premises, without charge, to exercise any of Lender’s rights or remedies; 
 (e) apply to the Obligations any (i) balances and deposits of Borrower it holds, or (ii) any amount held by Lender owing to or for the credit
or the account of Borrower; 
  

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 (f) ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and
sell the Collateral. Lender is hereby granted a non-exclusive, royalty-free license or other right to use, without charge, Borrower’s labels, patents, copyrights, mask works, rights of use of any name, trade secrets, trade names, trademarks,
service marks, and advertising matter, or any similar property as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and, in connection with Lender’s exercise of its rights under this
Section, Borrower’s rights under all licenses and all franchise agreements inure to Lender; 
 (g) place a “hold” on any
account and/or deliver a notice of exclusive control, any entitlement order, or other directions or instructions pursuant to any Control Agreement or similar agreements providing control of any Collateral; 
 (h) demand and receive possession of Borrower’s Books; and 
 (i) exercise all rights and remedies available to Lender under the Loan Documents or at law or equity, including all remedies provided under the Code (including disposal of the Collateral pursuant to the terms
thereof). 
 9.2 Power of Attorney. Borrower hereby irrevocably appoints Lender as its lawful attorney-in-fact, exercisable only upon
the occurrence and during the continuance of an Event of Default, to: (a) endorse Borrower’s name on any checks or other forms of payment or security; (b) sign Borrower’s name on any invoice or bill of lading for any Account or
drafts against Account Debtors; (c) settle and adjust disputes and claims about the Accounts directly with Account Debtors, for amounts and on terms Lender determines reasonable; (d) make, settle, and adjust all claims under
Borrower’s insurance policies; (e) pay, contest or settle any Lien, charge, encumbrance, security interest, and adverse claim in or to the Collateral, or any judgment based thereon, or otherwise take any action to terminate or discharge
the same; and (f) transfer the Collateral into the name of Lender or a third party as the Code permits. Borrower hereby appoints Lender as its lawful attorney-in-fact to sign Borrower’s name on any documents necessary to perfect or
continue the perfection of Lender’s security interest in the Collateral regardless of whether an Event of Default has occurred until all Obligations (other than inchoate indemnity obligations) have been satisfied in full and Lender is under no
further obligation to make Credit Extensions hereunder. Lender’s foregoing appointment as Borrower’s attorney in fact, and all of Lender’s rights and powers, coupled with an interest, are irrevocable until all Obligations (other than
inchoate indemnity obligations) have been fully repaid and performed and Lender’s obligation to provide Credit Extensions terminates. 
 9.3 Protective Payments. If Borrower fails to obtain the insurance called for by Section 6.5 or fails to pay any premium thereon or fails to pay any other amount which Borrower is obligated to pay under this Agreement or any
other Loan Document, Lender may obtain such insurance or make such payment, and all amounts so paid by Lender are Lender’s Expenses and immediately due and payable, bearing interest at the then highest applicable rate, and secured by the
Collateral. Lender will make reasonable efforts to provide Borrower with notice of Lender obtaining such insurance at the time it is obtained or within a reasonable time thereafter. No payments by Lender are deemed an agreement to make similar
payments in the future or Lender’s waiver of any Event of Default. 
 9.4 Application of Payments and Proceeds. Borrower shall
have no right to specify the order or the accounts to which Lender shall allocate or apply any payments required to be made by Borrower to Lender or otherwise received by Lender under this Agreement when any such allocation or application is not
specified elsewhere in this Agreement. If an Event of Default has occurred and is continuing, Lender may apply any funds in its possession, whether from Borrower account balances, payments, proceeds realized as the result of any collection of
Accounts or other disposition of the Collateral, or otherwise, to the Obligations in such order as the Lender shall determine in its sole discretion. Any surplus shall be paid to Borrower or other Persons legally entitled thereto; Borrower shall
remain liable to Lender for any deficiency. If Lender, in its good faith business judgment, directly or indirectly enters into a deferred payment or other credit transaction with any purchaser at any sale of Collateral, Lender shall have the option,
exercisable at any time, of either reducing the Obligations by the principal amount of the purchase price or deferring the reduction of the Obligations until the actual receipt by Lender of cash therefor. 
  

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 9.5 Liability for Collateral. So long as the Lender complies with reasonable banking practices
regarding the safekeeping of the Collateral in the possession or under the control of the Lender, the Lender shall not be liable or responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage to the Collateral;
(c) any diminution in the value of the Collateral; or (d) any act or default of any carrier, warehouseman, bailee, or other Person. Borrower bears all risk of loss, damage or destruction of the Collateral. 
 9.6 No Waiver; Remedies Cumulative. Lender’s failure, at any time or times, to require strict performance by Borrower of any provision of
this Agreement or any other Loan Document shall not waive, affect, or diminish any right of Lender thereafter to demand strict performance and compliance herewith or therewith. No waiver hereunder shall be effective unless signed by Lender and then
is only effective for the specific instance and purpose for which it is given. Lender’s rights and remedies under this Agreement and the other Loan Documents are cumulative. Lender has all rights and remedies provided under the Code, by law, or
in equity. Lender’s exercise of one right or remedy is not an election, and Lender’s waiver of any Event of Default is not a continuing waiver. Lender’s delay in exercising any remedy is not a waiver, election, or acquiescence.

 9.7 Demand Waiver. Borrower waives demand, notice of default or dishonor, notice of payment and nonpayment, notice of any default,
nonpayment at maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees held by Lender on which Borrower is liable. 
 10 NOTICES 
 All notices,
consents, requests, approvals, demands, or other communication (collectively, “Communication”) by any party to this Agreement or any other Loan Document must be in writing and shall be deemed to have been validly served, given, or
delivered: (a) upon the earlier of actual receipt and three (3) Business Days after deposit in the U.S. mail, first class, registered or certified mail return receipt requested, with proper postage prepaid; (b) upon transmission, when
sent by electronic mail (if an email address is specified herein) or facsimile transmission; (c) one (1) Business Day after deposit with a reputable overnight courier with all charges prepaid; or (d) when delivered, if hand-delivered
by messenger, all of which shall be addressed to the party to be notified and sent to the address, facsimile number, or email address indicated below. Either, Lender or Borrower may change its address or facsimile number by giving the other party
written notice thereof in accordance with the terms of this Section 10. 
  

			
	If to Borrower:	  	 Metabasis Therapeutics, Inc.
 11119 North Torrey Pines
Road
 La Jolla, CA 92037

		
		  	 Attn: Chief Financial Officer
 Fax:
858-587-2770

		
	If to Oxford:	  	 Oxford Finance Corporation
 133 North Fairfax Street

 Alexandria, Virginia 22314
 Attention: General
Counsel
 Fax: (703) 519-5225


 11 CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER 
 Virginia law governs the Loan Documents without regard to principles of conflicts of law. Borrower and Lender each submit to the exclusive jurisdiction of
the State and Federal courts in the Commonwealth of Virginia. Notwithstanding the foregoing, nothing in this Agreement shall be deemed to operate to preclude Lender from bringing suit or taking other legal action in any other jurisdiction to realize
on the Collateral or any other security for the Obligations, or to enforce a judgment or other court order in favor of Lender. Borrower expressly submits and consents in advance to such jurisdiction in any action or suit commenced in any such court,
and Borrower hereby waives any objection that it may have based upon lack of personal jurisdiction, improper venue, or forum non 

  

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conveniens and hereby consents to the granting of such legal or equitable relief as is deemed appropriate by such court. Borrower hereby waives personal
service of the summons, complaints, and other process issued in such action or suit and agrees that service of such summons, complaints, and other process may be made by registered or certified mail addressed to Borrower at the address set forth in
Section 10 of this Agreement and that service so made shall be deemed completed upon the earlier to occur of Borrower’s actual receipt thereof or three (3) days after deposit in the U.S. mails, proper postage prepaid. 
 TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND LENDER EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING
OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR THE PARTIES TO ENTER INTO THIS AGREEMENT. EACH PARTY HAS
REVIEWED THIS WAIVER WITH ITS COUNSEL. 
 12 GENERAL PROVISIONS 
 12.1 Successors and Assigns. This Agreement binds and is for the benefit of the successors and permitted assigns of each party. Borrower may not
assign this Agreement or any rights or obligations under it without Lender’s prior written consent (which may be granted or withheld in Lender’s discretion). Lender has the right, without the consent of or notice to Borrower, to sell,
transfer, assign, negotiate, or grant participation in all or any part of, or any interest in, Lender’s obligations, rights, and benefits under this Agreement and the other Loan Documents. 
 12.2 Indemnification/Expenses. Borrower agrees to indemnify, defend and hold Lender and their respective directors, officers, employees,
agents, attorneys, or any other Person affiliated with or representing the Lender harmless against: (a) all obligations, demands, claims, and liabilities (collectively, “Claims”) asserted by any other party in connection with
the transactions contemplated by the Loan Documents; and (b) all losses or Lender’s Expenses incurred, or paid by Lenders from, following, or arising from transactions between Lender and Borrower (including reasonable attorneys’ fees
and expenses), except for Claims, losses and Lender Expenses to the extent directly caused by Lender’s gross negligence or willful misconduct. 
 12.3 Time of Essence. Time is of the essence for the performance of all Obligations in this Agreement. 
 12.4
Severability of Provisions. Each provision of this Agreement is severable from every other provision in determining the enforceability of any provision. 
 12.5 Amendments in Writing; Integration. All amendments to this Agreement must be in writing signed by Lender and Borrower. This Agreement and the Loan Documents represent the entire agreement about this
subject matter and supersede prior negotiations or agreements. All prior agreements, understandings, representations, warranties, and negotiations between the parties about the subject matter of this Agreement and the Loan Documents merge into this
Agreement and the Loan Documents. 
 12.6 Counterparts. This Agreement may be executed in any number of counterparts and by different
parties on separate counterparts, each of which, when executed and delivered, are an original, and all taken together, constitute one Agreement. 
 12.7 Survival. All covenants, representations and warranties made in this Agreement continue in full force until this Agreement has terminated pursuant to its terms and all Obligations (other than inchoate indemnity obligations and
any other obligations which, by their terms, are to survive the termination of this Agreement including) have been satisfied. The obligation of Borrower in Section 12.2 to indemnify Lender shall survive until the statute of limitations with
respect to such claim or cause of action shall have run. 
  

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 12.8 Confidentiality. In handling any confidential information, Lender shall exercise the same
degree of care that it exercises for its own proprietary information, but disclosure of information may be made: (a) to Lender’s Subsidiaries or Affiliates; (b) to prospective transferees or purchasers of any interest in the Credit
Extensions (provided, however, Lender shall use commercially reasonable efforts to obtain such prospective transferee’s or purchaser’s agreement to the terms of this provision); (c) as required by law, regulation, subpoena, or other
order; (d) to regulators or as otherwise required in connection with an examination or audit; and (e) as Lender considers appropriate in exercising remedies under this Agreement. Confidential information does not include information that
either: (i) is in the public domain or in Lender’s possession when disclosed to Lender, or becomes part of the public domain after disclosure to Lender through no fault of Lender; or (ii) is disclosed to Lender by a third party, if
Lender does not know that the third party is prohibited from disclosing the information. 
 12.9 Right of Set Off. Borrower
hereby grants to Lender a lien, security interest and right of set off as security for all Obligations to Lender, whether now existing or hereafter arising upon and against all deposits, credits, collateral and property, now or hereafter in the
possession, custody, safekeeping or control of Lender or any entity under the control of Lender (including a Lender affiliate) or in transit to any of them. At any time after the occurrence and during the continuance of an Event of Default, without
demand or notice, Lender may set off the same or any part thereof and apply the same to any liability or obligation of Borrower even though unmatured and regardless of the adequacy of any other collateral securing the Obligations. ANY AND ALL RIGHTS
TO REQUIRE LENDER TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER ARE HEREBY
KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED. 
 13 DEFINITIONS 
 13.1 Definitions. As used in this Agreement, the following terms have the following meanings: 
 “Account” is any “account” as defined in the Code with such additions to such term as may hereafter be made, and includes,
without limitation, all accounts receivable and other sums owing to Borrower. 
 “Account Debtor” is any “account
debtor” as defined in the Code with such additions to such term as may hereafter be made. 
 “Affiliate” of any Person
is a Person that owns or controls directly or indirectly the Person, any Person that controls or is controlled by or is under common control with the Person, and each of that Person’s senior executive officers, directors, partners and, for any
Person that is a limited liability company, that Person’s managers and members. 
 “Agreement” is defined in the
preamble hereof. 
 “Board” means Borrower’s board of directors. 
 “Borrower” is defined in the preamble hereof. 
 “Borrower’s Books” are all Borrower’s books and records including ledgers, federal and state tax returns, records regarding Borrower’s assets or liabilities, the Collateral, business
operations or financial condition, and all computer programs or storage or any equipment containing such information. 
 “Business
Day” is any day that is not a Saturday, Sunday or a day on which Lender is closed. 
 “Cash Equivalents” are
(a) marketable direct obligations issued or unconditionally guaranteed by the United States or any agency or any State thereof having maturities of not more than one (1) year from the date of acquisition; and (b) commercial paper
maturing no more than one (1) year after its creation and having the highest rating from either Standard & Poor’s Ratings Group or Moody’s Investors Service, Inc. Notwithstanding the foregoing, Cash Equivalents does not
include and each Borrower and Subsidiary 

  

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is prohibited from purchasing, purchasing participations in, entering into any type of swap or other equivalent derivative transaction, or otherwise holding
or engaging in any ownership interest in any type of debt instrument, including, without limitation, any corporate or municipal bonds with a long-term nominal maturity for which the interest rate is reset through a dutch auction and more commonly
referred to as an auction rate security. 
 “Claims” are defined in Section 12.2. 
 “Code” is the Uniform Commercial Code, as the same may, from time to time, be enacted and in effect in the Commonwealth of Virginia
provided, that, to the extent that the Code is used to define any term herein or in any Loan Document and such term is defined differently in different Articles or Divisions of the Code, the definition of such term contained in Article or Division 9
shall govern; provided further, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection, or priority of, or remedies with respect to, Lender’s Lien on any Collateral is governed by the Uniform
Commercial Code in effect in a jurisdiction other than the Commonwealth of Virginia, the term “Code” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes on the provisions
thereof relating to such attachment, perfection, priority, or remedies and for purposes of definitions relating to such provisions. 
 “Collateral” is any and all properties, rights and assets of Borrower described on Exhibit A. 
 “Commodity Account” is any “commodity account” as defined in the Code with such additions to such term as may hereafter be made. 
 “Communication” is defined in Section 10. 
 “Compliance Certificate”
is that certain certificate in the form attached hereto as Exhibit C. 
 “Contingent Obligation” is, for any Person,
any direct or indirect liability, contingent or not, of that Person for (a) any indebtedness, lease, dividend, letter of credit or other obligation of another such as an obligation directly or indirectly guaranteed, endorsed, co-made,
discounted or sold with recourse by that Person, or for which that Person is directly or indirectly liable; (b) any obligations for undrawn letters of credit for the account of that Person; and (c) all obligations from any interest rate,
currency or commodity swap agreement, interest rate cap or collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; but “Contingent
Obligation” does not include endorsements in the ordinary course of business. The amount of a Contingent Obligation is the stated or determined amount of the primary obligation for which the Contingent Obligation is made or, if not
determinable, the maximum reasonably anticipated liability for it determined by the Person in good faith; but the amount may not exceed the maximum of the 
 “Credit Extension” is the Term Loan. 
 “Default” is any event which with
notice or passage of time or both, would constitute an Event of Default. 
 “Default Rate” is defined in Section 2.2(b).

 “Designated Deposit Account” is Borrower’s deposit account, account number 1450-8-07652, maintained with Bank of
America. 
 “Dollars,” “dollars” and “$” each mean lawful money of the United
States. 
 “Effective Date” is defined in the preamble of this Agreement. 
  

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 “Equipment” is all “equipment” as defined in the Code with such additions to
such term as may hereafter be made, and includes without limitation all machinery, fixtures, goods, vehicles (including motor vehicles and trailers), and any interest in any of the foregoing. 
 “ERISA” is the Employee Retirement Income Security Act of 1974, and its regulations. 
 “Event of Default” is defined in Section 8. 
 “Funding Date” is any date on which a Credit Extension is made to or on account of Borrower which shall be a Business Day. 
 “GAAP” is generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other Person as may be approved by a significant segment of the accounting
profession, which are applicable to the circumstances as of the date of determination. 
 “General Intangibles” is all
“general intangibles” as defined in the Code in effect on the date hereof with such additions to such term as may hereafter be made, and includes without limitation, all copyright rights, copyright applications, copyright registrations and
like protections in each work of authorship and derivative work, whether published or unpublished, any patents, trademarks, service marks and, to the extent permitted under applicable law, any applications therefor, whether registered or not, any
trade secret rights, including any rights to unpatented inventions, payment intangibles, royalties, contract rights, goodwill, franchise agreements, purchase orders, customer lists, route lists, telephone numbers, domain names, claims, income and
other tax refunds, security and other deposits, options to purchase or sell real or personal property, rights in all litigation presently or hereafter pending (whether in contract, tort or otherwise), insurance policies (including without limitation
key man, property damage, and business interruption insurance), payments of insurance and rights to payment of any kind. 
 “Governmental Approval” is any consent, authorization, approval, order, license, franchise, permit, certificate, accreditation, registration, filing or notice, of, issued by, from or to, or other act by or in respect of,
any Governmental Authority. 
 “Governmental Authority” is any nation or government, any state or other political
subdivision thereof, any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government, any
securities exchange and any self-regulatory organization. 
 “Indebtedness” is (a) indebtedness for borrowed money or
the deferred price of property or services, such as reimbursement and other obligations for surety bonds and letters of credit, (b) obligations evidenced by notes, bonds, debentures or similar instruments, (c) capital lease obligations,
and (d) Contingent Obligations. 
 “Insolvency Proceeding” is any proceeding by or against any Person under the United
States Bankruptcy Code, or any other bankruptcy or insolvency law, including assignments for the benefit of creditors, compositions, extensions generally with its creditors, or proceedings seeking reorganization, arrangement, or other relief.

 “Inventory” is all “inventory” as defined in the Code in effect on the date hereof with such additions to such
term as may hereafter be made, and includes without limitation all merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished products, including without limitation such inventory as is temporarily out
of Borrower’s custody or possession or in transit and including any returned goods and any documents of title representing any of the above. 
  

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 “Investment” is any beneficial ownership interest in any Person (including stock,
partnership interest or other securities), and any loan, advance or capital contribution to any Person. 
 “Lender’s
Expenses” are all audit fees and expenses, costs, and expenses (including reasonable attorneys’ fees and expenses) for preparing, amending, negotiating, administering, defending and enforcing the Loan Documents (including, without
limitation, those incurred in connection with appeals or Insolvency Proceedings) or otherwise incurred with respect to Borrower. 
 “Lien” is a claim, mortgage, deed of trust, levy, charge, pledge, security interest or other encumbrance of any kind, whether voluntarily incurred or arising by operation of law or otherwise against any property.

 “Loan Documents” are, collectively, this Agreement, any note, or notes or guaranties executed by Borrower in connection
with this Agreement, and any other present or future agreement between Borrower and/or for the benefit of Lender in connection with this Agreement, all as amended, restated, or otherwise modified. 
 “Material Adverse Change” is any material adverse change in the general affairs, senior management, results of operations, or financial
condition of Borrower, whether or not arising from transactions in the ordinary course of business, that is likely to impair the ability of Borrower to repay any portion of the Obligations or a material impairment in the value or
priority of Lender’s security interest in the Collateral. 
 “Obligations” are Borrower’s obligation to pay when
due any debts, principal, interest, Lender’s Expenses, and other amounts Borrower owes Lender now or later, whether under this Agreement, the Loan Documents, or otherwise, including, without limitation, all obligations relating to letters of
credit (including reimbursement obligations for drawn and undrawn letters of credit), cash management services, and foreign exchange contracts, if any, and including interest accruing after Insolvency Proceedings begin (whether or not allowed) and
debts, liabilities, or obligations of Borrower assigned to Lenders, and the performance of Borrower’s duties under the Loan Documents. Notwithstanding anything to the contrary contained herein, the term “Obligations” shall not include
any obligations of Borrower under any warrant issued to Lender or any equity-related documents executed solely in connection therewith. 
 “Operating Documents” are, for any Person, such Person’s formation documents, as certified with the Secretary of State of such Person’s state of formation on a date that is no earlier than 30 days prior to the
Effective Date, and (a) if such Person is a corporation, its bylaws in current form, (b) if such Person is a limited liability company, its limited liability company agreement (or similar agreement), and (c) if such Person is a
partnership, its partnership agreement (or similar agreement), each of the foregoing with all current amendments or modifications thereto. 
 “Permitted Indebtedness” is: 
 (a) Borrower’s Indebtedness to Lender under this Agreement and the other Loan
Documents; 
 (b) Indebtedness existing on the Effective Date; 
 (c) Subordinated Debt; 
 (d) unsecured Indebtedness to trade creditors incurred in the ordinary course of
business; 
 (e) Indebtedness secured by Permitted Liens; and 
 (f) extensions, refinancings, modifications, amendments and restatements of any items of Permitted Indebtedness (a) through (e) above, provided that the principal amount thereof is not increased or the terms
thereof are not modified to impose more burdensome terms upon Borrower or its Subsidiary, as the case may be. 
  

 17 








 “Permitted Investments” are: 
 (a) Investments existing on the Effective Date; 
 (b) Cash Equivalents; 
 (c) Investments consisting of the endorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of Borrower; 
 (d) Investments consisting of deposit accounts; 
 (e) Investments accepted in connection with Transfers permitted by Section 7.1; 
 (f) Investments of Subsidiaries in or to other Subsidiaries or Borrower and Investments by Borrower in Subsidiaries not to exceed One Hundred Thousand
Dollars ($100,000) in the aggregate in any fiscal year; 
 (g) Investments consisting of (i) travel advances and employee relocation
loans and other employee loans and advances in the ordinary course of business, and (ii) loans to employees, officers or directors relating to the purchase of equity securities of Borrower or its Subsidiaries pursuant to employee stock purchase
plans or agreements approved by Borrower’s Board of Directors; 
 (h) Investments (including debt obligations) received in connection
with the bankruptcy or reorganization of customers or suppliers and in settlement of delinquent obligations of, and other disputes with, customers or suppliers arising in the ordinary course of business; 
 (i) Investments consisting of notes receivable of, or prepaid royalties and other credit extensions, to customers and suppliers who are not Affiliates,
in the ordinary course of business; provided that this paragraph (i) shall not apply to Investments of Borrower in any Subsidiary; and 
 (j) joint ventures or strategic alliances in the ordinary course of Borrower’s business consisting of the non-exclusive licensing of technology, the development of technology or the providing of technical support, provided that any
cash investments by Borrower do not exceed One Hundred Thousand Dollars ($100,000) in the aggregate in any fiscal year; and 
 (k) other
investments permitted by the Borrower’s Investment Policy as approved by the Borrower’s board of directors and provided to Lender on the Effective Date; provided, however that Permitted Investments shall not include any corporate or
municipal bonds with a long-term nominal maturity for which the interest rate is reset through a dutch auction, more commonly referred to as auction rate securities. 
 “Permitted Liens” are: 
 (a) Liens existing on the Effective Date or arising under this
Agreement and the other Loan Documents; 
 (b) Liens for taxes, fees, assessments or other government charges or levies, either not
delinquent or being contested in good faith and for which Borrower maintains adequate reserves on its Books, if they have no priority over the any of Lender’s Liens; 
 (c) purchase money Liens (i) on Equipment acquired or held by Borrower incurred for financing the acquisition of the Equipment securing no more than Two Hundred Fifty Thousand Dollars ($250,000) in the aggregate
amount outstanding, or (ii) existing on Equipment when acquired, if the Lien is confined to the property and improvements and the proceeds of the Equipment; 
 (d) Liens incurred in the extension, renewal or refinancing of the indebtedness secured by Liens described in (a) through (c), but any extension, renewal or replacement Lien must be limited to the property
encumbered by the existing Lien and the principal amount of the indebtedness may not increase; 
  

 18 








 (e) leases or subleases of real property granted in the ordinary course of business, and leases,
subleases, non-exclusive licenses or sublicenses of property (other than real property or intellectual property) granted in the ordinary course of Borrower’s business, if the leases, subleases, licenses and sublicenses do not prohibit
granting Lender a security interest; 
 (f) existing leases of personal property in an aggregate amount not to exceed One Hundred Fifty
Thousand Dollars ($150,000); 
 (g) non-exclusive and exclusive licenses of intellectual property granted to third parties in the ordinary
course of business, and exclusive licenses of intellectual property in one or more respects granted to third parties pursuant to a collaboration agreement that is customary in the biotechnology industry, which collaboration agreement has been
approved by Borrower’s Board of Directors and disclosed to Lenders; 
 (h) Liens of carriers, warehousemen, suppliers, or other Persons
that are possessory in nature arising in the ordinary course of business so long as such Liens attach only to Inventory, securing liabilities in the aggregate amount not to exceed One Hundred Thousand Dollars ($100,000) and which are not delinquent
or remain payable without penalty or which are being contested in good faith and by appropriate proceedings which proceedings have the effect of preventing the forfeiture or sale of the property subject thereto; 
 (i) Liens to secure payment of workers’ compensation, employment insurance, old-age pensions, social security and other like obligations incurred in
the ordinary course of business (other than Liens imposed by ERISA); 
 (j) Liens arising from attachments or judgments, orders, or decrees
in circumstances not constituting an Event of Default hereunder; and 
 (k) Liens in favor of other financial institutions arising in
connection with Borrower’s deposit and/or securities accounts held at such institutions. 
 “Person” is any individual,
sole proprietorship, partnership, limited liability company, joint venture, company, trust, unincorporated organization, association, corporation, institution, public benefit corporation, firm, joint stock company, estate, entity or government
agency. 
 “Registered Organization” is any “registered organization” as defined in the Code with such additions
to such term as may hereafter be made 
 “Requirement of Law” is as to any Person, the organizational or governing
documents of such Person, and any law (statutory or common), treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject. 
 “Responsible Officer” is any of the Chief Executive Officer,
President, Chief Financial Officer and Controller of Borrower. 
 “Secured Promissory Note” is defined in
Section 2.3. 
 “Subordinated Debt” is indebtedness incurred by Borrower subordinated to all of Borrower’s now or
hereafter indebtedness to Lender (pursuant to a subordination, intercreditor, or other similar agreement in form and substance satisfactory to Lender and entered into between Lender, the Borrower and the other creditor), on terms acceptable to
Lender. 
 “Subsidiary” means, with respect to any Person, any Person of which more than 50.0% of the voting stock or other
equity interests (in the case of Persons other than corporations) is owned or controlled, directly or indirectly, by such Person or one or more of Affiliates of such Person. 
  

 19 








 “Term Loan” is defined in Section 2.1.1 hereof. 
 “Term Loan Maturity Date” is June 1, 2010. 
 “Transfer” is defined in Section 7.1. 
 IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be executed as a sealed instrument under the laws of the Commonwealth of Virginia as of the Effective Date. 
  

			
	BORROWER:
	
	METABASIS THERAPEUTICS, INC.
		
	By	 	 /s/ Tran Nguyen

	Name:	 	 Tran Nguyen

	Title:	 	 CFO

	
	ARAMED, INC.
		
	By	 	 /s/ Mark Erion

	Name:	 	 Mark D. Erion

	Title:	 	 President, CEO & CSO

	
	LENDER:
	
	OXFORD FINANCE CORPORATION
		
	By	 	 /s/ John Henderson

	Name:	 	 John G. Henderson

	Title:	 	 VP & General Counsel


  

 20 








 EXHIBIT A 
 The Collateral consists of all of Borrower’s right, title and interest in and to the following personal property: 
 All goods, Accounts, Equipment, Inventory, General Intangibles (except as provided below), commercial tort claims, documents, instruments (including any promissory notes), chattel paper (whether tangible or
electronic), all certificates of deposit, fixtures, letters of credit rights (whether or not the letter of credit is evidenced by a writing), whether now owned or hereafter acquired, wherever located; and 
 all Borrower’s Books relating to the foregoing, and any and all claims, rights and interests in any of the above and all substitutions for,
additions, attachments, accessories, accessions and improvements to and replacements, products, proceeds and insurance proceeds of any or all of the foregoing. 
 Notwithstanding the foregoing, the Collateral does not include any of the following, whether now owned or hereafter acquired: (i) securities and all other investment property, supporting obligations, and
financial assets; (ii) cash, Cash Equivalents, and deposit accounts; (iii) any interest in a foreign subsidiary to the extent such interest exceeds 65% of the total outstanding voting interests in such foreign subsidiary; or (iv) any
copyright rights, copyright applications, copyright registrations and like protections in each work of authorship and derivative work, whether published or unpublished, any patents, patent applications and like protections, including improvements,
divisions, continuations, renewals, reissues, extensions, and continuations-in-part of the same, trademarks, service marks and, to the extent permitted under applicable law, any applications therefor, whether registered or not, and the goodwill of
the business of Borrower connected with and symbolized thereby, know-how, operating manuals, trade secret rights, rights to unpatented inventions, and any claims for damage by way of any past, present, or future infringement of any of the foregoing;
provided, however, the Collateral shall include all Accounts, license and royalty fees and other revenues, proceeds, or income arising out of or relating to any of the foregoing. 
 Pursuant to the terms of a certain negative pledge arrangement with Lender, Borrower has agreed not to encumber any of its copyright rights, copyright
applications, copyright registrations and like protections in each work of authorship and derivative work, whether published or unpublished, any patents, patent applications and like protections, including improvements, divisions, continuations,
renewals, reissues, extensions, and continuations-in-part of the same, trademarks, service marks and, to the extent permitted under applicable law, any applications therefor, whether registered or not, and the goodwill of the business of Borrower
connected with and symbolized thereby, know-how, operating manuals, trade secret rights, rights to unpatented inventions, and any claims for damage by way of any past, present, or future infringement of any of the foregoing, without Lender’s
prior written consent. 
  

 1 








 EXHIBIT B 
 [INTENTIONALLY LEFT BLANK] 







 EXHIBIT C 
 COMPLIANCE CERTIFICATE 
  

					
	TO:	  	OXFORD FINANCE CORPORATION, as Lender	  	Date:                      
	FROM:	  	METABASIS THERAPEUTICS, INC.	  	

 The undersigned authorized officer of Metabasis Therapeutics, Inc. (“Borrower”)
certifies that under the terms and conditions of the Loan and Security Agreement between Borrower, and the Lender (the “Agreement”), (1) there are no Events of Default which have occurred and are continuing, (2) all
representations and warranties in the Agreement are true and correct in all material respects on this date except as noted below; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that
already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such
date, (3) Borrower, and each of its Subsidiaries, has timely filed all required tax returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower except
as otherwise permitted pursuant to the terms of Section 5.8 of the Agreement, and (4) no Liens have been levied or claims made against Borrower or any of its Subsidiaries relating to unpaid employee payroll or benefits of which Borrower
has not previously provided written notification to Lender. Attached are the required documents supporting the certification. The undersigned certifies, in the capacity as an officer of the Borrower, that these are prepared in accordance with GAAP
consistently applied from one period to the next except as explained in an accompanying letter or footnotes or as permitted in the Agreement. The undersigned acknowledges, in the capacity as an officer of the Borrower, that no borrowings may be
requested at any time or date of determination that Borrower is not in compliance with any of the terms of the Agreement, and that compliance is determined not just at the date this certificate is delivered. Capitalized terms used but not otherwise
defined herein shall have the meanings given them in the Agreement. 
 Please indicate compliance status by circling Yes/No under “Complies”
column. 
  

					
	 Reporting Covenant
	  	 Required
	  	Complies
	 Compliance Certificate
	  	Quarterly within 45 days	  	Yes    No

 The following are the exceptions with respect to the certification above: (If no exceptions exist,
state “No exceptions to note.”) 
                                        
                                         
                                         
                                         
                                         
                                         
              
                                        
                                         
                                         
                                         
                                         
                                         
              
                                        
                                         
                                         
                                         
                                         
                                         
              
  

			
	METABASIS THERAPEUTICS, INC.
		
	By:	 	  

	Name:	 	  

	Title:	 	  




			
	LENDER USE ONLY
		
	Received by:	 	  

		 	AUTHORIZED SIGNER
		
	Date:	 	  

		
	Verified:	 	  

		 	AUTHORIZED SIGNER
		
	Date:	 	  

	
	Compliance Status:        Yes    No



  
  







 EXHIBIT D 
 SECURED PROMISSORY NOTE 
  

			
	$	  	Dated:            , 2008

 FOR VALUE RECEIVED, the undersigned, METABASIS THERAPEUTICS, INC., a Delaware corporation and
ARAMED, INC.., a Delaware corporation (jointly and severally, individually and collectively, the “Borrower”), HEREBY PROMISES TO PAY to the order of OXFORD FINANCE CORPORATION (“Lender”) the principal amount of Two
Hundred Thousand Dollars ($200,000) or such lesser amount as shall equal the outstanding principal balance of the Term Loan made to Borrower by Lender, plus interest on the aggregate unpaid principal amount of Term Loan, at the rates and in
accordance with the terms of the Loan and Security Agreement by and between Borrower and Lender (as amended, restated, supplemented or otherwise modified from time to time, the “Loan Agreement”). If not sooner paid, the entire principal
amount and all accrued interest hereunder and under the Loan Agreement shall be due and payable on the Term Loan Maturity Date as set forth in the Loan Agreement. 
 Principal, interest and all other amounts due with respect to the Term Loan, are payable in lawful money of the United States of America to Lender as set forth in the Loan Agreement and this Secured Promissory Note. The principal amount of
this Note and the interest rate applicable thereto, and all payments made with respect thereto, shall be recorded by Lender and, prior to any transfer hereof, endorsed on the grid attached hereto which is part of this Note. 
 The Loan Agreement, among other things, (a) provides for the making of a secured Term Loan to Borrower, and (b) contains provisions for acceleration of the
maturity hereof upon the happening of certain stated events. 
 This Note may not be prepaid except as set forth in Section 2.1.1(c) and
Section 2.1.1(d) of the Loan Agreement. 
 This Note and the obligation of Borrower to repay the unpaid principal amount of the Term Loan, interest
on the Term Loan and all other amounts due Lender under the Loan Agreement is secured under the Loan Agreement. 
 Presentment for payment, demand, notice of
protest and all other demands and notices of any kind in connection with the execution, delivery, performance and enforcement of this Note are hereby waived. 
 Borrower shall pay all reasonable fees and expenses, including, without limitation, reasonable attorneys’ fees and costs, incurred by Lender in the enforcement or attempt to enforce any of Borrower’s obligations hereunder not
performed when due. This Note shall be governed by, and construed and interpreted in accordance with, the laws of the Commonwealth of Virginia. 
 Note
Register; Ownership of Note. The ownership of an interest in this Note shall be registered on a record of ownership maintained by Lender or its agent. Notwithstanding anything else in this Note to the contrary, the right to the principal of, and
stated interest on, this Note may be transferred only if the transfer is registered on such record of ownership and the transferee is identified as the owner of an interest in the obligation. Borrower shall be entitled to treat the registered holder
of this Note (as recorded on such record of ownership) as the owner in fact thereof for all purposes and shall not be bound to recognize any equitable or other claim to or interest in this Note on the part of any other person or entity. 







 IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed by one of its officers thereunto
duly authorized on the date hereof. 
  

			
	BORROWER:
	
	METABASIS THERAPEUTICS, INC.
		
	By:	 	 /s/ Tran Nguyen

	Name:	 	 Tran Nguyen

	Title:	 	 CFO

	
	ARAMED, INC.
		
	By:	 	 /s/ Mark Erion

	Name:	 	 Mark D. Erion

	Title:	 	 President, CEO & CSO