Exhibit
4.1


Execution
Copy


WARRANT


THE SECURITIES EVIDENCED BY THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), OR ANY OTHER APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED IN
RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND SUCH OTHER SECURITIES LAWS. 
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED, HYPOTHECATED OR
OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO A TRANSACTION WHICH IS EXEMPT FROM, OR
NOT SUBJECT TO, SUCH REGISTRATION.


November
2, 2006


Warrant to Purchase up to Two Hundred Sixty Thousand
(260,000) shares of Common Stock of Metabasis Therapeutics, Inc. (the “Company”).


In consideration for Kingsbridge Capital Limited, an
entity organized and existing under the laws of the British Virgin Islands,
whose registered address is Palm Grove House, 2nd Floor, Road Town, Tortola,
British Virgin Islands (the “Investor”), agreeing to enter into that
certain Common Stock Purchase Agreement, dated as of the date hereof, between
the Investor and the Company (the “Agreement”), the Company hereby
agrees that the Investor or any other Warrant Holder (as defined below) is
entitled, on the terms and conditions set forth below, to purchase from the
Company at any time during the Exercise Period (as defined below) up to two
hundred sixty thousand (260,000) fully paid and nonassessable shares of common
stock, par value $0.001 per share, of the Company (the “Common Stock”)
at the Exercise Price (hereinafter defined), as the same may be adjusted from
time to time pursuant to Section 6 hereof. 
The resale of the shares of Common Stock or other securities issuable
upon exercise or exchange of this Warrant is subject to the provisions of the
Registration Rights Agreement. 
Capitalized terms used herein and not otherwise defined shall have the
meanings given them in the Agreement.


Section 1.               Definitions.


“Affiliate” shall mean any Person that,
directly or indirectly through one or more intermediaries, controls or is
controlled by, or is under direct or indirect common control with any other
Person.  For the purposes of this definition,
“control,” when used with respect to any Person, means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise, and the term “controls”
and “controlled” have meanings correlative to the foregoing.


“Closing Price” as of any particular day shall
mean the volume weighted average price (the aggregate sales price of all trades
of Common Stock during such Trading Day divided by the total number of shares
of Common Stock traded during such Trading Day) per share of the Company’s
Common Stock as reported by Bloomberg L.P. on such day using the AQR function.


“Exercise Period” shall mean that period
beginning six months after the date of this Warrant and continuing until (i)
the expiration of the five-year period thereafter, or (ii) a Funding Default,
subject in each case to earlier termination in accordance with Section 6
hereof.















 


“Exercise Price” as of the date hereof shall
mean nine dollars and twenty-six cents ($9.26), representing 130% of the
average Closing Price of the Common Stock during the five (5) Trading Days
immediately preceding the date of this Warrant.


“Funding Default” shall mean a failure by the
Investor to accept a Draw Down Notice made by the Company and to acquire and
pay for the Shares in accordance therewith within three (3) Business Days
following the delivery of such Shares to the Investor, provided such Draw Down
Notice was made in accordance with the terms and conditions of the Agreement
(including the satisfaction or waiver of the conditions to the obligation of
the Investor to accept a Draw Down set forth in Article VII of the Agreement),
provided further, that such failure was reasonably within the control of the
Investor.


“Per Share Warrant Value” shall mean the
difference resulting from subtracting the Exercise Price from the average of
the Closing Prices on the ten Trading Days immediately preceding the Exercise
Date.


“Person” shall mean an individual, a
corporation, a partnership, a limited liability company, an association, a
trust or other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.


“Principal Market” shall mean the NASDAQ Global
Select Market, the NASDAQ Global Market, the NASDAQ Capital Market, the
American Stock Exchange or the New York Stock Exchange, whichever is at the
time the principal trading exchange or market for the Common Stock.


“SEC” shall mean the United States Securities
and Exchange Commission.


“Trading Day” shall mean any day other than a
Saturday or a Sunday on which the Principal Market is open for trading in
equity securities.


“Warrant Holder” shall mean the Investor or any
permitted assignee or permitted transferee of all or any portion of this
Warrant.


“Warrant Shares” shall mean those shares of
Common Stock received or to be received upon exercise of this Warrant.


Section 2.               Exercise.


(a)   Method of Exercise.  This Warrant may be exercised in whole or in
part (but not as to a fractional share of Common Stock), at any time and from
time to time during the Exercise Period, by the Warrant Holder by (i) surrender
of this Warrant, with the form of exercise attached hereto as Exhibit A
completed and duly executed by the Warrant Holder (the “Exercise Notice”),
to the Company at the address set forth in Section 10.04 of the Agreement,
accompanied by payment of the Exercise Price multiplied by the number of shares
of Common Stock for which this Warrant is being exercised (the “Aggregate
Exercise Price”) or (ii) telecopying an executed and completed Exercise
Notice to the Company and delivering to the Company within five (5) Business
Days thereafter the original Exercise Notice, this Warrant and the Aggregate
Exercise Price.  The later of the date on
which an Exercise Notice is received by the Company in accordance with clauses
(i) or (ii) above or the Company receives payment of the Exercise Price (unless
the Warrant is exercised as provided in Section 2(c) below) shall be deemed an “Exercise
Date.”


(b)   Payment of Aggregate Exercise Price.  Subject to paragraph (c) below, payment
of the Aggregate Exercise Price shall be made by wire transfer of immediately available
funds to an account



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designated by the Company.  If the amount of the payment received by the
Company is less than the Aggregate Exercise Price, the Warrant Holder will be
notified of the deficiency and shall make payment in that amount within three
(3) Business Days.  In the event the
payment exceeds the Aggregate Exercise Price, the Company will refund the
excess to the Warrant Holder within five (5) Business Days of receipt.


(c)   Cashless Exercise.  In the event that the Warrant Shares to be
received by the Warrant Holder upon exercise of the Warrant may not be resold
pursuant to an effective registration statement or an exemption to the
registration requirements of the Securities Act of 1933, as amended (the “Securities
Act”), and applicable state laws, the Warrant Holder may, as an alternative
to payment of the Aggregate Exercise Price upon exercise in accordance with
paragraph (b) above, elect to effect a cashless exercise by so indicating
on the Exercise Notice and including a calculation of the number of shares of
Common Stock to be issued upon such exercise in accordance with the terms
hereof (a “Cashless Exercise”). 
If a registration statement on Form S-1 or Form S-3 under the Securities
Act, or such other form as deemed appropriate by counsel to the Company for the
registration for the resale by the Warrant Holder of (x) the shares of
Common Stock of the Company that may be purchased under the Agreement,
(y) the Warrant Shares, or (z) any securities issued or issuable with
respect to any of the foregoing by way of exchange, stock dividend or stock
split or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization or otherwise, has been declared effective
by the SEC and remains effective, the Company may, in its sole discretion,
permit the Warrant Holder to elect to effect a Cashless Exercise or require the
Warrant Holder to pay the Exercise Price of the Warrant Shares being purchased
by the Warrant Holder under this Warrant. 
In the event of a Cashless Exercise, the Warrant Holder shall receive
that number of shares of Common Stock determined by (i) multiplying the number
of Warrant Shares for which this Warrant is being exercised by the Per Share
Warrant Value and (ii) dividing the product by the average of the Closing
Prices on the ten Trading Days immediately preceding the Exercise Date, rounded
to the nearest whole share.  The Company
shall cancel the total number of Warrant Shares equal to the excess of the
number of the Warrant Shares for which this Warrant is being exercised over the
number of Warrant Shares to be received by the Warrant Holder pursuant to such
Cashless Exercise.


(d)   Replacement Warrant.  In the event that the Warrant is not
exercised in full, the number of Warrant Shares shall be reduced by the number
of such Warrant Shares for which this Warrant is exercised, and the Company, at
its expense, shall forthwith issue and deliver to or upon the order of the
Warrant Holder a new Warrant of like tenor in the name of the Warrant Holder,
reflecting such adjusted number of Warrant Shares.


Section 3.               Exercise Limitation.  The Warrant Holder may not exercise this
Warrant such that the number of Warrant Shares to be received pursuant to such
exercise aggregated with all other shares of Common Stock then owned by the
Warrant Holder beneficially or deemed beneficially owned by the Warrant Holder
would result in the Warrant Holder owning more than 9.9% of all of such Common
Stock as would be outstanding on such Exercise Date, as determined in
accordance with Section 13(d) of the Exchange Act of 1934 and the rules
and regulations promulgated thereunder.


Section 4.               Delivery
of Warrant Shares.


(a)   Subject to the terms and conditions of this
Warrant, as soon as practicable after the exercise of this Warrant in full or
in part, and in any event within ten (10) Business Days thereafter, the Company
at its expense (including, without limitation, the payment by it of any
applicable issue taxes) will cause to be issued in the name of and delivered to
the Warrant Holder, or as the Warrant Holder may lawfully direct, a certificate
or certificates for, or make deposit with the Depositary Trust Company via
book-entry of, the number of validly issued, fully paid and non-assessable
Warrant Shares to which the Warrant Holder shall be entitled on such exercise,
together with any other stock or other securities or property



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(including cash, where applicable) to which the
Warrant Holder is entitled upon such exercise in accordance with the provisions
hereof.


(b)   This Warrant may not be exercised as to
fractional shares of Common Stock.  In
the event that the exercise of this Warrant, in full or in part, would result
in the issuance of any fractional share of Common Stock, then in such event the
Warrant Holder shall receive the number of shares rounded to the nearest whole
share.


Section 5.               Representations,
Warranties and Covenants of the Company.


(a)   The Warrant Shares, when issued in accordance
with the terms hereof, will be duly authorized and, when paid for or issued in
accordance with the terms hereof, shall be validly issued, fully paid and
non-assessable.


(b)   The Company shall take all commercially
reasonable actions and proceedings as may be required and permitted by
applicable law, rule and regulation for the legal and valid issuance of this
Warrant and the Warrant Shares to the Warrant Holder.


(c)   The Company has authorized and reserved for
issuance to the Warrant Holder the requisite number of shares of Common Stock
to be issued pursuant to this Warrant.  The
Company shall at all times reserve and keep available, solely for issuance and
delivery as Warrant Shares hereunder, such shares of Common Stock as shall from
time to time be issuable as Warrant Shares.


(d)   From the date hereof through the last date on
which this Warrant is exercisable, the Company shall take all commercially
reasonable actions to ensure that the Common Stock remains listed or quoted on
the Principal Market.


Section 6.               Adjustment of the Exercise
Price.  The Exercise Price and,
accordingly, the number of Warrant Shares issuable upon exercise of the
Warrant, shall be subject to adjustment from time to time upon the happening of
certain events as follows:


(a)   Reclassification,
Consolidation, Merger, Mandatory Share Exchange, Sale or Transfer.


(i)            Upon occurrence of any of the events
specified in subsection (a)(ii) below (the “Adjustment Events”)
while this Warrant is unexpired and not exercised in full, the Warrant Holder
may in its sole discretion require the Company, or any successor or purchasing
corporation, as the case may be, without payment of any additional
consideration therefor, to execute and deliver to the Warrant Holder a new
Warrant providing that the Warrant Holder shall have the right to exercise such
new Warrant (upon terms not less favorable to the Warrant Holder than those
then applicable to this Warrant) and to receive upon such exercise, in lieu of
each share of Common Stock theretofore issuable upon exercise of this Warrant,
the kind and amount of shares of stock, other securities, money or property
receivable upon such Adjustment Event by the holder of one share of Common
Stock issuable upon exercise of this Warrant had this Warrant been exercised
immediately prior to such Adjustment Event. 
Such new Warrant shall provide for adjustments that shall be as nearly
equivalent as may be practicable to the adjustments provided for in this
Section 6.


(ii)           The Adjustment Events shall be
(1) any reclassification or change of Common Stock (other than a change in
par value, as a result of a subdivision or combination of Common Stock or in
connection with an Excluded Merger or Sale), (2) any consolidation, merger
or mandatory share exchange of the Company with or into another corporation
(other than a merger or mandatory share exchange with another corporation in
which the Company is a continuing corporation and which does not



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result in any reclassification or change other than a
change in par value or as a result of a subdivision or combination of Common
Stock), other than (each of the following referred to as an “Excluded Merger
or Sale”) a transaction involving (A) sale of all or substantially all of
the assets of the Company, (B) any merger, consolidation or similar transaction
where the consideration payable to the shareholders of the Company by the
acquiring Person consists substantially of cash or publicly traded securities,
or a combination thereof, or where the acquiring Person does not agree to
assume the obligations of the Company under outstanding warrants (including
this Warrant).  In the event of an
Excluded Merger or Sale, the Company shall deliver a notice to the Warrant
Holder at least 10 days before the consummation of such Excluded Merger or
Sale, the Warrant Holder may exercise this Warrant at any time before the consummation
of such Excluded Merger or Sale (and such exercise may be made contingent upon
the consummation of such Excluded Merger or Sale), and any portion of this
Warrant that has not been exercised before consummation of such Excluded Merger
or Sale shall terminate and expire, and shall no longer be outstanding.


(b)   Subdivision or Combination of Shares.  If the Company, at any time while this
Warrant is unexpired and not exercised in full, shall subdivide its Common
Stock, the Exercise Price shall be proportionately reduced as of the effective
date of such subdivision, or, if the Company shall take a record of holders of
its Common Stock for the purpose of so subdividing, as of such record date,
whichever is earlier.  If the Company, at
any time while this Warrant is unexpired and not exercised in full, shall
combine its Common Stock, the Exercise Price shall be proportionately increased
as of the effective date of such combination, or, if the Company shall take a
record of holders of its Common Stock for the purpose of so combining, as of
such record date, whichever is earlier.


(c)   Stock Dividends.  If the Company, at any time while this
Warrant is unexpired and not exercised in full, shall pay a dividend or other
distribution in shares of Common Stock to all holders of Common Stock, then the
Exercise Price shall be adjusted, as of the date the Company shall take a
record of the holders of its Common Stock for the purpose of receiving such
dividend or other distribution (or if no such record is taken, as at the date
of such payment or other distribution), to that price determined by multiplying
the Exercise Price in effect immediately prior to such payment or other
distribution by a fraction:  (i)  the numerator of which shall be the total
number of shares of Common Stock outstanding immediately prior to such dividend
or distribution, and (ii) the denominator of which shall be the total number of
shares of Common Stock outstanding immediately after such dividend or
distribution.  The provisions of this
subsection (c) shall not apply under any of the circumstances for which an
adjustment is provided in subsections (a) or (b).


(d)   Liquidating Dividends, Etc.  If the Company, at any time while this
Warrant is unexpired and not exercised in full, makes a distribution of its
assets or evidences of indebtedness to the holders of its Common Stock as a
dividend in liquidation or by way of return of capital or other than as a
dividend payable out of earnings or surplus legally available for dividends
under applicable law or any distribution to such holders made in respect of the
sale of all or substantially all of the Company’s assets (other than under the
circumstances provided for in the foregoing subsections (a) through (c)),
then the Warrant Holder shall be entitled to receive upon exercise of this
Warrant in addition to the Warrant Shares receivable in connection therewith,
and without payment of any consideration other than the Exercise Price, the
kind and amount of such distribution per share of Common Stock multiplied by
the number of Warrant Shares that, on the record date for such distribution,
are issuable upon such exercise of the Warrant (with no further adjustment
being made following any such event which causes an adjustment in the number of
Warrant Shares issuable), and an appropriate provision therefor shall be made a
part of any such distribution.  The value
of a distribution that is paid in other than cash shall be determined in good
faith by the Board of Directors of the Company. 
Notwithstanding the foregoing, in the event of a proposed dividend in
liquidation or distribution to the shareholders made in respect of the sale of
all or substantially all of the Company’s assets, the Company shall deliver a
notice to the Warrant Holder at



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least 10 days before the consummation of such event,
the Warrant Holder may exercise this Warrant at any time before the
consummation of such event (and such exercise may be made contingent upon the
consummation of such event), and any portion of this Warrant that has not been exercised
before consummation of such event shall terminate and expire, and shall no
longer be outstanding.


Section 7.               Notices.  Whenever the Exercise Price or number of
Warrant Shares shall be adjusted pursuant to Section 6 hereof, the Company
shall promptly prepare a certificate signed by its Chief Executive Officer or
Chief Financial Officer setting forth in reasonable detail the event requiring
the adjustment, the amount of the adjustment, the method by which such
adjustment was calculated (including a description of the basis on which the
Company’s Board of Directors made any determination hereunder), and the
Exercise Price and number of Warrant Shares purchasable at that Exercise Price
after giving effect to such adjustment, and shall promptly cause copies of such
certificate to be sent by overnight courier to the Warrant Holder.  In the event of any taking by the Company of
a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend (other
than a cash dividend) or other distribution, any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other similar right accruing to a
stockholder by virtue of ownership of shares of the Company’s capital stock,
the Company shall mail to the Warrant Holder, at least five (5) Business Days
prior to the date specified therein, a notice specifying the date on which any
such record is to be taken for the purpose of such dividend, distribution or
right, and the amount and character of such dividend, distribution or right.


Section 8.               No Impairment.  The Company will not, by amendment of its
Certificate or Bylaws or through any reorganization, transfer of assets,
consolidation, merger, dissolution or issue or sale of securities, avoid or
seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Warrant Holder against
impairment.  Without limiting the
generality of the foregoing, the Company (a) will not increase the par
value of any Warrant Shares above the amount payable therefor on such exercise,
and (b) will take all such action as may be reasonably necessary or appropriate
in order that the Company may validly and legally issue fully paid and
nonassessable Warrant Shares on the exercise of this Warrant.


Section 9.               Rights As Stockholder.  Except as set forth in Section 6 above, prior
to exercise of this Warrant, the Warrant Holder shall not be entitled to any
rights as a stockholder of the Company with respect to the Warrant Shares,
including (without limitation) the right to vote such shares, receive dividends
or other distributions thereon or be notified of stockholder meetings.


Section 10.             Replacement of Warrant.  Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
the Warrant and, in the case of any such loss, theft or destruction of the
Warrant, upon delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the Company or, in the case of any such mutilation,
on surrender and cancellation of such Warrant, the Company at its expense will
execute and deliver, in lieu thereof, a new Warrant of like tenor.


Section 11.             Choice of Law.  This Warrant shall be construed under the
laws of the State of New York.


Section 12.             Entire Agreement; Amendments.  Except for any written instrument concurrent
or subsequent to the date hereof executed by the Company and the Investor, this
Warrant and the Agreement contain the entire understanding of the parties with
respect to the matters covered hereby and



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thereby.  No
provision of this Warrant may be waived or amended other than by a written
instrument signed by the party against whom enforcement of any such amendment
or waiver is sought.


Section 13.             Restricted
Securities.


(a)   Registration or Exemption Required.  This Warrant has been issued in a transaction
exempt from the registration requirements of the Securities Act in reliance
upon the provisions of Section 4(2) thereof and Regulation D thereof, and/or
upon such other exemption from the registration requirements of the Securities
Act as may be available with respect to this Warrant.  This Warrant and the Warrant Shares issuable
upon exercise of this Warrant may not be resold except pursuant to an effective
registration statement or an exemption to the registration requirements of the
Securities Act and applicable state laws. 
The Company shall have no obligation to register the Warrant or the
Warrant Shares except as explicitly set forth in that certain Registration
Rights Agreement entered into by and between the Investor and the Company on
even date hereof.


(b)   Legend. Any replacement Warrants
issued pursuant to Section 2 and Section 10 hereof and, unless a
registration statement has been declared effective by the SEC and remains
effective in accordance with the Securities Act, with respect thereto, any
Warrant Shares issued upon exercise hereof, shall bear the following legend:


“THE SECURITIES EVIDENCED
BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY OTHER APPLICABLE
SECURITIES LAWS AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER SECURITIES
LAWS.  NEITHER THIS SECURITY NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED, HYPOTHECATED OR OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO A
TRANSACTION WHICH IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.”


(c)   No Other Legend or Stock Transfer
Restrictions.  No legend other than
the one specified in Section 13(b) has been or shall be placed on the
share certificates representing the Warrant Shares and no instructions or “stop
transfer orders” (so called “stock transfer restrictions”) or other
restrictions have been or shall be given to the Company’s transfer agent with
respect thereto other than as expressly set forth in this Section 13.


(d)   Assignment.  Assuming the conditions of Section 13(a)
above regarding registration or exemption have been satisfied, the Warrant
Holder may sell, transfer, assign, pledge or otherwise dispose of this Warrant
(each of the foregoing, a “Transfer”), in whole or in part, but only to
an Affiliate of the Warrant Holder.  The
Warrant Holder shall deliver a written notice to the Company, substantially in
the form of the Assignment attached hereto as Exhibit B, indicating the person
or persons to whom the Warrant shall be Transferred and the respective number
of Warrant Shares to be covered by the warrants to be Transferred to each
assignee.  The Company shall effect the
Transfer within ten (10) days, and shall deliver to the Transferee(s)
designated by the Warrant Holder a Warrant or Warrants of like tenor and terms
for the appropriate number of shares.  In
connection with and as a condition of any such proposed Transfer, the Company
may require (i) the Warrant Holder to provide an opinion of counsel to the
Warrant Holder in form and substance reasonably satisfactory to the Company to
the effect that the



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proposed Transfer complies with all applicable federal
and state securities laws and (ii) the proposed Transferee to make customary
and reasonable representations to the Company in connection with such Transfer
attendant to the acquisition of unregistered securities, including without
limitation the Transferee’s investment intent and status as an “accredited
investor” as defined in Regulation D.


(e)   Investor’s Compliance.  Nothing in this Section 13 shall affect
in any way the Investor’s obligations under any agreement to comply with all
applicable securities laws upon resale of the Common Stock.


Section 14.             Notices.  All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder shall be
given in accordance with Section 10.04 of the Agreement.


Section 15.             Miscellaneous.  This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver, discharge
or termination is sought.  The headings
in this Warrant are for purposes of reference only, and shall not limit or
otherwise affect any of the terms hereof. 
The invalidity or unenforceability of any provision hereof shall in no
way affect the validity or enforceability of any other provision.


Section 16.             Company Call Right.


(a)   If a Funding Default occurs, the Company
shall have the right to demand the surrender of this Warrant or any remaining
portion thereof, Shares and/or cash from the Investor as follows (the “Call
Right”):


(i)            If the Investor has not previously
exercised this Warrant in full, then this Warrant shall automatically be deemed
to have been canceled and shall have no further force or effect.


(ii)           If, prior to receiving a Call Right
Notice, the Investor has previously exercised this Warrant with respect to some
or all of the Warrant Shares, and the Investor has not previously sold such
Warrant Shares, then Company shall have a right to purchase from the Investor
that number of shares of Common Stock equal to the number of shares of Common
Stock issued in connection with the exercise(s) of the Warrant, at a repurchase
price per share equal to the cash price per share paid by the Investor in
connection with such exercise(s).  For
greater certainty, (a) if Warrant Shares were exercised for cash, the
purchase price per share under the Call Right shall be equal to the Exercise
Price, (b) if Warrant Shares were exercised on a cashless exercise basis,
the purchase price per share for such Warrant Shares under the Call Right shall
be zero, and (c) if such Warrant Shares were exercised on both a cash and
cashless exercise basis, the purchase price per share under the Call Right
shall be equal to the total amount of cash paid in connection with such cash
exercise(s) divided by the total number of shares of Common Stock issued in
connection with all exercises of the Warrant (whether on a cash or cashless
basis).


(iii)          If, prior to receiving a Call Right
Notice, the Investor has previously exercised this Warrant with respect to some
or all of the Warrant Shares, and the Investor subsequently sold such Warrant
Shares, then the Investor shall remit to the Company the excess, if any, of (x)
the proceeds received by Investor through the sale of such Warrant Shares, over
(y) the aggregate Exercise Price for such Warrant Shares.  In the event that the Investor obtained such
Warrant Shares through a Cashless Exercise, then the Investor shall instead
remit to the Company all proceeds received by the Investor through the sale of
such Warrant Shares.  For the avoidance
of doubt, in the event that the Investor has sold some or all of the Warrant
Shares prior to receiving a Call Right Notice, then the right set forth in



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this paragraph (iii) shall constitute the sole Call
Right of the Company with respect to such Warrant Shares which have been sold.


(b)   The Company may exercise the Call Right by
delivering a notice (the “Call Right Notice”) to the Investor within
thirty (30) days after the occurrence of a Funding Default.  On the tenth (10th) Business Day following delivery of the
Call Right Notice to the Investor, the Company shall tender the purchase price,
if any, and the Investor shall tender shares of Common Stock, if any, to be
sold to the Company pursuant to the Call Right Notice, immediately following
which the Company and the Investor shall consummate such purchase and
sale.  The Call Right shall survive both
the assignment of the Warrant by the Investor and the disposition of the
Warrant Shares by the Investor following exercise of the Warrant.


Section 17.             Absence of Presumption.  This Warrant shall be construed without
regard to any presumption or rule requiring construction or interpretation
against the party drafting or causing any instrument to be drafted.


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IN WITNESS WHEREOF, this Warrant was duly executed by
the undersigned, thereunto duly authorized, as of the date first set forth
above.


	
   

  	
  METABASIS THERAPEUTICS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ PAUL K. LAIKIND

  	
   

  
	
   

  	
   

  	
  Paul K. Laikind, Ph.D.

  
	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  Investor
  acknowledges and agrees to the terms and conditions of this Warrant.

  
	
   

  
	
   

  	
  KINGSBRIDGE CAPITAL
  LIMITED

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ MARIA O’DONOGHUE

  	
   

  
	
   

  	
   

  	
  Maria O’Donoghue

  
	
   

  	
   

  	
  Director

  



 


SIGNATURE PAGE – WARRANT










 



EXHIBIT A TO THE WARRANT


EXERCISE FORM


METABASIS THERAPEUTICS,
INC.


The undersigned hereby irrevocably exercises the right
to purchase                   
shares of Common Stock of Metabasis Therapeutics, Inc., a Delaware corporation
(the “Company”), evidenced by the attached Warrant, and (CIRCLE EITHER (i) or
(ii)) (i) tenders herewith payment of the Aggregate Exercise Price with respect
to such shares in full, in the amount of $        ,
in cash, by certified or official bank check or by wire transfer for the
account of the Company or (ii) elects, pursuant to Section 2(c) of
the Warrant, to convert such Warrant into shares of Common Stock of the Company
on a cashless exercise basis, all in accordance with the conditions and
provisions of said Warrant and in accordance with the calculations attached
hereto.


The undersigned requests that stock certificates for
such Warrant Shares be issued, and a Warrant representing any unexercised
portion hereof be issued, pursuant to this Warrant, in the name of the
registered Warrant Holder and delivered to the undersigned at the address set
forth below.


	
  Dated:

  	
   

  	
   

  
	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Signature of Registered
  Holder

  
	
   

  
	
   

  
	
   

  	
   

  
	
  Name of Registered
  Holder (Print)

  
	
   

  
	
   

  
	
   

  	
   

  
	
  Address

  



 










 



EXHIBIT B TO THE WARRANT


ASSIGNMENT


(To be executed by the registered Warrant Holder
desiring to transfer the Warrant)


FOR VALUED RECEIVED, the undersigned Warrant Holder of
the attached Warrant hereby sells, assigns and transfers unto the persons below
named the right to purchase               
shares of Common Stock of Metabasis Therapeutics, Inc. (the “Company”)
evidenced by the attached Warrant and does hereby irrevocably constitute and
appoint                       
attorney to transfer the said Warrant on the books of the Company, with full
power of substitution in the premises.


	
  Dated:

  
	
   

  
	
   

  
	
   

  	
   

  
	
  Signature

  
	
   

  
	
  Fill in for new Registration of Warrant:

  
	
   

  
	
   

  
	
   

  	
   

  
	
  Name

  
	
   

  
	
   

  
	
   

  	
   

  
	
  Address

  
	
   

  
	
   

  
	
   

  	
   

  
	
  Please print name and address of assignee

  
	
  (including zip code number)