Document:

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                                                                   EXHIBIT 10.34

                                            ***TEXT OMITTED AND FILED SEPARATELY
                                    WITH THE SECURITIES AND EXCHANGE COMMISSION.
                                                CONFIDENTIAL TREATMENT REQUESTED
                                           UNDER 17 C.F.R. SECTIONS 200.80(b)(4)
                                                                  AND 240.24b-2.

                                                                  Execution Copy

                        DEVELOPMENT AND LICENSE AGREEMENT

                                     BETWEEN

                         VALEANT RESEARCH & DEVELOPMENT

                                       AND

                              SCHERING CORPORATION

                          Dated as of December 13, 2006

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                                TABLE OF CONTENTS

<TABLE>
<S>                                                                           <C>
ARTICLE I DEFINITIONS AND INTERPRETATION...................................    1
ARTICLE II LICENSE.........................................................    9
ARTICLE III CONDITIONS PRECEDENT...........................................   12
ARTICLE IV COMPENSATION....................................................   12
ARTICLE V [INTENTIONALLY OMITTED]..........................................   17
ARTICLE VI DEVELOPMENT AND MARKETING OBLIGATIONS...........................   17
ARTICLE VII Ongoing Phase II Study.........................................   18
ARTICLE VIII INTELLECTUAL PROPERTY.........................................   19
ARTICLE IX REPRESENTATIONS, WARRANTIES AND LIMITATION OF LIABILITY.........   22
ARTICLE X INDEMNIFICATION AND LIMITATION OF LIABILITY......................   25
ARTICLE XI CONFIDENTIALITY AND PUBLICATION.................................   27
ARTICLE XII TERM AND TERMINATION...........................................   30
ARTICLE XIII ASSIGNMENT; SUCCESSORS........................................   32
ARTICLE XIV DISPUTE RESOLUTION.............................................   33
ARTICLE XV GENERAL PROVISIONS..............................................   35
EXHIBIT A - Licensed Compound
EXHIBIT B - Sample Invoice
</TABLE>

Execution Copy - Valeant Schering License

                                        i

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                        DEVELOPMENT AND LICENSE AGREEMENT

     This Development and License Agreement (this Agreement) is made as of
December 12, 2006 and is effective as of the Effective Date by and between
Valeant Research & Development, a Delaware corporation (Valeant) and Schering
Corporation (LICENSEE), a New Jersey corporation (each a "Party" and
collectively the "Parties").

                                    RECITALS

     A. Valeant possesses certain intellectual property related to the compound
Pradefovir.

     B. LICENSEE has expertise in researching, developing, manufacturing and
marketing pharmaceutical products for the treatment of human diseases and wishes
to develop, manufacture, and market Products based on the Licensed Compound in
accordance with this Agreement.

     C. Metabasis Therapeutics, Inc. (Metabasis) and Valeant, as the successor
in interest to ICN Pharmaceuticals, Inc., previously entered into a Development
and License Agreement as of October 1, 2001 relating to the Licensed Compound
(the Original Agreement).

     D. Metabasis, Valeant and LICENSEE have executed an Assignment Agreement
effective concurrently with the Effective Date, pursuant to which Metabasis and
Valeant have consented to the assignment by Valeant to LICENSEE of Valeant's
rights and obligations under the Original Agreement.

     E. Effective as of the Effective Date, LICENSEE and Metabasis have amended
and restated the Original Agreement (the Metabasis License Agreement) pursuant
to which Metabasis has, among other things, granted LICENSEE an exclusive
license to Metabasis' rights in the Licensed Compound.

     F. Valeant wishes to grant an exclusive license to LICENSEE and LICENSEE
wishes to acquire an exclusive license to Valeant's intellectual property with
respect to, and to develop, manufacture, and market Products based on the
Licensed Compound, in accordance with this Agreement.

                                    AGREEMENT

     In consideration of the above and the mutual covenants set forth in this
Agreement and other valuable consideration received by the Parties, the Parties
agree as follows.

                                    ARTICLE I

                         DEFINITIONS AND INTERPRETATION

     1.1  DEFINITIONS

     In this Agreement, capitalized terms have the respective meanings set forth
below.

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                                       1.

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     Act means the Federal Food, Drug and Cosmetic Act (21 U.S.C. Section 301,
et seq.), including any amendments or supplements.

     Accounting Period means a calendar quarter commencing on the first day of
an Accounting Period (and for the first Accounting Period, commencing on the
Effective Date), respectively January 1, April 1, July 1, and October 1, each
being the first day, and finishing the last day of an Accounting Period
respectively on March 31, June 30, September 30 and December 31, each being the
last day.

     Accounting Standards means with respect to both Valeant and LICENSEE, GAAP
(United States Generally Accepted Accounting Principles) in each case as
generally and consistently applied throughout the Party's organization.

     Affiliate of a Party means any corporation or other business entity that
controls, is controlled by, or is under common control with a Party, where
control means direct or indirect ownership of more than fifty percent (50%) of
the voting interest in a corporation or entity, or such other relationship as,
in fact, constitutes actual control of management or the ability to cause the
direction of the management or policies of a corporation or other entity. In the
case of entities organized under the laws of certain countries, the maximum
percentage ownership permitted by law for a foreign investor may be less than
fifty percent (50%), and in such case such lower percentage shall be substituted
in the preceding sentence, provided that such foreign investor has the power to
direct the management and policies of such entity.

     Agreement has the meaning set forth in the preamble.

     Approval Authority means a governmental authority or agency whose approval
is required in a country for any Regulatory Approval, including the FDA, EMEA
and any national or regional regulatory authorities.

     Assignment Agreement means the assignment agreement entered into among
Metabasis, LICENSEE and Valeant relating to the assignment by Valeant to
LICENSEE of Valeant's rights and obligations under the Original Agreement.

     Bankruptcy Code means Title 11, U.S. Code.

     Breaching Party has the meaning set forth in Section 12.3.

     Business Day means a day when banks are open for business in Los Angeles,
California, and New York, New York.

     Claims has the meaning set forth in Section 10.1.

     Combined Product means any pharmaceutical product with two or more active
pharmaceutical ingredients (in any formulation and including a combination of
separate dosage forms in a single package), one of which is a Licensed Compound
and one or more of which is not, sold as a single item for one price.

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                                       2.

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     Commercially Reasonable Efforts means with respect to the development,
manufacture, Regulatory Approval, and commercialization of Licensed Compound and
Product, application of efforts and resources at all times that are consistent
with what LICENSEE applies for similar pharmaceutical products of similar market
potential at similar stages of development.

     Competitive Product means any pharmaceutical product in final form which
[...***...] and such product is not a Product being commercialized by LICENSEE
or a Sublicensee of LICENSEE pursuant to this Agreement.

     Compassionate Sales means, with respect to a Product in any country in the
Territory, any sale of the Product by LICENSEE or any of its Affiliates or
Sublicensees that is required by a governmental authority to be made to certain
persons or classes of persons in such country, before or after the Product has
been approved for use in such country by the Approval Authority, but before the
price of the Product (or reimbursement for the Product) has been determined by
the applicable governmental authority in such country.

     Conditions Precedent means:

          (i) the full and complete execution of the Other Agreements by the
parties thereto in accordance with Section 1.3; and

          (ii) any required filing under the HSR Act and expiration or early
termination of the subsequent waiting period as described in Section 15.17.

     Confidential Information means all know-how and other proprietary
information and data of a financial, commercial or technical nature which the
disclosing Party or any of its Affiliates has supplied or otherwise made
available to the other Party, whether made available orally, in writing or in
electronic form, including information comprising or relating to concepts,
discoveries, inventions, data, designs or formulae in relation to this
Agreement.

     Control or Controlled means, with respect to any compound, material,
information or intellectual property right, that the party owns or has a license
and has the ability to grant to the other party a license or a sublicense (as
applicable) as provided for herein without violating (i) the terms of any
agreement with any Third Party or (ii) any law or governmental regulation
applicable to such license or sublicense.

     Cover, Covering or Covered means that, with respect to a Patent Right, a
compound, product, practice or the like which would infringe a Valid Claim of
such Patent Right in the absence of a license.

     Dollars or $ means the lawful currency of the United States.

     Effective Date means the later of (a) the date of signature of the
Agreement by both Parties and (b) the date on which all the Conditions Precedent
have been satisfied.

     EMEA means the European Medicines Agency, or any successor entity thereto.

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                                       3.

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     Encumbrance means any claim, charge, equitable interest, hypothecation,
lien, mortgage, pledge, option, license, assignment, power of sale, retention of
title, right of pre-emption, right of first refusal or security interest of any
kind.

     EU Major Market means any three or more of the following countries:
[...***...]

     EU Regulatory Approval means (a) marketing authorization approval from the
EMEA and pricing approval and reimbursement in the EU Major Market or (b)
marketing authorization approval and pricing approval and reimbursement in the
EU Major Market.

     European Union means the amalgamation of European member states created by
the Treaty on European Union (commonly called the Maastricht Treaty) effective
January 1, 1993 as expanded since such date.

     FDA means the United States Food and Drug Administration, or any successor
entity thereto.

     Field means all human and animal pharmaceutical and diagnostic applications
in all indications, including for prevention or treatment of all diseases.

     First Commercial Sale means, with respect to a Product in any country in
the Territory, the first arms-length sale to a Third Party purchaser in such
country of a Product by LICENSEE or any of its Affiliates or Sublicensees, after
Regulatory Approval in such country, which transfers physical possession and
title to the Product, provided, however, that any Compassionate Sales or sales
for pre-marketing, testing, or sampling will not be a First Commercial Sale.

     Generic Affiliate means any Affiliate of a Party whose principal business
activity is the development, manufacture, commercialization or distribution of
generic pharmaceutical products.

     Generic Equivalent means, as to any specific Product at issue which has
received Regulatory Approval in the country at issue, a pharmaceutical product
with the same active ingredient and administrative route as the Product and
which has (i) in the United States, received Regulatory Approval from the FDA
(x) under an abbreviated NDA in accordance with 21 C.F.R. 314.94(a) which refers
to the specific Product at issue as the Reference Listed Drug (as defined in 21
C.F.R. 314.3(b)), (y) under an NDA described in Section 505(b)(2) of the Act as
to which information necessary for approval is contained in the NDA filed for
the specific Product at issue but as to which the applicant in the NDA for such
potential Generic Equivalent does not have a right of reference or (z) by any
means by which the potential Generic Equivalent can obtain Regulatory Approval
based, in part, on information contained in the NDA filed for the specific
Product at issue but as to which the applicant in the application for Regulatory
Approval for such potential Generic Equivalent does not have a right of
reference; and (ii) in any other country in the Territory, from the Regulatory
Authority having jurisdiction in such country (x) under an application similar
to an abbreviated NDA which references the specific Product at issue in a manner
similar to a Reference Listed Drug, (y) under an application similar to an NDA
described in Section 505(b)(2) of the Act as to which information necessary for
approval is contained in the NDA filed for the specific Product at issue (or the
comparable application filed in the country at issue) but as to which the
applicant in the application for such potential Generic

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                                       4.

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Equivalent does not have a right of reference or (z) by any means by which the
potential Generic Equivalent can obtain Regulatory Approval based, in part, on
information contained in the NDA filed for the specific Product at issue (or the
comparable application filed in the country at issue) but as to which the
applicant in the application for Regulatory Approval for such potential Generic
Equivalent does not have a right of reference.

     Handle has the meaning set forth in Section 8.1.

     IND means an Investigational New Drug application in the US filed with the
FDA or the corresponding application for the investigation of the Product in any
other country or group of countries, as defined in the applicable laws and
regulations and filed with the Approval Authority of a given country or group of
countries.

     Indemnified Party has the meaning set forth in Section 10.3.

     Indemnifying Party has the meaning set forth in Section 10.3.

     Know-How means any and all inventions, developments, results, and other
information, including clinical, technical, scientific and medical information,
know-how, methods, practices and trade secrets, quality control information and
procedures, pharmacological, toxicological and clinical test data and results
and regulatory information.

     Licensed Compound means all forms of MB6866 as identified at Exhibit A (at
times known as remofovir and now known as pradefovir) including any complexes,
chelates, clathrates, acids, bases, esters, salts, isomers, stereoisomers,
enantiomers, pro-drug form, metabolite, hydrate, solvate, polymorph, and
crystalline forms thereof, or any Substitute Compound substituted in accordance
with Article III of the Original Agreement, and its various forms including
salts and prodrugs.

     Licensed Know-How means any Know-How Controlled by Valeant as of the
Effective Date or thereafter during the Term relating to the Licensed Compound
that is reasonably necessary or useful to research, develop, prepare, make, have
made, market, export, have exported, import, use, offer for sale, sell, have
sold, distribute, promote, detail or otherwise commercialize a Licensed Compound
or Product in the Field in the Territory.

     Licensed Patents means any and all Patent Rights licensed to LICENSEE
pursuant to the terms of the Metabasis License Agreement.

     Licensed Technology means the Licensed Know-How.

     LICENSEE has the meaning set forth in the preamble.

     MAA means an application for authorization to market the Product in any
country or group of countries outside the United States, as defined in the
applicable laws and regulations and filed with the Approval Authority of a given
country or group of countries.

     Major Health Care Company shall mean a Third Party pharmaceutical or
biotechnology company (including a "group" within the meaning of Section
13(d)(3) of the Securities

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                                       5.

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Exchange Act of 1934) [...***...]

     Major Market Country means each of the following countries and its
territories and possessions: [...***...]

     Metabasis has the meaning set forth in the preamble.

     Metabasis License Agreement has the meaning set forth in the preamble.

     Milestone means any event relating to the development and commercialization
of Products set forth in Section 4.2.

     Milestone Payment means any of the payments required under Section 4.2.

     NDA means a New Drug Application filed with the FDA for marketing approval
for a drug pursuant to the Act and the Regulations.

     Net Sales means gross amounts invoiced by or on behalf of LICENSEE and any
of its Affiliates or Sublicensees for the Product sold to Third Parties who are
not Affiliates or Sublicensees of LICENSEE, unless such Affiliate or Sublicensee
is the end user of such Product, in which case the amount billed therefor shall
be deemed to be the amount that would be billed to a Third Party end user in
bona fide, arms-length transactions, less the following deductions, as
determined in accordance with LICENSEE's usual and customary accounting methods,
which are in accordance with its Accounting Standards as consistently applied at
LICENSEE, to the extent included in the gross invoiced sales price of any
Product or otherwise directly paid or incurred by LICENSEE, its Affiliates or
Sublicensees with respect to the sale of such Product: normal and customary
trade and quantity discounts actually allowed and properly taken directly with
respect to sales of the Product; amounts repaid or credited by reasons of
defects, rejection, recalls, returns, field destroys, rebates and allowances of
goods specifically identifiable to the Product; chargebacks and other amounts
paid on sale or dispensing of such Product; amounts payable resulting from
governmental, regulatory or agency mandated rebate programs; tariffs, duties,
excise, sales, value-added and other taxes (other than taxes based on income);
retroactive price reductions that are actually allowed or granted; cash
discounts actually granted for timely payment; discounts actually granted
pursuant to indigent patient programs and patient discount programs, including,
without limitation, coupon discounts; a deduction of [...***...] for
distribution and warehouse expenses; amounts repaid or credited for
uncollectible amounts on previously sold products; and any other specifically
identifiable amounts included in gross amounts invoiced for Products to the
extent such amounts are customary exclusions from net sales calculations in the
pharmaceutical industry for reasons substantially equivalent to those listed
above and are reasonable in amount relative to similar deductions taken by
LICENSEE in calculating net sales of its other products. Each of the deductions
set forth above shall be determined on an accrual basis in accordance with GAAP.

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                                       6.

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     In the event the Product is sold as a Combined Product, the Net Sales of
the Product, for the purposes of determining royalty payments, shall be
determined by multiplying the Net Sales of the Combined Product by the fraction,
A/(A+B) where A is the weighted (by sales volume) average sale price in a
particular country of the Product when sold separately in finished form and B is
the weighted (by sales volume) average sale price in that country of the other
product(s) sold separately in finished form. In the event that such average sale
price cannot be determined for both the Product and the other product(s) in
combination, Net Sales for purposes of determining royalty payments shall be
agreed by the Parties based on the relative value contributed by each component,
such agreement not to be unreasonably withheld.

     Original Agreement has the meaning set forth in the Preamble.

     Original Closing Date means October 1, 2001.

     Other Agreements means the Assignment Agreement and the Metabasis License
Agreement.

     Patent Rights means all patents, including all divisionals, continuations,
substitutions, continuations-in-part, re-examinations, reissues, additions,
renewals, extensions, registrations, and supplemental protection certificates
and the like of any of the foregoing as well as applications of any of the
foregoing. Patent Rights shall include regulatory-based extensions to patent
terms, including pediatric exclusivity periods in the United States.

     Phase I Clinical Trial means the initial introduction of an investigational
new drug into humans primarily designed to determine the metabolism and
pharmacologic actions of the drug in humans, the side effects associated with
increasing doses, and, if possible, to gain early evidence on effectiveness, and
also may include studies of drug metabolism, structure-activity relationships,
and mechanism of action in humans, as well as studies in which investigational
drugs are used as research tools to explore biological phenomena or disease
processes.

     Phase II Clinical Trial means a controlled clinical study conducted
primarily to evaluate the effectiveness of a drug for a particular indication or
indications in patients with the disease or condition under study and to
determine the common short-term side effects and risks associated with the drug.

     Phase III Clinical Trial means a pivotal clinical study of a Product in
patients the protocol of which is designed to establish efficacy and safety of
such Product for the purpose of preparing and submitting a filing for NDA
approval in the US or EU Regulatory Approval.

     PMEA means 9-[2-(phosphonomethoxy)ethyl]adenine.

     Prodrug of PMEA means any compound which, as a result of in vivo metabolism
after administration, releases PMEA as the active ingredient.

     Product means any human pharmaceutical product in finished pharmaceutical
form containing, in whole or as a component, the Licensed Compound.

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                                       7.

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     Recipient has the meaning set forth in Section 11.2(a).

     Regulations means the regulations made under the Act, as amended or
supplemented.

     Regulatory Approval means with respect to a particular country all
government approvals required by any government or regulatory authority to
permit the sale of Products in such country, including any necessary pricing or
pricing reimbursement approvals.

     Royalty Obligation Period has the meaning set forth in Section 4.4.

     Royalty Payments means the royalty due by LICENSEE to MV on Net Sales as
set out in Clause 4.3(a)(i).

     Sales & Royalty Report means a written report or reports showing each of:
(a) the Net Sales of each Product in each country in the world during the
reporting period by LICENSEE and each Affiliate and Sublicensee; and (b) the
Royalty Payments, in United States Dollars, which shall have accrued in respect
of such sales and the basis of calculating the Royalty Payments, including for
each country where applicable, any royalty reductions made under Sections 4.3
(a)(ii), (c), (d) and (e).

     Sublicensee means each person to whom LICENSEE has granted a sublicense
under Section 2.2.

     Term means the term of this Agreement, as set forth in Section 12.1.5.

     Territory means all the countries of the world and their territories and
possessions.

     Third Party means any person other than: Valeant, LICENSEE, or any of their
Affiliates.

     United States means the United States of America and its territories and
possessions.

     Valeant Change of Control means any transaction or series of related
transactions in which a Major Health Care Company acquires or becomes the
beneficial owner of (i) more than fifty percent (50%) of the outstanding voting
securities of Valeant or the surviving entity, whether by merger, consolidation,
reorganization, tender offer or similar means, or (ii) all or substantially all
of the assets of Valeant, howsoever caused, including by sale or lease.

     Valeant Insolvency Event means, in relation to Valeant, any one of the
following: (a) that Valeant is the subject of voluntary or involuntary
bankruptcy proceedings instituted on behalf of or against Valeant (except for
involuntary bankruptcy proceedings which are dismissed within sixty (60) days);
(b) an administrative receiver, receiver and manager, interim receiver,
custodian or similar officer is appointed in respect of Valeant; (c) a notice
shall have been issued to convene a meeting for the purpose of passing a
resolution to wind up Valeant, or such a resolution shall have been passed other
than a resolution for the solvent reconstruction or reorganization of Valeant;
(d) a resolution shall have been passed by Valeant or Valeant's directors to
make an application for an administration order or to appoint an administrator;
or (e) that Valeant makes any general assignment, composition or arrangement
with or for the benefit

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                                       8.

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of all or some of Valeant's creditors or suspends making payments to all or
substantially all of Valeant's creditors.

     Valid means with respect to an NDA or an MAA or other filing for Regulatory
Approval with the relevant Approval Authority that the relevant Approval
Authority has determined that such NDA or MAA or other filing for Regulatory
Approval has successfully completed its validation procedure.

     Valid Claim means any claim of an issued and unexpired Patent Right which
has neither been revoked, held unenforceable, unpatentable nor invalid by a
final decision of a court or a governmental agency of competent jurisdiction
(including any competent patent office), and any patent application within the
Licensed Patents which is being Handled by Metabasis which has been pending for
less than (i) [...***...] for patent applications in the United States, or (ii)
[...***...] for non-U.S. patent applications from the date of filing, unless on
the date of expiration of the applicable foregoing (i) or (ii), one or more
rejections of the pending claims of such patent application are under appeal to
a board of appeals, court, or other authority with jurisdiction over appeals of
such rejections.

     1.2 INTERPRETATION

     In this Agreement, unless the context requires otherwise:

     (a) the singular includes the plural and vice versa;

     (b) words denoting persons include corporations, partnerships and other
legal persons;

     (c) a reference to a specified section, or paragraph is a reference to that
specified section or paragraph of this Agreement;

     (d) the article and section headings and the Table of Contents are for
convenience only and do not affect the interpretation of this Agreement;

     (e) "including" means including without limitation; and

     (f) a reference to a Party includes its successors and permitted assigns.

                                   ARTICLE II

                                     LICENSE

     2.1 LICENSE

     Subject to the terms and conditions of this Agreement, Valeant grants to
LICENSEE, and LICENSEE accepts, the exclusive right and exclusive license under
the Licensed Technology within the Field throughout the Territory (with the
right to grant sublicenses in accordance with Section 2.2), to research,
develop, manufacture, have manufactured, market, export, have exported, import,
use, offer for sale, sell, have sold, distribute, promote, detail, and otherwise
commercialize the Licensed Compound or Products. The license is exclusive (even
as to Valeant)

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with respect to the Licensed Technology. This Section 2.1 does not prevent
Valeant from granting licenses to Third Parties with respect to compounds or
products that do not fall within the definition herein of Licensed Compounds or
Products.

     2.2 SUBLICENSE

     (a) Subject to Sections 2.2(b) and 2.2(c), LICENSEE has the sole and
exclusive right to sublicense the rights granted to it by Valeant under the
Licensed Technology within the Field throughout the Territory, to any Affiliate
or Third Party at any time at its sole discretion (as such, a Sublicensee). In
addition, LICENSEE may subcontract to Third Parties the performance of tasks and
obligations with respect to the development and commercialization of the Product
as LICENSEE deems appropriate.

     (b) LICENSEE shall remain responsible for ensuring compliance with the
terms of this Agreement by Sublicensees. LICENSEE shall also pay to Valeant
royalties on Net Sales by Third Party Sublicensees pursuant to Section 4.3 of
this Agreement and LICENSEE will pay such royalties irrespective of whether
LICENSEE receives payments or other consideration due from such Third Party
Sublicensees.

     (c) LICENSEE may sublicense its rights and obligations under this Agreement
only to the extent it has sublicensed the corresponding rights and obligations
under the Metabasis License Agreement.

     (d) Any sublicense granted by LICENSEE other than in conformity with the
provisions of this Section 2.2 shall be null and void.

     2.3 EXCLUSIVITY

     During the Term, Valeant will not license or otherwise grant to any Third
Party any rights under the Licensed Technology to research, develop,
manufacture, have manufactured, market, export, have exported, import, use,
offer to sell, or sell, have sold, distribute, promote, detail or otherwise
commercialize Licensed Compounds or Products in the Territory within the Field.

     2.4 PROVISION OF INFORMATION

     (a) Within [...***...] following the Effective Date, Valeant will disclose
and provide all information in its possession or control relating to the
Licensed Patents and the Licensed Technology to LICENSEE or its designated
Affiliate to the extent necessary or useful to enable LICENSEE to perform its
obligations under this Agreement to develop, manufacture, register, use or
market the Licensed Compound or Product and practice the licenses granted
hereunder efficiently, including, to the extent reasonably available to Valeant,
any clinical data, study reports, any information relating to manufacturing, any
agreements in respect of the Licensed Compound, and any related correspondence
and filings with any Approval Authority (including notes or minutes of any
meetings with any Approval Authority). As part of such disclosure, as soon as
reasonably practicable, Valeant will disclose to LICENSEE all Licensed
Technology, including pre-formulation reports, clinical manufacturing batch
records, development reports, IND documentation, analytical results, analytical
method validation report, raw material and excipient sourcing information,
quality audit findings, stability reports and any

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other relevant technical information. Such information is subject to the
confidentiality provisions of Article XI hereof.

     (b) Valeant shall have a continuing obligation to disclose and provide to
LICENSEE such additional Licensed Technology as is developed or obtained by
Valeant or its Affiliates during the term of this Agreement which Valeant has
the legal right to disclose to LICENSEE. In addition, Valeant shall promptly
disclose and provide to LICENSEE all data arising out of the ongoing Phase II
study related to the Licensed Compound that it completes pursuant to Article 7
hereof. Further, Valeant will, [...***...] provide reasonable assistance to
LICENSEE in connection with understanding and using the Licensed Technology,
including by providing information to assist LICENSEE in developing the Licensed
Compounds or Product and its related activities.

     2.5 LIMITS ON THE USE OF LICENSED COMPOUND BY VALEANT

     Except as provided for in Article VII hereof, from the Effective Date,
Valeant and its Affiliates will not research, develop, manufacture, have
manufactured, market, export, have exported, import, use, offer for sale, or
sell, have sold, distribute, promote, detail or otherwise commercialize the
Licensed Compound. The rights granted under this Agreement are to the exclusion
of Valeant, except as otherwise set forth in this Agreement.

     2.6 NON COMPETITION

     (a) Valeant agrees that for a period beginning on the Effective Date and
ending [...***...] in a country, Valeant and its Affiliates will not, directly
or indirectly, promote the sale of, sell, or otherwise commercialize any
Competitive Product, or license, assign, permit or otherwise assist, Third
Parties to engage in any of such activities in such country, provided, however,
that Valeant and its Affiliates shall be permitted to commercialize a
Competitive Product in any country with respect to which LICENSEE's rights have
terminated pursuant to a termination by Valeant under Section 12.3 or a
termination by LICENSEE under Section 12.5 of this Agreement.

     (b) LICENSEE and its Affiliates (other than any Generic Affiliates) may
not, for a period beginning on the Effective Date and [...***...], directly or
indirectly, promote the sale of, sell, or otherwise commercialize a Competitive
Product in such country. For the avoidance of doubt, if LICENSEE acquires or
becomes the beneficial owner of a Third Party and as a result of such
acquisition acquires full commercialization rights to any Competitive Product,
LICENSEE shall [...***...]

     (c) Notwithstanding anything in the Agreement to the contrary, in the event
that Valeant breaches the non competition provisions contained herein, LICENSEE
shall have the

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right to offset the full amount of damages it has suffered as a result of
Valeant's breach against any payments to Valeant pursuant to Article 4 hereof.

                                   ARTICLE III

                              CONDITIONS PRECEDENT

     3.1 This Agreement will become effective only upon the occurrence of all
the Conditions Precedent.

     3.2 LICENSEE and Valeant acknowledge that the non-occurrence of any of the
conditions that are part of the Conditions Precedent will render this Agreement
null and void.

                                   ARTICLE IV

                                  COMPENSATION

     4.1 LICENSE FEE

     Within five (5) business days following the Effective Date, LICENSEE will
make a one-time, non-refundable, non-creditable payment to Valeant in the amount
of nineteen million two hundred thousand dollars ($19,200,000) (the "Valeant
License Fee"), which, together with the Metabasis Upfront Fee set forth in
Section 4.1 of the Metabasis License Agreement, comprise the Total Upfront Fee
set forth in Section 4.1 of the Metabasis License Agreement.

     4.2 MILESTONE PAYMENTS

     (a) In consideration of the licenses and rights granted by Valeant to
LICENSEE hereunder LICENSEE will pay to Valeant the following non-refundable,
non-creditable Milestone Payments, provided that the amounts below, together
with the milestone payments due Metabasis under Section 4.2 of the Metabasis
License Agreement, constitute the full amount of the milestones due Metabasis
and Valeant pursuant to the terms of both this Agreement and the Metabasis
License Agreement:

          (i) [Intentionally omitted]

          (ii) [...***...]

          (iii) [...***...]

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          (iv) [...***...]

          (v) [...***...]

          (vi) [...***...] and

          (vii) [...***...]

     (b) Each Milestone Payment due under Section 4.2(a) will be due only once
for the first Product in respect of which the indicated Milestone occurs,
regardless of the substitution for the Licensed Compound of a Substitute
Compound pursuant to Article III. LICENSEE will notify Valeant in writing within
[...***...] of the occurrence of each Milestone and will make all Milestone
Payments within [...***...] after receipt of an invoice from Valeant for payment
of the Milestone substantially in the form of Exhibit B. For the avoidance of
doubt the subsequent occurrence of any similar event in respect of any Product,
including in respect of any additional indication(s), will not give rise to any
additional obligation of LICENSEE to make a Milestone Payment with respect to
such subsequent event.

     4.3 ROYALTIES

     (a) In addition to the amounts payable under Section 4.2, LICENSEE will
collectively pay Metabasis and Valeant (collectively referred to as "MV"), in
any calendar year during the Royalty Obligation Period, royalties in the
aggregate amounts as follows on a Product-by-Product and country-by-country
basis and provided that the amounts below constitute the full amount of the
royalties due MV pursuant to the terms of both this Agreement and the Metabasis
License Agreement:

          (i) in any country in which there is a Valid Claim of a Licensed
Patent, a royalty on Net Sales in such country as provided below:

               (A) on Net Sales of Products [...***...]

               (B) on Net Sales of Products [...***...]

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          (ii) on Net Sales of each Product in any country in which there is no
Valid Claim of a Licensed Patent, [...***...]

     (b) Royalties on Net Sales will be calculated every Accounting Period.
Within [...***...] after the last day of each such Accounting Period during the
term of this Agreement following the First Commercial Sale of a Product,
LICENSEE will provide to MV the Sales & Royalty Report. If MV has no comments on
such report, Metabasis and Valeant shall each submit an invoice to LICENSEE
substantially in the form of Exhibit B with respect to the Royalty Payment, each
of which shall be signed by both Metabasis and Valeant and shall indicate the
proportion of the Royalty Payments that shall be made to each of (i) Metabasis
and (ii) Valeant, provided, however, that the sum of the payments to be made to
each of Metabasis and Valeant may not exceed 100% of the actual Royalty Payments
due (the "Total Royalties Due"). In the event that there are invoicing
discrepancies (such that, for example, the total of the Royalty Payments based
on the invoices received from each of Metabasis and Valeant exceeds the Total
Royalties Due), LICENSEE may, in it sole discretion, make payment to each of
Metabasis and Valeant as it determines is appropriate and in keeping with the
terms of this Agreement and shall have no liability to Metabasis or Valeant with
regard to any disagreement with respect to such allocation so long as the total
of such payments is equal to the Total Royalties Due. LICENSEE shall pay the
Royalty Payment within [...***...] after receipt of the invoices. All such
Royalty Payments constitute the full amount of the Royalty Payments due MV
pursuant to the terms of both this Agreement and the Metabasis License
Agreement.

     (c) LICENSEE may obtain a license under any issued patent from one or more
Third Parties which patent, but for such license, would be infringed by the
exercise of the rights granted to LICENSEE hereunder. For any such Third-Party
licenses, LICENSEE may reduce the royalties otherwise due to MV hereunder by an
amount [...***...] paid by LICENSEE to such Third Party or Third Parties to the
extent attributable to such license, including any [...***...]; provided,
however, that the total such reduction for all such Sublicenses shall not cause
the royalties due to MV in any calendar year to fall below [...***...] of the
royalties which would otherwise be due (i.e. without reference to the reduction
due to Sublicense royalties) to MV in such year. Any portion of such reduction
which is unused in any year because of the foregoing proviso [...***...]; and
further provided that no reduction in royalties will result from a license to a
Third Party patent that claims [...***...] that are not necessary in order to
develop, manufacture or commercialize the Licensed Compound, [...***...] and
further provided that no reduction in royalties will result from a license to a
Third Party patent where such license covers a Combined Product and where no
actual or alleged infringement by the claims of such patent would result from
activities relating to a Product whose only active pharmaceutical ingredient is
a Licensed Compound, [...***...] Valeant shall remain responsible for the
payment of royalty obligations, if any, due to Third Parties under any Licensed
Technology which has been licensed to Valeant and is sublicensed to LICENSEE
under this Agreement. All such payments shall be made promptly by Valeant in
accordance with the terms of its license agreement.

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     (d) If a Third Party sells a product which is a Generic Equivalent to a
Product in any country in which LICENSEE, an Affiliate or Sublicensee is selling
such Product, the royalty payable by LICENSEE to MV under this Agreement with
respect to such Product in each such country will be [...***...] for the time
period during which such Generic Equivalent is sold by or on behalf of such
Third Party in such country.

     (e) If any Approval Authority imposes a price limitation for specific
indications or patients, and [...***...] determines that such limitation
[...***...] for a Product in such country, LICENSEE will promptly notify Valeant
of such limitation. Pursuant to the terms of the Metabasis License Agreement (i)
if Metabasis agrees with LICENSEE's determination, [...***...] and (ii) if
Metabasis and LICENSEE fail to promptly agree [...***...] the matter will be
referred to arbitration pursuant to Article XIV of the Metabasis License
Agreement and [...***...] LICENSEE will, to the extent permitted by law, use
reasonable commercial efforts to resist the imposition or continuation of any
such price limitation.

     4.4  DURATION OF ROYALTY OBLIGATIONS

     The period during which LICENSEE is required to pay the royalty under
Section 4.3 with respect to each Product (the Royalty Obligation Period) will
terminate in each country in the Territory upon the occurrence of the later of:

     (a) the expiration or invalidation in such country of the last to expire or
be invalidated Licensed Patent which but for the Metabasis License Agreement
would be infringed by the manufacture, use or sale of such Product in such
country; and

     (b) [...***...] after the First Commercial Sale in such country of such
Product.

     4.5  PAYMENT TERMS

     (a) LICENSEE will make all payments required to be made to Valeant under
this Agreement in Dollars to Valeant by wire transfer of immediately available
funds to a bank account of Valeant designated by Valeant from time to time in
accordance with this Agreement. LICENSEE shall have no obligation to pay any
proportion of a Royalty Payment to Metabasis or Valeant, as the case may be,
until and unless a valid invoice indicating the appropriate proportion of the
Royalty Payment to make to such party has been submitted pursuant to Section
4.3(b).

     (b) In the event that any payment due to Valeant hereunder, including any
upfront payment, royalty payment and milestone payment, is not made when due,
the payment shall accrue interest from the date due at the [...***...] provided,
however, that in no event shall such rate exceed the

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maximum legal annual interest rate. The payment of such interest shall not limit
a party from exercising any other rights it may have as a consequence of the
lateness of any payment.

     4.6  TAXES

     All amounts owed under this Agreement will be reduced and paid after
deduction as required by law for all applicable taxes, fees, and other charges
on such amounts except taxes imposed with respect to or based on a Party's net
income. In particular, any tax required to be withheld by LICENSEE under the
laws of any country for the account of Valeant (withholding taxes) will be
promptly paid by LICENSEE for and on behalf of Valeant to the appropriate
governmental authority, and LICENSEE will furnish Valeant with reasonable proof
of payment of such tax. All such tax actually paid on Valeant's behalf will be
deducted from royalty payments due Valeant or promptly reimbursed to LICENSEE if
no further payments are due Valeant. LICENSEE will reasonably assist Valeant in
minimizing the withholding taxes applicable to any payment made by LICENSEE and
in claiming tax refund at Valeant's request. Each Party agrees to reasonably
assist the other Party in claiming exemption from such withholding of taxes of
any type under double taxation or similar agreement or treaty from time to time
in force and in minimizing the amount required to be so withheld or deducted.

     4.7  ALLOCATION OF ROYALTY PAYMENT

     Provided that LICENSEE shall make the Royalty Payments in the aggregate
amount specified in Section 4.3 and as specified in the Invoices submitted by
Metabasis and Valeant in accordance with Section 4.3(b), LICENSEE shall have no
liability to Metabasis or Valeant with regard to any disagreement with respect
to the allocation of the Royalty Payment between Metabasis and Valeant.

     4.8  RECORDS

     LICENSEE and its Affiliates will keep, and will require its Sublicensees to
keep, full, true and accurate books of account containing all particulars that
may be necessary for the purpose of calculating all royalties and Milestone
Payments payable to Valeant with accounting principles consistently applied from
period to period, in accordance with the applicable Accounting Standards. Such
books of account will be kept, as the case may be, at LICENSEE's or its
Affiliate's or Sublicensee's principal place of business for [...***...]
following the Accounting Period to which they pertain. From time to time in
accordance with this Agreement, an internationally recognized independent public
accounting firm retained by Valeant may perform an audit of such books and
records of LICENSEE, its Affiliates and Sublicensees for the period or periods
reasonably requested by Valeant solely for the purpose of ensuring compliance
with the terms of this Agreement by LICENSEE, its Affiliates and Sublicensees
with respect to all Milestone Payments, royalties and other amounts payable to
Valeant under this Agreement, including the correctness of any report or
payments made under this Agreement. Upon timely request of at least [...***...]
prior written notice from Valeant, such audit will be conducted during regular
business hours in such a manner as to not unnecessarily interfere with
LICENSEE's normal business activities or those of its Affiliates or
Sublicensees, and will be limited to [...***...] prior to delivery of such
written notice. Such audit will not be performed more frequently than once per
calendar year nor more frequently than once

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with respect to any Accounting Period. All information, data documents and
abstracts examined in the audit will be used only for the purpose of verifying
royalty statements or compliance with this Agreement, will be treated by Valeant
as LICENSEE Confidential Information subject to the obligations of Article 11 of
this Agreement and may not be retained more than [...***...] Audit work papers
and results will be shared by Valeant to LICENSEE. If the audit reveals an
underpayment, LICENSEE will promptly make up such underpayment. The failure of
Valeant to request verification of any royalty calculation within the period
during which corresponding records must be maintained will be deemed to be
acceptance of the royalty reporting. The fees charged by such accountant will be
paid by Valeant unless the audit discloses that any Milestone Payment payable to
Valeant was not paid in accordance with this Agreement or the royalties payable
to Valeant by LICENSEE or its Affiliates or Sublicensees for the audited period
are [...***...] of the royalties actually paid to Valeant for such period, in
which case LICENSEE will pay the fees and expenses charged by the accountant.
LICENSEE will require each of its Affiliates and Sublicensees to make reports to
LICENSEE to the same extent as is required of LICENSEE to Valeant pursuant to
this Agreement and to keep and maintain records of Net Sales made pursuant to
such sublicense and to grant access to such records to Valeant's independent
accountant to the same extent required of LICENSEE under this Agreement. Any
disagreement between Valeant and LICENSEE concerning alleged overpayments or
underpayments or other disputes arising from such audits will be resolved by the
dispute resolution procedure set forth in Article XIV.

     4.9  SALES IN FOREIGN CURRENCIES

     Whenever for the purpose of calculating royalties, conversion from any
foreign currency is required, such conversion will be made as follows:

     (a) for LICENSEE and its Affiliates, when calculating the Net Sales, the
amount of such sales in foreign currencies will be converted from any foreign
currency into Dollars using LICENSEE's then-current standard exchange rate
methodology as applied in its external reporting (which is ultimately based on
official rates such as Reuters and European Central Bank) for conversion of
foreign currency sales into Dollars.

                                    ARTICLE V

                             [INTENTIONALLY OMITTED]

                                   ARTICLE VI

                      DEVELOPMENT AND MARKETING OBLIGATIONS

     6.1  COMMERCIAL DEVELOPMENT OBLIGATION

     (a) Subject to Section 6.1(b), LICENSEE will at its sole expense use
Commercially Reasonable Efforts to develop and commercialize a Product in each
Major Market Country in the Field as well as generally elsewhere in the
Territory, except where such development and

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commercialization is not commercially reasonable for such Product.
Notwithstanding the foregoing, such obligation to use Commercially Reasonable
Efforts shall not require LICENSEE to develop and commercialize a Product in
every country or territory. Subject to compliance with the foregoing provisions
of this Section 6.1(a), the manner of the development, the commercialization and
marketing of the Product(s) shall be in LICENSEE's sole discretion.

     (b) Notwithstanding the provisions of (a) above, the manufacture and supply
of the Licensed Compound and/or Product under this Agreement shall be in the
sole discretion of LICENSEE.

     6.2  USE OF NAME

     Valeant may not use the name of LICENSEE or any of its Affiliates or any
variant thereof, and LICENSEE may not use the name of Valeant or any variant
thereof, in each case in connection with the advertising or sale of any Product,
without the prior written consent of the other, except as required by any
Approval Authority, including in relation to any Product labeling or packaging.

                                   ARTICLE VII

                             ONGOING PHASE II STUDY

     7.1 Valeant shall use commercially reasonable efforts to complete the
ongoing Phase II study [...***...] related to the Licensed Compound. The Parties
understand that the specific protocol amendments under which this study will be
conducted are subject to change as a result of the decisions of regulatory
authorities. The Parties agree to enter into a separate Contract Research
Agreement on customary terms as soon as practical following the Effective Date
to govern the performance of such ongoing Phase II study. Until such time as
such agreement is entered into, Valeant agrees that it will take direction from
LICENSEE in completing such study.

     7.2 LICENSEE shall pay all reasonable documented costs and expenses
(including FTEs for Valeant personnel involved in the ongoing study and Third
Party expenses such as for drug substance, dosage manufacture, medical writing,
and under CRO agreements) incurred after the Effective Date with respect to such
ongoing Phase II study, provided, however, that such costs and expenses must not
exceed the budget provided to LICENSEE related to such ongoing Phase II study by
more than [...***...] without LICENSEE's prior written consent. Such payment
shall be made by LICENSEE [...***...] of its receipt of any invoice together
with supporting documentation thereon from Valeant, which invoices may be sent
no more frequently than every [...***...]

     7.3 Valeant shall provide LICENSEE with a final study report for the
ongoing Phase II study in accordance with its usual format and content for like
reports within [...***...] following unblinding of the clinical data.

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                                  ARTICLE VIII

                              INTELLECTUAL PROPERTY

     8.1  PATENT PROSECUTION AND MAINTENANCE

     (a) For patents to inventions owned by Valeant that become a part of the
Licensed Technology, LICENSEE will be responsible, at its own expense for
preparing, filing, prosecuting and maintaining (collectively, Handling) such
patents. Valeant shall provide such assistance as LICENSEE reasonably requires
in relation to the Handling of all such patents. LICENSEE will consult with
Valeant as to the Handling of such patents and will furnish to Valeant copies of
all material documents relevant to any such Handling. LICENSEE will furnish such
documents and consult with Valeant in sufficient time ([...***...] prior to any
first deadline for taking any actions) before any action by Valeant is due to
allow Valeant to provide comments thereon, which comments LICENSEE must
consider. At LICENSEE's expense and reasonable request, Valeant shall provide
reasonable assistance in connection with the Handling of all such patents.
Should LICENSEE decide that it does not desire to Handle a Patent Right within
such patents in a country in the Territory, it will notify Valeant thereof in
writing with sufficient time for Valeant to take any appropriate actions. In
such circumstances, Valeant may, but is not obligated to, Handle the same at
Valeant's own cost, to the extent that Valeant desires to do so, and LICENSEE's
rights under this Agreement to any such patents in such country so Handled by
Valeant shall terminate immediately upon such notification.

     (b) Patents Covering Inventions Owned By LICENSEE. LICENSEE will be
responsible for, at its own expense, Handling all Patent Rights owned by
LICENSEE Covering the Licensed Compound and/or Product (the LICENSEE Patents).

     (c) Cooperation of the Parties. Each Party agrees to cooperate fully in the
Handling of any Patent Rights owned by the other Party under this Agreement.
Such cooperation includes:

          (i) executing all papers and instruments, or requiring its employees
or agents to execute all such papers and instruments to enable the other party
to apply for and to prosecute patent applications in any country; and

          (ii) promptly informing the other Party of any matters coming to such
Party's attention that may materially affect the preparation, filing,
prosecution or maintenance of any such Patent Rights.

     8.2  NOTIFICATION OF INFRINGEMENT

     If a Party learns of infringement or threatened infringement or
misappropriation by a Third Party of any patent or Licensed Technology relating
to Licensed Compounds or Products within the Territory, it will promptly notify
the other Party and will include in such notice a description of the basis for
the alleged infringement or misappropriation.

     8.3  ENFORCEMENT

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     LICENSEE shall have the first right to bring and control any action or
proceeding with respect to infringement of any intellectual property licensed to
it by Valeant pursuant to the terms of this agreement, at its own expense and by
counsel of its own choice, and Valeant shall have the right but not the
obligation, at its own expense, to be represented in any such action by counsel
of its own choice. If LICENSEE fails to bring an action or proceeding within (a)
[...***...] following the notice of alleged infringement or (b) [...***...]
before the time limit, if any, set forth in the appropriate laws and regulations
for the filing of such actions, whichever comes first, Valeant shall have the
right to bring and control any such action at its own expense and by counsel of
its own choice, and LICENSEE shall have the right, at its own expense, to be
represented in any such action by counsel of its own choice. In the event a
Party brings an infringement action, the other Party shall at the first Party's
expense, cooperate fully, including if required to bring such action, the
furnishing of a power of attorney. Any settlement or other action by a Party
which requires payment or other action by the other Party, subjects the other
Party to liability or otherwise materially adversely affects the other Party's
rights and obligations under this Agreement will require the other Party's prior
written consent, which will not be unreasonably withheld or delayed. The Party
which actually brings the action shall be entitled to any damage award and other
recoveries resulting therefrom, provided that to the extent that any such damage
award or other recovery realized by LICENSEE constitutes compensation for lost
sales, [...***...]

     8.4  OWNERSHIP

     (a) Valeant Owned Inventions. As between Valeant and LICENSEE, Valeant
shall own all rights in and to any inventions and Know-How, including any Patent
Rights (collectively, Inventions) made solely by or on behalf of Valeant during
the Term of this Agreement. For the avoidance of doubt, and except as set forth
in the immediately following sentence, such rights shall not form part of the
Licensed Technology and shall not be licensed to LICENSEE without additional
reasonable compensation. To the extent such rights are necessary for LICENSEE to
develop or commercialize Licensed Compound or Products as a solid oral dosage
form, on written notice from LICENSEE, Valeant grants LICENSEE an exclusive
license under such rights solely to research, develop, manufacture, have
manufactured, market, export, have exported, import, use, offer for sale, sell,
have sold, distribute, promote, detail, and otherwise commercialize such
Licensed Compound or Products during the term of this Agreement. Any patent
licensed under this Section shall be considered a Licensed Patent for purposes
of the Royalty Obligation Period.

     (b) LICENSEE Owned Inventions. As between Valeant and LICENSEE, LICENSEE
shall own all rights in and to any and all Inventions made solely by or on
behalf of LICENSEE during the Term of this Agreement.

     (c) Joint Inventions. All Inventions made jointly by employees or
consultants of both Parties during the Term of this Agreement in connection with
the development and commercialization of the Product hereunder ("Joint
Inventions") shall be jointly owned by the Parties in equal shares.

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     8.5  TRADEMARKS

     LICENSEE will have the sole right to obtain and own all trademarks
associated with or used in connection with the manufacture, marketing and sale
of any Products, together with associated goodwill. Such LICENSEE trademarks may
vary by country or within a country. LICENSEE will be responsible for obtaining,
maintaining and protecting all applicable trademarks in connection with the
manufacture, marketing and sale of any Products as it determines reasonably
necessary.

     8.6  DEFENSE OF INFRINGEMENT AND INVALIDITY ACTIONS

     (a) Each Party shall promptly notify the other in writing of any allegation
by a Third Party that the activity of either of the Parties pursuant to this
Agreement infringes or may infringe the intellectual property rights of such
Third Party.

     (b) LICENSEE, at its sole expense, will have the first right and, if
exercised, will have primary responsibility for and control over the defense of
any legal action brought by any Third Party in which LICENSEE, any of its
Affiliates or Sublicensees is or becomes a defendant and which is related to
alleged infringement of a Third Party patent, as a result of the development or
sale of Licensed Compounds or Products, and Valeant shall have the right, at its
own expense (including attorney fees and any other additional costs associated
with its participation), to be represented in any such action by counsel of its
own choice. If LICENSEE fails to proceed in a timely fashion with regard to such
defense, Valeant shall have the right at its sole option to control any such
defense, and LICENSEE shall have the right, at its own expense, to be
represented in any such action by counsel of its own choice.

     (c) LICENSEE and Valeant will each use commercially reasonable efforts to
cooperate with the other in defending actions under this Section 8.6, including
but not limited to giving their consent to being joined in an action to which
they are a necessary party. The defending Party will at all times keep the other
Party reasonably informed as to the status of any action under this Section 8.6.
Any settlement or other action by a Party which requires payment or other action
by the other Party, subjects the other Party to liability or otherwise
materially adversely affects the other Party will require the other Party's
prior written consent, which will not be unreasonably withheld or delayed.

     (d) The allocation and reimbursement of costs in connection with the
defense, settlement, or damage awards under this Section 8.6 supersedes and
replaces any indemnification that may otherwise have been available under
Article X of this Agreement.

     8.7  PATENT EXTENSIONS

     (a) If requested by LICENSEE, Valeant shall cooperate in obtaining patent
term restoration (including as permitted under the Drug Price Competition and
Patent Term Restoration Act), supplemental protection certificates or their
equivalents, and patent term extensions with respect to the Licensed Patents in
any country or region where applicable. Valeant shall provide all reasonable
assistance requested by LICENSEE, including permitting LICENSEE to proceed with
applications for such in the name of Valeant, if deemed appropriate by LICENSEE.

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     (b) LICENSEE shall in its sole discretion determine which, if any, Licensed
Patents, it will apply to extend.

     (c) If requested, Valeant shall provide reasonable assistance to LICENSEE,
including by executing documents and providing any relevant information to
LICENSEE.

                                   ARTICLE IX

             REPRESENTATIONS, WARRANTIES AND LIMITATION OF LIABILITY

     9.1  REPRESENTATIONS OF VALEANT

     Except as otherwise disclosed on Valeant's Schedule of Exceptions attached
to and being a part of this Agreement, Valeant represents and warrants to
LICENSEE as follows.

     (a) Valeant is a corporation duly organized under the laws of the State of
Delaware, and has all requisite legal and corporate power and authority to carry
on its business and to perform its obligations under this Agreement.

     (b) All action on the part of Valeant necessary for the execution and
delivery of this Agreement and the performance of Valeant's obligations under
this Agreement has been taken.

     (c) The person(s) executing this Agreement on behalf of Valeant have all
necessary corporate powers and have been duly authorized by Valeant to execute
and deliver this Agreement on its behalf.

     (d) This Agreement constitutes a valid and binding obligation of Valeant,
enforceable in accordance with its terms except (a) as the same may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar Laws
now or hereafter in effect relating to creditor's rights generally and (b)
subject, as to enforceability, to general principles of equity (regardless of
whether enforcement is sought in a proceeding at law or in equity).

     (e) Except as have been or will be obtained by Valeant and except for
Regulatory Approval, no permit, consent, approval or authorization of, or
declaration to or filing with, any person, party or governmental authority is
required in connection with the delivery, consummation, or performance by
Valeant of this Agreement.

     (f) The execution, delivery and performance of this Agreement by Valeant
will not, with or without notice or the passage of time or both, result in any
violation of, be in conflict with or constitute a default under any material
contract, obligation or commitment to which Valeant is a party or by which it is
bound, or, to the best knowledge of Valeant, any statute, rule or governmental
regulation applicable to Valeant.

     (g) To the knowledge of Valeant, Valeant owns all right, title and interest
in and to the Licensed Technology, in each case free and clear of all
Encumbrances.

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     (h) The Licensed Technology is not subject to any Third Party royalty or
other payment obligation.

     (i) There are no adverse actions, suits, or claims pending or, to the
knowledge of Valeant, threatened against Valeant in any court or by or before
any governmental body or agency with respect to the Licensed Technology and, to
the actual knowledge of Valeant without having made any inquiry, there are no
Third Party Patent Rights which would reasonably be expected to give rise to
such actions, suits or claims.

     (j) Valeant has not initiated or been involved in any proceedings or claims
in which it alleges that any Third Party is or was infringing or
misappropriating the Licensed Technology, nor have any proceedings been
threatened by Valeant, nor to the knowledge of Valeant is there any valid basis
for any such proceeding.

     (k) Valeant has obtained from its employees, and to its knowledge, all
other individuals who participated in any respect in the invention or authorship
of the Licensed Technology, effective assignments of all ownership rights of
such individuals in such Licensed Technology, either pursuant to written
agreement or by operation of law.

     (l) Valeant has not granted a license to any Third Party or Affiliate
Covering any [...***...] that would prevent LICENSEE from exercising its rights
under this Agreement.

     (m) To the actual knowledge of Valeant, Valeant owns the Licensed
Technology as of the Effective Date. There are no adverse actions, suits, or
claims pending or to the knowledge of Valeant, threatened against Valeant in any
court or by or before any governmental body or agency with respect to the
Licensed Technology and, to the actual knowledge of Valeant, there are no Third
Party patents which would reasonably be expected to give rise to such actions,
suits or claims.

     (n) Valeant has not granted a license to any Third Party or Affiliate
covering the Licensed Technology, Licensed Compound or any Product that would
prevent LICENSEE from exercising its rights under this Agreement.

     (o) Valeant does not own or Control any patents that cover the Licensed
Compound or any Product, other than those Patent Rights granted to it pursuant
to the terms of the Original Agreement that will be granted to LICENSEE pursuant
to the terms of the Metabasis License Agreement and Assignment Agreement.

     (p) As of the Effective Date, to the knowledge of Valeant, Valeant has not
failed to provide any information or data related to Licensed Compound and
Product safety, efficacy and Chemistry, Manufacturing and Controls (CMC), that
as of the Effective Date would be reasonably deemed to be material.

     9.2  REPRESENTATIONS OF LICENSEE

     LICENSEE represents and warrants to Valeant as follows.

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     (a) LICENSEE is a corporation duly organized under the laws of the State of
New Jersey. LICENSEE has all requisite legal and corporate power and authority
to carry on its business and perform its obligations under this Agreement.

     (b) All action on the part of LICENSEE necessary for the execution and
delivery of this Agreement and the performance of LICENSEE's obligations under
this Agreement has been taken.

     (c) The person(s) executing this Agreement on behalf of LICENSEE have all
necessary corporate powers and have been duly authorized by LICENSEE to execute
this Agreement on its behalf.

     (d) This Agreement constitutes a valid and binding obligation of LICENSEE,
enforceable in accordance with its terms except (a) as the same may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar Laws
now or hereafter in effect relating to creditor's rights generally and (b)
subject, as to enforceability, to general principles of equity (regardless of
whether enforcement is sought in a proceeding at law or in equity).

     (e) Except as have been or will be obtained by LICENSEE and except for
Regulatory Approval, no permit, consent, approval or authorization of, or
declaration to or filing with, any person, party or governmental authority is
required in connection with the delivery, consummation or performance by
LICENSEE of this Agreement.

     (f) The execution, delivery and performance of this Agreement by LICENSEE
will not, with or without notice or the passage of time or both, result in any
violation of, be in conflict with or constitute a default under any material
contract, obligation or commitment to which LICENSEE is a party or by which it
is bound, or, to the best knowledge of LICENSEE, any statute, rule or
governmental regulation applicable to LICENSEE.

     (g) To the knowledge of LICENSEE, after having made reasonable inquiry,
LICENSEE is not performing research or development activities with respect to
any compound which may become a Competitive Product.

     9.3  COVENANTS OF VALEANT.

     Valeant covenants and agrees that it will not grant any interest in the
Licensed Technology which is inconsistent with the terms and conditions of this
Agreement.

     9.4  DISCLAIMER OF WARRANTIES

     EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, THE LICENSED COMPOUND, THE
LICENSED TECHNOLOGY AND PRODUCTS LICENSED BY VALEANT TO LICENSEE UNDER THIS
AGREEMENT ARE PROVIDED "AS IS," AND VALEANT EXPRESSLY DISCLAIMS ANY AND ALL
OTHER WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION
THE WARRANTIES OF DESIGN, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND
NONINFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS

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OF THIRD PARTIES. Without limiting the generality of the foregoing, Valeant
expressly disclaims any warranty of (a) the success of any study or test
commenced pursuant to this Agreement, or (b) the safety or usefulness for any
purpose of the Licensed Compound, the Licensed Technology or Products.

                                    ARTICLE X

                   INDEMNIFICATION AND LIMITATION OF LIABILITY

     10.1 INDEMNIFICATION BY LICENSEE

     LICENSEE will at all times, during and after the Term, indemnify, defend
and hold harmless Valeant and its Affiliates, and their respective directors,
officers, employees, and agents (collectively, Valeant Indemnitees) against any
and all Third Party claims, demands, actions and liabilities, including
reasonable attorneys' fees and costs (collectively, Third Party Claims), arising
out of or relating to (i) any breach of any representation, warranty or covenant
of LICENSEE under this Agreement, (ii) the actions of LICENSEE or its Affiliates
in connection with the development or commercialization of the Products, or
(iii) the negligence or willful misconduct of LICENSEE or its Affiliates, or
(iv) Valeant's management of the ongoing Phase II study under Article VII of
this Agreement where such claim arises from circumstances arising after the
Effective Date. This indemnity obligation will not apply:

     (a) to any Third Party Claim indemnifiable by Valeant under Section 10.2;
or

     (b) to the extent that any claim, loss, damage, liability or Third Party
Claim or suit is the result of any negligence or willful misconduct of any
Valeant Indemnitee.

     10.2 INDEMNIFICATION BY VALEANT

     Valeant will at all times, during and after the Term, indemnify, defend and
hold harmless LICENSEE, its Affiliates, and its Sublicensees and their
respective directors, officers, employees and agents (collectively, LICENSEE
Indemnitees) against any and all Third Party Claims arising out of or relating
to (i) any breach of any representation, warranty or covenant of Valeant under
this Agreement; (ii) the personal injury or death of any Third Party claimant as
a result of the actions of Valeant or its Affiliates in connection with the
development of the Product; or (iii) the negligence or willful misconduct of
Valeant or its Affiliates. This indemnity obligation will not apply with respect
to:

     (a) any Claim indemnifiable by LICENSEE under Section 10.1; or

     (b) to the extent that any Third Party Claim, loss, damage, liability or
Third Party Claim or suit is the result of any negligence or willful misconduct
of any LICENSEE Indemnitee.

     10.3 OBLIGATIONS OF THE PARTY SEEKING TO BE INDEMNIFIED

     If any party entitled to indemnity under this Article X (in each case, an
Indemnified Party) desires to seek indemnity under this Agreement from Valeant
or LICENSEE, as the case may be

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(in each case, an Indemnifying Party), the Indemnified Party will as soon as
reasonably practicable give notice to the Indemnifying Party, including full
particulars of any Third Party Claim to the extent known to the Indemnified
Party. Failure to give timely notice to the Indemnifying Party will not release
the Indemnifying Party from any liability to the Indemnified Party except to the
extent that the Indemnifying Party is injured by such delay. The Indemnifying
Party will have the right, by prompt notice to the Indemnified Party, to assume
the defense of the matter at the cost of the Indemnifying Party. For the
avoidance of doubt, all indemnification claims in respect of a LICENSEE
Indemnitee or Valeant Indemnitee shall be made solely by LICENSEE or Valeant,
respectively.

     10.4 INDEMNIFICATION PROCEDURE

     (a) Upon assumption of the defense of a Third Party Claim by the
Indemnifying Party: (i) the Indemnifying Party shall have the right to and shall
assume sole control and responsibility for dealing with the Third Party Claim;
(ii) the Indemnifying Party may, at its own cost, appoint as counsel in
connection with conducting the defense and handling of such Third Party Claim
any law firm or counsel reasonably selected by the Indemnifying Party (in the
event that it is ultimately decided by a court of law that the Indemnifying
Party is not obligated to indemnify, defend or hold harmless an Indemnitee from
and against the Third Party Claim, the Indemnified Party shall reimburse the
Indemnifying Party for any and all costs and expenses (including attorneys' fees
and costs of suit) and any Losses incurred by the Indemnifying Party in its
defense of the Third Party Claim); (iii) the Indemnifying Party shall keep the
Indemnified Party informed of the status of such Third Party Claim; and (iv) the
Indemnifying Party shall have the right to settle the Third Party Claim on any
terms the Indemnifying Party chooses; provided, however, that it shall not,
without the prior written consent of the Indemnified Party, agree to a
settlement of any Third Party Claim which could lead to liability or create any
financial or other obligation on the part of the Indemnified Party for which the
Indemnified Party is not entitled to indemnification hereunder or which admits
any wrongdoing or responsibility for the claim on behalf of the Indemnified
Party.

     (b) The Indemnified Party shall cooperate with the Indemnifying Party and
shall be entitled to participate in, but not control, the defense of such Third
Party Claim with its own counsel and at its own expense. In particular, the
Indemnified Party shall furnish such records, information and testimony, provide
witnesses and attend such conferences, discovery proceedings, hearings, trials
and appeals as may be reasonably requested in connection therewith. Such
cooperation shall include access during normal business hours by the
Indemnifying Party to, and reasonable retention by the Indemnified Party of,
records and information that are reasonably relevant to such Third Party Claim,
and making the Indemnified Party, the Indemnitees and its and their employees
and agents available on a mutually convenient basis to provide additional
information and explanation of any records or information provided, and the
Indemnifying Party shall reimburse the Indemnified Party for all its related
reasonable out-of-pocket expenses.

     (c) If the Indemnifying Party does not defend the Third Party Claim, the
Indemnified Party shall retain control of the defense thereof. The Indemnified
Party may appoint as counsel in connection with conducting the defense and
handling of such Third Party Claim any law firm or counsel reasonably selected
by the Indemnified Party. The Indemnified Party may defend such Third Party
Claim in such manner as it may deem appropriate; provided, however, that the

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Indemnified Party shall keep the Indemnifying Party informed of the status of
such Third Party Claim and shall not settle such Third Party Claim without the
prior written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld. If the Indemnified Party defends or handles such Third
Party Claim, the Indemnifying Party shall cooperate with the Indemnified Party
and shall be entitled to participate in the defense and handling of such Third
Party Claim with its own counsel and at its own expense. In addition, the
reasonable and verifiable costs and expenses, including attorneys' fees and
disbursements, incurred by the Indemnified Party shall be reimbursed on a
quarterly basis by the Indemnifying Party, without prejudice to the Indemnifying
Party's right to contest the Indemnified Party's right to indemnification and
subject to refund in the event the Indemnifying Party is ultimately held not to
be obligated to indemnify the Indemnified Party.

     10.5 MITIGATION OF LOSS

     Each Indemnified Party will take and will procure that its Affiliates take
all such reasonable steps and action as are necessary or as the Indemnifying
Party may reasonably require in order to mitigate any losses under this Article.
Nothing in this Agreement shall or shall be deemed to relieve any Party of any
common law or other duty to mitigate any losses incurred by it.

     10.6 SPECIAL, INDIRECT AND OTHER LOSSES

     EXCEPT FOR THIRD PARTY CLAIMS INDEMNIFIED UNDER SECTION 10.1 AND 10.2,
NEITHER PARTY NOR ANY OF ITS AFFILIATES SHALL BE LIABLE IN CONTRACT, TORT,
NEGLIGENCE, BREACH OF STATUTORY DUTY OR OTHERWISE FOR ANY SPECIAL, INDIRECT,
INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES OR FOR ANY ECONOMIC LOSS OR LOSS
OF PROFITS SUFFERED BY THE OTHER PARTY.

     10.7 NO EXCLUSION

     No Party excludes any liability for death or personal injury caused by its
negligence or that of its employees, agents or sub-contractors.

                                   ARTICLE XI

                         CONFIDENTIALITY AND PUBLICATION

     11.1 CONFIDENTIALITY

     Subject to Section 11.2, during the Term and for [...***...] after the
Term, each Party will maintain in confidence all Confidential Information
disclosed by the other Party pursuant to this Agreement, including any
Confidential Information contained in Licensed Technology, and will not use such
Confidential Information for any purpose except as permitted by this Agreement.
Neither Party will disclose such information and materials to anyone other than
those of its Sublicensees, Affiliates, potential Sublicensees, employees,
consultants, agents or subcontractors as are necessary in connection with such
Party's activities pursuant to this

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Agreement and each Party hereby agrees to protect such Confidential Information
with the same degree of care with which such Party maintains its own proprietary
information, but in no event less than reasonable care. Each Party will obtain a
written agreement from its Sublicensees, potential Sublicensees, consultants,
agents and subcontractors (if any), prior to disclosure, to hold in confidence
and not make use of such trade secrets or other proprietary information for any
purpose other than as permitted by this Agreement.

     11.2 DISCLOSURE

     The obligation of confidentiality in this Agreement does not apply to the
extent that:

     (a) either Party or their Affiliates (as such, the Recipient) are required
to disclose Confidential Information by order or regulation of a governmental
agency or a court of competent jurisdiction, or under the securities laws of any
jurisdiction or in connection with any filing of information with the U.S.
Securities and Exchange Commission or any stock exchange upon which its
securities are listed, except that the Recipient will not make any such
disclosure (other than as required under the securities laws of any jurisdiction
or in connection with any filing of information with the U.S. Securities and
Exchange Commission or any stock exchange upon which its securities are listed)
without first notifying the other Party and allowing such other Party a
reasonable opportunity to seek injunctive relief from (or protective order with
respect to) the obligation to make such disclosure;

     (b) the Recipient can demonstrate that (i) the disclosed Confidential
Information was at the time of such disclosure to the Recipient already in (or
later enters) the public domain other than as a result of actions of the
Recipient, Recipient's Affiliates, employees, Sublicensees, agents or
subcontractors in violation of this Agreement; (ii) the disclosed Confidential
Information was rightfully known by the Recipient or its Affiliates (as shown by
its written records) prior to the date of disclosure to the Recipient in
connection with the negotiation, execution or performance of this Agreement or
independently generated by the Recipient or its Affiliates at any time; or (iii)
the disclosed Confidential Information was received by the Recipient or its
Affiliates on an unrestricted basis from a source unrelated to either Party to
this Agreement and not under a duty of confidentiality to the other Party;

     (c) with respect to a disclosure by LICENSEE, disclosure is made to a
government regulatory agency as part of such agency's product license approval
process for the Product, provided, however, that the Recipient will notify the
other Party, limit the disclosure to the extent possible and, where appropriate,
seek confidential treatment to the extent available; or

     (d) disclosure is necessary to obtain or secure patent protection of any
Licensed Technology, provided, however, that the Recipient will notify the other
Party, limit the disclosure to the extent possible and, where appropriate, seek
confidential treatment to the extent available.

     In addition to disclosures described above, each Party may disclose
Confidential Information belonging to the other Party to the extent such
disclosure is necessary in the following instances: (i) filing or prosecuting
Patent Rights as permitted by this Agreement;

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(ii) regulatory filings for Products such Party has a license or right to
develop hereunder; and (iii) prosecuting or defending litigation as permitted by
this Agreement.

     11.3 PUBLICITY

     (a) Metabasis, Valeant and LICENSEE shall agree on the form, content and
timing of any initial press releases concerning this Agreement and the Metabasis
License Agreement which shall be issued promptly after the date of execution of
this Agreement. Following the date of execution of this Agreement, Valeant may
not originate any publication, news release or other public announcement,
written or oral, whether in the public press, stockholders' reports or
otherwise, relating to the terms and conditions of this Agreement or to any
sublicense under this Agreement, or to the performance under this Agreement or
under any sublicense under this Agreement, without the prior written approval of
LICENSEE, unless such releases are limited substantially to LICENSEE's public
announcements. Valeant may use the substance of the initial press releases,
LICENSEE's public announcements, and any other materials approved by LICENSEE,
in Valeant's investor relations and public relations activities. Valeant shall
make no public announcement, either written, oral or in any medium relating to
the safety or efficacy of or clinical data pertaining to Licensed Compound,
except for statement in official correspondence with government patent
authorities in support of Patent Rights, without the prior written consent of
LICENSEE. Nothing in the foregoing, however, shall prohibit Valeant from making
disclosures to the extent deemed necessary under applicable federal or state
securities laws or any rule or regulation of any nationally recognized
securities exchange, provided same is accurate and complete. In such event,
however, Valeant shall where applicable, request confidential treatment to the
extent available, and shall provide copies of the proposed disclosure reasonably
in advance of such filing or other disclosure for LICENSEE's prior review and
comment and shall give due consideration to any comments by LICENSEE relating to
such filing, including without limitation the provisions of this Agreement for
which confidential treatment should be sought.

     (b) To the extent LICENSEE originates any written publication, news release
or other public announcement relating to this Agreement, LICENSEE shall provide
Valeant with a copy of its proposed release or public disclosure for review and
comment, provided that such right of review and comment shall only apply for the
first time that specific information is to be disclosed, and shall not apply to
the subsequent disclosure of substantially similar information that has
previously been disclosed. LICENSEE shall give due consideration to any comments
by Valeant relating to such proposed press release or other public disclosure
provided that Valeant responds with such comments within [...***...] of
receiving such copy.

     (c) Notwithstanding the foregoing, LICENSEE shall be entitled to (i) issue
press releases and other public statements to the extent necessary or useful in
connection with the development or commercialization of the Product, including
in connection with sublicensing and subcontracting transactions; and (ii)
publish or have published information about clinical trials related to the
Product, including the results of such clinical trials on the clinicaltrials.gov
website.

     11.4 SCIENTIFIC PUBLICATIONS

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     LICENSEE shall be free to publish scientific articles about the Licensed
Compound or Products but Valeant may only do so with the prior written consent
of LICENSEE. LICENSEE will first provide Valeant with a copy of the proposed
publication for review and comment. LICENSEE shall give due consideration to any
reasonable comments by Valeant relating to such proposed publication.

                                   ARTICLE XII

                              TERM AND TERMINATION

     12.1 TERM

     (a) The Term of this Agreement (the Term) commences as of the Effective
Date and, unless sooner terminated in accordance with this Agreement, will
expire in each country in the Territory with respect to a Product upon the
occurrence of the later of

          (i) the expiration or invalidation of the last to expire or be
invalidated of the Licensed Patents which but for the Metabasis License
Agreement would be infringed by the sale of such Product using such Licensed
Patents in such country; and

          (ii) [...***...] after the First Commercial Sale in such country of
such Product.

     (b) Upon expiration of the Term in a country with respect to any Product,
LICENSEE will have a perpetual, fully paid-up, fully and freely sub-licensable,
royalty free, exclusive license within the Field in such country to exercise the
rights granted in Article II relating to the Licensed Compound or Product.

     12.2 TERMINATION OF METABASIS LICENSE AGREEMENT

     This Agreement will terminate automatically upon early termination of the
Metabasis License Agreement by Metabasis.

     12.3 TERMINATION FOR CAUSE

     (a) Either Party (as such, the Non-Breaching Party) may terminate this
Agreement upon written notice with immediate effect if:

          (i) the other Party (as such, the Breaching Party) has not complied
with any of its material obligations under this Agreement; and

          (ii) the Non-Breaching Party gives written notice to the Breaching
Party specifying the nature of the default, requiring the Breaching Party to
cure the default, and referring to the Non-Breaching Party's right to terminate
this Agreement pursuant to this Section 12.3; and

          (iii) the default is not cured within [...***...] after the receipt of
such written notice (or, in the event that cure cannot be effected within such
[...***...] period,

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reasonable efforts by the Breaching Party are not commenced and continuing
throughout such period and the default is not finally cured within [...***...]
after the receipt of such notice).

     (b) If LICENSEE or Metabasis terminates the Metabasis License Agreement for
a particular country, this Agreement will automatically terminate for that
country and LICENSEE's rights with respect to Licensed Technology will also
terminate automatically.

     (c) Waiver by either Party of any event or succession of events giving rise
to the right of termination will not deprive the waiving Party of the right to
terminate this Agreement under this Section 12.3 on the basis of any subsequent
event giving rise to such right.

     12.4 RIGHTS AND OBLIGATIONS UPON TERMINATION FOR CAUSE

     (a) Upon any termination by Valeant under Section 12.3 with respect to a
particular country or countries, all licenses and other rights granted to
LICENSEE pursuant to Article II will terminate pursuant to Section 12.5.3 with
respect to such country or countries.

     (b) Upon any termination by LICENSEE under Section 12.3, LICENSEE in its
sole option and discretion may in such termination notice elect to either (A)
terminate this Agreement in its entirety in which case all licenses granted
hereunder shall cease with immediate effect; or (B) continue to exercise the
licenses granted to LICENSEE in which case the following terms shall apply:

          (i) any licenses granted by LICENSEE to Valeant will terminate and
revert to LICENSEE;

          (ii) the licenses granted by Valeant to LICENSEE under Article II will
remain in effect in accordance with their respective terms, including LICENSEE's
obligation to pay Valeant the royalties as set forth in Section 4.3 and the
Milestone Payments as set forth in Section 4.2, provided that such license shall
henceforth be freely sub-licensable and the restrictions on sub-licensing in
Section 2.2 shall no longer apply and provided further that LICENSEE shall have
the right to offset the full amount of damages it has suffered as a result of
Valeant's breach against any royalties or Milestone payments that would
otherwise be payable in accordance with Section 4.3 or 4.2

          (iii) the provisions of Section 2.6 (Non-Competition) shall continue
to apply;

          (iv) LICENSEE shall continue to have the right to Handle and defend
those patents as specified in Article VIII;

          (v) LICENSEE will have no further obligation to disclose any
Confidential Information to Valeant and LICENSEE may request the immediate
return or destruction of any Confidential Information already disclosed to
Valeant; and

          (vi) Except as amended as described above, the rights and obligations
of LICENSEE and Valeant under this Agreement shall continue in full force and
effect.

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     12.5 LICENSEE TERMINATION WITHOUT CAUSE

          (i) LICENSEE may terminate this Agreement in whole or in part without
cause only if it terminates corresponding rights in the Metabasis License
Agreement without cause and upon [...***...]

     12.6 VALEANT CHANGE OF CONTROL AND INSOLVENCY EVENT

     Within [...***...] after any Valeant Change of Control or any Valeant
Insolvency Event, LICENSEE may upon written notice to Valeant (or its successor)
immediately terminate any obligations upon LICENSEE to provide Valeant with
reports (other than Royalty Reports) or updates relating to the development or
commercialization of the Licensed Compound or Product(s). From and after any
such termination, LICENSEE will have no further obligation to disclose any
Confidential Information (other than that which may be contained in the Royalty
Reports) to Valeant or its successor and LICENSEE may request the immediate
return or destruction of any Confidential Information already disclosed to
Valeant. Except as terminated as described above, the rights and obligations of
LICENSEE and the Valeant successor under this Agreement shall continue in full
force and effect.

     12.7 SURVIVING PROVISIONS

     The Parties' rights and obligations under Sections 4.8, 6.2, 8.4, 11.1,
11.2, 11.3 and Articles X, XII, XIII, XIV and XV will survive any termination
and expiration of this Agreement. Termination or expiration of this Agreement
for any reason will be without prejudice to any rights accrued to the benefit of
either Party prior to termination or expiration and will not relieve either
Party from obligations expressly indicated to survive termination or expiration
of this Agreement. Termination or expiration of this Agreement will not
terminate LICENSEE's obligation to pay all royalties accrued prior to the
effective date of termination or expiry. Any other provisions of this Agreement
required to interpret and enforce the Parties' rights and obligations under this
Agreement will also survive to the extent required for the full observation and
performance of this Agreement by the Parties.

                                  ARTICLE XIII

                             ASSIGNMENT; SUCCESSORS

     13.1 ASSIGNMENT

     (a) Subject to Section 13.1(d), neither this Agreement nor any interest
under this Agreement may be assigned by LICENSEE to a Third Party without the
prior written consent of Valeant, which consent cannot be withheld and will be
granted without delay in the event that consent to assignment of a corresponding
interest to such Third Party under the Metabasis License Agreement has been
granted by Metabasis. Neither this Agreement nor any interest under this
Agreement may be assigned by LICENSEE unless an assignment has been made of the
Metabasis License Agreement or of a corresponding interest under the Metabasis
License Agreement.

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     (b) Subject to Section 13.1(d) and to the Valeant Change of Control
provisions described elsewhere in this Agreement, neither this Agreement nor any
interest under this Agreement may be assigned by Valeant without the prior
written consent of LICENSEE, except that Valeant may assign this Agreement to
the acquirer of its, along with its Affiliates', entire business and assets
which acquirer agrees in writing to assume all of the obligations of Valeant
under this Agreement.

     (c) No assignment or sublicense will release either Party from any
liability under this Agreement.

     (d) Each of LICENSEE and Valeant may assign this Agreement or any rights or
performance obligations under this Agreement to any Affiliate or to any
successor by merger, consolidation, sale or acquisition of all or substantially
all of the assets used in the business which is the subject of this Agreement.

     (e) Any assignment not made in accordance with this Section 13.1 will be
void.

     13.2 BINDING UPON SUCCESSORS AND ASSIGNS

     Subject to the limitations on assignment under Section 13.1, this Agreement
binds all successors in interest and assigns of Valeant and LICENSEE. Any
successor or assignee of LICENSEE's or Valeant's interest will expressly assume
in writing the performance of all the terms and conditions of this Agreement and
the Other Agreements to be performed by LICENSEE or Valeant, as the case may be.

     13.3 PARTIES RESPONSIBLE FOR PERFORMANCE OF AFFILIATES

     Each Party shall remain responsible for the performance of this Agreement
by its Affiliates to which this Agreement has been assigned, and shall cause
such Affiliates to comply with the provisions of this Agreement in connection
with such performance. Each Party hereby expressly waives any requirement that
the other Party exhaust any right, power or remedy, or proceed against an
Affiliate, for any obligation or performance hereunder prior to proceeding
directly against such Party.

                                   ARTICLE XIV

                               DISPUTE RESOLUTION

     14.1 ARBITRATION

     Subject to Section 14.2, any dispute, controversy or claim arising under,
out of or in connection with this Agreement, or the breach thereof, including
any subsequent amendments, may be referred to and finally settled by arbitration
in accordance with the commercial rules of the [...***...] in force on the date
of commencement of the arbitration. The arbitration will be final and binding,
and judgment upon the award rendered by the arbitrators may be entered in any
court having jurisdiction thereof. There will be three arbitrators, one
arbitrator selected by Valeant and one arbitrator selected by LICENSEE, which
arbitrators

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will then jointly select the third arbitrator. If either party fails to nominate
an arbitrator within [...***...] from the date of notification made to it of the
other Party's request for arbitration, then the third arbitrator will be
appointed in accordance with [...***...] The place of the arbitration will be
New York, USA and the laws of the State of New York will be applied. Each of the
arbitrators will have at least 10 years experience in commercial transactions.
The arbitration will commence within [...***...] after appointment of the
arbitrators and will continue uninterrupted, unless otherwise suspended by the
arbitrators for good cause, for not longer than [...***...] (including without
limitation any discovery permitted by the arbitrators). The arbitrators will,
within such [...***...] period, render a written decision with findings of fact
and conclusions of law and deliver such decision to the Parties. No arbitrator
(nor the panel of arbitrators) shall have the power to award punitive damages
under this Agreement and such award is expressly prohibited. The decision of the
arbitrators will be final and non-appealable and binding upon the Parties, and
may be entered and enforced in any court having jurisdiction. The Parties shall
share the costs of the arbitration equally.

     14.2 PRE-ARBITRATION DISPUTE RESOLUTION

     No dispute under this Agreement will be referred to arbitration under
Section 14.1 until the following procedures have been satisfied. The [...***...]
of Valeant and, depending on whether the dispute is one which relates to a
pre-approval or post-approval matter, the [...***...] of LICENSEE (or designees
with similar authority to resolve such dispute) will meet to review any dispute
with respect to the interpretation of any provision of this Agreement or with
respect to the performance of either Party under this Agreement. Such review
will be initiated by one Party sending written notice of the dispute to the
other Party, and as soon as practicable, but in any event within [...***...] of
such notice, the designated representatives of the Parties will meet for
attempted resolution by good faith negotiations. If such representatives are
unable to resolve such dispute within [...***...] after a meeting to discuss the
dispute, either Party may at any time provide written notice to the other Party
specifying the terms of the dispute in reasonable detail and notifying the other
Party of its decision to institute arbitration proceedings under Section 14.1.

     14.3 PROVISIONAL REMEDY

     Nothing in this Agreement limits the right of either Party to seek to
obtain in any court of competent jurisdiction any interim relief or provisional
remedy, including injunctive relief. Seeking or obtaining any interim relief or
provisional remedy in a court will not be deemed a breach or waiver of this
agreement to arbitrate.

     14.4 CONFIDENTIALITY

     Subject to Article 11 or as otherwise required by law, the existence of the
dispute, any settlement negotiations, the arbitration hearing, any submissions
(including exhibits, testimony, proposed ruling, and briefs), and the rulings of
the arbitrators will be deemed Confidential Information. The arbitrators will
have the authority to impose sanctions for unauthorized disclosure of
Confidential Information.

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<PAGE>

                                   ARTICLE XV

                               GENERAL PROVISIONS

     15.1 RELATIONSHIP OF THE PARTIES

     For purposes of this Agreement, the relationship of Valeant to LICENSEE is
that of an independent contractor. Valeant and LICENSEE are not joint venturers,
partners, principal and agent, master and servant or employer and employee. With
respect to the subject matter of this Agreement, Valeant and LICENSEE have no
power to bind or obligate each other in any manner, other than as expressly set
forth in this Agreement. A change of this relationship is not excluded by this
Agreement,

     15.2 EXCUSABLE DELAY

     The failure or omission by a Party in the performance of any obligation
under this Agreement will not be deemed a breach of this Agreement or create any
liability if it arises from any cause or causes beyond the control of the Party,
such as strikes, riots, war, acts of God, invasion, fire, explosion, floods,
pandemic, delay of carrier, shortage or failure in the supply of materials,
energy shortage and acts of government or governmental agencies or
instrumentalities. If due to such an event either Party is delayed or hindered
in or prevented from the performance of its duties or doing acts required under
the terms of this Agreement, the performance of such act will be excused for the
period of the delay not to exceed [...***...] A Party subject to such an
excusable delay will use commercially reasonable efforts to resolve any
condition forming the basis of the delay.

     15.3 NOTICES

     All notices, consents, requests, waivers and other communications required
or permitted under this Agreement:

     (a) must be in writing, signed by an authorized officer of the sender, and
sent by personal delivery, fax (with confirmation copy), internationally
recognized courier, or certified or registered mail, postage prepaid (airmail
where applicable);

     (b) will be deemed to be given when actually received; and

     (c) must be sent to the receiving Party at the address or fax number, as
applicable, set forth below, or any replacement address or fax number notified
to the sender by notice actually received by the sender:

     if to Valeant, to:

          Valeant Research & Development
          3300 Hyland Avenue
          Costa Mesa, California 92626
          Attention: General Counsel

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<PAGE>

          Fax No.: 714-641-7206

     with a copy to:

          Skadden, Arps, Slate, Meagher & Flom LLP
          Four Times Square
          New York, New York 10036
          Attention:  Bruce J. Goldner, Esq.
          Fax No.: 917-777-2972

     if to LICENSEE, to:

          Schering Corporation
          2000 Galloping Hill Road
          Kenilworth, NJ 07033-0530
          Attention: Vice President, Global Licensing and Strategic Alliances
          Fax No.: 908-298-7366

     with a copy to:

          Senior Legal Director, Licensing
          Fax No.: 908-298-2739

     15.4 EXPENSES

     Except as expressly provided otherwise in this Agreement, all legal and
other costs and expenses incurred in connection with the negotiation and
entering into of this Agreement and the transactions contemplated by this
Agreement will be paid by the Party incurring such costs or expenses.

     15.5 FURTHER ASSURANCES

     Except as expressly provided elsewhere in this Agreement, each Party will
at its expense promptly execute and deliver any further instruments and
documents and take any further action as the other Party may reasonably request
in order to give effect to the transactions contemplated by this Agreement.

     15.6 AMENDMENT

     This Agreement may not be altered or otherwise amended except by an
instrument in writing signed by each of the Parties.

     15.7 WAIVER

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                                       36.

<PAGE>

     A Party may, by written instrument executed by such Party, extend the time
for the performance of any obligations of the other Party, waive any
inaccuracies and representations by the other Party in this Agreement or in any
document delivered pursuant to this Agreement or waive compliance by the other
Party with any of the covenants, conditions or performance of any of its
obligations under this Agreement. Any such waiver or failure to insist upon
strict compliance with such covenant, condition or obligation will not operate
as a waiver of, or estoppel with respect to, any subsequent or other failure.

     15.8 NO THIRD PARTY BENEFICIARIES

     This Agreement does not confer any rights, remedies, agreements,
undertakings, obligations or liabilities on any person other than Metabasis and
the successors-in-interest and permitted assigns of each Party.

     15.9 ENTIRE AGREEMENT

     This Agreement, together with the Assignment Agreement, constitute the
entire agreement between the Parties with respect to its subject matter and,
upon the Effective Date, supersedes all prior discussions, negotiations,
correspondence, agreements, and understandings, both oral and written, between
the Parties with respect to its subject matter.

     15.10 CONSTRUCTION

     The Parties have participated jointly in the negotiation and drafting of
this Agreement. If a question of intent or interpretation arises, this Agreement
will be construed as if drafted jointly by the Parties and no presumption or
burden of proof will arise favoring or disfavoring a party because of the
authorship of any provision of this Agreement.

     15.11 INCORPORATION OF EXHIBITS

     All Exhibits identified in this Agreement are incorporated by reference and
made a part of this Agreement.

     15.12 COUNTERPARTS

     This Agreement may be executed in any number of counterparts and by
facsimile, each of which will be deemed to be an original and all of which
together will constitute one and the same agreement.

     15.13 SEVERABILITY

     If any provision of this Agreement is finally determined to be invalid,
unlawful or incapable of being enforced in a jurisdiction, (i) it will be deemed
to be severed from this Agreement in such jurisdiction, (ii) every other
provision of this Agreement will remain in full force and effect in such
jurisdiction, (iii) the Parties will negotiate in good faith to modify this
Agreement so as to achieve the original intent of the Parties as closely as
possible in an acceptable manner with respect to such jurisdiction and (iv) such
invalidity, unlawfulness or

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                                       37.

<PAGE>

unenforceability will not affect the interpretation or enforcement of this
Agreement in any other jurisdiction.

     15.14 BANKRUPTCY

     All rights and licenses granted under or pursuant to this Agreement by
Valeant to LICENSEE are, and will otherwise be deemed to be, for purposes of
Section 365(n) of the Bankruptcy Code, licenses of rights to "intellectual
property" as defined under Section 101(35A) of the Bankruptcy Code. LICENSEE, as
a licensee of such rights under this Agreement, will retain and may fully
exercise all of its rights and elections under the Bankruptcy Code.

     15.15 REMEDIES CUMULATIVE

     The rights and remedies of the Parties under this Agreement are in addition
to any other rights available to them at law or in equity. The use of any right
or remedy by a Party does not preclude or waive the right to use any other
remedies. This Section 15.15 does not limit the obligations of the Parties under
Section 14.1 and Section 14.2.

     15.16 GOVERNING LAW

     This Agreement will be governed by and construed in accordance with the
laws of the State of New York, USA, without regard to its principles regarding
conflicts of law.

     15.17 ANTITRUST FILINGS

     Each of LICENSEE and Valeant agrees to prepare and make appropriate filings
under the Hart-Scott Rodino (HSR) Act and other antitrust requirements relating
to this Agreement and the transactions contemplated hereby as soon as reasonably
practicable, but in any event within ten (10) days after the Execution Date (the
"Antitrust Filing Date"). The Parties agree to cooperate in the antitrust
clearance process and to furnish promptly to the FTC, the Antitrust Division of
the Department of Justice and any other applicable agency or authority, any
information reasonably requested by them in connection with such filings. Other
than the provisions of Articles XIV and XV (including this Section 15.17) and
Sections 11.1, 11.2, 11.3 and 12.1(a), the rights and obligations of the Parties
under this Agreement shall not become effective until the waiting period
provided by the HSR Act shall have terminated or expired without any action by
any government agency or challenge to the transaction or any other timeline
required by another relevant agency or authority. Upon the expiry or termination
of the waiting period and subject to fulfillment of the other Conditions
Precedent, all provisions of this Agreement shall become effective automatically
without the need for further action by the Parties. In the event that antitrust
clearance from the FTC, Antitrust Division of the Department of Justice or any
other required agency or authority is not obtained within ninety (90) days after
the Antitrust Filing Date, or such other date as the Parties may mutually agree,
this Agreement may be terminated by either Party on written notice to the other.
In the event a provision of this Agreement needs to be deleted or substantially
revised in order to obtain regulatory clearance of this transaction, the parties
will negotiate in good faith in accordance with Section 15.13.

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                                       38.

<PAGE>

     IN WITNESS WHEREOF, the Parties have executed this Agreement by their duly
authorized representatives as of the date set forth above.

                                        SCHERING CORPORATION

                                        By: /s/ Michael J. DuBois
                                            ------------------------------------
                                        Name: Michael J. DuBois
                                        Title: Vice President

                                        VALEANT RESEARCH & DEVELOPMENT

                                        By: /s/ Wesley P. Wheeler
                                            ------------------------------------
                                        Name: Wesley P. Wheeler
                                        Title: Executive Vice President,
                                        Development

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                                       39.

<PAGE>

                         VALEANT SCHEDULE OF EXCEPTIONS

[...***...]

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                                       40.
<PAGE>

                                    EXHIBIT A

                                LICENSED COMPOUND

[...***...]

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                                       41.

<PAGE>

                              EXHIBIT A, CONTINUED

                                LICENSED COMPOUND

[...***...]

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                                       42.
<PAGE>

                                    EXHIBIT B

                                 Sample Invoice

[...***...]

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                                      43.<PAGE>

                                                                   EXHIBIT 10.35

                                            ***TEXT OMITTED AND FILED SEPARATELY
                                    WITH THE SECURITIES AND EXCHANGE COMMISSION.
                                                CONFIDENTIAL TREATMENT REQUESTED
                                           UNDER 17 C.F.R. SECTIONS 200.80(b)(4)
                                                                  AND 240.24b-2.

                                                                  EXECUTION COPY

                       ASSIGNMENT AND ASSUMPTION AGREEMENT

                                      AMONG

                          METABASIS THERAPEUTICS, INC.

                                       AND

                              SCHERING CORPORATION

                                       AND

                         VALEANT RESEARCH & DEVELOPMENT

                          Dated as of December 13, 2006

<PAGE>

     This Assignment and Assumption Agreement (this Agreement) is made by and
among Metabasis Therapeutics, Inc., a corporation organized and existing under
the laws of Delaware (Metabasis), Schering Corporation, a New Jersey corporation
(Schering), and Valeant Research & Development, a Delaware corporation (Valeant)
and is effective as of the Effective Date.

                                    RECITALS

     A. Valeant has been developing the compound pradefovir for treatment of
human diseases pursuant to the terms of a Development and License Agreement of
October 1, 2001 between Metabasis and Valeant, as successor in interest to ICN
Pharmaceuticals, Inc., (the "ORIGINAL AGREEMENT") and has generated intellectual
property including data and other know-how.

     C. Schering has expertise in researching, developing, manufacturing and
marketing pharmaceutical products for the treatment of human and animal diseases
and wishes to develop, manufacture, and market Products based on pradefovir in
accordance with this Agreement.

     D. Valeant wishes to assign its rights, interests, and obligations under
the Original Agreement to Schering and Schering wishes to acquire Valeant's
rights and interests and assume Valeant's obligations under the Original
Agreement in order to continue development and to manufacture and market
Products.

     E. Metabasis wishes Valeant to assign Valeant's rights, interests, and
obligations under the Original Agreement to Schering and that Schering acquire
and those rights and interests and assume those obligations.

     F. To effect these ends, (1) Schering and Metabasis have entered into an
Amended and Restated Development and License Agreement (the "AMENDED METABASIS
AGREEMENT"), and (2) Schering and Valeant have entered into a Development and
License Agreement (the "VALEANT SCHERING AGREEMENT"). Terms not otherwise
defined herein shall have the meanings set forth in the Amended Metabasis
Agreement and the Valeant Schering Agreement.

                                    AGREEMENT

          1. Valeant hereby irrevocably sells and assigns to Schering without
recourse to Valeant, and Schering hereby irrevocably purchases and assumes from

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                                        2

<PAGE>

Valeant without recourse to Valeant, as of the Effective Date (as defined
below), all of Valeant's rights, title and interests and assumes Valeant's
obligations under the Original Agreement (the "ASSIGNED INTEREST") and Metabasis
hereby irrevocably consents to such assignment and assumption without recourse
to Valeant.

          2. Valeant makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Amended Metabasis Agreement.

          3. Metabasis makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Valeant Schering Agreement.

          4. Metabasis and Valeant agree that they will continue to indemnify
the other in accordance with the terms of the Original Agreement for any claim
arising out of facts and circumstances occurring before the Effective Date
hereof.

          5. Schering agrees that it will be bound by the provisions of the
Amended Metabasis Agreement and the Valeant Schering Agreement and will perform
in accordance with the terms and obligations of those agreements.

          6. Metabasis agrees that it will be bound by the provisions of the
Amended Metabasis Agreement and will perform in accordance with the terms and
obligations of that agreement.

          7. Valeant agrees that it will be bound by the provisions of the
Valeant Schering Agreement and will perform in accordance with the terms and
obligations of that agreement.

          8. Schering and Metabasis agree that they may not amend the Amended
Metabasis Agreement in any way that will materially affect Valeant's rights
under the Valeant Schering Agreement, such rights including but not limited to
Valeant's rights to receive milestone payments and royalty payments in the
amounts and for the periods set forth in the Valeant Schering Agreement.

          9. Schering and Valeant agree that they may not amend the Valeant
Schering Agreement in any way that will materially affect Metabasis's rights
under the Amended Metabasis Agreement, such rights including but not limited to
Metabasis's rights to receive milestone payments and royalty payments in the
amounts and for the periods set forth in the Amended Metabasis Agreement.

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                                        3

<PAGE>

          10. Valeant and Metabasis agree that the aggregate royalties owed by
Schering under the Amended Metabasis Agreement and the Valeant Schering
Agreement will be divided between Metabasis and Valeant and invoiced to Schering
according to the Royalty Calculation Exhibit attached hereto.

          11. Metabasis and Valeant agree that in the event the Amended
Metabasis Agreement terminates in whole or in part of its Territory and the
rights to develop and commercialize compounds and products in the whole or in
such terminated parts of the Territory revert to Metabasis, then subject to
Section 12 hereof, Metabasis will automatically assume Schering's rights and
obligations under the Valeant Schering Agreement in whole or in respect of such
terminated part of the Territory, as applicable.

          12. Valeant and Metabasis agree that in the event the Amended
Metabasis Agreement terminates in whole or in part of the Territory and the
rights to develop and commercialize Licensed Compounds and Products in the whole
or in such terminated parts of the Territory revert to Metabasis, then:

               (a) if Metabasis advances the development or commercializes a
Product in such terminated whole or part of the Territory substantially on its
own, then (i) Metabasis will pay to Valeant the full royalties that would have
been payable by Schering under the Valeant Schering Agreement for the terminated
whole or part of the Territory, which royalties shall be reduced by [...***...]
of any amount of royalties owed by Metabasis to Schering under the Amended
Metabasis Agreement, provided that any such reduction shall not reduce the
royalties owed to Valeant by Metabasis to [...***...] of the royalties owed in
the absence of such reduction, and further provided that in the event that
Metabasis is not able to reduce Valeant's royalties by the [...***...] of any
such royalties owed to Schering, the amount of the royalty reduction not taken
may be used by Metabasis in another market or at a later date to offset other
royalties or milestone payments due Valeant; and (ii) Metabasis and Valeant
agree that the remaining schedule of milestone payments due to Valeant upon
achievement by Metabasis of events related to the terminated whole or part of
the Territory under the assumed Valeant Schering Agreement shall be modified as
necessary to [...***...], provided that any postponed milestone or part thereof
would begin accruing interest at the [...***...] rate on the date payment was
due under the assumed Valeant Schering Agreement, plus [...***...], and further
provided that in the event of a postponement by such modification of part or all
of one or more milestone payments, Metabasis shall, at a minimum, pay to Valeant
on a quarterly basis [...***...] of (i) the Net Sales of Products less (ii) the
[...***...] paid by Metabasis to Schering, Valeant, or any third party on sales
of such Products ("NET NET SALES") under the assumed Valeant Schering Agreement
toward payment of such postponed milestone payment(s) and the interest due
thereon, unless the remaining amount due from all postponed payments and
interest is [...***...] of such Net Net Sales, in which case Metabasis shall pay
all remaining postponed payments and interest at the end of the quarter in which
the remaining amount is [...***...] of Net Net Sales; or

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<PAGE>

               (b) if, following Metabasis' assumption of Schering's rights and
obligations under the Valeant Schering Agreement pursuant to Section 11 hereof,
Metabasis sublicenses the development and commercialization of Licensed Compound
or Product under such Agreement, through a sublicense to a third party which
third party becomes responsible for all or substantially all of the activities
required to develop or commercialize the Licensed Compound or Product, then (i)
Metabasis will pay to Valeant the full royalties that would otherwise have been
payable by Schering under the Valeant Schering Agreement for the terminated
whole or part of the Territory, which royalties shall be reduced by [...***...]
of any amount of royalties owed by Metabasis to Schering, provided that any such
reduction shall not reduce the royalties owed to Valeant by Metabasis to
[...***...] of the royalties otherwise owed, and further provided that in the
event that Metabasis is not able to reduce Valeant's royalties by the
[...***...] of any royalties owed by Metabasis to Schering, the amount of the
royalty reduction not taken may be used by Metabasis in another market or at a
later date to offset other royalties or milestone payments due Valeant; and (ii)
Metabasis will make the milestone payments due to Valeant related to events in
the terminated whole or part of the Territory under the assumed Valeant Schering
Agreement in accordance with the terms of that agreement applicable to the
terminated whole or part of the Territory.

          13. Schering and Metabasis agree that Schering may disclose
confidential information to Valeant which information was received pursuant to
the terms of the Amended Metabasis Agreement and for which the disclosure of
such information is necessary for Schering to fulfill its obligations under the
Valeant Schering Agreement, and that such disclosure to Valeant will not
constitute a breach of any confidentiality obligation under the Amended
Metabasis Agreement.

          14. Schering and Valeant agree that Schering may disclose confidential
information to Metabasis which information was received pursuant to the terms of
the Valeant Schering Agreement and for which the disclosure of such information
is necessary for Schering to fulfill its obligations under the Amended Metabasis
Agreement, and that such disclosure to Metabasis will not constitute a breach of
any confidentiality obligation under the Valeant Schering Agreement.

          15. The effective date of this Agreement shall be the date of the last
to occur of the execution by all parties thereto of (i) the Amended Metabasis
Agreement; and (ii) the Valeant Schering Agreement (the "EFFECTIVE DATE");
provided that this Agreement will become effective only upon the expiration or
termination of the applicable waiting period under the Hart-Scott Rodino (HSR)
Act and other antitrust requirements relating to this Agreement and the
agreements identified in the foregoing (i) and (ii) (the "OTHER AGREEMENTS") and
the transactions contemplated thereby. Valeant and Metabasis and Schering
acknowledge that the complete execution of the Other Agreements is a condition
precedent to the effectiveness of this Agreement and that failure of either or
both of those separate agreements to be fully executed will render this
Agreement null and void.

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<PAGE>

          16. From and after the Effective Date, (a) Schering shall be a party
to the Amended Metabasis Agreement and, to the extent provided in this
Agreement, have the rights and obligations thereunder and shall be bound by the
provisions thereof and (b) Valeant shall, to the extent provided in this
Agreement, relinquish its rights and be released from its obligations under the
Original Agreement.

          17. Dispute Resolution.

               (a) Subject to Section 17(b) hereof, any dispute, controversy or
claim arising under, out of or in connection with this Agreement, or the breach
thereof, including any subsequent amendments, may be referred to and finally
settled by arbitration in accordance with the commercial rules of [...***...] in
force on the date of commencement of the arbitration. The arbitration will be
final binding and judgment upon the award rendered by the arbitrators may be
entered in any court having jurisdiction thereof. There will be three
arbitrators, one arbitrator selected by Metabasis and one arbitrator selected by
Schering, which arbitrators will then jointly select the third arbitrator,
provided, however, that to the extent Schering is not a party to such dispute,
the second arbitrator shall be selected by Valeant and Schering shall not be
required to become a party to any arbitration proceedings regarding such
dispute. If the relevant Party fails to nominate an arbitrator within thirty
(30) days from the date of notification made to it of the other Party's request
for arbitration, then the third arbitrator will be appointed in accordance with
[...***...] The place of the arbitration will be New York, USA and the laws of
the State of New York will be applied. Each of the arbitrators will have at
least 10 years experience in commercial transactions. The arbitration will
commence within [...***...] days after appointment of the arbitrators and will
continue uninterrupted, unless otherwise suspended by the arbitrators for good
cause, for not longer than [...***...] (including without limitation any
discovery permitted by the arbitrators). The arbitrators will, within such
[...***...] period, render a written decision with findings of fact and
conclusions of law and deliver such decision to the Parties. No arbitrator (nor
the panel of arbitrators) shall have the power to award punitive damages under
this Agreement and such award is expressly prohibited. The decision of the
arbitrators will be final and non-appealable and binding upon the Parties, and
may be entered and enforced in any court having jurisdiction. The Parties among
whom the dispute exists shall share the costs of the arbitration equally,
provided, however, that in the event of a dispute solely between any two
Parties, the other Party that is not involved in the dispute shall not be
required to share in the costs of such arbitration.

               (b) No dispute under this Agreement will be referred to
arbitration under Section 17(a) hereof until the following procedures have been
satisfied. The [...***...] of Metabasis, the [...***...] of Valeant, and
depending on whether the dispute is one which relates to a pre-approval or
post-approval matter, the [...***...] of Schering (or designees with similar
authority to resolve such dispute) will meet to review any dispute with respect
to the interpretation of any provision of this Agreement or with respect to the
performance of any Party under this Agreement. Such review will be initiated by
one Party sending written notice of the dispute to the other Parties, and as
soon as practicable, but in any event within [...***...]

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<PAGE>

[...***...] of such notice, the designated representatives of the Parties will
meet for attempted resolution by good faith negotiations. If such
representatives are unable to resolve such dispute within [...***...] after a
meeting to discuss the dispute, any Party may at any time provide written notice
to the other Parties specifying the terms of the dispute in reasonable detail
and notifying the other Party of its decision to institute arbitration
proceedings under Section 17(a).

               (c) Nothing in this Agreement limits the right of either Party to
seek to obtain in any court of competent jurisdiction any interim relief or
provisional remedy, including injunctive relief. Seeking or obtaining any
interim relief or provisional remedy in a court will not be deemed a breach or
waiver of this agreement to arbitrate.

          18. This Agreement will be governed by and construed in accordance
with the laws of the State of New York, USA, without regard to its principles
regarding conflicts of law.

          19. All notices, consents, requests, waivers and other communications
required or permitted under this Agreement:

     (a) must be in writing, signed by an authorized officer of the sender, and
sent by personal delivery, fax (with confirmation copy), internationally
recognized courier, or certified or registered mail, postage prepaid (airmail
where applicable);

     (b) will be deemed to be given when actually received; and

     (c) must be sent to the receiving Party at the address or fax number, as
applicable, set forth below, or any replacement address or fax number notified
to the sender by notice actually received by the sender:

          if to Metabasis, to:

          Metabasis Therapeutics, Inc.
          9390 Towne Centre Drive
          San Diego, California 92122
          Attention: Chief Executive Officer

          with a copy to:

          Michael J. O'Donnell
          Wilson Sonsini Goodrich & Rosati P.C.
          650 Page Mill Road
          Palo Alto, CA 94304-1050

          if to Schering, to:

          Schering Corporation
          2000 Galloping Hill Road

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                                        7

<PAGE>

          Kenilworth, NJ 07033-0530
          Attention: Vice President, Global Licensing and Strategic Alliances
          Fax No.: 908-298-7366

          with a copy to:

          Senior Legal Director, Licensing
          Fax No.: 908-298-2739

          with a copy to:

          if to Valeant, to:

          Valeant Research & Development
          3300 Hyland Avenue
          Costa Mesa, California 92626
          Attention: General Counsel
          Fax No.: 714-641-7206

          with a copy to:

          Skadden, Arps, Slate, Meagher & Flom LLP
          Four Times Square
          New York, New York  10036
          Attention: Bruce J. Goldner, Esq.
          Fax No.: 917-777-2972

          20. Except as expressly provided otherwise in this Agreement, all
legal and other costs and expenses incurred in connection with the negotiation
and entering into of this Agreement and the transactions contemplated by this
Agreement will be paid by the Party incurring such costs or expenses.

          21. Except as expressly provided elsewhere in this Agreement, each
Party will at its expense promptly execute and deliver any further instruments
and documents and take any further action as the other Party may reasonably
request in order to give effect to the transactions contemplated by this
Agreement.

          22. This Agreement may not be altered or otherwise amended except by
an instrument in writing signed by each of the Parties.

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                                        8

<PAGE>

          23. A Party may, by written instrument executed by such Party, extend
the time for the performance of any obligations of the other Party, waive any
inaccuracies and representations by the other Party in this Agreement or in any
document delivered pursuant to this Agreement or waive compliance by the other
Party with any of the covenants, conditions or performance of any of its
obligations under this Agreement. Any such waiver or failure to insist upon
strict compliance with such covenant, condition or obligation will not operate
as a waiver of, or estoppel with respect to, any subsequent or other failure.

          24. This Agreement does not confer any rights, remedies, agreements,
undertakings, obligations or liabilities on any person other than the
successors-in-interest and permitted assigns of each Party.

          25. This Agreement, along with the Other Agreements, constitutes the
entire agreement between the Parties with respect to its subject matter and,
upon the Effective Date, supersedes all prior discussions, negotiations,
correspondence, agreements, and understandings, both oral and written, between
the Parties with respect to its subject matter, including without limitation the
Original Agreement.

          26. The Parties have participated jointly in the negotiation and
drafting of this Agreement. If a question of intent or interpretation arises,
this Agreement will be construed as if drafted jointly by the Parties and no
presumption or burden of proof will arise favoring or disfavoring a party
because of the authorship of any provision of this Agreement.

          27. All Exhibits identified in this Agreement are incorporated by
reference and made a part of this Agreement.

          28. This Agreement may be executed in any number of counterparts and
by facsimile, each of which will be deemed to be an original and all of which
together will constitute one and the same agreement.

          29. If any provision of this Agreement is finally determined to be
invalid, unlawful or incapable of being enforced in a jurisdiction, (i) it will
be deemed to be severed from this Agreement in such jurisdiction, (ii) every
other provision of this Agreement will remain in full force and effect in such
jurisdiction, (iii) the Parties will negotiate in good faith to modify this
Agreement so as to achieve the original intent of the Parties as closely as
possible in an acceptable manner with respect to such jurisdiction and (iv) such
invalidity, unlawfulness or unenforceability will not affect the interpretation
or enforcement of this Agreement in any other jurisdiction.

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          30. All rights and licenses granted under or pursuant to this
Agreement are, and will otherwise be deemed to be, for purposes of Section
365(n) of the Bankruptcy Code, licenses of rights to "intellectual property" as
defined under Section 101(35A) of the Bankruptcy Code. Any licensee of such
rights under this Agreement, will retain and may fully exercise all of its
rights and elections under the Bankruptcy Code.

          31. The rights and remedies of the Parties under this Agreement are in
addition to any other rights available to them at law or in equity. The use of
any right or remedy by a Party does not preclude or waive the right to use any
other remedies. This Section 31 does not limit the obligations of the Parties
under Section 17(a) and Section 17(b).

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          IN WITNESS WHEREOF, the Parties have executed this Agreement by their
duly authorized representatives as of the date set forth above.

                                        METABASIS THERAPEUTICS, INC.

                                        By: /s/ [Illegible]
                                            ------------------------------------
                                        Name: Paul [Illegible]
                                        Title: President & CEO

                                        SCHERING CORPORATION

                                        By: /s/ Michael J. DuBois
                                            ------------------------------------
                                        Name: Michael J. DuBois
                                        Title: Vice President

                                        VALEANT RESEARCH & DEVELOPMENT

                                        By /s/ Wesley P. Wheeler
                                           -------------------------------------
                                        Name: Wesley P. Wheeler
                                        Title: Executive Vice President,
                                               Development

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