Document:

Exhibit 10.1

***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.

May 1, 2006

Metabasis
Therapeutics, Inc.

11119 North Torrey Pines Road

La Jolla, CA 92037

Re:                             Exclusive
License and Research Collaboration Agreement dated as of December 23,
2003, as amended from time to time prior to the date hereof (as so amended, the ”Collaboration Agreement”) between Merck & Co., Inc. (“Merck”) and
Metabasis Therapeutics, Inc. (“Metabasis”)

Ladies and Gentlemen:

This Letter (this “Letter”)
will confirm the understanding of Merck and Metabasis regarding certain matters
relating to the Collaboration Agreement and is intended to be legally binding
on both parties.  Capitalized terms used
but not otherwise defined in this Letter
shall have the meanings provided in the Collaboration Agreement.  Whereas the Research Program Term under the
Collaboration Agreement was scheduled to have terminated on December 23, 2005 and
the Parties have extended the Research Program Term under the terms and
conditions specified in this Letter.

The Parties hereby acknowledge and agree to perform
additional research of Collaboration Compounds and amend the Collaboration
Agreement as follows:

1.                                      Pursuant
to Section 2.7.1 of the Collaboration Agreement, the Research Program Term
has been extended from December 23, 2005 until May 31, 2006 (such extended time
period being referred to herein as the “Extended Research Period”).
Notwithstanding anything to the contrary in Section 2.4 of the Collaboration
Agreement, the Committee is not required to meet during the Extended Research
Period unless mutually agreed by the Parties.

2.                                      Notwithstanding
anything to the contrary in Sections 2.3, 2.7 and/or 5.2 of the Collaboration
Agreement, during the Extended Research Period [***], and [***].

3.                                      The
Research Plan has been modified and is fully set forth in its entirety in its
current form in Exhibit A to this Letter (provided that Schedules I, II, III, IV and V
to the Research Plan shall remain in the forms in effect immediately prior to
the effective date of this Letter).

4.                                      The
term “MB09084” shall mean that certain
Collaboration Compound designated as MB09084, the structure of which is set
forth in the Research Plan[***].

***Confidential Treatment Requested

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5.                                      During
the Extended Research Period, Metabasis agrees to perform the research
activities with respect to MB09084 described in the Research Plan under the
heading Research to Be Performed by Metabasis During the
Extended Research Period (the ”Extended
Research”), which shall include, without limitation, [***].  On or before April 30, 2006, Metabasis shall
deliver to Merck [***] (the ”Deliverable”)
which shall [***].

6.                                      As promptly as commercially reasonable after
Merck’s receipt of the Deliverable [***] from Metabasis, Merck shall initiate
the series of studies of MB09084 described in the Research Plan under the
heading Research to Be Performed by Merck Upon Receipt of
Deliverable (each, a ”Merck Study”
and collectively, the ”Merck Studies”);
provided that Merck is not required to [***].  If the results of a Merck Study meet or
exceed the applicable success criteria for such Merck Study as set forth in the
Research Plan, Merck shall promptly initiate the next Merck Study specified in
the Research Plan, and provided that each preceding Merck Study meets or
exceed the applicable success criteria as set forth in the Research Plan, Merck
shall [***].  Promptly following
completion of each Merck Study that Merck conducts, Merck shall disclose to
Metabasis in writing a report of the results of such Merck Study.

7.                                      Merck
shall pay Metabasis the amount of [***] only in the event that: (a) the
Deliverables satisfy the Deliverable Specifications; and (b) (i) the results of
all of the Merck Studies meet or exceed the applicable success criteria set
forth in the Research Plan, (ii) Merck [***], or (iii) Merck [***]. This Paragraph 7 shall be Merck’s only
obligation to reimburse Metabasis for its FTE work during the Extended Research
Period.

8.                                      For
purposes of Section 11.4 of the Collaboration Agreement, Metabasis’
address for delivery of notices shall be amended as follows:

Metabasis Therapeutics, Inc.

11119 North Torrey Pines Road

La Jolla, CA 92037

Attention: Chief Executive Officer

Facsimile No.: (858) 587-2770

9.                                      For
the purposes of clarity (a) Merck acknowledges that its diligence obligations
under Section 3.3 of the Collaboration Agreement apply to MB09084 as they would
to any other Collaboration Compound, and (b) Merck and Metabasis each
acknowledge and agree that the initiation, performance and/or completion of any
and/or all of the Merck Studies shall [***].

This Letter shall become effective as of December 23, 2005.  Except as amended by this Letter, together
with the Schedules and Exhibits attached hereto, the terms and conditions of
the Collaboration Agreement shall remain in full force and effect in all other
respects, unless further amended by written agreement in accordance with
Section 11.7 of the Collaboration Agreement.  On and after the effectiveness of this
Letter, each reference in the Collaboration Agreement to “this Agreement”, “hereunder”,
“hereof”, “herein” or words of like import referring to the Collaboration
Agreement shall mean and be a reference to the Collaboration Agreement as
amended by this Letter.  The Parties
hereby further agree that the terms and conditions set forth in Article 11 of
the Collaboration Agreement, including without limitation the Assignment and
Change of Control provisions of Section 11.2, the Applicable Law
provisions of Section 11.5

***Confidential Treatment Requested

 2
 

 

and the Dispute Resolution provisions of Section 11.6, shall apply
to this Letter as if fully set forth herein;

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

If the foregoing is acceptable to you, please sign this Letter in the space provided below
and return it to me.

	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
  MERCK
  & CO., INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ M. J.
  Turner, Ph.D.

  	
   

  
	
   

  	
  Name: 

  	
  M. J. Turner,
  Ph.D.

  	
   

  
	
   

  	
  Title: 

  	
  Senior Vice
  President Worldwide

  	
   

  
	
   

  	
  Licensing and
  External Research

  	
   

  
						

 

Agreed to and accepted as of the date first set
forth above:

	
  METABASIS THERAPEUTICS, INC.

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Paul K. Laikind

  	
   

  
	
  Name:

  	
  Paul K. Laikind

  	
   

  
	
  Title:

  	
  President and Chief Executive Officer

  	
   

  
					

 

 3

 

EXHIBIT A

Amended
Research Plan

The Research Plan may be
revised to include a similar series of experiments with other Merck-owned or
controlled compounds, subject to mutual agreement by the Parties and subject to
availability of FTEs within the Research Program as described in the
Collaboration Agreement.

[***] of the Research
Program significant progress has been made in the [***]. In summary, [***].

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

The
achievement of [***]

An
important [***]

Research to Be Performed by Metabasis During the Extended Research
Period

MTI
has [***]

[***]

***Confidential Treatment Requested

 

Research
to Be Performed by Merck Upon Receipt of Deliverable

Activities
[***]

[***]

[***]

***Confidential Treatment RequestedExhibit
10.2

FIRST
AMENDMENT TO LEASE

THIS FIRST AMENDMENT TO LEASE (this “First Amendment”)
is dated as of May 16, 2006, between CARRAMERICA REALTY, L.P., a Delaware
limited partnership (“Landlord”) and METABASIS
THERAPEUTICS, INC., a Delaware corporation (“Tenant”).

A.                                   Landlord
and Tenant are parties to that certain Lease dated as of December 21, 2004 (the
“Lease”), with respect to certain premises (the “Premises”) located at 11119
North Torrey Pines Road, San Diego, California (the “Building”), pursuant to
which Landlord leased to Tenant 81,816 rentable square feet in the Building, as
more particularly identified in the Lease. 
Initially capitalized terms not specifically defined herein shall have
the meanings set forth in the Lease.

B.                                     Landlord
and Tenant desire to amend the Lease in order to confirm the terms of the Lease
relating to the Additional Allowance, as defined in Section 3 of Appendix C to
the Lease.

NOW THEREFORE, in consideration of the foregoing
recitals, the mutual covenants and agreements contained herein, and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Landlord and Tenant agree, and amend the Lease as follows:

1.                                       Effective
Date.  This First Amendment shall be
deemed effective as of the date first written above (the “Effective Date”).

2.                                       Additional
Allowance.  Reference is made to
Section 3 of Appendix C of the Lease, in which the following provision appears
(such provision repeated here for convenience of reference):

“Landlord further agrees to make available up to $245,448 ($3 per
rentable square foot) (“Additional Allowance”) to Tenant to pay for any Change
Orders approved by Tenant in accordance with Section 2, provided that (a) the
actual amount of the Additional Allowance utilized by Tenant shall be amortized
over the Term with interest at 8%, and added to the Monthly Base Rent paid by
Tenant under the Lease; and (b) prior to the Rent Commencement Date, Landlord
and Tenant shall execute an amendment to this Lease to reflect any such
adjustment in the Monthly Base Rent.”

Landlord and Tenant hereby acknowledge that the actual
amount of the Additional Allowance utilized by Tenant was $300,000, and the
parties agree that the Lease is amended accordingly.  Further, the parties agree that the monthly
amortized amount of the Additional Allowance is $3,639, and such amount shall
be payable in the same manner and at the same time as Base Rent.  Landlord further acknowledges Tenant has paid
such amount each month from November 1, 2005 through the Effective Date.

3.                                       Rent
Commencement Date.  Item 10 of the
Schedule to the Lease is hereby amended so that the “Second Rent Commencement
Date” shall mean the first day of the 25th

 

month following the Rent Commencement Date, and the “Third
Rent Commencement Date” shall mean the first day of the 43rd month following the Rent Commencement Date.

4.                                       Counterparts.  This First Amendment may be executed in any
number of counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which counterparts taken together shall
constitute but one and the same instrument. 
Signature pages may be detached from the counterparts and attached to a
single copy of this First Amendment to physically form one document.

5.                                       Brokers.  Each party (each, the “Indemnifying Party”)
represents to the other party that it has dealt with no brokers in connection
with this First Amendment.  The
Indemnifying Party hereby agrees to indemnify, defend and hold harmless the
other party from claims through the Indemnifying Party by any broker for a
commission or other fee arising out of this First Amendment.

6.                                       Reaffirmation
of Obligations.  Landlord and Tenant
hereby acknowledge and reaffirm all of the terms of the Lease, as such Lease
has been amended by this First Amendment, and agrees that any reference made in
any other document to the Lease shall mean the Lease as amended pursuant to
this First Amendment.  Except as
expressly provided herein, the Lease remains unmodified and in full force and
effect.

7.                                       Miscellaneous.   The agreements, conditions and provisions
herein contained shall apply to and bind the heirs, executors, administrators,
successors and assigns of the parties hereto.  
If any provisions of this First Amendment or the Lease shall be
determined to be illegal or unenforceable, such determination shall not affect
any other provision of the Lease or this First Amendment and all such other
provisions shall remain in full force and effect.  If there is any inconsistency between the
provisions of this First Amendment and the other provisions of the Lease, the
provisions of this First Amendment shall control with respect to the subject
matter of this First Amendment.  This
First Amendment shall be construed in accordance with the laws of the state of
California.  This First Amendment
constitutes a part of the Lease and is incorporated by this reference.

SIGNATURES APPEAR ON FOLLOWING PAGE

 2

 

IN WITNESS WHEREOF, Landlord and Tenant have caused
this First Amendment to be duly executed and delivered as of the date first
above written.

“Landlord”

CARRAMERICA
REALTY, L.P.,

a Delaware limited partnership

	
  By:

  	
  CarrAmerica Realty GP Holdings, LLC,

  	
   

  
	
   

  	
  a Delaware limited liability company,

  	
   

  
	
   

  	
  its general partner

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  CarrAmerica Realty Operating Partnership, L.P.,

  	
   

  
	
   

  	
  a Delaware limited partnership,

  	
   

  
	
   

  	
  its sole member

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  CarrAmerica Realty Corporation,

  	
   

  
	
   

  	
  a Maryland corporation,

  	
   

  
	
   

  	
  its general partner

  	
   

  

 

	
  By:

  	
  /s/ W.M. O’Donnell, JR

  	
   

  
	
  Print Name:

  	
  W.M. O’Donnell, JR

  	
   

  
	
  Print Title:

  	
  Managing Director

  	
   

  
					

 

“Tenant”

METABASIS
THERAPEUTICS, INC.,

a California corporation

	
  By:

  	
  /s/ John W. Beck

  	
   

  
	
  Print Name:

  	
  John W. Beck

  	
   

  
	
  Print Title:

  	
  Senior VP Finance and CFO

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