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Exhibit 10.17    
    

***Text
Omitted and Filed Separately

with the Securities and Exchange Commission.

Confidential Treatment Requested

Under 17 C.F.R. Sections 200.80(b)(4),

200.83 and 230.406. 

AMENDED AND RESTATED

COLLABORATIVE RESEARCH AND DEVELOPMENT AND LICENSE

AGREEMENT  

        THIS AMENDED AND RESTATED COLLABORATIVE RESEARCH AND DEVELOPMENT AND LICENSE AGREEMENT (this  "Agreement"), dated as of June 30, 1999, is between METABASIS THERAPEUTICS, INC., a Delaware
corporation having its principal place of business at 9390 Towne Centre Drive, San Diego, California 92121 ("MTI"), and SANKYO
CO., LTD., a Japanese corporation having its principal place of business at 5-1 Nihonbashi-Honcho, 3-chome, Chuo-ku, Tokyo 103, Japan
("Sankyo"). 

W I T N E S S E T H:  

        WHEREAS, SICOR Inc., a Delaware corporation formerly known as Gensia
Sicor Inc.("SICOR"), and Sankyo entered into a Collaborative Research and Development Agreement, dated as of April 18, 1997 and amended by
an Amendment dated as of September 22, 1998 (the "Original R&D Agreement"), under which Sankyo agreed to sponsor research to be conducted by
SICOR to develop products for treatment of Diabetes (as such term is hereinafter defined) and to commercialize with SICOR products resulting from such research; and 

        WHEREAS, pursuant to the Asset and Liability Transfer Agreement, dated as of December 17, 1997 (the  "Transfer Agreement"), SICOR sold, assigned, transferred
and delivered to MTI, and MTI acquired from SICOR, all of SICOR's right, title and interest in,
to and under, amongst other things, the Original R&D Agreement; and 

        WHEREAS, MTI and Sankyo each desire to amend and restate the Original R&D Agreement and to modify certain of the rights and obligations of
the parties thereunder. 

        NOW, THEREFORE, in consideration of the premises and of the covenants herein contained, the parties hereto mutually agree as follows: 

ARTICLE 1  

 DEFINITIONS  

        For purposes of this Agreement, the terms defined in this Section shall have the meanings specified below: 

        1.1   "Affiliate" shall mean, in respect of either party hereto, any corporation or other entity which
controls, is controlled by, or is under common control with such party. A corporation or other entity shall be regarded as in control of another corporation or entity if it owns or directly or
indirectly controls more than fifty percent (50%) of the voting stock or other ownership interest of the other corporation or entity, or if it possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the corporation or other entity or the power to elect or appoint fifty percent (50%) or more of the members of the governing body of the
corporation or other entity. 

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        1.2   "Candidate Compound" shall mean a Recommended Compound which has been selected by the appropriate
research and development committee of Sankyo under Section 4.3 hereof for further development and evaluation under this Agreement. 

        1.3   "Compound" shall mean a Research Compound, Recommended Compound, Candidate Compound or Licensed
Compound. 

        1.4   "Diabetes" shall mean insulin-dependent diabetes mellitus (Type I Diabetes),
noninsulin-dependent diabetes mellitus (Type II Diabetes) and other conditions of high blood glucose. 

        1.5   "Effective Date" shall mean April 21, 1997. 

        1.6   "Field" shall mean the treatment of Diabetes by means of lowering blood glucose levels by direct
suppression of hepatic gluconeogenesis by inhibiting fructose-1, 6-bisphosphatase. 

        1.7   "First Commercial Sale" of any Product shall mean the first sale for use or consumption by the
general public of such Product in a country after required marketing and pricing approval has been granted by the governing health authority of such country. 

        1.8   "IND" shall mean an Investigational New Drug Application filed with the Food and Drug
Administration, or any successor agency, in the United States pursuant to 21 C.F.R. Part 312, or any successor provision thereto (or the equivalent application with the governing health
authority of any other Primary Country, as defined in Section 4.2 hereof). 

        1.9   "Licensed Compound" shall mean a Candidate Compound which Sankyo has deemed a Licensed Compound
pursuant to Section 4.4 below. 

        1.10 "NDA" shall mean an application to market a new drug filed with the Food and Drug
Administration, or any successor agency, in the United States pursuant to Section 505 of the Federal Food, Drug and Cosmetic Act and 21 C.F.R. Part 314, or any successor provisions
thereto (or the equivalent application with the governing health authority of any other Primary Country). 

        1.11 "Net Sales" with respect to any Product shall mean the invoiced sales price of such Product
billed to independent customers (who are not Affiliates), less, to the extent such amounts are included in the invoiced sales price, actual credited allowances to such independent customers for such
Product which was spoiled, damaged, out-dated or returned, and less actual (a) freight and insurance costs incurred in transporting such Product to such customers;
(b) quantity and other trade discounts (including prime vendor rebates) actually allowed and taken; (c) customs duties and surcharges and other governmental charges incurred in
connection with the exportation or importation of such Product in final form; and (d) liabilities incurred resulting from any government (or agency thereof) mandated rebate program, whether
Federal, State, Municipal or Local; provided, however, that, with respect to any Product in any country, the sum of the amounts in clauses (a), (b), (c)
and (d) with respect to such Product in such country, when expressed as a percentage of the invoiced sales price of such Product in such country, shall not exceed  [***]. 

        1.12 "Patent Rights" shall mean all patent applications heretofore or hereafter filed or having legal
force in any country within the Territory owned by or licensed to MTI or Sankyo or to which MTI or Sankyo otherwise acquires rights, which claim a Product or Licensed Compound, or the process of
manufacture or use of a Product or Licensed Compound for use in the Field, together with any and all patents that have issued or in the future issue therefrom, including utility model and design
patents, extensions or restorations, including Supplementary Protection Certificates or the equivalent thereof, certificates of invention and any and all divisions, continuations,
continuations-in-part, reissues or additions to any of the aforesaid patents and patent applications; all to the extent and only to the extent that MTI or Sankyo now has or
hereafter will have the right to grant licenses, immunities or other rights thereunder. Patent Rights shall also include technology respecting the subject matter of the 

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patents
and patent applications embraced by Patent Rights necessary to carry out the purposes of this Agreement in the Field. 

        1.13 "Products" shall mean pharmaceutical compositions incorporating a Licensed Compound. All
formulations of the same drug substance for the same route of administration, such as oral, parenteral or intravenous, shall constitute a single Product. 

        1.14 "Recommended Compound" shall mean a Research Compound which has utility in the Field and which
has been selected by the Steering Committee under Section 4.2 hereof for further development under the Research Program. 

        1.15 "Recommended Compound Criteria" shall mean the detailed scientific criteria set forth in
Appendix A for determining whether a Research Compound has utility in the Field and is suitable for further development and evaluation as a Recommended Compound under this Agreement. 

        1.16 "Research Compound" shall mean a compound that is selected by the party which owns or licenses
(with a right to sublicense) such compound (or in the case of jointly-owned compounds, selected jointly) and that is evaluated as part of the Research Program. 

        1.17 "Research Program" shall mean the research program described generally in the research work plan
set forth in Appendix A hereto, as revised from time to time as provided in this Agreement. 

        1.18 "Research Program Term" shall mean the period of time indicated in Section 3.4 as
modified by the termination provisions in Article 14. 

        1.19 "Research Year" shall mean each twelve-month period during the Research Program with the first
Research Year beginning May 1, 1997. 

        1.20 "Royalty Term" shall mean, with respect to each Product in each country, the period of time
equal to the longer of (a) ten (10) years from the date of the First Commercial Sale of such Product in such country or (b) if the manufacture, use or sale of such Product in such
country was at the time of the First Commercial Sale in such country covered by a Valid Patent Claim, the term for which such Valid Patent Claim remains in effect and would, if in a granted patent, be
infringed but for the license granted by this Agreement. 

        1.21 "Steering Committee" shall mean the joint research committee composed of representatives of MTI
and Sankyo described in Section 5.1 hereof. 

        1.22 "Territory" shall mean the entire world. 

        1.23 "Third Party" shall mean any entity other than MTI or Sankyo and their respective Affiliates. 

        1.24 "Valid Patent Claim" shall mean either (a) a claim of an issued and unexpired patent
included within the Patent Rights, which has not been held permanently revoked, unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction, unappealable
or unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise or (b) a claim of a pending patent
application included within the Patent Rights, which claim was filed in good faith and has not been abandoned or finally disallowed without the possibility of appeal or refiling of said application. 

ARTICLE 2  

 REPRESENTATIONS AND WARRANTIES  

        2.1    Authorization.    Each party warrants and represents to the other that it has the legal rights and power to
extend the rights and licenses granted to the other in this Agreement, that it has the full right to enter into this Agreement, and to fully perform its obligations hereunder, and that it has not 

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made
nor will it make any commitments to others in conflict with or in derogation of such rights or this Agreement. Except as otherwise disclosed, each party further represents to the other that it
is not aware of any legal obstacles, including patent rights of others, which could prevent it from carrying out the provisions of this Agreement. 

        2.2    Patent Validity.    Nothing in this Agreement shall be construed as a warranty or representation by either
party as to the validity or scope of any Patent Rights. 

ARTICLE 3  

 RESEARCH PROGRAM  

        3.1    Research Procedures.    

        3.1.1    Conduct of Research.    The Research Program shall be
conducted in good scientific manner, and in compliance with all applicable legal requirements, to attempt to achieve efficiently and expeditiously its objectives. MTI and Sankyo shall proceed
diligently with the work set out in the Research Program by using their respective good faith efforts considering, in the case of MTI, the funding received from Sankyo hereunder. 

        3.1.2    Use of Research Funding.    MTI shall apply all funding it
receives from Sankyo under this Agreement (other than milestone payments payable by Sankyo to MTI pursuant to Section 7.3) for the sole purpose of discovering, identifying, studying, improving
and testing Research Compounds in accordance with the Research Program (including overhead expenses related thereto) set forth on Appendix A hereto, and amended from time to time by the
parties, with the goal of identifying candidate compounds for designation as Recommended Compounds. All milestone payments paid by Sankyo to MTI pursuant to Section 7.3 shall be used by MTI for
working capital purposes. In each of the first two Research Years during the term of the Research Program, MTI shall allocate an average of approximately  [***] full time equivalent researchers and staff
to perform its obligations under the Research Program. In the third Research
Year during the term of the Research Program, MTI shall allocate an average of [***] full time equivalent researchers and staff
to perform its obligations under the Research Program [***]. MTI's staffing obligations during the term of the Research Program
shall be subject to adjustment at the recommendation of the Steering Committee. Sankyo acknowledges that MTI's allocation of full time equivalent researchers and staff to perform its obligations under
the Research Program during the period commencing on the Effective Date and ending on the date hereof has been acceptable. MTI shall continue to fulfill its obligations under this Section 3.1.2
by allocating full time equivalent researchers and staff in a manner which is consistent with its past practices. 

        3.1.3    Other Work.    During the Research Program Term, neither MTI
nor Sankyo shall perform any research and development work for any Third Party in the Field, except that either party may use for any purpose outside the Field any Research Compounds made or obtained
by such party that are not designated as Recommended Compounds and are no longer being evaluated for designation as Recommended Compounds, any Recommended Compounds made or obtained by such party that
are not selected as Candidate Compounds, and any Candidate Compounds made or obtained by such party that are not licensed as Licensed Compounds. It is understood that MTI and Sankyo each presently
conducts, and will conduct during the Research Program Term, research for itself and for others outside the Field. 

        3.1.4    Subcontracts.    MTI may subcontract portions of the Research
Program with the prior written approval of the Steering Committee. 

        3.1.5    Data.    MTI and Sankyo shall each maintain records in
sufficient detail and in good scientific manner appropriate for patent purposes and as will properly reflect all work done and 

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results
achieved in the performance of the Research Program (including all data in the form required under any applicable governmental regulations). Such records shall include books, records, reports,
research notes, charts, graphs, comments, computations, analyses, recordings, photographs, computer programs and documentation thereof, computer information storage means, samples of materials and
other graphic or written data generated in connection with the Research Program including any data required to be maintained pursuant to applicable governmental regulations. MTI and Sankyo shall each
provide the other the right to inspect records, and, as requested from time to time by the other party, shall provide copies of all requested records, to the extent reasonably required for the
performance of the requesting party's obligations, or exercise of the requesting party's rights, under this Agreement; provided that each party shall
maintain such records and the information of the other contained therein in confidence in accordance with Section 11.1 below and shall not use such records or information except to the extent
otherwise permitted by this Agreement. 

        3.1.6    Delivery of Compounds.    MTI will promptly identify and
deliver to Sankyo [***] information on the structure of, data generated on, and (if so requested) reasonable quantities (for
research and preclinical pharmacology use) of, any Research Compound [***], Recommended Compound or Candidate Compound, for
development and evaluation by Sankyo in accordance with this Agreement. The parties shall discuss in good faith any requested arrangements for the synthesis and supply to Sankyo of larger quantities
of materials for use under the Research Program. Upon the occurrence of an event which would entitle to Sankyo to terminate this Agreement pursuant to Section 1.42, MTI will promptly identify
and deliver to Sankyo (for
research and preclinical pharmacology use) [***] fifty percent (50%) of the quantity of any Research Compound then in the
possession of MTI. 

        3.1.7    MTI and Sankyo Quarterly Reports.    MTI and Sankyo shall
each provide to the members of the Steering Committee quarterly written reports which shall reasonably detail and evaluate the work each has performed during such calendar quarter under the Research
Program and the results thereof. In addition, each quarterly report by MTI shall set forth, in reasonable detail, (a) the goals of the Research Program for such calendar quarter, (b) the
results actually achieved by MTI under the Research Program during such calendar quarter, (c) the number of full time equivalent researchers and staff allocated to perform MTI's obligations
under the Research Program during such calendar quarter, (d) MTI's estimated fully burdened cost for such full time equivalent researchers and staff allocated to perform its obligations under
the Research Program during such calendar quarter, (e) a summary of the costs and expenses of any subcontractors and outside consultants incurred by MTI under the Research Program during such
calendar quarter, and (f) the goals of the Research Program for the next calendar quarter. Such reports shall be sent to each member of the Steering Committee fourteen (14) days
subsequent to the end of a calendar quarter. 

        3.1.8    Steering Committee Quarterly Reports.    Within fourteen (14)
days following a Steering Committee meeting held pursuant to the provisions of Section 5.1 hereof, the Steering Committee shall prepare and send to each party to this Agreement minutes of such
meeting, together with a reasonably detailed written report which shall (a) describe the work performed to date on the Research Program, (b) evaluate the work performed in relation to
the goals of the Research Program and (c) state any determination of the Steering Committee not to proceed with a Research Compound and the reasons therefor. 

        3.2    Other Options.    

        3.2.1    Screening of Third Party Compounds.    MTI may screen
compounds obtained from a Third Party ("Third Party Research Compounds") with a view to finding Recommended Compounds. The Steering Committee shall
decide whether such evaluation of Third Party Research Compounds 

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can
be carried out within the existing budget of the Research Program, or if additional funding is required for such evaluation. If the Steering Committee decides that additional funding is required,
Sankyo may at its sole option agree to provide the necessary additional funding, in which case such evaluation shall be treated as part of the Research Program. In the event Sankyo does not agree to
provide such funding, MTI may provide the funding, and shall be entitled to a royalty, in an amount to be negotiated between the parties in
good faith, in addition to that set forth in Section 7.1.1 hereof on any Products resulting from such Third-Party Compounds. 

        3.2.2    Sankyo Compounds.    At its option, Sankyo shall supply MTI
with available Sankyo compounds for screening, and shall designate a Sankyo employee whose responsibility shall be the procurement of compounds for screening from within Sankyo and from other sources. 

        3.3    Funding of the Research Program.    

        3.3.1    Amount of Funding.    In consideration of MTI's performance
of its obligations under the Research Program, (a) Sankyo paid MTI a research fee of US$3,500,000 for each of the first two Research Years during the term of the Research Program, and
(b) Sankyo shall pay a research fee of US$3,500,000 for the third Research Year during the term of the Research Program, of which US$1,750,000 remains outstanding. 

        3.3.2    Payment Terms.    The balance of the research fee for third
Research Year shall be paid in equal quarterly installments on the first business day of the fourth, seventh and tenth months in that Research Year. 

        3.3.3    Audit.    

        (a)   Upon the written request of Sankyo at Sankyo's expense and not more than once in any  [***] period, MTI shall permit an internationally recognized
independent public accountant selected by Sankyo and reasonably
acceptable to MTI, to have access during normal business hours to such supporting financial records of MTI as may be reasonably necessary to verify the accuracy of the allocable expense calculations
set forth in MTI's reports under Section 3.1.7 above in respect of any fiscal year ending not more than [***] prior to
the date of such request. 

        (b)   The fees charged by such accountant shall be paid by Sankyo unless the audit discloses that the allocable expense
calculations reported by MTI for the audited period are more than [***] of the actual allocable expense calculations for such
period, in which case MTI shall pay the reasonable fees and expenses charged by the accountant. 

        (c)   Upon the expiration of [***] following the end of
any fiscal year, the expense calculations with respect to such year shall be binding and conclusive upon Sankyo. Sankyo agrees that all information subject to review under this Section 3.3 is
confidential and that Sankyo shall cause its accountant to retain all such information in confidence. 

        3.3.4    Adjustments to Second and Third Year
Funding.    Notwithstanding anything to the contrary in this Section 3.3, if the aggregate expenditures by MTI in performing its obligations under the Research
Program during the [***] are greater than [***] or are
less than [***] of the aggregate US$3,500,000 in research funding received by
MTI from Sankyo under Section 3.3.1 above for such Research Year, then [***]. 

        3.4    Term of Research Program.    

        3.4.1    Term.    Except as provided herein, the term of the Research
Program commenced as of May 1, 1997, and shall continue for three (3) years. 

        3.4.2    Extension.    Within  [***] following the expiration or
termination of the Research Program (other than under Section 14.2 hereof), MTI and
Sankyo shall prepare a written report describing Research Compounds that have not, as of the date of such expiration or termination, been recommended as Recommended Compounds. Sankyo shall have the
right during the [***]

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period
after receipt of such report to fund further research and development of such Research Compounds by so notifying MTI. In the event Sankyo so funds further research and development of such
Research Compounds, such further research and development shall be carried out [***]. 

ARTICLE 4  

 FURTHER EVALUATION AND DEVELOPMENT

OF RESEARCH COMPOUNDS  

        4.1    Research and Evaluation of Research Compounds.    The parties shall conduct such research and evaluation under
the Research Program of a Research Compound until such time as it is determined whether or not such Research Compound meets the Recommended Compound Criteria. 

        4.2    Designation of Recommended Compounds.    Within  [***] after identification by either party of a Research Compound which
is believed to meet the Recommended Compound Criteria,
each party shall present to the Steering Committee all data and other evidence available to such party regarding such Research Compound for use in the Field. The Steering Committee promptly shall
review all such data and other evidence and shall determine whether such Research Compound meets the Recommended Compound Criteria. If the Steering Committee determines that such Research Compound
meets the Recommended Compound Criteria, such Research Compound shall be designated as a Recommended Compound. Notwithstanding the foregoing, after the expiration or termination of the Research
Program Term, Sankyo shall have the right to designate any Research Compound as a Recommended Compound. Promptly after making any such designation, Sankyo shall provide MTI with written notice
thereof. 

        4.3    Selection of Candidate Compounds.    For a period of  [***] after designation of a Recommended Compound, Sankyo shall have
the right to conduct further preclinical development and
evaluation of such Recommended Compound under the Research Program, and to determine in its sole discretion whether such Recommended Compound is appropriate to conduct more extensive preclinical
development under this Agreement to evaluate its potential as a clinical candidate. If, within such [***] period, Sankyo gives
written notice to MTI that the appropriate research and development committee of Sankyo has selected such Recommended Compound to conduct further preclinical development under this Agreement,
thereafter such Recommended Compound shall be a Candidate Compound. 

        4.4    Licensed Compounds.    For a period of  [***] after selection of a Candidate Compound, Sankyo shall have the right to
conduct more extensive preclinical development and
evaluation of such Candidate Compound as a clinical candidate, and to determine in its sole discretion whether such Candidate Compound should be deemed a Licensed Compound in accordance with the
provisions of this Agreement. If, at any time within such [***] period, Sankyo determines in its sole discretion that such
Candidate Compound should be deemed a Licensed Compound, Sankyo shall provide written notice thereof to MTI. Thereafter, such Candidate Compound shall be a Licensed Compound for all purposes under
this Agreement. Licensed Compounds shall also include any Research Compound that Sankyo determines meets the Recommended Compound Criteria, Recommended Compound and/or Candidate Compound which Sankyo
may further develop following the termination or expiration of the Research Program Term in accordance with Sections 6.1.1, 14.2 and 14.3 and which Sankyo may determine, in its sole discretion,
to deem as a Licensed Compound pursuant to this Section 4.4. 

        4.5    Clinical Development.    

        4.5.1    Responsibility to Develop.    Sankyo is to be responsible for
all clinical development and regulatory approvals and shall own all such approvals; provided that in the event that MTI terminates this Agreement
pursuant to Section 14.2 hereof, Sankyo shall transfer all such registrations to MTI. MTI may attend meetings held by Sankyo respecting development of Licensed Compounds, and Sankyo will
provide notice to MTI of such meetings in a reasonable and timely manner and solicit MTI input, but no such development meetings need be delayed, postponed or altered to accommodate participation by
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Sankyo
shall neither commence human clinical trials of any Compound, nor file any regulatory application therefor, unless and until such Compound is a Licensed Compound. 

        4.5.2    Clinical Development and Marketing.    The preclinical and
clinical development of Licensed Compounds shall be the responsibility of Sankyo. For each Licensed Compound, Sankyo shall use reasonable diligence and scientific judgment to evaluate and develop such
Licensed Compounds in a timely manner in accordance with industry standards and Sankyo's internal practices and advise MTI as to the status of such Licensed Compounds. Sankyo agrees to conduct such
preclinical and human clinical trials as are necessary to obtain all regulatory approvals to manufacture and market Products in each Primary Country in the Territory, and diligently, consistent with
industry standards generally, develop, obtain necessary approval to market and commence marketing each such Product in Primary Countries unless in its reasonable business judgment such development and
marketing is not practical or is strategically inadvisable. For the purposes of this Agreement, "Primary Countries" shall mean Australia, the Benelux
countries, Canada, France, Germany, Italy, Japan, the Scandinavian countries, Spain, Switzerland, the United Kingdom and the United States. Sankyo shall use reasonable diligence, consistent with
industry standards generally, to develop and market Products in other countries (the "non-Primary Countries") in the Territory unless in its
reasonable business judgment such development and marketing is not practical or strategically inadvisable. Notwithstanding anything to the contrary in this Agreement, if Sankyo does not diligently
develop and market a Product incorporating a Licensed Compound in a Primary Country or in a non-Primary Country where Sankyo has not made a reasonable business judgment that to develop and
market such Product is not practical or strategically inadvisable, then following [***] written notice by MTI to Sankyo if such
decision has not been reversed by Sankyo, (a) the license and other rights granted to Sankyo with respect to such Licensed Compound and such country shall  [***] and (b) Sankyo [***] as necessary to
develop, make, use, import and sell Products incorporating such Licensed Compound in such country. 

        4.5.3    Development Information.    Sankyo shall keep MTI informed as
to the progress of Sankyo in the development and testing of all Licensed Compounds and Products and the preparing, filing and obtaining of the approvals necessary for marketing. In addition, Sankyo
shall provide MTI with a minimum of three (3) months' advance notice of the contemplated filing of an IND or an NDA. Sankyo shall also provide MTI with a report on all regulatory submissions,
communications or meetings on or prior to the date of such submissions and a copy of any INDs, NDAs or other regulatory communication within five (5) days of filing thereof, which material
shall be subject to Article 11 hereof except as otherwise set forth herein. 

        4.6    Rights to Compounds.    

        4.6.1    Subject to Section 6.1, any Research Compounds that are not designated as Recommended Compounds, any Recommended
Compounds that are not selected as Candidate Compounds, any Candidate Compounds that are not deemed as Licensed Compounds, and any Licensed Compounds that have been dropped by Sankyo or have not been
diligently developed or commercialized by Sankyo, its Affiliates or sublicensees, [***]. Thereafter, the parties shall  [***] the confidentiality
obligations which may be applicable under Article 11 or as otherwise set forth in this
Agreement. 

        4.6.2    Notwithstanding the above, if within a period of  [***] after [***] any such Compound 
[***] under Section 4.6.1 above, [***], or within
a period of five (5) years after termination or expiration of the Research Program Term, Sankyo, its Affiliates or (sub)licensees develops any other compound for use in the Field, then such
Compound or compound will be subject to the payment obligations, co-promotion rights and other rights in favor of MTI under this Agreement. 

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        4.6.3    Notwithstanding the above, for a period of  [***] after [***] any such Compound  [***] under Section 4.6.1 above, [***];
provided, however, that (a) after the expiration of the Research Program Term,  [***], (b) if, after the expiration or termination of the Research
Program Term, Sankyo decides not to develop or
commercialize a Licensed Compound or a Product, Sankyo will provide MTI with written notice of such decision and, after receipt of such notice,  [***], and (c) if, within [***] after the
termination or expiration of the Research Program Term, Sankyo fails to designate a Research Compound as a Recommended Compound in accordance with Section 4.2,  [***]. 

        4.6.4    If, in accordance with the terms of Section 4.6.3,  [***] any Compound [***] under
Section 4.6.1
above, [***]: 

        (a)   [***] 

        (b)   [***] 

        The
provisions of Section [***] and Articles  [***] shall apply [***] under Section 4.6.1
above. 

ARTICLE 5  

 MANAGEMENT OF THE PROGRAM  

        5.1    Steering Committee.    A joint research committee comprised of three named representatives of Sankyo and three
named representatives of MTI (the "Steering Committee") shall meet once each calendar quarter during the term of the Research Program within
forty-five (45) days of the end of the preceding calendar quarter. Such meetings shall be at times and places agreed to by MTI and Sankyo, alternating between San Diego and Tokyo,
or such other locations as the parties shall agree. At such meetings, the Steering Committee will discuss the Research Program, set priorities thereunder and make any necessary modifications to the
research workplan therefor. Members of the Steering Committee may be represented at any meeting by another member of the Steering Committee, or by a deputy. Any approval, determination or other action
agreed to by all of the members of the Steering Committee or their deputies present at the relevant Steering Committee meeting shall be the approval, determination or other action of the Steering
Committee; provided that at least two representatives of each party are present at such meeting. Each party shall bear its own costs in connection with
the Steering Committee meetings. The Steering Committee shall have only such powers as are specifically delegated to it hereunder, and, notwithstanding the creation of the Steering Committee, each
party to this Agreement shall retain the rights, powers and discretion granted to it hereunder, and the Steering Committee shall not be vested with any such rights, powers or discretion except as
expressly provided herein or as expressly agreed to by the parties in writing. The Steering Committee shall not have the power to amend this Agreement, which may be amended only by the parties as
provided in Section 20.4 hereof. 

        5.2    Disagreements.    All disagreements within the Steering
Committee shall be subject to the following: 

        5.2.1    The representatives of the Steering Committee shall promptly present the disagreement to the executive of each of MTI
and Sankyo who has the principal responsibility for his representative company's work under this Agreement; 

        5.2.2    Such executives shall meet to discuss each party's view and to explain the basis for such disagreement; 

        5.2.3    If such executives cannot promptly resolve such disagreement, then such disagreement shall be referred to the chief
executive officers of MTI and Sanko; 

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        5.2.4    If such chief executive officers cannot promptly resolve such disagreement, then  [***]. 

        5.3    Project Leaders.    MTI and Sankyo shall each appoint a project leader to coordinate its part of the Research
Program. Project leaders shall be the primary contact between the parties with respect to the Research Program. Each party notified the other within thirty (30) days of the Effective Date of
the appointment of its project leader and shall notify the other party as early as practicable before changing this appointment. 

        5.4    Availability of Employees.    Each party agrees to make its employees and nonemployee consultants reasonably
available at their respective places of employment to consult with the other party on issues arising during the Research Program and in connection with any request from any regulatory agency,
including regulatory, scientific, technical and clinical testing issuers. 

        5.5    Visit of Facilities.    Representatives of MTI and Sankyo may, upon reasonable notice and at times reasonably
acceptable to the other party (a) visit the facilities where the Research Program is being conducted, and the facilities where the other party manufactures any Product or active compound
contained therein (or has a Product or such a compound manufactured) to the extent relating to such Product or compound, (b) consult informally during such visits and by telephone, with
personnel of the other party performing work on the Research Program, and (c) with the other party's prior approval, which approval shall not be withheld unreasonably, visit the sites of any
clinical trials or other experiments being conducted by such other party in connection with the Research Program or Products, but only to the extent in each case as such trials or other experiments
relate to the Research Program or Products. If requested by the other party, MTI and Sankyo shall cause appropriate individuals working on the Research Program or Products to be available for meetings
at the location of the facilities where such individuals are employed at times reasonably convenient to the party responding to such request. 

ARTICLE 6  

 LICENSE—RESEARCH, DEVELOPMENT,

MARKETING AND MANUFACTURING  

        6.1    License Grant to Sankyo.    

        6.1.1    Sankyo's License Rights.    MTI hereby grants to Sankyo,
subject to the provisions of this Agreement, (a) a non-exclusive license (or, in the case of any Third Party Patent Rights licensed to MTI, a non-exclusive sublicense),
including the right to grant sublicenses, under the Patent Rights licensable or sublicensable by MTI, including MTI's rights in any jointly owned Patent Rights, to further develop Research Compounds
in connection with the development of pharmaceutical compositions for use in the Field, and (b) an exclusive license (or, in the case of Third Party Patent Rights licensed to MTI, an exclusive
sublicense or, in the event that an exclusive sublicense may not be granted to Sankyo under the terms of the license granted to MTI, a sublicense to the full extent permitted under the terms of the
license granted to MTI), including the right to grant sublicenses, under the Patent Rights licensable or sublicensable by MTI), including MTI's rights in any jointly owned Patent Rights, to
(i) further develop Candidate Compounds and Recommended Compounds in connection with the development of pharmaceutical compositions for use in the Field, and (ii) make, have made, use,
offer to sell, sell and import Products incorporating Licensed Compounds, and Licensed Compounds for use in Products, in the Territory; provided,
however, that no license or sublicense is granted to Sankyo or its sublicensees for any use outside the Field covered by claims of patents or patent applications of MTI or its
Affiliates directed to uses outside the Field. In the event that Sankyo [***] a sublicense to a Third Party, Sankyo agrees to  [***]. 

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        6.1.2    Sankyo's Right to Negotiate Further Licenses.    In the event
that MTI or its Affiliates owns or has licensed (with the right to grant sublicenses) any patents or patent applications (other the Patent Rights) which, if in an issued patent, would be infringed by
making, using or selling such Licensed Compound, or any Product incorporating such Licensed Compound [***], then upon the
written request of Sankyo, the parties in good faith shall attempt to negotiate a mutually acceptable [***] to Sankyo under such
patents and patent applications to make, use and
sell such Licensed Compound, or any Product incorporating such Licensed Compound [***]. 

        6.2    Joint Development and Marketing.    

        6.2.1    Co-Promotion Option.    MTI shall have the option
to co-promote each Product in the United States, Canada and Mexico in accordance with terms and conditions of a co-promotion agreement to be negotiated in good faith between
MTI and Sankyo. 

        6.2.2    Notification to MTI.    In the event that Sankyo plans to
file an NDA on a Product in the United States or Canada, it shall so inform MTI in writing of its intention to file an NDA at least three (3) months prior to such filing. Included with such
written notification by Sankyo will be all information Sankyo has on the Product which has not previously been provided to MTI relevant to MTI's making a decision as to whether it wishes to
co-promote Product pursuant to Section 6.2.1 above. Such decision shall be communicated, in writing, to Sankyo not more than  [***] after MTI has received the notification and information referred
to in the preceding sentence. 

        6.2.3    Brand of Product.    The parties agree that all
co-promoted Products shall be sold and marketed under a common brand chosen and owned by Sankyo. 

        6.2.4    Development Committee.    Promptly after Sankyo's designation
of a Licensed Compound pursuant to Section 4.4, the parties shall designate a committee (the "Development Committee"). In addition to any other
responsibilities designated herein, the Development Committee shall meet from time to time on an as-needed basis to discuss at such meetings the preclinical or clinical development, or the
marketing, of Licensed Compounds or Products, as well as any anticipated regulatory filings with respect to possible Products. The parties may designate and appoint any reasonable number of scientific
or technical personnel of the parties to interact with each other regarding the Licensed Compounds or the products to be marketed hereunder. Members of the Development Committee may be represented at
any meeting by another member of the Development Committee, or by a deputy. Any approval, determination or other action agreed to by all of the members of the Development Committee or their deputies
present at the relevant Development Committee meeting shall be the approval, determination or other action of the Development Committee; provided that
at least two representatives of each party are present at such meeting. Each party shall bear its own costs in connection with the Development Committee meetings. The Development Committee shall have
only such powers as are specifically delegated to it hereunder, and, notwithstanding the creation of the Development Committee, each party to this Agreement shall retain the rights, powers and
discretion granted to it hereunder, and the Development Committee shall not be vested with any such rights, powers or discretion except as expressly provided herein or as expressly agreed to by the
parties in writing. The Development Committee shall not have the power to amend this Agreement, which may be amended only by the parties as provided in Section 20.4 hereof. 

        6.2.5    Disagreements.    All disagreements within the Development
Committee shall be subject to the following: 

        (a)   The representatives of the Development Committee shall promptly present the disagreement to the executive of each of MTI
and Sankyo who has the principal responsibility for his respective company's work under this Agreement; 

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        (b)   Such executives shall meet to discuss each party's view and to explain the basis for such disagreement; 

        (c)   If such executives cannot promptly resolve such disagreement, then such disagreement shall be referred to the chief
executive officers of MTI and Sankyo; 

        (d)   If such chief executive officers cannot promptly resolve such disagreement, then  [***]. 

        6.3    Manufacturing.    Except as otherwise provided in this Agreement, Sankyo, its Affiliates and permitted
sublicensees shall have the exclusive license to manufacture Compounds and Products; provided, however, that if  [***]. 

        6.4    Transfer of Screening Technology.    MTI hereby grants to Sankyo a non-exclusive, fully
paid-up, perpetual, irrevocable, worldwide license, including the right to grant sublicenses, under all of its intellectual property rights  [***] to enable Sankyo to exercise its rights under
Section 6.1, including, without limitation, the development of
Candidate Compounds, Recommended Compounds and Research Compounds. Promptly after the date of this Agreement, MTI shall [***]. 

ARTICLE 7  

 ROYALTIES, SIGNING FEE, EQUITY

PURCHASE AND MILESTONE PAYMENTS  

        7.1    Royalties Payable by Sankyo.    

        7.1.1    Subject to the other provisions in this Section 7.1, in consideration of licenses granted to Sankyo herein,
during the Royalty Term, Sankyo shall pay to MTI a royalty equal to (a) [***] of Net Sales of Products by Sankyo, its
Affiliates, permitted sublicensees or distributors in Japan and [***] of Net Sales of Products by Sankyo, its Affiliates,
permitted sublicensees or distributors in the rest of the Territory, with respect to those Products, the manufacture, use or sale of which is  [***] and (b) [***]
 the royalty rate set forth
above with respect to those Products, the manufacture, use or sale of which is [***]. 

        7.1.2    If MTI chooses to co-promote the Products in accordance with Section 6.2 hereof, the royalty payable
by Sankyo shall be [***] instead of the percentages set forth in Section 7.1.1 for such country or countries for which
the right to co-promote was exercised. 

        7.1.3    Royalties shall be paid in respect of Net Sales of Each Product in a country for a period equal to the Royalty Term for
such Product in such country. 

        7.1.4    In the event that a Product is covered by more than one Patent Right claiming the composition, manufacture or method of
use of such Product, only the royalties set forth in Section 7.1.1 above, shall be paid with respect to such Product. 

        7.1.5    In the event that either party owns or controls patented technology that could be used to significantly improve the
pharmacokinetics of a Product or extend the patent life of such Product, as determined by the Steering Committee or the Development Committee, the parties will meet to determine whether such
technology will be incorporated into such Product (the resulting product hereinafter referred to as an "Improved Product") and, if so, will negotiate an
increase in the royalty payable to MTI (in the case of technology owned or controlled by MTI) or a decrease in the royalty payable to MTI (in the case of technology owned or controlled by Sankyo). If
Sankyo declines to incorporate such technology, MTI shall have the [***] right to develop and market the Improved Product upon
payment of a reasonable royalty to Sankyo. 

        7.2    [Intentionally omitted.]    

        7.3    Development Milestone Payments.    Sankyo shall make the
following development milestone payments to MTI (a) for [***] which achieves the milestone events set forth in the table
below, in the amounts and in accordance with the table below, and (b) for [***] which achieves the milestone events set
forth in the table below, in [***] the amounts and in accordance with the table below; in each case other
than for Compounds which have properties, results and effects that are substantially similar to a Compound (a "Back-up Compound") for which
Sankyo has previously 

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made
milestone payments. Sankyo shall not make milestone payments for any Back-up Compound [***] which has not gone
to market, and in this instance, the only milestone payments due are [***] such Back-up Compound shall no longer be
a Back-up Compound. Notwithstanding the above, if such Back-up Compound is subsequently developed in addition to the Compound it was meant to replace, all appropriate milestone
payments (for those milestones which such Back-up Compound already has achieved) shall be promptly paid [***]. 

	
 Milestone Achieved
 
	
 	

Payment

	Selection of a Compound as a Candidate Compound pursuant to Section 4.3	 	US$1.0 million
	

First filing of an IND for a Licensed Compound	
 	

US$2.0 million
	

Proof of efficacy in a clinical study for a Licensed Compound	
 	

US$3.5 million
	

First filing of an NDA for a Licensed Compound	
 	

[***]
	

First approval of an NDA (or receipt of marketing approval in the U.S. or in a Primary Country) for a Licensed Compound	
 	

[***]

Notwithstanding
the above, Sankyo shall pay to MTI US$2,000,000 within thirty (30) days after the execution of this Agreement. Such payment shall be deemed a pre-payment of
development milestone payments otherwise due to MTI pursuant to this Section 7.3, and, at Sankyo's sole discretion, shall be creditable against any development milestone payments due to MTI, in
whole or in part, after the execution of this Agreement in accordance with the table set forth herein above. Notwithstanding the foregoing, if, after the date hereof, the Steering Committee
determines, in its sole discretion, to devote a portion of such $2,000,000 payment to supplement the research funding provided by Sankyo under this Agreement, the proceeds of such $2,000,000 payment
shall be applied, first, to such supplemental research funding, and, second, in accordance with the preceding sentence. 

        7.4    Combination Product.    In the event a Product is sold in a combination product with other pharmacologically
active components, Net Sales, for purposes of royalty payments on the combination product, shall be calculated by multiplying the Net Sales of that combination by the fraction  [***]. In the event that
no such separate sales are made by Sankyo or a permitted sublicensee, Net Sales for royalty
determination shall be calculated by multiplying Net Sales of the combination by the fraction [***]. In no event shall Net Sales
of any Product calculated under this Section 7.4 with respect to any combination product be less than [***] of the Net
Sales of such combination product. 

ARTICLE 8  

 ROYALTY REPORTS AND ACCOUNTING  

        8.1    Reports, Exchange Rates.    During the term of this Agreement following the First Commercial Sale of Product,
Sankyo shall furnish to MTI a written quarterly report showing, on a country by country basis, (i) the gross sales of all Products sold by Sankyo and its sublicensees in the Territory during
the reporting period and the calculation of Net Sales from such gross sales; (ii) the royalties payable in U.S. dollars, which shall have accrued hereunder in respect of such sales;
(iii) withholding taxes, if any, required by law to be deducted in respect of such royalties; [***] (iv) the dates
of the First Commercial Sales of any Products in any country in the Territory during the reporting period; and (v) the exchange rates used in determining the amount of United States dollars.
For sales which took place outside of the United States, its territories and possessions, the royalty obligation of Sankyo shall be determined on the basis of Sankyo's monthly standard account of
sales which shall be interpreted as representing the result of conversion of all local currency sales to U.S. Dollars at the rate equal to the average of the rate published in  The London Times for the
close of business in 

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London
on the last business day of each of the three (3) months of the calendar quarter for which the payments are reported. Reports shall be due on the  [***] following the close of each respective
quarter. If no royalty is due for any royalty period hereunder, Sankyo shall so
report. Sankyo shall keep accurate records in sufficient detail to enable the royalties payable hereunder to be determined. 

        8.2    Audits.    

        8.2.1    Upon the written request of MTI at MTI's expense and not more than once in  [***], Sankyo shall permit an internationally recognized
independent public accountant selected by MTI and reasonably acceptable
to Sankyo, to have access during normal business hours to such of the records of Sankyo as may be reasonably necessary to verify the accuracy of the royalty reports hereunder in respect of any fiscal
year ending not more than [***] prior to the date of such request. 

        8.2.2    In the event such accountant concludes that additional royalties were owed during such period, the additional royalty
shall be paid within [***] of the date MTI delivers to Sankyo such accountant's written report so concluding. The fees charged
by such accountant shall be paid by MTI unless the audit discloses that the royalties payable by Sankyo for the audited period are more than  [***] of the royalties actually paid for such period, in
which case Sankyo shall pay the reasonable fees and expenses charged by
the accountant. 

        8.2.3    Sankyo shall include in each sublicense granted by it pursuant to this Agreement a provision requiring the sublicensee
to make reports to Sankyo, to keep and maintain records of sales made pursuant to such sublicense and to grant access to such records by MTI's independent accountant to the same extent required of
Sankyo under this Agreement. Upon the expiration of [***] following the end of any fiscal year, the calculation of royalties
payable with respect to such year shall be binding and conclusive upon MTI, and Sankyo and its sublicensees shall be released from any liability or accountability with respect to royalties for such
year. 

        8.3    Confidential Financial Information.    MTI agrees that all information subject to review under this
Article 8 or under any sublicense agreement is confidential and that MTI shall cause its accountant to retain all such information in confidence. 

ARTICLE 9  

 PAYMENTS  

        9.1    Payment Terms.    Royalties shown to have accrued by each royalty report provided for under Article 8 of
this Agreement shall be due and payable on the date such royalty report is due. Payment of royalties in whole or in part may be made in advance of such due date. Royalties determined to be owing, and
any overpayments to be credited, with respect to any prior quarter shall be added, together with interest thereon under Section 9.4 below from the date of the report for the quarter for which
such amounts are owing, or credited, as the case may be, to the next quarterly payment hereunder. 

        9.2    Exchange Control.    Except as hereinafter provided in this Section 9.2, all royalties due and other
payments hereunder shall be paid in United States dollars. If at any time legal restrictions prevent the prompt remittance of part or all royalties with respect to any country of the Territory where
the product is sold, payment shall be made through such lawful means or methods as Sankyo may determine. When in any country the law or regulations prohibit both the transmittal and deposit of
royalties on sales in such a country, royalty payments shall be suspended for as long as such prohibition is in effect (provided, however, that such
suspended payments shall bear interest at the initial rate stated in Section 9.4 hereof), and so soon as such prohibition ceases to be in effect, all royalties that Sankyo or its sublicensees
would have been obligated to transmit or deposit, but for the prohibition, shall forthwith be deposited or transmitted promptly to the extent allowable, as the case may be. If the 

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royalty
rate specified in this Agreement should exceed the permissible rate established in any country, the royalty rate for sales in such country shall be adjusted to the highest legally permissible
or government-approved rate. 

        9.3    Payment Method.    Except as provided in Section 9.2, all payments by Sankyo to MTI under this Agreement
shall be made by bank wire transfer in immediately available funds to such account as MTI specified to Sankyo before such payment is due. 

        9.4    Late Payments.    Any payments by Sankyo that are not paid  [***] due under this Agreement shall bear interest, to the
extent permitted by applicable law, at  [***] above the London Interbank Offered Rate (LIBOR) calculated on the respective dates such payments are due. 

        9.5    [***]    

        9.5.1    Royalties.    Sankyo may  [***] hereunder; provided, however, that the net amount payable to MTI for any
royalty period shall in no event [***] of the royalties owing to MTI for such royalty period. Sankyo agrees to reasonably
cooperate with MTI in obtaining [***] hereunder on the sale or manufacture of Products. 

        9.5.2    Other Payments.    All amounts payable by Sankyo to MTI
hereunder, other than royalties due on the sale or manufacture of Products, [***]. MTI agrees to reasonably cooperate with
Sankyo in obtaining [***]. In the event that MTI is successful in obtaining  [***], MTI agrees to promptly remit [***]
 to Sankyo. 

ARTICLE 10  

 INFRINGEMENT ACTIONS BY THIRD PARTIES  

        10.1    Defense.    If MTI or Sankyo, or any of their respective Affiliates, shall be named as a defendant in a legal
proceeding by a Third Party for infringement of a patent because of (i) the development of Candidate Compounds, Recommended Compounds, and Research Compounds, (ii) the use of the  [***], or
(iii) the manufacture, use, offer for sale, sale or importation of Products or Candidate Compounds, Recommended
Compounds, Research Compounds or Licensed Compounds (but only to the extent such manufacture, use or sale is claimed in the MTI Patent Rights), the party which has been sued shall promptly notify the
other party in writing of the institution of such suit. The party which has been sued may, at its option and at its sole expense, control and defend such suit. The controlling party may not settle
such suit or otherwise consent to an adverse judgment in such suit that diminishes the right or interests of the non-controlling party, or subjects the non-controlling party to
any liability for contribution pursuant to Section 10.3 hereof, without the express written consent of the non-controlling party. The party which has been sued shall keep the other
party at all times reasonably informed as to the states of the suit. The party which is not controlling such legal proceedings shall have the right to be represented by advisory counsel of its own
selection (such counsel's opinion shall be reasonably considered by the controlling party), at its own expense, and shall cooperate fully in the defense of such suit and furnish to the party
controlling such legal proceedings all evidence and assistance in its control. 

        10.2    Defense of Actions Against MTI and Sankyo.    If MTI and Sankyo, or any of their respective Affiliates shall
be jointly named as defendants in a legal proceeding by a Third Party or shall be joined in the same litigation for infringement of a patent because of (i) the development of Candidate
Compounds, Recommended Compounds, and Research Compounds, (ii) the use of the [***], or (iii) the manufacture,
use, offer for sale, sale or importation of Products or Candidate Compounds, Recommended Compounds, Research Compounds or Licensed Compounds (but only to the extent such manufacture, use or sale is
claimed in the MTI Patent Rights), MTI shall be entitled to control the defense of such suit, and all expenses including costs, attorney fees, adverse judgments or 

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settlement
amounts incurred on account of Sankyo or MTI or both shall be paid as set forth under Section 10.3 below. Sankyo shall have the right to be represented by counsel of its own
selection, but at its sole expense, and shall cooperate fully in the defense of such suit and furnish to MTI all evidence and assistance in its control. MTI shall, however, not be entitled to settle
such suit or otherwise consent to an adverse judgment in such suit without the express written consent of Sankyo if such settlement or adverse judgment diminishes any right or interest of Sankyo
hereunder, or subjects Sankyo to any liability for contribution pursuant to Section 10.3 hereof. 

        10.3    Contribution.    With respect to any judgments, settlements or damages payable with respect to legal
proceedings covered by Sections 10.1 and 10.2 above, MTI shall contribute an amount, equal to [***] and Sankyo shall pay the
remainder. With respect to any legal proceedings covered by Section 10.2 above, MTI may deduct the actual expenses paid by MTI in such suit, including costs, attorney fees, advance judgments or
settlement amounts, for the purpose of determining the amount of its contribution under the previous sentence. 

ARTICLE 11  

 CONFIDENTIALITY  

        11.1    Nondisclosure Obligations.    Except as otherwise provided in this Article 11, and subject to
Article 12 hereof, during the term of this Agreement and for a period of [***] thereafter, both parties shall maintain in
confidence and use only for purposes of this Agreement confidential information and data, received from the other party, resulting from or related to the development of Research Compounds or Products. 

        For
purposes of this Article 11, information and data described above shall be referred to as "Information." To the extent it is
reasonably necessary or appropriate to fulfill its obligations or exercise its rights under this Agreement (including, without limitation, in the case of Sankyo, the exercise of its rights under
Article 6), a party may disclose Information it is otherwise obligated under this Section not to disclose to its Affiliates, sublicensees, consultants, outside contractors and clinical
investigators, on a need-to-know basis on condition that such entities or persons agree to keep the Information confidential for the same time periods and to the same extent as
such party is required to keep the Information confidential; and a party or its sublicensees may disclose such Information to government or other regulatory authorities to the extent that such
disclosure is reasonably necessary to obtain patents or authorizations to conduct clinical trials with and to commercially market the Product. The obligation not to disclose Information shall not
apply to any party of such Information that (i) is or becomes patented, published or otherwise part of the public domain other than by acts of the party obligated not to disclose such
Information or its Affiliates or sublicensees in contravention of this Agreement; or (ii) is disclosed to the receiving party or its Affiliates or sublicensees by a Third Party;  provided such
Information was not obtained by such Third Party directly or indirectly from the other party under this Agreement; or (iii) prior
to disclosure under this Agreement, was already in the possession of the receiving party or its Affiliates or sublicensees; provided such Information
was not obtained directly or indirectly from the other party under this Agreement; or (iv) can be shown by written documents to have been independently developed by the receiving party or its
Affiliates without breach of any of the provisions of this Agreement. 

        11.2    Terms of This Agreement.    MTI and Sankyo each agrees not to disclose any terms or conditions of this
Agreement to any Third Party without the prior consent of the other party, except as required by applicable law or to persons with whom Sankyo or MTI has entered into or proposes to enter into a
business relationship. Notwithstanding the foregoing, prior to execution of this Agreement, Sankyo and MTI shall agree upon the substance of information that can be used to describe the terms of this
transaction, and Sankyo and MTI may disclose such information, as modified by mutual agreement from time to time, without the other party's consent. 

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ARTICLE 12  

 PUBLICATION  

        12.1    During the terms of this Agreement, MTI and Sankyo each acknowledge the other party's interest in publishing certain of
its results to obtain recognition within the scientific community and to advance the state of scientific knowledge. Each party also recognizes the mutual interest in obtaining valid patent protection.
Consequently, either party, its employees or consultants wishing to make a publication (including any oral disclosure made without obligation of confidentiality) relating to work performed by such
party as part of the Research Program (the "Publishing Party") shall transmit to the other party (the "Reviewing
Party") a copy of the proposed written publication at least sixty (60) days prior to submission for publication, or an abstract of such oral disclosure at least thirty
(30) days prior to submission of the abstract or the oral disclosure, which ever is earlier. The Reviewing Party shall have the right (a) to propose modifications to the publication for
patent reasons, (b) to request a delay in publication or presentation in order to protect patentable information and (c) to propose modifications to the publication to protect valuable
know-how and technology of the Receiving Party. 

        If
the Reviewing Party requests such a delay, the Publishing Party shall delay submission or presentation of the publication for a period of ninety (90) days to enable patent
applications protecting each party's rights in such information to be filed in accordance with Article 13 below. Upon the expiry of sixty (60) days, in the case of proposed written
disclosures, or thirty (30) days, in the case of an abstract or proposed oral disclosures, from transmission of such proposed disclosures to the Reviewing Party, the Publishing Party shall be
free to proceed with the written publication or the oral presentation, respectively, unless the Reviewing Party has requested the delay described above. 

ARTICLE 13  

 PATENTS  

        13.1    Ownership of Inventions, Applications for Patent, Patents and Copyrights.    The entire right and title in all
writings, inventions, discoveries, improvements and other technology directed to the manufacture or use of a Product, or constituting a Product; whether or not patentable or copyrightable, and any
patent applications, patents or copyrights based thereon (collectively, the "Inventions") that are made or conceived during and as a result of the
Research Program (i) solely by employees or others acting on behalf of MTI shall be solely owned by MTI ("MTI Inventions"), (ii) solely by
employees of Sankyo or others acting on behalf of Sankyo shall be solely owned by Sankyo ("Sankyo Inventions"), or (iii) jointly by employees or
others acting on behalf of MTI and Sankyo shall be owned jointly by Sankyo and MTI ("Joint Inventions"). Each party shall promptly disclose to the other
party the making, conception or reduction to practice of Inventions by employees or others acting on behalf of such party. Each party represents and agrees that, all employees and
other persons acting on its behalf in performing its obligations under this Agreement shall be obligated under a binding written agreement to assign to such party or as such party shall direct, all
Inventions made or conceived by such employee or other person, or in the case of non-employees working for other companies or institutions on behalf of MTI or Sankyo; MTI or Sankyo, as
applicable, shall have the right to license all Inventions made by such non-employees on behalf of MTI or Sankyo, as applicable, in accordance with the policies of said company or
institution. MTI and Sankyo agree to undertake to enforce such agreements (including, where appropriate, by legal action) considering, among other things, the commercial value of such inventions. 

        13.2    Patent Applications.    

        13.2.1    Priority Filings.    When a MTI Invention or Joint Invention
has been made which may reasonably be considered to be patentable, MTI promptly shall file a United States priority 

17

 

patent
application, and, in the case of a Joint Invention, shall assign such patent application jointly to Sankyo and MTI. When a Sankyo Invention has been made which may reasonably be considered to
be patentable, Sankyo promptly shall file a Japanese priority patent application. MTI shall give Sankyo an opportunity to review the text of an application for a Joint Invention before filing, and
shall supply Sankyo with a copy of the application as filed, together with a note of its filing date and serial number. 

        13.2.2    Foreign Filing Decisions.    No later than nine
(9) months following the filing date of a priority patent application filed according to Section 13.2.1 above, the parties shall consult together, through the Steering Committee or
otherwise, and agree whether such priority application should be abandoned without replacement; abandoned and refilled; proceeded within the country of filing only; or used as the basis for a claim of
priority under the Pans Convention for corresponding applications in other countries. 

        13.2.3    Prosecution and Maintenance.    

        (a)   [***] shall control the preparation, filing,
prosecution and maintenance of all patent applications and patents which claim MTI Inventions and Joint Inventions. [***] shall
control the preparation, filing, prosecution and maintenance of all patent applications and patents which claim Sankyo Inventions. 

        (b)   [***] shall bear all applicable costs associated
with the preparation, filing, prosecution and maintenance of patents and patent applications which claim MTI Inventions in the United States, its territories and possessions. All applicable costs
associated with the preparation, filing, prosecution and maintenance of patents and patent applications which claim Joint Inventions in the United States, its territories and possessions shall  [***]
shall bear all applicable costs associated with the preparation, filing, prosecution and maintenance of all other patents
and patent applications subject to this Section 13.2. 

        13.3    Cooperation.    Each party shall make available to the other party or its authorized attorneys, agents or
representatives, its employees, agents or consultants necessary or appropriate to enable the appropriate party to file, prosecute and maintain patent applications and resulting patents with respect to
Inventions for a period of time sufficient for such party to obtain the assistance it needs from such personnel. Where appropriate, each party shall sign or cause to have signed all documents relating
to said patent applications or patents at no charge to the other. 

        13.4    No Other Technology Rights.    Except as otherwise provided in this Agreement, under no circumstances shall a
party hereto, as a result of this Agreement, obtain any ownership interest or other right in any technology, know-how, patents, pending patent applications, products, vaccines, antibodies,
cell lines or cultures, or animals of the other party, including items owned, controlled or developed by the other, or transferred by the other to said party at any time pursuant to this Agreement. It
is understood and agreed by the parties that this Agreement does not grant to either party any license or other right in basic technology of the other party except to the extent necessary to enable
the parties to carry out their part of this Agreement. 

        13.5    Enforcement of Patent Rights.    

        13.5.1    MTI and Sankyo shall promptly notify the other in writing of any alleged or threatened infringement of Patent Rights
in the Field of which they become aware. The Parties shall then confer and may agree jointly to prosecute any infringement described in this Section 13.5. The party owning the Patent alleged or
threatened to be infringed shall control the joint litigation in the event of any dispute between the parties with respect to any aspect of the litigation. With respect to Joint Inventions, MTI shall
control such joint litigation. 

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18

 

        13.5.2    If the parties do not agree on whether or how to proceed with enforcement activity within
(i) ninety (90) days following the notice of alleged infringement or (ii) ten (10) days before the time limit, if any, set forth in the appropriate laws and regulations for
the filing of such actions, whichever comes first, then either party may act in its own name to commence litigation with respect to the alleged or threatened infringement. The
non-controlling party shall reasonably cooperate with the party bringing such enforcement action, at the sole expense of the party bringing such enforcement action. 

        13.5.3    In the event a party brings an infringement action, the other party shall reasonably cooperate, including, if required
to bring such action, the furnishing of a power of attorney. Neither party shall have the
right to settle any patent infringement litigation under this Section 13.5 in a manner that diminishes the rights or interests of the other party without the express written consent of such
other party. 

        13.5.4    The costs of any joint litigation commenced pursuant to Section 13.5.1, including attorneys' fees and expenses,
shall be borne [***]. Only out-of-pocket costs shall be accounted for and reimbursed under this
Section 13.5.4, without an allocation for internal resources devoted to the litigation. The costs of any sole litigation commenced pursuant to Section 13.5.2, including attorneys' fees
and expenses, shall be borne solely by the party bringing such infringement action. 

        13.5.5    Except as otherwise agreed to by the parties as part of a cost sharing arrangement, any recovery realized as a result
of any joint litigation commenced pursuant to Section 13.5.1 shall be [***]. Any recovery realized as a result of any
sole litigation commenced pursuant to Section 13.5.2 shall be [***]. 

ARTICLE 14  

 TERM, TERMINATION  

        14.1    Expiration.    Unless terminated earlier pursuant to Section 14.2 below, and subject to termination of
the Research Program according to Article 3 hereof, this Agreement shall expire on the expiration of the Royalty Term. 

        14.2    Termination for Cause.    Either party may terminate this Agreement upon the occurrence of any of the
following: 

        14.2.1    Upon written notice by one party to the other, if the other party files or has filed against it a petition under the
Bankruptcy Act, makes an assignment for the benefit of creditors, has a receiver appointed for it or any of its assets; provided that, notwithstanding
anything herein to the contrary, a party shall not be able to terminate this Agreement pursuant to this Section 14.2.1 for any period during which the other party is proceeding in good faith to
reorganize under Chapter 11 of the United States Bankruptcy Code. In the event Sankyo terminates this Agreement pursuant to this Section 14.2.1, Sankyo shall retain (i) all rights under
this Agreement to further develop Candidate Compounds, Recommended Compounds, and Research Compounds in connection with the development of pharmaceutical compositions for use in the Field,
(ii) all rights under this Agreement to make, have made, use, offer to sell, sell and import the Products incorporating Licensed Products, and the Licensed Compounds for use in Products, in
accordance with the terms hereof, and (iii) all rights under this Agreement the use of the [***], subject to the payment
to MTI of royalties and other amounts under the terms and conditions set forth in this Agreement. 

        14.2.2    Upon the failure of either party to comply with any material obligation set forth in this Agreement (a  "Default"), the
non-defaulting party shall give to the defaulting party written notice (the "Notice of
Default") specifying the nature of the Default and requesting that the defaulting party cures such Default within  [***]. If the defaulting party shall dispute the existence,
extent or nature of any Default set forth in a Notice of Default,
the parties shall use good faith efforts to resolve the dispute. In the event any Default shall not be cured within [***] of the
defaulting party's receipt of a Notice of Default, the non-defaulting party shall be entitled to
terminate this Agreement in its entirety and the licenses granted hereunder, but only after the Chief Executive Officers of the parties have conferred as provided in Section 20.2.2 hereof. 

        (a)   If the non-defaulting party under this Section 14.2.2 is Sankyo, Sankyo shall retain (i) all
rights under this Agreement to further develop Candidate Compounds, Recommended Compounds and Research Compounds in connection with the development of pharmaceutical composition for use in the Field,
(ii) all rights under this Agreement to make, have made, use, offer to sell, sell and import Products incorporating Licensed Compounds, and Licensed Compounds for use in Products, in accordance
with the terms hereof, and (iii) all rights under this Agreement to use the [***], subject to the payment to MTI of
royalties and other amounts under the terms and conditions set forth in this Agreement; provided, however, that such payment to MTI shall be at  [***] the
rates set forth in Article 7 hereof in the event of MTI's default. 

	***
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Treatment Requested. 

19

 

         (b)   If the non-defaulting party under this Section 14.2.2 is MTI, all rights to Compounds shall revert to
MTI if such compounds were MTI Compounds or Third Party compounds or revert to Sankyo if such compounds were Sankyo Compounds (subject to the restrictions set forth in Section 4.6 hereof). 

        14.2.3    If events occur which would entitle Sankyo to exercise its right to terminate this Agreement pursuant to both
Section 14.2.1 and Section 14.2.2, Sankyo may, in its sole discretion, exercise its right to terminate this Agreement under either such Section. 

        14.3    Termination Right.    If Sankyo exercises its right under Section 8.2 of the Convertible Term Loan
Agreement, dated as of the date hereof, as amended, supplemented or otherwise modified from time to time, between Sankyo and MTI, Sankyo may terminate this Agreement concurrently therewith. 

        14.4    Effect of Expiration or Termination.    Expiration or termination of this Agreement shall not relieve the
parties of any obligation accruing prior to such expiration or termination. The provisions of this Section 14.4, Sections 4.2, 4.3, 4.4, 4.6, 6.1 (to the extent such provisions survive
in accordance with Section 14.2.2(a)), 6.4, 7.1 (as modified by Sections 14.2.2(a)) and 7.3 (as modified by Section 14.2.2(a) and solely with respect to any Candidate Compound
that has been identified prior to any such expiration or termination), and Articles 8, 9, 11, 12, 15 and 20 shall survive the expiration or termination of this Agreement for any reason, and the
provisions of Sections 14.2.2(a) and (b) shall survive termination of this Agreement in accordance with the terms of such Sections as set forth above. 

ARTICLE 15  

 INDEMNITY  

        15.1    Sankyo Indemnity Obligations.    Sankyo agrees to defend, indemnify and hold MTI, MTI's Affiliates and their
directors, officers, employees and agents harmless from all losses, liabilities, damages and expenses (including reasonable attorneys' fees and costs) incurred as a result of any claim, demand,
action, or other proceeding by any Third Party arising as a result of (a) breach of representation or warranty by Sankyo; (b) breach of any of its obligations under this Agreement by
Sankyo; (c) actual or asserted violations of any applicable law or regulation by Sankyo, its Affiliates or sublicensees by virtue of which Products manufactured, distributed or sold by Sankyo,
its Affiliates or sublicensees shall be alleged or determined to be adulterated, misbranded, mislabeled or otherwise not in compliance with any applicable law or regulation; (d) bodily injury,
death or property damage attributable to the manufacture, distribution, sale or use of Products by Sankyo, its Affiliates or sublicensees or otherwise attributable to a Product manufactured in
accordance with specifications provided by Sankyo; or (e) Product recall ordered by a governmental agency, or required by a confirmed Product failure as reasonably determined by the parties
hereto, with respect to a Product manufactured by Sankyo, its Affiliates or sublicensees, in each case except to the extent such loss, liability, damage or expense was attributable to MTI's gross
negligence or willful misconduct. 

        15.2    MTI Indemnity Obligations.    MTI agrees to defend, indemnify and hold Sankyo, Sankyo's Affiliates and their
directors, officers, employees and agents harmless from all losses, liabilities, damages and expenses (including reasonable attorneys' fees and costs) incurred as a result of any claim, demand,
action, or other proceeding by any Third Party arising as a result of (a) breach of representation or warranty by MTI; (b) breach of any of its obligations under this Agreement by MTI;
(c) actual or asserted violations of any applicable law or regulation by MTI, its Affiliates or licensees (other than Sankyo, its Affiliates or sublicensees) by virtue of which Products
manufactured, distributed or sold by MTI, its Affiliates or licensees (other than Sankyo, its Affiliates or sublicensees) shall be alleged or determined to be adulterated, misbranded, mislabeled or
otherwise not in compliance with any applicable law or regulation; (d) bodily injury, death or property damage attributable to the manufacture of Products by MTI, its Affiliates or licensees
(other than Sankyo, its Affiliates or sublicensees), unless manufactured in accordance with specifications provided by Sankyo; or (e) Product recall ordered by a governmental agency, or
required by a confirmed Product failure as reasonably determined by the parties hereto, with respect to a Product manufactured by MTI, its Affiliates or 

20

 

licensees
(other than Sankyo, its Affiliates or sublicensees), unless manufactured in accordance with specifications provided by Sankyo; in each case except to the extent such loss, liability, damage
or expense was attributable to Sankyo's gross negligence or willful misconduct. 

        15.3    Procedure.    A party or any of its Affiliates or their employees or agents (the  "Indemnnitee") that intends to
claim indemnification under this Article 15 shall promptly notify the other party (the
"Indemnnitor") of any
loss, claim, damage, liability or action in respect of which the Indemnitee intends to claim such indemnification, and the Indemnitor shall assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an Indemnitee shall have the right to retain its own counsel, with the fees and expenses to be paid
by the Indemnitor, if representation of such Indemnitee by the counsel retained by the Indemnitor would be inappropriate due to actual or potential differing interests between such Indemnitee and any
other party represented by such counsel in such proceedings. The indemnity agreement in this Article 15 shall not apply to amounts paid in settlement of any loss, claim, damage, liability or
action if such settlement is effected without the consent of the Indemnitor, which consent shall not be withheld unreasonably. The failure to deliver notice to the Indemnitor within a reasonable time
after the commencement of any such action, if prejudicial to its ability to defend such action, shall relieve such Indemnitor of any liability to the Indemnitee under this Article 15, but the
omission so to deliver notice to the Indemnitor will not relieve it of any liability that it may have to any Indemnitee otherwise than under this Article 15. The Indemnitee under this
Article 15, its employees and agents, shall cooperate fully with the Indemnitor and its legal representatives in the investigation of any action, claim or liability covered by this
indemnification. In the event that each party claims indemnity from the other and one party is finally held liable to indemnify the other, the Indemnitor shall additionally be liable to pay the
reasonable legal costs and attorneys' fees incurred by the Indemnitee in establishing its claim for indemnity. 

        15.4    Insurance.    Sankyo and MTI shall each maintain product liability insurance with respect to development,
manufacture and sales of Products by Sankyo or MTI, respectively, in such amount as Sankyo or MTI, respectively, customarily maintains with respect to the development, manufacture and sales of its
other products. Sankyo or MTI, as applicable, shall maintain such insurance for so long as it continues to develop, manufacture or sell any Products, and thereafter for so long as Sankyo or MTI, as
applicable, customarily maintains insurance for itself covering the development, manufacture or sale of its other products. 

ARTICLE 16  

 FORCE MAJEURE  

        Neither party shall be held liable or responsible to the other party nor be deemed to have defaulted under or breached this Agreement for failure or delay in
fulfilling or performing any term of this Agreement when such failure or delay is caused by or results from causes beyond the reasonable control of the affected party including but not limited to
fire, floods, embargoes, war, acts of war (whether war be declared or not), insurrections, riots, civil commotions, strikes, lockouts or other labor disturbances, acts of God or acts, omissions or
delays in acting by any governmental authority or the other party. 

ARTICLE 17  

 ASSIGNMENT  

        This Agreement may not be assigned or otherwise transferred by either party without the prior written consent of the other party. Notwithstanding the foregoing
sentence, MTI may, without the prior written consent of Sankyo, assign or otherwise transfer this Agreement and its rights and obligations hereunder to its Affiliates or in connection with the
transfer or sale of all or substantially all of its business to which this Agreement pertains, or in the event of its merger or consolidation or change in 

21

 

control
or similar transaction; provided that (i) [***] and
(ii) the transferee or surviving entity, as the case may be, is not one of the entities listed on attached Schedule 1. Any purported assignment in violation of the preceding sentences
shall be void. Any permitted assignee shall assume all obligations of its assignor under this Agreement. 

ARTICLE 18  

 NOTIFICATION OF PATENT TERM RESTORATION  

        MTI shall notify Sankyo of (i) the issuance of each United States patent included within the Patent Rights, giving the date of issue and patent number for
each such patent, and (ii) each notice pertaining to any patent included within the Patent Rights which it receives as patent owner pursuant to the Drug Price Competition and Patent Term
Restoration Act of 1984 (the "Act"), including notices pursuant to Sections 101 and 103 of the Act from persons who have filed an abbreviated
NDA. Such notices shall be given promptly, but in any event within fifteen (15) calendar days of each such patent's date of issue or receipt of each such notice pursuant to the Act, whichever
is applicable. MTI shall notify Sankyo of each filing for patent term restoration under the Act, any allegations of failure to show due diligence and all awards of patent term restoration (extensions)
with respect to the Patent Rights. Likewise, Sankyo will inform MTI of patent extensions and periods of data exclusivity in the rest of the world regarding any Product. 

ARTICLE 19  

 SEVERABILITY  

        Each party hereby agrees that it does not intend to violate any public policy, statutory or common laws, rules, regulations, treaty or decision of any government
agency or executive body thereof of any country or community or association of countries. Should one or more provisions of this Agreement be or become invalid, the parties hereto shall substitute, by
mutual consent, valid provisions for such invalid provisions which valid provisions in their economic effect are sufficiently similar to the invalid provisions that it can be reasonably assumed that
the parties would have entered into this Agreement with such valid provisions. In case such valid provisions cannot be agreed upon, the invalidity of one or several provisions of this Agreement shall
not affect the validity of this Agreement as a whole, unless the invalid provisions are of such essential importance to this Agreement that it is to be reasonably assumed that the parties would not
have entered into this Agreement without the invalid provisions. 

ARTICLE 20  

 MISCELLANEOUS  

        20.1    Notices.    Any consent, notice or report required or permitted to be given or made under this Agreement by
one of the parties hereto to the other shall be in writing, and shall be considered as given when delivered personally or by facsimile with confirmation or receipt (and promptly confirmed by personal
delivery or courier) or three (3) business days after having been deposited with an internationally recognized courier service, or such earlier delivery date as may be confirmed to the sender
by such courier service, addressed to such 

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other
party at its address indicated below, or to such other address as the addressee shall have last furnished in writing to the addressor and shall be effective upon receipt by the addressee. 

	If to MTI:	 	Metabasis Therapeutics, Inc.

9390 Towne Centre Drive

San Diego, California 92121

U.S.A.

Attention: President

Telephone: (619) 622-5550

Facsimile: (619) 458-3504
	

Copy to:	
 	

General Counsel
	

If to Sankyo:	
 	

Sankyo Company, Ltd.

2-58, Hiromachi I-chome

Shinagawa-ku

Tokyo 140-8710, Japan

Attention: Dr. H. Fukumi, Deputy Director, Research Institute

Telephone: (813) 3492-3131

Facsimile: (813) 5436-8561
	

Copy to:	
 	

Morrison & Foerster LLP

AIG Building, 7th Floor

1-3 Marunouchi 1-chome

Chiyoda-ku

Tokyo 100-0005, Japan

Attention: Ken Siegel, Esq.

Telephone: (813) 3214-6522

Facsimile: (813) 3214-6512

        20.2    Applicable Law; Arbitration.    

        20.2.1    Applicable Law.    This Agreement shall be governed by and
construed in accordance with the laws of the state of California. 

        20.2.2    Arbitration.    Any disputes arising between the parties
relating to, arising out of or in any way connected with this Agreement or any term or condition hereof, or the performance by either party of its obligations hereunder, whether before or after
termination of this Agreement, shall be promptly presented to the chief executive officers of MTI and Sankyo for resolution and if the chief executive officers cannot promptly resolve such disputes,
then such dispute shall be finally resolved by binding arbitration. Whenever a party shall decide to institute arbitration proceedings, it shall give written notice to that effect to the other party.
The party giving such notice shall refrain from instituting the arbitration proceedings for a period of sixty (60) days following such notice. Any arbitration hereunder shall be conducted under
the International Chamber of Commerce Arbitration Rules. Each such arbitration shall be conducted in the English language by a panel of three arbitrators appointed in accordance with such rules. Any
such arbitration shall be held in [***]. The arbitrators shall have the authority to grant specific performance, and to allocate
between the parties the costs of arbitration in such equitable manner as they determine.
Judgment upon the award so rendered may be entered in any court having jurisdiction or application may be made to such court for judicial acceptance of any award and an order of enforcement, as the
case may be. 

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        20.3    Release.    Each of MTI and Sankyo acknowledges and agrees that SICOR is relieved and discharged of all
further responsibilities, obligations and liabilities under this Agreement, except that SICOR shall continue to be bound by Section 11 of this Agreement as if it were a party hereto. Sankyo
hereby releases SICOR from any claims, whether now existing or hereafter coming into being, based on a breach by MTI of any of its obligations under this Agreement. 

        20.4    Entire Agreement.    This Agreement contains the entire understanding of the parties with respect to the
subject matter hereof. All express or implied agreements and understandings, either oral or written, heretofore made are expressly merged in and made a part of this Agreement. This Agreement may be
amended, or any term hereof modified, only by a written instrument duly executed by both parties hereto. 

        20.5    Headings.    The captions to the several Articles and Sections hereof are not a part of this Agreement, but
are merely guides or labels to assist in locating and reading the several Articles and Sections hereof. 

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

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

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

        20.9    Effectiveness.    This Agreement shall become effective as of the date first set forth above when
(a) counterparts hereof, which, when taken together, bear signatures for each of the parties hereto and SICOR, shall have been delivered to MTI and Sankyo and (b) all of the conditions
precedent under Section 4.1 of the Convertible Term Loan Agreement, dated as of the date hereof, between MTI and Sankyo have been satisfied. 

        IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth above. 

	

 	
 	
METABASIS THERAPEUTICS, INC.
	

 	
 	

By:	
 	

/s/ PAUL K. LAIKIND
	 	 	 	 	

	 	 	 	 	Name: Paul K. Laikind, Ph.D.
	 	 	 	 	Title: Chairman and CEO
	

 	
 	
SANKYO COMPANY, LTD.
	

 	
 	

By:	
 	

/s/ DR. TETSUO HIRAOKA
	 	 	 	 	

	 	 	 	 	Name: Dr. Tetsuo Hiraoka

Title: Member of the Board,

Director of Research Institute

SICOR hereby confirms to Sankyo that (i) all of SICOR's right, title and interest in, to and under the Original R&D Agreement was assigned to MTI pursuant to the
Transfer Agreement and 

24

 

(ii) notwithstanding
the foregoing, SICOR shall continue to abide by Article 11 of this Agreement as if it were a party thereto. 

	

 	
 	
SICOR INC
	

 	
 	

By:	
 	

/s/ JOHN SAYWARD
	 	 	 	 	

	 	 	 	 	Name: John Sayward

Title: Executive Vice President, Chief Financial Officer and Treasurer

25

   Appendix A  

 RESEARCH PROGRAM  

	1.
	PROJECT RESOURCES  

1.1    MTI:    MTI will maintain a project headcount of  [***]. The expected distribution of manpower at MTI is as set
forth in the table below. Significant changes in the distribution
will be according to the needs of the project and will be reviewed by the Steering Committee. 

[***]
[***]
[***]
[***]

1.2    Sankyo:    Sankyo will provide [***]. Sankyo will
provide [***]. 

2.     COMPOUND FLOW  

2.1    Compound Testing:    Compounds will be tested according to the  [***]. Changes in the [***] will be approved by the
Steering Committee. In general, MTI will be responsible for [***]. MTI will send to Sankyo compounds that satisfy the  [***]. Sankyo will be responsible for
[***]. Results
from [***], as defined by the project team from time to time to be the  [***], will be provided to MTI [***].
Since these tests
will be defined in detail [***], the protocols for each test will require approval by the Steering Committee. 

2.2    Compound Optimization:    Strategies to optimize the activity of the lead candidates will be  [***]. 

2.3    Compound Synthesis:    MTI will be primarily responsible for the  [***]. MTI will supply Sankyo with sufficient
amounts of  [***] Sankyo is responsible for carrying out as well as for studies agreed upon by the Steering Committee that will provide
information considered to be of value to the project team. Compound requirements for [***] as decided by the Steering Committee.  [***]. 

2.4    Compound Selection:    A compound meeting the [***]
will be considered as a Recommended Compound. Designation of the Recommended Compound will be [***]. 

3.     RECOMMENDED COMPOUND CRITERIA  

3.1    [***]    The Recommended Compound will  [***]. 

3.2    [***]    The Recommended Compound will  [***] used for candidate testing will be approved by the Steering
Committee and will include  [***] 

3.3    [***]    The Recommended Compound will  [***]

3.4    [***]    The Recommended Compound will have  [***]

3.5    [***]    The Recommended Compound will  [***] will be based on the [***] selected and approved
by the Steering Committee will be the [***]. 

3.6    [***]    used in the study will be at the  [***]

3.7    [***]    The Recommended Compound will  [***] In addition, the Recommended Compound in these studies will 
[***]. 

4.    INTERPRETATION  

        Nothing in this document shall be deemed to amend, modify or otherwise affect the Amended and Restated Collaborative Research and Development and License
Agreement, dated as of June 30, 1999 (the "Agreement") between MTI and Sankyo. In the event of a conflict between the terms of this Research
Program and the terms of the Agreement, the terms of the Agreement shall govern. 

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[***]

Figure
1 

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SCHEDULE 1  

 LIST OF ENTITIES TO WHOM MTI MAY NOT ASSIGN THIS AGREEMENT  

	1)	 	[***]
	

2)	
 	

[***]
	

3)	
 	

[***]
	

4)	
 	

[***]
	

5)	
 	

[***]
	

6)	
 	

[***]
	

7)	
 	

[***]
	

8)	
 	

[***]
	

9)	
 	

[***]
	

10)	
 	

[***]
	

11)	
 	

[***]
	

12)	
 	

[***]
	

13)	
 	

[***]

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28

 
FIRST AMENDMENT TO THE AMENDED AND

RESTATED COLLABORATIVE RESEARCH AND DEVELOPMENT AND

LICENSE AGREEMENT  

        THIS FIRST AMENDMENT TO AMENDED AND RESTATED COLLABORATIVE RESEARCH AND DEVELOPMENT AND LICENSE AGREEMENT (this  "Agreement"), dated as February 9, 2000 between METABASIS THERAPEUTICS, INC., a Delaware
corporation having its principal place of business at 9390 Towne Centre Drive, San Diego, California 92121 ("MTI"), SANKYO
COMPANY, LTD., a Japanese corporation having its
principal place of business at 5-1 Nihonbashi-Honcho, 3-chome, Chuo-ku, Tokyo 103, Japan ("Sankyo"). 

WITNESSETH:  

        WHEREAS, SICOR Inc., a Delaware corporation formerly known as Gensia Sicor Inc.
("SICOR"), and Sankyo entered into a Collaborative Research and Development Agreement, dated as of April 18, 1997 and amended by an Amendment
dated as of September 22, 1998 (the "Original R&D Agreement"), under which Sankyo agreed to sponsor research to be conducted by Sicor to develop
products for treatment of Diabetes (as such term is hereinafter defined) and to commercialize with SICOR products resulting from such research; and 

        WHEREAS, pursuant to the Asset and Liability Transfer Agreement, dated as of December 17, 1997 (the  "Transfer Agreement"), SICOR sold, assigned, transferred
and delivered to MTI, and MTI acquired from SICOR, all of SICOR's right, title and interest in,
to and under, amongst other things, the Original R&D Agreement; and 

        WHEREAS, MTI and Sankyo entered into the Amended and Restated Collaborative Research and Development and License Agreement, dated as of
June 30, 1999, (the "Amended R&D Agreement") amending and restating the same to modify their respective rights and obligations thereunder; and 

        WHEREAS, MTI and Sankyo each desire to amend the Amended R&D Agreement to, among other things, extend its term for an additional one year. 

        NOW, THEREFORE, the parties hereby amend the Amended R&D Agreement as follows: 

        1.    Sections 3.3.1 and 3.3.2 of the Amended R&D Agreement are hereby deleted in their entirety and replaced with the
following: 

        "3.3.1    Amount of Funding.    In consideration of MTI's performance
of its obligations under the Research Program, (a) Sankyo paid, or in the case of the third year will pay, MTI a research fee ofUS$3,500,000 for each of the first three Research Years during
the term of the Research Program, and (b) Sankyo shall pay a research fee ofUS$3,500,000 for the fourth Research Year during the term of the Research Program. 

        3.3.2    Payment Terms.    The research fee for fourth Research Year
shall be paid in equal quarterly installments on the first business day of the first, fourth, seventh and tenth months in that Research Year." 

        2.    Section 3.4.1 of the Amended R&D Agreement is hereby deleted in its entirely and replaced with the following: 

        "3.4.1    Term.    Except as provided herein, the term of the Research
Program commenced as of May 1, 1997, and shall continue for four (4) years." 

1

 

        IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth above. 

	

 	
 	
METABASIS THERAPEUTICS, INC.
	

 	
 	

By:	
 	

/s/ PAUL K. LAIKIND
	 	 	 	 	

	 	 	 	 	Name: Paul K. Laikind, Ph.D.

Title: Chairman and CEO
	

 	
 	
SANKYO COMPANY, LTD.
	

 	
 	

By:	
 	

/s/ TETSUO HIRAOKA
	 	 	 	 	

	 	 	 	 	Name: Tetsuo Hiraoka, Ph.D.

Title: General Manager, Research Institute

2

   
***Text Omitted and Filed Separately

with the Securities and Exchange Commission.

Confidential Treatment Requested

Under 17 C.F.R. Sections 200.80(b)(4),

200.83 and 230.406. 

SECOND AMENDMENT TO THE AMENDED AND

RESTATED COLLABORATIVE RESEARCH AND DEVELOPMENT AND

LICENSE AGREEMENT  

        THIS SECOND AMENDMENT TO THE AMENDED AND RESTATED COLLABORATIVE RESEARCH AND DEVELOPMENT AND LICENSE AGREEMENT
(this "Agreement"), dated as of March 22, 2001, between METABASIS THERAPEUTICS, INC., a
Delaware corporation having its principal place of business at 9390 Towne Centre Drive, San Diego, California 92121 ("MTI"), and  SANKYO COMPANY, LTD., a Japanese corporation having its principal place of business at 5-1 Nihonbashi-Honcho, 3-chome,
Chuo-ku, Tokyo 103, Japan ("Sankyo"). 

WITNESSETH:  

        WHEREAS, SICOR Inc., a Delaware corporation formerly known as Gensia Sicor Inc.
("SICOR"), and Sankyo entered into a Collaborative Research and Development Agreement, dated as of April 18, 1997 and amended by an Amendment
dated as of September 22, 1998 (the "Original R&D Agreement"), under which Sankyo agreed to sponsor research to be conducted by SICOR to develop
products for treatment of Diabetes (as such term is defined in the Original R&D Agreement) and to commercialize with SICOR products resulting from such research; and 

        WHEREAS, pursuant to the Asset and Liability Transfer Agreement, dated as of December 17,1997, SICOR sold, assigned, transferred
and delivered to MTI, and MTI acquired from SICOR, all of SICOR's right, title and interest in, to and under, among other things, the Original R&D Agreement; and 

        WHEREAS, MTI and Sankyo entered into the Amended and Restated Collaborative Research and Development and License Agreement, dated as of
June 30, 1999 (the "Amended R&D Agreement"), amending and restating the same to modify certain of their respective rights and obligations
thereunder; and 

        WHEREAS, MTI and Sankyo entered into the First Amendment to the Amended R&D Agreement, dated as of February 9, 2000 (the  "First Amendment"), amending
the same to, among other things, extend its term for an additional one year; and 

        WHEREAS, MTI and Sankyo each desires to further amend the Amended R&D Agreement (as amended by the First Amendment) to, among other
things, extend its term for an additional one year. 

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

        1.    The parties hereby further amend the Amended R&D Agreement (as amended by the First Amendment) as follows: 

        (a)   The forth line of Section 3.1.2 is hereby deleted in its entirety and replaced with the following: 

        "In
each of the third, fourth and fifth Research Years during the term of the Research Program, MTI shall allocate  [***] full time equivalent researchers and staff to perform its obligations under the
Research Program  [***]" 

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        (b)   Sections 3.3.1 and 3.3.2 of the Amended R&D Agreement (as amended by the First Amendment) are hereby deleted in their
entirety and replaced with the following: 

        "3.3.1    Amount of Funding.    In consideration of MTI's performance
of its obligations under the Research Program, (a) Sankyo paid MTI a research fee of US$3,500,000 for each of the first four Research Years during the term of the Research Program and
(b) Sankyo shall pay a research fee of US$3,500,000 for the fifth Research Year during the term of the Research Program. 

        3.3.2    Payment Terms.    The research fee for the fifth Research
Year shall be paid in equal quarterly installments on the first business day of the first, fourth, seventh and tenth months in that Research Year." 

        (c)   Section 3.4.1 of the Amended R&D Agreement (as amended by the First Amendment) is hereby deleted in Its entirety
and replaced with the following: 

        "3.4.1    Term.    Except as provided herein, the term of the Research
Program commenced as of May 1, 1997, and shall continue for five (5) years." 

        (d)   Sankyo's address for notices set forth in Section 20.1 of the Amended R&D Agreement (as amended by the First
Amendment) is hereby deleted in its entirety and replaced with the following: 

"If
to Sankyo: Sankyo Company, Ltd.

2-58, Hiromachi 1-chome

Shinagawa-ku

Tokyo 140-8710, Japan

Attention: Hidenori Shimotsu

Telephone: (813)-3492-3131

Facsimile: (813)-5436-8561" 

Copy
to: Morrison & Foerster LLP

AlG Building 11F

1-1-3 Marunouchi

Chiyoda-ku

Tokyo 100-0005, Japan

Attention: Ken Siegel, Esq.

Telephone: (813)-3214-6522

Facsimile: (813)-3214-6512 

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

        3.    This Agreement shall become effective as of the date first set forth above when counterparts hereof, which, when taken
together, bear signatures for each party hereto, shall have been delivered to MTI and Sankyo. This Agreement is to be narrowly construed. Except as expressly amended hereby and by the First Amendment,
all terms and provisions of the Amended R&D Agreement shall continue to be in full force and effect, and both parties hereto shall be entitled to all of the benefits thereof. 

        4.    This Agreement shall be governed by and construed in accordance with the laws of the State of California. 

2

 

        IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth above. 

	

 	
 	
METABASIS THERAPEUTICS, INC.
	

 	
 	

By:	
 	

/s/ PAUL K. LAIKIND
	 	 	 	 	

	 	 	 	 	Name: Paul K. Laikind, Ph.D.

Title: Chairman and CEO
	

 	
 	
SANKYO COMPANY, LTD.
	

 	
 	

By:	
 	

/s/ TETSUO HIRAOKA
	 	 	 	 	

	 	 	 	 	Name: Tetsuo Hiraoka, Ph.D.

Title: Executive Managing Director, General Manager, Research Institute

3

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Exhibit 10.17QuickLinks
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Exhibit 10.18    
    

***Text
Omitted and Filed Separately

with the Securities and Exchange Commission.

Confidential Treatment Requested

Under 17 C.F.R. Sections 200.80(b)(4),

200.83 and 230.406. 

EXCLUSIVE OPTION AGREEMENT  

        THIS EXCLUSIVE OPTION AGREEMENT (the "Agreement") is made as of
October 21, 2002 (the "Option Effective Date") by and between METABASIS
THERAPEUTICS, INC., a Delaware corporation ("Metabasis"), and SANKYO
CO., LTD., a Japanese corporation ("Sankyo"). 

RECITALS  

        WHEREAS, Sankyo and Metabasis are parties to that certain Amended and Restated Collaborative Research and
Development and License Agreement, dated as of June 30, 1999, as amended on February 9, 2000 and March 22, 2001 (the "Restated
Agreement"), for the development of products for treatment of Diabetes; 

        WHEREAS, the Research Program Term under the Restated Agreement expired on May 1, 2002; 

        WHEREAS, pursuant to the Restated Agreement, Metabasis has, among other things, granted to Sankyo an exclusive, worldwide license to the
Licensed Compound referred to as CS-917 and Products incorporating such Licensed Compound; and 

        WHEREAS, Metabasis and Sankyo wish to enter into this Agreement to, among other things, provide Sankyo an exclusive option to obtain an
exclusive license to a new Back-up Compound for CS-917 and an exclusive first right to negotiate a new agreement with Metabasis for discovery and commercialization of next
generation compounds in the Field on the terms and conditions set forth herein. 

        NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants and agreements contained herein, the parties hereto,
intending to be legally bound, do hereby agree as follows: 

AGREEMENT  

ARTICLE 1  

 DEFINITIONS  

        Except as otherwise defined in this Agreement, all capitalized terms used in this Agreement have the meaning given such terms in the Restated Agreement. 

        1.1   "Back-up Compound" means any and all Compounds that have properties, results and
effects that are substantially similar to CS-917. 

        1.2   "CS-917" means that certain Compound known as CS-917 (also known as
MB6322), which is a Licensed Compound under the Restated Agreement. 

        1.3   "Current Back-up Compound" means the Back-up Compound for
CS-917 known as MB6835. 

1

 

        1.4   "Diabetes" means insulin-dependent diabetes mellitus (Type I Diabetes),
noninsulin-dependent diabetes mellitus (Type II Diabetes) and other conditions of high blood glucose. 

        1.5   "Discovery Period" means the period from May 1, 2002 through the end of the Option Term. 

        1.6   "Event of Force Majeure" has the meaning set forth in Section 9.1 

        1.7   "Field" means the treatment of Diabetes by means of lowering blood glucose levels by direct
suppression of hepatic gluconeogenesis by inhibiting fructose-1, 6-bisphosphatase. 

        1.8   "Indemnified Party" has the meaning set forth in Section 6.7. 

        1.9   "Indemnifying Party" has the meaning set forth in Section 6.7. 

        1.10 "Information" has the meaning set forth in Section 7.2. 

        1.11 "License" has the meaning set forth in Section 3.1. 

        1.12 "Loan Agreement" means the Convertible Term Loan Agreement, dated June 30, 1999, between
Sankyo and Metabasis. 

        1.13 "Losses" has the meaning set forth in Section 6.7. 

        1.14 "Metabasis Activities" means the activities conducted by Metabasis pursuant to
Section 2.1. 

        1.15 "Negotiation Period" has the meaning set forth in Section 4.2(a). 

        1.16 "Negotiation Right" has the meaning set forth in Section 4.1. 

        1.17 "New Agreement" has the meaning set forth in Section 4.1. 

        1.18 "New Back-up Compound" means a Back-Up Compound to CS-917
that is more suitable with respect to the Field, and/or has a better phannacokinetic and toxicological profile, than CS-917 or the Current Back-up Compound. 

        1.19 "Next Generation Compounds" means any and all compounds in the Field owned or licensed (with a
right to sublicense) by Metabasis, other than (a) Compounds to which Sankyo may have rights under the Restated Agreement and (b) the New Back-up Compound should the Option
for one be exercised as set forth in Section 3.2. 

        1.20 "Option" has the meaning set forth in Section 3.1. 

        1.21 "Option Notice" has the meaning set forth in Section 3.2. 

        1.22 "Option Term" means the period beginning on the Option Effective Date and ending on the earlier
of (a) the date that is eighteen (18) months after the Option Effective Date, or (b) the date that is ninety (90) days after dosing of the last patient in the fourteen
(14)-day, multiple dose study of CS-917 in Type II Diabetes, unless terminated earlier as provided in Section 8.2. The Option Term shall be automatically
extended: (a) for the duration of any Event of Force Majeure; (b) for the period of time equal to the aggregate of any time periods during which Metabasis is in breach under any material
provision of this Agreement; and (c) if the last day of the Option Term falls on a Saturday, Sunday, or holiday, through and including the next business day following such Saturday, Sunday or
holiday (as used herein, "holiday" means any holiday which is recognized by the government of Japan). 

        1.23 "Third Party Conditions" has the meaning set forth in Section 4.2(c). 

2

 
ARTICLE 2  

 ACTIVITIES IN THE FIELD  

        2.1    Metabasis Activities.    During the Option Term, Metabasis will conduct discovery and evaluation activities in
the Field, including making reasonable efforts to identify New Back-up Compounds. Subject to Section 2.6, Metabasis will have sole right to make decisions regarding how to conduct
the Metabasis Activities; provided that Metabasis will conduct the Metabasis Activities in good scientific manner and in compliance with applicable legal requirements, to attempt to achieve
efficiently and expeditiously its objectives. Metabasis shall proceed diligently with the Metabasis Activities by using good faith efforts. 

        2.2    Assigned Researchers.    Metabasis agrees to assign, at all times during the Option Term, between  [***] and [***] full-time
equivalent researchers to the Metabasis Activities, the specific number within such range to be determined by Metabasis. 

        2.3    Data.    Metabasis will maintain records in sufficient detail and in good scientific manner appropriate for
patent purposes and as will properly reflect all work done and results achieved in the performance of the Metabasis Activities (including all data in the form required under any applicable
governmental regulations). Metabasis shall provide Sankyo the right to inspect such records, and, as requested from time to time by Sankyo, shall provide copies of all requested records, to the extent
reasonably required for the exercise of Sankyo's rights under this Agreement; provided that Sankyo shall maintain such records and the information of Metabasis contained therein in confidence in
accordance with Article 7 and shall not use such records and information except to the extent otherwise permitted by this Agreement. 

        2.4    Quarterly Reports.    Metabasis will provide to Sankyo no later than fourteen (14) days after the Option
Execution Date a written report which shall describe in reasonable detail the discovery and evaluation activities undertaken in the Field by Metabasis during the period commencing on May 1,
2002 and ending on the Option Effective Date, which such report shall include, without limitation, information on the chemical structure of, and data generated on, any potential New
Back-up Compound discovered by Metabasis during such period. Thereafter, Metabasis will provide to Sankyo no later than fourteen (14) days after the end of each calendar quarter
during the Option Term a written report which shall reasonably detail and evaluate the Metabasis Activities performed during such calendar quarter and the results thereof. 

        2.5    Delivery of Compounds.    Metabasis will promptly identify and deliver to Sankyo  [***] information on the chemical
structure of, data generated on, and (if so requested) reasonable quantities (for research and
preclinical pharmacology use) of, any potential New Back-up Compound. Upon termination of this Agreement by Sankyo pursuant to Section 8.2, Metabasis will promptly identify and
deliver to Sankyo (for research and preclinical pharmacology use) [***] of the quantity of any potential New Back-up
Compound in the possession of Metabasis. 

        2.6    Evaluation of New Back-up Compound.    In the event that Sankyo decides, in its sole discretion, to
test any potential New Back-up Compound discovered by Metabasis during the Discovery Period, Metabasis will promptly provide such compound to Sankyo so that Sankyo may engage in such
evaluation. Sankyo will test such compound to evaluate such compound as a New Back-up Compound in a timely manner in accordance with industry standards and Sankyo's internal practices.
Sankyo will have the sole right to make decisions regarding how to conduct such evaluation, but will keep Metabasis reasonably informed of the results of such evaluation and involve Metabasis in the
evaluation process in a manner consistent with the parties' practices under the Restated Agreement. No later than [***] after
completion of each quality control check on the results of Sankyo's evaluation of any potential New Back-up Compound, which Sankyo will perform in a timely manner consistent with Sankyo's
internal practices, Sankyo will provide Metabasis with a report describing the results of the 

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evaluation
of such New Back-up Compound in reasonable detail. Metabasis will have the right to use for any and all purposes any data, results and other information contained in any such
report. In addition, Sankyo agrees to reasonably consider requests by Metabasis for additional information generated by Sankyo in connection with the evaluation of any potential New Backup Compound
pursuant to this Section 2.6 and to provide such additional information to Metabasis, with Metabasis [***], in the event
that Metabasis reasonably deems such additional information to be necessary in order for it to comply with applicable legal requirements or regulatory requests. The foregoing shall not, however, be
deemed to require Sankyo to preserve or maintain records or internal data as to tests or test results other than in a manner consistent with Sankyo's internal practices. 

ARTICLE 3  

 GRANT AND EXERCISE OF OPTION  

        3.1    Grant of Option.    Metabasis hereby grants to Sankyo an exclusive option (the  "Option") to obtain an exclusive
license to anyone (1) New Back-up Compound discovered by Metabasis during the Discovery Period (the  "License"), which License, should the Option be exercised as set forth in Section 3.2,
 will be granted pursuant to Section 6.1.1(b) of the
Restated Agreement and otherwise on the terms and conditions set forth in the Restated Agreement, including, without limitation, Articles 6 and 7 of the Restated Agreement;  provided, however, that,
in the event such Recommended Compound is designated a Candidate Compound, Sankyo will
[***]. Sankyo will designate the one (1) New Back-up Compound discovered by Metabasis which is subject to the
Option by providing written notice to Metabasis identifying such New Back-up Compound on or prior to the date that is  [***] after the end of the Option Term. 

        3.2    Exercise of Option.    Subject to Section 4.3(c), if Sankyo has designated a New Back-up
Compound pursuant to Section 3.1 and, at any time during or after the Option Term, Sankyo decides, pursuant to the Restated Agreement, to terminate development of CS-917 and not to
develop, or terminate development of, the Current Back-up Compound, then Sankyo may elect to exercise the Option pursuant to this Section 3.2. Sankyo may exercise the Option for the
New Back-up Compound designated by Sankyo pursuant to Section 3.1 by providing Metabasis written notice (the "Option Notice") stating
that Sankyo has exercised the Option with respect to such New Back-up Compound. Upon the date that Metabasis receives the Option Notice, the License to such New Back-up
Compound shall become effective and such New Back-up Compound shall be deemed a Recommended Compound under the Restated Agreement. Sankyo may not conduct any clinical testing of any New
Back-up Compound or potential New Back-up Compound unless and until Sankyo exercises the Option with respect to such New Back-up Compound; provided, that Sankyo
shall be entitled prior to exercise of the Option to engage in evaluation, preclinical testing or Phase I clinical studies of any such New Back-up Compound or potential New
Back-up Compound pursuant to Section 2.6. In addition, upon Sankyo's exercise of the Option with respect to a New Back-up Compound, Sankyo will not
conduct any further clinical testing of CS-917 or the Current Back-up Compound. 

ARTICLE 4  

 RIGHT OF FIRST NEGOTIATION  

        4.1    Grant of Negotiation Right.    Metabasis hereby grants to Sankyo an exclusive first right to negotiate (the  "Negotiation
Right") with Metabasis during the Option Term for a new collaborative research, development and commercialization agreement between the
parties for the discovery, development and commercialization of Next Generation Compounds in the Field (the "New Agreement"). During the Option Term,
Metabasis will not perform any research and development work for any Third Party in, or with respect to, the Field. It is understood that Metabasis presently conducts, and may conduct during the
Option Term, research for itself in the Field and for itself and others outside the Field. 

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        4.2    Exercise of Negotiation Right.    

        (a)   Sankyo may exercise the Negotiation Right only during the Option Term by providing Metabasis written notice of its
election to exercise the Negotiation Right. If Sankyo exercises the Negotiation Right in accordance with this Section 4.2, Sankyo and Metabasis will negotiate in good faith regarding
commercially reasonable terms and conditions of the New Agreement, which shall include those terms set forth in Section 4.3 and such additional terms and conditions as Sankyo and Metabasis may
agree upon following good faith negotiations, until the earliest to occur of the following events: (i) execution of the New Agreement; (ii) mutual written agreement of the parties to end
negotiations; or (iii) [***] following the expiration of the Option Term (the "Negotiation
Period"). Metabasis will negotiate exclusively with Sankyo under this Section 4.2(a) during the Negotiation Period. 

        (b)   If Sankyo does not exercise the Negotiation Right during the Option Term, or the parties do not enter into the New
Agreement within the Negotiation Period, Metabasis shall be free to continue the discovery,
development and commercialization of Next Generation Compounds owned or licensed by Metabasis, and may proceed to establish business arrangements with third parties with respect to such activities,
without any further obligation to Sankyo under this Agreement with respect to such Next Generation Compounds, except as set forth in Section 4.2(c). 

        (c)   If Sankyo exercised the Negotiation Right during the Option Term, but the parties did not enter into the New Agreement
within the Negotiation Period, then during the [***] period following the Negotiation Period, Metabasis will not enter into a
binding agreement with a Third Party concerning the discovery, development or commercialization of Next Generation Compounds which includes (i) economic terms that are more favorable to such
Third Party, in the aggregate, than those set forth in Section 4.3(a) (provided that, for purposes of determining whether such economic terms are more favorable to such Third Party, the payment
described in Section 4.3(a)(i) shall be deemed to be [***], taking into account any  [***]) and (ii) non-economic terms relating to drug discovery
and evaluation that are more favorable to such
Third Party, in the aggregate, than those set forth in the Restated Agreement, unless (x) Metabasis provides Sankyo with written notice setting forth the material terms and conditions upon
which Metabasis proposes to enter into an agreement with such Third Party (the "Third Party Conditions") and (y) Sankyo does not, within  [***]
after receiving such notice of the Third Party Conditions, commit in writing to enter into an agreement with Metabasis on
the Third Party Conditions. If Sankyo commits in writing to enter into an agreement with Metabasis on the applicable Third Party Conditions during such  [***] period, then the parties will promptly enter
into an agreement on such Third Party Conditions and other terms and
conditions customary for such an agreement in the industry. If the parties do not agree on all terms and conditions (other than the Third Party Conditions) of such agreement, then the parties will
resolve the dispute regarding such terms and conditions pursuant to Section 9.6. If Sankyo does not commit in writing to enter into an agreement with Metabasis on the Third Party Conditions
during such [***] period, then Metabasis may, within the next succeeding  [***] period, enter into an agreement with such Third Party concerning the
discovery, development or commercialization of Next
Generation Compounds on substantially the same terms as set forth in Metabasis' notice to Sankyo. If Metabasis does not enter into an agreement on such terms within such  [***] period, then Metabasis
shall no longer have the right to enter into an agreement with a Third Party concerning the
discovery, development or commercialization of Next Generation Compounds without again fully complying with the provisions of this Section 4.2(c). This Section 4.2(c) will terminate at
the end of the [***] period after the expiration of the Negotiation Period or, if earlier, upon Metabasis entering into an
agreement with a Third Party or Sankyo concerning the discovery, development or commercialization of Next Generation Compounds in compliance with the provisions of this Section 4.2(c). 

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        Notwithstanding
the above, if the Third Party Conditions include a term or terms that [***]. An example of such a
term would include but not be limited to [***]. 

        4.3    Terms of New Agreement.    

        (a)   The economic terms of the New Agreement will be the same as the comparable economic terms of the Restated Agreement
(which is attached as Exhibit A hereto for reference), except as follows: 

        (i)    the payment due upon execution of the New Agreement will be  [***], which [***]; 

        (ii)   the research funding under the New Agreement shall be  [***] per year and the research period under the New Agreement shall be for  [***]; 

        (iii) the development milestone payments under the New Agreement will be payable as follows: 

	Milestone Achieved
 
	 	Payment

	Selection of Next Generation Compound for further Development and evaluation by applicable Sankyo committee	 	[***]
	First filing of an IND	 	[***]
	Proof of efficacy in clinical study	 	[***]
	First filing of an NDA	 	[***]
	First approval of an NDA (or receipt of marketing approval) in the US or a Primary Country	 	[***]

        (iv)  the royalty payable under the New Agreement shall be  [***] of Net Sales in all jurisdictions; 

        (b)   The number of full-time equivalent researchers allocated by Metabasis to perform research and development
activities pursuant to the New Agreement shall fall within the range set forth in Section 3.1.2 of the Restated Agreement. If Sankyo and Metabasis enter into a New Agreement, any New
Back-up Compound designated by Sankyo pursuant to Section 3.1 may, at the election of Sankyo, be treated as a Recommended Compound for purposes of the New Agreement, and, in such
event,
notwithstanding Section 3.2, Sankyo shall not be obligated to cease development of, or otherwise give up rights to, CS-917 or the Current Back-up Compound. All potential
New Back-up Compounds discovered by Metabasis during the Discovery Period shall, upon execution of the New Agreement, be deemed Research Compounds thereunder. Under the New Agreement,
Sankyo may withhold from royalties due to Metabasis thereunder amounts for payment of any withholding tax that Sankyo has paid to any taxing authority with respect to the royalty amounts due to
Metabasis thereunder; provided, however, that the net amount payable to Metabasis for any royalty period shall in no event be reduced by more than  [***] of
the royalties owing to Metabasis for such royalty period. All other amounts payable by Sankyo to Metabasis under the
New Agreement shall represent the actual net proceeds to be received by Metabasis and Sankyo would be responsible for payment of any withholding taxes thereon; provided,
however, that Sankyo shall have the right to deduct from the milestone payments to Metabasis for "First filing of an NDA" and for "First approval of an NDA (or receipt of
marketing approval) in the US or a Primary Country" under the New Agreement, as described in Section 4.3(a)(iii) of this Agreement, an amount equal to  [***] of any withholding tax arising from
payment of such milestone payment; provided further that the amount of withholding tax
deducted from any such milestone payment may not exceed [***] of the total amount of such milestone payment. In addition, the
parties agree to reasonably cooperate in obtaining a refund or credit of any withholding taxes paid with respect to any amounts paid to Metabasis under the New Agreement, and any refund or credit
obtained will belong to the parties [***]; and 

        (c)   The terms of the New Agreement, other than economic terms described in Section 4.3(a) and the other terms
described in Section 4.3(b), related to drug discovery and evaluation will be substantially the same as the comparable terms of the Restated Agreement. 

        4.4    No Negotiation.    During the Option Term, Metabasis will not, and will not authorize or permit its employees,
officers, directors, agents, affiliates or representatives to solicit, initiate or otherwise engage in any discussion or negotiation with any Third Party with respect to an agreement for the
performance of research and development work in, or with respect to, the Field, or concerning 

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the
discovery, development or commercialization of any Next Generation Compound or otherwise perform any research or development work in the Field for or on behalf of any Third Party. 

ARTICLE 5  

 PAYMENT OBLIGATIONS  

        5.1    Rights Fee.    In consideration for the rights granted to Sankyo under this Agreement, Sankyo shall pay to
Metabasis a one-time, non-refundable fee equal to US$8,500,000 within ten (10) business days after the Option Effective Date. If Sankyo and Metabasis enter into the New
Agreement, Sankyo will [***] under the New Agreement. 

        5.2    Taxes.    The amounts payable by Sankyo to Metabasis under this Agreement  [***]. Metabasis agrees to reasonably cooperate
with Sankyo in obtaining a refund of any withholding taxes paid by Sankyo with
respect to any such amount paid to Metabasis under this Agreement. In the event that Metabasis is successful in obtaining any refund of any withholding taxes paid by Sankyo with respect to such amount
payable to Metabasis under this Agreement, Metabasis agrees to promptly remit the amount of such refund to Sankyo. 

        5.3    Payment Terms.    All payments due to Metabasis under this Agreement will be paid in United States dollars by
bank wire transfer in immediately available funds to such account as Metabasis has specified to Sankyo in writing reasonably in advance of the date on which such payment is due. Any payment by Sankyo
that is not paid [***] due under this Agreement will bear interest, to the extent permitted by applicable law, at  [***] the London Interbank Offered Rate
(LIBOR) calculated on the date such payment is due. 

        5.4    Prepayment of Loan.    Sankyo may, at its option, elect to deduct from the amounts otherwise payable pursuant
to Section 5.1 of this Agreement up to (i) US$1,500,000 of the aggregate principal amount outstanding under the Loan Agreement as of the Option Effective Date and (ii) the entire
amount of interest accrued under the Loan Agreement through March 29, 2002, which such amount the parties acknowledge and agree is US$535,243.93. Sankyo may exercise the foregoing right by
providing Metabasis with written notice in advance of the Payment Date which shall include a statement that Sankyo has elected to exercise its rights pursuant to this Section 5.4. Any such
deduction shall constitute full and complete payment of the deducted amount in accordance with the terms of the Loan Documents (as that term is defined in the Loan Agreement). Any outstanding
principal amount and accrued interest under the Loan Agreement that is not deducted pursuant to this Section 5.4 shall be payable in accordance with the terms of the Loan Agreement; provided
that, notwithstanding any provision of the Restated Agreement or the Loan Agreement to the contrary, Sankyo may not setoff any outstanding principal amount or accrued interest under the Loan Agreement
against any amount owing from Sankyo to Metabasis under this Agreement (except as permitted by this Section 5.4), the Restated Agreement or the Loan Agreement. 

        5.5    Loan Maturity Date.    Sankyo may, at its option, upon any payment of a milestone payment pursuant to
Section 7.3 of the Restated Agreement, elect to change the definition of (x) "First Maturity Date" under the Loan Agreement to "(i) January 10, 2004, or (ii) such
earlier date as all of the Obligations shall become due and payable in full", and (y) "Second Maturity Date" under the Loan Agreement to "(i) March 30, 2004, or (ii) such
earlier date as all of the Obligations shall become due and payable in full". 

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ARTICLE 6  

 REPRESENTATIONS, WARRANTIES AND COVENANTS  

        6.1    Corporate Power.    Each party hereby represents and warrants that such party is duly organized and validly
existing under the laws of the jurisdiction of its formation and has full power and authority to enter into this Agreement and to carry out the provisions hereof. 

        6.2    Due Authorization.    Each party hereby represents and warrants that such party is duly authorized to execute
and deliver this Agreement and to perform its obligations hereunder. 

        6.3    Binding Obligation.    Each party hereby represents and warrants that this Agreement is a legal and valid
obligation binding upon it and is enforceable in accordance with its terms. The execution, delivery and performance of this Agreement by such party does not conflict with any agreement, instrument or
understanding, oral or written, to which it is a party or by which it may be bound, nor violate any law or regulation of any court, governmental body or administrative or other agency having authority
over it. 

        6.4    Third Party Rights.    Metabasis represents and warrants that, as of the Option Effective Date, the exercise of
any of the rights herein granted or conveyed (or which may be granted or conveyed) by Metabasis to Sankyo will not infringe upon any copyright, trade secret or, to its knowledge, any other
intellectual property right of any Third Party. Metabasis covenants that, during the term of this Agreement, it will not grant to any Third Party rights to Metabasis' intellectual property in the
Field that would prohibit or restrict the exercise of any of the rights granted or conveyed (or which may be granted or conveyed) by Metabasis to Sankyo under this Agreement. Without limiting the
foregoing, prior to the expiration of the Negotiation Period, or the expiration of the Option Term without exercise of the Negotiation Right by Sankyo under
Section 4.1, Metabasis will not grant to any Third Party any rights with respect to any potential New Back-up Compound discovered by Metabasis during the Discovery Period. 

        6.5    Disclaimer of Warranties.    EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES ANY
REPRESENTATION OR WARRANTY TO THE OTHER PARTY OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY FURTHER WARRANTY OF NON-INFRINGEMENT, MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE. Without limiting the generality of the foregoing, Metabasis expressly does not warrant the success of any of the Metabasis Activities or the safety or usefulness for any purpose of
any technology that may be licensed to Sankyo upon exercise of the Option. 

        6.6    Limitation of Liability.    EXCEPT FOR ANY BREACH OF THE PROVISIONS OF ARTICLE 7, NEITHER PARTY SHALL BE
ENTITLED TO RECOVER FROM THE OTHER PARTY ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES IN CONNECTION WITH THIS AGREEMENT OR ANY LICENSE GRANTED HEREUNDER. The parties
acknowledge and agree that payments under Article 5 shall in no event be considered special, incidental, consequential, exemplary or punitive damages. 

        6.7    Mutual Indemnification.    Each party (the "Indemnifying
Party") hereby agrees to save, defend, indemnify and hold harmless the other party and its officers, directors, employees, consultants and agents (each an  "Indemnified Party") from and against any and all losses, damages, liabilities, expenses and costs, including reasonable legal expense and attorneys'
fees ("Losses"), to which the Indemnified Party may become subject as a result of any claim, demand, action or other proceeding by any Third Party to
the extent such Losses arise directly or indirectly out of activities performed by the Indemnifying Party pursuant to this Agreement, except to the extent such Losses result from the gross negligence
or willful misconduct of any Indemnified Party. In the event an Indemnified Party seeks indemnification under this Section 6.7, it shall inform the Indemnifying Party of a claim as soon as 

8

 

reasonably
practicable after it receives notice of the claim, shall permit the Indemnifying Party to assume direction and control of the defense of the claim (including the right to settle the claim
solely for monetary consideration), and shall cooperate as requested (at the expense of the Indemnifying Party) in the defense of the claim. 

ARTICLE 7  

 CONFIDENTIALITY; PUBLICATION  

        7.1    Nondisclosure Obligations.    Except as otherwise provided in this Article 7 and without limiting
Metabasis' rights to use reports, data, results and other information provided to Metabasis by Sankyo under Section 2.6 for any and all purposes, during the term of this Agreement and for a
period of [***] thereafter (or such longer period as provided under the Restated Agreement or the New Agreement, as applicable),
both parties shall maintain in confidence and use only for purposes of this Agreement (or the Restated Agreement or the New Agreement, as applicable) confidential information and data received from
the other party pursuant to this Agreement resulting from or related to the Metabasis Activities. Each party agrees to protect the Information of the other party with the same degree of care normally
used to protect its own similar Information, but no less than a reasonable degree of care. 

        7.2    Exceptions.    For purposes of this Article 7, information and data described above shall be referred to
as "Information." To the extent it is reasonably necessary or appropriate to fulfill its obligations or exercise its rights under this Agreement, a
party may disclose Information it is otherwise obligated under Section 7.1 not to disclose to its Affiliates, employees, consultants and outside contractors, on a
need-to-know basis on condition that such entities or persons agree to keep the Information confidential for the same time periods and to the same extent as such party is
required to keep the Information confidential under this Agreement. The obligation not to disclose Information shall not apply to any part of such Information that (i) is or becomes patented,
published or otherwise part of the public domain other than by acts of the party obligated not to disclose such Information or its Affiliates, employees, consultants or outside contractors in
contravention of this Agreement; or (ii) is disclosed to the receiving party or its Affiliates by a Third Party, provided such Information was not obtained by such Third Party directly or
indirectly from the other party under this Agreement; or (iii) prior to disclosure under this Agreement was already in the possession of the receiving party of its Affiliates, provided such
Information was not obtained directly or indirectly from the other party to this Agreement; or (iv) can be shown by written documents to have been independently developed by the receiving party
or its Affiliates without breach of any of the provisions of this Agreement. 

ARTICLE 8  

 TERM AND TERMINATION  

        8.1    Term.    This Agreement shall commence as of the Option Effective Date and shall continue through the last day
of the Option Term, or the expiration of the Negotiation Period if later, unless terminated earlier as provided in Section 8.2. 

        8.2    Termination for Cause.    A party may terminate this Agreement upon or after the material breach of any
material provision of this Agreement by the other party if the breaching party has not cured such breach within thirty (30) days after receiving written notice thereof by the
non-breaching party. 

        8.3    Surviving Obligations.    Expiration or termination of this Agreement shall not relieve the parties of any
obligation accruing prior to such expiration or termination. The obligations and rights of the parties under
Sections 2.5 (last sentence only), 2.6 (last sentence only) and 8.3 and Articles 1, 6, 7 and 9 shall survive expiration or termination of this Agreement. If this Agreement expires before 

	***
	Confidential
Treatment Requested. 

9

 

Sankyo
has designated a New Back-up Compound in accordance with the last sentence of Section 3.1, then the obligations and rights of the parties under the last sentence of
Section 3.1 shall survive expiration of this Agreement for ninety (90) days after the end of the Option Term. The obligations and rights of the parties under Section 3.2 shall
survive expiration of this Agreement until the Option has been exercised or the Restated Agreement terminates. The obligations and rights of the parties under Section 4.2(c) shall survive
expiration of this Agreement for the period specified therein. In the event this Agreement is terminated by Sankyo pursuant to Section 8.2, the "Option
Term" for purposes of Section 4.4 shall be deemed to be [***] after the Option Effective Date.
Within eighteen (18) months following the expiration or termination of this Agreement, each party shall return to the other party, or destroy, upon the written request of the other party, any and all
Information of the other party in its possession which was provided pursuant to this Agreement (unless otherwise permitted under the Restated Agreement or the New Agreement, as applicable). 

ARTICLE 9  

 MISCELLANEOUS  

        9.1    Force Majeure.    Neither party shall be held liable or responsible to the other party nor be deemed to have
defaulted under or breached this Agreement for failure or delay in fulfilling or performing any term of this Agreement when such failure or delay is caused by or results from causes beyond the
reasonable control of the affected party, including, but not limited to, fire, floods, embargoes, war, acts of war (whether war be declared or not), insurrections, riots, civil commotions, strikes,
lockouts or other labor disturbances, acts of God or acts, omissions or delays in acting by any governmental authority or the other party (each, an "Event of Force
Majeure"). 

        9.2    Assignment.    Except as expressly provided hereunder, neither this Agreement nor any rights or obligations
hereunder may be assigned or otherwise transferred by either party without the prior written consent of the
other party. Notwithstanding the foregoing sentence, Metabasis may, without the prior written consent of Sankyo, assign or otherwise transfer this Agreement and its rights and obligations hereunder to
its Affiliates or in connection with the transfer or sale of all or substantially all of its business to which this Agreement pertains, or in the event of its merger or consolidation or change in
control or similar transaction, so long as the transferee or surviving entity, as the case may be, is not one of the entities listed on  Schedule 1 attached hereto; provided, however, that, in the event of such merger or other
transaction, no intellectual property of any acquiring entity that is not a party to this Agreement on the Option Effective Date (other than intellectual property acquired from such a party to this
Agreement in connection with such merger or other transaction) shall be included in the technology subject to this Agreement. The rights and obligations of the parties under this Agreement shall be
binding upon and inure to the benefit of the successors and permitted assigns of the parties. Any assignment not in accordance with this Agreement shall be void. 

        9.3    Severability.    Each party hereby agrees that it does not intend to violate any public policy, statutory or
common laws, rules, regulations, treaty or decision of any government agency or executive body thereof of any country or community or association of countries. Should one or more provisions of this
Agreement be or become invalid, the parties hereto shall substitute, by mutual consent, valid provisions for such invalid provisions which valid provisions in their economic effect are sufficiently
similar to the invalid provisions that it can be reasonably assumed that the parties would have entered into this Agreement with such valid provisions. In case such valid provisions cannot be agreed
upon, the invalidity of one or several provisions of this Agreement shall not affect the validity of this Agreement as a whole, unless the invalid provisions are of such essential importance to this
Agreement that it is to be reasonably assumed that the parties would not have entered into this Agreement without the invalid provisions. 

10

 

        9.4    Notices.    Any consent, notice or report required or permitted to be given or made under this Agreement by one
of the parties hereto to the other shall be in writing, and shall be considered given when delivered personally or by facsimile with confirmation or receipt (and promptly confirmed by personal
delivery or courier) or three business days after having been deposited with an internationally recognized courier service, or such earlier delivery date as may be confirmed to the sender by such
courier service, addressed to such other party at its address indicated below, or to such other address as the addressee shall have last furnished in writing to the addressor and shall be effective
upon receipt by the addressee. 

	If to Metabasis:	 	METABASIS THERAPEUTICS, INC.

9290 Towne Centre Drive, Building 300

San Diego, CA 92121

U.S.A.

Attn: President

Telephone: (858) 622-5550

Facsimile: (858) 458-3504
	
Copies to:	
 	
COOLEY GODWARD LLP

4401 Eastgate Mall

San Diego, CA 92121

U.S.A.

Attn: L. Kay Chandler, Esq.

Telephone: (858) 550-6000

Facsimile: (858) 550-6420
	
If to Sankyo:	
 	
SANKYO CO., LTD.

2-58, Hiromachi 1-chome

Shinagawa-ku

Tokyo 140-8710, Japan

Attn: Dr. N. Nakamura,

Deputy General Manager, Research Institute

Telephone: (813) 3492-3131

Facsimile: (813) 5436-8561
	
Copies to:	
 	
MORRISON & FOERSTER LLP

1-3, Marunouchi 1-chome

Chiyoda-ku

Tokyo 100-0005, Japan

Attn: Ken Siegel, Esq.

Telephone: (813) 3214-6522

Facsimile: (813) 3214-6512

        9.5    Applicable Law.    This Agreement shall be governed by, and construed and enforced in accordance with, the laws
of the State of California, without reference to conflicts of law principles. 

        9.6    Arbitration.    The provisions of Section 20.2.2 of the Restated Agreement will apply to any disputes
arising between the parties relating to, arising out of or in any way connected with this Agreement or any term or condition hereof, or the performance by either party of its obligations hereunder,
whether before or after termination of this Agreement. 

        9.7    Entire Agreement.    This Agreement (including the provisions of the Restated Agreement referenced herein)
contains the entire understanding of the parties with respect to the subject matter hereof. All express
or implied agreements and understandings, either oral or written, heretofore made with respect to the subject matter hereof are expressly merged in and made a part of this Agreement; 

11

 

provided
that the Restated Agreement shall remain in effect in accordance with its terms; provided further that nothing in this Agreement shall be considered to be a waiver of, or shall otherwise
diminish, either party's rights and/or obligations under the Restated Agreement. This Agreement may be amended, or any term hereof modified, only by a written instrument duly executed by both parties
hereto. 

        9.8    Headings.    The captions to the several Articles and Sections hereof are not a part of this Agreement, but are
merely guides or labels to assist in locating and reading the several Articles and Sections hereof. 

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

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

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

12

        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in duplicate by their duly authorized officers as of the
date first above written. 

	METABASIS THERAPEUTICS, INC.	 	SANKYO CO., LTD.
	
 By: /s/  PAUL K. LAIKIND    

	
 	

By: /s/  YUKIO SUGIMURA    

	Name: Paul K. Laikind, Ph.D.	 	Name: Yukio Sugimura
	Title: Chairman, CEO and President	 	Title: Executive Managing Director, General Manager, Research Institute

SIGNATURE PAGE TO

EXCLUSIVE OPTION AGREEMENT  

Schedule 1  

        List of entities to whom Metabasis may not assign this Agreement without Sankyo's prior written consent: 

	1)
	[***]

	2)
	[***]

	3)
	[***]

	4)
	[***]

	5)
	[***]

	6)
	[***]

	7)
	[***]

	8)
	[***]

	9)
	[***]

	10)
	[***]

	11)
	[***]

	12)
	[***]

	13)
	[***]

	14)
	[***]

	15)
	[***]

	***
	Confidential
Treatment Requested. 

QuickLinks

Exhibit 10.18

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