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EXHIBIT 10.35
***TEXT OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
CONFIDENTIAL TREATMENT REQUESTED
UNDER 17 C.F.R. SECTIONS 200.80(b)(4)
AND 240.24b-2.
EXECUTION COPY
ASSIGNMENT AND ASSUMPTION AGREEMENT
AMONG
METABASIS THERAPEUTICS, INC.
AND
SCHERING CORPORATION
AND
VALEANT RESEARCH & DEVELOPMENT
Dated as of December 13, 2006
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This Assignment and Assumption Agreement (this Agreement) is
made by and
among Metabasis Therapeutics, Inc., a corporation organized and
existing under
the laws of Delaware (Metabasis), Schering Corporation, a New
Jersey corporation
(Schering), and Valeant Research & Development, a Delaware
corporation (Valeant)
and is effective as of the Effective Date.
RECITALS
A. Valeant has been developing the compound pradefovir for
treatment of
human diseases pursuant to the terms of a Development and
License Agreement of
October 1, 2001 between Metabasis and Valeant, as successor in
interest to ICN
Pharmaceuticals, Inc., (the "ORIGINAL AGREEMENT") and has
generated intellectual
property including data and other know-how.
C. Schering has expertise in researching, developing,
manufacturing and
marketing pharmaceutical products for the treatment of human and
animal diseases
and wishes to develop, manufacture, and market Products based on
pradefovir in
accordance with this Agreement.
D. Valeant wishes to assign its rights, interests, and
obligations under
the Original Agreement to Schering and Schering wishes to
acquire Valeant's
rights and interests and assume Valeant's obligations under the
Original
Agreement in order to continue development and to manufacture
and market
Products.
E. Metabasis wishes Valeant to assign Valeant's rights,
interests, and
obligations under the Original Agreement to Schering and that
Schering acquire
and those rights and interests and assume those obligations.
F. To effect these ends, (1) Schering and Metabasis have entered
into an
Amended and Restated Development and License Agreement (the
"AMENDED METABASIS
AGREEMENT"), and (2) Schering and Valeant have entered into a
Development and
License Agreement (the "VALEANT SCHERING AGREEMENT"). Terms not
otherwise
defined herein shall have the meanings set forth in the Amended
Metabasis
Agreement and the Valeant Schering Agreement.
AGREEMENT
1. Valeant hereby irrevocably sells and assigns to Schering
without
recourse to Valeant, and Schering hereby irrevocably purchases
and assumes from
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Valeant without recourse to Valeant, as of the Effective Date
(as defined
below), all of Valeant's rights, title and interests and assumes
Valeant's
obligations under the Original Agreement (the "ASSIGNED
INTEREST") and Metabasis
hereby irrevocably consents to such assignment and assumption
without recourse
to Valeant.
2. Valeant makes no representation or warranty and assumes
no
responsibility with respect to any statements, warranties or
representations
made in or in connection with the Amended Metabasis
Agreement.
3. Metabasis makes no representation or warranty and assumes
no
responsibility with respect to any statements, warranties or
representations
made in or in connection with the Valeant Schering
Agreement.
4. Metabasis and Valeant agree that they will continue to
indemnify
the other in accordance with the terms of the Original Agreement
for any claim
arising out of facts and circumstances occurring before the
Effective Date
hereof.
5. Schering agrees that it will be bound by the provisions of
the
Amended Metabasis Agreement and the Valeant Schering Agreement
and will perform
in accordance with the terms and obligations of those
agreements.
6. Metabasis agrees that it will be bound by the provisions of
the
Amended Metabasis Agreement and will perform in accordance with
the terms and
obligations of that agreement.
7. Valeant agrees that it will be bound by the provisions of
the
Valeant Schering Agreement and will perform in accordance with
the terms and
obligations of that agreement.
8. Schering and Metabasis agree that they may not amend the
Amended
Metabasis Agreement in any way that will materially affect
Valeant's rights
under the Valeant Schering Agreement, such rights including but
not limited to
Valeant's rights to receive milestone payments and royalty
payments in the
amounts and for the periods set forth in the Valeant Schering
Agreement.
9. Schering and Valeant agree that they may not amend the
Valeant
Schering Agreement in any way that will materially affect
Metabasis's rights
under the Amended Metabasis Agreement, such rights including but
not limited to
Metabasis's rights to receive milestone payments and royalty
payments in the
amounts and for the periods set forth in the Amended Metabasis
Agreement.
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10. Valeant and Metabasis agree that the aggregate royalties
owed by
Schering under the Amended Metabasis Agreement and the Valeant
Schering
Agreement will be divided between Metabasis and Valeant and
invoiced to Schering
according to the Royalty Calculation Exhibit attached
hereto.
11. Metabasis and Valeant agree that in the event the
Amended
Metabasis Agreement terminates in whole or in part of its
Territory and the
rights to develop and commercialize compounds and products in
the whole or in
such terminated parts of the Territory revert to Metabasis, then
subject to
Section 12 hereof, Metabasis will automatically assume
Schering's rights and
obligations under the Valeant Schering Agreement in whole or in
respect of such
terminated part of the Territory, as applicable.
12. Valeant and Metabasis agree that in the event the
Amended
Metabasis Agreement terminates in whole or in part of the
Territory and the
rights to develop and commercialize Licensed Compounds and
Products in the whole
or in such terminated parts of the Territory revert to
Metabasis, then:
(a) if Metabasis advances the development or commercializes
a
Product in such terminated whole or part of the Territory
substantially on its
own, then (i) Metabasis will pay to Valeant the full royalties
that would have
been payable by Schering under the Valeant Schering Agreement
for the terminated
whole or part of the Territory, which royalties shall be reduced
by [...***...]
of any amount of royalties owed by Metabasis to Schering under
the Amended
Metabasis Agreement, provided that any such reduction shall not
reduce the
royalties owed to Valeant by Metabasis to [...***...] of the
royalties owed in
the absence of such reduction, and further provided that in the
event that
Metabasis is not able to reduce Valeant's royalties by the
[...***...] of any
such royalties owed to Schering, the amount of the royalty
reduction not taken
may be used by Metabasis in another market or at a later date to
offset other
royalties or milestone payments due Valeant; and (ii) Metabasis
and Valeant
agree that the remaining schedule of milestone payments due to
Valeant upon
achievement by Metabasis of events related to the terminated
whole or part of
the Territory under the assumed Valeant Schering Agreement shall
be modified as
necessary to [...***...], provided that any postponed milestone
or part thereof
would begin accruing interest at the [...***...] rate on the
date payment was
due under the assumed Valeant Schering Agreement, plus
[...***...], and further
provided that in the event of a postponement by such
modification of part or all
of one or more milestone payments, Metabasis shall, at a
minimum, pay to Valeant
on a quarterly basis [...***...] of (i) the Net Sales of
Products less (ii) the
[...***...] paid by Metabasis to Schering, Valeant, or any third
party on sales
of such Products ("NET NET SALES") under the assumed Valeant
Schering Agreement
toward payment of such postponed milestone payment(s) and the
interest due
thereon, unless the remaining amount due from all postponed
payments and
interest is [...***...] of such Net Net Sales, in which case
Metabasis shall pay
all remaining postponed payments and interest at the end of the
quarter in which
the remaining amount is [...***...] of Net Net Sales; or
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(b) if, following Metabasis' assumption of Schering's rights
and
obligations under the Valeant Schering Agreement pursuant to
Section 11 hereof,
Metabasis sublicenses the development and commercialization of
Licensed Compound
or Product under such Agreement, through a sublicense to a third
party which
third party becomes responsible for all or substantially all of
the activities
required to develop or commercialize the Licensed Compound or
Product, then (i)
Metabasis will pay to Valeant the full royalties that would
otherwise have been
payable by Schering under the Valeant Schering Agreement for the
terminated
whole or part of the Territory, which royalties shall be reduced
by [...***...]
of any amount of royalties owed by Metabasis to Schering,
provided that any such
reduction shall not reduce the royalties owed to Valeant by
Metabasis to
[...***...] of the royalties otherwise owed, and further
provided that in the
event that Metabasis is not able to reduce Valeant's royalties
by the
[...***...] of any royalties owed by Metabasis to
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