AMENDMENT OF TR BETA CONTINGENT VALUE RIGHTS AGREEMENT

This Amendment (this “Amendment”) is dated May 20, 2014 and amends that certain “TR Beta” Contingent Value Rights Agreement dated as of January 27, 2010 (the “Agreement”) by and among Ligand Pharmaceuticals Incorporated, a Delaware corporation, Metabasis Therapeutics, Inc., a Delaware corporation (“Target”), David F. Hale, as Stockholders’ Representative (the “Stockholders’ Representative”), and Computershare Inc., a Delaware corporation (successor to Mellon Investor Services LLC, a New Jersey limited liability company), as Rights Agent (the “Rights Agent”) and as initial TR Beta CVR Registrar. Pursuant to Section 5.2(a) of the Agreement, this Amendment is effective upon the signatures only of Ligand Pharmaceuticals Incorporated, a Delaware corporation (authorized by a Board Resolution) and the Rights Agent, accompanied by the consent of the Stockholders’ Representative. Pursuant to Section 5.4 of the Agreement, every Holder shall be bound by this Amendment.

Capitalized terms not otherwise defined in this Amendment shall have the meanings ascribed to them in the Agreement. References herein to “Ligand” shall be understood to mean Ligand Pharmaceuticals Incorporated, a Delaware corporation, and its consolidated group (including without limitation Target), all together; unless the context requires “Ligand” to be understood to mean Ligand Pharmaceuticals Incorporated, a Delaware corporation, in which case the term shall be understood to mean Ligand Pharmaceuticals Incorporated, a Delaware corporation.

1.     Transaction. Ligand is contemplating a transaction (the “Transaction”) in which Ligand would cause Target to grant licenses of one or more drug candidates and/or technology and/or Intellectual Property from the TR Beta Program (the “Transaction TR Beta Program License”) to Viking Therapeutics, Inc., a Delaware corporation (“Viking”). As part of the Transaction, Viking would also be capitalized with other assets, including without limitation licenses of one or more drug candidates and/or technology and/or Intellectual Property from Target’s FBPase Inhibitor Program and one or more drug candidates and/or technology and/or Intellectual Property from Target’s DGAT-1 Program. Under the Transaction TR Beta Program License, Ligand and/or Target would have milestone payment and royalty rights. In addition, as further consideration for the Transaction TR Beta Program License, Viking would give Ligand a contingent right to receive a calculated number and type of shares of stock of Viking (the “TR Beta Program Contingent Stock Right”). In particular,

(a)    Ligand shall have the right to receive such calculated number and type of shares if and when Viking closes the first private offering of Viking shares for which Ligand affirmatively elects to trigger the TR Beta Program Contingent Stock Right (provided that Viking has not previously closed an initial public offering of Viking shares) – this is referred to as the “Private Trigger”; and

(b)    Ligand shall have the right to receive such calculated number and type of shares if and when Viking closes an initial public offering of Viking shares (provided that Ligand has not previously affirmatively elected to trigger the TR Beta Program Contingent Stock Right for a private offering of stock as contemplated in subsection 1(a) above) – this is referred to as the “Public Trigger.”

2.    Public or Private Trigger Payout is Proceeds.

(a)    If, as and when Ligand receives from Viking shares of stock of Viking in respect of the TR Beta Program Contingent Stock Right or receives from Viking other consideration in lieu of shares of stock of Viking in respect of the TR Beta Program Contingent Stock Right (e.g., if the Transaction agreement is amended to provide for such other consideration to be received in lieu), the shares so received (and the total fair market value of such other consideration received in lieu) shall be deemed Proceeds received by Ligand in connection with a TR Beta Licensing Event for a TR Beta Program.

(b)    For the purpose of calculating the TR Beta Licensing Payment Amounts/TR Beta CVR Payment Amounts associated with the Transaction agreement, it is acknowledged that the TR Beta Licensing Event associated with the Transaction agreement would occur before the sixth anniversary of the Effective Time; and that therefore such TR Beta Licensing Payment Amounts/TR Beta CVR Payment Amounts would be 50% of actual Proceeds received by Ligand before the Outside Date, less any out-of-pocket costs and expenses reasonably incurred by Ligand,

or any of its subsidiaries or Affiliates, in connection with such TR Beta Licensing Event (including reasonable attorneys fees and brokers commissions). Ligand shall pay the indicated TR Beta CVR Payment Amount in respect of the TR Beta Program Contingent Stock Right in cash, as and when contemplated by Section 2.4(a) of the Agreement, based upon the cash equivalent of such non-cash proceeds (i.e., of such shares of Viking received) or of such other consideration in lieu of such Viking stock determined as of the day Ligand receives such Viking stock (or as of the day Ligand receives such other consideration in lieu of such Viking stock).

(c)    Notwithstanding the foregoing subsection 2(b) and notwithstanding anything in the Agreement to the contrary, in the case of a Public Trigger payout:

(i)    The cash equivalent per share of any and all shares of Viking issued by Viking to Ligand in connection with such Public Trigger (i.e., the cash equivalent per share of such non-cash proceeds) shall be conclusively deemed to be 100% of the offering price per share to the public of the shares of Viking sold and issued in such initial public offering.

(ii)    Ligand need not deliver the indicated TR Beta CVR Payment Amount in cash to the Rights Agent until the tenth Business Day before the applicable TR Beta CVR Payment Date.

(iii)    Depending upon the period in which the date of the Achievement Certificate falls, the “applicable TR Beta CVR Payment Date” (for the purpose of the foregoing subsection 2(c)(ii)) shall be the date set forth in the following table:

(d)    Notwithstanding the foregoing subsection 2(b) and notwithstanding anything in the Agreement to the contrary, it is understood and agreed that the proportion of (i) the number of shares of Viking issuable by Viking to Ligand under the TR Beta Program Contingent Stock Right in respect of the Transaction TR Beta Program License to (ii) the aggregate number of shares of Viking issuable by Viking to Ligand under all contingent rights of Ligand to receive shares of Viking in connection with the Transaction (including not only in respect of the Transaction TR Beta Program License but also in respect of all other licenses of Ligand assets being licensed by Ligand to Viking in connection with the Transaction) shall be established by Ligand and Viking in the Transaction agreement as follows:

(i)    The license for the TR Beta Program: 2.5/29

(ii)    The license for the FBPase Program: 3.5/29

(iii)    The license for the DGAT-1 Program: 1/29

(iv)    The license for Ligand’s SARM program: 21/29

(v)    The license for Ligand’s EPOR program: 1/29

and that the fairness of such proportion, if so established in good faith, shall be deemed conclusive and binding for all purposes of the Agreement and of this Amendment. For avoidance of doubt: this same proportion calculated pursuant to the preceding sentence shall also establish, conclusively and on a binding basis, the percentage of Additional Shares which are allocated to the Transaction TR Beta Program License such as to, when and if received, constitute Proceeds. “Additional Shares” refers to any and all additional shares of Viking issuable under the TR Beta Program Contingent Stock Right by Viking to Ligand (or to any other consideration given by Viking to Ligand in lieu of such additional shares of Viking stock) under the Transaction agreement in the event that the pre-money valuation of Viking associated with the Public Trigger or the Private Trigger (as applicable) exceeds a certain threshold amount. Notwithstanding anything contained herein to the contrary, until an Achievement Certificate is received by the Rights Agent, the Rights Agent may presume conclusively for all purposes that a TR Beta CVR Payment Event has not occurred.

3.    Milestone Payments; Royalties. For the avoidance of doubt: if, as and when Ligand receives from Viking any milestone payments or royalties pursuant to the terms of the Transaction TR Beta Program License, such milestone payments or royalties shall constitute the receipt by Ligand of Proceeds in connection with a TR Beta Licensing Event, and the provisions of the Agreement shall apply thereto.

4.    Upfront Payments. Ligand represents and warrants that the Transaction TR Beta Program License will not include any upfront payments other than the TR Beta Program Contingent Stock Right.

5.    Things which are not Proceeds. Notwithstanding anything in the Agreement to the contrary:    

(a)    Ligand’s receipt of the TR Beta Program Contingent Stock Right shall be deemed not to constitute the receipt by Ligand of any Proceeds. (Rather, payouts by Viking upon the TR Beta Program Contingent Stock Right to Ligand shall be deemed to constitute the receipt by Ligand of Proceeds.)

(b)    Any proceeds received by Viking or its stockholders (including by Ligand in its capacity as a Viking stockholder) in connection with Viking being acquired shall be deemed not to constitute the receipt by Ligand of any Proceeds.

(c)    Any proceeds received by Viking from a sale or sublicensing of the Transaction TR Beta Program License shall be deemed not to constitute the receipt by Ligand of any Proceeds.

(d)    Any dividends ever paid by Viking on its stock, including on shares thereof owned by Ligand, shall be deemed not to constitute the receipt by Ligand of any Proceeds.

(e)    If Ligand, after receiving shares of Viking stock and paying or satisfying the indicated TR Beta CVR Payment Amount as contemplated herein, disposes of any or all of such shares of Viking stock for value (e.g., open market sales), such value received shall be deemed not to constitute the receipt by Ligand of any Proceeds.

6.    No Privity. For the avoidance of doubt: Viking shall not assume any of Ligand’s obligations under the Agreement (as amended hereby) and Viking shall have no obligations of any kind to the Stockholders’ Representative or the Holders unless Viking hereafter expressly assumes such obligations.

7.    Miscellaneous.    

(a)    This Amendment is entered into in order to induce and facilitate the Transaction, which each party considers to be in its own interest. If the Transaction has not occurred within one year after the date of this Amendment, this Amendment shall be void. Failure of Viking to attempt or close an initial public offering and/or one of more private financings would not void this Amendment, however.

(b)    Except as expressly set forth herein, the Agreement remains unchanged and in full force and effect.

(c)    Ligand Pharmaceuticals Incorporated represents and warrants that it is authorized by a Board Resolution to enter into this Amendment.

    (d)    This Amendment shall be governed by and construed in accordance with the laws of the State of California without regard to its rules of conflicts of laws; provided, however, that all provisions, regarding the rights, duties, obligations and liabilities of the Rights Agent shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed entirely within such state.

(e)    In case any one or more of the provisions contained in this Amendment shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Amendment, but this Amendment shall be construed as if such invalid or illegal or unenforceable provisions had never been contained herein; provided, however, that if any such excluded term, provision, covenant or restriction shall adversely affect the rights, immunities, duties or obligations of the Rights Agent, the Rights Agent shall be entitled to resign immediately. Upon such determination that any term or other provisions is invalid, illegal or unenforceable, the court or other tribunal making such determination is authorized and instructed to modify this Amendment so as to effect the original intent of the parties as closely as possible so that the transactions and agreements contemplated herein are consummated as originally contemplated to the fullest extent possible.

(f)    This Amendment may be signed in any number of counterparts (which may be effectively delivered by facsimile or other electronic means).

        

IN WITNESS WHEREOF, the undersigned parties have executed and entered into this Amendment of “TR Beta” Contingent Value Rights Agreement as of the date first written above.