Shares of drug developers

Valeant Pharmaceuticals

(VRX)

and

Metabasis Therapeutics

(MBRX) - Get Report

jumped in after-hours trading Wednesday after the companies announced licensing agreements with drug giant

Schering-Plough

( SGP) for a new hepatitis B treatment.

Schering-Plough has licensed exclusive worldwide rights to develop and market the investigational treatment, pradefovir, for patients with chronic hepatitis B. Valeant initially licensed pradefovir from Metabasis in 2000 and has been evaluating the drug's safety and efficacy in treating the disease. The drug uses Metabasis' so-called HepDirect technology to direct higher drug concentrations into the liver, the primary site where the hepatitis B virus replicates.

"Pradefovir has the potential to offer improved treatment options for patients with chronic hepatitis B, a serious blood-borne infection affecting some 400 million people worldwide," said Dr. Robert Spiegel, chief medical officer of Schering-Plough Research Institute.

The transaction is expected to close in the first quarter of 2007, pending customary closing conditions. Under the terms of the deal, Schering-Plough will make upfront payments to Valeant and Metabasis and will pay additional fees to the companies upon the achievement of certain development and regulatory milestones.

Schering-Plough will fund all future research and development activities including clinical studies and regulatory filings, and will pay both of the companies royalties if the drug enters the market.

Valeant's shares gained 3.7% to $17.52 and Metabasis jumped 6.3% to $8.30 in after-hours trading, while Schering-Plough's shares were down 6 cents to $23.24.