Exhibit 10.40

EXECUTION COPY

CONFIDENTIAL

AMENDMENT TO

LICENSE & DEVELOPMENT AGREEMENT

This AMENDMENT TO LICENSE & DEVELOPMENT AGREEMENT (this “Amendment”) is entered
into as of January 4, 2013 (the “Amendment Effective Date”), by and between
ALEXZA PHARMACEUTICALS, INC., a Delaware corporation with a principal place of
business at 2091 Stierlin Court, Mountain View, CA 94043 (“Alexza”), and ROYALTY
PHARMA a Delaware statutory trust with a principal place of business at 110 East
59th Street, 33rd Floor, New York, NY 10022 (acquiror of CYPRESS BIOSCIENCE,
INC., a Delaware corporation with a principal place of business at 4350
Executive Drive, Suite 325, San Diego, CA 92121 (“Cypress”)) (“Royalty Pharma”).
Alexza and Royalty Pharma are sometimes referred to herein individually as a
“Party” and collectively as the “Parties”.

RECITALS

WHEREAS, Alexza and Cypress are parties to that certain License & Development
Agreement, dated August 25, 2010 (the “Agreement”);

WHEREAS, Cypress was acquired by Royalty Pharma on January 5, 2011 and Royalty
Pharma is Cypress’s successor in interest to the Agreement;

WHEREAS, Alexza has completed activities contemplated by the Agreement as of the
Amendment Effective Date, and Royalty Pharma has fully paid Alexza for the work
completed as of the Amendment Effective Date; and

WHEREAS, Alexza and Royalty Pharma now desire to amend the terms and conditions
of the Agreement, as outlined below.

Now, THEREFORE, in consideration of the premises, and the mutual covenants
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:

1. STACCATO® NICOTINE PROJECT EQUIPMENT DISPOSITION. The following new
Section 3.6 is hereby added after Section 3.5 of the Agreement:

3.6 Purchased Equipment. During the term of the Agreement, as of the Amendment
Effective Date, various pieces of equipment were purchased by Royalty Pharma in
support of the Alexza Development Plan and are still on-site at Alexza’s
location at the address above (the “Purchased Equipment”). Alexza and Royalty
Pharma agree that the Purchased Equipment shall be owned by Alexza. Each Party
agrees to take all further acts reasonably required to evidence such ownership
and transfer.

 

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2. PATENT PROSECUTION AND MAINTENANCE. Section 7.2 of the Agreement is hereby
deleted and replaced in its entirety with the following:

7.2 Patent Prosecution and Maintenance. As of the Amendment Effective Date,
Alexza shall have the right and authority to prepare, file, prosecute (including
any interferences, reissue proceedings and reexaminations) and maintain the
Alexza Patents, Cypress Patents and Joint Patents in any jurisdiction in the
world and all costs and expenses incurred by Alexza in connection with the
preparation, prosecution, and maintenance of the Alexza Background Patents and
Alexza Product Patents (other than the Alexza Nicotine Product Patents) shall be
borne by Alexza. For clarity, all costs and expenses incurred by Royalty Pharma
in connection with the preparation, prosecution, and maintenance of the Alexza
Nicotine Product Patents and the Cypress Patents prior to the Amendment
Effective Date shall be borne by Royalty Pharma. All reasonable, out-of-pocket
documented costs and expenses incurred by Alexza accrued from and after
October 1, 2012 in connection with the preparation, prosecution, and maintenance
of the Alexza Nicotine Product Patents and the Cypress Patents shall be
reimbursed by Royalty Pharma, with such reimbursement payable by Royalty Pharma
to Alexza within thirty (30) days of receipt of monthly invoices from Alexza.
Each Party represents and warrants to the other Party that, as of the Amendment
Effective Date, it has fully disclosed to the other Party all Inventions.
Subject to the foregoing representation and warranty, the Parties acknowledge
and agree that, as of the Amendment Effective Date, there are no Joint Patents
or Joint Inventions the Parties desire to patent and the Parties do not
anticipate filing any Joint Patents during the Term. Alexza shall keep Royalty
Pharma reasonably informed of its prosecution activities with respect to the
Alexza Background Patents, Alexza Product Patents and Cypress Patents. If, in
accordance with Section 7.8, the Parties agree that a particular Alexza
Background Patent will be listed or would reasonably be expected to be listed in
the Orange Book, then such patent will hereinafter be called an “Orange Book
Alexza Background Patent.” Alexza shall provide Royalty Pharma with a copy of
material communications from any patent authority regarding any Orange Book
Alexza Background Patent, any Alexza Product Patent or any Cypress Patent and
shall provide drafts of any material filings or responses to be made to such
patent authorities regarding such Orange Book Alexza Background Patent, Alexza
Product Patent or Cypress Patent a reasonable amount of time in advance of
submitting such filings or responses and Royalty Pharma shall have an
opportunity to review and comment thereon within ten (10) business days of
receipt thereof. Alexza shall discuss and reasonably consider any comments
received from Royalty Pharma. Alexza shall use commercially reasonable efforts
to separate any Alexza Patent claims directed primarily toward a Product into
distinct divisional (or equivalent) patent applications, to the extent feasible
and permitted under Applicable Laws, and to the extent Alexza does not
reasonably believe that such separation would materially adversely affect the
claim scope or likelihood or timing of patent issuance of any Alexza Patent, and
such

 

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distinct divisional (or equivalent) patent applications shall be Alexza Nicotine
Product Patents. Alexza shall have the right, in its sole discretion, to
abandon, cease prosecution of or not maintain any Alexza Patent or Cypress
Patent anywhere in the world. Should Alexza determine to abandon prosecution of,
or cease to maintain, any Alexza Product Patents or Cypress Patent in any
jurisdiction, Alexza shall promptly so notify Royalty Pharma and provided that
Alexza has no reasonable objection shall permit Royalty Pharma, should Royalty
Pharma choose to do so, at Royalty Pharma’s expense, to continue to prosecute or
maintain such patent in such jurisdiction, and Alexza shall, at the expense of
Royalty Pharma, cooperate with Royalty Pharma in regard thereto. The Parties
acknowledge and agree that it shall be unreasonable for Alexza to object
pursuant to the preceding sentence if such Alexza Patent or Cypress Patent
proposed for abandonment is required to protect, or to extend the time of patent
protection for, the Product in the jurisdiction where abandonment is proposed.
Alexza and Royalty Pharma agree that the patent application entitled “NICOTINE
TRIFUMARATE” (U.S. Patent Application No. 61/512,763), filed July 28, 2011 will
be abandoned. Alexza and Royalty Pharma agree that Alexza will file a patent
application for the “nicotine salt formed with 3-hydroxybenzoic acid” and such
Alexza Nicotine Product Patent will be pursued by Alexza pursuant to the terms
of this Section 7.2.

3. TERMINATION.

(a) The following new Section 11.2(c) is hereby added after Section 11.2(b) of
the Agreement:

(c) Royalty Pharma shall use commercially reasonable efforts to complete an
Asset Sale or Asset License by September 30, 2013. Alexza shall have no
additional development obligations or commitments as a result of the foregoing.
Alexza shall use commercially reasonable efforts, at Royalty Pharma’s expense,
to support Royalty Pharma’s reasonable requests in connection with its Asset
Sale or Asset License solely with respect to necessary due diligence activities
with any potential partner or licensee. Notwithstanding anything to the contrary
in this Agreement, this Agreement shall terminate automatically if Royalty
Pharma does not complete an Asset Sale or Asset License by December 31, 2013. If
Royalty Pharma completes an Asset Sale or Asset License by December 31, 2013,
this Agreement shall not automatically terminate under this Section 11.2(c).

(b) The first sentence of Section 11.3(a) of the Agreement is hereby amended as
follows:

“Section 11.2(a) or 11.2(b)” is hereby replaced with “Section 11.2(a), 11.2(b)
or 11.2(c)”

 

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4. TERMINATION OF THE SUBLET AND ADMINISTRATIVE SERVICES AGREEMENT. The Parties
acknowledge and agree that the Sublet and Administrative Services Agreement
between Alexza and Cypress, dated August 25, 2010 (the “Sublease”) is fully paid
and shall be terminated effective October 31, 2012 and neither Party has any
liability to the other Party thereunder.

5. MISCELLANEOUS.

(a) References. All references to Cypress in the Agreement shall be deemed
references to Royalty Pharma.

(b) Full Force and Effect; Entire Agreement. This Amendment amends the terms of
the Agreement as expressly provided above, and the Agreement, as so amended and
including all of its other terms and provisions that are not amended, remains in
full force and effect and sets forth the complete, final and exclusive agreement
and all the covenants, promises, agreements, warranties, representations,
conditions and understandings between the Parties hereto with respect to the
subject matter of the Agreement and supersedes, as of the Amendment Effective
Date, all prior and contemporaneous agreements and understandings between the
parties with respect to the subject matter of the Agreement.

(c) Capitalized Terms. Capitalized terms used but not defined herein shall have
the meanings set forth in the Agreement. For clarity, the term “Agreement” in
the Agreement means the Agreement as amended.

(d) Severability. In the event any provision of this Amendment should be held
invalid, illegal or unenforceable in any jurisdiction or shall render this
Amendment or the entire Agreement to be invalid, illegal or unenforceable, the
Parties shall negotiate in good faith and enter into a valid, legal and
enforceable substitute provision that most nearly reflects the original intent
of the Parties. All other provisions of this Agreement shall remain in full
force and effect in such jurisdiction. Such invalidity, illegality or
unenforceability shall not affect the validity, legality or enforceability of
such provision in any other jurisdiction.

(e) Governing Law. This Agreement and all questions regarding the existence,
validity, interpretation, breach or performance of this Amendment, shall be
governed by, and construed and enforced in accordance with, the laws of the
State of California, without reference to its conflicts of law principles

(f) Counterparts. This Amendment may be executed in any number of counterparts
each of which shall be deemed an original, and all of which together shall
constitute one and the same instrument. Signatures provided by facsimile
transmission or in Adobe™ Portable Document Format (PDF) sent by electronic mail
shall be deemed to be original signatures.

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Parties have executed this Amendment to License &
Development Agreement as of the Amendment Effective Date.

 

ALEXZA PHARMACEUTICALS, INC.     ROYALTY PHARMA By:  

/s/ Thomas B. King

    By:  

/s/ PABLO LEGORRETA

Name:  

Thomas B. King

    Name:  

PABLO LEGORRETA

Title:  

President & CEO

    Title: