Exhibit 10.12

CONFIDENTIAL TREATMENT REQUESTED

WITH RESPECT TO CERTAIN PORTIONS HEREOF

DENOTED WITH “***”

FIRST AMENDMENT AGREEMENT

This FIRST AMENDMENT AGREEMENT (the “Amendment”) is entered this August 2, 2006
(the “First Amendment Date”) by Arius Two, Inc. (“Arius Two”) and Arius
Pharmaceuticals, Inc. (“Arius”).

WHEREAS, Arius and Arius Two are parties to that certain BEMA License Agreement,
dated August 2, 2006, (the “License”);

WHEREAS, Arius and BioDelivery Sciences International, Inc. (“Parent”) intend to
enter into a licensing agreement with third parties with respect to the Fentanyl
Product (as defined in the License);

WHEREAS, Arius currently anticipates that the Fentanyl Product will be the First
Product;

WHEREAS, the License does not permit the sublicensing of Arius’ rights
thereunder with respect to the First Product to any Third Party (other than CDC
IV, LLC (“CDC”));

WHEREAS, Arius Two wishes to enable Arius to obtain development and commercial
partners for the Fentanyl Product to ensure Arius complies with the requirements
of Section 3.01(e) the License;

WHEREAS, Arius and Parent (with Arius, “BDSI”) intend to grant Meda AB (“Meda”)
rights to develop and commercialize the Fentanyl Product in Europe as will be
described in a license agreement anticipated to be executed between BDSI and
Meda following the execution of this Amendment (such license, the “Meda
License”);

WHEREAS, the Meda License requires that Meda’s rights shall survive Arius Two’s
termination of Arius’ and CDC’s rights with respect to the Fentanyl Product
(such termination of both Arius’ and CDC’s rights, an “Arius Two Termination
Event”) (including without limitation rendering an exclusive license
non-exclusive), with the Meda License surviving such Arius Two Termination Event
and being automatically assigned from BDSI to Arius Two upon such Arius Two
Termination Event, in order to permit Meda to continue the undisturbed enjoyment
of its rights under the Meda License.

NOW THEREFORE, in consideration of the foregoing premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties to this Amendment agree as follows:

1. Definitions. Any capitalized terms not separately defined in this Amendment
shall have the meaning provided in the License.

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***CONFIDENTIAL TREATMENT REQUESTED***

Note: The portions hereof for which confidential

treatment are being requested are denoted with “***”.

 

2. The definition of Sublicense Revenue is amended in its entirety to read as
follows:

“Sublicense Revenue” means

(a) all license fees, sublicense fees, license option payments (whether in
relation to the grant or exercise of any license option), milestone payments,
and royalties on sales of any Product, BEMA Technology, the Marks and any other
kinds of revenue whatsoever received (including value received in the form of
securities) by Arius, and/or an Affiliate of Arius, in respect of the grant to
Third Parties of sublicenses in the Territory to any Product, or the right to
manufacture, sell or distribute any Product in the Territory; provided,
however,***.

(b) any net manufacturing profits (defined as revenues from applicable
manufacturing less fully-burdened manufacturing and supply costs) realized by
Arius, and/or an Affiliate of Arius, on any supply of any Product in the
Territory (but excluding any net manufacturing profits considered royalties on
the First Product in the Territory);

(c) research and development payments received by Arius, and/or any Affiliate of
Arius, in connection with its performance under a development program for any
Product in the Territory, where such payments are made other than for
reimbursement of costs and expenses incurred by Arius, and/or an Affiliate of
Arius, at full-time equivalent rates equal to or below the following (as
adjusted annually for percentage increases or decreases in CPI), with the
amounts paid above such full-time equivalent rates considered Sublicense
Revenue:

 

  (i) $*** per hour for Vice President level employees and above;

 

  (ii) $*** per hour for Director level employees;

 

  (iii) $*** per hour for supervisor level employees;

 

  (iv) $*** per hour for non-supervisor, laboratory, or regulatory associates;

 

  (v) actual reasonable market expenses for non-Affiliate consultants.

(d) any amount in excess of fair market value paid by a subscriber for stock of
Arius and/or its Affiliates as consideration for the grant of a sublicense in
the Territory or right to manufacture, sell or distribute any Product in the
Territory (a “Premium Equity Payment”);

(i) where Arius or one of its Affiliates is publicly listed on a recognized
stock exchange, the premium paid over the average closing price of such stock of
Arius or its Affiliates, for the 30 trading day period immediately prior to any
such subscription; or

 

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***CONFIDENTIAL TREATMENT REQUESTED***

Note: The portions hereof for which confidential

treatment are being requested are denoted with “***”.

 

(ii) where Arius, and/or an Affiliate of Arius, is not publicly listed on a
recognized stock exchange, the premium paid over the fair market value of such
stock as reasonably determined by the board of directors of Arius, and/or an
Affiliate of Arius, in good faith and certified in a resolution of such board
taking into account ***.

If Arius Two disagrees with ***, and provides written notice thereof to Arius,
then the Parties shall attempt to agree on such value in good faith without the
use of appraisers. If the Parties are unable to so agree within the 21 days
immediately following the giving of such written notice, then each Party shall
select an independent, neutral appraiser experienced in the business of
evaluating or appraising the market value of stock. The two appraisers so
selected (the “Initial Appraisers”) shall appraise the value of the shares
purchased by the sublicensee or partner as of the date of such purchase. ***.

3. Section 2.04(a) of the License is hereby amended by inserting the following
sentence at the end of the paragraph:

“The parties agree that the Clinical Documentation and Results generated by any
sublicensee of Arius with respect to the Territory will be the property of such
sublicensee; provided, however, that (i) Arius shall provide Arius Two with
copies of all such Clinical Documents and Results in Arius’ possession that
relate to the Fentanyl Product upon reasonable advance request and (ii) Arius
shall, if and as reasonably requested by Arius Two in writing, use commercially
reasonable efforts to obtain any sublicensee’s Clinical Documentation or Results
with respect to the Territory not in Arius’ possession and, upon Arius’ receipt
thereof, provide such Clinical Documentation and Results to Arius Two.”

4. Section 3.01(b) of the License is hereby amended by deleting the first
sentence of Section 3.01(b) in its entirety and replacing it with the following
sentence:

“Subject to the terms of this Agreement, Arius shall have the right to grant a
sublicense hereunder to an Affiliate or a Third Party; provided, however, that
any such sublicense agreement (and any subsequent amendments or revisions
thereto) shall be delivered to Arius Two for review and Arius Two’s approval,
which approval shall not be unreasonably withheld, prior to its execution,
provided that Arius Two shall be deemed to have approved such sublicense
agreement if Arius Two does not, within 30 days of receiving an approval request
from Arius, provide Arius written notice objecting to such sublicense agreement,
detailing Arius Two’s objections; and provided, further, that with respect to
the Fentanyl Product, such approval shall be in Arius Two’s sole and absolute
discretion.”

5. Section 3.01(e) is hereby amended by:

(a) deleting the second sentence of Section 3.01(e) in its entirety and
replacing it with the following two sentences:

“The above notwithstanding, Arius shall, no later than ***; and

 

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***CONFIDENTIAL TREATMENT REQUESTED***

Note: The portions hereof for which confidential

treatment are being requested are denoted with “***”.

 

(b) deleting the phrase “may, subject to the limitations contained below in this
Section 3.01(e), upon” in the last sentence of Section 3.01(e) and substituting
in lieu thereof the phrase “may, subject to the limitations contained below in
this Section 3.01(e) and provided that Arius fails to remedy such breach within
*** days from receipt of written notice thereof, upon”.

6. Section 3.03(a) of the License is hereby amended by deleting the last
sentence of Section 3.03(a) in its entirety and replacing it with the following
sentence:

“In the event Arius Two terminates this Agreement pursuant to Sections 13.02 or
13.03 or the License is terminated for any reason, Arius shall grant to Arius
Two a non-exclusive, perpetual, irrevocable non-royalty-bearing license, with
rights of sublicense, under, to the extent Controlled by Arius, Improvements
made by Arius or any sublicensee of Arius and any Patent Rights claiming such
Improvements, to use, patent, develop, market, advertise, promote, distribute,
offer for sale, sell, export, import, manufacture, and have manufactured
BEMA-based Products in the Territory.”

7. Section 5.01(b) of the License is hereby amended by inserting the following
at the end of the first sentence thereof:

“, provided that the efforts of any sublicensee of Arius shall be deemed those
of Arius for purposes of Arius’ satisfaction of the foregoing obligation.”

8. Section 11.03 of the License is hereby amended in its entirety to read as
follows:

“Section 11.03. Marketing Efforts. Arius covenants and agrees that it (or its
sublicensees) will obtain all Governmental Approvals necessary to market and
sell the Fentanyl Product in such countries in the Territory as are required by
Section 3.01(e) and any additional countries in the Territory in which Arius, or
its sublicensees, determines they shall, in their sole discretion, seek to sell
Products.”

9. Section 11.05 of the License is hereby amended by inserting the following
phrase at the end of Section 11.05:

“, provided that, notwithstanding the foregoing, Arius shall only have the
obligation to provide such reports made by its sublicensees with respect to the
Fentanyl Product within two business days of when such reports are made
available to Arius.”

10. The following shall be added as Section 12.11 to the License:

“Section 12.11 Meda License Survival and Assignment. Effective upon the
execution of a license agreement to be executed by Arius and Meda AB (“Meda”) on
August 2, 2006, granting rights to Meda with respect to the Fentanyl Product in
Europe (such license, the “Meda License”), Arius Two agrees that, upon the
termination of Arius’ and CDC’s rights with respect to the Fentanyl Product
(such termination of both Arius’ and CDC’s rights, an “Arius Two Termination
Event”) (including without limitation rendering an exclusive license
non-exclusive), the Meda License shall survive such Arius Two Termination Event
and, to the extent not imposing obligations in excess of those

 

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***CONFIDENTIAL TREATMENT REQUESTED***

Note: The portions hereof for which confidential

treatment are being requested are denoted with “***”.

 

imposed on Arius Two under the Arius Two License, be automatically assigned from
BDSI to Arius Two in order to enable Meda to continue the undisturbed enjoyment
of its rights under the Meda License, as contemplated and required by the Meda
License. The parties agree that (i) Meda shall be deemed a third party
beneficiary of this Section 12.11 for purposes of enforcing this provision and
(ii) this Section 12.11 shall not be amended during the term of the Meda License
without Meda’s prior written consent, which consent shall not be unreasonably
withheld.”

11. Effective Date of this Amendment. This Amendment shall not become effective
until CDC, in its capacity as a third-party beneficiary to certain terms and
provisions contained in the License, has consented to the changes set forth in
this Amendment in a separate written agreement. The failure of CDC to provide
such consent shall render this Amendment void ab initio.

12. Amended License to Continue in Full Force and Effect. To the extent that the
terms of the License are varied by this Amendment, such variations shall be
deemed to be lawfully made amendments to the License pursuant to Section 14.11
thereof. Except as modified by this Amendment, the License shall remain
unchanged and in full force and effect.

13. Governing Law. This Amendment shall be governed by, and construed and
enforced in accordance with, the laws of the State of North Carolina, excluding
its choice of law provisions.

14. Counterparts. This Amendment may be executed in two or more counterparts,
each of which shall be deemed and original, but all of which together shall
constitute one and the same instrument. Signatures to the Amendment may be
transmitted via facsimile and such signatures shall be deemed to be originals.

[Signature page to follow]

 

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***CONFIDENTIAL TREATMENT REQUESTED***

Note: The portions hereof for which confidential

treatment are being requested are denoted with “***”.

 

IN WITNESS WHEREOF, the parties have executed and delivered this Amendment as of
the First Amendment Date.

 

ARIUS TWO, INC. By:  

/s/ Mark A. Sirgo

Name:   Mark A. Sirgo Title:   President ARIUS PHARMACEUTICALS, INC. By:  

/s/ Mark A. Sirgo

Name:   Mark A. Sirgo Title:   President

 

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