<PAGE>

                                                                    EXHIBIT 10.1
May 1st 2004

SERVICE CONTRACT

between

Prosidion Ltd.

and

Anker Lundemose

<PAGE>
                                                                               .
                                                                               .
                                                                               .

CONTENTS

<TABLE>
<S>                                                                                                                <C>
1.    COMMENCEMENT, STATUS OF EMPLOYMENT AND RESPONSIBILITIES.............................................         1

2.    PLACE OF WORK.......................................................................................         2

3.    HOURS OF WORK.......................................................................................         2

4.    SALARY..............................................................................................         2

5.    HOLIDAYS............................................................................................         3

6.    BUSINESS EXPENSES...................................................................................         3

7.    BENEFITS............................................................................................         3

8.    TERM AND TERMINATION................................................................................         4

9.    INTELLECTUAL PROPERTY RIGHTS........................................................................         4

10.     RESTRICTIVE COVENANTS.............................................................................         5

11.     DUTY OF CONFIDENTIALITY AND DOCUMENTS.............................................................         6

12.     RETURN OF MATERIAL................................................................................         6

13.     GOVERNING LAW AND VENUE...........................................................................         6

14.     SIGNATURES........................................................................................         7
</TABLE>

                                       i

<PAGE>

                  SERVICE CONTRACT

BETWEEN           Prosidion Ltd., a company registered in England and Wales
                  under registered number 4600121 and whose registered office is
                  at
                  Watlington Road
                  Oxford , OX4 6LT
                  United Kingdom
                  (the "Company")

AND               Anker Lundemose
                  Sdr. Fasanvej 87A
                  2000 Frederiksberg
                  Denmark
                  (the "Manager")

1. COMMENCEMENT, STATUS OF EMPLOYMENT AND RESPONSIBILITIES

      1.1. COMMENCEMENT

            1.1.1. This Service Contract replaces the Service Contract between
                   the parties dated October 10th 2004. The Manager assumed the
                   position of manager and CEO of the Company on 1 February
                   2003.

      1.2. STATUS OF EMPLOYMENT

            1.2.1. The Manager shall not be subject to the Danish Salaried
                   Employees Act (Funktionaerloven).

      1.3. RESPONSIBILITIES

            1.3.1. The Manager shall be responsible for carrying out his duties
                   in accordance with the job specification provided to the
                   Manager and with the responsibilities and liabilities vested
                   in him in his capacity of CEO of the Company in accordance
                   with applicable laws. In the course of his duties the Manager
                   shall protect and promote the interests of the Company in
                   accordance with regulations laid down by the Company from
                   time to time. The Manager shall regularly notify the Board of
                   Directors of the Company and other officers and employees of
                   the Company, as appropriate from time to time, of his
                   activities in this regard. The Manager shall report to the
                   Chairman of the Board of the Company, currently Dr. Colin
                   Goddard.

            1.3.2. The Manager shall be responsible for ensuring that the
                   activities of the Company are conducted in accordance with
                   applicable regulations for the

<PAGE>

                  activities of the Company and in general with the directions
                  of the Board of Directors and with the Articles of Association
                  of the Company and relevant laws as may apply from time to
                  time.

           1.3.3. The Manager shall perform his duties diligently and loyally
                  devoting his full time, attention and endeavours to promote
                  the interests of the Company. The Manager shall not have any
                  other paid work without the prior written consent of the
                  Company, however, it is accepted and agreed that the Manager
                  is member of the board of Symphogen A/S and OncoTac ApS. In
                  addition, the Manager shall not, without the prior written
                  consent of the Company, have any unpaid work affecting his
                  performance in any manner whatsoever or otherwise causing
                  inconvenience to the Company or which may be considered a
                  conflict of interest with his duties for and on behalf of the
                  Company, however, it is accepted and agreed that the Manager
                  is managing his private investments via the two small limited
                  companies Proliferator ApS and 3B In-vest ApS.

                  The Manager warrants that he has not entered into any
                  arrangement or obligation which could or does current conflict
                  with the duties and obligations hereunder, except that he
                  prior to this employment has been employed by Pantheco A/S.
                  The Manager is co-founder of Pantheco A/S and retains a small
                  equity position in the company. Further, the Manager
                  undertakes that he will not, during the term of this Service
                  Contract of Section 8.1, enter into any arrangement or
                  obligation which may reasonably be considered as a conflict of
                  interest with the duties and obligations hereunder.

2. PLACE OF WORK

      2.1.  The place of work shall be the registered office of the Company in
            Oxford as well as the private address of the Manager. The Manager
            shall travel as required to perform his duties.

3. HOURS OF WORK

      3.1.  The normal daily hours of the Manager shall be from 9 a.m. until 6
            p.m.

      3.2.  The Manager can be expected to work overtime in order to perform his
            duties for the Company and be will not receive any separate
            remuneration for such work.

4. SALARY

      4.1.  The fixed annual salary of the Manager is GBP 150,000 payable
            one-twelfth before the last business day of each month.

                                        2

<PAGE>

5. HOLIDAYS

   The Manager is entitled to six weeks (30 working days) of paid holidays per
   year. The Manager shall not be covered by the Danish Holiday Act. The Manager
   shall decide on the time of any holiday with due regard to the interests of
   the Company and shall notify the Company thereof.

6. BUSINESS EXPENSES

      6.1.  The Manager shall be reimbursed for reasonable business,
            entertainment and traveling expenses incurred in connection with his
            duties under this Service Contract, as agreed with the Company and
            against approved receipts submitted in a timely manner.

      6.2.  The Company shall reimburse the Manager for all of the Manager's
            costs in relation to home telephone expenses, cellular telephone
            expenses, and home PC high-speed Internet connection (ADSL) upon the
            submission of receipts in a timely manner.

            The tax consequences to the Manager of reimbursement as referred to
            in Section 6.1 - 6.2 shall be of no concern to the Company and the
            Manager shall bear the full responsibility and liability for any tax
            arising.

7. BENEFITS

      7.1.  The Manager shall in addition to his fixed salary cf. Section 4.1
            also receive pension contribution of 10% of the fixed salary cf.
            Section 4.1, a car allowance of (pound)1,200 per month and an annual
            bonus. Adjustment of the fixed salary shall be discussed with the
            Company each year before 1 February, such adjustment, if any, being
            effective for the fixed salary for that year. In the event that the
            Company terminates this Service Contract, the Manager shall be
            entitled to severance pay in cash corresponding to 6 months' salary.

      7.2.  Possible tax consequences to the Manager of benefits as referred to
            in Section 7.l shall be of no concern to the Company and the Manager
            shall bear the full responsibility and liability for any tax
            arising.

      7.3.  The Executive shall be eligible for a maximum of (pound)30,000
            towards reasonable relocation expenses (subject to the production of
            appropriate documentation). The Manager may use this sum of monies
            towards rental costs or home purchase or a combination of both until
            such time as the (pound)30,000 is depleted. The Company will meet
            any tax liabilities up to any statutory limit.

      7.4.  Upon a change of Control of Prosidion, i.e., when OS1 no longer
            holds the majority of the outstanding shares of Prosidion, vesting
            will he accelerated of any unvested Prosidion options.

                                        3

<PAGE>

      7.5.  Should the Manager decide to adopt a child from a location outside
            of the UK, the Manager will notify the Company about the time of the
            adoption process as soon as he is notified by the adoption
            authorities. Should this adoption necessitate that the Manager stay
            at the location of the adoption for a prolonged period of time, the
            Manager will be approved for such leave and agrees to perform his
            duties in the Company to the extent possible.

8. TERM AND TERMINATION

      8.1.  During the term of this employment the Manager shall be entitled to
            terminate this Service Contract on giving three month's written
            notice to the Company to expire at the end of a calendar month and
            the Company shall be entitled to terminate this Service Contract on
            giving 6 (six) months written notice to the Manager.

      8.2.  If the Company or the Manager materially breaches the party's
            obligations under this Service Contract or the relevant assumptions
            on which it is based, the other party may terminate the Service
            Contract without notice or with effect from an arbitrarily fixed
            date. If such termination is due to the Manager's breach of
            contract, he is only entitled to remuneration until the date of such
            termination of the Service Contract. The party in breach shall
            compensate for any direct loss suffered by the other party as a
            result of the breach.

9. INTELLECTUAL PROPERTY RIGHTS

      9.1.  All intellectual property rights, including copyrights, rights
            protected under the Danish Marketing Practices Act
            (markedsfoaringsloven), patentable inventions and such other
            intellectual property rights obtained by the Manager anywhere in the
            world in the course of the employment shall be the property of the
            Company without any consideration. This shall also apply to similar
            rights obtained by the Manager following termination of the
            employment where the right results in whole or in part from work
            performed during the employment with the Company.

      9.2.  The Manager shall not receive any separate consideration for the
            assignment or utilization of the rights under Section 9.1, such
            consideration to be deemed to be included in his regular salary.

      9.3.  The intellectual property rights of the Company under Section 9.1
            shall apply whether or not the work of the Manager resulting therein
            was performed within or outside the business area of the Company,
            within or outside normal working hours or within or outside the
            premises of the Company.

      9.4.  The Manager shall promptly notify the Company upon becoming aware
            that an intellectual property right has been obtained in whole or
            part as a result of his work, or that such right must be expected to
            be obtained.

                                        4

<PAGE>

      9.5.  The Manager shall reasonably assist the Company in protecting and
            using its intellectual property rights, including, without
            limitation, the signing of all necessary documents.

      9.6.  The Company may use this Service Contract as documentation for
            purposes of registering the said rights.

      9.7.  Patentable inventions and utility models shall generally be governed
            by the Danish act on employee inventions (lov om arbejdstageres
            opfindelser) as may from time to time apply unless otherwise
            stipulated herein.

10. RESTRICTIVE COVENANTS

      10.1. During the term of this Service Contract and for a period of 1 year
            after the expiry or termination hereof, the Manager will not solicit
            or influence, or attempt to influence:

            10.1.1. any Key Employee of the Company or the Company's group or
                    by companies now or previously affiliated with the Company,
                    including, without limitation OSI Pharmaceuticals Inc. or
                    OSI Pharmaceuticals (UK) Limited with whom he had contact in
                    the course of his employment under this Service Contract, so
                    as to terminate or otherwise cease his or her employment
                    with such company; or

            10.1.2. any person engaged by any client of the Company or the
                    Company's group or by companies now or previously affiliated
                    with the Company with whom he had contact in the course of
                    his employment under this Service Contract, so as to
                    terminate or otherwise cease his or her employment with such
                    entity.

      10.2. For the purpose of Section 10.1, a Key Employee shall be any person
            who, at the date of termination of employment, or within a period of
            12 months prior to such termination of employment, has been engaged
            in a position which involved (i) pharmaceutical research and/or
            development in the therapeutic area of diabetes; or (ii) receiving
            confidential information about such pharmaceutical research and
            development by virtue of his/her position; or (iii) discussions with
            investors and potential investors relating to business in the
            therapeutic area of diabetes carried on by his/her employer.

      10.3. The restrictions in Sections 10.1.1 and 10.1.2 are separate and
            distinct and are each to be construed separately from the other
            restriction. In the event that either such restriction shall be
            found to be void or unenforceable but would be valid or enforceable
            if some part or parts of it were deleted, the Manager and the
            Company agree that such restriction shall apply with such deletions
            as may be necessary to make it valid and effective.

                                        5

<PAGE>

11. DUTY OF CONFIDENTIALITY AND DOCUMENTS

      11.1. The Manager shall have a duty of confidentiality in respect of the
            trade secrets of the Company and all affiliated companies,
            including, without limitation, OSI Pharmaceuticals Inc., and/or OSI
            Pharmaceuticals (UK) Ltd., save for matters of a nature requiring
            disclosure to governmental and regulatory bodies or courts of
            competent jurisdiction provided such disclosure is limited to the
            extent necessary and that reasonable notice is given to the Company
            to enable protectionary measures to be taken. Such duty of
            confidentiality shall continue to apply after termination of the
            employment.

      11.2. All documents relating to the affairs of the Company and any
            affiliated company, including, without limitation, OSI
            Pharmaceuticals Inc., and/or OSI Pharmaceuticals (UK) Ltd., such as
            business relations, price lists, calculations etc., shall be kept in
            a proper and confidential manner and shall not be used for any
            purpose other than to fulfill the obligations contained herein and
            in pursuance of the Manager's duties contemplated herein nor shall
            be disclosed to any third party. Such documents shall not be sold by
            the Manager personally or by any third party. When the Manager
            actually leaves the Company, howsoever caused and whether before or
            after expiry of any notice period, such documents shall promptly be
            returned to the Company. The Manager is not entitled to retain the
            documents.

      11.3. It is agreed between the Parties that any material violation of
            Section 11.1 or Section 11.2 shall constitute a breach entitling the
            Company to terminate the employment promptly in accordance with
            Section 8.5.

      11.4. Section 11.1 -- 11.3 shall apply in addition to the separate
            Confidentiality Agreement between the Manager and OSI
            Pharmaceuticals Inc. dated 14 November 2002 already in existence at
            the date hereof and such provisions shall not affect the terms and
            conditions thereof. Where any conflict arises between the terms of
            the Confidentiality Agreement and Sections 11.1 to 11.3, the terms
            hereof shall prevail.

12. RETURN OF MATERIAL

      12.1. When the Manager actually leaves the Company, howsoever caused and
            whether before or after expiry of any notice period, all material
            and chattels belonging to the Company or any affiliated company and
            in the possession of the Manager shall be returned to the Company.
            The Manager is not entitled to retain such material and chattels.

13. GOVERNING LAW AND VENUE

      13.1. This Service Contract shall be governed by Danish Law except for its
            choice of law principles.

                                        6

<PAGE>

      13.2. All disputes arising out of this Service Contract shall be referred
            to Danish High Court.

14. SIGNATURES

      14.1. This Service Contract has been executed in two original copies, one
            for each of the parties.

Place and date:                                Place and date: June 10TH 2004
For the Company

/s/ COLIN GODDARD                              /s/ ANKER LUNDEMOSE
-----------------------                        ---------------------------------
Colin Goddard, Director                        Anker Lundemose
Prosidion Ltd.

                                        7