Document:

exv10w26

 

Exhibit 10.26

***Text Omitted and Filed Separately with the Securities and Exchange

Commission. Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

LICENSE AGREEMENT

THIS LICENSE AGREEMENT (this “Agreement”), dated on October 31, 2007, is made by and between
Neurocrine Biosciences, Inc., 12790 El Camino Real, San Diego, California, U.S.A. 92130
(“Neurocrine”) and Dainippon Sumitomo Pharma Co., Ltd., 6-8 Doshomachi 2-chome, Chuo-ku, Osaka
541-0045, Japan (“DSP”).

     WHEREAS, DSP is engaged in the research, development and commercialization of human
pharmaceutical products;

     WHEREAS, Neurocrine is the owner or licensee of certain patent rights and know how relating to
Indiplon (as defined below), a proprietary sleep hypnotic compound;

     WHEREAS, DSP and Neurocrine have agreed to collaborate, on the terms and conditions set forth
herein, in the development and commercialization of Indiplon;

     NOW, THEREFORE, in consideration of the mutual representations, warranties and covenants
contained herein and other good and valuable consideration, the Parties agree as follows:

ARTICLE ONE

DEFINITIONS

When used in this Agreement, each of the following terms shall have the meanings set forth in this
Article One. Any terms defined elsewhere in this Agreement should be given equal weight and
importance as though set forth in this Article One.

	1.1	 	“Affiliate” shall mean a person that, directly or indirectly, through one or more
intermediates, controls, is controlled by, or is under common control with the person
specified. For the purposes of this definition, control shall mean the direct or indirect
ownership of, (a) in the case of corporate entities, securities authorized to cast more than
fifty percent (50%) of the votes in any election for directors or (b) in the case of
non-corporate entities, more than fifty percent (50%) ownership interest with the power to
direct the management and policies of such non-corporate entity. Notwithstanding the
foregoing, the term “Affiliate” shall not include corporate entities in which a Party or its
Affiliates owns a majority of the ordinary voting power to elect a majority of the board of
directors, but is restricted from electing such majority by contract or otherwise, until such
time as such restrictions are no longer in effect.
	 
	1.2	 	“Collaboration” shall mean the collaboration between Neurocrine and DSP to Develop and
Commercialize Products under the terms and conditions set forth herein.
	 
	1.3	 	“Commercialize” or “Commercialization” shall mean those activities relating to the commercial
manufacture, marketing and sale of Products.
	 
	1.4	 	“Commercially Reasonable Efforts” shall mean efforts and resources commonly used in the
pharmaceutical industry for a product at a similar stage with the Products in its development
or product life and is of similar market

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Commission. Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

	 	 	potential taking into account efficacy, safety, Regulatory Authorities’ approved labeling,
the competitiveness of alternative products in the marketplace, the patent and other
proprietary position of the product, the likelihood of Regulatory Approval given the
regulatory structure involved, the profitability of the product including the royalties
payable to licensors of patent rights, alternative products and other relevant factors.
Commercially Reasonable Efforts shall be determined on a market-by-market basis for a
particular product, and it is anticipated that the level of effort will change over time,
reflecting changes in the status of the Products and the market involved.

	1.5	 	“Confidential Information” shall mean with respect to each Party, non-public proprietary data
or information which is in whole or in part owned or Controlled by such Party and/or any of
its Affiliates and/or information designated as Confidential Information of such Party
hereunder.
	 
	1.6	 	“Control(s)” or “Controlled” shall mean with respect to Technology, the possession of the
ability to grant licenses or sublicenses without violating the terms of any agreement or other
arrangement with, or the rights of, any Third Party.
	 
	1.7	 	“Default” shall mean with respect to a Party that (i) any representation or warranty of such
Party set forth herein shall have been untrue in any material respect when made or (ii) such
Party shall have failed to perform any material obligation set forth in this Agreement.
	 
	1.8	 	“Develop” or “Development” shall mean those activities related to the non-clinical and
clinical development of Products.
	 
	1.9	 	“Development Program” shall mean the worldwide program of Development of the IR Product (and
upon DSP’s exercise of the MR Option, the MR Product) consisting of the DSP Development
Program and the Neurocrine Development Program.
	 
	1.10	 	“DOV Agreement” shall mean the Sublicense and Development Agreement dated June 30, 1998 by
and between DOV Pharmaceutical, Inc. and Neurocrine as such agreement may be amended from time
to time.
	 
	1.11	 	“DSP Confidential Information” shall mean Confidential Information owned or Controlled by DSP
and/or any of its Affiliates or otherwise designated as DSP Confidential Information
hereunder.
	 
	1.12	 	“DSP Development Program” shall mean the program to Develop the IR Product (and upon DSP’s
exercise of the MR Option, the MR Product) in the Territory conducted by DSP with the
Collaboration of Neurocrine pursuant to this Agreement.
	 
	1.13	 	“DSP Technology” shall mean, all Technology owned or Controlled by DSP and/or any of its
Affiliates on the Effective Date and/or at any time during the term of this Agreement that (i)
is necessary or useful to make, have made, use, Develop, sell, offer for sale, have sold and
import Indiplon or Products and/or (ii) claims, describes or relates to the manufacture or use
of Indiplon and/or Products.
	 
	1.14	 	“Effective Date” shall mean the date first written above.

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Commission. Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

	1.15	 	“FDA” shall mean the Federal Food and Drug Administration of the United States Department of
Health and Human Services or any successor agency thereof.
	 
	1.16	 	“Field of Use” shall mean all human therapeutic, prophylactic and diagnostic uses.
	 
	1.17	 	“First Commercial Sale” shall mean with respect to any Product approved for commercial sale,
the first transfer by DSP, any of its Affiliates and/or its sublicensees of the Product to a
Third Party in exchange for cash or some equivalent to which value can be assigned.
	 
	1.18	 	“Generic Products” shall mean pharmaceutical products (other than Products Developed and
Commercialized by DSP pursuant to this Agreement) that contain Indiplon and can reasonably be
used, or are reasonably used, for the same indication as any one or more indication(s) of
Products.
	 
	1.19	 	“Indiplon” shall mean the nonbenzodiazepine insomnia agent compound described on Exhibit A.
	 
	1.20	 	“IR Product” shall mean the immediate release tablet, capsule or other formulation of
Indiplon whose release profiles are proved to be equivalent thereto.
	 
	1.21	 	“Manufacture” or “Manufacturing” shall mean the activities required to manufacture Indiplon
API (as defined in Section 6.1) or Products including, without limitation, test method
development and stability testing, formulation, process development, manufacturing scale up,
and quality assurance/quality control.
	 
	1.22	 	“MHLW” shall mean Kosei-Rodo-sho (Ministry of Health, Labour and Welfare of Japan) or
successor agency thereof in Japan.
	 
	1.23	 	“[...***...] Differentiation Strategy” shall mean existing or future data generated in
support of Neurocrine’s stated [...***...] dosing/administration of Indiplon. Such existing
data supporting the [...***...] will be expanded upon as the focus of [...***...] conducted by
Neurocrine and/or ROW Partner(s). The [...***...] may be conducted with Indiplon alone or
with Indiplon and comparative compounds relevant to the Rest of World insomnia market
including but not limited to [...***...].
	 
	1.24	 	“Milestones” shall mean the payments to be made by DSP to Neurocrine upon occurrence of
certain events as set forth in Article Seven.
	 
	1.25	 	“MR Development Program” shall mean the program to Develop the MR Product in the Rest of
World conducted by Neurocrine, its Affiliates, Neurocrine together with a ROW Partner, or ROW
Partner, including all Development activities in the United States of America. For the
avoidance of doubt, MR Development Program shall include all Development of MR Product
conducted prior to the Effective Date or during the term of this Agreement.
	 
	1.26	 	“MR Product” shall mean the modified or extended release tablet, capsule or other formulation
of Indiplon whose release profiles are proved to be equivalent thereto.

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Commission. Confidential Treatment Requested Under

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	1.27	 	“MR Program Data” shall mean all data and information owned or Controlled
by Neurocrine or any of its Affiliates arising out of the MR Development Program, that is
(i) collected under the requirements of Good Clinical Practice, Good Laboratory Practice or
Good Manufacturing Practice (as defined by Regulatory Authorities), whether or not such
data and information is submitted to Regulatory Authorities in Rest of World by Neurocrine,
its Affiliates or the ROW Partner and (ii) non-clinical and CMC (chemistry, manufacturing
and controls) data to the extent submitted in Regulatory Filings in the Rest of World and
Necessary for Regulatory Filings in the Territory.
	 
	1.28	 	“MR Option” shall mean the option set forth in Section 3.2(a).
	 
	1.29	 	“NDA” shall mean a New Drug Application filed with the FDA pursuant to 21 CFR 314.
	 
	1.30	 	“Net Sales” shall mean the gross invoiced amount from sales of Products in the Territory by
DSP, its Affiliates or sublicensees (the “Selling Party”) to Third Parties less deductions
actually allowed or specifically allocated to Products by the Selling Party using generally
accepted accounting standards (GAAP) in the Territory for:

	 	(i)	 	packing, handling and transportation charges, including
insurance, for transporting Products;
	 
	 	(ii)	 	sales and excise taxes and duties paid or allowed by the
Selling Party and any other governmental charges imposed upon the production,
importation, use or sale of such Products;
	 
	 	(iii)	 	trade, quantity and cash discounts (including
non-discretionary early settlement discounts) allowed on Products;
	 
	 	(iv)	 	allowances or credits to customers on account of rejection or
return of Products;
	 
	 	(v)	 	allowances or credits to customers on account of retroactive
price reductions affecting such Products; and
	 
	 	(vi)	 	Product rebates and Product charge backs including those
granted to managed care entities and government agencies.

	 	 	Sales between DSP, its Affiliates and its or their sublicensees shall be excluded from the
computation of Net Sales and no payments shall be payable on such sales except where such
Affiliates or sublicensees are end users but Net Sales shall include the subsequent final
sales to Third Parties by such Affiliates or sublicensees.
	 
	1.31	 	“Neurocrine Confidential Information” shall mean Confidential Information owned or Controlled
by Neurocrine and/or any of its Affiliates or otherwise designated as Neurocrine Confidential
Information hereunder.
	 
	1.32	 	“Neurocrine Development Program” shall mean the program of Development of the IR Product (and
upon DSP’s exercise of the MR Option, the MR Product) conducted by or on behalf of Neurocrine
or any of its Affiliates and/or the ROW Partners prior to the Effective Date and/or at any
time during the term of this Agreement.
	 
	1.33	 	“Neurocrine Program Data” shall mean the data and information, including the Registration
Program Data, owned or Controlled by Neurocrine, or any of its Affiliates arising out of the
Neurocrine Development Program, that is (i)
collected under the requirements of Good Clinical Practice, Good Laboratory

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	 	 	Practice or
Good Manufacturing Practice (as defined by Regulatory Authorities) whether or not such data
and information is submitted to Regulatory Authorities in Rest of World by Neurocrine or
any of its Affiliates or the ROW Partner and (ii) non-clinical and CMC (chemistry,
manufacturing and controls) data to the extent submitted in Regulatory Filings in the Rest
of World. Neurocrine Program Data will include data and information owned or Controlled by
Neurocrine’s ROW Partner(s) to the extent such data and information is Necessary for DSP to
obtain and maintain Regulatory Approval of the IR Product (and upon exercise of the MR
Option, the MR Product) in the Territory. For the purposes of this Agreement, data and
information will be deemed “Necessary” for Regulatory Approval of the IR Product
[...***...] in the Territory if [...***...], based on requirements and precedents with
similar products. For the avoidance of any doubt, such Necessary data and information will
be owned or Controlled by Neurocrine or any of its Affiliates.

	1.34	 	“Neurocrine Patent Rights” shall mean Patent Rights owned or Controlled by Neurocrine and/or
any of its Affiliates in the Territory that are applicable to Indiplon and necessary or useful
to make, have made, use, develop, sell, offer for sale, have sold and import Indiplon in the
Territory. Neurocrine Patent Rights shall specifically include but not be limited to the
Neurocrine Patent Rights set forth on Exhibit B and all Patent Rights derived therefrom.
	 
	1.35	 	“Neurocrine Technology” shall mean, all Technology owned or Controlled by Neurocrine and/or
any of its Affiliates in the Territory on the Effective Date and/or at any time during the
term of this Agreement that (i) is necessary or useful to make, have made, use, develop, sell,
offer for sale, have sold and import Indiplon or Products, (ii) is applicable to Indiplon
and/or Products, and/or (iii) claims, describes or relates to the manufacture or use of
Indiplon and/or Products. Neurocrine Technology shall specifically include but not be limited
to the Neurocrine Patent Rights, the Regulatory Filings (to the extent owned or Controlled by
Neurocrine) and the Registration Program Data. Neurocrine Technology will not include any
Technology owned or Controlled by Neurocrine that is (i) royalty bearing to any Third Party
other than DOV Pharmaceutical, Inc, after the Effective Date and/or (ii) not incorporated in
Products in the Rest of World and/or (iii) is not required to be provided under the terms of
this Agreement.
	 
	1.36	 	“Neurocrine Trademarks” shall mean any trademarks for Products in the Rest of World that are
owned or Controlled by Neurocrine.
	 
	1.37	 	“Party” shall mean DSP or Neurocrine, as the case may be, and “Parties” shall mean DSP and
Neurocrine.
	 
	1.38	 	“Patent Rights” shall mean the rights and interests in and to all issued patents and pending
patent applications in any country, including, without limitation, all provisional
applications, substitutions, continuations, continuations-in-part, divisions, and renewals,
all letters patent granted thereon, and all patents-of-addition, reissues, reexaminations and
extensions or restorations by existing or future extension or restoration mechanisms,
including, without limitation Supplementary Protection Certificates or the equivalent thereof.
	 
	1.39	 	“Person” shall mean any individual, firm, corporation, partnership, limited liability
company, trust, unincorporated organization or other entity or a government agency or
political subdivision thereto, and shall include any successor (by merger or otherwise) of
such Person.

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	1.40	 	“Product(s)” shall mean any product containing Indiplon as an active ingredient, including
the IR Product and, upon DSP’s exercise of the MR Option, the MR Product. When used herein,
“Products” shall not, in the event of a combination product, include any of the active
ingredients of the combination product other than Indiplon but shall include derivatives and
formulations of Indiplon.
	 
	1.41	 	“Registration Program Data” shall mean the data and information set forth in the NDAs for IR
Product filed with the FDA, including but not limited to the NDA for IR Product filed on June
12, 2007.
	 
	1.42	 	“Regulatory Approval” shall mean the technical, medical and scientific licenses,
registrations, authorizations and approvals (including, without limitation, approvals of
Investigational Drug Applications, NDAs and equivalents, supplements and amendments, pre- and
post- approvals, pricing and third party reimbursement approvals, and labeling approvals) of
any national, supra-national, regional, state or local regulatory agency, department, bureau,
commission, council or other governmental entity, necessary for the development, manufacture,
distribution, marketing, promotion, offer for sale, use, import, export or sale of Product(s)
in a regulatory jurisdiction.
	 
	1.43	 	“Regulatory Authorities” shall mean FDA and the MHLW and comparable regulatory or
governmental authorities.
	 
	1.44	 	“Regulatory Filings” shall mean, collectively, Investigational New Drug Applications, Product
License Applications, Drug Master Files, NDAs and/or any other equivalent or comparable
filings as may be required by Regulatory Authorities to obtain Regulatory Approvals.
	 
	1.45	 	“Rest of World” shall mean all countries of the world outside the Territory.
	 
	1.46	 	“ROW Partner(s)” shall mean one or more Third Party Development and Commercialization
partners selected by Neurocrine for the Rest of World.
	 
	1.47	 	“Royalties” shall mean those royalties payable by DSP to Neurocrine pursuant to Article Seven
of this Agreement.
	 
	1.48	 	“Safety Data” shall mean data with respect to any adverse drug experience (as defined in 21
CFR 314.80) and serious adverse drug experience (as defined in 21 CFR 314.80 or 312.32) as
such information is reportable to Regulatory Authorities. Safety Data shall also include
“adverse events”, “adverse drug reactions” and “unexpected adverse drug reactions”, as these
terms are expanded on and defined in the ICH Harmonized Tripartite Guideline for Clinical
Safety Data Management: Definitions and Standards for Expedited Reporting.
	 
	1.49	 	“Sleep Maintenance Indication” shall mean FDA approval of an NDA for MR Product with an
indication statement that reflects effective use for sleep maintenance or similar verbiage.
	 
	1.50	 	“Steering Committee” shall have the meaning set forth in Article Four hereof.
	 
	1.51	 	“Technology” shall mean proprietary data, information and all intellectual property,
including but not limited to, trade secrets, know-how, inventions and technology, whether
patentable or not, and Patent Rights directed to products,

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	 	 	processes, formulations and/or
methods but which term shall specifically exclude copyright and all unregistered trademarks.
	 
	1.52	 	“Territory” shall mean Japan.
	 
	1.53	 	“Third Party(ies)” shall mean any Person other than Neurocrine, DSP and their respective
Affiliates.
	 
	1.54	 	“Third Party Royalties” shall mean payments, based on Net Sales of Products by DSP, its
Affiliates or sublicensees, to Third Parties to make, have made, use sell, offer for sale or
import Indiplon in the Territory where the payments are based on Patent Rights owned or
Controlled by such Third Party in the Territory.
	 
	1.55	 	“Valid Claim” shall mean a claim of an issued and unexpired and unabandoned patent or a
pending claim of a pending patent application and which has not been held invalid or
unenforceable by a court or other government agency of competent jurisdiction from which no
appeal can be or has been taken and has not been admitted to be invalid or unenforceable
through re-examination or disclaimer or otherwise.

ARTICLE TWO

REPRESENTATIONS AND WARRANTIES

	2.1	 	Neurocrine Representations and Warranties. Neurocrine represents and warrants:

     (a) Corporate Power. Neurocrine is duly organized and validly existing under the laws
of the State of Delaware and has full corporate power and authority to enter into this Agreement
and to carry out the provisions hereof.

     (b) Due Authorization. Neurocrine is duly authorized to execute and deliver this
Agreement and to perform its obligations hereunder. The Person executing this Agreement on
Neurocrine’s behalf has been duly authorized to do so by all requisite corporate action.

     (c) Binding Agreement. This Agreement is a legal and valid obligation binding upon
Neurocrine and enforceable in accordance with its terms. The execution, delivery and performance
of this Agreement by Neurocrine does not conflict with any agreement, instrument or understanding,
oral or written, to which it is a party or by which it may be bound, nor violate any material law
or regulation of any court, governmental or administrative body or agency having jurisdiction over
it.

     (d) Validity. Neurocrine is aware of no action, suit or inquiry or investigation
instituted by any federal, state, local or country governmental agency which questions or threatens
the validity of this Agreement.

     (e) Patent. As of the Effective Date, Neurocrine has not received any notice of
infringement or any written communication relating in any way to the possible infringement of any
Third Party’s patent by the activities of the Parties contemplated by this Agreement. As of the
Effective Date, Neurocrine is not aware of any Third Party’s patent or patent application that
would be infringed by the activities of the Parties contemplated by this Agreement or by DSP’s
exercise of the licenses granted by

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Neurocrine other than that which has already been disclosed to
DSP. Neurocrine is aware of no action, suit or inquiry or investigation instituted or threatened by
any Person that questions or threatens the validity of, or Neurocrine’s rights to, any Neurocrine
Technology.

     (f) DOV Agreement. To the extent any rights, licenses, consents or approvals must be
obtained from DOV Pharmaceutical, Inc. or in accordance with the DOV Agreement in order for either
(or both) of the Parties to perform its (or their) obligations hereunder or to Develop and
Commercialize the Products as contemplated hereunder, or in order for DSP to fully exercise its
rights under this Agreement, Neurocrine possesses and has obtained for itself and for DSP (and
DSP’s Affiliates and sublicensees, as applicable) all such rights, licenses, consents and
approvals. The DOV Agreement does not include or impose any restrictions, obligations, conditions
or payments applicable to DSP or its activities or rights hereunder other than those expressly
incorporated in this Agreement.

	2.2	 	DSP Representations and Warranties. DSP represents and warrants:

     (a) Corporate Power. DSP is duly organized and validly existing under the laws of
Japan and has full corporate power and authority to enter into this Agreement and to carry out the
provisions hereof.

     (b) Due Authorization. DSP is duly authorized to execute and deliver this Agreement
and to perform its obligations hereunder. The Person executing this Agreement on DSP’s behalf has
been duly authorized to do so by all requisite corporate action.

     (c) Binding Agreement. This Agreement is a legal and valid obligation binding upon
DSP and enforceable in accordance with its terms. The execution, delivery and performance of this
Agreement by DSP does not conflict with any agreement, instrument or understanding, oral or
written, to which it is a party or by which it may be bound, nor violate any material law or
regulation of any court, governmental or administrative body or agency having jurisdiction over it.

     (d) Validity. As of the Effective Date, DSP is aware of no action, suit or inquiry or
investigation instituted by any federal, state, local or country governmental agency which
questions or threatens the validity of this Agreement.

2.3 Covenants.

     (a) Neurocrine. Neurocrine recognizes that the Neurocrine Program Data may be
indispensable for DSP to obtain the Regulatory Approval for the IR Product in the Territory. Based
upon such recognition, Neurocrine shall make available to DSP [...***...]. Neurocrine shall make
the Neurocrine Program Data available to DSP in a timely manner if DSP determines and represents to
Neurocrine in good faith that such data is reasonably necessary for DSP to obtain and maintain
Regulatory Approval for the IR Product in the Territory. In addition, notwithstanding Section 3.2,
Neurocrine shall provide DSP with the MR Program Data in a timely manner to the extent that DSP
determines and represents to Neurocrine in good faith that such data is reasonably necessary for
DSP to obtain and maintain the Regulatory Approval for the IR Product in the Territory. Unless and
until DSP exercises the MR Option pursuant to Section 3.2, DSP shall use such MR Program Data for
the sole purpose of obtaining and maintaining the Regulatory Approval for the IR Product in the
Territory. [...***...].

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     (b) DSP. DSP shall use Commercially Reasonable Efforts to Develop and Commercialize
Products in the Territory.

     (c) Neurocrine covenants to keep the DOV Agreement in full force and effect except where the
failure to do so will not have any material adverse effect on the ability of DSP to Develop and
Commercialize Indiplon or Products in the Territory. DSP
covenants to assist and co-operate with Neurocrine in meeting the obligations under the DOV
Agreement in so far as they relate to the Territory.

2.4 Invention Assignment Agreements. All Neurocrine and DSP personnel conducting the Development
Program shall have executed Neurocrine’s or DSP’s, as the case may be, standard non-disclosure and
invention assignment agreement.

2.5 Disclaimer. EXCEPT AS EXPRESSLY PROVIDED HEREIN, EACH PARTY MAKES NO OTHER REPRESENTATION OR
WARRANTY, EITHER EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO ANY MATERIALS OR MATTERS
WHATSOEVER, INCLUDING WITHOUT LIMITATION NEUROCRINE TECHNOLOGY AND DSP TECHNOLOGY.

ARTICLE THREE

LICENSES

3.1 License Grant to DSP. Neurocrine hereby grants to DSP the sole and exclusive (even as to
Neurocrine) right and license, with the right to sublicense, under the Neurocrine Technology to (i)
identify, make, have made, use, develop, sell, offer for sale, have sold and import Products in the
Field of Use in the Territory and (ii) make, have made, use, sell, offer for sale, have sold and
import Indiplon in bulk, active ingredient form in the Territory in connection with exercising its
rights and licenses and its rights to sublicense under this Section 3.1.

3.2 MR Option. Neurocrine grants to DSP an exclusive option (the “MR Option”) to obtain
exclusive (even as to Neurocrine) right and license, with the right to sublicense, under the
MR Program Data to (i) identify, make, have made, use, develop, sell, offer for sale, have
sold and import MR Product in the Field of Use in the Territory and (ii) make, have made, use,
sell, offer for sale, have sold and import Indiplon in bulk, active ingredient form in the
Territory in connection with exercising its rights and licenses and its rights to sublicense
under this Section 3.2. The MR Option may be exercised at any time after [...***...] and
prior to [...***...] on the terms and conditions set forth in Section 7.3.

	3.3	 	Neurocrine Trademarks.

     (a) Promptly after the Neurocrine Trademarks which will be used for any of the Products in any
country of the Rest of World are determined, Neurocrine shall notify DSP in writing of such
Neurocrine Trademarks. DSP may at any time and at its own discretion determine the trademark which
will be used for the IR Product in the Territory, and shall have the right, but no obligation, to
use such Neurocrine Trademarks for the IR Product in the Territory.

     (b) Grant. In the event that DSP determines to use the Neurocrine Trademarks under Section
3.3(a), Neurocrine grants to DSP the exclusive license and right, free of

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charge, to use the
Neurocrine Trademarks solely and exclusively for the purpose of Commercialization of Products in
the Territory in accordance with this Agreement and shall register the DSP’s license of the
Neurocrine Trademark at the Japan Patent Office pursuant to Section 9.6. Neurocrine shall make its
best effort to obtain and maintain the registration of the Neurocrine Trademark in the Territory.

     (c) In the event DSP elects to use the Neurocrine Trademarks for Products in the Territory,
DSP shall be responsible for the direct payment of, or reimbursement to Neurocrine of, the
Neurocrine expenses for registering and maintaining the Neurocrine Trademarks in the Territory
incurred after Neurocrine registers the DSP’s license of the Neurocrine Trademark at the Japan
Patent Office, and all the other expenses relating to the Neurocrine Trademark shall be borne by
Neurocrine unless otherwise provided for in this Agreement.

     (d) In the event DSP does not elect to use the Neurocrine Trademarks for Products in the
Territory, all trademarks associated with Products in the Territory shall be selected and owned by
DSP and maintained at DSP’s expense.

3.4 License Grant to Neurocrine. DSP hereby grants to Neurocrine the sole and exclusive (even as
to DSP) right and license, with the right to sublicense, under the DSP Technology solely and
exclusively to identify, make, have made, use, develop, sell, offer for sale, have sold and import
Indiplon or Products in the Field of Use in the Rest of World. Notwithstanding the foregoing, DSP
shall have no obligation to grant to Neurocrine any right and/or license under the DSP Technology
to make, use or sell Products incorporating DSP’s proprietary [...***...] (but will provide
Neurocrine with any data or information on the DSP Technology as it is applied to [...***...]) but
DSP may grant a royalty-bearing license for such DSP Technology to Neurocrine on the terms and
conditions mutually agreed upon between the Parties.

	3.5	 	Sublicenses; CROs; Contract Manufacturers. DSP shall have the right to

     (a) grant sublicenses to Neurocrine Technology in the Territory, and

     (b) retain, and in connection therewith, delegate authority to contract research organizations
for purposes of conducting certain non-clinical and clinical studies in and/or outside the
Territory under DSP Development Program for the sole purpose of obtaining Regulatory Approval in
the Territory,

     (c) subject to Section 6.6, retain contract manufacturers to Manufacture Indiplon API and/or
Products in and/or outside the Territory solely for the purpose of Development and
Commercialization in the Territory, and

     (d) delegate DSP’s other rights and/or obligations hereunder in whole or in part to DSP’s
Affiliates, sublicensees and/or DSP’s designees (“Designees”),

provided however, that DSP shall remain responsible for the full and complete performance of all
applicable DSP’s rights and obligations hereunder. DSP shall provide Neurocrine with full and
complete copies (provided the numbers associated with financial terms may be redacted) of all
sublicense agreements between DSP and Third Parties in which rights to or sublicenses of the
Neurocrine Technology are granted by DSP.

3.6 Regulatory Filings. As promptly as practicable after the Effective Date, Neurocrine shall make
available to DSP all Neurocrine Program Data [...***...] and copies of the Regulatory Filings with
respect to the IR Product. As promptly as

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practicable after the exercise of the MR Option by DSP,
Neurocrine shall make available to DSP all MR Program Data and Regulatory Filings with respect to
the MR Product, existing on the exercise date, subject to Section 3.2.

	3.7	 	Right of Inspection and Right of Reference.

     (a) Inspection. Neurocrine hereby grants to DSP a right of inspection to prepare for
and related to a request for inspection by the MHLW (and a right to have inspection conducted by
the MHLW) to the Regulatory Filings of IR Product by Neurocrine and held in Neurocrine’s name in
Rest of World, to the extent required for DSP to obtain and maintain Regulatory Approval in the
Territory. Neurocrine shall, to the extent Neurocrine has the right and authority, grant to DSP a
right of inspection to Regulatory Filings of IR Product by the ROW Partner(s) or held in the ROW
Partner(s) name in the Rest of World to the extent required for DSP to obtain and maintain
Regulatory Approval in the Territory. In addition, notwithstanding Section 3.2, Neurocrine hereby
grants to DSP a right of inspection to prepare for and related to a request for inspection by the
MHLW (and a right to have inspection conducted by the MHLW) to the Regulatory Filings of MR Product
by Neurocrine and held in Neurocrine’s name in the Rest of World to the extent required for DSP to
obtain and maintain Regulatory Approval in the Territory and Neurocrine shall, to the extent
Neurocrine has the right and authority, grant to DSP a right of inspection to Regulatory Filings
of MR Product by the ROW Partner(s) or held in the ROW Partner(s) name in the Rest of World to the
extent required for DSP to obtain and maintain Regulatory Approval in the Territory. Unless and
until DSP exercises the MR Option pursuant to Section 3.2, DSP shall use such right of inspection
to Regulatory Filings of MR Product for the sole purpose of obtaining and maintaining the
Regulatory Approval for the IR Product in the Territory. Upon DSP’s exercise of the MR Option,
Neurocrine shall grant to DSP a right of inspection to prepare for and related to a request for
inspection by the MHLW (and a right to have inspection conducted by the MHLW) to the Regulatory
Filings with respect to the MR Product filed by Neurocrine and held in Neurocrine’s name in the
Rest of World, and, to the extent Neurocrine has the right and authority, grant to DSP a right of
inspection to Regulatory Filings of MR Product by the ROW Partner(s) and held in the ROW Partner(s)
in the Rest of World to the extent required for DSP to obtain and maintain Regulatory Approval in
the Territory. DSP shall give Neurocrine prompt notice of any such inspections and allow
representatives of Neurocrine to be present during any such inspections. To the extent Neurocrine
does not have the right or authority to grant to DSP a right of inspection with respect to any
Regulatory Filings by the ROW Partner(s), [...***...].

     (b) Reference. Neurocrine hereby grants to DSP a right of reference to the IND(s) and
NDA(s) filed on the IR Product in the Rest of World by Neurocrine and held in Neurocrine’s name to
the extent required for DSP to obtain and maintain Regulatory Approval for the IR Product in the
Territory. Neurocrine will, to the extent Neurocrine has the right and authority, grant to DSP a
right of reference to the IND(s) and NDA(s) filed on the IR Product in the Rest of World by the ROW
Partner and held in the ROW Partner(s) name to the extent required for DSP to obtain and maintain
Regulatory Approval in the Territory. In addition, notwithstanding Section 3.2, Neurocrine hereby
grants to DSP a right of reference to the IND(s) and NDA(s) filed on the MR Product in the Rest of
World by Neurocrine and held in Neurocrine’s name to the extent required for DSP to obtain and
maintain Regulatory Approval for the IR Product in the Territory and shall, to the extent
Neurocrine has the right and authority, grant to DSP a right of reference to Regulatory Filings of
MR Product by the ROW Partner(s) and held in the ROW Partner(s) name in the Rest of World to the
extent required for DSP to obtain and maintain Regulatory Approval for the IR Product in the
Territory. Unless and until DSP exercises the MR Option pursuant to Section 3.2, DSP

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shall use
such MR Program Data for the sole purpose of obtaining and maintaining the Regulatory Approval for
the IR Product in the Territory. Similarly, upon DSP’s exercise of the MR Option, Neurocrine shall
grant to DSP a right of reference to the IND(s) and NDA(s) filed on MR Product in the Rest of World
by Neurocrine and held in Neurocrine’s name and Neurocrine will, to the extent Neurocrine has the
right and authority, grant to DSP a right of reference to the IND(s) and NDA(s) filed on the MR
Product in the Rest of World by the ROW Partner and held in the ROW Partner(s) name to the extent
required for DSP to obtain
and maintain Regulatory Approval in the Territory. To the extent Neurocrine does not have the
right or authority to grant to DSP a right of reference with respect to any Regulatory Filings by
the ROW Partner(s), [...***...].

     (c) Safety Data of Indiplon. Neurocrine hereby grants to DSP a right of reference to
all Safety Data of Indiplon including the Safety Data of the Neurocrine Program Data. Neurocrine
further commits that the ROW Partner(s) will grant to DSP a right of reference to all Safety Data
of Indiplon arising out of the Neurocrine Development Program.

     (d) Other Data. Neurocrine grants to DSP the right to use the Registration Program
Data to Develop and Commercialize Products in the Territory, In addition, Neurocrine grants to DSP
the right to use Neurocrine Program Data other than the Registration Program Data and, to the
extent Neurocrine has the right and authority, a right to use the Neurocrine Program Data developed
by the ROW Partner(s) with a right to inspect any Regulatory Filings by the ROW Partner(s) included
in Neurocrine Program Data, in each case without further charge to the extent DSP represents to
Neurocrine in good faith that such data is reasonably necessary for DSP to obtain and maintain
Regulatory Approval for the IR Product (and upon exercise of the MR Option, the MR Product) in the
Territory. To the extent Neurocrine does not have the right or authority to grant to DSP a right
to use any data arising from Neurocrine Development Program, [...***...] data in their respective
territories to the extent [...***...] in their respective territories [...***...]

     (e) Pharmacovigilance Agreement. At such time as DSP initiates Development in the
Territory, the pharmacovigilance departments of the Parties shall meet and determine the approach
to be taken for the collection, review, assessment, tracking and filing of information related to
adverse events associated with Products worldwide. This approach shall be documented in a separate
drug safety exchange agreement. In the event Neurocrine has selected one or more ROW Partners, the
terms and conditions of any drug safety exchange agreement shall be subject to the reasonable
comments of the ROW Partners and mutual agreement of DSP, Neurocrine and the ROW Partners, and
shall not include any monetary consideration.

ARTICLE FOUR

STEERING COMMITTEE

4.1 Creation; Mission. Within sixty (60) days after the Effective Date, Neurocrine and DSP shall
form a steering committee (the “Steering Committee”) to oversee the Development in the Territory.
The Steering Committee shall, subject to Section 4.4, have the following responsibilities: (i) to
discuss policies for the Development in the Territory and the Rest of World, (ii) to coordinate
activities of Development in the Territory with activities of Development in Rest of World, (iii)
to review and monitor the annual plans of Development for the Territory including review of
non-clinical and clinical study protocols, (iv) to coordinate data exchange and preparation of
Regulatory

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Filings including right of inspection of data which will be used for Regulatory Filings
in the Territory, (v) to formulate a plan consistent with the Rest of World plan for reporting to
one another and Regulatory Authorities, Safety Data reported or arising in the Development and
(vi) to decide such other activities which the Parties agree to consign to the Steering Committee.

4.2 Secretary. A secretary to the Steering Committee shall be appointed on an annual basis and
shall rotate between those designated by DSP and Neurocrine, with DSP providing the first such
secretary. The secretary shall be responsible for scheduling
semi-annual meetings, distributing meeting materials in advance of meetings and meeting minutes
following meetings. The secretary shall also be empowered to call special meetings on request of
any Steering Committee member and the secretary shall not unreasonably withhold or delay consent to
call such a meeting upon request. The Party whose designated Steering Committee member requested
such special meeting shall send notices and agenda for such meetings to the other Party and to each
Steering Committee member.

4.3 Meetings. The Steering Committee shall meet no less frequently than every six (6) months.
Steering Committee meetings may be by teleconference or by videoconference as well as in person,
with at least one face-to-face meeting per annum, timing of which shall be decided by mutual
agreement of the Parties. Each Party shall be responsible for expenses incurred by its designated
members of the Steering Committee incurred in attending or otherwise participating in Steering
Committee meetings. The location for face-to-face meetings shall alternate between Japan and
California, unless otherwise agreed by the Parties.

4.4 Members and Decisions of the Steering Committee. All decisions of the Steering Committee shall
be made in good faith and shall be unanimous. The Steering Committee shall consist of at least
three (3) members from each of Neurocrine and DSP (with Neurocrine and DSP having equal
representation). If the required vote for decision cannot be obtained (i.e., if all members of the
Steering Committee cannot unanimously agree on a decision on such matter), the undecided matter
(each an “Undecided Matter”) shall be submitted to the Chief Executive Officer of Neurocrine and
Executive Director, Drug Development Division or other representative of DSP of the same or higher
level for resolution. In the event the Undecided Matter is, [...***...], the Neurocrine Chief
Executive Officer and the DSP Executive Director, Drug Development Division or other representative
of the same or higher level shall discuss in good faith a resolution of the matter [...***...]
shall be entitled to make the final decision; provided that, such decision shall be made in good
faith; and provided further that, such decision shall not [...***...] and such decision shall not
[...***...] under this Agreement. In the event the Undecided Matter is, in the reasonable opinion
of the Chief Executive Officer of Neurocrine, [...***...], the Neurocrine Chief Executive Officer
and the DSP Executive Director, Drug Development Division or other representative of the same or
higher level shall discuss in good faith a resolution of the matter that addresses both [...***...]
shall be entitled to make the final decision; provided that, such decision shall be made in good
faith in the best interests of Development and Commercialization in the Territory. The Parties
agree that matters relating to [...***...]. Notwithstanding the foregoing, in the event the
Undecided Matter concerns [...***...] shall be entitled to make the final decision regarding the
matter.

4.5 Reporting and Disclosure.

     (a) Prior to each regularly scheduled meeting of the Steering Committee, the Parties shall
distribute to each other written copies of all materials intended to be

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submitted at the Steering
Committee meeting plus, to the extent not set forth in the Steering Committee materials, a written
report outlining material data and information arising out of each Party’s Development activities.
Within sixty (60) days after the internal review board of DSP approves the non-clinical and
clinical protocols, DSP shall provide Neurocrine with English language copies of synopses/summaries
of all protocols for Product non-clinical and clinical studies and upon further request of
Neurocrine, DSP shall provide to Neurocrine an English translation of the full protocols for those
non-clinical and clinical protocols specified by Neurocrine. The cost of the English translation
of the full protocols shall be equally shared by the Parties.

     (b) In the event that after receipt of any such materials or report, either Party shall
reasonably request additional data or information relating to any Neurocrine Program Data, DSP Data
(as defined in Section 5.2(c)) or Technology licensed hereunder, the Party to whom such request is
made shall promptly provide to the other Party such data or information.

     (c) In addition to the Steering Committee materials and reports, (i) in the event of any
material development under the Neurocrine Development Program, Neurocrine shall notify DSP of such
event and promptly provide DSP with such information regarding the event as is reasonably available
to Neurocrine and (ii) in the event of any material development under the DSP Development Program,
DSP shall notify Neurocrine of such event and promptly provide Neurocrine with such information
regarding the event as is reasonably available to DSP.

     (d) Neurocrine shall report to DSP the status of the Neurocrine Development Program at each
meeting of the Steering Committee. Neurocrine will provide informal summary reports on the status
of the Neurocrine Development Program at such other times as DSP shall reasonably request.

ARTICLE FIVE

DEVELOPMENT AND COMMERCIALIZATION

5.1 Development Program. The Development Program shall consist of the Neurocrine Development
Program and the DSP Development Program. It is the intention of the Parties that the Neurocrine
Development Program existing as of the Effective Date shall provide the foundation for the DSP
Development Program and that the DSP Development Program shall consist of those additional
activities required for Regulatory Approval for Products in the Territory and such other activities
as the Steering Committee deems useful and appropriate to achieve maximum Product value in the
Territory. The Neurocrine Development Program and DSP Development Program shall be conducted to
complement one another and in the event of conflict, shall be resolved in the best interest of
worldwide Product development and value, provided that the resolution shall not negatively affect
DSP’s rights and obligations under this Agreement.

	5.2	 	DSP Development Program.

     (a) Conduct. DSP (or its Affiliates, sublicensees or Designees) shall conduct the DSP
Development Program according to a development plan prepared and finally determined by DSP and
discussed by the Steering Committee (the “Development
Plan”), provided that DSP shall not make any
material modifications to the Development Plan without first presenting to the Steering Committee
for discussion. The implementation of the Development Plan shall be reviewed and coordinated by the

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Steering Committee. The Development Plan shall be detailed and include non-clinical and clinical
trials and protocols as they are developed and as indicated herein. DSP will have final decision
making authority with respect to the Development Plan provided however that all decisions with
respect to the Development Plan will take into consideration the perspectives and opinions of each
Party and will in good faith consider the impact of such decisions in Rest of World.

     (b) Funding. DSP shall fund the Development in the Territory.

     (c) Data. DSP shall provide to Neurocrine, all data generated in the conduct of DSP
Development Program (“DSP Data”). To the extent the DSP Data is Safety Data
or DSP Data Necessary for the ROW Partners to obtain and maintain Regulatory Approval,
Neurocrine and its ROW Partner, if any, shall have the exclusive right to use the DSP Data for
Development and Commercialization in the Rest of World. To the extent the DSP Data is data other
than Safety Data or DSP Data Necessary for the ROW Partners to obtain and maintain Regulatory
Approval, DSP will provide to Neurocrine the exclusive right to use the DSP Data for Development
and Commercialization in the Rest of World. Neurocrine will have the right to sublicense the DSP
Data (other than Safety Data or DSP Data Necessary for the ROW Partners to obtain and maintain
Regulatory Approval) to any ROW Partner [...***...] the data arising from Neurocrine Development
Program in the Territory. Neurocrine will use best reasonable efforts to [...***...].

     (d) Neurocrine Assistance. DSP may request that Neurocrine conduct certain
Development activities on DSP’s behalf for the Territory. If Neurocrine agrees to conduct such
activities on DSP’s behalf, DSP shall reimburse Neurocrine for all (i) external pass through costs
and (ii) Neurocrine internal costs at a rate of [...***...] per Neurocrine FTE devoted to such
activities provided that Neurocrine shall obtain DSP’s prior written agreement on such external and
internal costs.

5.3 Commercialization of Products. DSP shall Commercialize Products in the Territory according to
a marketing plan prepared and finally determined by DSP and these activities shall be reviewed by
Neurocrine subject to DSP’s final decision. DSP shall use Commercially Reasonable Efforts to
Commercialize Products in the Territory. Neurocrine will be supportive of DSP Commercialization
activities in order to maximize Product sales in the Territory.

ARTICLE SIX

MANUFACTURING

6.1 Non-clinical Supply. Neurocrine shall provide to DSP [...***...] of Indiplon Active
Pharmaceutical Ingredient (“API”) for use in [...***...]. For avoidance of doubt, this API will be
used in [...***...] and not in [...***...]. Additional quantity of Indiplon API for use in
conducting [...***...] on Indiplon shall be provided by Neurocrine to DSP at a cost of [...***...].
Payment of the price of the Indiplon API shall be made in US Dollars by telegraphic transfer to a
bank account designated by Neurocrine, within forty-five (45) days after the date of receipt of the
Indiplon API by DSP. Such study plans and outlines shall be attached hereto as Exhibit C.

	6.2	 	Clinical Supply.

     (a) On DSP’s request, Neurocrine shall provide DSP with DSP’s requirements for (i) Indiplon
API, (ii) [...***...] IR Product [...***...] and (iii) [...***...] IR

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Product [...***...]
(collectively, “Clinical Drug Product”) for use by DSP in clinical studies in and outside the
Territory under DSP Development Program at a cost [...***...]. Payment of the price of the
Clinical Drug Product shall be made in US Dollars by telegraphic transfer to a bank account
designated by Neurocrine, within forty-five (45) days after the date of receipt of the Clinical
Drug Product by DSP.

     (b) As soon as practicable after the Effective Date, DSP will provide Neurocrine with
non-binding forecast of DSP’s purchase orders for Clinical Drug Product which may be placed for the
initial [...***...], and thereafter, DSP will provide Neurocrine with non-binding forecast of DSP’s
purchase order for Clinical Drug Product [...***...]. The purchase orders for Clinical Drug
Product shall be placed to allow no less than [...***...] lead time prior to the shipment dates
specified in the said purchase orders,
and Neurocrine will use best reasonable efforts to comply with the purchase orders provided
however that in the event Neurocrine does not have sufficient stock of Clinical Drug Product, the
lead time for the Clinical Drug Product shall be determined by mutual agreement of Neurocrine and
DSP through good faith discussions. The purchase orders for the Clinical Drug Product shall be in
any event non-cancelable. The risk of loss and damage for, and the title in, Clinical Drug Product
supplied hereunder shall pass to DSP upon delivery of the Clinical Drug Product to the carrier
designated by DSP. Shipment shall be FCA an international airport or port designated by Neurocrine
as defined in INCOTERMS 2000 as amended.

     (c) Neurocrine through its contract manufacturers shall manufacture Clinical Drug Product in
compliance with any and all applicable laws and regulations and in accordance with such appropriate
quality, specifications and test methods, formula and manufacturing process as specified by mutual
agreement of Neurocrine and DSP, which may not be changed by Neurocrine without prior written
consent of DSP, except as may be required by any Regulatory Authorities. DSP shall not use
Clinical Drug Product which to DSP’s knowledge does not meet the then-prevailing quality,
specifications and test methods, formula and manufacturing process.

     (d) DSP shall carry out quality testing to confirm that the Clinical Drug Product conforms to
the specifications and shall use the testing method specified by mutual agreement of Neurocrine and
DSP. In case that any quantity of Clinical Drug Product supplied by Neurocrine hereunder does not,
at the time of delivery, conform to the then-prevailing specifications, Neurocrine shall at its own
cost replace such quantity of the Clinical Drug Product with material of the quality specified in
such specifications, and DSP shall at Neurocrine’s option and expense return to Neurocrine or
dispose of such quantity of the Clinical Drug Product which failed to meet such specifications;
provided, however, that DSP shall have notified Neurocrine, within forty-five (45) days from
receipt of the said Clinical Drug Product of the failure of such quantity to meet the
specifications and in any event before DSP has utilized the Clinical Drug Product for any purpose.
In case that DSP notifies Neurocrine within the forty-five (45)-day period that the Clinical Drug
Product does not conform to the specifications, Neurocrine may have the relevant Clinical Drug
Product tested by an appropriate independent institute acceptable to DSP in order to determine
finally whether or not the Clinical Drug Product conforms to the specifications. The results of
such test carried out by the institute shall be binding upon the Parties. The expense of the test
shall be borne by Neurocrine, except that DSP shall bear the expense if the result of the test
indicates that the relevant Clinical Drug Product conforms to the specifications. ALL OTHER
EXPRESS AND IMPLIED WARRANTIES INCLUDING WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE ARE SPECIFICALLY DISCLAIMED BY NEUROCRINE AND EXCLUDED FROM THE TERMS OF SALE OF THE
CLINICAL DRUG PRODUCT.

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     (e) Unless otherwise agreed upon between the Parties, DSP shall use the Clinical Drug Product
supplied under this Section 6.2 for the sole purpose of Development and testing, including
formulation studies of Indiplon and Products.

     (f) DSP may at any time elect to manufacture Clinical Drug Product provided such election
will not terminate any purchase orders for Clinical Drug Product submitted by DSP to Neurocrine
prior to notice of such election. Neurocrine may elect to terminate the commitment to provide
Clinical Drug Product hereunder as set forth in Section 6.5.

6.3 Commercial Supply of API. At DSP’s request, Neurocrine, through its contract manufacturers,
shall manufacture and supply DSP’s requirements for bulk Indiplon API for Commercialization at a
transfer price equal to [...***...]. Notwithstanding the foregoing, DSP shall assume responsibility
for manufacture and
supply of DSP’s requirements for bulk Indiplon API, (a) upon mutual agreement of the Parties, or
(b) in the event that DSP elects to Manufacture bulk Indiplon API for Commercialization and
provides Neurocrine with one (1) year prior written notice, or (c) in the event it is not feasible
(whether for commercial, financial, logistic or technical reasons) for Neurocrine to supply DSP’s
requirements or (d) in the event that Neurocrine is no longer engaged in the manufacture of
Indiplon API or (e) in the event Regulatory Authorities in the Territory impose specifications on
bulk Indiplon API that are materially different than those in Rest of World, provided that in the
event of (c) or (d), Neurocrine shall notify DSP of the circumstances as soon as possible, and
provided further that in the event of (e), Neurocrine shall use Commercially Reasonable Efforts to
manufacture and supply the bulk Indiplon API conforming to the specifications required by the
Regulatory Authorities in the Territory, and Neurocrine may be released from the responsibility for
manufacture and supply of DSP’s requirements for bulk Indiplon API if, notwithstanding Neurocrine’s
Commercially Reasonable Efforts, Neurocrine reasonably determines that manufacture and supply of
such requirements is not practicable for technical and/or economic reason. Neurocrine’s commitment
to supply bulk Indiplon API for Commercialization may be terminated pursuant to Section 6.5.

6.4 Manufacturing Agreement/Quality Agreement for Commercial Supply. Neurocrine, through its
contract manufacturers, shall manufacture bulk Indiplon API for Commercialization in compliance
with any and all applicable laws and regulations and in accordance with such appropriate quality,
specifications and test methods, formula and manufacturing process as specified by mutual agreement
of Neurocrine and DSP, which may not be changed by Neurocrine without prior written consent of DSP,
except as may be required by any Regulatory Authorities. DSP shall not use bulk Indiplon API which
to DSP’s knowledge does not meet the then-prevailing quality, specifications and test methods,
formula and manufacturing process. Upon DSP’s request that Neurocrine supply DSP with bulk Indiplon
API hereunder, the Parties shall negotiate and enter into a manufacturing agreement setting forth
procedures pursuant to which DSP’s requirements can be forecasted and ordered consistent with
Neurocrine’s manufacturing arrangements then in place as well as any other Neurocrine contractual
obligations and addressing such issues as quality assurance, specifications, insurance, delivery
and recall. In addition, the Parties shall negotiate in good faith and enter into a quality
agreement specifying in detail the responsibilities of the Parties.

6.5 Termination of Supply. In the event Neurocrine elects to terminate the commitment to supply
Clinical Drug Product or bulk Indiplon API for Commercialization pursuant to Sections 6.2 and 6.3
or DSP elects to Manufacture the Clinical Drug Product or bulk Indiplon API for Commercialization
pursuant to Section 6.3, Neurocrine and DSP will in good faith prepare and agree on a schedule and
plan

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pursuant to which DSP (directly or through contract manufacturers) can assume manufacturing
responsibility at the first reasonable opportunity taking into consideration the avoidance of
adverse impact such as delay of development schedule to the DSP Development Program. Neurocrine
shall use best reasonable efforts to assist DSP in negotiating contracts with Neurocrine’s contract
manufacturers with the goal of achieving terms and conditions as favorable to DSP as those
Neurocrine has negotiated on its own behalf. Notwithstanding Neurocrine’s efforts in this regard,
DSP acknowledges that manufacturing and supply terms are dependant upon a number of factors
including number of products, volume and the like and there can be no assurance that contracts with
Neurocrine’s contract manufacturers shall be available to DSP on terms equivalent to those provided
to Neurocrine or at all.

6.6 Contract Manufacturers Outside the Territory. In the event Neurocrine elects to terminate the
commitment to supply bulk Indiplon API pursuant to Section 6.3, Neurocrine shall grant to DSP the
non-exclusive right to have Indiplon API
Manufactured outside the Territory for the sole and exclusive purpose of Development and
Commercialization inside the Territory.

6.7 Technology Transfer. Upon election by Neurocrine pursuant to Section 6.2 and/or 6.3 to
terminate the commitment to supply Clinical Drug Product or bulk Indiplon API for Commercialization
or upon election by DSP to Manufacture Clinical Drug Product or bulk Indiplon API for
Commercialization, Neurocrine shall disclose to DSP all relevant Neurocrine manufacturing
technology for Indiplon API and/or Products (“Manufacturing Technology”). Neurocrine shall
facilitate the transfer of the Manufacturing Technology from Neurocrine’s contract manufacturers to
DSP and/or its contract manufacturers and the expenses reasonably incurred for the assistance shall
be borne by DSP. During the term of this Agreement, Neurocrine shall remain available to answer
technology transfer questions relating to the Manufacturing Technology. In the event DSP should
require any additional technical assistance, Neurocrine shall provide such assistance at DSP’s
expense to the extent it has personnel available. Neurocrine makes no warranty, express or
implied, with respect to the Neurocrine technical assistance.

6.8 Information on Manufacture. To the extent Neurocrine supplies Clinical Drug Product or bulk
Indiplon API for Commercialization under this Agreement, Neurocrine shall make available to DSP all
information on Manufacture of Clinical Drug Product, bulk Indiplon API and/or Product to enable DSP
to maintain or obtain the Regulatory Filings and/or the Regulatory Approval in the Territory.

6.9 Inspection of Manufacturing Facilities. In the event that during the period of Neurocrine’s
supply of Clinical Drug Product or bulk Indiplon API hereunder, the Regulatory Authorities in the
Territory requests inspection of Neurocrine’s (or its contract manufacturers’) facilities, premises
and operation relating to the Clinical Drug Product or bulk Indiplon API supplied by Neurocrine
hereunder and such inspection is reasonably required to obtain and maintain the Regulatory
Approval, Neurocrine shall receive such inspection. Neurocrine shall cooperate with DSP in the
preparation of the inspection to the extent possible. Additionally, DSP may, upon reasonable
notice to Neurocrine, have person(s) appointed by DSP visit the manufacturing facilities, premises
and operation of Neurocrine and/or its contract manufacturers relating to manufacture of the
Clinical Drug Product or bulk Indiplon API during normal business hours to observe and assure the
quality of the Clinical Drug Product or bulk Indiplon API. Such visit shall not be more than once
in any calendar year, unless otherwise agreed upon between the Parties, and shall be conducted on
dates mutually agreed upon by the Parties. DSP shall bear traveling, sojourn and other expenses
incurred for such DSP’s visit.

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ARTICLE SEVEN

FEES, ROYALTIES AND MILESTONES

7.1 License Fees. In consideration of the rights and license granted hereunder, within thirty (30)
days of the Effective Date, DSP shall pay to Neurocrine a license fee equal to twenty million
United States dollars (US$20,000,000).

	7.2	 	Royalties.

(a) In consideration of [...***...], or if pursued by DSP, [...***...] in the Territory by the
MHLW, the following Royalty scheme has been established to provide for the specific scenario case
in which a Regulatory Approval for Indiplon is achieved in the Territory [...***...]. Until the
end of the first Fiscal Year in which the Net Sales of
Product exceeds [...***...] Yen, DSP shall pay to Neurocrine a Royalty of Net Sales of Product as
set forth below. For the purpose of this Agreement, the term “Fiscal Year” shall mean a fiscal year
of DSP commencing on April 1 of a calendar year and ending on March 31 of the following calendar
year:

  For that portion of:

  Net Sales less than [...***...] Yen                      [...***...]%

  Net
Sales greater than or equal to [...***...] Yen and less
than [...***...] Yen [...***...]%

  Net Sales greater than [...***...] Yen and less than [...***...] Yen [...***...]%

  Net Sales greater than or equal to [...***...] Yen                      [...***...]%

     (b) After the first Fiscal Year in which the Net Sales of Product exceeds [...***...] Yen, DSP
shall pay to Neurocrine a Royalty of Net Sales of Product as set forth below:

  For that portion of:

  Net Sales less than [...***...] Yen                      [...***...]%

  Net Sales greater than or equal to [...***...] Yen and less than [...***...] Yen [...***...]%

  Net Sales greater than or equal to [...***...] Yen                      [...***...]%

7.3 Option. DSP shall pay to Neurocrine a license fee equal to [...***...] within thirty (30) days
of DSP’s exercise of the MR Option. For the avoidance of any doubt, upon exercise of the MR
Option, the Royalty rate set forth in Section 7.2(a) and (b) shall apply to total Net Sales of the
Products (IR Product and MR Product) and the Parties shall in good faith negotiate appropriate
milestone and bonus payments with respect to MR Product provided that any such agreed milestone and
bonus payments shall not be less favorable to Neurocrine (both with respect to timing and amounts)
than those set forth in Section 7.7 with respect to IR Product.

7.4 Generic Competition. Generic Competition shall exist during a given Fiscal Quarter in the
Territory if, during such Fiscal Quarter, one or more Generic Products shall be commercially
available in the Territory. In the event Generic Products have in the aggregate greater than or
equal to [...***...] of the total market share for Indiplon in

*** Confidential Treatment Requested

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any Fiscal Quarter, the Royalty
payable pursuant to Section 7.2 shall be reduced by [...***...]. For the purpose of this Agreement,
the term “Fiscal Quarter” shall mean a three (3)-month period commencing on January 1, April 1,
July 1 or October 1.

	7.5	 	Third Party Royalty.

     (a) Neurocrine shall be responsible for all payments pursuant to the DOV Agreement.

     (b) [...***...] of Third Party Royalties paid by DSP are creditable against the Royalty
payable to Neurocrine hereunder, provided that in no event shall Royalties payable to Neurocrine be
reduced by more than [...***...], and provided further that in no event shall the Royalty paid to
Neurocrine by DSP be less than [...***...].

7.6 Term of Royalty. Royalties shall be payable on a Product by Product basis until the later of
(i) the date when the last remaining Valid Claim within the Neurocrine Patent
Rights, which would be infringed by the sale of the Product in the Territory but for the license
granted hereunder, expires, lapses, or is adjudicated, admitted, or declared invalid or
unenforceable or (ii) [...***...] years following the First Commercial Sale of the Product in the
Territory. Upon the expiration of DSP’s final remaining obligation to pay Royalties to Neurocrine
hereunder with respect to a Product in the Territory, DSP shall have a fully paid, irrevocable,
non-exclusive and unrestricted license under the Neurocrine Technology to make, have made, use,
develop, sell, have sold, and offer to sell and import the Product in the Territory.

7.7 Milestones and Bonus Payments. In consideration for the license and rights granted by
Neurocrine to DSP hereunder, DSP shall make the following one-time payments within thirty (30) days
of the first occurrence of the following events with respect to the IR Product:

	 	 	 
	Milestone Event	 	Payment
	Last to occur of (i) [...***...] and
	 	 
	(ii) [...***...]

	 	[...***...]
	Initiation of [...***...] in the Territory

	 	[...***...]
	Regulatory Filing (Iyakuhin-Shonin-Shinsei) in the Territory

	 	[...***...]
	Regulatory Approval in Territory

	 	[...***...]

	 	 	 
	Bonus Event	 	Payment
	Annual Net Sales of Products in Fiscal Year in Territory
	 	 
	equal to or greater than [...***...]

	 	[...***...]
	Annual Net Sales of Products in Fiscal Year in Territory
	 	 
	equal to or greater than [...***...]

	 	[...***...]
	Annual Net Sales of Products in Fiscal Year in Territory
	 	 
	equal to or greater than [...***...]

	 	[...***...]

	7.8	 	Reports and Payments.

     (a) Cumulative Royalties. The obligation to pay Royalties under this Article Seven
shall be imposed only once (i) with respect to any sale of the same unit of any Product and (ii)
with respect to a single unit of any Product regardless of how many Valid Claims of Neurocrine
Patent Rights would, but for this Agreement, be infringed by the making, using or selling of such
Products.

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     (b) Statements and Payments. DSP shall deliver to Neurocrine within sixty (60) days
after the end of each Fiscal Quarter (as defined in Section 7.4), a report certified by DSP as
accurate to the best of its ability based on information then available to DSP, setting forth for
such Fiscal Quarter the following information on a Product by Product basis: (i) Net Sales of
Products, (ii) the basis for any adjustments to the Royalty payable for the sale of Products and
(iii) the Royalty due hereunder for the sale of Products. The total Royalty due for the sale of
Products during a Fiscal Quarter shall be remitted at the time such report is made.

     (c) Taxes and Withholding. Withholding tax, if levied in Japan on any payments made
hereunder (including, without limitation, fees, Royalties and Milestones), shall be borne by
Neurocrine. To the extent Neurocrine does not make provision for payment of such taxes, they may
be deducted by DSP from the payment and paid by DSP to the appropriate tax authorities on
Neurocrine’s behalf. DSP shall provide Neurocrine with copies of all official receipts for such
payments. Except as set forth above, payments under this Agreement shall be made without any
deduction or withholding for or on account of any tax unless such deduction or withholding is
required by applicable law or regulations. If the paying Party is so required to deduct or
withhold, such Party shall (i) promptly notify the other Party of such requirement, (ii) pay to the
relevant authorities the full amount required to be deducted or withheld promptly upon the earlier
of determining that such deduction or withholding is required or receiving notice that such amount
has been assessed against the other Party, (iii) promptly forward to the other Party an official
receipt (or certified copy) or other documentation reasonably acceptable to the other Party
evidencing such payment to the authorities. In case the other Party cannot take a full credit
against its tax liability for the withholding tax deducted or withheld by the paying Party, then
such other Party may propose a change to the then current arrangement with respect to the flow of
moneys under this Agreement in order to reduce or eliminate the extra cost for any Party and the
Parties, with no obligation as to outcome, shall discuss such proposal in good faith.

     (d) Currency. All amounts payable and calculations hereunder shall be in United
States dollars. As applicable, Net Sales shall be translated into United States dollars in
accordance with the average daily closing exchange rate for Yen to Dollars as published in the Wall
Street Journal over all trading days inclusive in the Net Sales payment period. At DSP’s request,
Neurocrine will calculate the applicable rate of exchange each Fiscal Quarter and provide the
calculation to DSP along with supporting data and information. If governmental regulations prevent
remittances from the Territory with respect to sales made in the Territory, the Royalties shall
continue to accrue but the obligation of DSP to pay Royalties on sales in the Territory shall be
delayed until such remittances are possible. Neurocrine shall have the right, upon giving written
notice to DSP, to receive payment in that country in local currency.

     (e) Maintenance of Records; Audit. For a period of four (4) Fiscal Years (as defined
in Section 7.2(a)) after the end of the relevant Fiscal Year of DSP, DSP shall maintain and shall
cause its Affiliates and sublicensees to maintain complete and accurate books and records in
connection with the sale of Products hereunder, as necessary to allow the accurate calculation of
Royalties due hereunder including any records required to calculate any Royalty adjustments
hereunder. Once per Fiscal Year, Neurocrine (and/or its licensors of technology included within
the Neurocrine Technology) shall have the right to engage an independent accounting firm reasonably
acceptable to DSP, at Neurocrine’s expense, which shall have the right to examine in confidence the
relevant DSP records as may be reasonably necessary to determine and/or verify the amount of
Royalty payments due hereunder. Such examination shall be conducted during DSP’s normal business
hours, after at least thirty (30) days prior

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written notice to DSP and shall take place at the DSP facility(ies) where such records are
maintained. In the event there was an under-payment by DSP hereunder, DSP shall promptly (but in
no event later than thirty (30) days after DSP’s receipt of the independent auditor’s report) make
payment to Neurocrine of any short-fall unless DSP reasonably disputes such auditor’s findings. In
the event that there was an over-payment by DSP hereunder, DSP may credit the excess amount against
future payments due to Neurocrine hereunder unless Neurocrine reasonably disputes such auditor’s
findings. In case of dispute on auditor’s findings, DSP’s auditors and Neurocrine’s auditors shall
be required to resolve the matter in accordance with generally accepted accounting principles in
the Territory within thirty (30) days after the complaining Party notifies the other Party that it
disputes such findings (which notice shall be made no later than thirty (30) days after the
complaining Party’s receipt of such report). In the event any payment by DSP shall prove to have
been incorrect by more than five percent (5%) to Neurocrine’s detriment, DSP shall pay the
reasonable fees and costs of Neurocrine’s or its licensor’s independent auditor for conducting such
audit. In connection with any such audit, the auditor shall be permitted to report to the auditing
Party only as to the accuracy of the audited Party’s payment reports and compliance with its
payment obligations hereunder (provided that the auditor shall be required to provide such report
to the audited Party simultaneously). Each Party agrees that the information set forth in (a) the
reports required by Section 7.8(b), and (b) the records subject to audit under this Section 7.8(e),
(i) shall be the Confidential Information of DSP subject to the confidentiality restrictions set
forth in Article Eight hereof and maintained in confidence by Neurocrine, its licensors as
applicable and the independent accounting firm; (ii) shall not be used by Neurocrine, its licensors
as applicable or such accounting firm for any purpose other than verification of the performance by
DSP of its payment obligations hereunder; and (iii) shall not be disclosed by Neurocrine, its
licensors as applicable or such accounting firm to any other Person.

7.9 Neurocrine FTE Costs. Neurocrine personnel devoted to Development assistance (Section 5.2(d)),
manufacturing activities (Sections 6.2 and 6.3), and technology transfer (Section 6.7) shall be
billed to DSP at a rate of [...***...] per Neurocrine employee full time equivalent.

7.10 Audit of Neurocrine. For a period of four (4) years after the end of the relevant fiscal year
starting on January 1, Neurocrine shall maintain complete and accurate books and records in
connection with amounts invoiced by Neurocrine to DSP hereunder pursuant to Article Six, Article
Nine, or Section 7.9, as necessary to allow the accurate calculation of payments due hereunder.
Once per fiscal year of Neurocrine, DSP shall have the right to engage an independent accounting
firm reasonably acceptable to Neurocrine, at DSP’s expense, which shall have the right to examine
in confidence the relevant Neurocrine records as may be reasonably necessary to determine and/or
verify the payments due hereunder. Such examination shall be conducted during Neurocrine’s normal
business hours, after at least thirty (30) days prior written notice to Neurocrine and shall take
place at the Neurocrine facility(ies) where such records are maintained. In the event any
Neurocrine invoices were determined to have understated amounts due from DSP, DSP shall promptly
(but in no event later than thirty (30) days after DSP’s receipt of the independent auditor’s
report) make payment to Neurocrine of any short-fall unless DSP reasonably disputes such auditor’s
findings. In the event that there was an over-payment by DSP hereunder, DSP may credit the excess
amount against future payments due to Neurocrine hereunder unless Neurocrine reasonably disputes
such auditor’s findings. In case of dispute on auditor’s findings, DSP’s auditors and Neurocrine’s
auditors shall be required to resolve the matter in accordance with generally accepted accounting
principles within thirty (30) days after the complaining Party notifies the other Party that it
disputes such findings (which notice shall be made no later than thirty (30) days after the
complaining

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Party’s receipt of such report. In the event any invoice by Neurocrine shall prove to have
been incorrect by more than five percent (5%) to DSP’s detriment, Neurocrine shall pay the
reasonable fees and costs of the independent auditor for conducting such audit. In connection with
any such audit, the auditor shall be permitted to report to the auditing Party only as to the
accuracy of the audited Party’s payment reports and compliance with its payment obligations
hereunder (provided that the auditor shall be required to provide such report to the audited Party
simultaneously). Each Party agrees that the records subject to audit under this Section 7.10 shall
be the Confidential Information of Neurocrine subject to the confidentiality restrictions set forth
in Article Eight hereof and maintained in confidence by the independent accounting firm.

ARTICLE EIGHT

CONFIDENTIALITY, PUBLICATION AND

PUBLIC ANNOUNCEMENTS

8.1 Confidentiality. Except to the extent expressly authorized by this Agreement or otherwise
agreed in writing, the Parties agree that, for the term of this Agreement and for ten (10) years
thereafter, each Party (the “Receiving Party”), receiving hereunder any information designated
hereunder as Confidential Information of the other Party or information of the other Party marked
“Confidential” (in either case, the “Disclosing Party”), shall keep such information confidential
and shall not publish or otherwise disclose or use for any purpose other than as provided for in
this Agreement except, to the extent that it can be established:

(i) by the Receiving Party that the Confidential Information was already known to the
Receiving Party (other than under an obligation of confidentiality), at the time of
disclosure by the Disclosing Party and such Receiving Party has documentary evidence to
that effect;

(ii) by the Receiving Party that the Confidential Information was generally available
to the public or otherwise part of the public domain at the time of its disclosure to the
Receiving Party;

(iii) by the Receiving Party that the Confidential Information became generally
available to the public or otherwise part of the public domain after its disclosure or
development, as the case may be, and other than through any act or omission of the
Receiving Party in breach of this confidentiality obligation;

(iv) by the Receiving Party that the Confidential Information was disclosed to that
Party, other than under an obligation of confidentiality, by a Third Party who had no
obligation to the Disclosing Party not to disclose such information to others; or

(v) by the Receiving Party that the Confidential Information was independently
discovered or developed by the Receiving Party without the use of the Confidential
Information belonging to the other Party and the Receiving Party has documentary evidence
to that effect.

8.2 Authorized Disclosure.

     (a) Each Party. Each Party may disclose Confidential Information owned or Controlled
by the other Party to the extent such disclosure is reasonably necessary to:

(i) file or prosecute patent applications claiming inventions included within the
Neurocrine Technology or DSP Technology,

(ii) prosecute or defend litigation,

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(iii) submit the Regulatory Filings to the Regulatory Authorities,

(iv) exercise rights hereunder provided such disclosure is covered by terms of
confidentiality similar to those set forth herein, and

(v) comply with applicable governmental laws and regulations.

     In the event the Receiving Party deems it necessary to disclose pursuant to this Section
8.2(a), Confidential Information owned or Controlled by the Disclosing Party, the Receiving Party
shall to the extent possible give reasonable advance notice of such disclosure to the Disclosing
Party to enable the Disclosing Party to take reasonable measures to ensure confidential treatment
of such information.

     (b) Use. DSP shall have the right to use Neurocrine Confidential Information in the
conduct of the DSP Development Program and in Development and Commercialization of Products in the
Territory. Neurocrine shall have the right to use DSP Confidential Information in the conduct of
the Neurocrine Development Program and in Development and Commercialization of Products in Rest of
World.

     (c) Neurocrine’s Licensors. DSP acknowledges that Neurocrine has certain reporting
obligations to DOV Pharmaceutical, Inc. of technology included in the Neurocrine Technology and
hereby consents to the disclosure of Confidential Information as required under the DOV Agreement.
DSP shall cooperate with Neurocrine and make available to Neurocrine any information so required by
the DOV Agreement.

8.3 Publications. Each Party shall submit to the other Party for review and comment, all proposed
academic, scientific and medical publications relating to Products which in the reasonable opinion
of the submitting Party may negatively affect Development and/or Commercialization of Products in
the Territory or the Rest of World, as the case may be, and the submitted Party shall review such
proposed publications with a view to preservation of exclusive Patent Rights and/or to determining
whether Confidential Information should be modified or deleted and/or to determining impact on the
Development in the Territory or Rest of World, as the case may be. The submitted Party shall have
no less than thirty (30) days and no more than forty-five (45) days to review each proposed
publication. Such period may be further extended or shortened by mutual agreement of the Parties.
The submitting Party shall take the submitted Party’s comments if any into due consideration. The
foregoing shall not apply to any publications required by law provided that to the extent practical
the relevant Party will give prior written notice to the other Party.

8.4 Filings. The Parties shall consult with one another and agree on the provisions of this
Agreement to be redacted in any filings with the United States Securities and Exchange Commission
or as otherwise required by law or regulation. Notwithstanding the foregoing, each Party may
disclose terms of this Agreement or events arising from the Development Program to the extent
necessary to comply with the United States Securities and Exchange Commission, the Japanese
Securities and Exchange Law or as otherwise required by other applicable law or regulation.

ARTICLE NINE

INTELLECTUAL PROPERTY

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9.1 Patent Prosecution of the Licensed Patent Rights.

     (a) Direction. During the term of this Agreement, Neurocrine shall direct counsel
reasonably acceptable to DSP to prosecute and maintain all patents and/or patent applications
included within the Neurocrine Patent Rights in the Territory. Neurocrine shall regularly consult
with DSP and shall keep DSP and/or its designated patent officers and counsel advised of the status
of patent matters in the Territory. DSP shall have the right to comment upon all patent filings,
prosecution and/or maintenance relating to the Neurocrine Patent Rights in the Territory, and
Neurocrine shall take DSP’s comments if any into due consideration. Neurocrine shall register the
DSP’s license of the Neurocrine Patent Rights at the Japan Patent Office pursuant to Section 9.6
and shall furnish copies of relevant patent-related documents for the Territory to DSP in a timely
fashion to enable DSP to review and comment.

     (b) Expenses. All expenses in connection with prosecution and maintenance of the
Neurocrine Patent Rights in the Territory incurred after Neurocrine registers the DSP’s license of
the Neurocrine Patent Rights at the Japan Patent Office under Section 9.6 shall be borne by DSP,
provided that Neurocrine shall bear the expenses in connection with the Neurocrine Patent Rights in
the Territory incurred for the purpose of filing, prosecution and/or maintenance of the Neurocrine
Patent Rights in the Rest of World. All the other expenses relating to the Neurocrine Patent
Rights shall be borne by Neurocrine unless otherwise provided for in this Agreement.

9.2 Patent Infringement of the Licensed Patent Rights. Neurocrine may, but shall not be obligated
to, elect to take a lawsuit for infringement upon the Neurocrine Patent Rights in the Territory
against Third Parties and to defend the Neurocrine Patent Rights against any challenges in the
Territory. In the event Neurocrine so elect, Neurocrine shall determine the strategy and proceed
with the lawsuit at its own expense, and DSP shall reasonably assist and cooperate with Neurocrine
in any such lawsuit or defense, if necessary in the Territory in the reasonable opinion of DSP.
Any damages and recoveries paid by such Third Party to the Parties as a result of any such action
initiated after the Effective Date with respect to the Territory shall be allocated first to all
reasonable costs and expenses (including attorneys’ fees) incurred by Neurocrine and then all
reasonable costs and expenses (including attorneys’ fees) if any, incurred by DSP and the remainder
shall be shared equally by DSP and Neurocrine. In the event Neurocrine does not elect to do so, DSP
may determine the strategy and proceed with the lawsuit, and Neurocrine shall, at DSP’s expense,
reasonably assist and cooperate with DSP in any such lawsuit or defense, if necessary in the
Territory in the reasonable opinion of DSP. Any damages and recoveries paid by such Third Party
shall be [...***...].

9.3 Third Party Actions.

     (a) Neurocrine Patent Rights. Neurocrine shall defend any action naming Neurocrine,
or Neurocrine and DSP, in which there are claims or counterclaims that challenge in any way the
validity or enforceability of the Neurocrine Patent Rights in the Territory by reason of
infringement of any Third Party Patent Right through the making, having made, using, developing,
selling or having sold Indiplon or Products in the Territory (“Neurocrine Patent Right Claims”).
In the event any action naming Neurocrine and DSP does not relate in any way to the validity or
enforceability of the Neurocrine Patent Rights in the Territory but relates to the making, having
made, using, developing, selling or having sold of Products in the Territory (“DSP Claims”),
Neurocrine shall be responsible for strategy and defense of the Neurocrine Patent Right Claims and
DSP shall be responsible for strategy and defense of the DSP Claims. The Parties shall confer with
each other and cooperate during the defense of any action in which both Neurocrine and DSP are
named parties. DSP shall assist and cooperate with

*** Confidential Treatment Requested

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Neurocrine in the defense of Neurocrine Patent Right Claims and if Neurocrine finds it
necessary or desirable to have DSP join as a party, DSP shall execute all papers or perform such
other acts as may reasonably be required by Neurocrine. Neurocrine shall assist and cooperate with
DSP in the defense of DSP Claims and if DSP finds it necessary or desirable to have Neurocrine join
as a party, Neurocrine shall execute all papers or perform such other acts as may reasonably be
required by DSP. Neurocrine and DSP shall each be responsible for fifty percent (50%) of the total
costs and expenses (including attorneys’ fees) and damages incurred by the Parties collectively in
any action hereunder in so far as they relate to the Neurocrine Patent Right Claims and DSP shall
bear all costs and expenses (including attorneys’ fees) and damages incurred in any action
hereunder in so far as they related to the DSP Claims.

     (b) DSP Claims. DSP shall defend any action which names DSP in which there are DSP
Claims and no Neurocrine Patent Right Claims. If necessary and at DSP’s expense, Neurocrine shall
assist and cooperate with DSP in any such defense. DSP shall bear all costs and expenses
(including attorneys’ fees) and all damages and settlement amounts arising out of or in connection
with any such action.

9.4 New Inventions. Intellectual property rights regarding any invention which consists of the
making, using or selling of Indiplon or Products (including but not limited to formulations,
manufacturing processes, compositions, and uses) made by either Party during the term of this
Agreement shall be solely owned by such Party, and the other Party shall have no rights in or to
such invention other than those rights specifically granted to such other Party hereunder. Subject
to Section 9.1, the Party who made the invention shall have the right to prosecute and maintain, in
its sole discretion and at its own expenses, all patent application or patent regarding such
invention in any country in the world.

9.5 Notice. Each Party shall promptly notify the other upon becoming aware of (i) any Third Party
claim or action against DSP and/or Neurocrine for infringement of Third Party Patent Rights through
the making, having made, using, developing, selling or having sold Indiplon or Products or (ii) any
Third Party infringement of the Neurocrine Technology or DSP Technology.

9.6 Registration of License. With respect to the licenses under Patent Rights and Neurocrine
Trademarks granted to either Party (the “Licensed Party”) by the other party (the “Licensing
Party”) under Article Three, the Licensing Party agrees that the Licensed Party may, if available,
register such licenses with the patent offices of any country in which the Licensed Party is
granted such licenses. The Licensed Party shall, at its expense, prepare and deliver to the
Licensing Party such instruments and other documents necessary and in proper form for such
registration. The Licensing Party shall execute and return to the Licensed Party such appropriate
instruments and documents within thirty (30) days from the receipt thereof. The Licensed Party
shall bear all expenses of any registrations under this Section 9.6.

9.7 Settlements. Neither Party shall enter into any settlement with respect to any action under
Section 9.2 or 9.3 without the written consent of the other Party to the extent such settlement
would materially adversely affect the other Party’s entitlements, rights or obligations under this
Agreement.

9.8 No Warranty. Subject to Section 2.1(e) Neurocrine does not warrant that the right to the
Neurocrine Patent Rights and/or the Neurocrine Trademarks licensed to DSP hereunder are valid, but
warrants that to its knowledge, the Neurocrine Patent Rights and/or the Neurocrine Trademarks do
not infringe upon any patent, trademark or other intellectual property right held or to be held by
any Third Party in the Territory or

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performances of DSP (including DSP’s Affiliates, sublicensees and Designees) under this Agreement
are free from infringement upon any patent, trademark or other intellectual property right held or
to be held by any Third Party in the Territory. Neurocrine shall not be obliged to indemnify DSP
(including DSP’s Affiliates, sublicensees and Designees) for any cost, loss or damage caused by
invalidity of the Neurocrine Patent Rights and/or the Neurocrine Trademarks or infringement by
Indiplon, or the Product upon any patent, trademark or other intellectual property right held by
any Third Party.

ARTICLE TEN

INDEMNITY

10.1 Indemnification. Each Party (an “Indemnifying Party”) shall defend, indemnify and hold the
other Party (the “Indemnified Party”) harmless from and against any and all liability, damage,
loss, cost (including reasonable attorneys’ fees) and expense arising out of any Third Party claim
against the Indemnified Party based on the Development and/or Commercialization of Products by the
Indemnifying Party, any of its Affiliates and/or its sublicensees, other than those arising out of
a Third Party claim of infringement of a Patent Right of a Third Party through the making, using or
selling of Products or Indiplon by DSP, any of its Affiliates and/or its sublicensees as provided
for in Section 9.3, provided, however, in case the Indemnified Party receives notice of a claim for
which indemnification may be sought, the Indemnified Party shall promptly inform the Indemnifying
Party of such notice. Notwithstanding the foregoing, a Party shall not be entitled to
indemnification under this Section 10.1 against any claim to the extent resulting from such Party’s
negligence or misconduct or breach of this Agreement.

10.2 Indemnification Procedure. In the event the Indemnified Party shall inform the Indemnifying
Party of the notice set forth in Section 10.1 above, the Parties shall, subject to the provisions
of Article Nine with respect to patent related claims, decide how to respond to the claim and how
to handle the claim in an efficient manner. The Indemnified Party shall render all reasonable
assistance to the Indemnifying Party, provided that all costs of such assistance shall be borne
solely by the Indemnifying Party. The Indemnifying Party shall have the right to control the
defense and settlement of the claim. No claim that is subject to indemnification under this
Article Ten shall be settled or otherwise compromised other than by the Indemnifying Party, and
then only with the prior written consent of the Indemnified Party, which shall not be unreasonably
withheld; provided, however, that the Indemnified Party shall have no obligation to consent to any
settlement or compromise of any such claim, which settlement or compromise either (a) imposes on
the Indemnified Party any material liability or obligation which cannot be assumed and performed in
full by the Indemnifying Party, or (b) materially adversely affects the Indemnified Party.

10.3 Insurance. DSP shall name Neurocrine and DOV Pharmaceutical, Inc. as additional insureds on
its product liability insurance. DSP shall supply Neurocrine with evidence of such coverage and
during the term of this Agreement, DSP shall inform Neurocrine of any modifications to such
coverages.

ARTICLE ELEVEN

TERM AND TERMINATION

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11.1 Term. Unless earlier terminated by mutual agreement of the Parties or pursuant to the
provisions of this Article Eleven, this Agreement shall continue in full force and effect until the
final obligation to pay Royalties with respect to the sale of such Products in the Territory
expires as provided in Section 7.6 hereof.

11.2 Termination of Product Development. Should DSP prior to the First Commercial Sale of a
Product (a) elect to terminate at its discretion all Development in the Territory, or (b)
completely abandon all efforts towards its Development for a period of greater than six (6) months
for any reason other than those beyond DSP’s control, this Agreement shall terminate and the
provisions of Section 11.4 (i)-(vi) shall apply.

11.3 Default. The non-Defaulting Parties shall have the rights set forth below upon Default by the
other Party, which Default remains uncured for thirty (30) days in the case of nonpayment of any
amount due and sixty (60) days for all other Defaults, each measured from the date written notice
of such Default is given to the Defaulting Party, or, if such Default is not capable of remedy
within such sixty (60) day period and the Defaulting Party uses diligent good faith efforts to cure
such Default, ninety (90) days after written notice to the Defaulting Party. Notwithstanding the
foregoing, termination of this Agreement shall not go into effect if the allegedly Defaulting Party
has commenced dispute resolution proceedings in good faith pursuant to Section 12.1 (in which
event, such termination shall not become effective unless there has been a final mutually agreed
resolution by the Parties or final decision of the arbitrator in favor of the Party alleging
Default that the other Party has Defaulted).

     (a) Neurocrine. Upon Default by Neurocrine, in addition to any other remedies
available to DSP at law or in equity, DSP may terminate this Agreement.

     (b) DSP. Upon Default by DSP, in addition to any other remedies available to
Neurocrine at law or in equity, Neurocrine may terminate this Agreement and the provisions of
Section 11.4(i)-(vi) shall apply. In the event DSP, any of DSP’s Affiliates, sublicensee or
Designees takes, or assists any Third Party in taking, any action to challenge or contest the title
or validity of the Neurocrine Patent Rights, such action shall be a Default by DSP under this
Agreement and Neurocrine may terminate this Agreement.

11.4 Termination of Agreement. DSP may terminate this Agreement at any time for any reason upon
one hundred eighty (180) days prior written notice to Neurocrine. In the event of termination of
this Agreement pursuant to Section 11.2, 11.3(b) or this Section 11.4:

(i) all licenses granted by Neurocrine to DSP herein shall revert to Neurocrine;

(ii) DSP shall pay to Neurocrine a termination fee equal to any FTE funding amounts set
forth in Section 7.9 not paid as of the date of termination;

(iii) DSP shall provide to Neurocrine (or at Neurocrine’s request, destroy) all remaining
Product drug supplies and disclose to Neurocrine all material research, non-clinical and
clinical data on Products generated prior to the date of termination of this Agreement and
Neurocrine shall thereafter have the unrestricted right to use such data and information;

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(iv) DSP shall assign to Neurocrine all Regulatory Filings relating to Products in the
Territory, if assignment is permitted by applicable Regulatory Authorities;

(v) DSP shall grant to Neurocrine a perpetual, irrevocable, non-exclusive, royalty-free,
worldwide license with the right to sublicense and assign under the then-existing DSP
Technology to make, have made, use, develop, import, market, offer for sale and sell
Products in the Field of Use;

(vi) DSP shall promptly provide to Neurocrine any other materials, reagents, information,
contracts etc. DSP owns or Controls and are reasonably required to allow Neurocrine to
continue the research, Development and Commercialization of Products in the Territory with
minimal delay.

11.5 Bankruptcy. Each Party may, in addition to any other remedies available to it by law or in
equity, exercise the rights set forth below by written notice to the other Party (the “Insolvent
Party”), in the event the Insolvent Party shall have become insolvent or bankrupt, or shall cease
conducting business in the ordinary course, or shall have made an assignment for the benefit of its
creditors, or there shall have been appointed a trustee or receiver of the Insolvent Party or for
all or a substantial part of its property, or any case or proceeding shall have been commenced or
other action taken by or against the Insolvent Party in bankruptcy or seeking reorganization,
liquidation, dissolution, winding-up arrangement, composition or readjustment of its debts or any
other relief under any bankruptcy, insolvency, reorganization or other similar act or law of any
jurisdiction now or hereafter in effect, or there shall have been issued a warrant of attachment,
execution, distraint or similar process against any substantial part of the property of the
Insolvent Party, and any such event shall have continued for sixty (60) days undismissed, unbonded
and undischarged. All rights and licenses granted under or pursuant to this Agreement by
Neurocrine and DSP are, and shall otherwise be deemed to be, for purposes of Section 365 (n) of the
U.S. Bankruptcy Code, licenses of rights to “intellectual property” as defined under Section 101 of
the U.S. Bankruptcy Code. The Parties agree that the Parties as licensees of such rights under
this Agreement shall retain and may fully exercise all of their rights and elections under the U.S.
Bankruptcy Code if applicable. The Parties further agree that, in the event of the commencement of
a bankruptcy proceeding by or against either Party under the U.S. Bankruptcy Code, the other Party
shall be entitled to a complete duplicate of (or complete access to, as appropriate) any such
intellectual property and all embodiments of such intellectual property, and the same, if not
already in the other Party’s possession, shall be promptly delivered to the other Party (i) upon
any such commencement of a bankruptcy proceeding upon its written request therefor, unless the
Party subject to such proceeding elects to continue to perform all of their obligations under this
Agreement or (ii) if not delivered under (i) above, upon the rejection of this Agreement by or on
behalf of the Party subject to such proceeding upon written request therefor by the other Party.

     (a) Neurocrine. In the event Neurocrine shall be an Insolvent Party, DSP may
terminate this Agreement or keep this Agreement in full force and effect and retain all licenses
granted by Neurocrine to DSP herein to make, have made, use, develop, import, market, offer for
sale, sell and have sold Indiplon or Products in the Field of Use in the Territory, subject to the
payment to Neurocrine of the license fees, Milestones and Royalties set forth above.

     (b) DSP. In the event DSP shall be an Insolvent Party, Neurocrine may, to the extent
permitted by applicable law, terminate this Agreement and the provisions of Section 11.2 shall
apply.

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11.6 Liabilities. Termination of this Agreement shall not release either Party from any obligation
or liability which shall have accrued at the time of termination, or preclude either Party from
pursuing all rights at law and in equity with respect to any Default under this Agreement.
Notwithstanding the foregoing, neither Party shall be liable for punitive, exemplary or
consequential damages incurred by the other Party arising out of any Default under this Agreement.

11.7 Disclaimer. WITH RESPECT TO ANY DATA, INFORMATION OR INTELLECTUAL PROPERTY THAT EITHER PARTY
BECOMES OBLIGATED TO TRANSFER TO THE OTHER UNDER THIS ARTICLE ELEVEN, THE TRANSFERING PARTY MAKES
NO REPRESENTATIONS AND EXPRESSLY DISCLAIMS AND MAKES NO WARRANTIES OF ANY KIND, WRITTEN OR ORAL,
EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR
A PARTICULAR PURPOSE, OR THAT ANY SUCH INFORMATION, DATA OR INTELLECTUAL PROPERTY IS ACCURATE OR
COMPLETE OR CAN BE USED BY THE RECEIVING PARTY WITHOUT INFRINGING THE INTELLECTUAL PROPERTY RIGHTS
OF ANY THIRD PARTY.

ARTICLE TWELVE

MISCELLANEOUS

     12.1 Disputes. Other than matters for decision by the Steering Committee, for which Section 4.4
shall apply, if the Parties are unable to resolve a dispute relating to this Agreement or the
Collaboration between them informally, DSP and/or Neurocrine, by written notice to the other, may
have such dispute referred to their respective executive officers designated for attempted
resolution by good faith negotiations:

	 	 	 
	For DSP:	 	President or other Executive Officer of DSP
	 
	For Neurocrine:

	 	Chief Executive Officer of Neurocrine

Any such dispute shall be submitted to the above-designated officers no later than thirty (30) days
following such request by either DSP or Neurocrine. In the event the designated executive officers
are not able to resolve any such dispute within sixty (60) days after submission of the dispute to
such executive officers, such dispute shall be settled by arbitration in Osaka, Japan if initiated
by Neurocrine, or in San Diego, California, USA if initiated by DSP, in accordance with the Rules
of Arbitration of the International Chamber of Commerce. The language to be used in the
arbitration shall be English. The award thereof shall be final and binding upon the Parties and may
be entered into by any court of competent jurisdiction. All negotiations pursuant to this Section
12.1 shall be treated as compromise and settlement negotiations. Nothing said or disclosed, nor
any document produced, in the course of such negotiations which is not otherwise independently
discoverable shall be offered or received as evidence or used for impeachment or for any other
purpose in any current or future arbitration or litigation.

12.2 Assignment. Neither this Agreement nor any interest hereunder shall be assignable by either
Party without the prior written consent of the other Party, except for (a) assignment by operation
of law in connection with a merger of a Party with or into another Person and (b) assignment by a
Party to another Person who acquires or otherwise succeeds to all or substantially all of the
assets relating to the pharmaceutical

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business of such Party, and in the cases of (a) and (b) above, the assigning Party shall promptly
provide a written notice to the other Party. This Agreement shall be binding upon the successors
and permitted assigns of the Parties and the name of a Party appearing herein shall be deemed to
mean the name of such Party’s successor(s) or permitted assign(s). Any assignment not in
accordance with this Section 12.2 shall be void.

12.3 Further Actions. Each Party agrees to execute, acknowledge and deliver such further
instruments, and to do all such other acts, as may be necessary or appropriate in order to carry
out the purposes and intent of this Agreement.

12.4 Force Majeure. Neither Party shall be liable to the other Party for loss or damages, or shall
have any right to terminate this Agreement for any default or delay, attributable to any Force
Majeure, if the Party affected shall give prompt notice of any such cause to the other Party. The
Party giving such notice shall thereupon be excused from such of its obligations hereunder as it is
thereby disabled from performing for so long as it is so disabled, provided, however, that such
affected Party commences and continues to use its Commercially Reasonable Efforts to cure such
cause.

12.5 Correspondence and Notices

     (a) Ordinary Notices. Correspondence, reports, documentation, and any other
communication in writing between the Parties in the course of ordinary implementation of this
Agreement shall be delivered by hand, sent by facsimile transmission (receipt verified), or mailed
by airmail to the employee or representative of the other Party who is designated by such other
Party to receive such written communication.

     (b) Extraordinary Notices. Extraordinary notices and other communications hereunder
(including, without limitation, any notice of Force Majeure, breach, termination, change of
address, etc.) shall be in writing and shall be deemed given if delivered personally or by
facsimile transmission (receipt verified), mailed by registered or certified airmail (return
receipt requested), postage prepaid, or sent by internationally recognized express courier service,
to the Parties at the following addresses (or at such other address for a Party as shall be
specified by like notice, provided, however, that notices of a change of address shall be effective
only upon receipt thereof):

All correspondence to DSP shall be addressed as follows:

Dainippon Sumitomo Pharma Co., Ltd.

33-94 Enoki-cho, Suita, Osaka 564-0053

Japan

Attention: Director, Licensing

Facsimile Number: +81-6-6368-1573

All correspondence to Neurocrine shall be addressed as follows:

Neurocrine Biosciences, Inc.

12790 El Camino Real

San Diego

California

U.S.A.

92130

Attention: Business Development

Facsimile Number: +1-858-617-7605

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cc: General Counsel and Secretary

Facsimile Number: +1-858-777-3488

12.6 Amendment. No amendment, modification or supplement of any provision of this Agreement shall
be valid or effective unless made in writing and signed by a duly authorized officer of each Party.

12.7 Waiver. No provision of this Agreement shall be waived by any act, omission or knowledge of a
Party or its agents or employees except by an instrument in writing expressly waiving such
provision and signed by a duly authorized officer of the waiving Party.

12.8 Counterparts. This Agreement may be executed in any number of counterparts, each of which
need not contain the signature of more than one Party but all such counterparts taken together
shall constitute one and the same agreement.

12.9 Descriptive Headings. The descriptive headings of this Agreement are for convenience only,
and shall be of no force or effect in construing or interpreting any of the provisions of this
Agreement.

12.10 Governing Law. This Agreement shall be governed by and interpreted in accordance with the
substantive laws of the State of New York (without regard to conflict of law principles).

12.11 Severability. In the event that any clause or portion thereof in this Agreement is for any
reason held to be invalid, illegal or unenforceable, the same shall not affect any other portion of
this Agreement, as it is the intent of the Parties that this Agreement shall be construed in such
fashion as to maintain its existence, validity and enforceability to the greatest extent possible.
In any such event, this Agreement shall be construed as if such clause or portion thereof had never
been contained in this Agreement, and there shall be deemed substituted therefore such provision as
will most nearly carry out the intent of the Parties as expressed in this Agreement to the fullest
extent permitted by applicable law unless doing so would have the effect of materially altering the
right and obligations of the Parties, in which event this Agreement shall terminate and all the
rights and obligations granted to the Parties hereunder shall cease and be of no further force and
effect.

12.12 Entire Agreement of the Parties. This Agreement constitutes and contains the complete, final
and exclusive understanding and agreement of the Parties and terminates and supersedes any and all
prior and contemporaneous negotiations, correspondence, understandings and agreements except the
Confidential Disclosure Agreement dated October 6, 2006, whether oral or written, between the
Parties respecting the subject matter hereof and thereof.

12.13 Independent Contractors. The relationship between DSP and Neurocrine created by this
Agreement is one of independent contractors and neither Party shall have the power or authority to
bind or obligate the other except as expressly set forth in this Agreement.

12.14 No Trademark Rights. Expect as otherwise provided herein, no right, express or implied, is
granted by this Agreement to use in any manner the name “Neurocrine Biosciences” “Dainippon
Sumitomo Pharma Co., Ltd.” or any other trade name or trademark of the other Party or any of its
Affiliates in connection with the performance of this Agreement.

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12.15 Accrued Rights; Surviving Obligations. Unless explicitly provided otherwise in this
Agreement, termination, relinquishment or expiration of this Agreement for any reason shall be
without prejudice to any rights which shall have accrued to the benefit to any Party prior to such
termination, relinquishment or expiration, including damages arising from any breach hereunder.
Such termination, relinquishment or expiration shall not relieve any Party from obligations which
are expressly indicated to survive termination or expiration of this Agreement, including, without
limitation, those obligations set forth in Articles Eight, Ten, Eleven and Twelve and Sections
7.8(e), 7.10, 9.2, 9.3, 9.4 and 9.8 hereof.

12.16 Export. Notwithstanding anything to the contrary set forth herein, all obligations of
Neurocrine and DSP are subject to prior compliance with United States and foreign export
regulations and such other United States and foreign laws and regulations as may be applicable and
to obtaining all necessary approvals required by applicable agencies of the governments of the
United States and foreign jurisdictions. Neurocrine and DSP shall co-operate with one another and
provide assistance to one another as reasonably necessary to obtain any required approvals.

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     IN WITNESS WHEREOF, duly authorized representatives of the Parties have duly executed this
Agreement to be effective as of the Effective Date.

	 	 	 
	Dainippon Sumitomo Pharma Co., Ltd.
	 	 
	 
	 	 
	     /s/ Kenjiro Miyatake
 

	 	 
	By: Kenjiro Miyatake
	 	 
	 
	 	 
	Title: President
	 	 
	 
	 	 
	Neurocrine Biosciences, Inc.
	 	 
	 
	 	 
	     /s/ Gary A. Lyons
 

	 	 
	By: Gary A. Lyons
	 	 
	 
	 	 
	Title: President and Chief Executive Officer
	 	 

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EXHIBIT A

Indiplon

[...***...]

*** Confidential Treatment Requested

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EXHIBIT B

NEUROCRINE PATENT RIGHTS

[...***...]

*** Confidential Treatment Requested

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EXHIBIT C

DSP Non-clinical and Formulation Study Plan

[...***...]

*** Confidential Treatment Requested

37exv10w27

 

Exhibit 10.27

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AMENDMENT

AMENDMENT dated October 29, 2007 to the Sublicense and Development Agreement dated June 30, 1998
(the “Sublicense Agreement”) by and between DOV Pharmaceutical, Inc. 150 Pierce St., Somerset, NJ
08873 (“DOV”) and Neurocrine Biosciences, Inc., 12790 El Camino Real, San Diego, California 92130
(“Neurocrine”).

WHEREAS, DOV and Neurocrine have entered into a Consent and Agreement dated December 13, 2002
(“2002 Agreement”) pursuant to which certain provisions of the Sublicense Agreement were amended.

WHEREAS, DOV and Neurocrine entered into a Consent Agreement and Amendment dated February 25, 2004
(“2004 Agreement”) pursuant to which certain provisions of the Sublicense Agreement were amended.

WHEREAS, DOV and Neurocrine would now like to amend the Sublicense Agreement as amended by the 2002
Agreement and the 2004 Agreement (the “Amended Sublicense Agreement”) and the 2002 Agreement and
2004 Agreement.

NOW, THEREFORE, in consideration of the foregoing premises and the promises, mutual covenants and
obligations set forth below, the parties agree as follows:

1. Amendment of Section 3.1 of 2002 Agreement. Section 3.1 of the 2002 Agreement is hereby
revised to delete the following sentence:

“Any such sublicense shall require the prior written approval of each of DOV and
ACY...(each an “Approved Sublicensee”).

In place of the deleted sentence the following shall be added:

“Each sublicensee of Neurocrine shall be deemed an approved sublicensee (each an “Approved
Sublicensee”).”

2. Amendment of Section 4.2 of the Sublicense Agreement and Section 3.3 of the 2004
Agreement. (a) Section 4.2 of the Sublicense Agreement is hereby amended to delete the
following milestone:

“U.S. $3,000,000 upon regulatory approval for the marketing of the Marketed Product within
either the United States, Japan or within the EU.”

The following new milestone is hereby added.

“U.S. $2,000,000 on November 1, 2007. U.S. $1,000,000 upon the regulatory approval for the
marketing of the Marketed Product within either the United States, Japan or within the EU.”

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(b) Section 3.3 of the 2004 Agreement (amending Section 6.2 of the License Agreement, as amended
and supplemented in full) is hereby amended to delete the following:

“U.S. $1,500,000 upon regulatory approval for the marketing of the Marketed Product within
either the United States, Japan or within the EU.”

The following new milestone is hereby added.

“U.S. $1,000,000 on November 1, 2007. U.S. $500,000 upon the regulatory approval for the
marketing of the Marketed Product within either the United States, Japan or within the EU”

The parties acknowledge that pursuant to the 2004 Agreement, all payments by Neurocrine to DOV
under clause (a) are net of payments set forth in such Section 3.3 of the 2004 Agreement. For
clarity, such U.S. $2,000,000 clause (a) payment is hereby owed and accrued to DOV and due and
payable, is not contingent on any event, and is payable without any set-off, credit or deduction
(other than the one million dollar $1,000,000 payment to Neurocrine set forth in such Section 3.3
of the 2004 Agreement).

3. Royalty Prepayment.

(a) Definitions. Capitalized terms used herein and not otherwise defined will have the
definition set forth in the Amended Sublicense Agreement.

“FDA Approval” shall mean approval by the United States Food and Drug Administration of the NDA for
IR Product originally filed with the FDA on June 12, 2007 with [...***...].

“First Commercial Sale” shall mean with respect to the IR Product, after it is approved, commercial
sale by Neurocrine, any of its Affiliates and/or its sublicensees of the IR Product in its
commercial form to a third party in exchange for cash or some equivalent to which value can be
assigned. Transfer of IR Product between or among Neurocrine, its Affiliates and sublicensees will
not constitute commercial sales.

“Indiplon” shall mean N-methyl-N-(3-{3-[2-thienylcarbonyl]-pyrazolo-[1,5-a]-pyrimidin-7-yl}phenyl)
acetamide.

“IR Product” shall mean the immediate release capsule of Indiplon.

[...***...]

“U.S. Sublicense” shall mean Neurocrine shall have entered into an effective agreement providing
for a sublicense of any of Indiplon development and commercialization rights under the Amended
Sublicense Agreement in the United States territory with a biotechnology or pharmaceutical company.

*** Confidential Treatment Requested

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(b) Royalty Prepayment. Upon DOV’s election, Neurocrine will pay DOV [...***...] as a
prepayment (“Royalty Prepayment”) of the royalty payable to DOV pursuant to the Amended Sublicense
Agreement, this Amendment, the 2002 Agreement and the 2004 Agreement (the “Royalty”), as provided
below. Each Prepayment will be at DOV’s option upon each of the first and second occurrence of the
events set forth below (“Events”).

	 	 	 	 	 
	Events	 	 	 	Royalty Prepayment to DOV
	First to occur

	 	Any of:	 	 
	 

	 	(i) FDA Approval,	 	 
	 

	 	(ii) US Sublicense, or	 	 
	 

	 	(iii) First Commercial Sale
	 	[...***...]
	 
	 	 	 	 
	Second to occur

	 	Any of:	 	 
	 

	 	(i) FDA Approval,	 	 
	 

	 	(ii) US Sublicense, or	 	 
	 

	 	(iii) First Commercial Sale
	 	[...***...]

DOV may elect to receive each Royalty Prepayment upon written notice to Neurocrine within thirty
(30) days of the specified first to occur and second to occur Event, in which case Neurocrine shall
wire the Royalty Prepayment to an account designated by DOV within five(5) business days, without
any set-off, credit or deduction. Upon expiration of this thirty (30) day period, the option to
receive the Royalty Prepayment will lapse and DOV will have deemed to waive their right to receive
any future Royalty Prepayments; provided that such 30-day period will not lapse until thirty (30)
days after Neurocrine has
notified DOV in writing of the occurrence of an Event. If a Royalty Prepayment is made to DOV such
Royalty Prepayment would be non-refundable to Neurocrine; the parties acknowledge and agree that
the only obligation to repay any Royalty Prepayment will be from the Royalty otherwise payable to
DOV under the Amended Sublicense Agreement, this Amendment, the 2002 Agreement and the 2004
Agreement, and that if any such Royalty Prepayment is not fully repaid by the Royalty for whatever
reason, there will be no obligation to repay same. DOV acknowledges that this Royalty Prepayment is
potentially for multiple years of Royalty that would otherwise be payable to DOV.

DOV further agrees that the Royalty to be credited against the Royalty Prepayment will be
discounted at a [...***...] Royalty Prepayment until such time as the first Royalty Prepayment
balance is zero.

In the event of a second [...***...] Royalty Prepayment, the Royalty to be credited against the
Royalty Prepayment will be discounted at a [...***...] Royalty Prepayment until such time as the
second Royalty Prepayment balance is zero.

In the event that [...***...] Royalty Prepayments are made, the Royalty credited against the first
Royalty Prepayment will be exhausted [...***...] prior to crediting of Royalties

*** Confidential Treatment Requested

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against the second Royalty Prepayment [...***...]. The actual Royalty earned for each quarterly
period will not be paid to DOV, but instead will be credited against the unused balance of the
Royalty Prepayment until such time that the balance of the Royalty Prepayment is reduced to zero.
At the point the Royalty Prepayment is reduced to zero, cash Royalty payments to DOV will commence
as described in the Amended Sublicense Agreement.

For clarity an example is provided on Exhibit A.

Neurocrine hereby represents and warrants to DOV that the NDA presently under examination by the
FDA was filed on June 12, 2007, is for immediate release capsule of Indiplon, [...***...].

4. Royalty Sale. Neurocrine will, and hereby does upon DOV’s notice and request, permit
DOV (i) to assign the Royalty and audit rights (Section 5.5) under the Amended Sublicense
Agreement, this Amendment, the 2002 Agreement and the 2004 Agreement, (ii) to share the Royalty
reports delivered thereunder pursuant to commercially reasonable confidentiality provisions, and
(iii) to direct payment of the Royalty to any third party (including a financial institution as
part of a “lock-box” arrangement), optionally on an irrevocable basis, all of the foregoing in
connection with a monetization of the Royalty by DOV. Neurocrine will confirm same in connection
with any such
monetization at DOV’s request. Otherwise, all other rights under the Amended Sublicense Agreement
will be assignable only in compliance with such Section 11 and elsewhere thereunder.

5. Miscellaneous.

a. Counterparts. This Amendment may be executed in any number of counterparts each of which shall
be original and all originals of which shall be deemed a single instrument.

b. Governing Law. This Amendment will be governed and construed by the substantive laws of the
State of New York.

c. Rights of Approved Sublicensees. The parties hereby agree that the Approved Sublicensees (as
such definition is amended hereunder) have the rights specified under Section 4.7 of the 2002
Agreement.

d. Entire Agreement. The Amended Sublicense Agreement, this Amendment, the 2002 Agreement and the
2004 Agreement are the full understanding of the parties with respect to the subject matter hereof.
Each party confirms, to its knowledge as of the date first written above, that the other party is
not in default of any such agreements, and that such party does not have any damages claims against
such other party hereunder or thereunder.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their duly
authorized representatives.

*** Confidential Treatment Requested

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	NEUROCRINE BIOSCIENCES, INC.
	 	 
	 
	 	 
	     /s/ Gary A. Lyons
	 	 
	 

By: Gary A. Lyons

	 	 
	Title: President and Chief Executive Officer
	 	 
	 
	 	 
	DOV PHARMACEUTICAL, INC.
	 	 
	 
	 	 
	     /s/ Barbara Duncan
	 	 
	 

By: Barbara Duncan

	 	 
	Title: Chief Executive Officer
	 	 

5

 

***Text Omitted and Filed Separately with the Securities and Exchange

Commission. Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

EXHIBIT A

[...***...]

*** Confidential Treatment Requested

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