COLLABORATION AND LICENSE AGREEMENT

Exhibit 10.21

COLLABORATION AND LICENSE AGREEMENT

     THIS COLLABORATION AND LICENSE AGREEMENT (the “Agreement”) is made as of October 29, 2004, by and between Sucampo Pharmaceuticals, Inc., a corporation organized under the laws of Delaware, having its principal place of business at 4733 Bethesda Avenue, Suite 450, Bethesda, Maryland 20814 USA (“SPI”), and Takeda Pharmaceutical Company Limited, a corporation organized under the laws of Japan, having its principal place of business at 1-1 Doshomachi 4-chome, Chuo-ku, Osaka 540-8645, Japan (“Takeda”). SPI and Takeda are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”

Recitals

     WHEREAS, SPI is a United States based pharmaceutical company; and

     WHEREAS, Takeda is a multinational health care company with research, development and marketing activities in North America through its Affiliates (as hereinafter defined), and it desires to obtain potential drug products to develop and commercialize for gastroenterology indications;

     WHEREAS, SPI has obtained and licensed rights to certain patents, patent applications and know-how, and certain data, related to the compound known as SPI-0211, from its affiliate Sucampo AG, a Swiss corporation having its principal place of business at Graben 5, CH-6300 Züg, Switzerland (“SAG”), and has developed the Product (hereinafter defined) for gastroenterology indications in certain countries including without limitation the United States and Canada; and

     WHEREAS, SPI has appointed R-Tech Ueno, Ltd., a corporation organized under the laws of Japan, having its principal place of business at 10F Yamato Life Insurance Bldg., 1-1-7 Uchisaiwaicho, Chiyoda-ku, Tokyo, 100-0011 Japan (“RTU”) as the exclusive contract manufacturer to manufacture and supply the Compound and the Product (both hereinafter defined) for clinical and commercial purposes in certain countries including without limitation the United States and Canada;

     WHEREAS, Takeda wishes to obtain from SPI an exclusive license to co-develop, use, sell, promote, offer for sale, import and distribute the Product for the gastroenterology indications in the United States and Canada under the Licensed Trademark (hereinafter defined);

and

     WHEREAS, SPI is willing to grant Takeda such license and establish a collaboration for the development and commercialization of SPI-0211 on the terms and conditions contained in this Agreement.

     Further, for the avoidance of doubt, the Parties intend to enter into Ancillary Agreements (hereinafter defined) with SAG regarding the intellectual property matters, and with RTU regarding the manufacturing and supply matters simultaneously with the execution of this Agreement.

     NOW THEREFORE, in consideration of the premises and the mutual covenants hereinafter set forth, the parties hereto have agreed as follows:

Article 1 INTRODUCTORY PROVISIONS

1.1 Defined Terms . The following terms, when used in capitalized form in this Agreement, shall have the meanings set forth below:

“Additional Indication(s)” shall mean all Initial Indications, other than Constipation and Constipation-predominant Irritable Bowel Syndrome (“C-IBS”).

“Additional Territory” shall mean any of the following: (a) all countries in North America, Central America, South America, including the Caribbean but excluding the Initial Territory, (b) all countries in Europe, Middle East and Africa, or (c) all counties of the world other than those in the Initial Territory and those listed in (a) or (b) above. Takeda may obtain a license to Develop and Commercialize a Product for an Additional Territory as described in Section 3.3.

“Adverse Experience Data” shall mean all data concerning any serious or unexpected adverse events, side-effects and contraindications of any Product which come to the attention of either Party, its Affiliates or its sub-licensees and which is of such a nature and magnitude that it is required under the laws of any country in the Initial Territory to be collected, maintained and reported to a Regulatory Authority.

“Affiliate(s)” shall mean, in relation to a Party, any corporation or entity that, directly or indirectly, controls, is controlled by or is under common control with such Party. For purposes of this definition, the term “control” shall mean the ownership, directly or indirectly, of fifty percent (50%) or more of the voting interest in, or fifty percent (50%) or more of the equity of or the right to appoint fifty percent (50%) or more of the directors or managers of that corporation or other business entity or the power to direct or cause the direction of the management and policies of such corporation or entity, whether pursuant to the ownership of voting securities, by contract or otherwise.

“Agreed Annual Minimum PDEs” shall have the meaning set forth in Section 5.3(f).

“Agreed Annual Promotion Costs” shall have the meaning set forth in Section 5.2(b).

“Ancillary Agreements” shall mean the Agreement, dated as of the date hereof (i.e., the Effective Date), by and among SPI, Takeda and RTU (the “RTU Agreement”), and the Agreement, dated as of the date hereof (i.e., the Effective Date), by and among, SPI, Takeda and SAG (the “SAG Agreement”), and attached to the Agreement as Appendix A and Appendix B, respectively.

“Applicable Regulations” shall mean all statutes, laws and regulations applicable to the development, manufacture and testing of pharmaceutical materials in effect at a particular time and promulgated by the FDA or any other Regulatory Authority, including without limitation current good laboratory practices (“cGLP”), current good clinical practices (“cGCP”), current good manufacturing and control practices (“cGMP”) and quality system regulations (“QSR”), and any successor or replacement statues, laws and regulations.

“Bankruptcy Code” shall have the meaning set forth in Section 16.12.

“Best Efforts” shall mean those efforts that would be made by a reasonably prudent business person acting in good faith and in the exercise of reasonable commercial judgment based on acceptable practice, process and speed found in the pharmaceutical industry and taking into account the potential commercial market for the applicable product in the Initial Territory.

“Business Day” shall mean any day on which banks are not required or authorized to close in New York, New York.

“Change of Control” of a Party means the occurrence of any of the following with respect to such Party at any time after the date hereof:

     (a) a merger, reorganization or consolidation of such Party with a third party which results in the voting securities of such Party outstanding immediately prior thereto ceasing to represent at least fifty percent (50%) of the combined voting power of the surviving entity immediately after such merger, reorganization or consolidation; or

     (b) a third party person or group of persons becoming the direct or beneficial owner of fifty percent (50%) or more of the combined voting power of the outstanding securities or outstanding share of common stock of such Party; or

     (c) the sale or other transfer of all or substantially all of such Party’s assets which relate to this Agreement to a third party.

Notwithstanding the foregoing, an internal reorganization or consolidation among SPI and its Affiliates shall not be deemed a Change of Control for purposes of this Agreement.

“Change of Control Party” shall have the meaning set forth in Section 13.3.

“Commercial Launch” shall mean the date of first sale of a Product in any country of the Initial Territory for any indication.

“Commercialization” or “Commercialize” shall mean all activities undertaken pursuant to an approved Commercialization Plan relating to the import, promotion, marketing, detail, storage,

handling, offering for sale and sale of a Product for the Initial Indications and, if applicable, Additional Indications and/or New Formulations in the Initial Territory.

“Commercialization Plan” shall mean the written strategy, schedule and plan for the Commercialization of the Products for the Initial Indications and, if applicable, Additional Indications and/or New Formulations in the Initial Territory, which shall be developed, modified and approved by the JCC.

“Compound” shall mean the active pharmaceutical ingredient known as SPI-0211 or by the USAN name Lubiprostone, as further described in Exhibit A.

“Confidential Information” shall mean all information, including but not limited to any information on the markets, customers, suppliers, patents or patent applications, inventions, products, procedures, designs, formulas, business plans, financial projections, organizations, employees, consultants or any other similar aspects of a Party’s present or future business, the secrecy of which confers a competitive advantage upon that Party. Confidential Information shall include the terms of this Agreement and the Proprietary Product Information.

“Covering,” “Cover” or “Covered” shall mean, with respect to a patent, that, but for rights granted to a Party under such patent, the practice by such Party of an invention claimed in that patent would infringe a Valid Claim included in the patent, or in the case of a patent application, would infringe a Valid Claim in such patent application if it were to issue as a patent. “CROs” shall mean contract research organizations.

“Development” or “Develop” shall mean all activities undertaken pursuant to an approved Development Plan to obtain Regulatory Approval for a Product for the Initial Indications and, if applicable, Additional Indications and/or New Formulations in the Initial Territory. This includes preclinical studies, including but not limited to toxicology, pharmacology, chemistry manufacturing and control of bulk and finished product and any clinical studies as well as all the process and procedures necessary to obtain Regulatory Approval, including preparation and submission of an NDA and other regulatory application(s).

“Development Plan” shall mean the written strategy, schedule and plan for the Development of the Products for the Initial Indications and, if applicable, Additional Indications and/or New Formulations in the Initial Territory, which shall be developed, modified and approved by the JDC as described herein.

“Drug Approval Application” shall mean an application for Regulatory Approval, such as an NDA, required to be approved before commercial sale or use of a Product as a drug in a regulatory jurisdiction.

“Effective Date” shall mean the date first above written.

“FDA” shall mean the United States Food and Drug Administration or any successor entity thereto.

“Force Majeure” shall mean any event, not existing as of the Effective Date and not reasonably within the control of the parties as of such date, which, in whole or in material part, prevents or makes commercially unreasonable one Party’s performance of its obligations (except payment obligations) under this Agreement. Force Majeure shall include, without limitation: fire, storm, earthquake, flood, acts of State or other governmental action, war or civil unrest, strikes, and prolonged shortage of energy or any other supplies.

“Full-Scale DTC” shall mean the running of advertisements for the Product on TV in at least [**] states in the United States and for [**] or longer.

“GAAP” shall mean generally accepted accounting principles current in the United States.

“Generic Competition” shall mean commercial market penetration by one or more “Generic Equivalents” not covered by a Valid Claim of a Licensed Patent during a given year, with respect to the market for the Product, which cumulatively amounts to [**] percent ([**]%) or more of the market share of total sales of the aggregate of Product and Generic Equivalents, as determined on a per unit basis during such year based upon independent market research, the source of which will be agreed upon by the parties (e.g., IMS, Scott-Levin).

“Generic Equivalents” shall mean pharmaceutical products that contain the Compound as their active ingredient and are not developed, manufactured, marketed or otherwise commercialized by or on behalf of Takeda, Takeda Affiliates, SPI or SPI Affiliates under this Agreement.

“ICC” shall have the meaning set forth in Section 15.3.

“Initial Formulation” shall mean the oral formulation of a Product in non-enteric coated soft gel capsules which is specified in each NDA application for the Product for Constipation and C-IBS indications in the Initial Territory.

“Initial Indications” shall mean all gastroenterology indications, including but not limited to, Constipation and C-IBS for the Product.

“Initial Territory” shall mean the United States and Canada.

“JCC” shall have the meaning set forth in Section 5.1(a).

“JDC” shall have the meaning set forth in Section 4.1(a).

“JMC” shall have the meaning set forth in Section 6.1(a).

“JSC” shall have the meaning set forth in Section 3.1(a).

“Labeling Changes” shall have the meaning set forth in Section 4.2 (b)(iii).

“Liability” shall have the meaning set forth in Section 10.1.

“Licensed Know-How” shall mean all information and data, regardless of form, which is owned by or licensed (with right of sublicense) to SPI as of the Effective Date or at anytime during the

term of this Agreement and is necessary or useful to the Development, the Commercialization, use, importation or sale of the Products.

“Licensed Patents” shall mean the following, but limited to those parts relating to the Compound and/or the Product, which are owned by or licensed (with right of sublicense) to SPI covering the use, importation, or sale of the Products: (a) those patents and patent applications listed on Exhibit B hereto and any patents issuing therefrom, (b) any patents and patent applications conceived or reduced to practice during the term of this Agreement and (c) all reissues, continuations, continuations-in-part, extensions and reexaminations of any patent or patent applications referenced above. All matters in any patent, patent application or patent claim not covering the Product or the Compound shall be excluded from the scope of this definition.

“Licensed Trademarks” shall mean the trademark(s) and trade name(s) selected by SPI for use in connection with the Products that are set forth on Exhibit C hereto which may be modified from time to time, provided, however, that if the Licensed Trademarks need to be changed from those set forth as of the Effective Date on Exhibit C hereto, SPI shall consult Takeda (or, if applicable, Takeda Affiliates or its sub-licensee(s)) with regard to the appropriateness of the candidate of Licensed Trademarks from commercial standpoint of view.

“Manufacturing Specification” shall mean the commercial specification for the manufacturing, quality control, packaging, labeling, shipping, delivery and storage of the Product as set forth in a Drug Approval Application and/or in the specification agreed upon in accordance with this Agreement or Ancillary Agreement.

“Marketing Authorization” shall mean (a) for the United States, the approval of an NDA and (b) for any foreign jurisdiction, the approval from the relevant Regulatory Authority to necessary market and sell the Product in that country, including, without limitation, all applicable pricing and government reimbursement approvals.

“NDA” shall mean a new drug license application or supplemental application filed with the FDA or any comparable application filed with a Regulatory Authority in or for Canada to obtain Marketing Authorization for a pharmaceutical product in or for Canada.

“Negative Event” shall mean any of the following events:

     (a) a material change in the Product Profile or Safety Profile;

     (b) a material recall of the Product;

     (c) the entry into the market of a significant competing product which was unexpected based on information known as of the Effective Date

     (d) the inability of SPI to supply a material amount of the Product for a material period of time;

     (e) Force Majeure.

“Net Sales Revenue” shall mean the gross invoiced sales of the Product by Takeda, Takeda Affiliates and/or its sub-licensee to a third party, less a deduction for any amounts actually incurred by Takeda, Takeda Affiliates and/or its sub-licensee for any of the following items to the extent such items specifically relate to sale of the Product and are incurred by Takeda, Takeda Affiliates and/or its sub-licensee in the normal course of business, provided that the total deductions for any particular sale shall not exceed [**] percent ([**]%) of the gross invoiced amount of such sale of the Product:

          (a) credits, price adjustments or allowances for damaged products, returns or rejections of the Product;

          (b) normal and customary trade, cash and quantity discounts, allowances and credits;

          (c) chargeback payments and rebates granted to group purchasing organizations, managed health care organizations or to federal, state/provincial, local and other governments, including their agencies;

          (d) sales, excise taxes (to the extend not refundable in accordance with applicable law) and other taxes directly related to the sale (but not including taxes assessed against the income derived from such sale); and

          (e) any freight charges, including postage, shipping, insurance and transportation.

     Such amounts shall be determined from the books and records of Takeda maintained in accordance with GAAP consistently applied.

“New Formulation(s)” shall mean any formulation of the Product other than the Initial Formulation.

“New Indication(s)” shall mean any indication for the Product other than the Initial Indications, which is subject to Takeda’s right of first refusal as provided in Section 3.2.

“Party” or “Parties” shall have the meaning set forth in the introductory paragraph.

“Phase IV Studies” shall mean clinical studies performed after obtaining Marketing Authorization for the purpose of supporting the marketing and Commercialization of the Product. For the avoidance of any doubt, “Phase IV Studies” does not include the RRS (as hereinafter defined).

“Post-Marketing Surveillance” shall mean all post-marketing safety surveillance in the Initial Territory with respect to the Product that is required by a Regulatory Authority in the Initial Territory or any Additional Territory in which the Products are being Developed or Commercialized.

“Primary Detail Equivalent” or “PDE” shall mean (a) one Primary Product Detail or (b) [**] Secondary Product Details.

“Primary Product Detail” shall mean a Product Detail during which key product attributes of the Product are verbally promoted and detailed in the first position on such Product Detail; provided, however, that a majority of the Product Detail time shall be spent detailing the Product.

“Product” shall mean any and all pharmaceutical preparation for human use that contains the Compound, a chemical equivalent, a salt, or a prodrug thereof as an active ingredient.

“Product Detail(s)” shall mean a face-to-face meeting in an individual or group setting between a professional sales representative and a health care professional with prescribing or dispensing authority for the purpose of discussing information about the Products.

“Product Profile” shall mean any of the following:

     (a) an appropriate dose regimen in C-IBS phase III study showing the efficacy which is not materially less than shown in phase II study (SPI\0211SIB-022) and

     (b) evidence of the clinical activity in both men and women.

“Proprietary Product Information” shall mean (a) all information and data now or hereafter contained in any Drug Approval Application or otherwise submitted in support of any Regulatory Approval to which either Party shall have the right under applicable law, regulations and administrative decisions to refer to, to authorize third parties to refer to and to prohibit third parties from referring to the Initial Indications and, if applicable, Additional Indications and/or New Formulations in the Initial Territory; (b) all data concerning any serious or unexpected adverse events, side effects and contra-indications of the Product which may come to the attention of either Party, its Affiliates or any sublicensee; (c) all data and information in the possession of either Party, its Affiliates or any permitted sublicensee of a Party relating to (i) the pharmacological or toxicological properties of a Product, (ii) pre-clinical or clinical testing and experience in relation to a Product which is not included in any Drug Approval Application and (iii) to the extent reasonably required for purposes of any application for Drug Approval Application, the chemical composition, manufacturing processes and quality control testing of a Product and (d) all other information and data now or hereafter in existence and not in the public domain, which is in the possession of either Party and its Affiliates and which relates in any way to the development, testing, manufacture, marketing, use or sale of the Products, including, without limitation, all such information or data that is developed as a result of the Development and/or Commercialization of the Products hereunder. Notwithstanding the foregoing, any data and information developed or obtained by a Party or its Affiliates or any sublicensee that is not based upon the other Party’s confidential or proprietary information shall not be deemed to be Proprietary Product Information.

“Regulatory Approval” shall mean any approvals (including pricing and reimbursement approvals), product and/or establishment licenses, registrations or authorizations of any federal, state or local regulatory agency, department, bureau or other governmental entity, necessary for the manufacture, use, storage, importation, marketing, export, transport or sale of a Product for the Initial Indications and, if applicable, Additional Indications and/or New Formulations in a regulatory jurisdiction of the Initial Territory.

“Regulatory Authority” shall mean, in respect of any country, any agency responsible for the issuance of Regulatory Approvals for pharmaceutical products marketed in that country.

“RRS” or “Regulatory Required Studies” shall mean all additional studies required by a Regulatory Authority in its approval letter or an approve letter granting of a Drug Approval Application or any other types of communication or notification from Regulatory Authority, made after the submission of NDA, for a Product for the Initial Indications and, if applicable, Additional Indications and/or New Formulations in the Initial Territory.

“R-Tech Ueno, Ltd.” or “RTU” shall have the meaning set forth in the Recitals.

“Safety Profile” shall mean that:

     (a) there is no risk management program requested by the FDA which demonstrates significant safety concerns;

     (b) the Product is safe for use by patients for up to one (1) year;

     (c) there are no unspecified adverse events which result in a material safety warning in the label for the Product; and

     (d) the incidence of diarrhea and nausea in C-IBS phase III study is not materially higher than incidence shown in Phase II study (SPI/0211SIB-0221).

“Secondary Product Detail(s)” shall mean any Product Detail other than Primary Product Detail.

“Sucampo AG” or “SAG” shall have the meaning set forth in the Recitals.

“SPE” shall mean Sucampo Pharma Europe Ltd., a corporation organized under the laws of the United Kingdom, having a principal place of business at 78 Cannon Street, London EC4N6NQ United Kingdom.

“SPE Option Fee” shall have the meaning set forth in Section 3.3.

“SPE Territory” shall have the meaning set forth in Section 3.3.

“SPI Option Fee” shall have the meaning set forth in Section 3.3.

“SPI Territory” shall have the meaning set forth in Section 3.3.

“SPL” shall mean Sucampo Pharma, Ltd., a corporation organized under the laws of Japan, having a principal place of business at Sakurabashi Toyo-Building, 4F, 2-2-16 Sonezakishinchi, Osaka 530-0002 Japan.

“SPL Option Fee” shall have the meaning set forth in Section 3.3.

“SPL Territory” shall have the meaning set forth in Section 3.3.

“Takeda Affiliates” shall mean those Affiliates of Takeda as set forth in Article 2, and are listed on Exhibit D; provided that Exhibit D may be modified from time to time during the term of this Agreement by mutual written agreement of SPI and Takeda.

“TPDHC” shall mean the Therapeutic Products Directorate of Health Canada.

“Valid Claim” shall mean a claim of an issued and unexpired patent that has not been revoked or held unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction, held unappealable or for which an appeal has not been filed within the time allowed for appeal, and which has not been disclaimed, denied or admitted to be invalid or unenforceable through reissue or disclaimer or otherwise. For the purposes of this Agreement, a Valid Claim shall also include a claim in a pending patent application which: (a) is or will be under active prosecution, (b) has been the subject of a request for formal examination or (c) is pending as a provisional application.

1.2 Other Rules of Interpretation . Unless the context clearly indicates otherwise, the following rules shall govern the interpretation of this Agreement:

          (a) The definitions of all terms defined herein shall apply equally to the singular, plural, and possessive forms of such terms.

          (b) All references to “Sections,” or “Exhibits” shall mean the corresponding Sections of and Exhibits to this Agreement.

Article 2 GRANT

2.1 Grant of License. Subject to the terms and conditions of this Agreement and the Ancillary Agreement and during their terms, SPI hereby grants to Takeda, exclusive, non-transferable license, with the right to sublicense Takeda Affiliates, under the Licensed Patents and Licensed Know-How, to co-develop, use, sell, promote, offer for sale, import and distribute the Product for the Initial Indications and, if applicable, Additional Indications and/or New Formulations in the Initial Territory under the Trademark. Takeda shall not sub-license such rights to, or enter into other arrangements with respect to such rights with, any third party (except for Takeda Affiliates) for any purpose, excerpt with a prior written consent of SPI. The foregoing license grant (a) does not in any way limit SPI’s and its Affiliates’ right to conduct Development or Commercialization of the Products for the Initial Indications and, if applicable, Additional Indications and/or New Formulations in the Initial Territory under the terms and conditions of this Agreement, or (b) does not grant Takeda and, if applicable, Takeda Affiliates or its-sub-licensees any rights to manufacture the Products unless otherwise agreed upon by SPI and Takeda in writing.

2.2 Trademark License . Subject to the terms and conditions of this Agreement and the SAG Agreement and during their terms, SPI hereby grants to Takeda an exclusive, non-transferable, limited license, with a right of sublicense to Takeda Affiliates, to use the Licensed Trademarks to advertise, market, promote and sell the Products for the Initial Indications and, if applicable, Additional Indications and/or New Formulations in the Initial Territory. Takeda shall not sub-license such Trademark License to, or enter into other arrangements with respect to such Trademark License with, any third party (except for Takeda Affiliates) for any purpose, excerpt

with a prior written consent of SPI. All such trademark usage by Takeda and, if applicable, Takeda Affiliates or its sub-licensee shall be in accordance with the guidelines and specifications provided by SPI from time to time subject that such guidelines and specifications are commercially reasonable. Takeda shall not acquire any rights in the Licensed Trademarks except the limited licensed granted hereunder, and all such use by Takeda shall inure to the benefit of SPI and/or its licensors.

2.3 Sub-license by Takeda. The right to sub-license to a third party or its Affiliates, with an exception for Takeda Affiliates, granted to Takeda under Section 2.1 and 2.2 shall be on the condition that the terms of any such sub-license shall be in accordance with the terms of the license granted to Takeda hereunder and shall be subject to the prior approval of SPI, such approval not to be unreasonably withheld or delayed.

2.4 Assurance by Takeda. Notwithstanding the appointment of any such Takeda Affiliates or its sub-licensee(s), Takeda shall assure to SPI the performance of its obligations under the terms hereof by Takeda, Takeda Affiliates or its sub-licensee(s). For the avoidance of any doubt, Takeda shall be responsible to SPI for any breach of such obligations, whether such breach was caused by Takeda, Takeda Affiliates or its sub-licensee(s).

Article 3 COLLABORATION

     3.1 Joint Steering Committee .

          (a) Within thirty (30) days after the Effective Date, the parties shall form a Joint Steering Committee (“JSC”) for the purpose of achieving mutually beneficial goals to maximize the value of the Product. The JSC shall provide overall management and strategic guidance for the collaboration between the Parties under this Agreement, and act in good faith to facilitate the collaboration between the Parties. The JSC shall be composed of three (3) executive representatives appointed by each Party (Such representatives may be management representatives of each Party’s Affiliates.), with a rotating chairman each year; the chairman for the first year shall be from SPI. All decisions of the JSC shall be unanimous.

          (b) The JSC shall meet, at a minimum, on a semi-annual basis, at a location(s) agreed upon by the JSC or by telephone or video conference, provided that any decision made during a meeting is evidenced in a writing signed by one of the members of the JSC from each of the Parties. Each Party shall bear the travel and living expenses of its own personnel to attend any such meetings. The JSC shall keep minutes reflecting actions taken at meetings.

          (c) The JSC responsibilities shall include (i) reviewing the Development Plan and Commercialization Plan, (ii) coordinating Initial Territory and Additional Territory, if any, Development and Commercialization efforts with the JDC, JCC or JMC, (iii) discussing and deciding necessary actions and solutions when the sale of the Product has stagnated as further discussed in Section 5.3(e), and (iv) resolving any conflicts arising within the JDC, JCC and JMC. In the event any such dispute arises within the JDC, JCC or JMC, JSC shall meet and confer in a good faith effort to resolve the conflict within [**]. If no resolution is reached during such time frame, the Chief Executive Officer of SPI and the Chief Operating Officer of Takeda shall meet for further discussions and resolution of the matter. If such executives are not able to

resolve the dispute within a timely manner, the Chief Executive Officer of SPI shall cast the deciding vote for disputes arising from the JDC and the JMC, and the Chief Operating Officer of Takeda shall cast the deciding vote for disputes arising from the JCC. The Parties shall faithfully perform their respective obligations hereunder fully cooperating with each other. As the term of the Agreement is through the year of 2020, there may be a material change in circumstance which would impose undue hardship upon a Party performing its obligations hereunder in such quite long time. In such case, the JSC and the meeting between the Chief Executive Officer of SPI and the Chief Operating Officer of Takeda shall be an instrumentality for the Parties to confer in good faith as to how to cope with such difficulty. Thus, the JSC shall also meet as necessary to discuss and resolve any significant changes, including but are not limited to, changes in economic conditions, changes in market conditions, or any other changes that could adversely impact the Development and/or Commercialization of the Product as well as collaboration between the Parties.

          (d) Notwithstanding the creation of the JSC, JDC, JMC and JCC, each Party shall retain the rights, powers and discretion granted to it hereunder, and such committees shall not be delegated or vested with any such rights, powers or discretion unless expressly so agreed in writing. Such committees shall not have the power to amend or modify this Agreement, which may be amended or modified only as provided in Section 16.6.

     3.2 New Indications . If SPI develops any New Indication(s) for the Products in the Initial Territory, Takeda shall be given the right of first refusal to obtain a license to develop and commercialize the Products for such New Indication(s) in the Initial Territory. SPI shall provide Takeda with notice of any such New Indication(s) once SPI enters into a proof of concept studies or Phase II studies for a New Indication(s) together with all such material information with regard to such New Indication(s) as enables Takeda to evaluate the New Indication(s) and its potential marketability, and if Takeda desires to obtain a license to the New Indication(s) stated in such notice for the Initial Territory pursuant to a separate written license agreement, the Parties shall then negotiate in good faith for a period of [**] after Takeda’s receipt of such notice. If basic terms and conditions of such license agreement have not been agreed upon by the Parties within the foregoing period, SPI shall be entitled to develop and commercialize the Product for such New Indication(s), and Takeda shall have no further rights with respect to such New Indication(s).

     3.3 Additional Territories . SPI shall represent itself and its Affiliates in discussions regarding the granting to Takeda of a license to develop and commercialize the Products in the Additional Territory for which such Affiliate has appropriate right and license. In particular, SPI shall be responsible for all countries in North, Central and South America (excluding the US and Canada, which countries are the subject of the license granted under this Agreement to Takeda) (the “SPI Territory”), SPE shall be responsible for Europe, the Middle East and Africa (the “SPE Territory”), and SPL shall be responsible for all other countries in the world, including Japan (the “SPL Territory”). With respect to the SPE Territory, Takeda shall pay SPI, for the benefit of SPE, an option fee (the “SPE Option Fee”) of [**] United States Dollars (US$[**]) within [**] of the Effective Date in order to obtain an exclusive option to negotiate and secure rights in the Products for the Initial Indications and, if applicable, Additional Indications and/or New Formulations in the SPE Territory, pursuant to a separate written license agreement, provided, however, that if no such agreement is executed, the aforementioned option for the SPE Territory

shall automatically expire upon the receipt of NDA approval by SPI for the Constipation indication for the Initial Territory, and SPI shall refund to Takeda [**] United States Dollars (US$[**]) of the SPE Option Fee paid by Takeda. With respect to the SPL Territory, Takeda shall pay SPI, for the benefit of SPL, an option fee (the “SPL Option Fee”) of [**] United States Dollars (US$[**]) within [**] of the Effective Date in order to obtain a [**] exclusive option to negotiate and secure rights in the Products for the Initial Indications and, if applicable, Additional Indications and/or New Formulations in the SPL Territory, pursuant to a separate written license agreement; provided, however, that if no such agreement is executed, the aforementioned option for the SPL Territory shall automatically expire after [**], in which case, SPI shall refund to Takeda [**] United States Dollars (US$[**]) of the SPL Option Fee paid by Takeda. The Parties agree that, during the option periods mentioned above, they will in good faith explore the best way to commercialize the Product in each of SPE Territory and SPL Territory. With respect to the SPI Territory, Takeda shall not be required to pay SPI a fee in order to obtain an exclusive option to negotiate and secure rights in the Products for the Initial Indications and, if applicable, Additional Indications and/or New Formulations in the SPI Territory, pursuant to a separate written agreement, provided, however, that if no such agreement is executed, the aforementioned option for the SPI Territory shall automatically expire upon the receipt of NDA approval by SPI for the Constipation indication for the Initial Territory. The SPE Option Fee and the SPL Option Fee shall be creditable towards any payments due under any license agreement entered into between Takeda and SPI or the applicable SPI Affiliate.

     3.4 Coordination with SPI Affiliates . SPI shall facilitate the planning and coordination of the Development and Commercialization of the Products hereunder with its Affiliates in the Additional Territories, in order to avoid conflicts regarding the Development and Commercialization strategies for the Products for the Initial Indications and, if applicable, Additional Indications and/or New Formulations in the Initial Territory and Additional Territories.

Article 4 DEVELOPMENT

     4.1 Joint Development Committee .

          (a) As soon as practicable after the Effective Date, the parties shall form a Joint Development Committee (“JDC”) to focus on and manage the Development of the Products for the Initial Indications and, if applicable, Additional Indications and/or New Formulations in the Initial Territory. The JDC shall be composed of two (2) management representatives appointed by each Party (Such representatives may be management representatives of each Party’s Affiliates.), with a rotating chairman each year; the chairman for the first year shall be from SPI. All decisions of the JDC shall be unanimous.

          (b) The JDC shall meet, at a minimum, on a quarterly basis, at a location(s) agreed upon by the JDC or by telephone or video conference, provided that any decision made during a meeting is evidenced in a writing signed by one of the members of the JDC from each of the Parties. Each Party shall bear the travel and living expenses of its own personnel to attend any such meetings. The JDC shall keep minutes reflecting actions taken at meetings.

          (c) The JDC responsibilities shall include (i) managing and overseeing Development of the Products for the Initial Indications and, if applicable, Additional Indications and/or New Formulations in the Initial Territory, (ii) developing, approving and modifying the Development Plan for the Initial Indications and, if applicable, Additional Indications and/or New Formulations in the Initial Territory, (iii) developing regulatory strategy and protocols for the Products for the Initial Indications and, if applicable, Additional Indications and/or New Formulations in the Initial Territory, (iv) managing Development budgeting for the Initial Indications and, if applicable, Additional Indications and/or New Formulations in the Initial Territory and (v) overseeing the approval process for all required Regulatory Approvals for the Initial Indications and, if applicable, Additional Indications and/or New Formulations in the Initial Territory. If the JDC cannot resolve an issue within its purview, the JSC shall attempt to resolve the conflict; provided, however that if a dispute arises with respect to the Additional Indications or New Formulations of the Products, the JCC shall be entitled to resolve such dispute.

     4.2 Parties’ Responsibilities .

          (a) In line with their respective role as provided for in this Agreement, SPI and Takeda each agree to collaborate diligently in the Development of the Product and to use their Best Efforts to Develop and bring the Product to market for the Initial Indications and, if applicable, Additional Indications and/or New Formulations provided for in the Development Plan, in the Initial Territory as soon as practicable. Each party further agrees to execute and substantially perform the obligations assumed by it under the Development Plan within the budgets set forth therein and to cooperate with the other party in carrying out the Development Plan.

          (b) As part of such Development Plan, the Parties agree that:

          (i) Development for NDA submission for Constipation and C-IBS . SPI shall conduct all Development work necessary for an NDA submission in the Initial Territory for Constipation and C-IBS in the Initial Formulation. Takeda shall fund all Development (which is conducted after the Effective Date) of the Product for Constipation and C-IBS for the Initial Territory up to maximum aggregate amount of Thirty Million United States Dollars (US$30,000,000) in accordance with the then current Development Plan approved by the JDC. If such funding exceeds Thirty Million United States Dollars (US$30,000,000), then (a) SPI shall fund the next Twenty Million United States Dollars (US$20,000,000) and (b) Takeda and SPI shall equally share any required funding in excess of Fifty Million United States Dollars (US$50,000,000). In accordance with the foregoing provisions of this Section 4.2 (b)(i), SPI shall submit an invoice to Takeda [**] prior to the first day of each calendar quarter for the estimated costs to be incurred by SPI during such quarter, and Takeda shall pay to SPI the Development cost on a quarterly basis against an invoice submitted to it by SPI, within [**] after its receipt of such an invoice. With regard to the period from the Effective Date until December 31, 2004, SPI shall submit an invoice to Takeda within [**] after the completion of the first JDC meeting for the estimated costs to be incurred by SPI during such period, and Takeda shall pay SPI the Development cost within [**] after its receipt of such an invoice. Within [**] after December 31 and June 30 (for the avoidance of doubt, the period from the Effective Date until December 31, 2004 shall be deemed to be the first quarter and the first half year for purposes of

this section), the Parties shall review the amounts paid by Takeda to SPI and make any adjustments that may be required. For example, (a) if the amount paid by Takeda under this Section 4.2(b)(i) for a calendar half year was Ten Million United States Dollars (US$10,000,000) and the amount actually spent by SPI for the same period was Eleven Million United States Dollars (US$11,000,000), Takeda would be required to pay SPI an additional One Million United States Dollars (US$1,000,000) within [**] after the end of such half year, and (b) if the amount paid by Takeda under this Section 4.2(b)(i) for a calendar half year was Ten Million United States Dollars (US$10,000,000) and the amount actually spent by SPI for the same period was Nine Million United States Dollars (US$9,000,000), SPI would be required to pay Takeda One Million United States Dollars (US$1,000,000) within [**] after the end of such half year; provided that neither Party shall be required to pay any interest to the other Party with respect to payments made under this Section. SPI shall submit to Takeda documentary evidence demonstrating the correctness of any invoiced amount within [**] after the end of each quarter; provided, however that in the event such documentary evidence is not available within [**], SPI shall forward it to Takeda as soon as reasonably practicable. For the avoidance of doubt, the Development cost to be funded by Takeda under this Section 4.2 (b)(i) shall include both external and internal costs of SPI; provided, that SPI’s internal costs shall be included only if such costs are lower than the costs that would have been paid to a reputable CRO for such work. The JDC shall review the invoice every quarter and approve and adjust the payment in accordance with the Development Plan budget agreed to by the JDC. SPI shall use its Best Efforts to make an NDA filing for Constipation in the first (1st) quarter of the calendar year [**], and shall use its Best Efforts to make an NDA filing for C-IBS in the first (1st) quarter of the calendar year [**]; provided that SPI’s failure to make such filings in the applicable time frame shall not be deemed a breach of this Agreement; and provided, further that the Parties acknowledge that SPI’s ability to make such filings are dependent upon SPI having adequate funding and the performance of its outside vendors, each despite of the fact that SPI has exerted its Best Efforts.

          (ii) Regulatory Required Studies or RRS for Constipation and C-IBS . SPI shall conduct all additional Studies required by the Regulatory Authority for Constipation and C-IBS in the Initial Territory. Takeda and SPI shall equally share the external costs of the RRS in the Initial Territory. Notwithstanding the foregoing, in no event shall SPI be required to incur costs of more than Twenty Million United States Dollars (US$20,000,000) pursuant to this Section 4.2(b)(ii) and, with respect to any costs to be incurred by SPI in excess of [**] United States Dollars (US$[**]), Takeda shall, at the request of SPI, pay such costs and deduct them from the next Development Milestone due to SPI, or in the event that there is no Development Milestone, against any royalties due to SPI. However, if this Agreement is terminated for any reason other than SPI’s breach of this Agreement or any agreement entered into in connection herewith, before the nearest Development Milestone becomes due, Takeda will not be entitled to request reimbursement from SPI for any amount in excess of [**] United S