DEVELOPMENT AND LICENSE AGREEMENT

Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.

Exhibit 10.99

DEVELOPMENT AND LICENSE AGREEMENT

BETWEEN

DURECT CORPORATION

AND

ALPHARMA IRELAND LIMITED

DATED AS OF

SEPTEMBER 19, 2008

CONFIDENTIAL

DEVELOPMENT AND LICENSE AGREEMENT

     THIS DEVELOPMENT AND LICENSE AGREEMENT (this “ Agreement ”), dated September 19, 2008 (“ Execution Date ”), is entered into by and between Durect Corporation, a corporation organized and existing under the laws of the State of Delaware, U.S.A. with a place of business at 2 Results Way, Cupertino, CA 95014 (“ Durect ”), and Alpharma Ireland Limited, a corporation organized and existing under the laws of Ireland, having its registered office at Arthur Cox Building, Earlsfort Terrace, Dublin 2, Ireland (“ Alpharma ”).

PRELIMINARY STATEMENTS

     A. Durect is the owner of a proprietary product for pain treatment consisting of a bupivacaine transdermal patch as described below and certain patents and know-how relating thereto;

     B. Durect desires to have such product further developed and commercialized in the territory specified below;

     C. Alpharma has capabilities in the development, manufacture, promotion, marketing and sales of pharmaceutical products in the field of pain treatment in the specified territory; and

     D. Durect desires to grant certain exclusive rights to Alpharma in respect of such product in the specified territory and related matters upon the terms and conditions hereinafter set forth.

AGREEMENT

     NOW THEREFORE, in consideration of the mutual covenants and agreements provided herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:

1. DEFINITIONS.

     As used in this Agreement, the following terms shall have the meanings set forth in this Section 1:

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     1.1 “ ANDA ” means an abbreviated new drug application pursuant to Section 505(j) of the FDC Act.

     1.2 “ Affiliate ” means, with respect to a Person, any Person that controls, is controlled by or is under common control with such first Person. For purposes of this definition only, “control” means (a) to possess, directly or indirectly, the power to direct the management or policies of a Person, whether through ownership of voting securities, by contract relating to voting rights or corporate governance, or (b) to own, directly or indirectly, fifty percent (50%) or more of the outstanding voting securities or other ownership interest of such Person. An entity will be an Affiliate for purposes of this Agreement only so long as it satisfies the definition set forth herein.

     1.3 “ Applicable Laws ” means the applicable laws, rules and regulations, including any rules, regulations, guidelines or other requirements of the Health Authorities, that may be in effect from time to time.

     1.4 [ ** ].

     1.5 “ Bupivacaine ” means 1-butyl-N-(2,6-dimethylphenyl) piperidine-2-carboxamide, including any and all pharmaceutically acceptable salts, solvates, prodrugs, esters, free base forms, enantiomers (and racemic or other mixtures of said enantiomers) thereof.

     1.6 “ cGMP ” means current Good Manufacturing Practice for medicinal products for human use as set forth in U.S. Code of Federal Regulations 21 CFR Part 210, 211 et seq. , Commission Directive 2003/94/EC the EU Good Manufacturing Practice guideline, Volume 4 for medicinal products for Human and Veterinary Use, the European Pharmacopoeia, and equivalent thereof, as applicable, each as amended from time to time.

     1.7 “ Change of Control ” means, as to Alpharma or Durect, the occurrence of a tender offer, stock purchase, other stock acquisition, merger, consolidation, recapitalization, reverse split, sale or transfer of assets or other transaction, or series of transactions, as a result of which any person, entity or group, other than an Affiliate of Alpharma or Durect, as the case may be, prior to the occurrence of such event (a) becomes the beneficial owner, directly or indirectly, of

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securities of Alpharma or Durect, as the case may be, representing more than 50% of the ordinary shares of Alpharma or Durect, as the case may be, or representing more than 50% of the combined voting power with respect to the election of directors of Alpharma or Durect, as the case may be, (b) obtains the ability to appoint a majority of the board of directors of Alpharma or Durect, as the case may be, or (c) obtains the ability to direct the operations or management of Alpharma or Durect, as the case may be.

     1.8 “ Clinical Trial ” means an investigation in human subjects and/or patients intended to discover or verify the clinical, pharmacological and/or other pharmacodynamic effects of an investigational product(s), and/or to identify any adverse reactions to an investigational product(s), and/or to study absorption, distribution, metabolism, and/or excretion of an investigational product(s) with the objective of ascertaining its safety, activity and/or efficacy.

     1.9 “ Collaboration Inventions ” means all Know-How (whether or not patentable) conceived and/or reduced to practice by or for a Party, or any Affiliate, subcontractor, agent, or sublicensee thereof, or jointly by any of the foregoing, arising out of or in connection with performing the activities under this Agreement, including the Development Plan. For clarity, and notwithstanding the foregoing, the definition of “Collaboration Inventions” shall not be construed to cover Development Data.

     1.10 “ CMC ” means chemistry, manufacturing and controls.

     1.11 “ CMC Data ” means CMC data generated with respect to the Product that is Controlled at any time during the Term of this Agreement by a Party, or any Affiliate, subcontractor, agent, sublicensee thereof, or jointly by any of the foregoing.

     1.12 “ CMO ” means a Third Party contract manufacturing organization.

     1.13 “ Committee ” means any of the Joint Executive Committee (JEC) or the Joint Development Committee (JDC), and when used in the plural, shall mean all of them or more than one of them, as the case may be.

     1.14 “ Commercialization ” or “ Commercialize ” means the ongoing process and activities generally engaged in by a company marketing human pharmaceutical therapeutic products to establish and maintain a presence for such product in a given territory, including

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offering for sale, selling, marketing, promoting, distributing, importing and exporting such product.

     1.15 “ Commercially Reasonable Efforts ” with respect to any activity means the efforts and resources that would be used by a specialty pharmaceutical company of comparable size and resources as Alpharma in the development, registration, Reimbursement authorization, market launch and/or manufacturing, with regard to a product at a similar stage in its product life taking into account the following factors to the extent reasonable and relevant: issues of safety and efficacy, product profile, market potential, difficulty in manufacturing the product, difficulty in establishing an appropriate clinical protocol for applicable indications, competitive market conditions, the patent, duration of regulatory exclusivity or other proprietary position of the product, the regulatory structure involved and the potential profitability and economic return of the product [**], all as measured by the facts and circumstances at the time such efforts are due. Where this Agreement requires Alpharma to use Commercially Reasonable Efforts, such efforts and resources that are used by Alpharma’s Affiliates and sublicensees shall also be attributed to Alpharma.

     1.16 “ Competitive Product ” means any formulation containing Bupivacaine, either alone or in combination with one or more other active ingredients, for transdermal delivery from a patch for use in the Field, other than the Product.

     1.17 “ Control ” or “ Controlled ” means possession by a Party or its Affiliate of the right to grant to the other Party a license, sublicense or other right to use, of the scope provided for in this Agreement, to Intellectual Property Rights (including patent rights, Know-How, trade secrets), data and rights to access or cross-reference regulatory filings without violating the terms of any Applicable Law, agreement or other arrangement with any Third Party existing at the time such Party or such Affiliate would be first required hereunder to grant the other Party such license, sublicense or other right.

     1.18 [**].

     1.19 [**].

     1.20 “ Cost ” means all internal and external costs, expenses, cost of labor and materials associated with an activity.

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     1.21 “ Development Data ” means all Preclinical, Non-Clinical and Clinical data and all CMC Data, including pharmacological, pharmacokinetic and toxicological data generated with respect to the Product that is Controlled at any time during the Term of this Agreement by a Party, or any Affiliate, subcontractor, agent, sublicensee thereof, or jointly by any of the foregoing.

     1.22 “ Dollars ” means U.S. Dollars, the lawful currency of the United States.

     1.23 “ Dosage Form Development ” means any pharmaceutical development activities for the Product that are necessary to design or modify a pharmaceutical formulation or dosage form to meet the desired clinical or commercial product profile, including in vitro studies on solubility, stability, physical and chemical characteristics, denaturation, particle formation, crystallization, micronization, excipient/material selection, compounding, mixing, casting, converting, drying, and similar activities.

     1.24 “ Durect Development Costs ” shall mean the Costs incurred by Durect in performing the Durect Development Responsibilities as calculated in accordance with Schedule 1.24.

     1.25 “ Durect Trademark ” means the trademark rights to the mark ELADUR™ and similar rights under the laws of any Governmental Entity, including all goodwill associated therewith, and all applications, registrations, extensions and renewals relating thereto.

     1.26 “ EMEA ” means the European Medicines Agency, and where and if applicable, the European Commission, the Council of the European Union and the Committee for Medicinal Products for Human Use or any successors thereto.

     1.27 “ EU ” shall mean the European Union, including each of the member states as modified from time to time.

     1.28 [**].

     1.29 [**].

     1.30 [**].

     1.31 [**].

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     1.32 “ FDA ” means the Food and Drug Administration of the United States Department of Health and Human Services or any successor agency thereof performing similar functions.

     1.33 “ FDC Act ” means the United States Federal Food, Drug, and Cosmetic Act and any successor acts thereto, as amended from time to time.

     1.34 “ Field ” means all pharmaceutical applications (including the treatment of pain) for human health.

     1.35 “ First Commercial Sale ” means: (i) with respect to a Jurisdiction, the first sale for use, consumption or resale of Product by Alpharma or an Affiliate or Sublicensee thereof to a Third Party in a bona fide arms’-length transaction in such Jurisdiction and (ii) with respect to the Territory, the First Commercial Sale in any Jurisdiction. A sale to an Affiliate shall not constitute a First Commercial Sale unless the Affiliate is the end-user of the Product.

     1.36 “ GAAP ” means generally accepted accounting principles in the United States, consistently applied by the Party at issue.

     1.37 “ Generic Product ” means a generic pharmaceutical Bupivacaine transdermal patch that is approved for the same labeled indication as the Product under an ANDA pursuant to the FDC Act, Article 10 of the EU Directive 2001/83/EC or other equivalent registration process under the Applicable Laws of the relevant Jurisdiction in which the Product is cited as the reference listed drug.

     1.38 “ Governmental Entity ” means any regional, central, federal, state, provincial or local court, commission or governmental, regulatory or administrative body, board, bureau, agency, instrumentality, authority or tribunal or any subdivision thereof.

     1.39 “ HSR ” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

     1.40 “ ICH Guidelines ” means the then-current guidelines applicable to pharmaceutical products adopted by the International Conference on Harmonization.

     1.41 “ IND ” means an investigational new drug application (together with all subsequent submissions, supplements and amendments thereto, and any materials, documents or information referred to or relied upon thereby) filed with a Regulatory Authority in conformance

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with applicable laws and regulations, and the equivalent thereof (or other right to commence Clinical Trials), as applicable, in Jurisdictions outside the United States.

     1.42 “ Intellectual Property Rights ” means patents, copyrights, trade secrets, database rights, proprietary know-how and similar rights of any type (excluding trademarks) under the laws of any Governmental Entity, including all applications, registrations, extensions and renewals relating to any of the foregoing.

     1.43 “ Jurisdiction ” means a country within the Territory.

     1.44 “ Know-How ” means all technical information and other technical subject matter, proprietary methods, ideas, concepts, formulations, discoveries, inventions, devices, technology, trade secrets, compositions, designs, formulae, know-how, show-how, specifications, drawings, techniques, results, processes, methods, procedures and/or designs, whether or not patentable.

     1.45 “ Knowledge ” means the actual knowledge of a Party’s executive officers.

     1.46 “ Manufacturing Technology ” means all Know-How Controlled by a Party or any of its Affiliates that pertains to the manufacture, finishing, or packaging of the Product, including any analytical methods and other quality control and assurance methods (including all processes, procedures, and techniques).

     1.47 “ MAA ” means a “Marketing Authorization Application” or other application for approval to market the Product in a Jurisdiction in the EU submitted to the Governmental Entity of such Jurisdiction, including any Marketing Authorization, as amended or supplemented from time to time.

     1.48 “ Marketing Authorization ” or “ MA ” means any registrations or authorizations issued under Directive 2001/83/EC (as amended by Directive 2004/27) or local legislation deriving thereof, Council Regulation 726/04 and any amendments or replacements thereof or any national equivalents in relation to the Product.

     1.49 “ Marketing Exclusivity Right ” means a marketing or data exclusivity right conferred as a result of (a) designation as a drug for rare diseases or conditions under Sections 525 et seq. of the FDC Act, (b) an exclusive right to sell under an NDA pursuant to Section 505(j)(5)(F)(ii), (iii) and (iv) or 505(c)(3)(E)(ii), (iii) and (iv) of the FDC Act or any relevant subsequent legislation, rules or regulations, (c) the exclusive right granted by the FDA upon

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completion of pediatric studies requested by the FDA under Section 505A(a) of the FDC Act, (d) Article 10 of EU Directive 2001/83/EC and/or Article 3(3) of EU Regulation 726/2004/EC or (e) EU Regulations 141/2000/EC and/or 847/2000/E, as applicable, or any equivalent or similar rights in the Territory or Jurisdiction, successor legislations of any of the foregoing or subsequent legislation that has the effect of extending marketing or data exclusivity right to a pharmaceutical product.

     1.50 “ NDA ” means a “New Drug Application,” or other application for Regulatory Approval to market a product in the U.S. submitted to the FDA as amended or supplemented from time to time.

     1.51 “ Non-Clinical ” when used with respect to studies or data refers to safety, toxicology and other studies undertaken in non-human animals in support of Clinical Trials or otherwise required for Regulatory Approval.

     1.52 “ Net Sales ” means the gross amount invoiced by Alpharma, and/or its Affiliates and Sublicensees for sale or other commercial disposition of the Product (in its final, finished form for use by the end-user) to an unrelated Third Party in arms’-length transactions, less the following deductions which are actually incurred, allowed, accrued or specifically allocated in their normal and customary amounts: (i) credits, price adjustments (including co-pay reduction programs) or allowances for damaged products, returns or rejections of Product; (ii) trade, cash and quantity discounts, allowances and credits (including with respect to marketing programs such as coupon programs); (iii) chargeback payments, fees and rebates (or the equivalent thereof) granted to group purchasing organizations, managed health care organizations, wholesalers, pharmacy benefit management (PBM) or other similar organizations or to federal, state/provincial, local and other governments, including their agencies, or to trade customers; (iv) any invoiced freight, postage, shipping, insurance and other transportation charges; (v) reasonable provisions for allowance for uncollectible amounts; and (vi) sales, value-added, and excise taxes, tariffs and duties, and other taxes directly related to the sale (but not including taxes assessed against the income derived from such sale).

     For clarity, Net Sales shall be determined in accordance with GAAP and a sale or transfer by Alpharma to its Affiliates and/or Sublicensees for resale by such Affiliate and/or Sublicensee shall not be considered a sale for the purpose of this provision but the resale by such Affiliate

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and/or Sublicensee to a Third Party shall be a sale for such purposes. Transfer for Preclinical trials and Clinical Trials, testing or market research or promotional purposes shall not be a sale for the purpose of calculating Net Sales.

     1.53 “ Orphan Indication ” means a disease or condition which qualifies as a “rare disease or condition” under the Orphan Drug Act (21 U.S.C. 360aa et seq .) and regulations relating thereto (21 CFR Part 316), including amendments and successor laws and regulations thereto.

     1.54 “ PHN ” means persistent pain associated with post-herpetic neuralgia.

     1.55 “ Party ” means Durect or Alpharma, as the case may be, and, when used in the plural, shall mean Durect and Alpharma.

     1.56 “ Patent ” and “ Patents ” mean issued patents and patent applications, including any and all provisionals, continuations, divisionals, continuation-in-part applications, foreign counterparts, substitutions, reissues, renewals, re-examinations, supplementary protection certificates, patent term extensions, adjustments or restoration rights, registrations, confirmations, successor protective rights or subsequently issued protective rights of similar nature of any of the above.

     1.57 “ Person ” means an individual or a corporation, partnership, association, trust, or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

     1.58 “ Preclinical ” when used with respect to studies or data refers to preliminary pharmacological studies undertaken in non-human animals, but not necessarily for purposes of submission in support of Regulatory Approval.

     1.59 “ Pricing ” or “ Pricing Approval ” means any approval or authorization of a Governmental Entity, establishing a pricing scheme for Product in a Jurisdiction.

     1.60 “ Product ” means the product under development by Durect currently known as ELADUR™, consisting of a transdermal patch containing Bupivacaine as the sole active pharmaceutical ingredient for use in the Field which incorporates Product Know-How and/or is covered by Product Patent Rights, including all dosage strengths thereof, as described in Schedule 1.60 hereto. Product shall include any improvements, reformulations and line

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extensions thereof, in each case consisting of a transdermal patch containing Bupivacaine as the sole active pharmaceutical ingredient for use in the Field which incorporates Product Know-How and/or is covered by Product Patent Rights (hereinafter “ Line Extension(s) ”).

     1.61 “ Product Know-How ” means Know-How related to the Product that is (a) Controlled by Durect or any of its Affiliates during the Term of this Agreement and (b) useful for a Party, or its Affiliates and/or licensees to develop, make, have made, use, Commercialize and/or register the Product.

     1.62 “ Product Patents Rights ” means (i) those Patents in the Territory Controlled by Durect or any of its Affiliates during the Term which relate to the Product, excluding the [**] and (ii) those Patents in the Territory Controlled by Durect or any of its Affiliates during the Term which cover Product Collaboration Inventions. Schedule 1.62 set forth a list of Product Patent Rights, as such list may be updated from time to time.

     1.63 [**].

     1.64 “ Regulatory Approval ” means, with respect to one or more Jurisdictions, final approval of the Regulatory Approval Application (including, with respect to any Jurisdiction(s) other than the U.S., any Pricing Approvals and/or Reimbursement Approvals that Alpharma reasonably determines, consistent with the exercise of Commercially Reasonable Efforts, are commercially necessary prior to commercial sale of the Product in such Jurisdiction(s)) for the Product filed in such Jurisdiction(s), including an approved NDA in the U.S., Marketing Authorization in the EU, or equivalent local final approvals in Jurisdictions.

     1.65 “ Regulatory Approval Application ” means a new drug application, health registration, marketing authorization application, common technical document, regulatory submission, notice of compliance or equivalent application (excluding local and general business licenses and permits) required to be approved before commercial sale or use of the Product as a pharmaceutical or medicinal product in a Jurisdiction (including, with respect to any Jurisdiction other than the U.S., any Pricing Approvals and/or Reimbursement Approvals that Alpharma reasonably determines, consistent with the exercise of Commercially Reasonable Efforts, are commercially necessary prior to commercial sale of the Product in such Jurisdiction), together with all subsequent submissions, supplements and amendments thereto, including an NDA in the U.S., MAA in the EU or local approvals in the Jurisdictions as applicable.

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     1.66 “ Regulatory Authority ” means the FDA, EMEA and any health regulatory authorities in the Territory or Jurisdiction that hold responsibility for the regulation of and/or the Reimbursement of medicinal products intended for human use.

     1.67 “ Regulatory Documentation ” means all submissions to Regulatory Authorities and other Governmental Entities, including for Clinical Trials, tests, and biostudies, relating to the Product, including all INDs and NDAs, as well as all correspondence with Governmental Entities (registration and licenses, Pricing and Reimbursement correspondence, regulatory drug lists, advertising and promotion documents), adverse event files, complaint files, manufacturing records and inspection reports.

     1.68 “ Reimbursement ” or “ Reimbursement Approval ” means the official decision by the relevant Governmental Entity in any Jurisdiction responsible for establishing a reimbursement scheme to cover the costs related to the treatment of patients with the Product.

     1.69 “ Royalty Term ” means, with respect to the Product in each Jurisdiction of the Territory on a Jurisdiction-by-Jurisdiction basis, the period of time commencing on the First Commercial Sale of the Product in such Jurisdiction and ending on the later of: (a) fifteen (15) years from the date of the First Commercial Sale of the Product in such Jurisdiction and (b) the end of the Patent Royalty Term in such Jurisdiction.

     1.70 [**].

     1.71 “ Specifications ” means the specifications for the Product, considering the applicable regulatory requirements in the Territory, as may be amended from time to time.

     1.72 “ Sublicense ” means the sublicense by Alpharma of Commercialization rights to the Product to any Third Party in the Territory such that the Third Party has the right to record sales for its own account in lieu of Alpharma (such Third Party grantee shall be deemed a “ Sublicensee ”).

     1.73 “ Sublicense Fees ” means any upfront payments, milestone payments and other license payments (including the fair market value of debt or equity securities or other consideration) received by Alpharma or any Affiliate thereof as consideration for a Sublicense. For clarity, and notwithstanding the foregoing, Sublicense Fees shall not include any royalties based on Product sales received by Alpharma or its Affiliates, any bona fide research and

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development funding paid to Alpharma and its Affiliates for research and development activities performed by Alpharma or any of its Affiliates with respect to the Product, or the fair market value purchase price paid to Alpharma or any of its Affiliates by a Sublicensee for the purchase of any debt or equity securities of Alpharma or any of its Affiliates.

     1.74 “ Subterritory ” means each one of the following:

     1.75 “ Terminated Countries ” means those Jurisdictions in the Territory for which Alpharma’s rights to develop and Commercialize the Product have been terminated in accordance with Sections 4.2(c) or 4.3(d).

     1.76 “ Territory ” means all the countries in the world excluding Terminated Countries, if any.

     1.77 “ Third Party ” means any Person who or which is neither a Party nor an Affiliate of a Party.

     1.78 [**].

     1.79 “ Valid Claim ” means, with respect to Product in a particular Jurisdiction, any claim of a Patent that either:

          (a) with respect to a granted and unexpired Patent in such Jurisdiction, that (i) has not been held permanently revoked, unenforceable or invalid by a decision of a court or other Governmental Entity of competent jurisdiction, which decision is unappealable or unappealed within the time allowed for appeal, and (ii) has not been abandoned, disclaimed, denied or admitted to be invalid or unenforceable through reissue or disclaimer or otherwise; or

          (b) with respect to a pending Patent application, that was filed and is being prosecuted in good faith and has not been abandoned or finally disallowed without the possibility of appeal or re-filing of the application; provided, however, that such claim is not

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pending more than [**] years after the filing of the earliest patent application from which such pending claim claims priority.

     1.80 Other Definitions .

     Each of the following terms is defined in the Section set forth opposite such term below:

     “ AAA ” – Section 14.12(b)

     “ Adverse Event ” – Section 4.9

     “ Agreement ” – Preamble

     “ Alliance Manager ” –Section 2.6.

     “ Alpharma ”—Preamble

     [**]

     “ Alpharma Post-Registration Study ”—Section 5.2

     “ Alpharma Related Party ”—Section 12.1

     [**]

     “ Annual Net Sales Period ” – Section 6.2(a)

     “ Audited Party ” – Section 7.5

     “ Auditing Party ” – Section 7.5

     “ Confidential Information ” – Section 10.4

     “ CRO ” – Section 13.7(c)

     “ Damages ” – Section 12.1

     [**]

     “ Designated Executives ” – Section 2.1(d)

     “ Development Plan ” – Section 4.2

     “ Development Plan Budget ” – Section 4.2

     “ Development Program ” – Section 4.1

     “ Dispute” – Section 14.12(b)

     “ Durect ” – Preamble

     [**]

     “ Durect Development Responsibilities ” – Section 4.6

     “ Durect Related Party ” – Section 12.2

     “ Effective Date ” –Section 13.2(a)

     “ Execution Date ” – Preamble

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     “ First Major Market Jurisdiction ”—Section 4.3(b)

     “ First Refusal Notice ”—Section 3.6

     “ Force Majeure ”– Section 14.14

     “ Indemnified Party ” –Section 12.4

     “ Indemnifying Party ” –Section 12.4

     “ Joint Development Committee ” or “ JDC ”– Section 2.2(a)

     “ Joint Executive Committee ” or “ JEC ” — Section 2.1(a)

     “ Joint Invention ”—Section 9.1(d)

     “ Joint Patent Rights ”—Section 9.2(b)

     “ Know-How Royalty Term ” — Section 6.2(b)

     “ Line Extensions ”—Section 1.60

     “ Major Market Jurisdiction ”—Section 4.3

     “ Negotiation Period ”—Section 3.6

     “ One-Time Payment ”—Section 6.1

     “ Patent Litigation Losses ”—Section 9.6(c)

     “ Patent Royalty Term ” —Section 6.2(a)

     “ Patent Term Extensions ” —Section 9.7

     “ Product Collaboration Inventions ”—Section 9.1(b)

     “ Product Material ”—Section 13.7(b)

     “ Product Trademarks ”—Section 3.5(a)

     “ Resolution Period ” – Section 2.1(d)

     “ Royalties ” –Section 6.2

     “ Rules ” – Section 14.12(b)

     “ Second Major Market Jurisdiction ”—Section 4.3(b)

     “ Serious Adverse Drug Experience ”—Section 13.3(b)

     “ Sublicensee ” – Section 1.72

     “ Technology Transfer Plan ”—Section 8.2

     “ Term ”—Section 13.1.

     “ Third Party License Fees ”—Section 9.6(e)

     1.81 Interpretation

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          (a) Whenever any provision of this Agreement uses the term “including” (or “includes”), such term shall be deemed to mean “including without limitation” and “including but not limited to” (or “includes without limitations” and “includes but is not limited to”) regardless of whether the words “without limitation” or “but not limited to” actually follow the term “including” (or “includes”);

          (b) “Herein”, “hereby”, “hereunder”, “hereof” and other equivalent words shall refer to this Agreement in its entirety and not solely to the particular portion of this Agreement in which any such word is used;

          (c) All definitions set forth herein shall be deemed applicable whether the words defined are used herein in the singular or the plural;

          (d) Wherever used herein, any pronoun or pronouns shall be deemed to include both the singular and plural and to cover all genders;

          (e) The recitals set forth at the start of this Agreement, along with the Exhibits and Schedules to this Agreement, and the terms and conditions incorporated in such recital, Exhibits and Schedules shall be deemed integral parts of this Agreement and all references in this Agreement to this Agreement shall encompass such recitals, Exhibits and Schedules and the terms and conditions incorporated in such recitals, Exhibits and Schedules, provided , that in the event of any conflict between the terms and conditions of this Agreement and any terms and conditions set forth in the Exhibits and Schedules, the terms of this Agreement shall control;

          (f) In the event of any conflict between the terms and conditions of this Agreement and any terms and conditions that may be set forth on any order, invoice, verbal agreement or otherwise, the terms and conditions of this Agreement shall govern;

          (g) The Agreement shall be construed as if both Parties drafted it jointly, and shall not be construed against either Party as principal drafter;

          (h) Unless otherwise provided, all references to Sections, Schedules and Exhibits in this Agreement are to Sections, Schedules and Exhibits of and to this Agreement;

          (i) All references to days, months, quarters or years are references to calendar days, calendar months, calendar quarters or calendar years unless otherwise expressly

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provided; references to a “business day” herein shall mean a day when both Alpharma and Durect corporate headquarters are open during regular business hours for the conduct of normal business operations.

          (j) Any reference to any federal, national, state, local or foreign statute or law shall be deemed to also refer to all rules and regulations promulgated thereunder, unless the context requires otherwise;

          (k) Any requirements of notice or notification by one Party to another shall be construed to mean written notice in accordance with Section 14.5; and

          (l) Wherever used, the word “shall” and the word “will” are each understood to be imperative or mandatory in nature and are interchangeable with one another.

2. GOVERNANCE.

     2.1 Joint Executive Committee .

          (a) Members; Officers . The Parties hereby establish a joint executive committee (the “ Joint Executive Committee ” or “ JEC ”), which shall consist of up to [**] members with an equal number of members nominated by each of Durect and Alpharma. The initial members of the JEC are set forth on Schedule 2.1, as may be amended by the designating Party from time to time. Representatives of the JEC shall be employees of the respective Party or its Affiliates. Each of Durect and Alpharma may replace any or all of its representatives on the JEC at any time upon written notice to the other Party. Any member of the JEC may designate a substitute with due authority to temporarily attend and perform the functions of that member at any meeting of the JEC. Durect and Alpharma each may, in its discretion, invite non-member representatives that are employees of such Party (or such Party’s Affiliates) and, with the other Party’s consent, consultants to attend meetings of the JEC. The JEC shall be chaired by a representative of Alpharma (or its Affiliates), as such representative may be changed by Alpharma at any time. The chairperson shall appoint a secretary of the JEC, and such secretary shall serve for such term as designated by the chairperson. The initial chairperson is designated on Schedule 2.1.

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          (b) Responsibilities . The JEC shall perform the following functions:

          (i) manage and oversee the interactions and performance of the Parties pursuant to the terms of this Agreement (including the development and Regulatory Approval process of the Product in the Territory);

          (ii) review and approve any modifications or amendments to the Development Plan and Development Plan Budget;

          (iii) review and advise Alpharma regarding final label indications for the Product in Subterritory A and Major Market Jurisdictions;

          (iv) at each meeting, as applicable, review the Product development status and expenditures with the activities, timelines and budget set forth in the Development Plan as well as discuss any deviations from the Development Plan;

          (v) recommend further development activities after Regulatory Approval of the Product in each Jurisdiction, including Phase 4 studies;

          (vi) review and evaluate the progress of the JDC;

          (vii) in accordance with the procedures established in Section 2.1(d), resolve disputes, disagreements and deadlocks unresolved by the JDC;

          (viii) review and advise Alpharma regarding Alpharma’s publication strategy for scientific publications relating to the Product other than medical education and marketing publications;

          (ix) consider and approve the development of any Line Extensions to the Product in the Territory;

          (x) establish trademark usage and quality standards in accordance with Section 9.8; and

          (xi) have such other responsibilities as may be assigned to the JEC pursuant to this Agreement or as may be mutually agreed upon by the Parties from time to time.

          (c) Meetings . The JEC shall meet in person, by video teleconference or by telephone initially at least [**] prior to the first Regulatory Approval of a Product in

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Subterritory A and thereafter at least [**], and more frequently as Durect and Alpharma deem appropriate or as required to resolve disputes, disagreements or deadlocks in the JDC, on such dates, and at such places and times, as the Parties shall agree. From time to time, each Party may request a JEC meeting upon notice to the other Party specifying the subject matters to be discussed, and the Parties shall convene such JEC meeting within [**] of the date of the notice. Meetings of the JEC that are held in person shall alternate between the offices of Durect and Alpharma (or the offices of their Affiliates designated by such Parties), or such other place as the Parties may agree. The members of the JEC also may convene or be polled or consulted from time to time by means of telecommunications, video conferences, electronic mail or correspondence, as deemed necessary or appropriate.

          (d) Decision-making . The JEC may make decisions with respect to any subject matter that is subject to the JEC’s decision-making authority and functions as set forth in Section 2.1(b). All decisions of the JEC shall be made by unanimous vote or written consent, with Durect and Alpharma each having, collectively, one vote in all decisions. The JEC shall use good faith and reasonable efforts to resolve the matters within its roles and functions or otherwise referred to it. With respect to all matters that are subject to the JEC’s decision-making authority, if the JEC cannot reach consensus within [**] after it has met and attempted to reach such consensus, including discussions between the Alliance Managers, the matter shall be referred on the [**] to the designated executive officers (“ Designated Executives ”) of Alpharma and Durect who shall meet as soon as practicable, but no later than [**] after such referral, to attempt in good faith to resolve the dispute. If the dispute related to the matter is not resolved by the Designated Executives by mutual agreement within [**] after a meeting to discuss the dispute (such [**] period after the meeting of the Designated Executives shall be referred to as the “ Resolution Period ”), [**].

     2.2 Joint Development Committee .

          (a) Members; Officers . The Parties hereby establish a joint development committee (the “ Joint Development Committee ” or “ JDC ”), which shall consist of up to [**] members with an equal number of members nominated by each of Durect and Alpharma, one of whom shall be designated by Alpharma as chairman. The initial representatives on the JDC are set forth on Schedule 2.2, as may be amended by the designating Party from time to time. Each

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of Durect and Alpharma may replace any or all of its representatives on the JDC at any time upon notice to the other Party. Such representatives shall be employees of each such Party or its Affiliates, and those representatives of each such Party shall, individually or collectively, have expertise in pharmaceutical drug development, regulatory matters, manufacturing, Clinical Trials, Non-Clinical studies and/or other expertise to the extent relevant. Any member of the JDC may designate a substitute with due authority to temporarily attend and perform the functions of that member at any meeting of the JDC. Durect and Alpharma each may invite non-member representatives that are employees of Alpharma or Durect (or their Affiliates) or external consultants of a Party to attend meetings of the JDC, provided that such external consultants have signed customary confidentiality agreements. The secretary of the JDC shall initially be designated by Alpharma and thereafter alternate between a representative of Durect and a representative of Alpharma.

          (b) Responsibilities . The JDC shall perform the following functions:

          (i) review and monitor the progress of the Development Program in accordance with the Development Plan;

          (ii) monitor the progress of regulatory filings and submissions for the Product in the Territory;

          (iii) facilitate the exchange of information and coordinate between the Parties as necessary or useful for development of the Product in the Territory;

          (iv) review a comparison of actual development costs of the Development Program to the Development Plan Budget for the year-to-date on a quarterly basis, such comparison to be as current as practicable as of the date of the meeting at which the review occurs, which comparison will be used as a basis for evaluating proposed changes to the Development Plan and the Development Plan Budget; and

          (v) have such other responsibilities as may be assigned to the JDC pursuant to this Agreement or as may be mutually agreed upon by the Parties from time to time.

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          (c) Meetings . The JDC shall meet in person, by video teleconference or by telephone initially at least [**], and more or less frequently as Durect and Alpharma deem appropriate or as reasonably requested by either such Party, on such dates, and at such places and times, as such Parties shall agree. From time to time, each Party may request a JDC meeting upon written notice to the other Party specifying the subject matters to be discussed, and the Parties shall convene such JDC meeting within [**] of the date of the notice. Meetings of the JDC that are held in person shall alternate between the offices of Durect and Alpharma, or such other place as such Parties may agree. The members of the JDC also may convene or be polled or consulted from time to time by means of telecommunications, video conferences, electronic mail or correspondence, as deemed necessary or appropriate.

          (d) Decision-making . The JDC may make decisions with respect to any subject matter that is subject to the JDC’s decision-making authority and functions as set forth in Section 2.2(b). All decisions of the JDC shall be made by unanimous vote or written consent, with Durect and Alpharma each having, collectively, one vote in all decisions. If, with respect to any matter that is subject to the JDC’s decision-making authority, after all reasonable efforts to reach consensus have been exhausted, including discussions between the Alliance Managers, the JDC cannot reach consensus within [**] after it has first met and attempted to reach such consensus, the matter shall be referred on the [**] to the JEC for resolution. For all purposes under this Agreement, any decision made pursuant to this Section 2.2(d) shall be deemed to be the decision of the JDC. [**].

     2.3 Minutes of JEC and JDC Meetings .

          (a) Definitive minutes of all JEC and JDC meetings shall be finalized no later than [**] after the meeting to which the minutes pertain, as follows:

          (i) Within [**] after a JEC or a JDC meeting, the secretary of such JEC or JDC shall prepare and distribute to all members of such JEC or JDC draft minutes of the meeting. Such minutes shall provide a list of any actions, decisions or determinations approved by such JEC or JDC and a list of any issues yet to be resolved (listing responsible persons and target completion dates), either within such JEC or JDC, or through the relevant escalation process.

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          (ii) The secretary of such JEC or JDC shall have [**] after distribution of the draft minutes to discuss each JEC or JDC member’s comments and finalize the minutes. The secretary and chairperson(s) of such JEC and JDC shall each sign and date the final minutes. The signature of such chairperson(s) and secretary upon the final minutes shall indicate each Party’s assent to the minutes.

          (b) If at any time during the preparation and finalization of JEC or JDC meeting minutes, the JEC and JDC members do not agree on any issue with respect to the minutes, such issue shall be resolved as provided in Section 2.1(d) or 2.2(d), as the case may be. The decision resulting from the foregoing process shall be recorded by the secretary in amended finalized minutes for said meeting. All other issues in the minutes that are not subject to the foregoing process shall be finalized within the [**] period as provided in Section 2.3(a).

     2.4 Duration of Committees . The JEC shall exist until the termination of this Agreement, unless [**], and the Parties shall thereafter agree to alternative ways to cover the responsibilities and duties of the JEC. The JDC shall exist until [**], and the Parties shall thereafter discuss alternative ways to cover the responsibilities and duties of the JDC.

     2.5 Expenses . Each Party shall be responsible for all travel and related Costs for its members and other representatives to attend meetings of, and otherwise participate on, a Committee.

     2.6 Alliance Managers . Each of Durect and Alpharma shall appoint one employee representative who possesses a general understanding of Clinical, regulatory, manufacturing and marketing issues to act as its respective alliance manager for this relationship (each, an “ Alliance Manager ”). The initial Alliance Managers are set forth on Schedule 2.6, as amended by the designating Party from time to time. Each of Durect and Alpharma may replace its respective Alliance Manager at any time upon written notice to the other. Any Alliance Manager may designate a substitute with due authority to temporarily perform the functions of that Alliance Manager. Each Alliance Manager shall be charged with creating and maintaining a collaborative work environment within and among the Committees. Each Alliance Manager will also be responsible for:

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          (a) providing a single point of communication for seeking consensus both internally within the respective Party’s organizations and between the Parties regarding business, contractual and strategic issues;

          (b) identifying and raising cross-Party and/or cross-functions disputes to the appropriate Committee in a timely manner; and

          (c) planning and coordinating internal and external communications.

     The Alliance Managers shall be entitled to attend meetings of any of the Committees, but shall not have, or be deemed to have, any rights or responsibilities of a member of any Committee. Each Alliance Manager may bring any matter to the attention of any Committee where such Alliance Manager reasonably believes that such matter requires such attention.

     2.7 Scope of Committees . Alpharma and Durect have chartered the Committees with a belief that vigorous interaction and cooperation between the Parties are essential for the success of the Product. For the JEC and JDC, each Party shall use all reasonable efforts to reach consensus decisions at the JEC or JDC level respectively. Nothing in this Section 2, and no decision made by the JEC or JDC under Sections 2.1(d) or 2.2 (d) shall be deemed to modify or supersede any express term or condition set forth in this Agreement, nor any decision or decision-making authority expressly provided to a Party in this Agreement. For clarity, no Committee shall have the authority to make any determination that any Party is in breach of this Agreement.

3. GRANT OF RIGHTS.

     3.1 Rights Granted to Alpharma . On the terms and subject to the conditions of this Agreement, Durect hereby grants to Alpharma:

          (a) the exclusive right and license to make, have made, use, offer for sale, sell and import the Product in the Territory, including the right to record sales for its own account;

          (b) in each case, solely for use in the Field and Territory and in connection with Alpharma’s development and Commercialization of the Product and to otherwise exercise Alpharma’s rights and perform its obligations under this Agreement:

          (i) an exclusive license under the Product Patents Rights and Product Know-How;

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          (ii) [**];

          (iii) [**]; and

          (iv) subject to the terms of the [**] Agreement, an exclusive sublicense under Durect’s license to the [**] Intellectual Property; and

          (c) an exclusive license and right of cross-reference to all Development Data Controlled by Durect in existence as of the Effective Date solely to exercise its rights and licenses under this Agreement with respect to the Product.

     3.2 Sublicense Rights . Alpharma shall have the right, [**] to delegate rights and obligations hereunder to an Affiliate and to appoint Affiliates to Commercialize the Product in the Territory. Furthermore, Alpharma shall have the right to appoint any Third Party designee(s) to develop, manufacture and Commercialize the Product in the Territory alone or in combination with Alpharma or its Affiliates and/or to sublicense the rights granted to it under Section 3.1; provided that in the event of any sublicense or delegation of rights by Alpharma hereunder, such sublicense or delegation shall be subject to the terms and conditions of this Agreement that, by their terms, are applicable to such sublicense or delegation, and the sublicense or delegation by Alpharma hereunder shall not relieve Alpharma of its obligations under the Agreement.

     3.3 Section 365(n) of the Bankruptcy Code . All rights and licenses granted under or pursuant to this Agreement, including amendments hereto, by each Party to the other Party are, for all purposes of 11 U.S.C. Section 365(n), licenses of rights to intellectual property as defined in Title 11. Each Party may elect to retain and may fully exercise all of its rights and elections under 11 U.S.C. Section 365(n).

    3.4 Exclusivity . (a) (a) During the Term of this Agreement, Durect and its Affiliates shall not develop or manufacture (except in performance of this Agreement) nor Commercialize, and shall not grant any rights or licenses to any Third Party to develop or manufacture (except in performance of this Agreement) or Commercialize the Product in the Territory.

     (b) During the Term of this Agreement, neither Party nor its Affiliates shall directly or indirectly develop or Commercialize a Competitive Product in the Territory, nor sponsor, license or contract with a Third Party to do any of the foregoing acts. Notwithstanding the foregoing, however, but subject to Sections 3.1 and 3.2, however, in the

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event of a Change of Control of a Party, the restrictions contained in this Section 3.4(b) shall[**]. In the event that a Party or one of its Affiliates obtains “control” (as defined in Section 1.2) [**] such Party shall, [**] such control.

          3.5 Trademarks; Logos .

          (a) Product Trademarks . Alpharma shall have the right to select the Product name and all trademarks used in connection with the marketing, promotion and Commercialization of the Product including special promotional or advertising taglines used in connection with the marketing of the Product, in each case in the Territory (all such trademarks specific to the Product, with exception of the Durect Trademark, including all goodwill associated therewith, and all applications, registrations, extensions and renewals relating thereto, shall be referred to as “ Product Trademarks ”). During the Term of the Agreement, Alpharma shall be the exclusive owner of the Product Trademarks and all goodwill associated therewith, and shall use Commercially Reasonable Efforts to register and maintain, at its Cost, such Product Trademarks as shall be used for the Commercialization of the Product in the Territory.

          (b) License to Durect Trademark . Subject to the provisions of this Agreement and for the Term hereof, Durect hereby grants to Alpharma an exclusive license to use the Durect Trademark in the Territory solely in connection with the Commercialization of Product in the Territory. Alpharma agrees that all use of the Durect Trademark by Alpharma shall inure to the benefit of and be on behalf of Durect. Alpharma agrees that it will not challenge the title or ownership of Durect in the Durect Trademark, or attack or contest the validity of such trademark.

          (c) Durect Rights . To the extent permitted by Applicable Laws, at Durect’s election, the labels and packaging of all Product to be marketed, distributed or sold in any Jurisdiction shall include text identifying Durect as the licensor of the Product and a Durect trademark (other than ELADUR™) selected by Durect to be placed in a size and location determined in the reasonable, good faith discretion of Alpharma, provided that such mark: (i) is used in a consistent and noticeable manner sufficient to constitute trademark usage under Applicable Law, (ii) is clearly identified as a trademark (i.e., through the use of a “ ^® ”, “™” or other appropriate identifier) and (iii) is not used as combination marks with other marks or

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trademarks. Furthermore, Product labels and packaging shall bear appropriate patent markings and notices as may be applicable.

          3.6 Right of [**] Regarding [**]. Commencing at any time upon [**] establishment of a development program for a [**], if any, if [**] desires to seek a Third Party to collaborate in the development and/or Commercialization of such [**] or if [**] elects to Commercialize such [**], it shall provide written notice thereof (“ First Refusal Notice ”) to [**] and provide information reasonably requested by [**] regarding such [**]. Upon receipt of a First Refusal Notice, [**] shall have [**] to (i) notify [**] in writing if it desires to participate with [**] in the further development and/or Commercialization of the [**] or (ii) decline to bid. If [**] does not respond in writing to the First Refusal Notice or notifies [**] that it declines to bid within such [**] period, then it shall no longer have any rights with respect to the [**]. If [**] provides [**] with timely notice of its interest in participating in the development and Commercialization of such [**], then the Parties shall attempt in good faith to negotiate the terms of an agreement for [**] to participate with [**] in the development or Commercialization of the [**] for a period of [**] (which may be extended upon written agreement of the Parties) (“ Negotiation Period ”). If, despite such good faith negotiations, [**] are unable to enter into a definitive agreement during such Negotiation Period, then [**] will thereafter be free to develop or Commercialize such [**] itself or enter into agreement(s) with Third Parties for the development and Commercialization of such [**]; provided that if thereafter [**] intends to license Commercialization rights to such [**] to a Third Party more than [**] after the end of the last Negotiation Period with respect to such [**] or intends to license Commercialization rights to such [**] to a Third Party on terms and conditions more favorable to the Third Party when all such terms and conditions are taken in the aggregate than those last offered to [**] shall first re-offer such opportunity to [**] by delivering a new First Refusal Notice to [**] and provide to [**] any updated information reasonably requested by [**] regarding such [**], in which case the second, third, fourth and fifth sentence of this Section 3.6 shall apply to such new First Refusal Notice. Notwithstanding anything herein to the contrary in this Section 3.6, however: (a) [**] shall have no further rights to any [**] if the Parties have not entered into a definitive agreement after [**] has been offered such [**] in accordance with the terms hereof and after the elapse of [**] full Negotiation Periods, provided the last offer was made to [**] after such [**] had completed [**].

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4. DEVELOPMENT AND REGULATORY.

     4.1 Development Generally . Commencing upon the Effective Date and subject to Section 4 and other terms of this Agreement, as between Durect and Alpharma, Alpharma shall be responsible, at its sole Cost, for development of and procuring Regulatory Approval for the Product in the Territory (all such activities the “ Development Program ”).

     4.2 U.S. Development .

          (a) Development Plan . As of the Effective Date, the Parties have agreed upon a development plan (the “ Development Plan ”) covering the activities necessary for developing the Product through Regulatory Approval in Subterritory A, including a budget (the “ Development Plan Budget ”), activities related to CMC development, Clinical and Non-Clinical development, Regulatory Approval strategy, capital expenses that are specific to the Product, activities associated with manufacturing of Product for use in Clinical Trials, process development, scale-up for providing clinical supplies, and technology transfer (including process development, scale up and validation activities) as needed to establish commercial scale manufacturing of the Product for Subterritory A, and other key elements reasonably necessary for the Parties to fulfill their development responsibilities to each other under the terms of the Agreement. After the Effective Date, Alpharma shall thereafter update the Development Plan in accordance with Alpharma’s normal planning cycle, but no less frequently than [**] a year, and provide a copy thereof to the JEC for review and approval. In the event that the JEC does not unanimously approve any such update, then such matter shall be resolved in accordance with Section 2.1(d).

          (b) Trials and Regulatory . Pursuant to the Development Plan and subject to this Section 4 and other terms of this Agreement, Alpharma shall use Commercially Reasonable Efforts to conduct such Preclinical and Non-Clinical trials and Clinical Trials, at its own Cost, as necessary to seek and maintain Regulatory Approval of the Product in Subterritory A. Alpharma shall also use Commercially Reasonable Efforts to obtain Regulatory Approvals for the Product in Subterritory A, including compiling, submitting and prosecuting all necessary data, documents and Regulatory Approval Applications (including labeling), in a format acceptable to the applicable Regulatory Authorities in Subterritory A. If and when any Regulatory Approval is secured anywhere in Subterritory A, Alpharma shall thereafter use

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Commercially Reasonable Efforts to maintain such Regulatory Approval and pay all user fees and other costs required to maintain such Regulatory Approval.

          (c) Development Diligence . Alpharma shall use Commercially Reasonable Efforts to develop the Product through Regulatory Approval in Subterritory A at its sole Cost. Without limiting the foregoing, Alpharma will use its Commercially Reasonable Efforts to perform the activities and to meet the timeline in the Development Plan. If, at any time, Alpharma materially defaults on any of its development obligations with respect to Subterritory A set forth in Section 4 and fails to cure such default within [**] after receipt of written notice of termination from Durect, Durect shall have the right to terminate Alpharma’s rights with respect to Subterritory A; provided , however , if the failure is not reasonably capable of being cured within the [**] cure period by Alpharma and Alpharma is making a good faith effort to cure such failure, Durect may not terminate Alpharma’s rights in Subterritory A; provided further , however , that Durect may terminate Alpharma’s rights in Subterritory A if such failure is not cured within [**] of Durect’s original notice of termination. In the event Durect terminates Alpharma’s rights with respect to Subterritory A hereunder: (i) Subterritory A shall thereafter be deemed a Terminated Country and no longer be included in the Territory, and (ii) Durect shall have the rights set forth in Section 13.7 with respect to Subterritory A. The foregoing termination rights of Durect shall be Durect’s sole and exclusive remedy and Alpharma’s sole and exclusive liability for any failure by Alpharma to develop and Commercialize the Product in Subterritory A.

          4.3 Development and Commercialization Diligence Outside the U.S.

          (a) Not later than [**] after the Effective Date, the Parties will jointly begin an assessment of the market opportunity for the Product for Subterritories B, C and D and develop criteria for determining which such Jurisdictions present significant commercial potential for the Product and are subject to the obligations of this Section 4.3. Not later than [**] after the Effective Date, the Parties will complete such assessment and the development of such criteria, and identify each Jurisdiction outside of the U.S. in which the development and Commercialization of Products by Alpharma shall be subject to the obligations of this Section 4.3 (each such country, a “ Major Market Jurisdiction ”). Thereafter, the Parties shall review such designations annually and determine whether previously designated countries should

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remain or cease to remain Major Market Jurisdictions and whether additional countries should be designated as Major Market Jurisdictions. If the Parties do not agree upon the designation of a country as a Major Market Jurisdiction or whether a country should remain or cease to remain a Major Market Jurisdiction, the Parties shall submit the matter to the JEC for resolution in accordance with Section 2.1(d). Notwithstanding the foregoing provisions of this Section 4.3 relating to the assessment, designation and review of Major Market Jurisdiction, the Jurisdictions listed on Schedule 4.3 are hereby categorized as Major Market Jurisdictions and shall not be subject to redesignation as non-Major Market Jurisdictions. Each Party shall bear its own Costs incurred in assessing, designating and reviewing Major Market Jurisdictions in accordance with this Section 4.3(a).

          (b) In at least one Major Market Jurisdiction (“ First Major Market Jurisdiction ”), Alpharma will either (i) initiate local Clinical Trials for a Product within [**] following U.S. Regulatory Approval or (ii) if local Clinical Trials are not required for Regulatory Approval in the First Major Market Jurisdiction, file an application for Regulatory Approval within [**] following U.S. Regulatory Approval. In at least one additional Major Market Jurisdiction (“ Second Major Market Jurisdiction ”), Alpharma will either (A) initiate local Clinical Trials for a Product within [**] following U.S. Regulatory Approval or (B) if local Clinical Trials are not required for Regulatory Approval in the Second Major Market Jurisdiction, file an application for Regulatory Approval within [**] following U.S. Regulatory Approval. If Subterritory C is not the First Major Market Jurisdiction or the Second Major Market Jurisdiction, then in addition to the foregoing requirements regarding the First Major Market Jurisdiction and the Second Major Market Jurisdiction, Alpharma will either (A) initiate local Clinical Trials for a Product in Subterritory C within [**] following U.S. Regulatory Approval or (B) if local Clinical Trials are not required for Regulatory Approval in Subterritory C, file an application for Regulatory Approval within [**] following U.S. Regulatory Approval. In all other Major Market Jurisdictions, Alpharma will use Commercially Reasonable Efforts to either (I) initiate local Clinical Trials for a Product within [**] following U.S. Regulatory Approval or (II) if local Clinical Trials are not required for Regulatory Approval in any such other Major Market Jurisdiction, file an application for Regulatory Approval within [**] following U.S. Regulatory Approval. For the avoidance of doubt, the filing of a Regulatory Approval Application with EMEA shall constitute filing of a

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Regulatory Approval Application in all Major Market Jurisdictions that are subject to EMEA’s regulatory authority, and initiating Clinical Trials for the purpose of supporting the filing of a Regulatory Approval Application with EMEA shall constitute initiating local Clinical Trials with respect to all Major Market Jurisdictions that are subject to EMEA’s regulatory authority.

          (c) After satisfying the requirements of Section 4.3 with respect to a Major Market Jurisdiction, Alpharma shall use Commercially Reasonable Efforts to obtain Regulatory Approval for and to Commercialize the Product in such Major Market Jurisdiction. [**].

          (d) If Alpharma fails to satisfy its obligations under this Section 4.3 with respect to a Major Market Jurisdiction, Durect shall thereafter have the right to terminate Alpharma’s rights in such Major Market Jurisdiction if Alpharma has not cured such failure within the [**] period following written notice of termination by Durect; provided , however , if the failure is not reasonably capable of being cured within the [**] cure period by Alpharma and Alpharma is making a good faith effort to cure such failure, Durect may not terminate Alpharma’s rights in such Major Market Jurisdiction; provided further , however , that Durect may terminate Alpharma’s rights in such Major Market Jurisdiction if such failure is not cured within [**] of Durect’s original notice of termination. Notwithstanding the foregoing, Alpharma shall be deemed to have satisfied its obligations under this Section 4.3 and shall retain rights to all Jurisdictions in the EU provided that Alpharma has satisfied its development and Commercialization obligations under this Section 4.3 in at least [**] of the Major Market Jurisdictions which are part of the EU. The Major Market Jurisdictions with respect to which Durect has terminated Alpharma’s rights hereunder will thereafter be deemed Terminated Countries and no longer be included in the Territory, and Durect shall have the rights set forth in Section 13.7 in such Terminated Countries. The foregoing termination rights of Durect shall be Durect’s sole and exclusive remedy and Alpharma’s sole and exclusive liability for any failure by Alpharma to develop and Commercialize the Product in any Major Market Jurisdiction.

          (e) Except as otherwise set forth in Section 4.3(a), if any dispute arises between the Parties regarding the matters set forth in Section 4.3, then such matter shall be submitted for resolution in accordance with Section 14.12.

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     4.4 Other Development Matters .

          (a) Prior to the first Regulatory Approval of the Product, Alpharma will provide to Durect draft forms of protocols for all studies required for seeking a label indication in Subterritory A and the Major Market Jurisdictions. Alpharma shall consider in good faith all comments provided by Durect in writing within the [**] period following Durect’s receipt of such protocols; provided that Alpharma shall have the sole discretion and authority to make all decisions with respect to final protocols and all other matters relating to development of the Product. Alpharma shall promptly provide Durect with a copy of all final reports and final protocols from Preclinical and Non-Clinical trials and Clinical Trials in Subterritory A and the Major Market Jurisdictions.

          (b) Promptly following, and in any event not later than [**] following, the Effective Date, Durect shall (i) transfer and assign to Alpharma ownership of all INDs held by Durect for the Product in the Territory, if any, including copies of any Regulatory Documentation regarding the Product in the Territory and (ii) transfer and assign to Alpharma, or to any Affiliate that Alpharma may specify, ownership of the Orphan Drug Designation received by Durect with respect to the Bupivacaine for PHN as described in Schedule 4.4 hereto and all other regulatory exclusivity rights, if any, held by Durect and its Affiliates with respect to the Product. In addition, promptly following the Effective Date, Durect shall transfer to Alpharma copies of all Development Data in existence as of the Effective Date. After such transfers and assignments by Durect, Alpharma shall be responsible for all Product-related reporting and other obligations to any Regulatory Authorities.

          (c) During the period that the JDC remains in existence, all significant Product-related regulatory decisions within the Subterritory A and the Major Market Jurisdictions shall be subject to review of the JDC. Durect shall have the right to review and comment upon material portions of regulatory filings and correspondence regarding major or material issues proposed to be made or sent with respect to the Product in Subterritory A and the Major Market Jurisdictions prior to their submission to Regulatory Authorities, provided that (i) such review opportunity may be provided by electronic access to drafts of such documents, (ii) the Alliance Managers will (with oversight from the JDC) coordinate the scope, timing and form of such document access in a manner that seeks to minimize administrative burden and (iii) for

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any comments from Durect to be considered, the comments shall be provided promptly and reasonably in advance of any deadlines or target dates for submission. Alpharma shall promptly provide to Durect copies of or electronic access to material portions of all such filings and correspondence from or to such Regulatory Authorities concerning the Product in Subterritory A and the Major Market Jurisdictions, provided that the Alliance Managers will (with oversight from the JDC) coordinate the scope, timing and form of all such document access in a manner that seeks to minimize administrative burden. With regard to the NDA in Subterritory A, Durect shall, at Alpharma’s request, assist Alpharma in creating and finalizing Modules 2 and 3. In addition, Durect shall, at Alpharma’s request, provide input for the creation and review of the Integrated Summary of Safety and the Integrated Summary of Efficacy. Upon request by Durect, other NDA sections or Modules will be available for review. At the request of Alpharma, Durect shall participate, at Alpharma’s Cost, in any conference or meeting with Regulatory Authorities with respect to the Product in Subterritory A and the Major Market Jurisdictions. Alpharma shall notify Durect in writing of its receipt of Regulatory Approval to market the Product in any Jurisdiction within [**] after receipt of any such approval.

     4.5 Line Extensions . In the event that Alpharma desires to develop Line Extensions to the Product which Alpharma deems beneficial to the Commercialization of the Product in the Territory, Alpharma shall deliver to the JEC a written proposal summarizing the proposed Line Extension together with a plan summarizing the activities necessary to develop the Line Extension through Regulatory Approval in the Territory similar to the approach outlined in the Development Plan. Upon receipt of such documentation, the JEC shall meet to discuss and consider such proposed Line Extension and approve any plans and budgets for any Durect Development Responsibilities. The Line Extension shall be encompassed in the definition of “Product” under the Agreement, and subject to all the terms and conditions applicable thereto under this Agreement.

     4.6 Durect Development Responsibilities .

     (a) Notwithstanding anything herein to the contrary, the following activities with respect to Product development are allocated to Durect (collectively “ Durect Development Responsibilities ”): (i) unless otherwise agreed upon by the Parties, all

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development activities through completion of Phase 2 [**]; (ii) Dosage Form Development; (iii) manufacturing and analytical method development, validation, stability and other CMC-related activities; (iv) management of any and all technology transfer, scale-up to commercial batch size and validation activities that may be required to enable any Person chosen by Alpharma to manufacture commercial supplies of the Product; (v) generation of necessary documents related to the Durect De