DISTRIBUTION AND LICENSE AGREEMENT

Exhibit 10.3

NOTE: C ERTAIN C ONFIDENTIAL I NFORMATION HAS BEEN OMITTED FROM THIS DOCUMENT AND REPLACED BY “[*]”. A COMPLETE COPY OF THIS DOCUMENT INCLUDING THE C ONFIDENTIAL I NFORMATION HAS BEEN FILED SEPARATELY WITH THE S ECURITIES AND E XCHANGE C OMMISSION .

DISTRIBUTION AND LICENSE AGREEMENT

BY AND BETWEEN

NPS ALLELIX CORP.

NPS PHARMACEUTICALS, INC.

AND

NYCOMED GmbH

DATED

SEPTEMBER 24, 2007

Table of Contents

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DISTRIBUTION AND LICENSE AGREEMENT

This Distribution and License Agreement (this “Agreement” ) is made and effective as of the 24th day of September, 2007 (the “Effective Date” ) by and between NPS Allelix Corp., a Canadian corporation ( “NPS Allelix” ), having offices at MaRS Centre, 101 College Street, South Tower, Suite 800, Toronto, ON MSG 1L8 Canada, NPS Pharmaceuticals, Inc., a Delaware corporation ( “NPS US” , and, together with NPS Allelix, collectively, “NPS” ), having offices at Morris Corporate Center 1, 4th Floor, Building B, 300 Interpace Parkway, Parsippany, NJ 07054, and Nycomed GmbH, a German corporation with company registration number Hrb Nr 701257 ( “Nycomed” ), having offices at Byk Gulden Str. 2, 78467 Konstanz.

INTRODUCTION

1. NPS Controls certain patents, know-how and other rights related to the Product;

2. Nycomed has considerable knowledge and experience in developing, promoting and marketing pharmaceutical products throughout the Territory;

3. NPS and Nycomed believe that a distribution and license arrangement regarding the Product in the Territory would be desirable; and

4. On the terms and subject to the conditions set forth herein, NPS and Nycomed therefore desire to provide for the development, manufacture and commercialization of Product as described herein.

NOW, THEREFORE, for and in consideration of the mutual covenants contained herein, NPS and Nycomed, intending to be legally bound, hereby agree as follows:

ARTICLE 1

DEFINITIONS

As used in this Agreement, the following terms, whether used in the singular or plural, shall have the meanings set forth below:

1.1 “ Additional Indication ” shall mean any indication for Product other than the Primary Indication.

1.2 “ Affiliate ” shall mean with respect to any Party, any Person controlling, controlled by or under common control with such Party. For purposes of this Section 1.2, “control” shall mean (a) in the case of a Person that is a corporate entity, direct or indirect ownership of fifty percent (50%) or more of the stock or shares having the right to vote (or such lesser percentage which is the maximum allowed to be owned by a foreign corporation in a particular jurisdiction) for the election of directors of such Person and (b) in the case of a Person that is an entity, but is not a corporate entity, the possession, directly or indirectly, of the power to direct, or cause the direction of, the management or policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

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1.3 “ API ” shall mean the drug substance/active pharmaceutical ingredient of the Compound.

1.4 “ Calendar Quarter ” shall mean for each Calendar Year, each of the three (3) month periods ending March 31, June 30, September 30 and December 31; provided, however, that the first calendar quarter for the first Calendar Year shall extend from the Effective Date to the end of the first complete calendar quarter thereafter.

1.5 “ Calendar Year ” shall mean, for the first calendar year, the period commencing on the Effective Date and ending on December 31 of the calendar year during which the Effective Date occurs, and each successive period beginning on January 1 and ending twelve (12) consecutive calendar months later on December 31.

1.6 “ CIGIM ” shall mean chemotherapy-induced gastrointestinal mucositis.

1.7 “ Claims ” shall mean all charges, complaints, actions, suits, proceedings, hearings, investigations, claims and demands.

1.8 “ CMO ” shall mean a contract manufacturing organization.

1.9 “ Commercialization ” or “ Commercialize ” shall mean any and all activities directed to obtaining marketing, pricing and reimbursement approvals, marketing, promoting, Detailing, distributing, importing, exporting, offering for sale or selling a product. Commercialization shall not include any activities related to Development or Manufacturing.

1.10 “ Compound ” shall mean the compound known as teduglutide, as further described in Schedule 1.10 , and any analogues, fragments, derivatives, receptors and compositions thereof.

1.11 “ Control ” or “ Controlled ” shall mean, with respect to any intellectual property right or other intangible property, the possession (whether by license or ownership, or by control over an Affiliate having possession by license or ownership) by a Party of the ability to grant to the other Party access and/or a license or sublicense as provided herein without violating the terms of any agreement with any Third Party.

1.12 “ Co-Owned Patent Rights ” shall mean the NPS Patent Rights, to the extent that such NPS Patent Rights were solely owned by NPS prior to the assignment in Section 3.1(b) hereof.

1.13 “ Country ” shall mean any generally recognized sovereign entity.

1.14 “ Cover ”, “ Covering ” or “ Covered ” shall mean, with respect to Product or Compound, or with respect to technology, that, in the absence of a license granted under a Valid Claim, the Manufacture, use, Commercialization, Development or importation of Product or the practice of such technology would infringe such Valid Claim.

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1.15 “ CPI ” shall mean the Consumer Price Index – Urban Wage Earners Clerical Workers, U.S. City Average, All Items, 1982-84 = 100, published by the United States Department of Labor, Bureau of Statistics (or its successor equivalent index).

1.16 “ Development ” or “ Develop ” shall mean non-clinical and clinical research and drug development activities associated with development of Product for Regulatory Approval as a drug product, including without limitation toxicology, test method development and stability testing, process development, formulation development, delivery system development, quality assurance and quality control development, statistical analysis, clinical studies (including pre- and post-approval studies and Investigator Sponsored Clinical Studies), regulatory affairs, and product approval and clinical study regulatory activities (excluding regulatory activities directed to obtaining pricing and reimbursement approvals).

1.17 “ Development Costs ” shall mean costs incurred by the Parties after the Effective Date and specifically attributable to Developing the Compound or a Product, and may include without limitation:

(a) the out-of-pocket costs and expenses incurred to the extent not covered by (b) through (d);

(b) the costs of internal scientific, medical, technical or managerial personnel engaged in such efforts, which costs shall be determined based on the applicable FTE Rate, unless another basis is otherwise agreed by the Parties in writing;

(c) the costs and expenses of clinical supplies for such efforts, including without limitation, (i) direct costs and expenses incurred to purchase and/or package comparator or combination drugs or devices, and (ii) direct costs and expenses of disposal of clinical samples; and

(d) the direct costs and expenses incurred in connection with manufacturing process development and validation, manufacturing scale-up and improvements, stability testing and quality assurance/quality control development, and qualification and validation of Third Party contract manufacturers.

1.18 “ Development Plan ” shall mean the plan for the Development of the Compound or a Product for any Indication including, without limitation, the budget and nature, number and schedule of Development activities.

1.19 “ Device ” shall mean the drug delivery device described in Schedule 1.19 hereto and any future Improvements or replacements thereof.

1.20 “ Diligent Efforts ” shall mean, with respect to Product, the carrying out of obligations in a diligent and sustained manner using efforts not less than the efforts a Party devotes to a product of similar market potential, profit potential or strategic value resulting from its own research efforts, but excluding consideration of any obligation to the other Party under this Agreement.

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1.21 “ Drucker License Agreement ” shall mean the License Agreement, dated September 28, 1995, by and among 1149336 Ontario Inc., Daniel J. Drucker, M.D. and Allelix Biopharmaceuticals Inc.

1.22 “ EMEA ” shall mean the European Medicines Agency or any successor agency thereto.

1.23 “ Equivalent Product ” shall mean any pharmaceutical product (other than any branded non-generic versions but Equivalent Product specifically includes any added-value generic versions) containing a glucagon-like peptide-2 (GLP-2) or any analog, homologue (including, but not limited to, teduglutide), or derivative or fragment thereof, including compositions thereof.

1.24 “ European Union ” or “ EU ” shall mean the Countries of the European Union, as it is constituted as of the Effective Date and as it may be expanded from time to time.

1.25 “ Executive Officers ” shall mean the Chief Executive Officer of NPS (or a senior executive officer of NPS designated by NPS’ Chief Executive Officer) and Nycomed’s Chief Executive Officer (or a senior executive officer of Nycomed designated by Nycomed’s Chief Executive Officer).

1.26 “ Existing Third Party Agreements ” shall mean the Drucker License Agreement, [*], the UTAUS License Agreement and the Restoragen License Agreement.

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

1.28 “ Field ” shall mean the treatment and diagnosis of all Indications in humans and animals.

1.29 “ First Commercial Sale ” shall mean, with respect to Product in a Country, the first commercial sale of Product in such Country.

1.30 “ FTE ” shall mean a full-time equivalent person year (consisting of a total of 1,750 hours) of work.

1.31 “ FTE Rate ” shall mean [*], increased or decreased by the percentage increase or decrease in the CPI as of the then most recent December 31 over the level of the CPI on December 31, 2006.

1.32 “ Future Partner ” shall mean a Third Party to whom NPS grants rights to Commercialize or distribute Product in North America.

1.33 “ GAAP ” shall mean United States generally accepted accounting principles.

1.34 “ Governmental Authority ” shall mean any court, tribunal, arbitrator, agency, legislative body, commission, official or other instrumentality of (a) any government of any Country, (b) a federal, state, province, county, city or other political subdivision thereof or (c) any supranational body.

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1.35 “ [*] Process ” shall mean the process for manufacturing Compound currently being Developed by NPS which, for the avoidance of doubt, is a different process than the secreted process.

1.36 “ Indications ” shall mean the Primary Indication and the Additional Indications.

1.37 “ Investigator Sponsored Clinical Study ” shall mean a human clinical study of Product that is sponsored and conducted by a Third Party under an agreement with a Party pursuant to which such Party provides clinical supplies of Product and/or funding for such clinical study.

1.38 “ Joint Intellectual Property ” shall mean Joint Know-How and Joint Patent Rights, collectively.

1.39 “ Joint Know-How ” shall mean any Know-How that is developed or acquired jointly by the Parties or their Affiliates or sublicensees in connection with their collaborative activities pursuant to this Agreement during the Term including Joint Inventions.

1.40 “ Joint Patent Rights ” shall mean Patent Rights that Cover Joint Inventions or Joint Know-How.

1.41 “ Know-How ” shall mean any information and materials, whether proprietary or not and whether patentable or not, including without limitation ideas, concepts, formulas, methods, procedures, designs, compositions, plans, documents, data, inventions, discoveries, trade secrets, works of authorship, compounds and biological materials, solely to the extent such know-how is directly related to the research, Development, Manufacture or Commercialization of Compound or Product in the Field.

1.42 “ Losses ” shall mean any and all damages (including all incidental, consequential, statutory and treble damages), awards, deficiencies, settlement amounts, defaults, assessments, fines, dues, penalties, costs, fees, liabilities, obligations, taxes, liens, losses, lost profits and expenses (including without limitation court costs, interest and reasonable fees of attorneys, accountants and other experts) incurred by or awarded to Third Parties and required to be paid to Third Parties with respect to a Claim by reason of any judgment, order, decree, stipulation or injunction, or any settlement entered into in accordance with the provisions of this Agreement, together with all documented out-of-pocket costs and expenses incurred in complying with any judgments, orders, decrees, stipulations and injunctions that arise from or relate to a Claim of a Third Party.

1.43 “ Major EU Country ” shall mean the United Kingdom, Germany, France, Italy and Spain.

1.44 “ Manufacturing ” or “ Manufacture ” shall mean activities directed to producing, manufacturing and processing Product.

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1.45 “ Master Cell Bank ” means NPS’ master cell banks containing the host cells (with the plasmid incorporated therein) used in the fermentation process for the production of recombinant glycine2-human glucagon-like peptide-2(ALX-600(Teduglutide)) as a secreted material in the fermentation culture broth and as a fusion peptide for the inclusion bodies in the host cell. The Master Cell Bank for the secreted process is designated [*] and is used to generate the Working Cell Bank for such process. The Master Cell Bank for the [*] Process is designated [ * ] and is used to generate the Working Cell Bank designated [ * ].

1.46 “ NDA ” shall mean a new drug application or supplemental new drug application or any amendments thereto submitted to the FDA in the United States.

1.47 “ NEC ” means necrotizing enterocolitis.

1.48 “ Net Sales ” shall mean, with respect to Product, the gross invoiced commercial sales of Product by Nycomed, its Affiliates and sublicensees to Third Parties in the Territory (and for the purposes of Section 4.5 only, sales of Product by NPS, its Affiliates or Future Partners, in Canada and/or Mexico, as applicable), less the following deductions to the extent included in the gross invoiced sales price for Product or otherwise directly paid, allowed, accrued, or incurred by Nycomed, its Affiliates or sublicensees with respect to the sale of Product:

(a) quantity or cash discounts, credits, retroactive price reductions, rebates, allowances and adjustments granted, to the extent usual and customary in the pharmaceutical industry and consistent with Nycomed’s usual course of dealing for its products other than Product (including, without limitation, government mandated and managed healthcare negotiated rebates);

(b) amounts repaid, credited or written off by reason of rejections, recalls, billing errors and returns;

(c) sales, excise, turnover, inventory, value-added, and similar taxes assessed on the sale of Product (other than income taxes of Nycomed, its Affiliates or sublicensees), and import and customs duties; and

(d) transportation, importation, shipping insurance and other handling expenses.

Notwithstanding the foregoing, in any case where Product is sold or otherwise disposed of in a transaction that is not an arm’s length sale of Product exclusively for cash that is separate from any sale or disposition of other products or of services, Net Sales shall mean the greatest of:

(x) the Net Sales amount for Product sold in such transaction determined as provided above, with any non-cash consideration attributable to such transaction valued at fair market value;

(y) if there has been any arm’s length sale of Product separate from any sale or disposition of other products or of services to a non-sublicensee Third Party, the Net Sales amount, determined as provided above, for the most contemporaneous such sale; or

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(z) if there has been no such arm’s length sale, the fraction of the overall value of such transaction reasonably attributed to Product sold in such transaction, with any non-cash consideration attributable to such transaction valued at fair market value.

For sake of clarity, sales by Nycomed, its Affiliates or sublicensees to distributors and wholesalers shall be considered sales to Third Parties.

1.49 “ North America ” shall mean the United States, Mexico and Canada.

1.50 [*].

1.51 “ NPS Intellectual Property ” shall mean NPS Know-How and NPS Patent Rights.

1.52 “ NPS Know-How ” shall mean any Know-How that is Controlled by NPS on the Effective Date, but shall not include Joint Know-How.

1.53 “ NPS Patent Rights ” shall mean Patent Rights, to the extent that they (a) Cover NPS Know-How or are directly related to the Manufacture, use, Commercialization or Development of Compound or Product in the Field, and (b) are Controlled by NPS, but shall not include Joint Patent Rights.

1.54 “ NPS Royalty Term ” shall mean the NPS Initial Royalty Term and the NPS Secondary Royalty Term.

1.55 “ NPS Initial Royalty Term ” shall mean the period commencing on the Effective Date and ending on the later of, on a Country-by-Country and Product-by-Product basis, (a) ten (10) years from First Commercial Sale of Product in such Country and (b) the expiration or termination of the last to expire Valid Claim of a Patent Right listed on Schedule 1.55 Covering such Product in such Country.

1.56 “ NPS Secondary Royalty Term ” shall mean the period commencing at the end of the NPS Initial Royalty Term, on a Country-by-Country and Product-by-Product basis, and ending twenty (20) years from First Commercial Sale of Product, on a Country-by-Country and Product-by-Product basis.

1.57 “ Nycomed Intellectual Property ” shall mean Nycomed Know-How and Nycomed Patent Rights.

1.58 “ Nycomed Know-How ” shall mean any Know-How that either (a) is Controlled by Nycomed on the Effective Date or (b) comes within Nycomed’s Control during the Term, including Nycomed Sole Inventions, but shall not include Joint Know-How.

1.59 “ Nycomed Patent Rights ” shall mean Patent Rights, to the extent that they (a) Cover Nycomed Know-How or are directly related to the Manufacture, use, Commercialization or Development of Compound or Product in the Field, and (b) are Controlled by Nycomed, but shall not include Joint Patent Rights.

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1.60 “ Nycomed Royalty Term ” shall mean the Nycomed Initial Royalty Term and the Nycomed Secondary Royalty Term.

1.61 “ Nycomed Initial Royalty Term ” shall mean the period commencing on the Effective Date and ending, on the later of, on a Country-by-Country and Product-by-Product basis, (a) ten (10) years from First Commercial Sale of such Product in such Country on a Country-by-Country and Product-by-Product basis and (b) the expiration or termination of the last to expire Valid Claim of a Patent Right Covering such Product in such Country.

1.62 “ Nycomed Secondary Royalty Term ” shall mean the period commencing at the end of the Nycomed Initial Royalty Term, on a Country-by-Country and Product-by-Product basis, and ending twenty (20) years from First Commercial Sale of Product, on a Country-by-Country and Product-by-Product basis.

1.63 “ Ongoing Studies ” shall mean the following clinical studies: (a) CL0600-004 entitled “A Study of the Efficacy of Teduglutide in Subjects with Parenteral Nutrition-Dependent Short Bowel Syndrome”, (b) CL0600-005 entitled “A Study of the Efficacy of Teduglutide in Subjects with Parenteral Nutrition-Dependent Short Bowel Syndrome Who Completed Protocol CL0600-004”, and (c) CL0600-017 entitled “Pharmacokinetics of 20mg Teduglutide in Subjects with Moderately Impaired Hepatic Function Compared to Healthy Subjects with Normal Hepatic Function”.

1.64 “ Parties ” shall mean NPS and Nycomed.

1.65 “ Party ” shall mean either NPS or Nycomed.

1.66 “ Patent Rights ” shall mean patents and patent applications and all substitutions, divisions, continuations, continuations-in-part, any patent issued with respect to any such patent applications, any reissue, reexamination, renewal or extension (including any supplemental protection certificate) of any such patent, and any confirmation patent or registration patent or patent of addition based on any such patent, and all counterparts thereof in any Country.

1.67 “ Person ” shall mean any natural person, corporation, firm, business trust, joint venture, association, organization, company, partnership or other business entity, or any government, or any agency or political subdivisions thereof.

1.68 “ Phase III Clinical Study ” shall mean a clinical study of Product in human subjects to confirm with statistical significance the efficacy and safety of Product performed to obtain Regulatory Approval for Product in any Country, which shall be deemed commenced when the first patient in such study has received his or her initial dose of Product.

1.69 “ Phase IV Clinical Study ” shall mean a clinical study initiated after Product has been granted Regulatory Approval in any Country, and which is aimed at strengthening the clinical evidence for Product to be used in the Commercialization of Product.

1.70 “ Primary Indication ” shall mean SBS.

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1.71 “ Product ” shall mean any pharmaceutical formulation, dosing and administration form containing the Compound as an active ingredient.

1.72 “ Regulatory Approval ” shall mean, with respect to a particular Indication for Product, any approval (including price approvals), registration, license or authorization from any Governmental Authority required for the Manufacture, Development, Commercialization, distribution, sale, storage or transport of Product for such Indication in any Country of the Territory, and shall include, without limitation, an approval, registration, license or authorization granted in connection with any Regulatory Approval Application.

1.73 “ Regulatory Approval Application ” shall mean, with respect to a particular Indication for Product, the submission to the relevant Governmental Authority of an appropriate application seeking any Regulatory Approval, and shall include, without limitation, a marketing authorization application, supplementary application or variation thereof, NDA or any equivalent applications in any Country of the Territory.

1.74 “ Regulatory Authority ” shall mean any federal, national, multinational, state, provincial or local regulatory agency, department, bureau or other governmental entity with authority over the marketing and sale of a pharmaceutical product in a Country, including without limitation FDA in the United States and EMEA in the EU.

1.75 “ Restoragen License Agreement ” shall mean the Exclusive License Agreement, dated November 21, 2002, by and between Restoragen, Inc. and NPS Pharmaceuticals, Inc.

1.76 “ SBS ” shall mean short bowel syndrome.

1.77 “ SBS Clinical Supply Cost ” shall mean, with respect to Product or the Device, as applicable, for Development for the Primary Indication, [*].

1.78 “ Successful Proof of Concept Study ” shall mean proof of efficacy in a particular Indication in the form of a clinical study that generates, confirms or otherwise provides an adequate benefit-risk for Product through statistically meaningful endpoints, which may be derived from one or more doses in accordance with the statistical analysis plan described in a Development Plan and which is used as the basis for a decision to move forward with a Regulatory Approval strategy for an Indication or a label change for a previous Indication for Product.

1.79 “ Territory ” shall mean the entire world and all Countries, territories and possessions therein, except for North America.

1.80 “ Third Party ” shall mean any Person other than a Party or any of its Affiliates.

1.81 “ United States ” shall mean the United States of America and its territories and possessions.

1.82 “ UTAUS License Agreement ” shall mean the Non-Exclusive Patent License Agreement, UTAUS Agreement No. 02-073, dated May 15, 2004, by and between the Board of Regents of the University of Texas System and NPS Allelix Corp.

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1.83 “ Validation Batch ” shall mean any one of each of three (3) consecutive batches of API or dosage form which conform to the critical parameters described in the process and which are Manufactured according to the Manufacturing process.

1.84 “ Valid Claim ” shall mean, with respect to any Country, a Claim of an issued and unexpired patent or a Claim included in a pending patent application within the NPS Intellectual Property, Nycomed Intellectual Property or Joint Intellectual Property in such Country Covering the Compound or Product which has not been held unenforceable, unpatentable or invalid by a decision of a court or other Governmental Authority of a competent jurisdiction, unappealable or unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through reissue, disclaimer or otherwise.

1.85 “ Working Cell Banks ” means NPS’ working cell banks containing the host cells (with the plasmid incorporated therein) used in the fermentation process for the production of recombinant glycine2-human glucagon-like peptide-2(ALX-0600(Teduglutide)) as a secreted material in the fermentation culture broth and as a fusion peptide for the inclusion bodies in the host cell. The Working Cell Banks for the secreted process are designated [*] and are generated from the Master Cell Bank for such process. The Working Cell Bank for the [*] Process is designated [*] and is generated from the Master Cell Bank designated [ * ].

1.86 Additional Definitions . Each of the following definitions is set forth in the Section of this Agreement indicated below:

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ARTICLE 2

MANAGEMENT OF COLLABORATIVE ACTIVITIES

2.1 Management Committee.

(a) Composition and Responsibilities. The management committee (the “ Management Committee ”) shall consist of two (2) members, one of which shall be an Executive Officer of NPS and one of which shall be an Executive Officer of Nycomed. Upon reasonable prior written notice to the other Party, a Party may designate a substitute to temporarily attend and perform the functions of such Party’s designee at any meeting of the Management Committee. NPS and Nycomed each may, on advance written notice to the other

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Party, invite non-member representatives of such Party to attend meetings of the Management Committee. The Management Committee shall perform the following functions:

(i) Manage and oversee the Development and Commercialization of each Indication for Product in the Territory pursuant to the terms of this Agreement;

(ii) Review and approve the Development Plan for any Indications of Product in the Territory and any material amendments to such Development Plan;

(iii) Approve any Development Plan and budget for the Primary Indication or any Additional Indication for both the Territory and North America where the Parties mutually agree to share Development Costs;

(iv) Review and approve the Promotional Materials;

(v) Review and approve the progress of the other committees;

(vi) In accordance with the procedures established in Section 2.1(c) resolve disputes, disagreements and deadlocks unresolved by the other committees; and

(vii) Have such other responsibilities as may be assigned to the Management Committee pursuant to this Agreement or as may be mutually agreed upon by the Parties from time to time.

(b) Meetings. The Management Committee shall meet in person at least once during every Calendar Year, and more frequently as NPS and Nycomed deem appropriate or as required to resolve disputes, disagreements or deadlocks in the other committees, on such dates, and at such places and times, as the Parties shall agree; provided that the Parties shall endeavor to have the first meeting of the Management Committee within thirty (30) days after the Effective Date. The Management Committee shall arrange to meet in person or convene otherwise to assess and approve any Development Plan submitted to the Management Committee in each Calendar Year so that such plans will be reviewed and approved within thirty (30) days following submission to the Management Committee. To the extent any such Development Plan is not approved and needs to be reformulated by the Joint Development Committee, such plans shall be reviewed by the Management Committee as soon as reasonably practicable after resubmission of same. Meetings of the Management Committee that are held in person shall alternate between offices of NPS and Nycomed, or such other place as such Parties may agree. The members of the Management Committee 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.

(c) Decision-Making. The Management Committee may make decisions with respect to any subject matter that is subject to the Management Committee’s decision-making authority and functions as set forth in Section 2.1(a). With respect to any issue relating to the Development or Commercialization of Product, if the Executive Officers cannot resolve such issue after good faith negotiations within ten (10) business days after the matter has been brought to the Management Committee’s attention, then such matter shall be decided by the Executive Officer of Nycomed; provided that, to the extent such issue relates to a Development

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Plan for both the Territory and North America where the Parties mutually agree to share Development Costs, any such decision may not change or otherwise affect in any material respect the key parameters of such Development Plan, including, without limitation, the resources to be provided by NPS, the expenditures to be incurred by NPS and the design and expected outcomes to achieve regulatory approval in North America.

2.2 Joint Development Committee.

(a) Establishment and Composition. Within thirty (30) days after the Effective Date, the Parties shall establish a joint development committee (the “ Joint Development Committee ”), and NPS and Nycomed shall designate an equal number of representatives, up to a maximum total of six (6) members on such Joint Development Committee. Each of NPS and Nycomed may replace any or all of its representatives on the Joint Development Committee at any time upon written notice to the other Party. Such representatives shall include individuals who have clinical trial and regulatory experience and expertise in pharmaceutical drug development. A Party may designate a substitute to temporarily attend and perform the functions of such Party’s designee at any meeting of the Joint Development Committee. NPS and Nycomed each may, on advance written notice to the other Party, invite non-member representatives of such Party to attend meetings of the Joint Development Committee. The Joint Development Committee shall be chaired by a representative appointed by Nycomed. The chairperson shall appoint a secretary of the Joint Development Committee.

(b) Responsibilities. The Joint Development Committee shall perform the following functions:

(i) Prepare and implement the Development Plans, including the budget, in the Territory for each Indication;

(ii) As early as necessary in each year beginning with the first full Calendar Year after the Effective Date, update and amend the Initial Development Plan and prepare the Development Plans for the Primary Indication and for any Additional Indications in the Territory for the following Calendar Year so that it can submit such proposed Development Plans to the Management Committee no later than September 30 of such year for review and approval;

(iii) Prepare the Development strategy and develop protocols for clinical studies for Indications for Commercialization;

(iv) Review and recommend to the Management Committee any material amendments or modifications to the Development Plans;

(v) Prepare any Development Plans for the Primary Indication or any Additional Indication for both the Territory and North America where the Parties mutually agree to share Development Costs, including any Development Plans relating to the [*] Process (the “ Joint Development Plans ”);

(vi) Coordinate use of Product Trademarks on a Country-by-Country and global basis;

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(vii) Coordinate and monitor regulatory strategy and activities for Product; and

(viii) Have such other responsibilities as may be assigned to the Joint Development Committee pursuant to this Agreement or as may be mutually agreed upon by the Parties from time to time.

(c) Meetings. The Joint Development Committee shall meet in person at least two (2) times during every Calendar Quarter, and more frequently as NPS and Nycomed deem appropriate or as reasonably requested by either such Party, on such dates, and at such places and times, as such Parties shall agree; provided that the Parties shall endeavor to have the first meeting of the Joint Development Committee within thirty (30) days after the establishment of the Joint Development Committee. Meetings of the Joint Development Committee that are held in person shall alternate between the offices of NPS and Nycomed, or such other place as the Parties may agree. The members of the Joint Development Committee 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 Joint Development Committee may make decisions with respect to any subject matter that is subject to the Joint Development Committee’s decision-making authority and functions as set forth in Section 2.2(b). All decisions of the Joint Development Committee shall be made by unanimous vote or written consent, with NPS and Nycomed each having collectively, among its respective members, one vote in all decisions. If the Joint Development Committee cannot reach consensus within ten (10) business days after it has first met and attempted to reach such consensus, then such issue shall be decided by Nycomed’s representatives in the Joint Development Committee; provided, however, that any issue relating to material changes in budgets, Development Plans or other material matters shall be referred on the eleventh (11th) business day to the Management Committee for resolution.

2.3 Additional Committees. The Parties may mutually agree to establish additional committees (“ Additional Committees ”) at any time after the Effective Date, including but not limited to (a) a joint commercialization committee to oversee the Commercialization of Product in the Territory and (b) a joint manufacturing committee to develop strategies for dosage forms and strength, presentation and commercial sourcing of Product and to identify and implement, whether through Nycomed or a Third Party, any additional Development studies with respect to Product that may be required to support any filings for Regulatory Approval in the Territory. Each Party shall designate an equal number of representatives, up to a maximum to be agreed by the Parties. Such representatives shall include individuals who have experience and expertise in pharmaceutical product marketing, sales and regulatory matters. All such Additional Committees may make decisions with respect to any subject matter that is subject to their decision-making authority and functions as mutually agreed between the Parties. All decisions of any Additional Committees shall be made by unanimous vote or written consent, with NPS and Nycomed each having collectively, among its respective members, one vote in all decisions. If any Additional Committee cannot reach consensus within ten (10) business days after it has first met and attempted to reach such consensus, such issue shall be decided by Nycomed’s representatives in any Additional Committee; provided, however, that any issue relating to material changes in budgets, commercialization or manufacturing plans or other material matters shall be referred on the eleventh (11th) business day to the Management Committee for resolution.

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2.4 Minutes of Committee Meetings. Definitive minutes of all committee meetings shall be finalized by Nycomed’s representatives in the applicable Committee no later than thirty (30) days after the meeting to which the minutes pertain as follows:

(a) Distribution of Minutes. Within ten (10) days after a committee meeting, the secretary of such committee shall prepare and distribute to all members of such committee draft minutes of the meeting. Such minutes shall provide a list of any issues already resolved and yet to be resolved, either within such committee or through the relevant resolution process.

(b) Review of Minutes. The Party members of each committee shall have ten (10) days after receiving such draft minutes to collect comments thereon and provide them to the secretary of such committee. If no comments are provided the minutes shall deemed to be approved by both Parties.

(c) Discussion of Comments. Upon the expiration of such second ten (10) day period, the Parties shall have an additional ten (10) days to discuss each other’s comments and finalize the minutes. The secretary and chairperson(s) of such committee 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.

(d) Expenses. Each Party shall be responsible for all travel and related costs and expenses for its members and other representatives to attend meetings of, and otherwise participate on, a committee.

2.5 Independent Action. Subject to the terms of this Agreement, the activities and resources of each Party shall be managed by such Party, acting independently and in its individual capacity.

2.6 Compliance with Law. Each Party hereby covenants and agrees to comply in all material respects with all laws and regulations applicable to its activities in connection with the Development, Manufacture and Commercialization of Product.

ARTICLE 3

LICENSE GRANTS AND ASSIGNMENTS

3.1 NPS Grants and Assignments.

(a) Exclusive License to Develop and Commercialize. Upon the terms and subject to the conditions of this Agreement and the Existing Third Party Agreements, NPS hereby grants to Nycomed an exclusive, royalty-bearing right and license, with the right to grant sublicenses solely as set forth in Section 3.2, under the NPS Intellectual Property and NPS’ rights in the Joint Intellectual Property to the extent necessary or useful to Develop and Commercialize the Compound and Product in the Field in the Territory.

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(b) Assignment of Co-Owned Patent Rights. Upon the terms and subject to the conditions of this Agreement, NPS hereby assigns to Nycomed, and Nycomed accepts from NPS, an undivided fifty percent (50%) interest in the Co-Owned Patent Rights, solely to the extent and for the purpose of prosecuting and maintaining such Co-Owned Patent Rights in the EU during the Term. Upon Nycomed’s request, NPS shall execute an assignment of such Co-Owned Patent Rights for the purpose of filing such assignment with the relevant patent offices.

(c) Manufacturing License. Upon the terms and subject to the conditions of this Agreement and the Existing Third Party Agreements, NPS hereby grants to Nycomed a co-exclusive right and license, with the right to grant sublicenses solely as set forth in Section 3.2, under the NPS Intellectual Property and NPS’ rights in the Joint Intellectual Property to the extent necessary or useful to Manufacture the Compound and Product in the Field in the Territory for Development and Commercialization by Nycomed in the Territory.

3.2 Sublicenses. Under the rights granted in Section 3.1, Nycomed shall (i) be entitled to sublicense to its Affiliates, and (ii) subject to the following sentence, be entitled to grant sublicenses to Third Parties, solely for purposes relating to the Development, Manufacture or Commercialization of Compound or Product in the Field in the Territory in accordance with this Agreement. To the extent Nycomed sublicenses Development and Commercialization rights to a country of the European Union, such sublicense shall be subject to NPS consent, which shall not be unreasonably withheld. Nycomed shall ensure that each of its Affiliates and permitted sublicensees or subcontractors accepts and complies with all of the terms and conditions of this Agreement as if such Affiliates or permitted sublicensees or subcontractors were a party to this Agreement and Nycomed shall guarantee its Affiliates’ and permitted sublicensees’ or subcontractors’ performance under this Agreement.

3.3 Nycomed Grants.

(a) License to Manufacture and Develop. Upon the terms and subject to the conditions of this Agreement, Nycomed hereby grants to NPS a co-exclusive, non-royalty-bearing right and license, with the right to grant sublicenses to its Affiliates, under the Nycomed Intellectual Property, the Co-Owned Patent Rights and Nycomed’s rights in the Joint Intellectual Property, to Manufacture and Develop the Compound or Product in the Field.

(b) Grant-Back License to Commercialize. Upon the terms and subject to the conditions of this Agreement, Nycomed hereby grants to NPS a co-exclusive, non-royalty-bearing right and license, with the right to grant sublicenses, under the Nycomed Intellectual Property, the Co-Owned Patent Rights and Nycomed’s rights in the Joint Intellectual Property, to Commercialize Compound or Product in the Field outside the Territory.

3.4 NPS Retained Rights; Transfer of Rights. Any rights of NPS not expressly granted to Nycomed under the provisions of this Agreement shall be retained by NPS.

3.5 Nycomed Right of First Negotiation. NPS shall have the right to license its rights in the Product outside the Territory to a Future Partner. If NPS decides to license such rights, NPS shall first offer such license to Nycomed by delivering a written notice to Nycomed of its intent to license such rights. Nycomed shall have [*] from its receipt of such notice (the

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“ Offer Period ”) to submit a written offer (the “ Nycomed Offer ”) to NPS for such license rights, setting forth the material terms and conditions of the proposed license. If Nycomed submits the Nycomed Offer within the Offer Period, NPS shall have [*] to evaluate the Nycomed Offer and to provide written notice to Nycomed of its acceptance or rejection of the Nycomed Offer. NPS shall consider the Nycomed Offer in good faith. If NPS accepts the Nycomed Offer, the Parties shall negotiate in good faith to enter into a definitive license agreement within [*] from the date of acceptance (the “ Negotiation Period ”). If (a) the Parties have not entered into a definitive license agreement upon the expiration of the Negotiation Period, (b) NPS rejects the Nycomed Offer or (c) Nycomed does not submit the Nycomed Offer within the Offer Period, then NPS shall have [*] from the end of the Negotiation Period to consummate an agreement with a potential Future Partner on terms at least as favorable to NPS as the Nycomed Offer. Upon consummation of such agreement with a Future Partner and subject to any confidentiality obligations relating thereto, if Nycomed requests, NPS shall disclose the material terms of such agreement to Nycomed (or, in the case of such confidentiality obligations, to an independent auditor selected by Nycomed and reasonably acceptable to NPS).

3.6 Licenses under Existing Third Party Agreements.

(a) Stand-By Licenses. At any time during the Term after the Termination Period, Nycomed may enter into stand-by licenses with any Third Parties to the Existing Third Party Agreements to ensure the survival or substitution of licenses or sublicenses granted to Nycomed under this Agreement. If Nycomed decides to seek to obtain a stand-by license from any such Third Party to an Existing Third Party Agreement, Nycomed shall notify NPS of such decision and shall provide NPS with regular updates regarding such ongoing negotiations. NPS agrees to provide reasonable assistance to Nycomed in obtaining such stand-by licenses and any amendments to the Existing Third Party Agreements required to obtain such stand-by licenses; provided however, that (i) any stand-by license shall provide that such license is effective only upon the termination of the license granted to NPS pursuant to the applicable Existing Third Party Agreement and (ii) NPS shall have no obligation to agree to any amendments to an Existing Third Party Agreement that are substantially less favorable to NPS than the terms existing on the Effective Date. Nycomed shall be solely responsible for making any and all payments owed to Third Parties under such stand-by licenses (other than, for the avoidance of doubt, the existing licenses to NPS under the Existing Third Party Agreements, except as otherwise specified in this Agreement). For clarity, any stand-by licenses obtained pursuant to this Section 3.6(a) shall not be subject to the terms of Section 7.5(b).

(b) Step-In Right. Subject to the provisions of the Existing Third Party Agreements, if NPS fails to take any action under an Existing Third Party Agreement that would be reasonably likely to result in an event of default and subsequent termination of the licenses under such Existing Third Party Agreement, such as a failure to make payments when due, then Nycomed may, in its discretion, provide NPS with written notice of its intent to take such action in the place of NPS. In any event, NPS shall promptly inform Nycomed of any such failure to take action and shall request that each Third Party to an Existing Third Party Agreement send a copy of any notice of material breach or other similar notice required to be sent under such Existing Third Party Agreement simultaneously to NPS and Nycomed upon any such occurrence. If NPS fails to take such action within ten (10) days (or such shorter period if necessary to prevent an event of default) after receipt of such notice, then Nycomed shall have

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the right to take such action that it believes is reasonably required to prevent such event of default and termination under such Existing Third Party Agreement. Any payments made in connection with an Existing Third Party Agreement by Nycomed on behalf of NPS pursuant to this Section 3.6 may be offset against any payments owed by Nycomed to NPS under Sections 7.2 and 7.4(a) hereof. For clarity, the terms of this Section 3.6(b) shall not in any way limit NPS’ obligations under Section 10.4.

ARTICLE 4

DEVELOPMENT

4.1 Development Rights. Either Party shall have the right to Develop the Compound and Product at its discretion, subject to the rights and obligations set forth in this Article 4.

4.2 Development Responsibilities.

(a) Ongoing Studies for the Primary Indication. NPS shall be responsible for completion, at its sole expense, of the Ongoing Studies. If required to obtain Regulatory Approval in the Territory, Nycomed shall be responsible, at its sole expense, for undertaking an additional Phase III Clinical Study for the Primary Indication; provided, however, that to the extent Nycomed conducts any such additional Phase III Clinical Study for the Primary Indication and such data is also required to obtain regulatory approval or approval for label expansion of Product in the United States, then NPS may elect to utilize such data for such purpose and in such case shall reimburse [*] of Nycomed’s expenses for such additional Phase III Clinical Study.

(b) Additional Indications. At any time after the Effective Date, if either Party desires to Develop an Additional Indication, such Party shall submit a proposal for such Additional Indication to the Joint Development Committee for its review and subsequent approval by the Management Committee. Such proposal shall include, at a minimum, (A) any data and other information supporting the rationale for Developing each Additional Indication from a scientific, regulatory and Commercial standpoint, (B) a reasonably detailed outline of the major Developmental activities for such Additional Indication, and (C) an estimate of the timeframe for and cost of such Development. In the event that the Management Committee does not approve any NPS suggestion for the Development of any Additional Indication, NPS or any Future Partner of NPS shall have the right to Develop, at its sole expense, the Compound for such Additional Indication for North America. Notwithstanding the foregoing, if the Joint Development Committee decides to Develop any Indication for Product for the Territory, NPS or any Future Partner of NPS shall not be obligated to Develop such Indication (other than SBS to the extent provided in Section 4.2(a)) for North America.

(c) Initial Development Plan; Annual Review. The initial Development Plan for the Primary Indication in the Territory shall be approved by the Joint Development Committee by February 15, 2008 and attached to this Agreement as Schedule 4.2(c) (the “ Initial Development Plan ”). The Joint Development Committee shall review any Development Plans no less frequently than annually and shall develop detailed and specific Development updates for each Calendar Year until the completion of the Product Development activities covered by any Development Plans. The Joint Development Committee shall submit all such updates to the

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Management Committee for review and approval no later than September 30 of the prior Calendar Year. The Joint Development Committee may also develop and submit to the Management Committee from time to time other proposed modifications to any Development Plans. The Management Committee shall review such proposed modifications presented by the Joint Development Committee and may approve such proposed modifications and/or any other proposed modifications that the Management Committee may consider from time to time in its discretion and, upon such approval by the Management Committee, any Development Plans shall be amended accordingly.

(d) Joint Development Plans. If the Parties agree to jointly Develop any Indications on a global basis, the Parties shall consider the specific sales potential and regulatory requirements on an Indication-by-Indication and Country-by-Country basis in designing any studies and in selecting the primary investigators, the key opinion leader and the trial centers used to Develop such Indication in such Country; provided that any such Joint Development Plans may not adversely affect the commercial potential of Product outside the Territory. Each Party shall be responsible for fifty percent (50%) of all costs and expenses associated with such joint Development of any Indication. If Nycomed desires to change any Joint Development Plan previously agreed by the Parties and NPS does not agree to such change, then NPS may elect not to participate in such Joint Development Plan and shall not be obligated to pay any costs or expenses associated with such Joint Development Plan; provided, however, that any such changes to a Joint Development Plan may not adversely affect the commercial potential of Product outside the Territory. In the event of such an election not to participate by NPS, NPS may subsequently opt-in to such Development Plan in accordance with Section 4.2(g).

(e) Development of CIGIM. Notwithstanding anything herein to the contrary, if NPS desires to conduct clinical Development of the Compound for CIGIM prior to having a meeting with the FDA regarding an Investigational New Drug (an “ IND ”) application for clinical studies for CIGIM to the FDA, NPS shall submit a proposed clinical plan (the “ CIGIM Proposal ”) to Nycomed for its review. Such CIGIM Proposal shall include, at a minimum, (A) any data and other information supporting the rationale for Developing CIGIM from a scientific, regulatory and Commercial standpoint, (B) a reasonably detailed outline of the major clinical Developmental activities for CIGIM, and (C) an estimate of the timeframe for and cost of such clinical Development. Nycomed shall have [*] from its receipt of the CIGIM Proposal to evaluate the CIGIM Proposal and shall provide written notice to NPS of its approval or disapproval of the CIGIM Proposal within such [*] period. Nycomed shall consider the CIGIM Proposal in good faith. During such period, NPS shall use commercially reasonable efforts to respond in a timely manner to Nycomed’s reasonable requests for further information regarding the CIGIM Proposal. NPS shall consider Nycomed’s comments to the CIGIM Proposal in good faith and shall take into consideration the potential results of any clinical studies conducted for CIGIM on the approvals of Product for other Indications. If Nycomed does not give written notice of its approval or disapproval to NPS within the [*] period, then Nycomed shall be deemed to have approved of the CIGIM Proposal. Notwithstanding the foregoing, NPS agrees not to perform any clinical studies in humans prior to having an effective IND for clinical studies pursuant to 21 CFR 312.40(b). For the avoidance of doubt, after an IND for clinical studies becomes effective, Nycomed shall no longer have a right of approval as set forth in this Section 4.2(e).

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(f) Phase IV Clinical Studies. Nycomed shall be responsible for conducting any Phase IV Clinical Studies in the Territory and shall be responsible for all costs related to such Phase IV Clinical Studies. NPS shall be responsible for conducting any Phase IV Clinical Studies outside the Territory and shall be responsible for all costs related to such Phase IV Clinical Studies.

(g) Buy-In Rights for Clinical Studies. In the event that a Party (the “ Active Party ”) is conducting or has completed Phase III Clinical Studies for any Additional Indication without the sharing of costs from the other Party (the “ Passive Party ”), the Passive Party shall be offered the rights to utilize the results from such studies for such Additional Indication in the Passive Party’s territory by reimbursing the Active Party an amount equal to [*] of the Active Party’s costs incurred after the Effective Date for all such studies conducted by the Active Party after the Effective Date for such Additional Indication plus interest on such amount equal to an annual compound rate of [*] of such amount beginning on the date the Active Party began incurring costs for such studies up to the date of payment. The Active Party shall submit such offer promptly after the publishing of data by the Active Party from such Phase III Clinical Study. The Passive Party shall have no other rights to such results. For the avoidance of doubt, any reimbursements made pursuant to this Section 4.2(g) are in addition to any milestone payments due pursuant to Section 7.2 for events occurring prior to the exercise of such buy-in which, in the case of Nycomed exercising such buy-in right, shall be paid together with such buy-in reimbursement.

(h) Clinical Site Management. In the case of Joint Development Plans, the intention of the Parties is that each Party shall manage clinical trials under such Joint Development Plan that are conducted in its respective territory.

(i) Investigator-Initiated Trials. If any clinical trials are initiated by a Third Party in connection with an Investigator Sponsored Clinical Study involving a Party, then such Party shall promptly notify the other Party of such clinical trial and shall provide the other Party with such information about such clinical trial as the other Party shall reasonably request.

4.3 Development Efforts; Manner of Performance; Reports.

(a) Efforts. Each of NPS and Nycomed shall use Diligent Efforts to execute and to perform, or cause to be performed, the Development activities assigned to it herein and to cooperate with the other in carrying out such Development activities, in each case in good scientific manner and in compliance with all applicable laws and regulations and good clinical and laboratory practice.

(b) Progress Reports. Within thirty (30) days after the end of each Calendar Quarter in which Development activities are performed, each Party will provide to the Joint Development Committee a written progress report, which will describe the Development activities such Party has performed or caused to be performed during such Calendar Quarter, evaluate the work performed in relation to the goals of such Development activities, and provide such other information as may be reasonably requested by the Joint Development Committee with respect to such Development activities.

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(c) Termination of Development. Subject to Section 4.2(a), Nycomed shall have the sole discretion with respect to Development of Product in the Territory, including the right to decide whether to develop the Product in a particular Indication and whether to continue such Development. If at any time prior to First Commercial Sale Nycomed ceases all activities in connection with Development or Commercialization of Compound or Product in the Territory for a period of at least two (2) years for reasons within Nycomed’s reasonable control, then NPS may deem a constructive termination at will pursuant to Section 11.2(a) to have occurred and all effects of termination in Section 11.3(a) shall apply. For the purposes of this Section 4.3(c), acts of government, Regulatory Authorities or price reimbursement bodies, measures taken for reasons of patient safety or reasonable expected risk of infringement of Third Party intellectual property shall not be deemed within Nycomed’s control.

4.4 Right to Audit. Each Party shall use Diligent Efforts to ensure that the other Party’s authorized representatives, and shall ensure that Regulatory Authorities, in both cases to the extent permitted by applicable law, may, during regular business hours, (a) examine and inspect its facilities or, subject to any Third Party confidentiality restrictions or obligations, the facilities of any subcontractor or any investigator site used by it in the performance of Development of Product, and (b) subject to applicable law and any Third Party confidentiality restrictions or obligations, inspect and copy all data, documentation and work products relating to the activities performed by it, the subcontractor or investigator site, including, without limitation, the medical records of any patient participating in any clinical study. This right to inspect and copy all data, documentation, and work products relating to Product may be exercised at any time during the Term (subject to each Party’s record retention policies then in effect), or such longer period as shall be required by applicable law.

4.5 Regulatory Submissions and Regulatory Approvals.

(a) Ownership of Regulatory Submissions.