Exhibit 10.6 *** Test Omitted and Filed Separately CONFIDENTIAL TREATMENT REQUESTED Under 17 C.F.R. §§ 200.80(b)(4) and 230.406 NM441 LICENSE AGREEMENT BETWEEN NIPPON SHINYAKU CO., LTD. AND OPTIMER PHARMACEUTICALS, INC

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Exhibit 10.6

*** Test Omitted and Filed Separately
CONFIDENTIAL TREATMENT REQUESTED
Under 17 C.F.R. §§ 200.80(b)(4) and 230.406

NM441 LICENSE AGREEMENT

BETWEEN

NIPPON SHINYAKU CO., LTD.

AND

OPTIMER PHARMACEUTICALS, INC.

i

LICENSE AGREEMENT

This Agreement is made on this 10th day of June, 2004 by and between

NIPPON SHINYAKU CO., LTD.,
a company organized and existing under the laws of Japan, having its principal office and place of business at 14, Nishinosho-monguchi-cho, Kisshoin, Minami-ku, Kyoto 601-8550, Japan (hereinafter referred to as "SHINYAKU")

and

OPTIMER PHARMACEUTICALS, INC.,
a company organized and existing under the laws of the State of Delaware, having its principal office and place of business at 10110 Sorrento Valley Road, Suite C, San Diego, CA 92121, U.S.A. (hereinafter referred to as "OPTIMER").

WITNESSETH THAT:

        WHEREAS (A), SHINYAKU is the proprietor of certain patents relating to the COMPOUND (hereinafter defined) and possesses technical information relating to the aforementioned patents and the development, use and manufacture of the COMPOUND and the PRODUCT (hereinafter defined) formulated therefrom;

        WHEREAS (B), OPTIMER wishes to obtain an exclusive license in the TERRITORY (hereinafter defined) under the patents and technical information referred to in Recital (A) above to develop, manufacture and commercialize the PRODUCT containing the COMPOUND referred to therein;

        WHEREAS (C), SHINYAKU represents it has the right to grant such license and is willing to grant to OPTIMER such license in the TERRITORY under the terms and conditions herein set forth;

        NOW THEREFORE, it is hereby agreed as follows:

ARTICLE 1

DEFINITIONS

1.1

• • The following terms used in this Agreement shall have the meanings as defined hereunder:

A.

• • Adverse Drug Reactions (ADR)s herein shall mean (i) any untoward medical occurrence in a patient or clinical investigation subject administered a pharmaceutical product and which does not necessarily have a causal relationship to the treatment; and (ii) a response to a drug which is noxious and unintended and which occurs at doses normally used in man for prophylaxis, diagnosis or therapy of disease or for modifications of physiological function.

B.

• • AFFILIATE herein shall mean, with respect to either party, any corporation, partnership or other entity directly or indirectly owned by, owning, or under common ownership with such party hereto, through common ownership of at least fifty percent (50%) of the stock or other equity interests having the power to vote for the election of directors, managers, or other executive management of such corporation, partnership or other entity to be deemed as AFFILIATE but only for so long as such ownership of voting stock continues.

C.

• • AGREEMENT TERM herein shall have the meaning set forth in ARTICLE 23 hereof.

D.

• • ANNUAL NET SALES herein shall mean the aggregate amount of NET SALES (hereinafter defined) that are made in the TERRITORY during each calendar year that is included within the AGREEMENT TERM.

E.

• • COMPETITIVE PRODUCT herein shall mean any product containing a quinolone derivative other than the COMPOUND as a pharmaceutical active ingredient which is in the public domain

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• • and in and after the development stage of animal study as of the EFFECTIVE DATE of the Agreement.

F.

• • COMPOUND herein shall mean the chemical compound with a chemical name of (±)6-Fluoro-1-methyl-7-[4-(5-methyl-2-oxo-1,3-dioxolen-4-yl)methyl-1-piperazinyl]-4-oxo-4 H - [1,3] thiazeto [3,2-a]quinoline-3-carboxylic acid, of which code name is designated as NM441.

G.

• • CONFIDENTIAL INFORMATION herein shall mean information and data relating to the COMPOUND and/or the PRODUCT including, but not limited to the OPTIMER TECHNICAL INFORMATION and the SHINYAKU TECHNICAL INFORMATION, and any information which is acquired, disclosed, exchanged or generated for the purposes of this Agreement.

H.

• • DEVELOPMENT PROGRAM shall mean a development program including the timeline of each study as set forth in SCHEDULE 1(H), which is attached hereto and made a part hereof.

I.

• • DMF shall mean the drug master file for the COMPOUND, and any amendments and supplements thereto, submitted by or on behalf of SHINYAKU, which shall contain all necessary information concerning the composition, manufacture, control and storage of the COMPOUND.

J.

• • EFFECTIVE DATE herein shall mean the date first appearing above.

K.

• • FDA herein shall mean the United States Food and Drug Administration.

L.

• • FIELD herein shall mean the prevention, treatment and cure for any diseases in human beings in all the therapeutic fields.

M.

• • FIRST COMMERCIAL SALE herein shall mean the first sale of the PRODUCT in the TERRITORY by OPTIMER or its SUBLICENSEE to unrelated third parties after the HEALTH REGISTRATION (hereinafter defined) has been granted in the TERRITORY.

N.

• • HEALTH REGISTRATION herein shall mean governmental authorizations and/or approvals required by the competent authorities in the TERRITORY for manufacturing, marketing and selling of the PRODUCT, and for importing of the COMPOUND in the TERRITORY, if necessary, including but not limited to, product registration(s) and price and marketing approvals, as applicable.

O.

• • NET SALES herein shall mean the collected gross invoiced sales of the PRODUCT by OPTIMER and its SUBLICENSEES, including OPTIMER's AFFILIATES, to unrelated third parties, less the following deductions from such gross invoiced sales in each case actually paid or taken with respect to the sale of the PRODUCT:
    
    

    (i)

    reasonable and customary discounts, credits, rebates, allowances, and adjustments; and all rejections, recalls and returns;

    (ii)

    price reductions or rebates retroactively or otherwise imposed by government authorities;

    (iii)

    sales, excise, turnover, value-added, and similar taxes assessed on the sale of the PRODUCT (but excluding income taxes);

    (iv)

    transportation, importation and insurance directly chargeable to the sale of the PRODUCT;

    (v)

    reasonable and customary chargebacks granted to drug wholesalers based upon sales to their customers where there are no direct shipments to such customers by OPTIMER or its SUBLICENSEES.

P.

• • OPTIMER PATENT herein shall mean all patent applications filed and/or patents issued in any country relating to the COMPOUND and/or the PRODUCT which may be necessary or useful in making the COMPOUND or in developing, making, using, selling or registering the PRODUCT and which OPTIMER owns, possesses and controls or has licensed from a third party (with the

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• • right to sublicense to SHINYAKU without breaching any contractual obligation with such third party) during the AGREEMENT TERM. OPTIMER PATENT shall include all provisional applications, divisions, continuations, continuations-in-part, additions, registrations, confirmations, renewals, extensions, supplemental protection certificates, re-examinations and reissues of the above patent applications and patents.

Q.

• • OPTIMER TECHNICAL INFORMATION herein shall mean all non-patented technical data and information, improvements, trade secrets, technology and/or know-how relating to the COMPOUND and/or the PRODUCT which may be necessary or useful in making the COMPOUND or in developing, making, using, selling or registering the PRODUCT, and which OPTIMER and its SUBLICENSEES have itself developed or discovered, own, or possess and control or have licensed from a third party (with the right to sublicense to SHINYAKU without breaching any contractual obligation with such third party, including to SUBLICENSEES) during the AGREEMENT TERM. This term includes, without limitation;
    
    

    i)

    specifications for the PRODUCT;

    ii)

    chemical data on the COMPOUND;

    iii)

    processes, instructions, procedures and techniques for the PRODUCT;

    iv)

    toxicological, pharmacological, pharmacokinetic data on the COMPOUND and the PRODUCT;

    v)

    clinical data including ADRs;

    vi)

    documents used for the New Drug Application in the TERRITORY;

    vii)

    package inserts for the PRODUCT; and

    viii)

    commercial and marketing information.

R.

• • PRODUCT herein shall mean any pharmaceutical preparation suitable for administration for human use containing the COMPOUND in the FIELD as an active ingredient.

S.

• • QUARTER herein shall mean each period of three (3) consecutive calendar months, ending March 31, June 30, September 30, and December 31.

T.

• • REASONABLE COMMERCIAL EFFORTS herein shall mean efforts which are consistent with those utilized by OPTIMER for its own internally developed pharmaceutical products of similar market potential at a similar stage of its product life taking into account the existence of other competitive products in the marketplace or under development, the proprietary position of the product, the profitability of the product and other relevant factors.

U.

• • SHINYAKU PATENT herein shall mean all patent applications filed and/or patents issued in any country relating to the COMPOUND and/or the PRODUCT, which may be necessary or useful in developing, making, using, selling or registering the PRODUCT and which SHINYAKU owns, possesses and controls or has licensed from a third party (with the right to sublicense to OPTIMER without breaching any contractual obligation with such third party) during the AGREEMENT TERM. SHINYAKU PATENT shall include all provisional applications, divisions, continuations, continuations-in-part, additions, registrations, confirmations, renewals, extensions, supplemental protection certificates, re-examinations and reissues of the above patent applications and patents. A list of the SHINYAKU PATENTS as of the EFFECTIVE DATE is attached hereto as SCHEDULE 1(U) and the list shall be updated by SHINYAKU during the AGREEMENT TERM.

V.

• • SHINYAKU TECHNICAL INFORMATION herein shall mean all non-patented technical data and information, improvements, trade secrets, technology and/or know-how relating to the

3

• • COMPOUND and/or the PRODUCT, which may be necessary or useful in developing, making, using, selling or registering the PRODUCT, and which SHINYAKU has itself developed or discovers, owns, or possesses and controls or has licensed from a third party (with the right to sublicense to OPTIMER without breaching any contractual obligation with such third party) during the AGREEMENT TERM. This term includes, without limitation;

    i)

    SPECIFICATION;

    ii)

    chemical data on the COMPOUND;

    iii)

    processes, instructions, procedures and techniques for the PRODUCT;

    iv)

    toxicological, pharmacological, pharmacokinetic data on the COMPOUND and the PRODUCT;

    v)

    clinical data including ADRs;

    vi)

    package inserts for the PRODUCT; and

    vii)

    commercial and marketing information.

W.

• • SPECIFICATION herein shall mean tests and standards of COMPOUND described in SCHEDULE 1(W) which is attached hereto and made a part hereof and other items which shall hereinafter be designated and/or modified in writing between the parties as necessary for manufacturing PRODUCT.

X.

• • SUBLICENSEE herein shall mean any third party including an AFFILIATE of OPTIMER which is sublicensed by OPTIMER or, as the case may be, SHINYAKU, the rights hereafter set forth in Sections 2.2 and 2.3, but excluding distributors and wholesalers.

Y.

• • TERRITORY herein shall mean U.S.A.

Z.

• • TESTING STANDARDS herein shall mean the testing standards specified in the HEALTH REGISTRATION.

AA.

• • TRADEMARK herein shall mean any trademark to be owned and used for the PRODUCT in the TERRITORY under this Agreement by OPTIMER and its SUBLICENSEE.

BB.

• • VALID CLAIM herein shall mean a claim of any unexpired SHINYAKU PATENT which has not been withdrawn, cancelled or disclaimed nor held invalid or unenforceable by a court or tribunal of competent jurisdiction in an unappealed or unappealable decision.

1.2

• • Rules of Construction.     The singular includes the plural and vice versa, words denoting any gender include all genders. Where the context so admits or requires, references to SHINYAKU, OPTIMER, their respective AFFILIATES and SUBLICENSEES shall include their respective employees and agents. The words "include" or "including" shall be construed as incorporating, "without limitation".

1.3

• • References.     References to Recitals, ARTICLES, Sections and SCHEDULES are reference to Recitals, ARTICLES, Sections and SCHEDULES of this Agreement.

1.4

• • Headings.     The headings are for ease of reference only and are not part of this Agreement for the purpose of construction.

ARTICLE 2

GRANT OF LICENSE

2.1

• • License Grant to OPTIMER.     Under the terms and conditions herein set forth, SHINYAKU hereby grants to OPTIMER an exclusive (even as to SHINYAKU) right and license in the FIELD

4

• • in the TERRITORY under SHINYAKU PATENT and SHINYAKU TECHNICAL INFORMATION (i) to import and purchase the COMPOUND from SHINYAKU and (ii) to develop, make, have made, use, offer to sell and sell the PRODUCT.

2.2

• • Right to Sublicense.     The license granted to OPTIMER under Section 2.1 hereof includes the right to sublicense to its AFFILIATE(s) and/or independent third parties in the TERRITORY. It is understood and agreed that no such SUBLICENSEE shall have any right to grant further sublicenses and any such sublicense shall be automatically terminated upon termination of this Agreement for any cause whatever. OPTIMER hereby warrants that each sublicense agreement between OPTIMER and its SUBLICENSEE shall be in writing and shall include the provision acknowledging that such sublicense is subject to the license granted to OPTIMER by SHINYAKU. OPTIMER hereby warrants that OPTIMER shall be wholly responsible for every act and omission of its SUBLICENSEE and that the quality of the PRODUCT sold by its SUBLICENSEE shall be under OPTIMER's full control. OPTIMER shall be responsible for the submission and accuracy of all reports by or on behalf of SUBLICENSEE required or contemplated hereby. OPTIMER shall be responsible for the performance of obligations of its SUBLICENSEE set forth herein. OPTIMER agrees to notify SHINYAKU of every name and address of such SUBLICENSEE.

2.3

• • Manufacturing License.     In the event Shinyaku is not able to supply OPTIMA with the COMPOUND as described in Section 11.3 and 14.3, SHINYAKU hereby shall grant to OPTIMER a non-exclusive, worldwide right and license for the TERRITORY under the SHINYAKU PATENT and SHINYAKU TECHNICAL INFORMATION to make or have made COMPOUND for OPTIMER and its SUBLICENSEES' requirements. However, OPTIMER hereby covenants not to exercise the foregoing right and license to make or have made COMPOUND except as expressly permitted in this Agreement.

2.4

• • License Grant to SHINYAKU under Optimer PATENT.     Under the terms and conditions herein set forth, OPTIMER shall grant to SHINYAKU, (a) a perpetual and exclusive license with a right to sublicense outside the TERRITORY during the term of this Agreement and non-exclusive license with a right to sublicense in the world after the termination of this Agreement, under OPTIMER PATENT free of charge, in case the invention in OPTIMER PATENT is derived exclusively from OPTIMER's own research and development and (b) a first refusal right for a license outside the TERRITORY under OPTIMER PATENT, in case the invention in OPTIMER PATENT is derived from the third party (i) to develop, make, have made, use, offer to sell and sell the PRODUCT; and (ii) to make or have made the COMPOUND (such a license outside the TERRITORY, an "OPTIMER LICENSE"). If OPTIMER contemplates entering into an OPTIMER LICENSE with a third party, OPTIMER shall first notify SHINYAKU and, for a period of sixty (60) days following such notice, negotiate in good faith the terms of an OPTIMER LICENSE exclusively with SHINYAKU. Following the expiration of such sixty (60) day period, if OPTIMER and SHINYAKU have not reached agreement on the terms of an OPTIMER LICENSE, then OPTIMER shall have the right to enter into an OPTIMER LICENSE with any third party without further obligation to SHINYAKU.

ARTICLE 3

DISCLOSURE OF INFORMATION

3.1

• • SHINYAKU PATENT and SHINYAKU TECHNICAL INFORMATION.     Promptly after EFFECTIVE DATE and from time to time thereafter during AGREEMENT TERM, SHINYAKU shall disclose to OPTIMER all information regarding SHINYAKU PATENT and SHINYAKU TECHNICAL INFORMATION which, in OPTIMER's reasonable opinion, is necessary or helpful for OPTIMER (i) to carry out the DEVELOPMENT PROGRAM and to obtain HEALTH

5

• • REGISTRATION, (ii) to manufacture the PRODUCT from the COMPOUND, and (iii) to generally fulfill the purposes of this Agreement.

3.2

• • Grant of Access to DMF and Regulatory Applications.     SHINYAKU or its designee shall submit the DMF to the FDA and shall authorize OPTIMER to petition the FDA to review the DMF as part of the HEALTH REGISTRATION process to be undertaken by OPTIMER. Upon OPTIMER's request, SHINYAKU shall provide to OPTIMER true and complete versions of any applications or filings for regulatory approvals outside the TERRITORY with respect to the PRODUCT, and all written and other information in SHINYAKU's possession or control, including information concerning the composition of the COMPOUND or the PRODUCT or other such information as may be required by governmental authorities to enable OPTIMER to file for, prosecute and maintain the HEALTH REGISTRATION. Further, SHINYAKU shall provide all letters of authorization, instruments and/or documents as OPTIMER may reasonably request for purposes of filing for, prosecuting and maintaining the HEALTH REGISTRATION. SHINYAKU will promptly notify OPTIMER of any changes, modifications or deletions to the DMF, as required by the FDA "Guidelines for Drug Master Files" Section VIIA and applicable regulatory standards, and shall not implement any such changes that would cause a delay in obtaining the HEALTH REGISTRATION without prior written agreement with OPTIMER. Such changes may include, but are not limited to, modifications in production, testing, packaging or storage procedures related to the COMPOUND or the PRODUCT.

3.3

• • OPTIMER TECHNICAL INFORMATION.     OPTIMER agrees to disclose to SHINYAKU from time to time during AGREEMENT TERM all information regarding OPTIMER TECHNICAL INFORMATION which OPTIMER and its SUBLICENSEES have heretofore developed or acquired or may hereafter develop or acquire during AGREEMENT TERM and SHINYAKU has the right to use such OPTIMER TECHNICAL INFORMATION free of charge outside the TERRITORY only. OPTIMER TECHNICAL INFORMATION to be provided by OPTIMER hereunder shall include, but not be limited to, the following:
    
    

    i)

    during the period before filing of an application for HEALTH REGISTRATION of the PRODUCT in the TERRITORY, progress report on all studies and tests carried out by or on behalf of OPTIMER, and data and documents obtained on each of such studies and tests; and

    ii)

    upon filing or submission of the Investigational New Drug Application in the TERRITORY or the application for HEALTH REGISTRATION of the PRODUCT in the TERRITORY, a copy of the documents so submitted or filed;

    iii)

    any other OPTIMER TECHNICAL INFORMATION which shall be made available to SHINYAKU upon reasonable specific written request of SHINYAKU, provided that it is, at the time of the request, in OPTIMER's possession and control.

3.4

• • Reciprocal Disclosures.     SHINYAKU may provide OPTIMER TECHNICAL INFORMATION free of charge to specific SHINYAKU licensees and its sublicensees of the COMPOUND outside the TERRITORY, who hold license rights to the COMPOUND at the time of execution of this definitive License Agreement, including only Angelini ACRAF S.p.A., YuHan Corporation or Meiji Seika Kaisha, Ltd.

ARTICLE 4

ADR REPORTING

4.1

• • Procedure.     During this AGREEMENT TERM, OPTIMER shall apprise SHINYAKU of its standard operating procedures for the investigation and reporting of ADRs concerning the COMPOUND and the PRODUCT. The parties hereto shall then promptly develop and agree upon procedures for the exchange of ADRs concerning the COMPOUND and the PRODUCT.

6

• • The parties hereto shall immediately implement such agreed procedures and shall provide each other on a regular basis with any information which has become available to them and which is relevant to the safe use of the COMPOUND or the PRODUCT to the extent specified in the agreed procedures. Such procedures shall also apply to OPTIMER's SUBLICENSEES.

4.2

• • Further Provisions.     Both as an integral part of the procedures referred to in Section 4.1 and as a separate obligation under this Agreement, further provisions concerning the reporting and notification of ADRs shall be separately agreed upon by the parties hereto promptly after the EFFECTIVE DATE to comply with regulatory requirements.

ARTICLE 5

MILESTONE PAYMENTS

5.1

• • Milestone Payments.     In consideration of the rights granted to OPTIMER by SHINYAKU hereunder, OPTIMER agrees to make the following payment in US Dollars to SHINYAKU by bank wire transfer or electronic funds transfer to such account as SHINYAKU shall designate at least ten (10) days before such payment is due:
    
    

    i)

    The sum of [***] US Dollars (US$ [***]), on the later of (a) July 2, 2004, or (b) within thirty (30) days after EFFECTIVE DATE;

    ii)

    The sum of [***] US Dollars (US$ [***]), within thirty (30) days after the date of the first New Drug Application filing in the TERRITORY.

5.2

• • Non-Refundability.     Except as specifically provided in this Agreement, the payments by OPTIMER as set forth in ARTICLE 5 shall not be creditable or refundable for any reason.

ARTICLE 6

MINIMUM PURCHASING AMOUNT

In the event that the total amount of COMPOUND to be purchased by OPTIMER pursuant to Article 11 for each Period (as hereinafter defined) does not reach Minimum Purchasing Amount for such period as set forth below, OPTIMER shall pay SHINYAKU the balance between such Minimum Purchasing Amount and the actual purchasing amount accrued during the said Period.

Minimum Purchasing Amount

These amount shall be fixed through mutual consultation between the parties, before the FIRST COMMERCIAL SALE of PRODUCT in the TERRITORY.

In this paragraph, Period 1 shall mean the period starting on and from the date of the FIRST COMMERCIAL SALE of PRODUCT by OPTIMER or its SUBLICENSEES in the TERRITORY and ending on December 31 of the following year including the first anniversary date of such FIRST COMMERCIAL SALE. No Minimum Purchasing Amount shall be required by SHINYAKU for any Period in the event that OPTIMER's failure to achieve the Minimum Purchasing Amount for such Period is due to an event of force majeure or due to the failure of SHINYAKU either to deliver a

7

sufficient quantity of COMPOUND as ordered by OPTIMER or to deliver COMPOUND that conforms to the SPECIFICATION.

ARTICLE 7

REPORTS AND ACCOUNTING

7.1

• • Reports.     During the term of this Agreement following the FIRST COMMERCIAL SALE of PRODUCT, OPTIMER shall furnish to SHINYAKU a written report within sixty (60) days of the end of each QUARTER showing NET SALES and the gross sales of all PRODUCTS sold by OPTIMER and its SUBLICENSEES in the TERRITORY during the QUARTER to which the report is applicable and the calculation of NET SALES from such gross sales, including the deductions set forth in Section 1.1(O), as further described in Section 12.1.

7.2

• • Audits.

    (i)

    Upon the written request of SHINYAKU and not more than once in each calendar year, OPTIMER shall permit an independent certified public accounting firm of internationally recognized standing, selected by SHINYAKU and reasonably acceptable to OPTIMER, at SHINYAKU's expense, to have access during normal business hours to such records of OPTIMER and its SUBLICENSEES as may be reasonably necessary to verify the accuracy of the reports hereunder for any year ending not more than twenty-four (24) months prior to the date of such request. The accounting firm shall disclose to SHINYAKU only whether the records are correct or not and, if applicable, the specific details concerning any discrepancies. The accounting firm shall provide a copy of its report to OPTIMER.

    (ii)

    If the accounting firm concludes that OPTIMER overpaid for the COMPOUND during such period, OPTIMER shall be entitled to a credit for such overpayment against future payment for the COMPOUND. If such accounting firm concludes that additional payment for the COMPOUND was owed to SHINYAKU during such period, OPTIMER shall pay the additional payment within thirty (30) days of the date SHINYAKU delivers to OPTIMER such accounting firm's written report so concluding. The fees charged by such accounting firm shall be paid by SHINYAKU; provided, however, if the audit discloses that the amount payable by OPTIMER for the audited period is more than one hundred five percent (105%) of the amount actually paid for such period, then OPTIMER shall pay the reasonable fees and expenses charged by such accounting firm.

    (iii)

    OPTIMER shall include in each permitted sublicense granted by it pursuant to this Agreement a provision requiring the SUBLICENSEE to make reports to OPTIMER, to keep and maintain records of sales made pursuant to such sublicense and to grant access to such records by SHINYAKU's accounting firm to the same extent required of OPTIMER under this Agreement. Upon the expiration of twenty-four (24) months following the end of any year, the calculation of the payment for the COMPOUND payable with respect to such year shall be binding and conclusive upon SHINYAKU, OPTIMER and its SUBLICENSEES, and OPTIMER and its SUBLICENSEES shall be released from any liability or accountability with respect to the payment for the COMPOUND for such year, except with respect to price reductions or rebates retroactively imposed by government authorities, including, but not restricted to, Medicare, Medicaid, and other government-run or controlled entities who may be involved in transactions involving the PRODUCT.

7.3

• • Confidential Financial Information.     SHINYAKU shall treat all financial information subject to review under this Article 7 or under any sublicense agreement as confidential, and shall cause its accounting firm to retain all such financial information in confidence as required by this Agreement.

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ARTICLE 8

DEVELOPMENT PROGRAM

8.1

• • OPTIMER Responsibility.     OPTIMER shall be solely responsible, and shall bear the full cost and expense and the liability (except insofar as such liability arises as a result of actions or omissions of, or defects in information or materials supplied by, SHINYAKU) for the performance of pre-clinical studies and clinical studies, governmental approval for clinical studies, HEALTH REGISTRATION, manufacturing, marketing and sales of the PRODUCT in the TERRITORY. According to the timeline in DEVELOPMENT PROGRAM, OPTIMER shall use REASONABLE COMMERCIAL EFFORTS to pursue the performance of pre-clinical studies, clinical studies, governmental approval for clinical studies, HEALTH REGISTRATION, manufacturing, marketing and sales of the PRODUCT in the TERRITORY. The obligations of OPTIMER with respect to the PRODUCT under this ARTICLE 8 are expressly conditioned upon the safety, efficacy or commercial feasibility of the PRODUCT, and such obligations shall be delayed, limited or suspended for so long as any condition or event exists which causes OPTIMER to question the safety, efficacy or commercial feasibility of the PRODUCT. SCHEDULE 1(H) contains OPTIMER's current DEVELOPMENT PROGRAM for the PRODUCT in the TERRITORY. Prior to finalizing any clinical trial protocol or filing a New Drug Application in the TERRITORY, OPTIMER shall advise SHINYAKU and reasonably consult with SHINYAKU regarding such matter.

8.2

• • Steering Committee

    (a)

    OPTIMER and SHINYAKU shall establish a Steering Committee (the "Steering Committee") consisting of three (3) members from OPTIMER and two (2) members from SHINYAKU. The function of the Steering Committee will be purely advisory and to provide a forum for exchanging information between and coordinating activities of the parties. The Steering Committee will review the clinical development issues for the PRODUCT in the TERRITORY and advise OPTIMER and SHINYAKU of any step in the DEVELOPMENT PROGRAM which may have an adverse effect on the development of any PRODUCT in the TERRITORY. Each party shall be responsible for its own members' costs associated with attending the Steering Committee meetings.

    (b)

    Within thirty (30) days after the EFFECTIVE DATE, OPTIMER and SHINYAKU shall each appoint its initial representatives to serve on the Steering Committee. Each party may change its representatives upon notice to the other party. A representative from OPTIMER shall chair the Steering Committee.

    (c)

    The Steering Committee shall meet at least semiannually during the AGREEMENT TERM, at such dates and times as agreed to by the parties. Meetings shall take place in person or by teleconference. The Steering Committee may also convene or be polled or consulted from time to time by means of telecommunications or correspondence.

8.3

• • Progress Reports.     OPTIMER shall regularly inform, not less than once every six (6) months, SHINYAKU of reports on any and all ongoing studies and procedures for HEALTH REGISTRATION conducted by OPTIMER as specified in the DEVELOPMENT PROGRAM and the parties will exchange relevant information as required. The Steering Committee shall convene to communicate and discuss the progress of DEVELOPMENT PROGRAM at least twice a year. The place of the Steering Committee meetings shall be agreed upon by the parties hereto, basically on an alternate basis between the United States and Japan.

8.4

• • Publication of Clinical and Preclinical Data.     OPTIMER shall refrain from directly or indirectly or otherwise disclosing the results of clinical or preclinical studies conducted by OPTIMER with respect to the COMPOUND and/or the PRODUCT, without previously obtaining a written

9

• • approval of SHINYAKU, such approval not to be unreasonably withheld, delayed or conditioned. SHINYAKU shall refrain from directly or indirectly or otherwise disclosing the results of clinical or preclinical studies conducted by SHINYAKU or OPTIMER with respect to the COMPOUND and/or the PRODUCT, without previously obtaining a written approval of OPTIMER, such approval not to be unreasonably withheld, delayed or conditioned.

8.5

• • COMPOUND for DEVELOPMENT PROGRAM AND PHYSICIAN SAMPLES.     SHINYAKU shall supply OPTIMER at [***] yen (¥[***]) per kilogram with reasonable quantity of the COMPOUND meeting the SPECIFICATION manufactured by SHINYAKU necessary to carry out the studies as specified in the DEVELOPMENT PROGRAM. OPTIMER shall use such COMPOUND only for development purposes pursuant to this Agreement. For the avoidance of doubt, OPTIMER shall agree that the COMPOUND used for the process validation and the like necessary for HEALTH REGISTRATION is supplied under this Section 8.5, provided that the PRODUCT manufactured by process validation and the like shall be used only as the physician samples as per the commercial development program.

8.6

• • HEALTH REGISTRATIONS.     OPTIMER shall be responsible for preparing and filing the application for HEALTH REGISTRATION to be submitted to the regulatory authorities in the TERRITORY. As of the EFFECTIVE DATE, OPTIMER shall use REASONABLE COMMERCIAL EFFORTS to submit a New Drug Application for the PRODUCT within twenty four (24) months following the EFFECTIVE DATE in the TERRITORY and to obtain HEALTH REGISTRATION approval in the TERRITORY. However, OPTIMER shall not be responsible for any delays caused by circumstances beyond its reasonable control, including guidance from the FDA to conduct a longer than expected clinical development program. In the event of any such delay, the time periods set forth above and in Section 16.1 will be extended for a reasonable period as agreed to in good faith by SHINYAKU and OPTIMER. If any delay is anticipated, OPTIMER will inform SHINYAKU of the reasons for the delay and the Steering Committee will discuss whether reasonable measures may be undertaken to minimize or eliminate the delay.

8.7

• • Alteration of Development Plan.     It is understood by the parties hereto that the DEVELOPMENT PROGRAM may be unattainable if unforeseen material problems arise beyond the Optimer's reasonable control. In the event that OPTIMER believes it necessary or desirable to alter or amend the DEVELOPMENT PROGRAM, it shall promptly advise SHINYAKU and provide details to SHINYAKU regarding the reasons for the proposed alteration or amendment prior to its adoption, and such revised DEVELOPMENT PROGRAM shall thereafter be the DEVELOPMENT PROGRAM. No alteration or amendment shall be made which does not take into account any reasonable suggestions made by the Steering Committee.

8.8

• • Meeting with FDA.     When OPTIMER meets with the FDA as to the development of the PRODUCT and organizes an investigator meeting in relation to the clinical trials in the TERRITORY, OPTIMER shall in reasonable advance inform SHINYAKU of the purpose and schedule of such a meeting and arrange, at OPTIMER's sole discretion, such that SHINYAKU may also attend such a meeting as an observer, provided that such attendance is acceptable to the FDA as appropriate. OPTIMER shall promptly provide to SHINYAKU a report of the proceedings of any such meeting that SHINYAKU does not attend.

ARTICLE 9

SECRECY

During the AGREEMENT TERM and for a period of five (5) years thereafter or fifteen (15) years from EFFECTIVE DATE hereof, whichever is longer, both parties shall, and shall cause its SUBLICENSEE to hold in confidence the other party's CONFIDENTIAL INFORMATION and shall not disclose such CONFIDENTIAL INFORMATION to any third party nor use such

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CONFIDENTIAL INFORMATION for any purpose other than the purpose of this Agreement, without first obtaining the written consent of the other party. However, this ARTICLE 9 shall not apply to the following information:

• • i)

    such CONFIDENTIAL INFORMATION which is a part of the public domain prior to the disclosure by the disclosing party to the receiving party hereunder;

    ii)

    such CONFIDENTIAL INFORMATION which becomes a part of public domain after the disclosure by the disclosing party hereunder without any breach of this Agreement by the receiving party;

    iii)

    such CONFIDENTIAL INFORMATION which the receiving party can demonstrate was already in its possession prior to the disclosure by the disclosing party hereunder and at its free disposal;

    iv)

    such CONFIDENTIAL INFORMATION which is disclosed to the receiving party by a third party who has the right to make such disclosure; or

    v)

    such CONFIDENTIAL INFORMATION which the receiving party can demonstrate was developed by it without reference to the CONFIDENTIAL INFORMATION disclosed to it by the disclosing party.

Nothing contained herein shall prevent either party and its SUBLICENSEE from disclosing such CONFIDENTIAL INFORMATION to the extent that (a) such CONFIDENTIAL INFORMATION is disclosed in connection with the securing of HEALTH REGISTRATION in the TERRITORY and/or other governmental approval required to commercially market the PRODUCT provided that the disclosing party shall take all reasonable steps to seek confidential treatment thereof; (b) disclosure of CONFIDENTIAL INFORMATION is reasonably necessary in prosecuting or defending litigation, or complying with applicable governmental laws, regulations or court order; provided that such party shall give the other party prior written notice thereof and adequate opportunity to object to any such disclosure or to take all reasonable steps to seek confidential treatment thereof; or (c) such CONFIDENTIAL INFORMATION is disclosed under appropriate secrecy agreement to potential SUBLICENSEES, SUBLICENSEES, consultants, outside contractors, clinical investigators and outside research institutions performing experiments, tests and studies on the COMPOUND and/or the PRODUCT so as to perform the purpose of this Agreement, notwithstanding such disclosures shall not jeopardize HEALTH REGISTRATIONS by either SHINYAKU or OPTIMER.

In addition, each of the parties hereto agrees not to disclose the terms of this Agreement to any third party without the prior written consent of the other party hereto, which consent shall not be unreasonably withheld, except to such party's attorneys, advisors and others on a need to know basis under circumstances that reasonably ensure the confidentiality thereof, or to the extent required by law. Notwithstanding such disclosures shall not jeopardize HEALTH REGISTRATIONS by either SHINYAKU or OPTIMER.

ARTICLE 10

REPRESENTATIONS

10.1

• • SHINYAKU Representations and Warranties.     SHINYAKU represents and warrants that:
    
    

    (i)

    SHINYAKU has the full right, power and corporate authority to enter into this Agreement and to make the promises set forth in this Agreement and that there are no outstanding agreements, assignments or encumbrances in existence in breach of the provisions of this Agreement or which would otherwise conflict with the rights granted and obligations assumed in terms of this Agreement;

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• • (ii)

    to the best of its knowledge, no SHINYAKU patent has been or will be obtained through any intentional activity, omission or representation by SHINYAKU that would limit or destroy the validity and/or enforceability of the SHINYAKU PATENT, and SHINYAKU has no knowledge or information as of the EFFECTIVE DATE that would have a material adverse effect on the validity and/or enforceability of any SHINYAKU PATENT;

    (iii)

    the performance by SHINYAKU of any of the terms and conditions of this Agreement on its part to be performed does not and will not constitute a breach of any other material agreement or understanding, written or oral, to which it is a party;

    (iv)

    SHINYAKU is the sole owner or exclusive licensee of the SHINYAKU PATENT and SHINYAKU TECHNICAL INFORMATION, and SHINYAKU has not authorized and will not authorize any third party to practice any SHINYAKU PATENT and/or SHINYAKU TECHNICAL INFORMATION or otherwise grant rights to make, have made, import, use, offer to sell or sell the COMPOUND or the PRODUCT in the FIELD in the TERRITORY in breach of this Agreement;

    (v)

    there are no adverse proceedings, claims or actions pending or threatened, to the best of SHINYAKU's knowledge, relating to any SHINYAKU PATENT and SHINYAKU TECHNICAL INFORMATION and at the time of disclosure and delivery thereof to OPTIMER, SHINYAKU shall, to the best of its knowledge, have the full right and legal capacity to disclose and deliver the SHINYAKU PATENT and SHINYAKU TECHNICAL INFORMATION without violating the rights of third parties;

    (vi)

    as of the EFFECTIVE DATE, SHINYAKU has not received any notices of infringement or any written communications relating in any way to the possible infringement of any third party patent by the activities of SHINYAKU prior to the EFFECTIVE DATE or the activities of SHINYAKU and OPTIMER contemplated by this Agreement, and is not otherwise aware of any such possible infringement;

    (vii)

    the patents and patent applications listed in SCHEDULE 1(U) constitute all of the SHINYAKU PATENT as of the EFFECTIVE DATE;

    (viii)

    as of the EFFECTIVE DATE, SHINYAKU has no knowledge of any DATA concerning the PRODUCT that SHINYAKU has not disclosed to OPTIMER that would demonstrate the PRODUCT is not approvable or commercially viable;

    (ix)

    As of the EFFECTIVE DATE, SHINYAKU has not, nor to SHINYAKU's knowledge, has any third party acting under authority of SHINYAKU, made an untrue statement of a material fact to any regulatory authority with respect to the COMPOUND or the PRODUCT, or knowingly failed to disclose a material fact required to be disclosed to any regulatory authority with respect to the COMPOUND or the PRODUCT. SHINYAKU has, and to SHINYAKU'S knowledge such third parties have, complied and will comply with all regulatory requirements with respect to the COMPOUND and the PRODUCT;

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• • (x)

    clinical and preclinical data within the SHINYAKU TECHNICAL INFORMATION have been generated in compliance with applicable laws and regulations;

    (xi)

    The facilities used to manufacture the COMPOUND, and the COMPOUND supplied hereunder meet all applicable regulatory requirements; and

    (xii)

    Title to all COMPOUND delivered hereunder will pass as provided herein free and clear of any security interest, lien or other encumbrance.

10.2

• • OPTIMER Representations and Warranties.     OPTIMER represents and warrants that:
    
    

    (i)

    OPTIMER has the full right, power and corporate authority to enter into this Agreement and to make the promises set forth in this Agreement and that there are no outstanding agreements, assignments or encumbrances in existence in breach of the provisions of this Agreement or which would otherwise conflict with the rights granted and obligations assumed in terms of this Agreement;

    (ii)

    to the best of its knowledge, no OPTIMER patent will be obtained through any intentional activity, omission or representation by OPTIMER that would limit or destroy the validity and/or enforceability of the OPTIMER PATENT;

    (iii)

    the performance by OPTIMER of any of the terms and conditions of this Agreement on its part to be performed does not and will not constitute a breach of any other material agreement or understanding, written or oral, to which it is a party;

    (iv)

    OPTIMER will not authorize any third party to practice any OPTIMER PATENT and/or OPTIMER TECHNICAL INFORMATION or otherwise grant rights to make, have made, import, use, offer to sell or sell the PRODUCT outside the TERRITORY in breach of this Agreement;

    (v)

    there are no adverse proceedings, claims or actions pending or threatened, to the best of OPTIMER's knowledge, relating to any OPTIMER PATENT and OPTIMER TECHNICAL INFORMATION, and at the time of disclosure thereof to SHINYAKU, OPTIMER shall, to the best of its knowledge, have the full right and legal capacity to disclose the OPTIMER PATENT and OPTIMER TECHNICAL INFORMATION without violating the rights of third parties; and

    (vi)

    OPTIMER will not employ (or, to the best of its knowledge, use any contractor or consultant that employs) any individual or entity debarred by the FDA or, to the best knowledge of OPTIMER, any individual who or entity which is the subject of an FDA debarrment investigation or proceeding, in the conduct of pre-clinical studies or clinical studies of the COMPOUND or the PRODUCT.

10.3

• • Compliance with Law.     OPTIMER and SHINYAKU each represent and warrant that it shall use its best efforts to comply with all applicable laws and regulations in connection with that party's performance of its obligations and rights pursuant to this Agreement, including the regulations of the U.S.A. and Japan concerning any export or other transfer of technology, services or products.

10.4

• • No Representations on Patent Validity.     Nothing in this Agreement or any license pursuant to this Agreement shall be construed or implied as a representation or warranty by SHINYAKU that any SHINYAKU PATENT is valid or enforceable, or that manufacture, exercise, use or sale of the PRODUCT under this Agreement is not an infringement of any patent owned by third parties or that such manufacture, exercise, use or sale of the PRODUCT does not otherwise infringe the rights of third parties.

10.5

• • Non-Warranty of Marketability.     Neither SHINYAKU nor OPTIMER represents or warrants that HEALTH REGISTRATION will be obtained and the PRODUCT can be commercially or legally

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• • marketed in the TERRITORY. SHINYAKU further represents that it is not in possession of any information, other than what has been disclosed to OPTIMER, which indicates that the PRODUCT may not be legally marketed in the TERRITORY.

10.6

• • Disclaimers and Liability Limitations.

    (i)

    Except as explicitly stated in this Agreement, all warranties including warranties of merchantability and fitness for any particular purpose are excluded.

    (ii)

    Except for a breach of ARTICLE 9 (SECRECY), neither party will be liable for consequential, incidental or special damages of any nature arising from such party's activities under this Agreement; provided, however, that this limitation shall not limit the indemnification or obligation of such party under ARTICLE 17 below for consequential, incidental or special damages recovered by a third party.

ARTICLE 11

SUPPLY OF COMPOUND

11.1

• • SUPPLY.     To the extent that any applicable laws allow, SHINYAKU shall manufacture and supply the COMPOUND meeting the SPECIFICATION in bulk form for all of OPTIMER's and its SUBLICENSEES' requirements for formulating the PRODUCT in the TERRITORY. Subject to the terms and conditions of the AGREEMENT, OPTIMER agrees to purchase all of OPTIMER's and its SUBLICENSEES' requirements of the COMPOUND exclusively from SHINYAKU during the AGREEMENT TERM.

11.2

• • ALLOCATION.     In the event that SHINYAKU cannot supply OPTIMER's requirements of the COMPOUND, SHINYAKU shall allocate the COMPOUND that it has in inventory, or is able to produce, on a reasonable pro-rated basis, among SHINYAKU and SHINYAKU's licensees of the COMPOUND throughout the world based on reasonable forecasts (taking into consideration past sales and sales performance against forecast) of OPTIMER (including its sublicensees), SHINYAKU, and SHINYAKU's other licensees.

11.3

• • RIGHT TO MANUFACTURE.     In the event that SHINYAKU actually fails to supply OPTIMER's requirements exclusively due to an event of force majeure as described in ARTICLE 26 and which failure lasts longer than 45 days, then (a) OPTIMER shall have the right to exercise its manufacturing license under Section 2.3, and (b) SHINYAKU shall promptly transfer all of the manufacturing information, know-how, protocols and the like necessary or useful for OPTIMER to manufacture the COMPOUND and generally assist OPTIMER in the establishment of such manufacturing capabilities without charge as reasonably necessary to enable OPTIMER to manufacture the COMPOUND. Upon thirty (30) days after the occurrence of an event of force majeure herein above, SHINYAKU shall take reasonable actions to accumulate such manufacturing information for deposit in an escrow account with an independent third party agent reasonably acceptable to SHINYAKU. Such escrow account shall be maintained at OPTIMER's expense, and such manufacturing information will only be released to OPTIMER in connection with the exercise of its manufacturing rights above. In case OPTIMER is granted the manufacturing license under Section 2.3 and actually manufacture and market the PRODUCT without being supplied with COMPOUND from SHINYAKU, OPTIMER shall pay to SHINYAKU [***] percent ([***]) of NET SALES as a royalty.

ARTICLE 12

SUPPLY PRICE

12.1

• • Formula.     For quantities of COMPOUND not used for development purposes, the supply price (CIP OPTIMER's designated airport) of the COMPOUND per kilogram shipped to OPTIMER by

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• • SHINYAKU in US Dollars, including royalty, shall be calculated pursuant to this Section 12.1. The price invoiced on OPTIMER's purchase orders shall be [***] Japanese yen([***]) per kilogram.

    (i)

    The Supply Pri