LICENSE AGREEMENT

Exhibit 10.5

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 .

LICENSE AGREEMENT

THIS AGREEMENT, effective September 28, 1995, is entered into

- BY -

1149336 ONTARIO INC.,

a corporation incorporated under the laws of the

Province of Ontario, having its registered office at

19 Fernwood Road, Toronto, Ontario M6B 3G3

(herein called “DRUCKER LTD.” )

- AND -

DANIEL J. DRUCKER, M.D.

an individual residing at

19 Fernwood Road, Toronto, Ontario M6B 3G3

(herein called “DR. DRUCKER”)

- AND -

ALLELIX BIOPHARMACEUTICALS INC.,

a corporation incorporated under the laws of Canada,

having its principal place of business at

6850 Goreway Drive, Mississauga, Ontario L4V IV7

(herein called “ALLELIX”).

1.0 DR. DRUCKER is a clinician and medical researcher operating out of the Toronto Hospital and the University of Toronto and has been, and continues to be, engaged in research aimed at the elucidation of a gastrointestinal growth factor.

1.1 ALLELIX is a biopharmaceuticals research and development company, and has sponsored DR. DRUCKER’s research in the gastrointestinal growth factor field, through cash payments; through in kind provisions of reagents and services; and by the supporting of DR. DRUCKER’s research under the Industrially Oriented Research (IOR) Grant Program. During the course of the research program, ALLELIX has provided advice and suggestions as to the conduct of the research and the potential utility of the gastrointestinal growth factor.

1.2 Under this research program, DR. DRUCKER has invented (1) a peptide to treat various medical conditions including conditions resulting from the impaired growth or loss of tissue, (2) a pharmaceutical composition including such a peptide, (3) a salt of such peptide, and (4) a method of medical treatment including the use of such pharmaceutical composition, and ALLELIX has arranged at its expense for the filing of a priority patent application therefor in the name of DR. DRUCKER.

1.3 DR. DRUCKER has assigned the results of his research and the aforementioned patent application to DRUCKER LTD.

1.4 ALLELIX, DRUCKER LTD. and DR. DRUCKER now wish to set forth the terms and conditions of a license under which ALLELIX shall be entitled to commercialize certain rights to the results of DR. DRUCKER’s research as assigned to DRUCKER LTD.

NOW THEREFORE, in consideration of the foregoing premises, the mutual covenants and obligations hereinafter contained, and other good and valuable consideration, DRUCKER LTD., DR. DRUCKER and ALLELIX agree as follows:

As used herein, the following terms shall have the meanings set forth below:

2.1 AFFILIATE means any COMPANY that is controlled directly or indirectly by a party hereto, or any COMPANY that directly or indirectly controls a party hereto, or any COMPANY that is directly or indirectly controlled by a COMPANY which also directly or indirectly controls a party hereto, so that AFFILIATE shall include any parent or subsidiary of a party hereto, or any directly or indirectly held subsidiary of a party hereto.

2.2 BASIC PATENTS means (1) the United States patent application filed April 14, 1995 entitled “Glucagon-Like Peptide-2 and Its Therapeutic Use” and includes (2) patents to be issued pursuant to (1) and all divisions, continuations in whole and in part, reissues, re-examinations, substitutes, extensions and foreign counterparts thereof.

2.3 COMPANY includes a corporation, firm, partnership or other entity.

2.4 CONFIDENTIAL INFORMATION shall mean all disclosures of know-how, inventions and other intellectual property under this Agreement, and any other information about the businesses or affairs of the other, but excluding information which:

(a) was already known to the receiving party at the time of its disclosure by the disclosing party;

(b) has been published or is otherwise within the public knowledge or is generally known to the public;

- 2 -

(c) has come into the public domain without any breach of this Agreement;

(d) became known or available to the receiving party from a source having the right to make such disclosure to the receiving party and without restriction on such disclosure to the receiving party;

(e) is disclosed to the public and is generally available to the public as a result of compliance with any applicable law or regulation; or

(f) is disclosed as the result of any applications for, or publication of, the PATENT RIGHTS.

2.5 CONTROL means the ownership, directly or indirectly, of more than 50% of voting rights attached to the issued voting shares or comparable interests in a COMPANY.

2.6 EFFECTIVE DATE shall be September 28, 1995.

2.7 EXPENDITURES means expenditures in cash and equivalent-to-cash value of expenditures in kind that ALLELIX has made on (1) research, development and exploitation of the PRODUCT, including expenditures made pursuant to the product development obligations specified in Article V hereof and expenditures under the SPONSORED RESEARCH AGREEMENT; and (2) expenditures on patent preparation, patent prosecution and patent maintenance pursuant to Article VIII hereof.

2.8 FIELD means, and is limited to, veterinary and human therapeutic and diagnostic products and the manufacture, use and sale thereof.

2.9 GROSS SALES shall mean the total sales price of PRODUCT sold by ALLELIX, its AFFILIATES and permitted assigns in final dosage form. Sales by ALLELIX to its SUB-LICENSEES shall not be included in GROSS SALES, but shall be included in any calculation of SUPPLY PROFIT.

2.10 IMPROVEMENT PATENTS means (1) patent applications for those inventions that (a) arise from research that is sponsored by ALLELIX and performed by or on behalf of DR. DRUCKER or DRUCKER LTD. and (b) relates to PRODUCT or to a method of making, using or selling PRODUCT, and all divisions, continuations in whole and in part, reissues, re-examinations, substitutes, extensions and foreign counterparts thereof.

2.11 NET SALES shall mean the total NET SALES PRICE of PRODUCT sold by ALLELIX, its AFFILIATES and permitted assigns in final dosage form. Sales by ALLELIX to its SUB-LICENSEES shall not be included in NET SALES, but shall be included in any calculation of SUPPLY PROFTT.

- 3 -

2.12 NET SALES PRICE shall mean the total of net invoice prices for all PRODUCT sold in arm’s length sales by ALLELIX, its AFFILIATES and permitted assigns, for any given period of time during the term of this Agreement, less wholesaler’s or distributor’s commissions, discounts rebates, samples and freight charges, and taxes separately listed on such invoices, and less the amount of any credits or refunds actually given by ALLELIX for defective or returned PRODUCT.

2.13 PATENT RIGHTS includes BASIC PATENTS and IMPROVEMENT PATENTS.

2.14 PRODUCT means all products which are Glucagon-Like Peptide-2 (GLP-2), and all analogues, fragments, derivatives, receptors and compositions thereof whether developed by ALLELIX and/or DR. DRUCKER pursuant to the SPONSORED RESEARCH AGREEMENT or otherwise.

2.15 SPONSORED RESEARCH AGREEMENT has the meaning attributed thereto in Section 4.6.

2.16 SUB-LICENSEE means a person to whom ALLELIX has sub-licensed or assigned all or part of the rights granted to ALLELIX by DRUCKER LTD. by this Agreement.

2.17 SUBLICENSEE REVENUE shall mean (1) SUPPLY PROFIT and (2) payments in cash and equivalent-to-cash value in-kind payments whether in the form of up front payments, royalties or in any other form actually received by ALLELIX from the sublicensing and assignment of the rights granted to ALLELIX under this Agreement, but shall exclude payments received by ALLELIX in consideration for the issuance of any debt or equity interest in ALLELIX within the definition of “security” in the Securities Act (Ontario) required for bona fide financing of ALLELIX.

2.18 SUPPLY PROFIT means the invoiced price of PRODUCT sold by ALLELIX to a SUB-LICENSEE, less 120% of the direct cost of manufacturing the supplied PRODUCT and less the amount of any credits or refunds actually given by ALLELIX for defective or returned PRODUCT.

2.19 TERRITORY means all countries of the world.

2.20 TOXICOLOGY REPORT has the meaning attributed thereto in Section 5.0(a).

- 4 -

2.21 TRADE SECRETS means all information, expertise, technical assistance and other trade secrets developed by or for DR. DRUCKER or DRUCKER LTD. relating to the manufacture, use or sale of PRODUCT and which constitute CONFIDENTIAL INFORMATION and which he discloses in writing to ALLELIX.

3.0 DRUCKER LTD. hereby grants to ALLELIX in the FIELD and TERRITORY, a license under PATENT RIGHTS and TRADE SECRETS to develop and to make, have made, use, sell, have sold and otherwise dispose of PRODUCT.

3.1 The license granted pursuant to Section 3.0 hereof shall be exclusive. Subject only to DRUCKER LTD.’s consent which shall not be unreasonably withheld or delayed having regard to the rights and obligations of ALLELIX under this Agreement, ALLELIX shall have the right to grant sublicenses of its rights set out in Section 3.0 which may, in ALLELIX’S discretion, convey to SUBLICENSEES the right to grant further sublicenses.

3.2 Section 3.1 notwithstanding, DRUCKER LTD. reserves a royalty-free license for the University of Toronto, the Toronto Hospital or any other like institution employing DR. DRUCKER under PATENT RIGHTS and TRADE SECRETS for purposes of research and teaching at the University of Toronto, the Toronto Hospital or like institution.

4.0 In consideration of the rights granted by DRUCKER LTD. to ALLELIX under this Agreement, ALLELIX shall pay DRUCKER LTD. the consideration set out in this Article.

4.1 On the execution of this agreement by DRUCKER LTD., DR. DRUCKER and ALLELIX, ALLELIX shall pay DRUCKER LTD. the non-refundable sum of [*] Cdn.

4.2 On April 1, l996 and annually thereafter, ALLELIX shall pay DRUCKER LTD. an annual non-refundable license maintenance fee of [*] Cdn.

4.3 On sales by ALLELIX, its AFFILIATES and permitted assigns of PRODUCT, ALLELIX shall pay DRUCKER LTD. a royalty which is equal to the greater of [*] of NET SALES and [*] of GROSS SALES. These royalty payments shall be made in accordance with Article VII of this Agreement. There shall be no minimum annual royalty payments payable by ALLELIX to DRUCKER LTD. for the rights set out in this Agreement.

- 5 -

4.4 To maintain its exclusive rights under this Agreement, ALLELIX shall make the following guaranteed non-refundable payments to DRUCKER LTD. At the following milestones. SUBLICENSING REVENUE paid under Section 4.5 shall apply to reduce guaranteed payments due under this Section 4.4 and guaranteed payments made under this Section 4.4 shall apply to reduce the SUBLICENSING REVENUE due under Section 4.5. For greater certainty, ALLELIX shall pay DRUCKER LTD. the greater of the payments set out in Section 4.5 or in this Section 4.4, but shall not make payments under both Sections.

4.5 ALLELIX shall provide DUCKER LTD. with a percentage of SUBLICENSING REVENUE actually received by ALLELIX, determined having regard to the EXPENDITURES made before the date ALLELIX receives the SUBLICENSING REVENUE as follows:

4.6 DR. DRUCKER and ALLELIX shall execute on the date of execution of this Agreement, a sponsored research agreement the “SPONSORED RESEARCH AGREEMENT”) effective September 1, 1995 regarding further research and development by DR. DRUCKER.

- 6 -

5.0 Upon execution of this Agreement ALLELIX, on its own or through a SUB-LICENSEE, shall ensure that reasonable commercial efforts are used, in relation to PRODUCT, to:

(a) perform in a timely fashion pre-clinical testing and evaluation, which shall include an assessment of toxicology based on results from both acute and chronic studies in two different mammalian species, the results of all of which shall be reported to DRUCKER LTD. as a toxicology report (the “TOXICOLOGY REPORT”) promptly after results of the final toxicology study are obtained; and

(b) seek governmental approvals required to produce, manufacture, distribute and market PRODUCT in the TERRITORY, including

1) commencing Phase II clinical trials in a first country in the TERRITORY within [*] from the date of the TOXICOLOGY REPORT; and

2) commencing Phase III clinical trials in a first country in the TERRITORY within [*] from the date of the TOXICOLOGY REPORT; and

3) filing a new drug application within [*] of the date on which the Phase III clinical trial is completed; and

(c) market PRODUCT in those countries within the TERRITORY where governmental approvals are obtained.

5.1 DRUCKER LTD. shall disclose to ALLELIX, and ALLELIX shall be entitled to use all information relating to the PRODUCT, including PATENT RIGHTS and all TRADE SECRETS, to enable ALLELIX or its SUB-LICENSEES to perform its obligations and enjoy the rights granted under this Agreement. DR. DRUCKER shall continue to conduct research in accordance with the SPONSORED RESEARCH AGREEMENT.

5.2 All know-how, inventions and all other intellectual property, whether or not protectable, generated solely by ALLELIX or its employees during the term of this Agreement and relating to the PRODUCT shall belong solely to ALLELIX but any PRODUCT derived therefrom shall be subject to the Licensing Consideration set out in Sections 4.3, 4.4 and 4.5. Determination of inventorship, for this Section 5.2 and for Sections 5.3 and 5.4, shall be made in accordance with United States patent law. Allelix shall disclose this intellectual property to DRUCKER LTD.

- 7 -

5.3 All know-how, inventions and all other intellectual property, whether or not protectable, generated solely by DR. DRUCKER and/or DRUCKER LTD. or by persons working with DR. DRUCKER in his laboratory, and relating to the PRODUCT shall belong solely to DR. DRUCKER. DR. DRUCKER shall disclose this intellectual property to ALLELIX. To the extent that such intellectual property relates to PRODUCT, such intellectual property shall be within the grant of rights from DRUCKER LTD. to ALLELIX as set out in Article III of this Agreement, subject to the agreement assigning rights of original property effected betwee