LICENSE AGREEMENT

Exhibit 10.26

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LICENSE AGREEMENT

THIS LICENSE AGREEMENT (this “Agreement”), dated on October 31, 2007, is made by and between Neurocrine Biosciences, Inc., 12790 El Camino Real, San Diego, California, U.S.A. 92130 (“Neurocrine”) and Dainippon Sumitomo Pharma Co., Ltd., 6-8 Doshomachi 2-chome, Chuo-ku, Osaka 541-0045, Japan (“DSP”).

      WHEREAS , DSP is engaged in the research, development and commercialization of human pharmaceutical products;

      WHEREAS , Neurocrine is the owner or licensee of certain patent rights and know how relating to Indiplon (as defined below), a proprietary sleep hypnotic compound;

      WHEREAS , DSP and Neurocrine have agreed to collaborate, on the terms and conditions set forth herein, in the development and commercialization of Indiplon;

      NOW, THEREFORE , in consideration of the mutual representations, warranties and covenants contained herein and other good and valuable consideration, the Parties agree as follows:

ARTICLE ONE
DEFINITIONS

When used in this Agreement, each of the following terms shall have the meanings set forth in this Article One. Any terms defined elsewhere in this Agreement should be given equal weight and importance as though set forth in this Article One.

1.1		“Affiliate” shall mean a person that, directly or indirectly, through one or more intermediates, controls, is controlled by, or is under common control with the person specified. For the purposes of this definition, control shall mean the direct or indirect ownership of, (a) in the case of corporate entities, securities authorized to cast more than fifty percent (50%) of the votes in any election for directors or (b) in the case of non-corporate entities, more than fifty percent (50%) ownership interest with the power to direct the management and policies of such non-corporate entity. Notwithstanding the foregoing, the term “Affiliate” shall not include corporate entities in which a Party or its Affiliates owns a majority of the ordinary voting power to elect a majority of the board of directors, but is restricted from electing such majority by contract or otherwise, until such time as such restrictions are no longer in effect.
1.2		“Collaboration” shall mean the collaboration between Neurocrine and DSP to Develop and Commercialize Products under the terms and conditions set forth herein.
1.3		“Commercialize” or “ Commercialization ” shall mean those activities relating to the commercial manufacture, marketing and sale of Products.
1.4		“Commercially Reasonable Efforts” shall mean efforts and resources commonly used in the pharmaceutical industry for a product at a similar stage with the Products in its development or product life and is of similar market

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potential taking into account efficacy, safety, Regulatory Authorities’ approved labeling, the competitiveness of alternative products in the marketplace, the patent and other proprietary position of the product, the likelihood of Regulatory Approval given the regulatory structure involved, the profitability of the product including the royalties payable to licensors of patent rights, alternative products and other relevant factors. Commercially Reasonable Efforts shall be determined on a market-by-market basis for a particular product, and it is anticipated that the level of effort will change over time, reflecting changes in the status of the Products and the market involved.

1.5		“Confidential Information” shall mean with respect to each Party, non-public proprietary data or information which is in whole or in part owned or Controlled by such Party and/or any of its Affiliates and/or information designated as Confidential Information of such Party hereunder.
1.6		“Control(s)” or “Controlled” shall mean with respect to Technology, the possession of the ability to grant licenses or sublicenses without violating the terms of any agreement or other arrangement with, or the rights of, any Third Party.
1.7		“Default” shall mean with respect to a Party that (i) any representation or warranty of such Party set forth herein shall have been untrue in any material respect when made or (ii) such Party shall have failed to perform any material obligation set forth in this Agreement.
1.8		“Develop” or “Development” shall mean those activities related to the non-clinical and clinical development of Products.
1.9		“Development Program” shall mean the worldwide program of Development of the IR Product (and upon DSP’s exercise of the MR Option, the MR Product) consisting of the DSP Development Program and the Neurocrine Development Program.
1.10		“DOV Agreement” shall mean the Sublicense and Development Agreement dated June 30, 1998 by and between DOV Pharmaceutical, Inc. and Neurocrine as such agreement may be amended from time to time.
1.11		“DSP Confidential Information” shall mean Confidential Information owned or Controlled by DSP and/or any of its Affiliates or otherwise designated as DSP Confidential Information hereunder.
1.12		“DSP Development Program” shall mean the program to Develop the IR Product (and upon DSP’s exercise of the MR Option, the MR Product) in the Territory conducted by DSP with the Collaboration of Neurocrine pursuant to this Agreement.
1.13		“DSP Technology” shall mean, all Technology owned or Controlled by DSP and/or any of its Affiliates on the Effective Date and/or at any time during the term of this Agreement that (i) is necessary or useful to make, have made, use, Develop, sell, offer for sale, have sold and import Indiplon or Products and/or (ii) claims, describes or relates to the manufacture or use of Indiplon and/or Products.
1.14		“Effective Date” shall mean the date first written above.

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1.15		“FDA” shall mean the Federal Food and Drug Administration of the United States Department of Health and Human Services or any successor agency thereof.
1.16		“Field of Use” shall mean all human therapeutic, prophylactic and diagnostic uses.
1.17		“First Commercial Sale” shall mean with respect to any Product approved for commercial sale, the first transfer by DSP, any of its Affiliates and/or its sublicensees of the Product to a Third Party in exchange for cash or some equivalent to which value can be assigned.
1.18		“Generic Products” shall mean pharmaceutical products (other than Products Developed and Commercialized by DSP pursuant to this Agreement) that contain Indiplon and can reasonably be used, or are reasonably used, for the same indication as any one or more indication(s) of Products.
1.19		“Indiplon” shall mean the nonbenzodiazepine insomnia agent compound described on Exhibit A.
1.20		“IR Product” shall mean the immediate release tablet, capsule or other formulation of Indiplon whose release profiles are proved to be equivalent thereto.
1.21		“Manufacture” or “Manufacturing” shall mean the activities required to manufacture Indiplon API (as defined in Section 6.1) or Products including, without limitation, test method development and stability testing, formulation, process development, manufacturing scale up, and quality assurance/quality control.
1.22		“MHLW” shall mean Kosei-Rodo-sho (Ministry of Health, Labour and Welfare of Japan) or successor agency thereof in Japan.
1.23		“[...***...] Differentiation Strategy” shall mean existing or future data generated in support of Neurocrine’s stated [...***...] dosing/administration of Indiplon. Such existing data supporting the [...***...] will be expanded upon as the focus of [...***...] conducted by Neurocrine and/or ROW Partner(s). The [...***...] may be conducted with Indiplon alone or with Indiplon and comparative compounds relevant to the Rest of World insomnia market including but not limited to [...***...].
1.24		“Milestones” shall mean the payments to be made by DSP to Neurocrine upon occurrence of certain events as set forth in Article Seven.
1.25		“MR Development Program” shall mean the program to Develop the MR Product in the Rest of World conducted by Neurocrine, its Affiliates, Neurocrine together with a ROW Partner, or ROW Partner, including all Development activities in the United States of America. For the avoidance of doubt, MR Development Program shall include all Development of MR Product conducted prior to the Effective Date or during the term of this Agreement.
1.26		“MR Product” shall mean the modified or extended release tablet, capsule or other formulation of Indiplon whose release profiles are proved to be equivalent thereto.

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1.27		“MR Program Data” shall mean all data and information owned or Controlled by Neurocrine or any of its Affiliates arising out of the MR Development Program, that is (i) collected under the requirements of Good Clinical Practice, Good Laboratory Practice or Good Manufacturing Practice (as defined by Regulatory Authorities), whether or not such data and information is submitted to Regulatory Authorities in Rest of World by Neurocrine, its Affiliates or the ROW Partner and (ii) non-clinical and CMC (chemistry, manufacturing and controls) data to the extent submitted in Regulatory Filings in the Rest of World and Necessary for Regulatory Filings in the Territory.
1.28		“MR Option” shall mean the option set forth in Section 3.2(a).
1.29		“NDA” shall mean a New Drug Application filed with the FDA pursuant to 21 CFR 314.
1.30		“Net Sales” shall mean the gross invoiced amount from sales of Products in the Territory by DSP, its Affiliates or sublicensees (the “Selling Party”) to Third Parties less deductions actually allowed or specifically allocated to Products by the Selling Party using generally accepted accounting standards (GAAP) in the Territory for:

	(i)		packing, handling and transportation charges, including insurance, for transporting Products;
	(ii)		sales and excise taxes and duties paid or allowed by the Selling Party and any other governmental charges imposed upon the production, importation, use or sale of such Products;
	(iii)		trade, quantity and cash discounts (including non-discretionary early settlement discounts) allowed on Products;
	(iv)		allowances or credits to customers on account of rejection or return of Products;
	(v)		allowances or credits to customers on account of retroactive price reductions affecting such Products; and
	(vi)		Product rebates and Product charge backs including those granted to managed care entities and government agencies.

		Sales between DSP, its Affiliates and its or their sublicensees shall be excluded from the computation of Net Sales and no payments shall be payable on such sales except where such Affiliates or sublicensees are end users but Net Sales shall include the subsequent final sales to Third Parties by such Affiliates or sublicensees.
1.31		“Neurocrine Confidential Information” shall mean Confidential Information owned or Controlled by Neurocrine and/or any of its Affiliates or otherwise designated as Neurocrine Confidential Information hereunder.
1.32		“Neurocrine Development Program” shall mean the program of Development of the IR Product (and upon DSP’s exercise of the MR Option, the MR Product) conducted by or on behalf of Neurocrine or any of its Affiliates and/or the ROW Partners prior to the Effective Date and/or at any time during the term of this Agreement.
1.33		“Neurocrine Program Data” shall mean the data and information, including the Registration Program Data, owned or Controlled by Neurocrine, or any of its Affiliates arising out of the Neurocrine Development Program, that is (i) collected under the requirements of Good Clinical Practice, Good Laboratory

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Practice or Good Manufacturing Practice (as defined by Regulatory Authorities) whether or not such data and information is submitted to Regulatory Authorities in Rest of World by Neurocrine or any of its Affiliates or the ROW Partner and (ii) non-clinical and CMC (chemistry, manufacturing and controls) data to the extent submitted in Regulatory Filings in the Rest of World. Neurocrine Program Data will include data and information owned or Controlled by Neurocrine’s ROW Partner(s) to the extent such data and information is Necessary for DSP to obtain and maintain Regulatory Approval of the IR Product (and upon exercise of the MR Option, the MR Product) in the Territory. For the purposes of this Agreement, data and information will be deemed “Necessary” for Regulatory Approval of the IR Product [...***...] in the Territory if [...***...], based on requirements and precedents with similar products. For the avoidance of any doubt, such Necessary data and information will be owned or Controlled by Neurocrine or any of its Affiliates.

1.34		“Neurocrine Patent Rights” shall mean Patent Rights owned or Controlled by Neurocrine and/or any of its Affiliates in the Territory that are applicable to Indiplon and necessary or useful to make, have made, use, develop, sell, offer for sale, have sold and import Indiplon in the Territory. Neurocrine Patent Rights shall specifically include but not be limited to the Neurocrine Patent Rights set forth on Exhibit B and all Patent Rights derived therefrom.
1.35		“Neurocrine Technology” shall mean, all Technology owned or Controlled by Neurocrine and/or any of its Affiliates in the Territory on the Effective Date and/or at any time during the term of this Agreement that (i) is necessary or useful to make, have made, use, develop, sell, offer for sale, have sold and import Indiplon or Products, (ii) is applicable to Indiplon and/or Products, and/or (iii) claims, describes or relates to the manufacture or use of Indiplon and/or Products. Neurocrine Technology shall specifically include but not be limited to the Neurocrine Patent Rights, the Regulatory Filings (to the extent owned or Controlled by Neurocrine) and the Registration Program Data. Neurocrine Technology will not include any Technology owned or Controlled by Neurocrine that is (i) royalty bearing to any Third Party other than DOV Pharmaceutical, Inc, after the Effective Date and/or (ii) not incorporated in Products in the Rest of World and/or (iii) is not required to be provided under the terms of this Agreement.
1.36		“Neurocrine Trademarks” shall mean any trademarks for Products in the Rest of World that are owned or Controlled by Neurocrine.
1.37		“Party” shall mean DSP or Neurocrine, as the case may be, and “Parties” shall mean DSP and Neurocrine.
1.38		“Patent Rights” shall mean the rights and interests in and to all issued patents and pending patent applications in any country, including, without limitation, all provisional applications, substitutions, continuations, continuations-in-part, divisions, and renewals, all letters patent granted thereon, and all patents-of-addition, reissues, reexaminations and extensions or restorations by existing or future extension or restoration mechanisms, including, without limitation Supplementary Protection Certificates or the equivalent thereof.
1.39		“Person” shall mean any individual, firm, corporation, partnership, limited liability company, trust, unincorporated organization or other entity or a government agency or political subdivision thereto, and shall include any successor (by merger or otherwise) of such Person.

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1.40		“Product(s)” shall mean any product containing Indiplon as an active ingredient, including the IR Product and, upon DSP’s exercise of the MR Option, the MR Product. When used herein, “Products” shall not, in the event of a combination product, include any of the active ingredients of the combination product other than Indiplon but shall include derivatives and formulations of Indiplon.
1.41		“Registration Program Data” shall mean the data and information set forth in the NDAs for IR Product filed with the FDA, including but not limited to the NDA for IR Product filed on June 12, 2007.
1.42		“Regulatory Approval” shall mean the technical, medical and scientific licenses, registrations, authorizations and approvals (including, without limitation, approvals of Investigational Drug Applications, NDAs and equivalents, supplements and amendments, pre- and post- approvals, pricing and third party reimbursement approvals, and labeling approvals) of any national, supra-national, regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity, necessary for the development, manufacture, distribution, marketing, promotion, offer for sale, use, import, export or sale of Product(s) in a regulatory jurisdiction.
1.43		“Regulatory Authorities” shall mean FDA and the MHLW and comparable regulatory or governmental authorities.
1.44		“Regulatory Filings” shall mean, collectively, Investigational New Drug Applications, Product License Applications, Drug Master Files, NDAs and/or any other equivalent or comparable filings as may be required by Regulatory Authorities to obtain Regulatory Approvals.
1.45		“Rest of World” shall mean all countries of the world outside the Territory.
1.46		“ROW Partner(s)” shall mean one or more Third Party Development and Commercialization partners selected by Neurocrine for the Rest of World.
1.47		“Royalties” shall mean those royalties payable by DSP to Neurocrine pursuant to Article Seven of this Agreement.
1.48		“Safety Data” shall mean data with respect to any adverse drug experience (as defined in 21 CFR 314.80) and serious adverse drug experience (as defined in 21 CFR 314.80 or 312.32) as such information is reportable to Regulatory Authorities. Safety Data shall also include “adverse events”, “adverse drug reactions” and “unexpected adverse drug reactions”, as these terms are expanded on and defined in the ICH Harmonized Tripartite Guideline for Clinical Safety Data Management: Definitions and Standards for Expedited Reporting.
1.49		“Sleep Maintenance Indication” shall mean FDA approval of an NDA for MR Product with an indication statement that reflects effective use for sleep maintenance or similar verbiage.
1.50		“Steering Committee” shall have the meaning set forth in Article Four hereof.
1.51		“Technology” shall mean proprietary data, information and all intellectual property, including but not limited to, trade secrets, know-how, inventions and technology, whether patentable or not, and Patent Rights directed to products,

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		processes, formulations and/or methods but which term shall specifically exclude copyright and all unregistered trademarks.
1.52		“Territory” shall mean Japan.
1.53		“Third Party(ies)” shall mean any Person other than Neurocrine, DSP and their respective Affiliates.
1.54		“Third Party Royalties” shall mean payments, based on Net Sales of Products by DSP, its Affiliates or sublicensees, to Third Parties to make, have made, use sell, offer for sale or import Indiplon in the Territory where the payments are based on Patent Rights owned or Controlled by such Third Party in the Territory.
1.55		“Valid Claim” shall mean a claim of an issued and unexpired and unabandoned patent or a pending claim of a pending patent application and which has not been held invalid or unenforceable by a court or other government agency of competent jurisdiction from which no appeal can be or has been taken and has not been admitted to be invalid or unenforceable through re-examination or disclaimer or otherwise.

ARTICLE TWO
REPRESENTATIONS AND WARRANTIES

2.1

Neurocrine Representations and Warranties. Neurocrine represents and warrants:

     (a)  Corporate Power . Neurocrine is duly organized and validly existing under the laws of the State of Delaware and has full corporate power and authority to enter into this Agreement and to carry out the provisions hereof.

     (b)  Due Authorization . Neurocrine is duly authorized to execute and deliver this Agreement and to perform its obligations hereunder. The Person executing this Agreement on Neurocrine’s behalf has been duly authorized to do so by all requisite corporate action.

     (c)  Binding Agreement . This Agreement is a legal and valid obligation binding upon Neurocrine and enforceable in accordance with its terms. The execution, delivery and performance of this Agreement by Neurocrine does not conflict with any agreement, instrument or understanding, oral or written, to which it is a party or by which it may be bound, nor violate any material law or regulation of any court, governmental or administrative body or agency having jurisdiction over it.

     (d)  Validity . Neurocrine is aware of no action, suit or inquiry or investigation instituted by any federal, state, local or country governmental agency which questions or threatens the validity of this Agreement.

     (e) Patent . As of the Effective Date, Neurocrine has not received any notice of infringement or any written communication relating in any way to the possible infringement of any Third Party’s patent by the activities of the Parties contemplated by this Agreement. As of the Effective Date, Neurocrine is not aware of any Third Party’s patent or patent application that would be infringed by the activities of the Parties contemplated by this Agreement or by DSP’s exercise of the licenses granted by

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Neurocrine other than that which has already been disclosed to DSP. Neurocrine is aware of no action, suit or inquiry or investigation instituted or threatened by any Person that questions or threatens the validity of, or Neurocrine’s rights to, any Neurocrine Technology.

     (f)  DOV Agreement . To the extent any rights, licenses, consents or approvals must be obtained from DOV Pharmaceutical, Inc. or in accordance with the DOV Agreement in order for either (or both) of the Parties to perform its (or their) obligations hereunder or to Develop and Commercialize the Products as contemplated hereunder, or in order for DSP to fully exercise its rights under this Agreement, Neurocrine possesses and has obtained for itself and for DSP (and DSP’s Affiliates and sublicensees, as applicable) all such rights, licenses, consents and approvals. The DOV Agreement does not include or impose any restrictions, obligations, conditions or payments applicable to DSP or its activities or rights hereunder other than those expressly incorporated in this Agreement.

2.2

DSP Representations and Warranties. DSP represents and warrants:

     (a)  Corporate Power . DSP is duly organized and validly existing under the laws of Japan and has full corporate power and authority to enter into this Agreement and to carry out the provisions hereof.

     (b)  Due Authorization . DSP is duly authorized to execute and deliver this Agreement and to perform its obligations hereunder. The Person executing this Agreement on DSP’s behalf has been duly authorized to do so by all requisite corporate action.

     (c)  Binding Agreement . This Agreement is a legal and valid obligation binding upon DSP and enforceable in accordance with its terms. The execution, delivery and performance of this Agreement by DSP does not conflict with any agreement, instrument or understanding, oral or written, to which it is a party or by which it may be bound, nor violate any material law or regulation of any court, governmental or administrative body or agency having jurisdiction over it.

     (d)  Validity . As of the Effective Date, DSP is aware of no action, suit or inquiry or investigation instituted by any federal, state, local or country governmental agency which questions or threatens the validity of this Agreement.

     (a)  Neurocrine . Neurocrine recognizes that the Neurocrine Program Data may be indispensable for DSP to obtain the Regulatory Approval for the IR Product in the Territory. Based upon such recognition, Neurocrine shall make available to DSP [...***...]. Neurocrine shall make the Neurocrine Program Data available to DSP in a timely manner if DSP determines and represents to Neurocrine in good faith that such data is reasonably necessary for DSP to obtain and maintain Regulatory Approval for the IR Product in the Territory. In addition, notwithstanding Section 3.2, Neurocrine shall provide DSP with the MR Program Data in a timely manner to the extent that DSP determines and represents to Neurocrine in good faith that such data is reasonably necessary for DSP to obtain and maintain the Regulatory Approval for the IR Product in the Territory. Unless and until DSP exercises the MR Option pursuant to Section 3.2, DSP shall use such MR Program Data for the sole purpose of obtaining and maintaining the Regulatory Approval for the IR Product in the Territory. [...***...].

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     (b)  DSP . DSP shall use Commercially Reasonable Efforts to Develop and Commercialize Products in the Territory.

     (c) Neurocrine covenants to keep the DOV Agreement in full force and effect except where the failure to do so will not have any material adverse effect on the ability of DSP to Develop and Commercialize Indiplon or Products in the Territory. DSP covenants to assist and co-operate with Neurocrine in meeting the obligations under the DOV Agreement in so far as they relate to the Territory.

2.4 Invention Assignment Agreements . All Neurocrine and DSP personnel conducting the Development Program shall have executed Neurocrine’s or DSP’s, as the case may be, standard non-disclosure and invention assignment agreement.

ARTICLE THREE
LICENSES

3.1 License Grant to DSP. Neurocrine hereby grants to DSP the sole and exclusive (even as to Neurocrine) right and license, with the right to sublicense, under the Neurocrine Technology to (i) identify, make, have made, use, develop, sell, offer for sale, have sold and import Products in the Field of Use in the Territory and (ii) make, have made, use, sell, offer for sale, have sold and import Indiplon in bulk, active ingredient form in the Territory in connection with exercising its rights and licenses and its rights to sublicense under this Section 3.1.

3.2 MR Option. Neurocrine grants to DSP an exclusive option (the “MR Option”) to obtain exclusive (even as to Neurocrine) right and license, with the right to sublicense, under the MR Program Data to (i) identify, make, have made, use, develop, sell, offer for sale, have sold and import MR Product in the Field of Use in the Territory and (ii) make, have made, use, sell, offer for sale, have sold and import Indiplon in bulk, active ingredient form in the Territory in connection with exercising its rights and licenses and its rights to sublicense under this Section 3.2. The MR Option may be exercised at any time after [...***...] and prior to [...***...] on the terms and conditions set forth in Section 7.3.

3.3

Neurocrine Trademarks.

     (a) Promptly after the Neurocrine Trademarks which will be used for any of the Products in any country of the Rest of World are determined, Neurocrine shall notify DSP in writing of such Neurocrine Trademarks. DSP may at any time and at its own discretion determine the trademark which will be used for the IR Product in the Territory, and shall have the right, but no obligation, to use such Neurocrine Trademarks for the IR Product in the Territory.

     (b) Grant. In the event that DSP determines to use the Neurocrine Trademarks under Section 3.3(a), Neurocrine grants to DSP the exclusive license and right, free of

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charge, to use the Neurocrine Trademarks solely and exclusively for the purpose of Commercialization of Products in the Territory in accordance with this Agreement and shall register the DSP’s license of the Neurocrine Trademark at the Japan Patent Office pursuant to Section 9.6. Neurocrine shall make its best effort to obtain and maintain the registration of the Neurocrine Trademark in the Territory.

     (c) In the event DSP elects to use the Neurocrine Trademarks for Products in the Territory , DSP shall be responsible for the direct payment of, or reimbursement to Neurocrine of, the Neurocrine expenses for registering and maintaining the Neurocrine Trademarks in the Territory incurred after Neurocrine registers the DSP’s license of the Neurocrine Trademark at the Japan Patent Office, and all the other expenses relating to the Neurocrine Trademark shall be borne by Neurocrine unless otherwise provided for in this Agreement.

     (d) In the event DSP does not elect to use the Neurocrine Trademarks for Products in the Territory, all trademarks associated with Products in the Territory shall be selected and owned by DSP and maintained at DSP’s expense.

3.4 License Grant to Neurocrine. DSP hereby grants to Neurocrine the sole and exclusive (even as to DSP) right and license, with the right to sublicense, under the DSP Technology solely and exclusively to identify, make, have made, use, develop, sell, offer for sale, have sold and import Indiplon or Products in the Field of Use in the Rest of World. Notwithstanding the foregoing, DSP shall have no obligation to grant to Neurocrine any right and/or license under the DSP Technology to make, use or sell Products incorporating DSP’s proprietary [...***...] (but will provide Neurocrine with any data or information on the DSP Technology as it is applied to [...***...]) but DSP may grant a royalty-bearing license for such DSP Technology to Neurocrine on the terms and conditions mutually agreed upon between the Parties.

3.5

Sublicenses; CROs; Contract Manufacturers. DSP shall have the right to

     (a) grant sublicenses to Neurocrine Technology in the Territory, and

     (b) retain, and in connection therewith, delegate authority to contract research organizations for purposes of conducting certain non-clinical and clinical studies in and/or outside the Territory under DSP Development Program for the sole purpose of obtaining Regulatory Approval in the Territory,

     (c) subject to Section 6.6, retain contract manufacturers to Manufacture Indiplon API and/or Products in and/or outside the Territory solely for the purpose of Development and Commercialization in the Territory, and

     (d) delegate DSP’s other rights and/or obligations hereunder in whole or in part to DSP’s Affiliates, sublicensees and/or DSP’s designees (“Designees”),

provided however, that DSP shall remain responsible for the full and complete performance of all applicable DSP’s rights and obligations hereunder. DSP shall provide Neurocrine with full and complete copies (provided the numbers associated with financial terms may be redacted) of all sublicense agreements between DSP and Third Parties in which rights to or sublicenses of the Neurocrine Technology are granted by DSP.

3.6 Regulatory Filings. As promptly as practicable after the Effective Date, Neurocrine shall make available to DSP all Neurocrine Program Data [...***...] and copies of the Regulatory Filings with respect to the IR Product. As promptly as

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practicable after the exercise of the MR Option by DSP, Neurocrine shall make available to DSP all MR Program Data and Regulatory Filings with respect to the MR Product, existing on the exercise date, subject to Section 3.2.

3.7

Right of Inspection and Right of Reference.

     (a)  Inspection . Neurocrine hereby grants to DSP a right of inspection to prepare for and related to a request for inspection by the MHLW (and a right to have inspection conducted by the MHLW) to the Regulatory Filings of IR Product by Neurocrine and held in Neurocrine’s name in Rest of World, to the extent required for DSP to obtain and maintain Regulatory Approval in the Territory. Neurocrine shall, to the extent Neurocrine has the right and authority, grant to DSP a right of inspection to Regulatory Filings of IR Product by the ROW Partner(s) or held in the ROW Partner(s) name in the Rest of World to the extent required for DSP to obtain and maintain Regulatory Approval in the Territory. In addition, notwithstanding Section 3.2, Neurocrine hereby grants to DSP a right of inspection to prepare for and related to a request for inspection by the MHLW (and a right to have inspection conducted by the MHLW) to the Regulatory Filings of MR Product by Neurocrine and held in Neurocrine’s name in the Rest of World to the extent required for DSP to obtain and maintain Regulatory Approval in the Territory and Neurocrine shall, to the extent Neurocrine has the right and authority, grant to DSP a right of inspection to Regulatory Filings of MR Product by the ROW Partner(s) or held in the ROW Partner(s) name in the Rest of World to the extent required for DSP to obtain and maintain Regulatory Approval in the Territory. Unless and until DSP exercises the MR Option pursuant to Section 3.2, DSP shall use such right of inspection to Regulatory Filings of MR Product for the sole purpose of obtaining and maintaining the Regulatory Approval for the IR Product in the Territory. Upon DSP’s exercise of the MR Option, Neurocrine shall grant to DSP a right of inspection to prepare for and related to a request for inspection by the MHLW (and a right to have inspection conducted by the MHLW) to the Regulatory Filings with respect to the MR Product filed by Neurocrine and held in Neurocrine’s name in the Rest of World, and, to the extent Neurocrine has the right and authority, grant to DSP a right of inspection to Regulatory Filings of MR Product by the ROW Partner(s) and held in the ROW Partner(s) in the Rest of World to the extent required for DSP to obtain and maintain Regulatory Approval in the Territory. DSP shall give Neurocrine prompt notice of any such inspections and allow representatives of Neurocrine to be present during any such inspections. To the extent Neurocrine does not have the right or authority to grant to DSP a right of inspection with respect to any Regulatory Filings by the ROW Partner(s), [...***...].

     (b)  Reference . Neurocrine hereby grants to DSP a right of reference to the IND(s) and NDA(s) filed on the IR Product in the Rest of World by Neurocrine and held in Neurocrine’s name to the extent required for DSP to obtain and maintain Regulatory Approval for the IR Product in the Territory. Neurocrine will, to the extent Neurocrine has the right and authority, grant to DSP a right of reference to the IND(s) and NDA(s) filed on the IR Product in the Rest of World by the ROW Partner and held in the ROW Partner(s) name to the extent required for DSP to obtain and maintain Regulatory Approval in the Territory. In addition, notwithstanding Section 3.2, Neurocrine hereby grants to DSP a right of reference to the IND(s) and NDA(s) filed on the MR Product in the Rest of World by Neurocrine and held in Neurocrine’s name to the extent required for DSP to obtain and maintain Regulatory Approval for the IR Product in the Territory and shall, to the extent Neurocrine has the right and authority, grant to DSP a right of reference to Regulatory Filings of MR Product by the ROW Partner(s) and held in the ROW Partner(s) name in the Rest of World to the extent required for DSP to obtain and maintain Regulatory Approval for the IR Product in the Territory. Unless and until DSP exercises the MR Option pursuant to Section 3.2, DSP

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shall use such MR Program Data for the sole purpose of obtaining and maintaining the Regulatory Approval for the IR Product in the Territory. Similarly, upon DSP’s exercise of the MR Option, Neurocrine shall grant to DSP a right of reference to the IND(s) and NDA(s) filed on MR Product in the Rest of World by Neurocrine and held in Neurocrine’s name and Neurocrine will, to the extent Neurocrine has the right and authority, grant to DSP a right of reference to the IND(s) and NDA(s) filed on the MR Product in the Rest of World by the ROW Partner and held in the ROW Partner(s) name to the extent required for DSP to obtain and maintain Regulatory Approval in the Territory. To the extent Neurocrine does not have the right or authority to grant to DSP a right of reference with respect to any Regulatory Filings by the ROW Partner(s), [...***...].

     (c)  Safety Data of Indiplon . Neurocrine hereby grants to DSP a right of reference to all Safety Data of Indiplon including the Safety Data of the Neurocrine Program Data. Neurocrine further commits that the ROW Partner(s) will grant to DSP a right of reference to all Safety Data of Indiplon arising out of the Neurocrine Development Program.

     (d)  Other Data . Neurocrine grants to DSP the right to use the Registration Program Data to Develop and Commercialize Products in the Territory, In addition, Neurocrine grants to DSP the right to use Neurocrine Program Data other than the Registration Program Data and, to the extent Neurocrine has the right and authority, a right to use the Neurocrine Program Data developed by the ROW Partner(s) with a right to inspect any Regulatory Filings by the ROW Partner(s) included in Neurocrine Program Data, in each case without further charge to the extent DSP represents to Neurocrine in good faith that such data is reasonably necessary for DSP to obtain and maintain Regulatory Approval for the IR Product (and upon exercise of the MR Option, the MR Product) in the Territory. To the extent Neurocrine does not have the right or authority to grant to DSP a right to use any data arising from Neurocrine Development Program, [...***...] data in their respective territories to the extent [...***...] in their respective territories [...***...]

     (e)  Pharmacovigilance Agreement . At such time as DSP initiates Development in the Territory, the pharmacovigilance departments of the Parties shall meet and determine the approach to be taken for the collection, review, assessment, tracking and filing of information related to adverse events associated with Products worldwide. This approach shall be documented in a separate drug safety exchange agreement. In the event Neurocrine has selected one or more ROW Partners, the terms and conditions of any drug safety exchange agreement shall be subject to the reasonable comments of the ROW Partners and mutual agreement of DSP, Neurocrine and the ROW Partners, and shall not include any monetary consideration.

ARTICLE FOUR
STEERING COMMITTEE

4.1 Creation; Mission. Within sixty (60) days after the Effective Date, Neurocrine and DSP shall form a steering committee (the “Steering Committee”) to oversee the Development in the Territory. The Steering Committee shall, subject to Section 4.4, have the following responsibilities: (i) to discuss policies for the Development in the Territory and the Rest of World, (ii) to coordinate activities of Development in the Territory with activities of Development in Rest of World, (iii) to review and monitor the annual plans of Development for the Territory including review of non-clinical and clinical study protocols, (iv) to coordinate data exchange and preparation of Regulatory

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Filings including right of inspection of data which will be used for Regulatory Filings in the Territory, (v) to formulate a plan consistent with the Rest of World plan for reporting to one another and Regulatory Authorities, Safety Data reported or arising in the Development and (vi) to decide such other activities which the Parties agree to consign to the Steering Committee.

4.2 Secretary. A secretary to the Steering Committee shall be appointed on an annual basis and shall rotate between those designated by DSP and Neurocrine, with DSP providing the first such secretary. The secretary shall be responsible for scheduling semi-annual meetings, distributing meeting materials in advance of meetings and meeting minutes following meetings. The secretary shall also be empowered to call special meetings on request of any Steering Committee member and the secretary shall not unreasonably withhold or delay consent to call such a meeting upon request. The Party whose designated Steering Committee member requested such special meeting shall send notices and agenda for such meetings to the other Party and to each Steering Committee member.

4.3 Meetings. The Steering Committee shall meet no less frequently than every six (6) months. Steering Committee meetings may be by teleconference or by videoconference as well as in person, with at least one face-to-face meeting per annum, timing of which shall be decided by mutual agreement of the Parties. Each Party shall be responsible for expenses incurred by its designated members of the Steering Committee incurred in attending or otherwise participating in Steering Committee meetings. The location for face-to-face meetings shall alternate between Japan and California, unless otherwise agreed by the Parties.

4.4 Members and Decisions of the Steering Committee . All decisions of the Steering Committee shall be made in good faith and shall be unanimous. The Steering Committee shall consist of at least three (3) members from each of Neurocrine and DSP (with Neurocrine and DSP having equal representation). If the required vote for decision cannot be obtained (i.e., if all members of the Steering Committee cannot unanimously agree on a decision on such matter), the undecided matter (each an “ Undecided Matter ”) shall be submitted to the Chief Executive Officer of Neurocrine and Executive Director, Drug Development Division or other representative of DSP of the same or higher level for resolution. In the event the Undecided Matter is, [...***...], the Neurocrine Chief Executive Officer and the DSP Executive Director, Drug Development Division or other representative of the same or higher level shall discuss in good faith a resolution of the matter [...***...] shall be entitled to make the final decision; provided that, such decision shall be made in good faith; and provided further that, such decision shall not [...***...] and such decision shall not [...***...] under this Agreement. In the event the Undecided Matter is, in the reasonable opinion of the Chief Executive Officer of Neurocrine, [...***...], the Neurocrine Chief Executive Officer and the DSP Executive Director, Drug Development Division or other representative of the same or higher level shall discuss in good faith a resolution of the matter that addresses both [...***...] shall be entitled to make the final decision; provided that, such decision shall be made in good faith in the best interests of Development and Commercialization in the Territory. The Parties agree that matters relating to [...***...]. Notwithstanding the foregoing, in the event the Undecided Matter concerns [...***...] shall be entitled to make the final decision regarding the matter.

     (a) Prior to each regularly scheduled meeting of the Steering Committee, the Parties shall distribute to each other written copies of all materials intended to be

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submitted at the Steering Committee meeting plus, to the extent not set forth in the Steering Committee materials, a written report outlining material data and information arising out of each Party’s Development activities. Within sixty (60) days after the internal review board of DSP approves the non-clinical and clinical protocols, DSP shall provide Neurocrine with English language copies of synopses/summaries of all protocols for Product non-clinical and clinical studies and upon further request of Neurocrine, DSP shall provide to Neurocrine an English translation of the full protocols for those non-clinical and clinical protocols specified by Neurocrine. The cost of the English translation of the full protocols shall be equally shared by the Parties.

     (b) In the event that after receipt of any such materials or report, either Party shall reasonably request additional data or information relating to any Neurocrine Program Data, DSP Data (as defined in Section 5.2(c)) or Technology licensed hereunder, the Party to whom such request is made shall promptly provide to the other Party such data or information.

     (c) In addition to the Steering Committee materials and reports, (i) in the event of any material development under the Neurocrine Development Program, Neurocrine shall notify DSP of such event and promptly provide DSP with such information regarding the event as is reasonably available to Neurocrine and (ii) in the event of any material development under the DSP Development Program, DSP shall notify Neurocrine of such event and promp