LICENSE AND SUPPLY AGREEMENT

Exhibit 10.18

LICENSE AND SUPPLY AGREEMENT

This Agreement dated this 31st day of March, 2003, by and between Cardinal Health P.R. 409 B.V. having its principal offices at Rd 925 Km 6.1, Bo. Junquito, Humacao PR 00791 (hereafter called “ Cardinal Health ”), and SkinMedica, Inc. (hereafter called “ Purchaser ”), having its principal offices at 5909 Sea Lion Place, Suite H, Carlsbad, CA 92008.

BACKGROUND

A. Cardinal Health specializes in manufacture, packaging and related services for the pharmaceutical and cosmeceutical industries and has certain technical and commercial information and know-how relating thereto.

B. Purchaser is a Delaware corporation engaged in the business of marketing dermatological products.

C. Purchaser desires to engage Cardinal Health to manufacture and supply certain of Purchaser’s products.

D. Cardinal Health is the owner of certain proprietary patented packaging technology commonly referred to as the DelPouch, which can be used in the unit-dose packaging of topical pharmaceutical and cosmeceutical products as well as certain proprietary delivery technology commonly referred to as Microsponge.

E. Purchaser desires to acquire from Cardinal Health, and Cardinal Health desires to grant to Purchaser, an exclusive right to purchase certain Products as set forth herein using the aforesaid proprietary patented technologies upon the terms and conditions set forth herein.

TERMS

In consideration of the mutual promises made by the parties hereto and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, intending to be legally bound, the parties hereto agree as follows:

1. DEFINITIONS

The following terms as used in this Agreement shall have the meanings set forth in this Article unless the context clearly indicates to the contrary:

(a) “ Affiliate(s) ” with respect to Cardinal Health, means Cardinal Health 400, Inc. (Sterile); Cardinal Health 402, Inc. (Development); Cardinal Health 403, Inc. (Oral); Cardinal Health 404, Inc. (Oral); Cardinal Health 405, Inc. (Development); Cardinal Health 407, Inc. and its subsidiaries (Packaging); Cardinal Health 409, Inc. and its subsidiaries (Oral); Cardinal Health P.R. 409 B.V. (Sterile); Cardinal Health 410, Inc. (Sterile); Cardinal Health 411, Inc. (Commercialization); and any other subsidiary of Cardinal Health, Inc. as may be designated by Cardinal Health, Inc. With respect to Purchaser, “Affiliate” means any corporation, firm, partnership or other entity which controls, is controlled by or is under common control with a party. For purposes of this definition, “ Control ” shall mean the ownership of at least fifty percent (50%) of the voting share capital of such entity or any other comparable equity or ownership interest.

(b) “ Agency ” shall mean any governmental regulatory authority involved in regulating any aspect of the development, Manufacturing, market approval, sale, distribution or use of the Product in the Territory.

(c) “ Benzoyl Peroxide Products ” shall mean collectively the trade and sample products to be Manufactured under this Agreement in three (3) concentrations of benzoyl peroxide packaged both in a tube and DelPouch as requested by Purchaser in accordance with the terms and conditions of this Agreement, as described more completely on Attachment 2.

(d) “ Calendar Quarter ” shall mean each three (3) month calendar period ending on the last day of March, June, September, or December of a given year.

(e) “ Cardinal Health Materials ” means all Cardinal Health Confidential Information, the Cardinal Health Patents, other intellectual property and developments (including all know-how, inventions, designs, concepts, improvements, technical information, manuals, instructions or specifications), owned, licensed or used by Cardinal Health for drug delivery, or in developing or Manufacturing of Products and the packaging equipment, processes or methods of Manufacturing, or any improvements to any of the foregoing, including any container, pouch, vial, ampoule or other form of container developed by Cardinal Health.

(f) “ Cardinal Health Patent(s) ” means the Patent(s) set forth in Attachment 1.

(g) “ Certificate of Analysis ” means a summary of the quality control testing, as described in the Specifications, performed by the Cardinal Health for Products supplied under this Agreement.

(h) “ cGMP ” means current Good Manufacturing Practices of the U.S. Food and Drug Administration, as may be amended from time to time.

(i) “ Contract Year ” means each twelve (12) month period during the Term which begins on the Effective Date or anniversary of the Effective Date.

(j) “ Delivery Date ” shall mean the date set forth in the relevant Purchase Order on which Cardinal Health must supply Purchaser with Products pursuant to Section 6(c).

(k) “ DelPouch ” means certain proprietary patented packaging technology owned by Cardinal Health and described in U.S. Patent No. 6,007,264.

(l) “ Effective Date ” shall mean the date set forth on page 1 of this Agreement.

(m) “ EpiQuin Product ” shall mean the trade and sample products to be Manufactured under this Agreement containing EpiQuin and packaged in a DelPouch in accordance with the terms and conditions of this Agreement, as described more completely on Attachment 2.

(n) “ Facility ” shall mean Cardinal Health’s facility at Road 925 Km. 6.1 Bo. Junquito, Humacao, PR 00791 or facility at State Road #3 Km. 82.2 Humacao, P.R. 00791 or such other facility as agreed by the parties.

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(o) “ Force Majeure ” shall mean any of the following events or conditions, provided that such event or condition did not exist as of the date of execution of this Agreement, was not reasonably foreseeable as of such date and is not reasonably within the control of either party and prevents as a whole or in material part, the performance by a party of its obligations hereunder: acts of state, governmental or regulatory action, orders, legislation, regulations, restrictions, priorities or rationing, riots, disturbance, war (declared or undeclared), terrorism, strikes, lockouts, slowdowns, prolonged shortage of energy supplies, interruption of transportation, embargo (inability to procure or shortage of supply materials, equipment or production facilities), delay of subcontractors or vendors, acts of God, fire, earthquake, flood, hurricane, typhoon, explosion and accident.

(p) “ Manufacture/Manufactured/Manufacturing ” shall mean the compounding, filling, packaging and testing of the Products as provided in this Agreement, the Development Plan (as defined in Section 2, below), applicable master batch records and the Specifications, including the development, scale-up, validation, stability, formulation, finished product testing.

(q) “ Microsponge ” means certain proprietary patented technology owned or licensed by Cardinal Health and described in U.S. Patent Nos. 5,145,675 and 4,690,825.

(r) “ Patent(s) ” shall mean (i) valid United States patents, reexaminations, reissues, renewals, extensions, term restorations, divisionals, continuations and continuations in part thereof, and foreign counterparts thereof, and (ii) pending applications for the United States and foreign patents and foreign counterparts thereof. “ Patent ” also includes a Supplementary Certificate of Protection of a member state of the European Community and any other similar protective rights in any other country.

(s) “ Product(s) ” shall mean each of or any of the products set forth on Attachment 2 Manufactured pursuant to this Agreement and the Specifications which (i) in the absence of this Agreement, the use, sale or distribution of which would result in the infringement of one or more claims in the Cardinal Health Patents; or (ii) utilize Cardinal Health Materials.

(t) “ Purchase Order ” shall mean a written document issued by Purchaser to Cardinal Health in accordance with Section 6(c) hereof, authorizing Cardinal Health’s performance of Manufacturing and other related services pursuant to the terms of this Agreement.

(u) “ Purchaser’s Materials ” shall mean all Purchaser Confidential Information, intellectual property and developments owned, developed or provided by Purchaser, including, without limitation, Patents, patent applications, know-how, inventions, designs, concepts, improvements, technical information, trademarks or trade names relating to such materials.

(v) “ Raw Materials ” means all raw materials, supplies, components and packaging necessary to manufacture the Product in accordance with the Specifications.

(w) “ Scope of Work ” shall mean the responsibilities of Cardinal Health and Purchaser as set forth in Attachment 4.

(x) “ Specifications ” shall mean the specifications and quality control testing for each Product mutually agreed upon by the parties promptly after the completion of the formulation work in the Development Phase (as defined in Section 5(a)) for such Product. The Specifications may be amended or modified only upon the written agreement of both parties.

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(y) “ Territory ” shall mean the United States, its territories, commonwealths and possessions.

(z) “ Tube Agreement ” shall mean the Manufacturing and Supply Agreement between Enhanced Derm Technologies, Inc. and SkinMedica dated June 15, 2002.

2. DEVELOPMENT, SUPPLY, AND GRANT OF LICENSE

(a) Development Plan . Within *** following the execution of this Agreement, the parties shall execute a development plan for each Product (“ Development Plan ”). The Development Plan shall set forth the responsibilities of the parties covering the activities and timing for the formulation and process development studies, package development and filling studies, pilot scale compounding and filling studies, pre-validation compounding and filling studies, and validation and stability testing to support (i) transfer of the finalized EpiQuin formulation to Puerto Rico, (ii) transfer of the finalized Benzoyl Peroxide formulation to Puerto Rico, and (iii) finalization of the DelPouch packaging. In the event of a conflict between the terms of this Agreement and the Development Plan, this Agreement shall control.

(b) ***

(c) Supply . Cardinal Health shall supply, and Purchaser shall purchase and pay for the Products, subject to the terms and conditions of this Agreement, including the Scope of Work. Subject to the terms of Section 5(d), Cardinal Health agrees that Purchaser shall have the following exclusive purchase rights during the Term of the Agreement:

(i) Purchaser shall have the exclusive right to purchase from Cardinal Health the EpiQuin Product (or any other product that contains hydroquinone as an active ingredient) in the DelPouch, but solely for use in the field of pigmentation disorders in the Territory, and solely to the extent they are available by prescription, but not including any such product in a DelPouch that is sold to a consumer without a prescription; and

(ii) Purchaser shall have the exclusive right to purchase from Cardinal Health the Benzoyl Peroxide Products (or any other product that contains benzoyl peroxide as the sole active ingredient) in the DelPouch for use in the Territory to the extent they are available by prescription, but not including any benzoyl peroxide product in a DelPouch that is sold to a consumer without a prescription.

(iii) Purchaser shall have the exclusive right to purchase from Cardinal Health the Benzoyl Peroxide Products as formulated with Microsponge in a tube for use in the Territory to the extent they are available by prescription, but not including any benzoyl peroxide product in a DelPouch that is sold to a consumer without a prescription, provided, however, that Cardinal Health shall be entitled to continue supplying two current customers (and their successors or assigns) of Cardinal

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Health affiliates, who are currently purchasing benzoyl peroxide Microsponge entrapment from Cardinal Health affiliates. Cardinal Health and its Affiliates agree not to supply benzoyl peroxide Microsponge entrapment, where benzoyl peroxide is the sole active ingredient, or the Microsponge to any third party (“Third Party Purchaser”) other than the two current customers unless the Third Party Purchaser agrees in writing not to market, use, or distribute such material, or supply it to others to market, use, or distribute in a prescription product in the Territory where benzoyl peroxide is the sole active ingredient.

For purposes of clarity, Cardinal Health agrees that Cardinal Health and its Affiliates shall not supply the Products, directly or indirectly, to any third party, including to its Affiliates, except (i) as set forth in subsection 2(c)(iii), or (ii) to the extent such Products are sold outside of the Territory, or (iii) to the extent such Products are available without a prescription, or (iv) in the case of the Benzoyl Peroxide Products, to the extent such Products contain another active ingredient in addition to benzoyl peroxide, or (v) in the case of the EpiQuin Products, to the extent such Products have an indication outside the field of treatment of pigmentation disorders.

(d) To the extent not prohibited by law, Purchaser shall not sell or distribute any Product to customers outside of the Territory or to any party whom Purchaser knows, or has reason to believe, may export a Product outside the Territory. Purchaser shall obtain a representation and warranty from third party customers purchasing the Product from SkinMedica that such customers shall use, sell or distribute the Products solely in the Territory. Purchaser shall take all reasonable actions within its legal rights and powers to cause such third parties to cease such exportation.

(g) Purchaser shall promote, market, and sell the Products only for use in the Territory. Purchaser shall use commercially reasonable efforts and make reasonable expenditures to market and promote sales of the Products for use in the Territory. Purchaser’s good faith efforts and expenditures will be at least comparable to Purchaser’s efforts and expenditures for other Purchaser products. Purchaser shall maintain a qualified sales organization sufficient to cover the Territory as accepted by industry standards, and Purchaser shall ensure that it gives proper coverage to the Products throughout the Territory on a regular basis. During the term of this Agreement, Purchaser shall not, without Cardinal Health’s prior written consent, directly or indirectly, manufacture, promote or sell any product containing benzoyl peroxide or EpiQuin in the concentrations identified in Attachment 2 other than those Products to be manufactured under this Agreement and the Tube Agreement.

(h) Trademark .

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3. RAW MATERIALS AND ARTWORK

(a) Raw Material . Cardinal Health shall be responsible for procuring, inspecting and releasing adequate Raw Materials to Manufacture the Products. If Customer insists on a specific supplier to be used for a Raw Material, Customer shall be responsible for the timeliness of supply, quantity of supply and quality of supply of such Raw Materials. If Cardinal Health provides reasonable documentation indicating that the cost of any such Raw Material is greater than Cardinal Health’s costs for such Raw Material of equal quality from other vendors, Cardinal Health shall add the difference between Cardinal Health’s cost of the Raw Material and Customer’s mandated supplier’s cost to the Price of the Product. Customer will be responsible for all direct costs associated with qualification of a new supplier of a Raw Material not previously qualified by Cardinal Health.

(b) Artwork . Purchaser shall provide approved specifications for labeling and packaging and approved artwork, trade dress, advertising and packaging information (collectively “ Artwork ”) to be used by Cardinal Health to Manufacture the Product or approve such items in writing prior to procurement of Raw Materials. Artwork shall be considered a part of the Specifications.

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(c) Reimbursement for Materials . Cardinal Health shall use reasonable commercial efforts to maintain appropriate quantity of Raw Materials to meet the Firm Commitment. In the event of (i) a Specification change for any reason; or (ii) expiration or termination of this Agreement for any reason, Customer shall bear the cost of any unused Raw Materials.

4. SHIPPING AND PAYMENT

(a) Shipping . Subject to the following provisions, all Product will be delivered F.O.B. the Facility. The common carrier shall be selected by Purchaser and title and risk of loss of the Product shall pass to Purchaser upon delivery by Cardinal Health. Purchaser shall insure the Product in transit.

(b) Payment . Cardinal Health shall invoice Purchaser ***; provided, however, that if Purchaser requests that Cardinal Health delay delivery beyond the delivery date specified in Purchaser’s Purchase Order, Cardinal Health shall invoice Purchaser on ***. Purchaser shall make full payment of each invoice to Cardinal Health, at the address specified on the invoice, no later than *** from the date of receipt of such invoice. If Purchaser has not made payment in full by the expiration of such *** period, Cardinal Health may, at its option elect to: (i) charge a late payment fee on such unpaid amount equal to *** per month of such unpaid amount; or (ii) suspend any further deliveries hereunder until such invoice is paid in full.

(c) Bill and Hold . If Purchaser fails to take delivery on any scheduled Delivery Date, Purchaser shall be invoiced on the first day of each month for reasonable administration and storage costs. For each such lot of undelivered Product, Purchaser agrees that: (i) Purchaser has made a fixed commitment to purchase such Product, (ii) risk of ownership for such Product passes to Purchaser, (iii) such Product shall be on a bill and hold basis for legitimate business purposes, (iv) if no delivery date is determined at the time of billing, Cardinal Health shall have the right to ship the Product to Purchaser within four months after billing, and (v) Purchaser will be responsible for any decrease in market value of such Product that relates to factors and circumstances outside of Cardinal Health’s control. Within *** following a written request from Cardinal Health, Purchaser shall provide Cardinal Health with a letter confirming items (i) through (v) of this Section for each batch of undelivered Product.

(d) Advance Payment . If at any time, in Cardinal Health’s reasonable determination, Purchaser’s credit is materially impaired, Cardinal Health shall have the right to require payment in advance before making any further shipment of the Product. If Purchaser shall fail, within a reasonable time, to make such payment in advance, or if Purchaser shall fail to make payment when due, Cardinal Health shall have the right, at its option, to suspend any further deliveries hereunder until such default is corrected, without thereby releasing Purchaser from its obligations under this Agreement.

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5. DEVELOPMENT FEES, PRICING, AND MINIMUM VOLUMES

(a) Development Fees. Purchaser has previously paid Cardinal Health the development fee for the EpiQuin Products under the Tube Agreement. Purchaser shall pay Cardinal Health a prototype development fee of *** for the Benzoyl Peroxide Products upon execution of this Agreement. Purchaser shall pay *** of the prototype development fee for Benzoyl Peroxide Products on the Effective Date and the remaining *** upon completion of the development of three prototype formulations for the Benzoyl Peroxide Products. Cardinal Health agrees to use commercially reasonable efforts to complete development of the three prototype formulations by June 30, 2003.

(b) Product Price . Purchaser shall pay to Cardinal Health the price for Manufacturing and supplying the Product, as set forth in Attachment 5 attached hereto (“ Price ”). Any tax (other than Cardinal Health’s income or franchise taxes), however denominated and measured, imposed upon the Product or upon its Manufacture, production, packaging, storage, inventory, sale, distribution, transportation, delivery, use or consumption shall be paid by Purchaser.

(c) Price Adjustments . The Price is subject to adjustment *** per Contract Year, effective on each anniversary date of this Agreement, upon *** written notice from Cardinal Health to Purchaser in an amount up to ***. In addition to the foregoing, Cardinal Health shall be entitled to pass through the actual amount of all price increases for Raw Materials beyond the *** that are reasonably documented by Cardinal Health to Purchaser. Upon request, Cardinal Health shall provide reasonable supporting documentation for such increases.

(d) Minimum Requirement .

(i) Purchaser shall purchase the minimum volume of *** units of EpiQuin Product (“ Minimum EpiQuin Requirement ”) during each twelve (12) month period, the first of which shall begin upon first acceptance of a shipment of an EpiQuin Product by Purchaser. A unit is a single DelPouch sample or single use trade size. One (1) trade size tube equals sixty (60) units of EpiQuin Product. The parties further agree that Purchaser’s purchase of EpiQuin Products from Enhanced Derm Technologies, Inc. (“ EDT ”) under the Tube Agreement shall count towards the Minimum EpiQuin Requirement. If Purchaser does not submit purchase orders to Cardinal Health with delivery dates sufficient to meet such Minimum EpiQuin Requirement during each applicable *** period, at least *** prior to end of such *** period, Cardinal Health shall provide Purchaser a written notice of its failure to satisfy the Minimum EpiQuin Requirement. If Purchaser does not respond to such written notice within *** and ***, Cardinal Health may convert the exclusive purchase rights granted by Cardinal Health to Purchaser for the EpiQuin Products under Section 2(c)(i) to non-exclusive purchase rights for the EpiQuin Products.

(ii) Purchaser shall purchase the minimum volume of *** units of the Benzoyl Peroxide Products in DelPouch (“ Minimum BPO DelPouch Requirement ”) and

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*** of Benzoyl Peroxide Products (“ Minimum BPO Tube Requirement ”) during each *** period, the first *** period to begin upon first acceptance of a shipment of a Benzoyl Peroxide Product by Purchaser. A unit is a single DelPouch sample or single use trade size. If Purchaser does not submit purchase orders to Cardinal Health with delivery dates sufficient to purchase the Minimum BPO DelPouch Requirement or the Minimum BPO Tube Requirement during each applicable *** period, at least *** prior to end of such *** period, Cardinal Health shall provide Purchaser a written notice of its failure to satisfy such requirements and the parties shall have the following options:

(a) If (i) Purchaser submits purchase orders to Cardinal Health with delivery dates sufficient to purchase *** units of Benzoyl Peroxide Products in DelPouch, and (ii) Purchaser does not pay to Cardinal Health the difference between the total amount Purchaser would have paid to Cardinal Health if Purchaser had purchased *** units of Benzoyl Peroxide Product in DelPouch and the sum of all purchases of Benzoyl Peroxide Product in DelPouch from Cardinal Health during such *** period, then Cardinal Health may convert the exclusive purchase rights granted by Cardinal Health to Purchaser for the Benzoyl Peroxide Products under Section 2(c)(ii) to non-exclusive purchase rights for the Benzoyl Peroxide Products.

(b) If (i) Purchaser submits purchase orders to Cardinal Health with delivery dates sufficient to purchase less than *** of Benzoyl Peroxide Products in DelPouch, and (ii) Purchaser does not pay to Cardinal Health the difference between the total amount Purchaser would have paid to Cardinal Health if Purchaser had purchased *** units of Benzoyl Peroxide Product in DelPouch and the sum of all purchases of Benzoyl Peroxide Product in DelPouch from Cardinal Health during such *** period, then Cardinal Health shall have the right to terminate the exclusive purchase rights in Section 2(c)(ii) and terminate its supply to Purchaser of the Benzoyl Peroxide Products in a DelPouch.

(c) If (i) Purchaser submits purchase orders to Cardinal Health with delivery dates sufficient to purchase *** units of Benzoyl Peroxide Products in a tube, and (ii) Purchaser does not pay to Cardinal Health the difference between the total amount Purchaser would have paid to Cardinal Health if Purchaser had purchased *** units of Benzoyl Peroxide Product in a tube and the sum of all purchases of Benzoyl Peroxide Product in a tube from Cardinal Health during such *** period, then Cardinal Health may convert the exclusive purchase rights granted by Cardinal Health to Purchaser for the Benzoyl Peroxide Products in a tube under Section 2(c)(iii) to non-exclusive purchase rights for the Benzoyl Peroxide Products.

6. FORECAST, PURCHASE AND SUPPLY

(a) Purchase and Supply . During the Term of this Agreement and subject to subsection (d) of this Section 6, Purchaser shall purchase and Cardinal Health shall supply such quantities of Product as shall be set forth on Purchase Orders issued by Purchaser to Cardinal