LICENSING AGREEMENT

1 -

DEFINITIONS

1.1

“ AFFILIATED COMPANIES ” or “ AFFILIATES ” means: (i) any entity, more than fifty percent (50%) of the voting equity interests of which is owned and/or controlled directly or indirectly by the referenced party; (ii) any entity which directly or indirectly owns and/or controls more than fifty percent (50%) of the voting equity interests of the referenced party; (iii) any entity which is directly or indirectly under common control of the referenced party through common shareholding or which is directly or indirectly under common control of the respective shareholders of the referenced party. For purposes of this Agreement, only Arius Pharmaceuticals, Inc., a Delaware corporation, shall be deemed to be an AFFILIATE or AFFILIATED COMPANY of the Company.

1.2

“ AGENCY ” means any regulatory authorities, including but not limited to, the U.S. Securities and Exchange Commission, the EMEA and FDA and other agencies responsible for granting any marketing registration or pricing approval, if applicable, necessary so the PRODUCTS may be marketed in the TERRITORY.

1.3

“ COMPOUNDS ” means the four chemical compounds listed on Exhibit B attached hereto, covered by certain patents and know-how owned or under the CONTROL of SIGMA-TAU or its AFFILIATES. With the prior written approval of BDSI, other chemical compounds for use within the FIELD may be added from time to time by SIGMA-TAU or its AFFILIATES.

1.4

“ CONTROL ” means possession of the ability, whether by ownership or license, to grant a license or sublicense as provided for herein without violating the terms of any agreement or other arrangements with any third party.

1.5

“ EFFECTIVE DATE ” shall have the meaning set forth in the introductory paragraph.

1.6

“ EMEA ” means the European Agency for the Evaluation of Medicinal Products and any successor agency thereto.

1.7

“ FDA ” means the United States Food and Drug Administration and any successor agency thereto.

1.8

“ FIELD ” means solely for use of the PRODUCTS in oncology, cardiovascular and immunology pharmaceuticals.

1.9

“ IND ” means an Investigational New Drug Application filed with the FDA or a corresponding application filed with an AGENCY with respect to development of the COMPOUNDS into a PRODUCT in the FIELD applicable in any country in the TERRITORY.

1.10

“ KNOW-HOW ” means all information and data, technical information, trade secrets, specifications, instructions, processes, formulae, expertise and information relating to the PATENTS in the FIELD which are: (i) developed and owned by or under the CONTROL of BDSI or any AFFILIATE thereof as of the EFFECTIVE DATE or during the term of this Agreement and (ii) used or potentially useable by SIGMA-TAU in connection with the development, registering, using, manufacturing and commercializing of the PRODUCTS in the FIELD.

1.11

“ MARKETING AUTHORIZATIONS ” mean the authorizations issued by the AGENCY which are necessary for the marketing, use, distribution and sale of the PRODUCTS in the TERRITORY.

1.12

“ NET SALES ” mean, with respect to the PRODUCTS, the proceeds actually derived from the sales of the PRODUCTS by SIGMA-TAU or any of its AFFILIATES to independent third party in the FIELD in the TERRITORY less: (i) trade and cash discounts actually allowed, (ii) credits or allowances for damaged, outdated or returned PRODUCTS actually paid, (iii) reasonable transportation and handling charges, (iv) reasonable insurance expenses and (v) value added tax and sales taxes imposed directly upon such sale, if any.

1.13

“ PATENTS ” means: (i) all the patents and the patent applications relating to drug cochleate composition, cochleate delivery system (including but not limited to, BDSI’s lipid-based cochleate delivery system) and cochleate formulations developed and owned by or under the CONTROL of BDSI or any AFFILIATE thereof as of the EFFECTIVE DATE, as specifically set forth and described on Exhibit A attached hereto and/or related or similar patents and patent applications relating to such delivery systems owned by or under the CONTROL of BDSI or any AFFILIATE thereof during the term of this Agreement; (ii) all patents arising from said applications and all patents and/or patent applications based upon and/or claiming the priority date(s) of any of the foregoing; (iii) any additions, divisions, continuations, continuations-in-part, amendments, amalgamations and reissues of such applications or patents; (iv) any confirmation, importation or registration patents thereof or therefor; and (v) any extensions and renewals of all such patents and/or patent applications in whatever legal form and/or by whatever legal title they are granted, including but not limited to, Supplementary Protection Certificate(s) or equivalent.

1.14

“ PRODUCTS ” means any product in finished pharmaceutical form for use and sale in the FIELD containing the COMPOUNDS formulated with and incorporating the PATENTS and KNOW-HOW and covered by a VALID CLAIM.

1.15

“ ROYALTY CALENDAR YEAR ” means each calendar year (January 1 - December 31) during the term hereof provided that the first ROYALTY CALENDAR YEAR shall begin on the first day of the month during which the PRODUCTS is first launched in a country of the TERRITORY and shall end on December 31 of the following calendar year.

1.16

“ STEERING COMMITTEE ” means a committee with the authority to determine, approve and coordinate any research and development activities connected with the PRODUCTS which may be brought to the attention of said committee throughout the term of this Agreement by either party.

1.17

“ TERRITORY ” means all the countries of the world.

1.18

“ TRADEMARK ” means any and all trademarks, their back-ups and clones, which shall be chosen, owned, filed, registered under SIGMA-TAU’s name and at its cost, or which is under the CONTROL of SIGMA-TAU or of any of its AFFILIATED COMPANIES and shall be used to identify the PRODUCTS (when commercialized) in the TERRITORY, including domain names.

1.19

“ VALID CLAIM ” means, on a country-by-country basis, a granted claim within the PATENTS, which has not been held invalid and/or unenforceable in a decision of a patent office, court or other government agency of competent jurisdiction, unappealable or unappealed within the time frame allowed for appeal.

It is understood that the definitions above shall have the same meaning regardless of whether a term is used in the singular or plural form.

2 -

GRANT OF RIGHTS

BDSI hereby grants to SIGMA-TAU and SIGMA-TAU hereby accepts the sole and exclusive license under the PATENTS and the KNOW-HOW to use, offer for sale, sell, develop, manufacture, and have manufactured the PRODUCTS in the FIELD in the TERRITORY, with the right to grant sublicenses relating only to PRODUCTS in the FIELD in the TERRITORY. Any such sublicense shall be in substantially the same form and contain all of the material terms contained in this Agreement.

3 -

EXCHANGE OF INFORMATION; CONFIDENTIALITY

3.1

Promptly after the EFFECTIVE DATE, BDSI agrees to make available to SIGMA-TAU all the KNOW-HOW.

3.2

To the best of BDSI’s knowledge, BDSI represents and warrants that the PATENTS are in full force and effect and have been maintained to date. BDSI shall periodically disclose to SIGMA-TAU on an ongoing basis during the term of this Agreement any other PATENTS and KNOW-HOW under the CONTROL of BDSI useful to SIGMA-TAU in order to develop, register, make, have made, use and commercialize the PRODUCTS in the FIELD in the TERRITORY.

3.3

It is acknowledged and agreed that the existing and/or already conceived inventions, discoveries and technologies of SIGMA-TAU and BDSI are their separate property and are not affected by this Agreement. Any and all inventions, discoveries or improvements, whether patentable or not, relating to cochleated COMPOUNDS and any analogs or derivatives thereof conceived and/or reduced to practice solely or jointly by employees of BDSI and/or SIGMA-TAU under this Agreement (“Inventions”) shall be the sole and exclusive property of SIGMA-TAU, provided that any Inventions consisting of improvements to the PATENTS and KNOW-HOW that exist independently of the COMPOUNDS (the “BDSI Technology Inventions”) shall be the sole and exclusive property of BDSI. The Parties shall execute any and all agreements, including assignments or licenses as appropriate, to effectuate ownership as contemplated by this Section 3.3. The Parties agree to maintain common ownership between patentably indistinct Inventions.

3.4

In order to facilitate the flow of information between the parties under this Agreement, the parties shall form a STEERING COMMITTEE composed of an even number of members equally designed by each of the parties. The STEERING COMMITTEE shall use its commercially reasonable efforts ensure a good communication and the necessary flow of information between the parties. Meetings of the STEERING COMMITTEE shall be held at locations designated by

the parties on a quarterly basis or as the STEERING COMMITTEE may otherwise deem necessary and may be held by teleconference or videoconference. At these meetings, progress of the work over the preceding period shall be discussed and the parties will discuss, formulate and agree to plans, including but not limited to the DEVELOPMENT PLAN (as defined in Section 4.1 below) and other plans and strategy for achieving the goals of the collaboration. Also, at these meetings each party will supply the other with progress reports summarizing any and all pre-clinical, clinical and technical activities conducted over the prior three-month period. At these meetings, either party shall be entitled to ask and to receive from the other party any detail on any and all aspects of the activities performed by the other party.

3.5

SIGMA-TAU and BDSI agree to keep and have kept in strict confidence all Confidential Information (as defined below) received from the other party under the terms of this Agreement. SIGMA-TAU and BDSI agree to use Confidential Information only for the purposes of this Agreement and pursuant to the rights granted to, respectively, SIGMA-TAU and BDSI under this Agreement and in no way harmful to or competitive with the other party. In particular, SIGMA-TAU and BDSI agree not to disclose such information and data to any third party other than:

   (i)

their respective AFFILIATED COMPANIES; or

   (ii)

their respective officers, directors, employees, AFFILIATES, agents and representatives, but solely to the extent necessary for furthering the purposes of this Agreement, provided that any such person or entity agrees in writing to maintain the confidentiality of the Confidential Information in a manner consistent with the confidentiality provisions of this Agreement.

SIGMA-TAU acknowledges that, in addition to protecting the legitimate business purposes of the parties hereto, a purpose of the foregoing confidentiality provisions is so that BDSI may maintain compliance with Regulation FD promulgated by the Securities and Exchange Commission.

Notwithstanding the foregoing, each party may disclose Confidential Information: (i) to any AGENCY to the extent that such disclosure: (A) is necessary for the purposes of this Agreement and/or (B) is legally required or (ii) pursuant to any subpoena or valid order of a court or any other governmental body. The receiving party may only make the foregoing permitted disclosures if it limits disclosure to that purpose, after giving the disclosing party prompt written notice of any instance of such a requirement in reasonable time for the disclosing party to take steps to object to or to limit such disclosure. In the event of disclosures required by law, the receiving party shall cooperate with the disclosing party as reasonably requested thereby.

As used in this Agreement, the term “Confidential Information” means, with respect to either party, as the case may be, any oral or written knowledge, trade secrets, technical data, mechanical equipment, know-how or other information of any kind, including, but not limited to, that which relates to research, data, algorithms, formulae, chemical entities, compounds, reaction maps, mixtures, product plans, products, services, customers, organization, markets, software, developments, inventions, patents and other intellectual property, manufacturing processes,

methods, designs, drawings, product or satisfaction surveys, questionnaires, marketing or finances and any written or oral plans, lists or other documentation of a party, regardless of how memorialized. Without limiting the generality of the foregoing, Confidential Information includes any reports or documents created by the receiving party that include, summarize or refer to the disclosing party’s Confidential Information disclosed hereunder.

The term “Confidential Information” does not include information that: (i) is in the possession of the receiving party at the time of disclosure without violation of any duty to the disclosing party, as shown by the receiving party’s files and records immediately prior to the time of disclosure, (ii) prior or after the time of disclosure becomes part of the public knowledge or literature, not as a result of any inaction or action of the receiving party; or (iii) is approved by the disclosing party, in writing, for release.

Neither party receiving Confidential Information hereunder shall use such Confidential Information to contest or challenge any protected rights or applications for protection of rights of the disclosing party hereunder concerning any matters addressed in the Confidential Information, and the receiving party shall refrain from undertaking any action which, to its knowledge, could affect such protected rights or impede any applications by using Confidential Information.

3.7

The confidentiality obligations herein contained shall last during and for a period of beginning on the EFFECTIVE DATE and ending on the later to occur of: (i) the EXPIRY DATE (as defined in Section 11.1 hereof) or (ii) ten (10) years after the pre-EXPIRY DATE termination of this Agreement.

3.8

Each party agrees that its obligations hereunder with respect to the confidentiality and use of the other party’s Confidential Information (the “Confidentiality Provisions”) are necessary and reasonable in order to protect the other party and the other party’s business, and expressly agrees that monetary damages would be inadequate to compensate the other party for any breach of any Confidentiality Provision. Accordingly, each party agrees and acknowledges that any such violation or threatened violation will cause irreparable injury to the other party and that, in addition to any other remedies that may be available, in law, in equity or otherwise, the other party shall be entitled to obtain injunctive relief against the threatened breach of the Confidentiality Provisions or the continuation of any such breach, without the necessity of proving actual damages and without the necessity of posting bond or other security.

4 -

DEVELOPMENT

4.1

SIGMA-TAU shall be responsible for conducting pre-clinical, clinical and other trials necessary or advisable to process encochleated COMPOUNDS in order to register and commercialize the PRODUCTS in the FIELD in the TERRITORY. As soon as possible after signature hereof (the parties envisage within sixty (60) days from EFFECTIVE DATE), and provided that BDSI fulfils its obligations under Sections 3.1 and 3.2 above, SIGMA-TAU and BDSI shall mutually agree upon a plan setting forth the respective duties and responsibilities for, among other matters as may be agreed to, the encochleation of the COMPOUNDS and the development and registration of the PRODUCTS in the FIELD (hereinafter referred to as

“DEVELOPMENT PLAN”). Such DEVELOPMENT PLAN may be amended from time to time during the term of this Agreement with the agreement of SIGMA-TAU and BDSI.

BDSI agrees to use its commercially reasonable efforts to provide to SIGMA-TAU two (2) cochleate formulations with respect to two (2) COMPOUNDS (to be mutually agreed upon by SIGMA-TAU and BDSI) by March 31, 2005. SIGMA-TAU shall use its commercially reasonable efforts to: (i) begin the testing of COMPOUNDS formulated with and incorporating the PATENTS and KNOW-HOW within thirty (30) days of receipt of same from BDSI and (ii) inform BDSI of the results of such testing and SIGMA-TAU’s view of subsequent next development and/or marketing and commercialization steps with respect to such COMPOUNDS within one hundred twenty (120) days of initial receipt of such COMPOUNDS from BDSI. In addition, SIGMA-TAU shall use its commercially reasonable efforts to complete all pre-clinical and clinical studies necessary to file the MARKETING AUTHORIZATION for the PRODUCTS in the FIELD in