OPTION AND LICENSE AGREEMENT

EXHIBIT 10.1

Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as **. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.

OPTION AND LICENSE AGREEMENT

THIS AGREEMENT (the "Agreement") is made and is effective the 10th day of June, 1998 (the "Effective Date") by and between:

Adolor Corporation, a Delaware corporation having its principal place of business at 371 Phoenixville Pike, Malvern, Pennsylvania 19355 ("ADOLOR") and Roberts Laboratories Inc., a New Jersey corporation, having its principal place of business at 4 Industrial Way West, Eatontown, New Jersey 07724 ("ROBERTS").

RECITALS

1. ADOLOR is engaged in the development and marketing of therapeutic products utilizing opiate receptor-mediated pathways.

2. ROBERTS has acquired from Eli Lilly and Company ("Lilly"), in an agreement dated November 5, 1996 (the "Lilly License"), an exclusive, world-wide license to make, have made, use or sell (+)-[2(S)-[4(R)-(3-hydroxyphenyl)- 3(R),4-dimethyl-1-piperidinyl]methyl]-1-oxo-3-phenylpropyl]amino]-acetic acid and all pharmaceutically acceptable salts and solvates thereof (the "Compound"), with the right to sublicense, which Lilly License and its Appendices A and B are appended hereto as Exhibit A.

3. An Investigational new Drug Application ("IND"), made to the United States Food and Drug Administration ("FDA"), was initiated for the Compound, but currently there is no activity pursuant to this Application.

4. As ADOLOR believes the Compound may provide the basis for a therapeutic product utilizing opiate receptor-mediated pathways, ADOLOR desires to obtain and ROBERTS desires to provide an exclusive, world-wide license including (a) a "Phase A" during which ADOLOR will seek to establish the therapeutic index of the Compound, and (b), provided the therapeutic index is satisfactory to ADOLOR at its sole discretion, a "Phase B" during which ADOLOR will pursue development and commercialization of the Compound.

5. Assuming ADOLOR proceeds to Phase B, ADOLOR further desires to seek to convert the license to an assignment of the Lilly License to ADOLOR subject to the same duties as between ADOLOR and ROBERTS as are set forth below, and ROBERTS desires to deliver such assignment to ADOLOR and to exert best efforts to obtain for ADOLOR the required permission from Lilly, though in the absence of such an assignment the license provided herein shall be maintained.

NOW THEREFORE, in consideration of the mutual covenants and obligations hereinafter set forth the parties agree to be legally bound as follows:

ARTICLE I - DEFINITIONS

Section 1.1 . "Affiliate," "Compound," "End User," "Lilly Intellectual Property Rights," "Net Sales" and "Product" shall have the meanings, respectively, set forth in the Lilly License.

Section 1.2. "First Commercial Sale" shall mean the first time sales are made of Product by ADOLOR to an unrelated third party on a country by country basis.

Section 1.3. "Lilly Know-How" shall have the meaning set forth for "Know- How" in the Lilly License.

Section 1.4. "NDA" shall mean an application filed with the FDA for the approval of the manufacturing, marketing or importation of a therapeutic product for use in humans. The references below to "similar filing" shall encompass, for example, Product License Applications ("PLAs") and Pre-Marketing Applications ("PMAs").

Section 1.5. "Technical Information" shall mean Technology which is owned, discovered or developed by or licensed to ROBERTS which is embodied or employed in the composition, manufacture or use of the Compound or Product, or components, reagents, parts or elements thereof. "ADOLOR Technical Information" shall mean Technology which is owned, discovered or developed by ADOLOR which is embodied or employed in the composition, manufacture or use of the Compound or Product, or components, reagents, parts or elements thereof.

Section 1.6. "Technology" shall mean know-how, protocols, processes, instruments, machines, materials, compositions, tests procedures, manufacturing procedures, techniques, formulations, methodologies and data, inventions, observations and information, related to the Compound or the Product.

ARTICLE II - LICENSE

Pursuant to the Lilly Intellectual Property Rights or any ROBERTS Technical Information, ROBERTS grants ADOLOR an exclusive, world-wide license to make, have made, use, sell or import Product pursuant to the Lilly Intellectual Property Rights or any other ROBERTS Technical Information. The term of the license shall be either the term of Phase A or, if ADOLOR elects to proceed with Phase B, the sum of the terms of Phase A and Phase B.

The rights acquired hereunder shall include all rights licensed to ROBERTS pursuant to the Lilly License.

ARTICLE III - PHASE A

Section 3.1. - Phase A Consideration

In consideration for Phase A, ADOLOR shall deliver to ROBERTS a non-refundable payment of $300,000 on the Effective Date.

Section 3.2. - Phase A Term

The term of Phase A shall be from the Effective date until the earlier of (a) the date on which ADOLOR delivers to ROBERTS notice of ADOLOR’s completing studies sufficient to establish the therapeutic index of the Compound and of whether ADOLOR intends to initiate Phase B and (b) July 31, 1999. The parties acknowledge that there are areas of risk to ADOLOR’s ability to meet this timetable including:

The parties further acknowledge that the above exemplified risks, should they become realities, would provide cause for the July 31, 1999 term expiration date to be extended. Should an event outside of ADOLOR’s control give rise to a reasonable basis to extend the July 31, 1999 term expiration date, meaning that it is reasonable to expect that ADOLOR acting with commercially reasonable diligence shall not have completed studies to establish the therapeutic index of the Compound by July 31, 1999, an extension of time will be provided to enable ADOLOR to complete the studies and the parties shall negotiate in good faith and arrive at a reasonable period of extension.

Section 3.3. - ADOLOR’s Phase A Duties

In addition to any other duties imposed by this Agreement, during the term of Phase A, ADOLOR shall use commercially reasonable efforts to conduct studies, including Phase I clinical studies, to establish the therapeutic index of the Compound. All costs associated therewith shall be borne by ADOLOR. While the Phase A is in effect, ADOLOR agrees to undertake the obligations incumbent on ROBERTS under the Lilly License, with the exception of the milestone payments set forth in Section 3.01 of the Lilly License and the costs associated with prosecuting or maintaining patents under the Lilly Intellectual Property Rights, which shall continue to be borne by ROBERTS.

Section 3.4. - ROBERTS’ Phase A Duties

In addition to any other duties imposed by this Agreement, ROBERTS shall:

(a) provide ADOLOR its stocks of the Compound, in the amount ROBERTS possesses in whatever condition that such Compound may be as of the Effective Date; and

(b) during the term of Phase A, refrain from discussing, negotiating or agreeing to, with a third party, a license or assignment of rights in the Compound, or its use, manufacture, sale or import.

ARTICLE IV - PHASE B

Section 4.1. - Term and Contingency

The term of Phase B begins on the last day of Phase A through to the end of the term defined in Section 8.01 of the Lilly License. Entrance into Phase B is contingent on ADOLOR delivering to ROBERTS during the term of Phase A notice of ADOLOR’s intent to proceed with Phase B.

Section 4.2. - Phase B Consideration

Subject to the foregoing, in consideration for Phase B, ADOLOR shall pay ROBERTS:

ADOLOR shall pay Lilly, on behalf of ROBERTS, $500,000 upon acceptance of a first NDA or similar filing in the United States, Canada, Japan or the European Community that seeks permission to market a Product, in accordance with Section 3.01(v) the Lilly License. ADOLOR agrees to pay Lilly, on behalf of ROBERTS, a royalty equal to ** % of Net Sales in accordance with the Lilly License. For any payment made on behalf of ROBERTS, ADOLOR shall deliver proof of such payment to ROBERTS.

Section 4.3. - ADOLOR’s Phase B Duties

While Phase B is in effect, ADOLOR agrees to undertake the obligations incumbent on ROBERTS under the Lilly License and accruing during Phase B, with the exception of the execution milestone payment set forth in Section 3.01(a)(i) of the Lilly License. Except for costs associated with Robert’s duties under this Agreement, all costs associated with developing and commercializing the Compound or Product shall be borne by ADOLOR.

ARTICLE V - SUBLICENSES OF THIS AGREEMENT

(a) ADOLOR shall have the right to grant sublicenses hereunder consistent with the terms of the Lilly License, provided , however , that should ADOLOR grant a sublicense hereunder within seventy-five (75) days of the Effective Date, ROBERTS shall receive 25% of any payments made to ADOLOR in consideration of such sublicense.

(b) Should ADOLOR decide to actively seek to sublicense marketing rights in the Compound or seriously consider a good faith offer by a third party to sublicense such marketing rights, ADOLOR shall notify ROBERTS of its intention to seriously seek to sublicense the marketing rights and shall provide ROBERTS with an opportunity to negotiate in good faith for a sublicense to the marketing rights. However, nothing herein shall imply that ROBERTS has a right of priority or preference in such negotiations, or imply any restraints whatsoever on ADOLOR’s business judgment as to partners in marketing the Compound.

ARTICLE VI - TECHNOLOGY TRANSFER

Section 6.1. - From ROBERTS to ADOLOR

Following execution and payment under Section 3.1 ROBERTS shall deliver to ADOLOR copies of the Lilly Know-how, ROBERTS Technical Information, and its inventory of Compound and intermediates for the production of Compound.

Section 6.2. - From ADOLOR to ROBERTS

(a) Should ADOLOR establish the therapeutic index of the Compound but nonetheless decline to initiate Phase B, ADOLOR shall deliver to ROBERTS copies of ADOLOR data on the therapeutic index of the Compound and any other ADOLOR data on the therapeutic efficacy of the Compound as well as any dosage forms containing the Compound.

(b) Should ADOLOR fail to establish the therapeutic index and should ADOLOR not dispute that the term of Phase A, taking into consideration any extensions thereto under Section 3.2, has expired, then ADOLOR shall deliver to ROBERTS copies of ADOLOR data on the therapeutic index of the Compound and any other ADOLOR data on the therapeutic efficacy of the Compound as well as any dosage forms containing the Compound.

(c) All such materials delivered to ROBERTS pursuant to this Section 6.2 shall thus become the sole and exclusive property of ROBERTS.

ARTICLE VII - REPORTS, RECORDS, PAYMENTS

Section 7.1. - Quarterly Reports

(a) ADOLOR shall give ROBERTS prompt written notice of-the first acceptance of a NDA or similar filing in t