SUPPLY AND LICENSE AGREEMENT

Exhibit 10.16

Execution Copy

SUPPLY AND LICENSE AGREEMENT

This Supply and License Agreement (hereinafter referred to as “Agreement”), effective as of the 27 ^th day of June, 2006 (the “Effective Date”), is made by and between SPI Pharma, Inc., a Delaware corporation with its principal offices at 321 Cherry Lane, New Castle, Delaware 19720 (hereinafter referred to as “Supplier”) and TransOral Pharmaceuticals, Inc., a Delaware corporation with its principal offices at 1003 W. Cutting Blvd., Suite 110, Pt. Richmond, California 94804 (hereinafter referred to as “Purchaser”). Purchaser and Supplier are sometimes referred to herein individually as a “Party” or collectively as the “Parties”.

WHEREAS, the Supplier is a manufacturer of the Products (as defined below);

WHEREAS, the Purchaser desires to purchase the Products from the Supplier and to obtain a license from Supplier to use on a nonexclusive basis certain technology and intellectual property rights associated with the Products (as more specifically described herein, the “License”); and

WHEREAS, Supplier is willing to supply the Products to the Purchaser and provide the License.

NOW, THEREFORE, in consideration of the covenants, conditions and obligations expressed herein, and intending to be legally bound thereby, the Parties hereto agree as follows:

Terms defined in the preamble of this Agreement have the meanings set forth therein, and the following terms have the meanings set forth below.

“Affiliate” means, with respect to each Party, any company or other entity which directly or indirectly controls or is controlled by or is under common control with that Party. An entity shall be regarded as in control of another entity for purposes of this definition if it owns or controls fifty percent (50%) or more of the shares of the subject entity entitled to vote in the election of directors (or, in the case of an entity that is not a corporation, for the election of the corresponding managing authority).

“API” means the active pharmaceutical ingredient Zolpidem Tartrate.

“Applicable Laws” means all laws, ordinances, rules and regulations of any governmental or regulatory authority that apply to the Products, Supplier’s manufacture and supply of the Products, or this Agreement, including without limitation (a) all applicable federal, state and local laws and regulations; (b) the U.S. Federal Food, Drug and Cosmetic Act (“FDCA”), (c) regulations and guidelines of the FDA and other Regulatory Agencies, and ICH guidelines and (d) GMP, and if applicable, current Good Laboratory Practices and current Good Clinical Practices promulgated by the FDA and other Regulatory Agencies.

“Facility” means: (i) Supplier’s GMP manufacturing facility located in Grand Haven, Michigan; or (ii) any other GMP manufacturing facility meeting the requirements of this Agreement, provided that Supplier has given Purchaser at least six (6) months’ prior written notice that it will manufacture Product for Purchaser at such other facility.

Confidential treatment has been requested for portions of this exhibit. These portions have been omitted from this exhibit and have been filed separately with the Securities and Exchange Commission.

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

“Finished Product” means a product comprising a Product together with the API, with the quantity of API contained in each unit of such product [***].

“GMP” means current good manufacturing practice and standards as provided for (and as amended from time to time) in the Current Good Manufacturing Practice Regulations of the U.S. Code of Federal Regulations Title 21 (Parts 11, 210, 211, 820), the FDA Guidance for Industry Q7A ICH Good Manufacturing Practice for Active Pharmaceutical Ingredients and the IPEC (The International Pharmaceutical Excipients Council) Good Manufacturing Practices Guide for Bulk Pharmaceutical Excipients.

“Know-How” means all tangible or intangible technical, scientific and other know-how, trade secrets, knowledge, technology, ideas, concepts, formulae, procedures, methods, processes, protocols, analytical methods, techniques, materials and results of experimentation and testing, including samples, data, results, discoveries, inventions (whether patentable or unpatentable), and other information including preclinical data and clinical results, and other intellectual property, in written, electronic or any other form, owned or controlled by or licensed to (with the right to assign or sublicense) the subject Party or any Affiliate thereof existing as of the Effective Date and that come into existence during the Term.

“Licensed Technology” means, collectively, the Patent Rights and Know-How in each case that (A) are owned by Supplier or its Controlled Affiliates or licensed by a third party to Supplier or its Controlled Affiliates as of the Effective Date and (B) pertain to the Product and/or cover the development, manufacture, importation, sales or offer for sale of the Product pursuant to the license set forth in Section 4.1. An entity shall be regarded as a “Controlled Affiliate” of Supplier if Supplier owns or directly or indirectly controls fifty percent (50%) or more of the shares of such entity entitled to vote in the election of directors (or in the case of an entity that is not a corporation, for the election of the corresponding managing authority) of such entity.

“Patent Rights” mean all present and future patent applications and issued patents, owned, controlled or licensed (with the right to assign or grant sublicenses) by the specified Party or any Affiliate thereof, including but not limited to any provisionals, divisionals, continuations, continuations-in-part, reissues, reexaminations, or extensions derived therefrom, as well as all foreign and international patent applications, granted patents and all counterparts thereof including, without limitation, substitutions, confirmations, registrations, revalidations, supplemental protection certificates, administrative protection certificates (or other governmental actions) that provide exclusive rights to the patent holders in any jurisdiction in the Territory.

“Phase III Clinical Trial” means human clinical trials, the principal purpose of which is to establish safety and efficacy in patients with the disease being studied as required in 21 C.F.R. §312.

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[***] Confidential treatment has been requested for portions of this exhibit. These portions have been omitted from this exhibit and have been filed separately with the Securities and Exchange Commission.

[***] means [***].

[***] means [***].

“Product” means [***].

“Regulatory Agency” means any governmental regulatory authority involved in regulating any aspect of the conduct, development, manufacture, market approval, sale, distribution, packaging or use of the Product and/or Finished Product, including the FDA and the European Medicines Evaluation Agency (“EMEA”).

“Regulatory Approval” means a required consent, license, approval or other authorization of a Regulatory Agency having authority over the manufacture, use, storage, import, export, clinical testing, transport, marketing, sale or distribution of the Product and/or Finished Product, as applicable, in all or any portion of the Territory.

“Similar Product” means a proprietary product of Supplier that is functionally similar to [***] (e.g. [***]).

“Specifications” means the specifications for each type of Product that are attached hereto as Exhibit A and Exhibit B, as applicable, and which may be amended from time to time by the mutual written agreement of the Parties.

“Term” has the meaning given in Section 9.1 of this Agreement.

“Territory” means [***].

2.1. Supply of Product . During the Term of this Agreement, Supplier agrees to supply to Purchaser, and Purchaser agrees to purchase from Supplier, all quantities of each type of Product ordered by Purchaser pursuant to purchase orders submitted to Supplier under Firm Orders in accordance with the terms of this Agreement and subject to the terms of Article 5 below. No change in Specifications will be made without the mutual written agreement of Supplier and Purchaser. Purchaser may purchase Product hereunder through its designee, and Supplier agrees to supply Product to such designee pursuant to the terms of this Agreement; provided, however, that Purchaser has provided the name of such designee to Supplier in advance, and such designee has agreed in writing with Purchaser to be bound by: (i) the restrictions of Section 4.1 with respect to such designee’s use of Products that it receives pursuant to this Agreement; (ii) the confidentiality obligations of Article 10 with respect to any of Supplier’s Information that such designee receives pursuant to this Agreement; and (iii) the audit provisions of the last sentence of Section 6.6 with respect to such designee’s use of Products that it receives pursuant to this Agreement.

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[***] Confidential treatment has been requested for portions of this exhibit. These portions have been omitted from this exhibit and have been filed separately with the Securities and Exchange Commission.

2.2. Quantity .

2.2.1. Product purchase quantity is projected to be [***]. The Parties acknowledge that these quantities are estimates only and shall in no case be binding upon Purchaser.

2.2.2. The quantity of each Product Supplier is obligated to supply hereunder and Purchaser is obligated to purchase hereunder for each calendar quarter shall be as set forth in Article 5 hereof.

2.3. Orders . Orders shall be documented by written or electronic purchase order form submitted to Supplier [***] prior to requested delivery, and will provide for shipment in accordance with reasonable delivery schedules and lead times as may be agreed upon from time to time by Supplier and Purchaser so long as the maximum lead time [***] unless otherwise agreed to by the Parties.

2.4. Packaging . Products shall be shipped packaged in containers in accordance with the applicable Specifications or as otherwise agreed by the Parties in writing. Each such container will be individually labeled with a description of its contents, including the manufacturer lot number, quantity and type of Product, date of manufacture and expiration date.

3.1. Purchase Price . The purchase price for each type of Product shall be [***]. Future pricing of Product [***] will be [***]. Notwithstanding the foregoing, if Supplier enters into a [***] arrangement with any third party in [***] similar to this Agreement for the supply of Product to such third party on terms or conditions [***]) [***] to such third party than those provided to Purchaser under this Supply Agreement, then Purchaser shall be provided [***] including, without limitation, the [***] being provided by Supplier to such third party.

3.2. Delivery . Supplier shall deliver the quantities of each type of Product ordered by Purchaser on the dates specified in Purchaser’s purchase orders submitted in accordance with Section 2.3 above. All Product shipments shall be delivered FOB (UCC) Supplier’s shipping point in [***]. The carrier shall be selected by agreement between Purchaser and Supplier, except that if no such agreement is reached, Purchaser shall select the carrier. All Product delivered hereunder shall be suitably packed for shipment by Supplier in accordance with good commercial practice with respect to protection of such Product during transportation and marked for shipment to Purchaser’s specified receiving point.

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[***] Confidential treatment has been requested for portions of this exhibit. These portions have been omitted from this exhibit and have been filed separately with the Securities and Exchange Commission.

4.1. License . Pursuant to the terms of this Agreement and for the Term, the Supplier hereby grants to the Purchaser a [***] license under the Licensed Technology (including the right to grant and authorize sublicenses): (i) for the limited purpose of using the Product as an ingredient in the Finished Product in the Territory; and (ii) to manufacture, market, sell, use, import and distribute the Finished Product in the Territory; and to have any of the foregoing done on its behalf. Notwithstanding the foregoing, Purchaser shall not be allowed to grant a sublicense under the license granted to it by Supplier in this Section 4.1 unless such sublicensee has agreed in writing with Purchaser to be bound by: (x) the restrictions of this Section 4.1 above with respect to such sublicensee’s use of Products that it receives pursuant to this Agreement; (y) the confidentiality obligations of Article 10 with respect to any of Supplier’s Information that such sublicensee receives pursuant to this Agreement; and (iii) the audit provisions of the last sentence of Section 6.6 with respect to such sublicensee’s use of Products that it receives pursuant to this Agreement. Purchaser agrees to provide written notice to Supplier upon its grant of any sublicenses hereunder.

4.2. License Fees . Purchaser agrees to pay Supplier for use and sale of both types of Product a one-time [***] license fee in the amount of [***] (the “License Fee”) payable as provided below.

4.2.1. Supplier acknowledges that Purchaser has already paid to Supplier a portion of the License Fee in the amount of [***] as provided by the terms of that certain Supply Term Sheet by and between the Parties dated February 20, 2006.

4.2.2. Purchaser agrees to pay to Supplier the remaining [***] of the License Fee upon the first to occur of: (i) the first dosing of a Finished Product in a human subject in a Phase III Clinical Trial conducted by Purchaser; and (ii) December 31, 2006.

4.2.3. Upon the commercial launch of a Finished Product by Purchaser, Supplier agrees to credit an amount of [***] of the License Fee (the “Credit Amount”) towards Purchaser’s future purchases of Product in the form of a [***] on the amounts that would otherwise be due to Supplier on each such future purchase by Purchaser of Product until the Credit Amount has been fully credited against such purchases.

4.2.4. If Purchaser determines, in its sole discretion, that neither Product will be used in its products containiing API due to regulatory, business or other issues, then at Purchaser’s option either (a) the License Fee can be applied in full by Purchaser towards the Licensing Fee associated with any Finished Product in the Future or (b) the Credit Amount can be applied in full by Purchaser toward Purchaser’s purchase of any Product in the form of a [***] on Supplier’s list price for such Product until the Credit Amount has been fully credited against such purchases.

4.3. No Implied License . There are no implied licenses under this Agreement, and any rights not expressly granted to the Purchaser hereunder are reserved by the Supplier.

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[***] Confidential treatment has been requested for portions of this exhibit. These portions have been omitted from this exhibit and have been filed separately with the Securities and Exchange Commission.

4.4. Intellectual Property Rights .

4.4.1. The Parties understand and agree that, except as otherwise expressly provided in this Agreement, no right, title or interest is provided by one Party to the other Party with respect to any Know-How, Patent Rights or other intellectual property of the Party.

4.4.2. Supplier shall own the entire right, title and interest in and to (i) all Know- How, Patent Rights and other proprietary rights existing and owned by it on the Effective Date and (ii) all Know-How, Patent Rights and other proprietary rights in respect of the Product developed, discovered, made or conceived by Supplier.

4.4.3. Purchaser shall own the entire right, title and interest in and to (i) all Know-How, Patent Rights and other proprietary rights existing and owned by it on the Effective Date and (ii) all Know-How, Patent Rights and other proprietary rights in respect of the Finished Product developed, discovered, made or conceived by Purchaser.

5.1. Forecasts . Upon the Effective Date of this Agreement and by December 31 ^st of each year of the Term (excluding December 31 ^st of the last year of the Term, unless this Agreement is extended by the mutual written consent of the Parties), the Purchaser shall provide Supplier with an estimated non-binding forecast of its requirements for each type of Product for the following calendar year. In addition, the Purchaser shall by the end of each calendar quarter provide a rolling forecast on a quarterly basis of its requirements for the Product for the following four calendar quarters ( “Ql”, “Q2”, “Q3” and “Q4” ).

5.2. Firm Orders .

5.2.1. The forecast given by Purchaser for Ql shall constitute a firm order (“Firm Order”) for the Product for Ql and Purchaser shall be obligated to purchase, and Supplier shall be obligated to supply, such quantities and types of Products pursuant to one or more purchase orders submitted to Supplier during Ql, in each case within the applicable ranges specified in Section 5.2.2 below.

5.2.2. It is understood and agreed that the forecasted quantities of Product for Q2, Q3 and Q4 shall not be binding upon Purchaser in any respect, and Purchaser shall not be liable with respect to its good faith efforts to provide such non-binding forecasts. Notwithstanding the foregoing, the Firm Order for the then current Ql may not be for an amount [***] of the immediately preceding forecast for each such calendar quarter and Supplier shall [***] of such forecasted amount, in each case unless otherwise agreed by the Parties in writing; provided, however, that Supplier shall use commercially reasonable efforts to fill the amounts of any Firm Order [***] cap described above.

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[***] Confidential treatment has been requested for portions of this exhibit. These portions have been omitted from this exhibit and have been filed separately with the Securities and Exchange Commission.

6.1. Specifications . The Supplier agrees that all Product supplied hereunder shall conform to the Specifications applicable to such Product and shall be manufactured at the Facility in accordance with Applicable Laws, including GMP manufacturing and record keeping procedures.

6.2. Quality Control . Prior to each shipment of Product, Supplier shall perform quality control testing procedures and inspections to verify that the Product to be shipped conforms fully to the applicable Specifications. Each shipment of Product shall be accompanied by a certificate of analysis in a form acceptable to Purchaser and describing all current requirements of the Specifications, results of tests performed certifying that the Product supplied have been manufactured, controlled and released at the Facility in accordance with the Specifications and Applicable Laws.

6.3. Batch Records; Samples . Supplier shall maintain batch records sufficient to trace the history of each batch, and representative samples from each batch of Product manufactured hereunder, for record keeping, stability testing, and other regulatory purposes, including as may be required by the Specifications or Applicable Laws, for as long as required by such Applicable Laws. Upon the request of Purchaser and so long as Supplier is required to maintain such records, Supplier shall provide Purchaser reasonable access to and copies of such records and samples.

6.4. Rejected Products . Purchaser’s receipt of Product delivered hereunder shall be an unqualified acceptance; provided, however, that Purchaser may reject such Product within [***] after such receipt if during such period Purchaser or its designee discovers, upon inspection of such Product, that such Product fails to conform with the Specifications therefor or otherwise fails to conform to the warranties given by Supplier in Article 12 below. Such rejection shall be accomplished by giving written notice to Supplier and, upon request from Supplier, Purchaser shall return the rejected Product in accordance with Supplier’s reasonable instructions and at Supplier’s expense, provided that such instructions comply with all Applicable Laws. Supplier shall use its best efforts to replace rejected Product within the [***] and in any event within [***] after Supplier’s receipt of notice thereof. In the event all or part of a shipment of Product is rejected prior to Purchaser’s payment therefor, Purchaser may withhold such payment until receipt of replacement Product that conform with the Specifications therefor and to the warranties given by Supplier in Article 12 below. The Parties shall use their reasonable efforts to resolve any dispute that may arise pursuant to this Section. If the Parties fail to agree, within [***] of Purchaser providing notice of rejection, whether any delivery of the Products supplied by Supplier to Purchaser conform to the Specifications therefor and the warranties given by Supplier in Article 12, the dispute shall be determined by an independent laboratory/expert mutually selected by the Parties and the decision of such independent laboratory/expert shall be final and binding on the Parties with respect to whether the Products in question conform to the Specifications therefor and the warranties given by Supplier in Article 12. In the event that the independent laboratory/expert decides that the Products in question conform to the Specifications and the warranties given by Supplier in Article 12, such Products shall be deemed accepted by Purchaser. In the event that the independent laboratory/expert decides that the Products in question do not conform to the Specifications and/or the warranties given by Supplier in Article 12, Supplier

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[***] Confidential treatment has been requested for portions of this exhibit. These portions have been omitted from this exhibit and have been filed separately with the Securities and Exchange Commission.

shall use its best efforts to replace such Products within the shortest possible time and in any event within [***] after Supplier’s receipt of notice regarding the independent laboratory/expert’s decision. For purposes of clarity, only disputes between the Parties regarding conformance of the Products as expressly described in this Section 6.4 above shall be resolved by an independent laboratory/expert, and all other disputes between the Parties shall be governed by the provisions of Section 14.8 below. The independent laboratory/expert’s fees and the prevailing Party’s out-of-pocket costs incurred in connection with the independent laboratory/expert’s decision shall be borne by the Party against whom the independent laboratory/expert’s decision is given.

6.5. Latent Defe