SUPPLY AGREEMENT

Exhibit 10.1

CERTAIN MATERIAL (INDICATED BY AN ASTERISK) HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

AMENDED AND RESTATED MANUFACTURING AND SUPPLY AGREEMENT

      THIS AMENDED AND RESTATED MANUFACTURING AND SUPPLY AGREEMENT (the “ Agreement ”) is made effective as of the 19th day of December, 2006 (the “ Effective Date ”) by and between Santarus, Inc. , a Delaware corporation, having offices at 10590 West Ocean Air Drive, Suite 200, San Diego, California 92130, U.S.A. (“ Santarus ”) and Patheon Inc. , a corporation incorporated under the laws of Canada, having offices at 7070 Mississauga Road, Suite 350, Mississauga, Ontario L5N 7J8, CANADA (“ Patheon ”) and replaces in its entirety the Manufacturing and Supply Agreement entered into between Santarus and Patheon on December 19, 2003, and any amendments thereto through the date hereof. Patheon and Santarus are sometimes referred to herein individually as a “ Party ” and collectively as the “ Parties .”

RECITALS

     WHEREAS, Santarus is a specialty pharmaceutical company focused on acquiring, developing and commercializing products for the prevention and treatment of gastrointestinal diseases and disorders;

     WHEREAS, Patheon is a leading global provider of outsourced drug development and manufacturing services to pharmaceutical and biotechnology companies;

     WHEREAS, Santarus seeks to retain a contract manufacturer to manufacture and supply commercial quantities of its SAN-05 immediate release omeprazole pharmaceutical product;

     WHEREAS, Patheon possesses substantial resources, experience, and expertise in the manufacture of pharmaceutical products; and

     WHEREAS, the Parties mutually desire to enter into an agreement for the commercial manufacture and supply of Santarus’ SAN-05 product.

     NOW THEREFORE, in consideration of the foregoing and the mutual covenants and agreements set forth below and in the Quality Agreement and the Capital Agreement, the Parties agree as follows:

ARTICLE 1
DEFINITIONS

      1.1 “Affiliate” means any individual, corporation, association, or other business entity, which directly or indirectly controls, is controlled by, or is under common control with the Party in question. As used in this definition of “Affiliate,” the term “control” shall mean, as to an entity, (a) direct or indirect ownership of [***] or more of the voting interests or other ownership interests in the entity in question; (b) direct or indirect ownership of [***] or more of the interest in the income of the entity in question; or (c) possession, directly or indirectly, of the power to direct or cause the direction of management or policies of the entity in question (whether through ownership of securities or other ownership interests, by contract or otherwise).

      1.2 “ Annual API Cap ” means a dollar amount not to exceed $[***] in any calendar year.

      1.3 “ API ” means the active pharmaceutical ingredient known as omeprazole (Chemical Abstract No. 73590-58-6).

      1.4 “ API Reimbursement Value ” means [***].

      1.5 “Applicable Laws” mean all laws, statutes, ordinances, codes, rules, regulations, guidelines, and procedures enacted or made by a Government Authority, including, without limitation, the FDA and any applicable Foreign Regulatory Authority, that are in force during the Term, and in each case only to the extent applicable to the subject matter of, or the performance by the Parties of their respective obligations under, this Agreement, including without limitation, in respect of Patheon and Santarus, the commercial manufacture of the Finished Product by Patheon and, in respect of Santarus only, the commercial marketing of the Finished Product in the United States by Santarus. For purposes of this Agreement, “Applicable Laws” shall include, without limitation, the FFDCA, the regulations promulgated thereunder (including, without limitation, those regulations currently contained in Title 21 of the Code of Federal Regulations), and other rules and regulations promulgated under the FFDCA relating to the manufacture of pharmaceutical products; and equivalent laws, regulations and standards promulgated by a Government Authority that may assert jurisdiction over the Finished Product or any applicable Patheon manufacturing facilities, including without limitation, the laws of the Province of Ontario and the laws of Canada applicable therein; GMP, including the FDA’s Guidance for Industry, Manufacturing, Processing or Holding Active Pharmaceutical Ingredients, March 1998, and any updates thereto; and the FDA’s regulations for drug establishment registration.

      1.6 “Bulk API” means the bulk form of API manufactured by a Third Party manufacturer and provided to Patheon for use in manufacturing the Finished Product in accordance with the terms and conditions of this Agreement.

      1.7 “Business Day” means any day other than a Saturday, Sunday or statutory holiday in Ontario, Canada or San Diego, California.

      1.8 “Capital Agreement” has the meaning set forth in Section 14.1.

      1.9 “Certificates of Compliance ” means (a) the certificate of analysis confirming the identity, strength, quality and purity of each batch of Finished Product to which it pertains (together with any certificate of analysis pertaining to the Bulk API contained in such batch), (b) the certificate of compliance confirming that each batch of Finished Product was manufactured, tested, stored and supplied by Patheon in compliance with this Agreement, including without limitation the Specifications, GMP and Applicable Laws, and (c) such other certificates and confirmations as described in the Quality Agreement, each such certificate signed by an authorized signatory of Patheon.

      1.10 “Commencement of Commercial Manufacturing” means August 19, 2004.

      1.11 “Deficiency Notice” has the meaning set forth in Section 3.5.1.

      1.12 “Effective Date” has the meaning specified on the first page of this Agreement.

      1.13 “Existing Lines Capacity” has the meaning set forth in Section 2.2.4.

      1.14 “Facility” means Patheon’s facilities located at 111 Consumers Drive, Whitby, Ontario, Canada, and any other facilities (including facilities utilized by subcontractors as permitted hereunder) that are used in connection with the activities performed by Patheon hereunder.

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

      1.16 “FFDCA” means the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. § 321 et seq., as amended.

      1.17 “Financial Penalty” has the meaning set forth in Section 2.7.

      1.18 “Finished Product” means Santarus’ SAN-05 immediate-release omeprazole pharmaceutical product, as more particularly described in the Specifications.

      1.19 “Firm Purchase Order” has the meaning set forth in Section 2.2.3.

      1.20 “Forecast” has the meaning set forth in Section 2.2.2.

      1.21 “Foreign Regulatory Authority” means, for each country other than the United States of America, the authority or authorities having jurisdiction over the Finished Product that correspond to the FDA.

      1.22 “GMP” means current good manufacturing practices applicable in Canada and the United States of America as described in:

(a) Division 2 of Part C of the Food and Drug Regulations (Canada); and

(b) Parts 210 and 211 of Title 21 of the United States Code of Federal Regulations and the requirements imposed thereunder by the FDA,

together with the latest Health Canada and FDA guidance and like documents pertaining to manufacturing and quality control practice, all as updated, amended and revised from time to time.

      1.23 “Government Authority” means any supra-national, national, regional, state, provincial or local government, court, governmental agency, authority, board, bureau, instrumentality or regulatory body having jurisdiction over the Finished Product.

      1.24 “INDA” means an investigational new drug application.

      1.25 “Initial Term” has the meaning set forth in Section 11.1.

      1.26 “Invention” means information relating to any invention, innovation, improvement, development, discovery, computer program, device, trade secret, method, know-how, process, technique or the like, whether or not written or otherwise fixed in any form or medium, regardless of the media on which it is contained and whether or not patentable or copyrightable.

      1.27 “Laws” means all laws, statutes, ordinances, regulations, rules, by-laws, judgments, decrees or orders of any Government Authority.

      1.28 “Lines” has the meaning set forth in Section 2.2.4.

      1.29 “Long Forecast” has the meaning set forth in Section 2.2.2.

      1.30 “Minimum Run Quantity” means the minimum number of batches of Finished Product to be produced during the same cycle of manufacturing as set forth in Exhibit A hereto.

      1.31 “NDA” means a New Drug Application filed with the FDA for marketing approval for a pharmaceutical product.

      1.32 “Other Invention” has the meaning set forth in Section 9.1.

      1.33 “Patheon Manufacturing Responsibilities” has the meaning specified in Section 3.1 of this Agreement.

      1.34 “Patheon Supply Commitment” has the meaning set forth in Section 2.2.4.

      1.35 “Price” means the price for the manufacture and supply of Finished Product under this Agreement specified in the pricing structure set forth in Exhibit B , as may be amended from time to time in accordance with Section 6.2 of this Agreement.

      1.36 “Product Invention” has the meaning set forth in Section 9.1.

      1.37 “Product Patents” means (i) United States patents 6,645,988, 6,699,885, 6,780,882, 6,489,346 and 5,840,737, (ii) any other United States patents or patent applications for an immediate-release buffered proton pump inhibitor, and (iii) any provisional, converted provisional, continued prosecution application, continuation, divisional and continuation-in-part thereof and any substitution, extension, registration, confirmation, reissue, re-examination, renewal and any like filing thereof, in each case owned by or licensed to Santarus during the Term.

      1.38 “Quality Agreement ” means that certain Quality Agreement dated February 9, 2004, by and between the Parties.

      1.39 “Raw Materials” has the meaning set forth in Section 7.1.

      1.40 “Regulatory Approval” means, with respect to a national or multinational jurisdiction, (a) any approvals, licenses, registrations, or authorizations necessary for the manufacture (where relevant), marketing and sale of the Finished Product in such nation or

jurisdiction, and (b) where relevant, pricing approvals necessary to obtain reimbursement from a Government Authority.

      1.41 “Renewal Term” has the meaning set forth in Section 11.1.

      1.42 “Responsible Executive” means the President or the Chief Executive Officer of a Party, or his or her designated representative.

      1.43 “Santarus Exclusivity Commitment” has the meaning set forth in Section 2.1.

      1.44 “Specifications” means the specifications for the Finished Product set forth in the Quality Agreement (as amended from time to time) together with applicable manufacturing protocols, packaging specifications, testing methodologies and all applicable requirements set forth in regulatory filings made with the FDA (including INDA’s and NDA’s) for the Finished Product.

      1.45 “Term” means the Initial Term and the Renewal Term.

      1.46 “Territory” means the United States of America.

      1.47 “Third Party” means any individual or entity other than Patheon or Santarus or their respective Affiliates.

      1.48 “unit” , in reference to Finished Product, means a single packet/dose of such Finished Product.

ARTICLE 2
SUPPLY, STORAGE, AND DELIVERY OF FINISHED PRODUCT

      2.1 Supply of Finished Product. During the Term, subject to the Patheon Supply Commitment (as defined in Section 2.2.4), Patheon shall manufacture and supply, in accordance with the provisions of this Agreement, the Specifications, GMP and Applicable Laws, [***].

      2.2 Commercial Supply.

          2.2.1 Supply Obligations . Patheon shall manufacture and supply to Santarus, and Santarus agrees to purchase from Patheon, such quantities of Finished Product specified by Santarus in accordance with this Agreement at the Price. [***].

          2.2.2 Forecasts .

               (i) Santarus shall use commercially reasonable efforts to determine its estimated requirements for Finished Product from Patheon and shall deliver to Patheon a written, non-binding, rolling [***] month forecast, by month, of such estimated requirements (the “ Forecast ”). Santarus shall, in accordance with the terms of this Agreement, update and revise the Forecast on a monthly basis. Santarus shall provide each updated Forecast not less than [***] calendar days prior to the beginning of the next month. Patheon shall use the Forecast for planning purposes and make available the production capacity and associated testing and release

capacity required to manufacture and supply the forecasted quantities of Finished Product within the time frames specified in each Forecast; and

               (ii) On or before June 30 in each calendar year, Santarus shall provide Patheon with a written non-binding three-year forecast (the “Long Forecast” ) (broken down by quarters for the second and third years of the forecast) of the volume of Finished Product Santarus then anticipates will be required to be produced and delivered by Patheon to Santarus during the three-year period.

          2.2.3 Firm Purchase Orders . Santarus shall submit to Patheon a firm, written purchase order (the “Firm Purchase Order” ) for the purchase of Finished Product at least [***] calendar days prior to the specified delivery date. Santarus shall submit Firm Purchase Orders on a monthly basis and acknowledges that quantities of Finished Product ordered in any single Firm Purchase Order will not be less than the Minimum Run Quantity. Each Firm Purchase Order shall specify the quantity or, if more than one shipment is requested, quantities of Finished Product ordered, the requested delivery date or dates, the delivery address(es) and any applicable shipping information. Patheon shall manufacture and supply the Finished Product in the quantities and by the delivery dates set forth in the applicable Firm Purchase Order, consistent with Patheon’s Supply Commitment.

          2.2.4 Supply Commitment . Patheon shall, subject to Santarus’ Firm Purchase Order requirements, supply to Santarus (to the extent ordered by Santarus on any Firm Purchase Order) amounts of Finished Product [***].

          2.2.5 Firm Purchase Order Amendments . Santarus may amend a Firm Purchase Order by submitting an amended Firm Purchase Order, as follows: (i) at least [***] days before the originally scheduled delivery date specified in the Firm Purchase Order, Santarus may amend the Firm Purchase Order to delay the delivery date to a date within [***] days of the originally scheduled delivery date; or (ii) at least [***] days before the originally scheduled delivery date specified in the Firm Purchase Order, Santarus may increase the quantity of Finished Product ordered and/or accelerate the delivery date to a date within [***] days of the originally scheduled delivery date, subject to the Patheon Supply Commitment and all commercially reasonable efforts of Patheon to meet these amended Firm Purchase Orders.

      2.3 Shipping and Delivery of Finished Product. Patheon shall as agent for Santarus, (i) arrange for shipping and insurance so that the Finished Product will be delivered to the delivery address on the delivery date set forth in the applicable Firm Purchase Order, at Santarus’ expense, and (ii) at Santarus’ risk and expense, obtain any export license or other official authorization and, in accordance with Santarus’ instructions, carry out all customs formalities necessary to export the Finished Products. Santarus may select the freight carrier used by Patheon to ship Finished Products and may monitor Patheon’s shipping and freight practices as they pertain to this Agreement. Finished Products shall be transported in accordance with the Specifications, GMP and Applicable Laws. Patheon shall notify Santarus in writing at the time of shipment as to the quantity of Finished Product shipped, the identity of the carrier and the anticipated delivery date. If any order is delayed and is not likely to be delivered on time, Patheon shall immediately notify Santarus and Santarus may direct Patheon to ship such order by expedited means of transportation as designated by Santarus. To the extent that any such delay is

due to any action or failure to act of Patheon or otherwise due to matters within Patheon’s control, Patheon shall bear the expense of any difference in cost for the expedited means of transportation.

      2.4 Title and Risk of Loss. Patheon shall deliver the Finished Product to the carrier selected by Santarus at Patheon’s shipping point unless otherwise mutually agreed in writing. Such title as Patheon has in Finished Products and risk of loss or of damage to Finished Products shall remain with Patheon until Finished Products are loaded onto the carrier’s vehicle by Patheon for shipment at Patheon’s shipping point at which time title and risk of loss or damage shall transfer to Santarus. Except as expressly provided otherwise in this Agreement, Santarus shall be responsible for all charges associated with shipping of Finished Product.

      2.5 Documentation and Customs. Upon completion of manufacturing, packaging and testing of Finished Product pursuant to each Firm Purchase Order, Patheon shall deliver to Santarus by electronic means quality documentation for such Finished Product manufactured pursuant to such Firm Purchase Order as specified in the Quality Agreement, including without limitation, the Certificates of Compliance in respect of such Firm Purchase Order and, if requested by Santarus, completed batch production records (collectively, the “ Pre-shipping Documentation ”). Patheon acknowledges and agrees that Santarus shall be responsible, at all times, for the final release of the Finished Product and accordingly, Patheon shall not ship any Finished Product until Santarus has notified Patheon in writing that it has completed its final release. Concurrent with the shipment of each Firm Purchase Order of Finished Product, Patheon shall deliver to Santarus the customs documentation corresponding to such shipment and such other documentation and information as may be necessary or desirable for complying with import, export, and customs laws, regulations and like requirements, as applicable. All Finished Product, including its packaging, shall meet all applicable export and customs laws, regulations and like requirements for Canada and, in respect of the United States, shall be in accordance with the instructions of Santarus in respect of all applicable import and customs laws, regulations and like requirements for the United States. Patheon and Santarus will cooperate and provide such assistance to each other as may be reasonably necessary to permit the import of the Bulk API into Canada.

      2.6 Invoices. Patheon may proceed to invoice Santarus for any order on the earlier of [***].

      2.7 Late Delivery/Shortages and Overages.

          2.7.1 If a shipment of Finished Product ordered by Santarus under this Agreement has not been delivered at the shipping point within [***] Business Days after the scheduled delivery date (any delivery that is more than [***] Business Days after the scheduled delivery date stated on the corresponding Firm Purchase Order is hereinafter referred to as a “Late Shipment”), or if the shipment received by Santarus contains less than [***] of the quantity specified in the corresponding Firm Purchase Order (a “Short Shipment”), Santarus shall notify Patheon promptly upon such discovery and, in any event, not later than [***] days after receipt of, or failure to receive, such ordered Finished Product. Subject to the Patheon Supply Commitment, Patheon shall use its best efforts to deliver the quantity of Finished Product it had failed to ship in the case of a Late Shipment or the quantity by which the shipment is short of the quantity ordered in the case of a Short Shipment, as soon as possible after notification of

such shortage, by expedited means of transportation at Patheon’s expense in respect of any difference in cost for such expedited means of transportation relative to regular delivery costs. If any shipment contains [***] more than the quantity ordered, Santarus may elect either to: (a) return to Patheon, at Patheon’s expense, the excess of the quantity ordered, or (b) accept any excess quantity ordered and reserve the right to deduct such excess from future orders. Santarus shall have no obligation to receive any quantity of Finished Product in excess of that ordered.

          2.7.2 In the event that there is a Late Shipment of Finished Product solely as a result of Patheon [***], the following additional provisions shall apply: (a) Santarus shall have the right, in its sole discretion and effective upon written notice, to require Patheon to [***]. The Financial Penalty shall be calculated as follows: [***].

Notwithstanding provision (b) above, the imposition of a Financial Penalty pursuant to provision (b) shall not apply upon [***]:

      2.8 Key Performance Indicators.

          2.8.1 For each [***] period during the Term, Patheon shall meet or exceed the key performance indicators established in good faith by Patheon and Santarus for such [***] period (collectively, as established with respect to the applicable [***] period, the “ KPIs ”). The current KPIs are set forth in Exhibit C , and the parties mutually agree to review such KPIs at each [***] review meeting contemplated by Section 2.12 with the intention of amending, if necessary, the KPIs in respect of the forthcoming [***] period. If no such amendments are necessary or if amendments are not agreed, the KPIs in respect of such forthcoming [***] period shall be at least as beneficial to Santarus as the KPIs for the then current [***] period.

          2.8.2 In the event that Patheon fails to meet one or more of the KPIs at any time during the term of this Agreement, then Patheon and Santarus shall work diligently to address such failure including, without limitation, the following:

               (i) Patheon’s site director and the Director of Contracting of Santarus shall meet within [***] days of the determination of the sustained failure in order to establish a procedure to address the problem (the “ Remediation Plan ”). If such meeting does not occur within such [***] days or if there is no agreement as to the Remediation Plan (a “ Stage 1 Failure ”), then clause (ii) shall apply;

               (ii) Patheon’s Senior Vice President, Canadian Operations and Santarus’ Senior Vice President, Product Development and Manufacturing will meet within [***] days of the Stage 1 Failure in order to establish a Remediation Plan. If such meeting does not occur within such [***] days or if there is no agreement as to the Remediation Plan (a “ Stage 2 Failure ”), then clause (iii) shall apply; and

               (iii) Patheon’s President and Santarus’ President shall meet within [***] days of the Stage 2 Failure in order to establish a Remediation Plan.

If the Remediation Plan is either not mutually agreed upon or is not, in the reasonable judgment of Santarus, implemented satisfactorily, then Patheon shall be deemed to be in material breach of its obligations hereunder. The Parties may mutually agree to extend any of the time periods referenced in this Section 2.8.

          2.8.3 Notwithstanding anything to the contrary in this Section 2.8, Patheon shall not be responsible for the failure to achieve the KPIs to the extent caused by any of the following events:

     (i) Santarus’ failure to have delivered to Patheon adequate supplies of Bulk API;

     (ii) Santarus’ failure to deliver Forecasts in accordance with Section 2.2.2;

     (iii) Santarus’ failure to timely deliver amended Specifications in the event that the Specifications are amended pursuant to Section 3.6.1 or 3.6.2;

     (iv) Santarus’ failure to deliver the Firm Purchase Orders in accordance with Sections 2.2.3 and 2.2.5; or

     (v) Santarus’ failure to timely complete the final release of the Finished Product in the absence of any production or quality issues.

      2.9 Storage of Finished Product. Until Finished Product is shipped, Patheon shall store all Finished Product identifiably distinct from any other raw material and finished or filled product stocks and shall comply with all storage requirements set forth in the Specifications. Patheon shall assume responsibility for any loss or damage to such Finished Product while stored by Patheon.

      2.10 Multi-Country Packaging Requirements. If and when Santarus decides that it wishes to have Patheon manufacture the Finished Product for countries in addition to the Territory, then Santarus shall inform Patheon of the packaging requirements for each new country and Patheon shall prepare a quotation for consideration by Santarus of the additional Raw Material costs, if any, and the Price for the Finished Product destined for such new country. The agreed additional packaging requirements and related packaging costs and Price shall be set out in a written amendment to this Agreement or otherwise recorded in a writing signed by the Parties.

      2.11 API Reconciliation and Yield.

          2.11.1 Inventory Reports . Patheon shall promptly (and in any event no later than [***] Business Days after Santarus’ request) provide an inventory status report to Santarus from time to time as reasonably requested by Santarus. In addition, Patheon shall monitor on a monthly basis the inventory of Bulk API held by Patheon and Patheon shall provide Santarus with a monthly inventory report (within [***] Business Days following the last day of the applicable month) of the Bulk API held by Patheon, which shall contain the following information for such month:

Quantity Received: The total quantity of Bulk API that complies with the Specifications and is received at the Facility during the applicable period.

Quantity Dispensed: The total quantity of Bulk API dispensed is calculated by adding the Quantity Received to the inventory of Bulk API that complies with the Specifications and is held at the beginning of the applicable period, less the inventory of Bulk API that complies with the Specifications at the end of the applicable period.

Quantity Converted: The total quantity of Bulk API contained within Finished Product batches released and shipped during the applicable period.

          2.11.2 Quarterly Physical Inventory. In addition, Patheon shall reconcile the physical inventory of Bulk API and Finished Product held by Patheon on a quarterly basis to the quarter-end inventory status reports and shall provide a report to Santarus concerning such reconciliation within [***] Business Days following the end of the applicable calendar quarter.

          2.11.3 Annual Average Yield . In addition, within [***] Business Days of the end of each calendar year, Patheon shall calculate the Annual Average Yield ( AAY ) for the Finished Product released and shipped during the calendar year and compare it to the target yield specified in Exhibit D for each of the following Finished Product sku’s, 20 mg 30’s, 40 mg 3’s, 40mg 5’s and 40mg 30’s (the “ Target Yield ”). The AAY shall be calculated by dividing the Quantity Converted by the Quantity Dispensed during the calendar year. Patheon shall strive to maintain AAY levels for each Finished Product above the applicable Target Yield. If the AAY falls more than [***] percentage points ([***]%) below the respective Target Yield in any calendar year, then Patheon shall reimburse Santarus for the cost of the shortfall within [***] days of the end of each calendar year. The following calculation shall be used to determine reimbursement value, provided that Patheon’s liability for Bulk API calculated in accordance with this Section 2.11.3 in a year shall not exceed, in the aggregate, the Annual API Cap:

[***]

It shall not constitute a material breach of this Agreement by Patheon if the AAY is less than the Target Yield.

2.11.4 Other API Losses .

(i) Patheon shall notify Santarus in writing in the event that an amount of [***] kilograms or more of Bulk API is damaged, lost or otherwise rendered unusable at any one time (a “ Significant API Loss ”) as soon as practicable following such incident. In addition, and notwithstanding any provision in this Section 2.11 to

the contrary, Patheon shall reimburse Santarus for such Bulk API at the API Reimbursement Value within [***] days after discovery of the Significant API Loss. For clarity, amounts paid for Significant API Loss must be counted towards Annual API Cap, however for the purposes of calculating the Annual Average Yield under Section 2.11.3, all API reimbursed to Santarus pursuant to this Section shall be removed from the Quantity Received and Quantity Dispensed totals.

(ii) Patheon shall notify Santarus in writing in the event that a batch of intermediate or Finished Product is potentially nonconforming as soon as practical, and in any event, within [***] days following discovery thereof. Upon discovery of such potentially nonconforming product, Patheon shall initiate an investigation to reach a final determination. If the investigation results in a determination that such product is nonconforming, Patheon shall reimburse Santarus for the Bulk API in such product at the API Reimbursement Value within [***] days of the determination. If there is a disagreement between the Parties as to whether product is nonconforming, the Parties shall follow the procedures outlined in Section 3.5.2 for submitting the product to an independent laboratory for final determination. Notwithstanding the foregoing, a final determination of whether product is nonconforming shall be made within [***] days of discovering potentially nonconforming product and if a final determination is not made within such time period for reasons within Patheon’s control, Patheon shall immediately reimburse Santarus for any Bulk API in such potentially nonconforming product at the API Reimbursement Value.

      2.12 Cooperation and [***] Review. Each Party shall forthwith upon execution of this Agreement designate those of its employees to be part of the team responsible for managing the relationship between the parties (the “ Relationship Team ”). The Relationship Team from each Party shall meet in person or by telephone or video conference not less than [***] to review the current status of the business relationship (including performance against the KPIs as well as any additional manufacturing performance indicators established by the Parties) and address any issues that have arisen.

ARTICLE 3
STANDARDS OF MANUFACTURE

      3.1 Finished Product. Patheon hereby covenants that all Finished Product manufactured and supplied to Santarus under this Agreement: (a) shall have been manufactured, packaged, tested and stored in compliance with the Specifications, GMP, Applicable Laws and the terms and conditions of this Agreement and the Quality Agreement; (b) shall not be adulterated, or misbranded within the meaning of the FFDCA or other Applicable Laws as of the time that the Finished Product is transferred to the carrier at Patheon’s shipping point; and (c) will have been shipped to Santarus not later than [***] days after the date of its manufacture (unless any delay in shipment beyond such [***] day period is due solely to a delay by Santarus in conducting its review for the final release of the Finished Product). The foregoing obligations are referred to in this Agreement as the “ Patheon Manufacturing Responsibilities .”

      3.2 Manufacturing Facility. Patheon will manufacture Finished Product at the Facility. Patheon shall not manufacture any Finished Product in any other facility without first obtaining Santarus’ prior written consent, such consent not to be unreasonably withheld.

      3.3 Testing and Release by Patheon. Patheon shall conduct chemical identity testing for all Bulk API received at the Facility within [***] days of such receipt. Further, Patheon shall conduct full release testing of all Bulk API received at the Facility not later than [***] months after the date of receipt in accordance with the procedures and using the analytical testing methodologies set forth in the Specifications and the Quality Agreement. Patheon shall promptly (and in any event within [***] days following completion of the applicable testing) notify Santarus in writing of any failure of the Bulk API to conform to the Specifications for same, and any other problem it may identify with the Bulk API detected during the inspection and testing process. Prior to shipping (or temporarily storing, if requested by Santarus) any order, Patheon shall test each batch of Finished Product manufactured under this Agreement, and Raw Materials used for such batch, for conformity with the Specifications (“Patheon Release Testing”) . Patheon shall conduct all such Patheon Release Testing in accordance with the procedures and using the analytical testing methodologies set forth in the Specifications and the Quality Agreement. Patheon shall retain sufficient quantities of all shipped Finished Product, Bulk API and Raw Materials to perform at least full duplicate quality control testing. Retained repository samples of all shipped Finished Product, Bulk API and Raw Materials shall be maintained in a suitable storage facility until one (1) year after expiry or such longer period as may be required by Applicable Laws. All such samples shall be available for inspection and testing by Santarus at reasonable intervals upon reasonable notice. Santarus shall be responsible, at all times, for the final release of the Finished Product, and Patheon shall not ship any Finished Product until Santarus has completed its final release. Patheon may arrange for subcontractors to perform specific testing services for Raw Materials arising under this Agreement without the consent of Santarus; provided that (a) Patheon shall notify Santarus in writing prior to utilizing any subcontractor (which original notice shall suffice for future similar uses of the same subcontractor); (b) all such subcontractors shall be duly qualified by Patheon under GMP and Applicable Laws to perform such testing; (c) Patheon shall at all times remain fully responsible to Santarus for the performance of all obligations hereunder related to such subcontracted testing services; and (d) no subcontractors shall be utilized in connection with release testing of the Finished Product.

      3.4 Stability Studies. Patheon shall conduct stability studies on the Finished Products according to the Specifications therefor, as required by the FDA or Foreign Regulatory Authorities as advised by Santarus or as requested by Santarus, and in any case on at least one batch of Finished Product from the Facility at least once per calendar year following Commencement of Commercial Manufacturing or more frequently as may be specified in the Quality Agreement. Patheon shall provide to Santarus a report of all results and data obtained from such stability studies annually or more frequently as may be specified in the Quality Agreement.

      3.5 Acceptance Procedures.

          3.5.1 Finished Product Claims . Santarus has the right to reject any portion of any shipment of Finished Products that deviates from the Patheon Manufacturing

Responsibilities, without invalidating any remainder of such shipment. Santarus or its agent shall visually inspect the Finished Products manufactured by Patheon upon receipt thereof and shall give Patheon written notice (a “ Deficiency Notice ”) of all claims for Finished Products that deviate from the Patheon Manufacturing Responsibilities within [***] days after Santarus’ receipt thereof (or, in the case of any defects not reasonably susceptible to discovery upon receipt by visual inspection of the Finished Product, including those requiring laboratory analysis, within [***] days after discovery thereof by Santarus, but in no event after the expiration date of the Finished Product). Should Santarus fail to provide Patheon with the Deficiency Notice within the applicable [***]—day period, then the delivery shall be deemed to have been accepted by Santarus on the [***] day after delivery or discovery, as applicable. Patheon shall have no liability under Section 3.5.3 for any deviations for which it has not received notice within the applicable [***]-day period.

          3.5.2 Determination of Deficiency . Upon receipt of a Deficiency Notice, Patheon shall have [***] days to advise Santarus by notice in writing that it disagrees with the contents of such Deficiency Notice. If Santarus and Patheon fail to agree within [***] days after the Santarus’ receipt of Patheon’s notice as to whether any Finished Products identified in the Deficiency Notice deviate from the Patheon Manufacturing Responsibilities, then the Parties shall mutually select an independent laboratory to evaluate if the Finished Products deviate from the Patheon Manufacturing Responsibilities. Such evaluation shall be binding on the Parties, and if such evaluation certifies that any Finished Products deviate from the Patheon Manufacturing Responsibilities, Santarus may reject those Finished Products in the manner contemplated in this Section 3.5. If such evaluation does not so certify in respect of any such Finished Products, then Santarus shall be deemed to have accepted delivery of such Finished Products on the [***] day after delivery (or, in the case of any defects not reasonably susceptible to discovery upon receipt by visual inspection of the Finished Product, including those requiring laboratory analysis, on the [***] day after discovery thereof by Santarus, but in no event after the expiration date of the Finished Product). The expenses of such testing shall be borne by Patheon if the non-conformity with the Patheon Manufacturing Responsibilities is confirmed, and otherwise by Santarus. The Parties mutually agree that they shall resolve all determinations of deficiencies as quickly as possible, and in any event, within [***] days of a Deficiency Notice.

          3.5.3 Patheon Responsibility . In the event Santarus rejects Finished Products in accordance with this Section 3.5 and the rejected Finished Product is determined not to conform to the Patheon Manufacturing Responsibilities, Patheon will credit Santarus’ account for Patheon’s invoice price to Santarus for such non-conforming Finished Products. If Santarus shall have previously paid for such defective Finished Products, Patheon shall promptly, at Santarus’ election, either: (i) refund the invoice price for such defective Finished Products; (ii) offset such amount against other amounts due to Patheon hereunder; or (iii) replace such Finished Products with conforming Finished Products as soon as reasonably possible without Santarus being liable for payment therefor under Section 6.3, contingent upon the receipt from Santarus of all API required for the manufacture of such replacement Finished Products. Further, Patheon shall reimburse Santarus for all reasonable shipping, handling and storage charges incurred in association with such non-conforming Finished Product and for the Bulk API utilized in such non-conforming Finished Product in accordance with Section 2.11.4. Nothing in this Section 3.5.3 shall be construed to limit the rights and remedies available to Santarus at law or in equity.

      3.6 Specification Amendments.

          3.6.1 Cooperation . Subject to Section 3.6.4, the Parties shall cooperate with each other to amend or supplement the Specifications to the extent necessary to comply with changes in GMP, Applicable Laws or other requirements of Government Authorities. If an amendment to the Specifications requires FDA approval and/or the approval of a Foreign Regulatory Authority, Patheon shall not implement such change unless and until the necessary approval has been obtained by Santarus in writing. In no event shall Patheon implement any other modification or addition to the Specifications, including without limitation, changes in raw materials, equipment or methods of production or testing for the Finished Product, without the prior written consent of Santarus, which consent may be withheld for any or no reason.

          3.6.2 Santarus’ Request for Change . Subject to Section 3.6.4, Santarus shall have the right to amend the Specifications from time to time.

          3.6.3 Patheon’s Request for Change . Subject to Section 3.6.4, if Patheon wishes to make any change to the Specifications, Patheon shall notify Santarus, and such notice shall describe the proposed change and the impact of such change on the manufacturing process, including details of any changes in manufacturing costs. Santarus may accept or reject, in its sole and absolute discretion, any such change proposed by Patheon.

          3.6.4 Price Adjustments . Amendments to the Specifications or the Quality Agreement requested by Santarus will only be implemented following a technical and cost review in good faith by Patheon and are subject to Santarus and Patheon reaching agreement as to revisions, if any, to the Price specified in Exhibit B necessitated by any such amendment. If Santarus accepts a proposed Price change, the proposed change in the Specifications shall be implemented, and the Price change shall become effective only with respect to those orders of Finished Products that are manufactured in accordance with the revised Specifications. In addition, Santarus agrees to reimburse Patheon for the cost of Raw Materials in accordance with, and under the circumstances described in, Section 7.3.

      3.7 Records. Patheon shall maintain all records necessary to comply with all GMP and Applicable Laws relating to the manufacture, packaging, testing, storage and shipment of Finished Product. All such records shall be maintained for such period as may be required by Applicable Laws; provided, however , that all records relating to the manufacture, stability and quality control of each batch of Finished Product shall be retained until the Parties agree in writing to dispose of such records.

      3.8 Audit. Upon reasonable prior notice and at reasonable intervals, Patheon shall allow Santarus and its representatives to inspect Patheon’s books and records relating to the manufacture of the Finished Product and permit Santarus to access Patheon’s facilities used to manufacture the Finished Product for the purposes of (a) making quality assurance audits of the facilities and of the procedures and processes used by Patheon in manufacturing, packaging, testing, storing and shipping Finished Product, and (b) confirming Patheon’s compliance with this Agreement, provided that a Patheon representative is present during any such inspection. Santarus, or its representative(s), shall conduct such audit during normal business hours at a time

on which the Parties have mutually agreed, and in such a manner that does not unreasonably interfere with Patheon’s normal business activities.

ARTICLE 4
REGULATORY MATTERS AND QUALITY CONTROL

      4.1 Compliance by Patheon. Patheon shall remain in compliance with all Applicable Laws, including GMP, at all times during the Term and, without limiting the generality of the foregoing, maintain a quality control program consistent with GMP as required by the FDA, and to the extent the parties have reached agreement pursuant to Section 2.10 with respect to countries in addition to the Territory, the applicable Foreign Regulatory Authorities.

      4.2 Santarus’ Regulatory Responsibility. Santarus shall be responsible for obtaining and maintaining all regulatory filings and approvals (excluding the overall licensure and permitting of the Facility) for the manufacture and marketing of the Finished Product, including without limitation all INDA’s and NDA’s for the Finished Product. Santarus shall control and own all such filings and approvals. Patheon will supply to Santarus from time to time, all such data relating to the Finished Product, including release test results, complaint test results, all investigations (in manufacturing, testing and storage), and the like, that Santarus reasonably requires in order to complete any such filing or approval, including any annual product review report that Santarus is required to file with the FDA and as provided in the Quality Agreement. At Santarus’ request and subject to an additional fee to be agreed by the Parties, Patheon may prepare annual product review reports on behalf of Santarus and in accordance with Santarus’ instructions.

      4.3 Manufacturing Process. If any process event occurs during the manufacturing of any Finished Product, which event is likely materially to affect the safety, efficacy or regulatory status of the Finished Product, then Patheon shall promptly notify Santarus. Further, Patheon shall fully and appropriately investigate and report to Santarus on all complaints and notices of quality issues concerning the Finished Products from the FDA, any Foreign Regulatory Authority or Government Authority of which Santarus shall have given Patheon notice. Santarus and Patheon shall consult with each other as to the disposition of all affected batches of such Finished Product. Patheon shall report to Santarus in writing any other atypical process event that is unlikely to materially affect the safety, efficacy or regulatory sta