Product Development And License Agreement

Confidential treatment has been requested as to certain portions of this document. Each such portion, which has been omitted herein and replaced with a series of three asterisks in brackets [***], has been filed separately with the Securities and Exchange Commission.] Exhibit 10.1 EXECUTION PRODUCT DEVELOPMENT AND LICENSE AGREEMENT BY AND BETWEEN NASTECH PHARMACEUTICAL COMPANY INC. AND PROCTER & GAMBLE PHARMACEUTICALS, INC. DATED AS OF JANUARY 27, 2006


[*Confidential treatment has been requested as to certain portions of this document. Each such portion, which has been omitted herein and replaced with a series of three asterisks in brackets [***], has been filed separately with the Securities and Exchange Commission.] PRODUCT DEVELOPMENT AND LICENSE AGREEMENT This Product Development and License Agreement (the " Agreement" ) is entered into as of January 27, 2006 by and between PROCTER & GAMBLE PHARMACEUTICALS, INC., a corporation organized under the laws of Ohio (" P&G" ), and NASTECH PHARMACEUTICAL COMPANY INC., a corporation organized under the laws of Delaware (" Nastech" ). WITNESSETH: WHEREAS, P&G possesses substantial expertise in the research, product development, pre-clinical and clinical trials, and sales and marketing of pharmaceutical products; WHEREAS, Nastech possesses substantial expertise and intellectual property rights (including patents, patent applications and know-how) relating to the intranasal administration of the Compound (as defined below) and the formulation and manufacture of products intended for intranasal administration; WHEREAS, Nastech and P&G desire to use their collective resources for the purposes of testing and developing the Compound for use as the active ingredient in the Products; WHEREAS, P&G wishes to acquire from Nastech, and Nastech is willing to grant to P&G, a license of Nastech' s intellectual property as it relates to the Compound and the Products in the Field (as defined below), so that P&G may obtain all necessary Regulatory Approvals (as defined below) for the use and sale of the Product in the Territory and may sell, promote and distribute the Product in the Territory. NOW, THEREFORE, for and in consideration of the mutual covenants contained herein, the parties hereto agree as follows: ARTICLE I
CERTAIN DEFINITIONS Unless otherwise specifically set forth herein, the following terms shall have their indicated meanings when used in this Agreement.

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[*Confidential treatment has been requested as to certain portions of this document. Each such portion, which has been omitted herein and replaced with a series of three asterisks in brackets [***], has been filed separately with the Securities and Exchange Commission.] " ACT" means, as applicable, the United States Federal Food, Drug and Cosmetic Act, 21 U.S.C. a7a7 301 et seq., and/or the Public Health Service Act, 42 U.S.C. a7a7 262 et seq., as such may be amended from time to time. " AFFILIATE" means (i) any corporation or business entity of which fifty percent (50%) or more of the securities or other ownership interests representing the equity, the voting stock or general partnership interest are owned, controlled or held, directly or indirectly, by P&G or Nastech; or (ii) any corporation or business entity which, directly or indirectly, owns, controls or holds fifty percent (50%) (or the maximum ownership interest permitted by law) or more of the securities or other ownership interests representing the equity, the voting stock or, if applicable, the general partnership interest, of P&G or Nastech; or (iii) any corporation or business entity of which fifty percent (50%) or more of the securities or other ownership interests representing the equity, the voting stock or general partnership interest are owned, controlled or held, directly or indirectly, by a corporation or business entity described in (i) or (ii). " AFTER ACQUIRED TECHNOLOGY" shall have the meaning set forth in Section 7.4 hereof. " AGREEMENT TERM" means the term of this Agreement which commences on the date hereof and ends (subject to earlier termination as permitted herein) on [***] . " APPLICABLE LAWS" means all applicable laws, statutes, rules, regulations, ordinances, orders, decrees, writs, judicial or administrative decisions and the like of any nation or government, any state or other political subdivision thereof, any entity exercising executive, judicial, regulatory or administrative functions of or pertaining to government (including, without limitation, any governmental authority, agency, department, board, commission or instrumentality of any governmental unit or any political subdivision thereof), any tribunal or arbitrator of competent jurisdiction, and any trade organization whose regulations have the force of law. " APPLICATION FOR APPROVAL" shall have the meaning set forth in Section 6.1 hereof. " CHANGE OF CONTROL" means with respect to a party: (1) the sale of all or substantially all of such party' s assets or business; (2) a merger, reorganization or consolidation involving such party in which the voting securities of such party outstanding

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[*Confidential treatment has been requested as to certain portions of this document. Each such portion, which has been omitted herein and replaced with a series of three asterisks in brackets [***], has been filed separately with the Securities and Exchange Commission.] immediately prior thereto cease to represent at least fifty percent (50%) of the combined voting power of the surviving entity immediately after such merger, reorganization or consolidation; or (3) a transaction or series of related transactions in which a person or entity, or group of persons or entities acting in concert, acquire (or enter into agreements so as to acquire) more than fifty percent (50%) of the voting equity securities or management control of such party. " CLAIM" means any notice of investigation, action, cause of action, claim, suit or proceeding. " CLINICAL TRIAL" means a Phase I Clinical Trial, Phase II Clinical Trial, Phase III Clinical Trial, and/or post-approval clinical trial. " COMBINATION PRODUCT" means a Product which incorporates or co-packages in a fixed combination one or more molecules in addition to the Compound, each of which additional molecules is pharmacologically active, has separate therapeutic application and is not subject to this Agreement (" OTHER ACTIVES" ). " COMMERCIALIZATION PLAN" has the meaning given in Section 2.4.4. " COMPETITIVE PRODUCT" means a [***] product utilizing the Compound as the active ingredient for the therapeutic indication of severe osteoporosis. " COMPETITIVE REDUCTION" has the meaning given in Schedule 4.2.1. " COMPOUND" means PTH 1-34 (as described below) [***] . " COMPULSORY LICENSE" means a license obtained by a Third Party through the order, decree, or grant of a competent governmental authority requiring or mandating the authorization of such Third Party under the Nastech Patents or Nastech Know-How to develop, manufacture, use, market, distribute or sell a Product. " CONFIDENTIAL INFORMATION" means any and all data and information of a proprietary or confidential nature that is owned or Controlled by any party hereto or their respective Affiliates and is made available by one party or its Affiliates to the other party or its Affiliates, including without limitation data, formulations, chemical structures, processing information, technical reports and specifications, marketing and sales information, customer lists, supplier lists and pricing information. Confidential Information shall not include information which:

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[*Confidential treatment has been requested as to certain portions of this document. Each such portion, which has been omitted herein and replaced with a series of three asterisks in brackets [***], has been filed separately with the Securities and Exchange Commission.] (a) was known or used by the receiving party or its Affiliates prior to its date of disclosure to the receiving party, as evidenced by the prior written records of the receiving party or its Affiliates; (b) either before or after the date of the disclosure to the receiving party, is lawfully disclosed without restriction on disclosure to the receiving party or its Affiliates by an independent, unaffiliated Third Party whose disclosure of such information does not violate any obligation to or right of the party owning or Controlling the Confidential Information; (c) either before or after the date of the disclosure to the receiving party, becomes published or generally known in the industry through no fault or admission on the part of the receiving party or its Affiliates or their employees or agents; (d) can be shown by written documents to have been independently developed by the receiving party or its Affiliates without breach of any of the provisions of this Agreement. " CONTROL" (including variations thereof, such as " Controlled" or " Controlling" ) means, with respect to any Know-How or intellectual property right, that the party controlling owns or has a license to use such Know-How or right and has the ability to grant the other party access, a license or a sublicense to use such Know-How or right as provided herein without violating the rights of any Third Party. " COVER" (including variations thereof such as " Covered," " Coverage," or " Covering" ) means that the manufacture, use, importation or sale of the Compound, a Product or a particular item or process relating to the manufacture, use, incorporation or sale of the Compound or a Product would infringe a Valid Claim of a Patent in the absence of a grant of rights under such Patent. The determination of whether an item or process is Covered by a Valid Claim shall be made on a country by country basis. " DAMAGES" means any and all liabilities, losses, damages, penalties, fines, assessments, expenses and costs, suffered or incurred by a person, including without limitation reasonable attorneys' fees and related costs and expenses. " DEVELOPMENT COSTS" means the direct and indirect costs incurred by Nastech or for its account which are incurred in accordance with the Development Plan and are specifically attributable to the development of Products. [***]

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[*Confidential treatment has been requested as to certain portions of this document. Each such portion, which has been omitted herein and replaced with a series of three asterisks in brackets [***], has been filed separately with the Securities and Exchange Commission.] " DEVELOPMENT PLAN" means the plan and estimated Development Costs for the development of Products approved from time to time pursuant to Section 2.2. " DEVELOPMENT PROGRAM" means the development activities undertaken by the parties pursuant to the Development Plan. " DOLLARS" shall mean United States Dollars or the official currency of the United States of America. " EMEA" means the European Medicines Evaluation Agency and the Committee for Proprietary Medicinal Product and any successor governmental authority having substantially the same authority. " EU MARKET" means each of the following countries of the European Union: France; Germany; Italy; and Spain, as well as the United Kingdom. " EXISTING NASTECH KNOW-HOW" shall have the meaning set forth in Section 7.1 hereof. " FDA" means the United States Food and Drug Administration, or any successor to its responsibilities with respect to pharmaceutical products such as the Products. " FIELD" means [***] . " FIRST COMMERCIAL SALE" means, with respect to a Product in a country, the initial transfer of a Product billed or invoiced by P&G (or one of its Affiliates or sublicensees) to a non-sublicensee Third Party in such country after all required Regulatory Approvals have been granted by the Regulatory Authority of such country. Sales in such country for clinical study purposes or compassionate, named patient use or under treatment IND programs or similar uses will not constitute a First Commercial Sale in such country. " IND" means an Investigational New Drug application, Clinical Study Application or Clinical Trial Exemption (as such terms are defined by the FDA), or any similar application or submission for approval to conduct human clinical investigations in accordance with applicable regulations and requirements of the FDA or the corresponding Regulatory Authority in any jurisdiction outside the United States. " INVENTION" means any process, method, composition of matter, article of manufacture, discovery or finding (including without limitation any Program Improvement) that is conceived and/or reduced to practice in the course of and arising from the Development Program.

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[*Confidential treatment has been requested as to certain portions of this document. Each such portion, which has been omitted herein and replaced with a series of three asterisks in brackets [***], has been filed separately with the Securities and Exchange Commission.] " LATE PAYMENT RATE" shall have the meaning set forth in Sections 2.8.3 and 4.8 hereof. " LICENSE(S)" shall mean the license(s) granted by Nastech to P&G pursuant to Section 3.1 hereof. " LICENSE EFFECTIVE DATE" means the date of this Agreement. " LICENSE FEE" shall have the meaning given in Schedule 4.1. " NASAL FORMULATIONS" shall mean the intranasally administrated formulation of the Compound set forth in Exhibit 1.1, [***] . " NASTECH KNOW-HOW" means Product Know-How Controlled by Nastech. " NASTECH PATENTS" means: (a) the Patents set forth on Exhibit 1.2 hereto; (b) any applications for Patents listed in Exhibit 1.2 hereto, and any division, continuation, or continuation-in-part of any such application, and any Patent which shall issue based on such application, division, continuation or continuation-in-part; (c) any applications for Patent filed hereafter by, and any Patents issued hereafter to, Nastech in any jurisdiction claiming priority to any application for Patent or Patent any identified in clauses (a) or (b) above or (d) any applications for Patent filed hereafter by, and any Patents issued hereafter to, Nastech in any jurisdiction covering Existing Nastech Know-how that was not filed prior to the License Effective Date or any later arising Program Improvements owned or controlled by Nastech.. [***] " NDA" means a New Drug Application, Biologics License Application, Worldwide Marketing Application, Marketing Application Authorization (as such terms are defined by the FDA) or a filing pursuant to Section 510(k) of the Act or the equivalent of any of the foregoing made in accordance with applicable regulations and requirements of the FDA or corresponding Regulatory Authority in any jurisdiction outside the United States to obtain marketing approval for a biological, pharmaceutical or diagnostic product in that country or in that group of countries. " NET SALES" means the gross invoice price of each Product sold by P&G or its Related Parties to the first Third Party after deducting, if not previously deducted, from the amount invoiced or received the following, provided such deductions shall be incurred reasonably for the benefit of the Product:

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[*Confidential treatment has been requested as to certain portions of this document. Each such portion, which has been omitted herein and replaced with a series of three asterisks in brackets [***], has been filed separately with the Securities and Exchange Commission.] (a) trade and quantity discounts including without limitation early pay cash discounts; (b) amount repaid or credited by reasons of defects, recalls, returns, rebates and allowances of goods or because of retroactive price reductions specifically identifiable to the Product; (c) [***]; (d) [***] ; (e) [***] ; (f) [***] ; (g) [***] ; (h) [***] ; and (i) sales or excise taxes, custom duties, and other governmental charges, to the extent separately stated on the applicable invoice.With respect to sales of a Combination Product, the invoice price of such Combination Product shall be set by P&G in good faith, applying a standard of fair and honest dealing with Nastech, and Net Sales of such Product included in the Combination Product shall be determined using the following formulae: (1) If such Product and Other Actives contained in the combination are available separately, the Net Sales for purposes of calculating royalty payments will be the result obtained by multiplying the Net Sales of the Combination Product by the fraction A/A+B, where A is the invoiced price of the Product in the Combination Product, and B is the invoiced price of all Other Actives in the Combination Product. (2) If the Combination Product includes Other Actives which are not sold separately (but the Product contained in the Combination Product is available separately), the Net Sales for purposes of calculating royalty payments will be the result of multiplying the Net Sales of the Combination Product by the fraction A/C, where A is as defined above and C is the invoiced price of the Combination Product. (3) If neither the Product nor the Other Actives contained in the Combination Product are sold separately, or if only the Product is not sold separately, [***] . " OTHER ACTIVES" shall have the meaning set forth in the definition of " COMBINATION PRODUCT" .

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[*Confidential treatment has been requested as to certain portions of this document. Each such portion, which has been omitted herein and replaced with a series of three asterisks in brackets [***], has been filed separately with the Securities and Exchange Commission.] " OTHER INFORMATION" means (a) information relating to a disapproval or cancellation of an NDA by the relevant Regulatory Authority of any jurisdiction; (b) information on modifications required to be made in the contents of an NDA in any jurisdiction in order to prevent, or to warn against risks of, death or bodily harm; (c) information on withdrawal of a Product from the marketplace in any jurisdiction; (d) information on important revisions of the precautions in the usage of a Product as set forth in the labeling pursuant to a Regulatory Approval in any jurisdiction; and (e) any information which would reasonably be expected to adversely impact the marketing of a Product in any jurisdiction. " PATENT(S)" means any and all patents and patent applications (which for the purposes of this Agreement shall be deemed to include certificates of invention and applications for certificates of invention) and any divisions, continuations, continuations-in-part, reissues, renewals, extensions, supplementary protection certificates, and the like of any such patents and patent applications. " PHASE I CLINICAL TRIAL" means a human clinical trial in any country that is intended primarily to evaluate the safety and/or pharmacological or antigenic effect of a Product in human subjects or that would otherwise satisfy the requirements of 21 CFR 312.21(a). " PHASE II CLINICAL TRIAL" means a human clinical trial in any country that is intended primarily to evaluate the effectiveness of a Product for a particular indication or indications in human subjects with the disease or indication under study or that would otherwise satisfy the requirements of 21 CFR 312.21(b). " PHASE III CLINICAL TRIAL" means a pivotal human clinical trial in any country the results of which could be used to establish safety and efficacy of a Product as a basis for an NDA or that would satisfy the requirements of 21 CFR 312.21(c). " PRODUCT" means any pharmaceutical preparation in final form containing a Nasal Formulation (i) for sale in the Field by prescription, over-the-counter or any other method, or (ii) for administration to human patients in a Clinical Trial in the Field; [***] . [***] " PRODUCT DEVELOPMENT TEAM" or " PDT" shall have the meaning given such term in Section 2.3.

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[*Confidential treatment has been requested as to certain portions of this document. Each such portion, which has been omitted herein and replaced with a series of three asterisks in brackets [***], has been filed separately with the Securities and Exchange Commission.] " PRODUCT KNOW-HOW" means all know-how and information (including without limitation clinical, technical, scientific and medical information, methods, inventions, practices and trade secrets, improvements, quality control information and procedures and pharmacological, toxicological and clinical test data and results and regulatory information) which (i) has application in the manufacture, use or sale of the Compound, Nasal Formulations or a Product, (ii) is Controlled by a party and (iii) is necessary for, directly used in or directly related to the development or use of the Compound or a Nasal Formulation or the development, registration, formulation, sale, use and commercialization of a Product. " PROGRAM IMPROVEMENTS" means any and all inventions, developments, results, know-how and other information, including but not limited to clinical, technical, scientific and medical information, know-how, methods, inventions, practices and trade secrets, quality control information and procedures, pharmacological, toxicological and clinical test data and results and regulatory information and all intellectual property relating to any of the foregoing, that is developed by or on behalf of P&G (or its Affiliates) or Nastech (or its Affiliates), or jointly by P&G and Nastech or any of their Affiliates, in connection with the Development Program. " PROTECTIVE ACTION" shall have the meaning set forth in Section 9.2.1 hereof. " PTH 1-34" shall mean Parathyroid Hormone (1-34), [***] . " REASONABLE EFFORTS" shall mean, with respect to the development and commercialization of a Product, those efforts and resources [***] , taking into account [***] . " REGULATORY APPROVAL" means (a) in the United States, written notice or other written evidence of marketing approval by the FDA based on acceptance of an NDA and satisfaction of any related applicable FDA registration and notification requirements (if any) and (b) outside the United States, written notice or other written evidence of marketing approval by the relevant Regulatory Authority in a particular jurisdiction of a single application or set of applications comparable to an NDA and satisfaction of any related applicable regulatory and notification requirements, if any, together with any other approval necessary to make and sell commercially in such jurisdiction a pharmaceutical or biological therapeutic product including, where necessary or applicable, satisfactory labeling and pricing approval, and, if necessary for commercialization of a pharmaceutical or biological therapeutic product, governmental reimbursement approval and/or inclusion on any

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[*Confidential treatment has been requested as to certain portions of this document. Each such portion, which has been omitted herein and replaced with a series of three asterisks in brackets [***], has been filed separately with the Securities and Exchange Commission.] governmental formularies effective in such jurisdiction; provided, however, that if the First Commercial Sale in a specific jurisdiction occurs prior to receipt of such pricing or reimbursement approval or inclusion in such formularies for such jurisdiction, then Regulatory Approval will be deemed to have been obtained. " REGULATORY AUTHORITY" shall mean the governmental regulatory authority involved in granting approvals for the manufacturing, use, marketing, reimbursement and/or pricing of a Product in any jurisdiction in the Territory, including, in the United States, the United States Food and Drug Administration and any successor governmental authority having substantially the same function and, in the EU Markets, without limitation the EMEA and the relevant authority in an individual country as permitted under Applicable Law. " RETAINED RIGHTS" shall have the meaning specified in Section 3.2 hereof. " RELATED PARTY" shall mean each of P&G, its Affiliates, and permitted sublicensees (which term does not include distributors), provided that a sublicensee permitted under Section 4.1.2 shall not be deemed a " Related Party" solely due to such sublicense. [***] " SUPPLY AGREEMENT" shall mean a certain commercial supply agreement by and between P&G and Nastech to be completed in accordance with Article 2.10. " TERRITORY" means all of the countries of the world and their respective territories and possessions. " THIRD PARTY" means any individual, estate, trust, partnership, joint venture, association, firm, corporation, company or other entity, other than the parties hereto and their respective Affiliates. " TRADEMARKS" means trademarks, service marks, trade dress, trade names, logos or other business identifiers, any registrations and applications for registration of any of the foregoing, and all goodwill connected therewith. " VALID CLAIM" will mean (as to whether a molecule, formulation, method of use or other activity is Covered) any claim set forth in an issued and unexpired Patent or application for a Patent which Patent or application (i) has not been revoked or held unenforceable, unpatentable or invalid by a final decision of a court or a governmental agency of competent jurisdiction (including without limitation any competent patent office), from which decision no further appeal is possible (ii) has not been withdrawn, disclaimed, denied or admitted by

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[*Confidential treatment has been requested as to certain portions of this document. Each such portion, which has been omitted herein and replaced with a series of three asterisks in brackets [***], has been filed separately with the Securities and Exchange Commission.] the holder of the application or the patent to be invalid or unenforceable through reissue, re-examination, disclaimer or otherwise and (iii) with respect to a pending Patent application, has not been pending for more than seven (7) years. ARTICLE II PRODUCT DEVELOPMENT TEAM AND DEVELOPMENT PLAN 2.1 COOPERATION. Subject to the other provisions of this Agreement, the parties agree that the principal objectives of the parties hereunder in entering into this Agreement are to develop, to obtain Regulatory Approval for and to market Products in the Territory in order to maximize Net Sales and the financial return of the parties. The parties agree that their respective efforts in this regard will be conducted in the framework described herein within which they will discuss the development, regulatory filings, marketing and sale of the Products in the Territory, it being understood and agreed that, notwithstanding the foregoing but subject to its obligation hereunder to use Reasonable Efforts, Nastech shall be entitled to make the final decision on any formulation, or chemistry, manufacturing and controls (CMC) issue [***] . P&G shall be entitled to make the final decision on any issues relating to [***] . 2.2 DEVELOPMENT PLAN. [***] 2.3 ESTABLISHMENT OF PDT AND COMMERCIALIZATION TEAM. 2.3.1 A number of committees will be formed in order to facilitate the orderly conduct of activities under this Agreement. These forums are intended to strengthen relationships, enhance communication, and ensure that each party understands the strategy and activities of each other under the Development Plan and Commercialization Plan as in effect from time to time, and the goals for the Product. [***] Subject to the foregoing and as part of this process, the parties will promptly form a PDT and a commercialization team (the " CT" ) to coordinate the parties' activities under this Agreement as set forth below. [***] 2.3.2 [***] 2.4 PDT AND CT FUNCTIONS. 2.4.1 The general functions of the PDT shall be to: (a) oversee the scope of work done by each party pursuant to the Development Plan;

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[*Confidential treatment has been requested as to certain portions of this document. Each such portion, which has been omitted herein and replaced with a series of three asterisks in brackets [***], has been filed separately with the Securities and Exchange Commission.] (b) prepare for and coordinate research and manpower commitments of each party pursuant to the Development Plan; (c) [***] ; (d) [***] ; (e) [***] ; (f) [***] ; and (g) such other matters as the parties may assign the PDT from time to time. 2.4.2 The PDT shall also review and make recommendations for P&G' s and its Affiliates' activities to obtain and maintain Regulatory Approvals in the Territory necessary to manufacture, market, distribute, sell and use Products in the Territory at the earliest practicable date, including: (a) Proposing Clinical Trials to be conducted, and means and methods of administration of proposed Clinical Trials; (b) Monitoring the progress of Clinical Trials, evaluating the work performed and results obtained; (c) Assessing the therapeutic relevance of the Clinical Trials; and (d) Facilitating the use of relevant data to prepare and file Regulatory Applications. 2.4.3 [***] 2.4.4 [***] 2.4.5 [***] P&G and Nastech [***] who will serve on a Project Leadership Team (the " ...