BDSI BioDelivery Sciences International Inc

License Agreement with Shionogi Inc.

On April 4, 2019 (the “Effective Date”), BioDelivery Sciences International, Inc. (the “Company”) and Shionogi Inc., a Delaware corporation (“Shionogi”), entered into an exclusive license agreement (the “License Agreement”) for the commercialization of Symproic® (naldemedine tosylate) (the “Product”) in the United States including Puerto Rico (the “Territory”) for opioid-induced constipation in adult patients with chronic non-cancer pain (the “Field”).

Pursuant to the terms of the License Agreement, and subject to the conditions set forth therein, the Company will pay Shionogi a $30 million up-front payment, payable in two installments (i.e., $20 million on the Effective Date and $10 million on the six-month anniversary of the Effective Date (or earlier if the License Agreement is assigned or transferred), and quarterly, tiered royalty payments on potential sales of the Product in the Territory that range from 8.5% to 17.5% (plus an additional 1% of net sales on a pass-through basis to a third party licensor of Shionogi) of net sales based on volume of net sales and whether the Product is being sold as an authorized generic.

The Company and Shionogi have made customary representations and warranties and have agreed to certain other customary covenants, including confidentiality, limitation of liability and indemnity provisions.

Either party may terminate the License Agreement for cause if the other party materially breaches or defaults in the performance of its obligations, and, if curable, such material breach remains uncured for 120 days (30 days for non-payment). Unless earlier terminated, the License Agreement will continue in effect until the expiration of the Company’s royalty obligations which expire on the latest of: (a) the expiration of all regulatory exclusivity for the Product in the Field in the Territory, (b) expiration of the last to expire orange book patent in the Territory, (c) the date of a final court decision holding all the unexpired claims of the orange book patents to be invalid or unenforceable, or (d) the tenth (10th) anniversary of the Effective Date for Product (or, for Symproic commercialized by the Company as an authorized generic in accordance with the License Agreement (the “AG Product”), the seventh (7th) anniversary of the first commercial sale of AG Product in the Territory). Upon expiration of the License Agreement, all licenses granted to Company for the Product in the Field and in the Territory survive and become fully-paid, royalty-free, perpetual and irrevocable.

The Company and Shionogi have also entered into a customary supply agreement under which Shionogi will supply the Product to the Company at cost plus an agreed upon markup for an initial term of up to two years. In the event the Company elects to source the Product from a third party supplier, Shionogi would continue to supply the Company with naldemedine tosylate for use in such Product at cost plus such agreed upon markup for the duration of the License Agreement. The Company and Shionogi also entered into a customary transition services and distribution agreement under which Shionogi will continue to perform certain sales, distribution and related activities and commercialization and administrative services on the Company’s behalf until June 30, 2019, or such later date as may be agreed by the parties pursuant to the transition services and distribution agreement (the “Transition Date”) (during which time, in lieu of paying royalties and cost-plus supply, distribution and transitional services during this period, Shionogi will retain 35% of the net sales of Product in the Territory and remit the remaining 65% of net sales to the Company) and certain other customary transitional services (if so requested by the Company), initially at no cost and thereafter, at a specified hourly rate for a term not to exceed three months from the Transition Date or the term of the Agreement.

The foregoing description of the License Agreement does not purport to be complete and is qualified in its entirety by reference to the text of the License Agreement, a copy of which is filed as Exhibit 10.1 hereto.

CRG Term Loan Amendment

On April 4, 2019, the Company entered into a third amendment (the “Third Amendment”) to the term loan agreement, dated as of February 21, 2017 and as amended on December 15, 2017 and on May 16, 2018 (the “Loan Agreement”), among the Company, the subsidiary guarantors, CRG Servicing LLC, as administrative agent and collateral agent (in such capacity, the “Administrative Agent”), and the lenders listed therein (the “Lenders”). The general terms, conditions and covenants of the Loan Agreement and the security granted by the Company and its subsidiaries thereunder are described in the Company’s Current Report on Form 8-K, filed with the SEC on February 27, 2017, as subsequently amended, which description is incorporated herein by reference.

Pursuant to the Third Amendment, the Administrative Agent and the Lenders consent to the Borrower’s entry into the License Agreement. The foregoing description of the Third Amendment does not purport to be complete and is qualified in its entirety by reference to the text of the Amendment, a copy of which is filed as Exhibit 10.2 hereto.