10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2003

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission File Number 1-10352

COLUMBIA LABORATORIES, INC.

(Exact name of Company as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)	59-2758596 (I.R.S. Employer Identification No.)
354 Eisenhower Parkway Livingston, New Jersey (Address of principal executive offices)	07039 (Zip Code)

Company’s telephone number, including area code: (973) 994-3999

Indicate by check mark whether the Company (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Company was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  X  No

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act)    Yes [X] No [    ]

Number of shares of the Common Stock of Columbia Laboratories, Inc. issued and outstanding as of August 1, 2003: 39,305,706

PART 1—FINANCIAL INFORMATION

Item 1.    Financial Statements

The following unaudited, condensed consolidated financial statements of the Company have been prepared in accordance with the instructions to Form 10-Q and, therefore, omit or condense certain footnotes and other information normally included in financial statements prepared in accordance with generally accepted accounting principles. In the opinion of management, all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the financial information for the interim periods reported have been made. Results of operations for the six months ended June 30, 2003 are not necessarily indicative of the results for the year ending December 31, 2003.

Except for historical information contained herein, the matters discussed in this document are forward looking statements made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties, including but not limited to economic, competitive, governmental and technological factors affecting the Company’s operations, markets, products and prices, and other factors discussed elsewhere in this report.

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COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30, 2003			December 31, 2002
	(Unaudited)
ASSETS
Current assets-
Cash and cash equivalents	$	6,908,362		$	5,018,365
Accounts receivable, net		4,421,658			2,198,181
Inventories		2,734,820			2,325,210
Prepaid expenses		541,817			825,833
Loans receivable, related party		—			211,122
Total current assets		14,606,657			10,578,711
Property and equipment, net		964,678			872,435
Intangible assets, net		1,018,335			1,163,341
Other assets		139,785			151,820
TOTAL ASSETS	$	16,729,455		$	12,766,307
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIENCY)
Current liabilities-
Notes payable—current portion	$	—		$	586,667
Accounts payable		3,804,685			3,489,118
Accrued expenses		4,296,219			1,785,606
Total current liabilities		8,100,904			5,861,391
Notes payable—long-term		10,000,000			10,000,000
Deferred revenue		4,221,367			3,949,859
Other long-term liabilities		8,081,663			1,350,000
TOTAL LIABILITIES		30,403,934			21,161,250
Stockholders’ equity (deficiency)-
Preferred stock, $.01 par value; 1,000,000 shares authorized:
Series B Convertible Preferred Stock, 130 and 1,130 shares issued and outstanding in 2003 and 2002, respectively		1			11
Series C Convertible Preferred Stock, 3,500 and 3,750 shares issued and outstanding in 2003 and 2002		35			38
Common stock, $.01 par value; 100,000,000 authorized 36,333,305 and 35,453,722 shares issued and outstanding in 2003 and 2002, respectively		363,333			354,537
Capital in excess of par value		130,366,714			126,664,805
Accumulated deficit		(144,567,873	)		(135,497,195	)
Accumulated other comprehensive income		163,311			82,861
TOTAL STOCKHOLDERS’ EQUITY (DEFICIENCY)		(13,674,479	)		(8,394,943	)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIENCY)	$	16,729,455		$	12,766,307

See notes to condensed consolidated financial statements

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COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Six Months Ended June 30,						Three Months Ended June 30,
	2003			2002			2003			2002
NET SALES	$	8,525,346		$	3,031,960		$	4,919,800		$	2,455,149
COST OF GOODS SOLD		3,814,715			1,853,030			2,137,367			901,748
Gross profit (loss)		4,710,631			1,178,930			2,782,433			1,553,401
OPERATING EXPENSES:
Selling and distribution		8,541,471			836,292			4,578,865			469,242
General and administrative		2,980,288			2,275,516			1,552,472			1,091,586
Research and development		1,589,998			2,317,629			658,887			1,079,264
Litigation settlement expense		—			3,960,000			—			3,960,000
Product recall costs		—			(449,489	)		—			(449,489	)
Total operating expenses		13,111,757			8,939,948			6,790,224			6,150,603
Loss from operations		(8,401,126	)		(7,761,018	)		(4,007,791	)		(4,597,202	)
OTHER INCOME (EXPENSE):
Interest income		11,448			21,689			2,459			11,192
Interest expense		(725,215	)		(405,998	)		(355,532	)		(217,159	)
Other, net		44,215			(91,114	)		(5,744	)		(52,329	)
		(669,552	)		(475,423	)		(358,817	)		(258,296	)
Net loss	$	(9,070,678	)	$	(8,236,441	)	$	(4,366,608	)	$	(4,855,498	)
NET LOSS PER COMMON SHARE:
Basic and diluted	$	(0.26	)	$	(0.25	)	$	(0.12	)	$	(0.14	)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:
Basic and diluted		35,619,030			33,498,703			35,782,522			34,034,705

See notes to condensed consolidated financial statements

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COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE OPERATIONS

(Unaudited)

	Six Months Ended June 30,						Three Months Ended June 30,
	2003			2002			2003			2002
NET LOSS	$	(9,070,678	)	$	(8,236,441	)	$	(4,366,608	)	$	(4,855,498	)
Other comprehensive income (loss):
Foreign currency translation, net of tax		80,450			50,722			58,248			62,631
Comprehensive loss	$	(8,990,228	)	$	(8,185,719	)	$	(4,308,360	)	$	(4,792,867	)

See notes to condensed consolidated financial statements

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COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended June 30,
	2003			2002
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(9,070,678	)	$	(8,236,441	)
Adjustments to reconcile net loss to net cash used in operating activities-
Depreciation and amortization		247,025			330,547
Provision for doubtful accounts		30,350			—
Provision for returns and allowances		90,072			40,000
Writedown of inventories		143,240			—
Interest amortization of PharmaBio Development		341,690			—
Changes in assets and liabilities-
(Increase) decrease in:
Accounts receivable		(2,343,899	)		(2,005,457	)
Inventories		(552,850	)		(646,865	)
Prepaid expenses		284,016			(477,307	)
Loans receivable, related parties		17,885			(6,327	)
Other assets		12,035			20,710
Increase (decrease) in:
Accounts payable		315,567			1,283,957
Accrued expenses		704,795			(504,281	)
Deferred revenue		271,508			—
Net cash used in operating activities		(9,509,244	)		(10,201,464	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(192,891	)		(544,643	)
Net cash used in investing activities		(192,891	)		(544,643	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock, net		2,467,364			6,462,067
Exercise of options and warrants		1,530,313
Issuance of note payable		—			3,960,000
Payment of note payable		(586,667	)		(220,000	)
Proceeds from PharmaBio Development		8,250,000			—
Payments to PharmaBio Development		(54,209	)		—
Dividends paid		(93,750	)		(93,750	)
Net cash provided by financing activities		11,513,051			10,108,317
EFFECT OF EXCHANGE RATE CHANGES ON CASH		79,081			48,055
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		1,889,997			(589,735	)
CASH AND CASH EQUIVALENTS, Beginning of period		5,018,365			4,060,836
CASH AND CASH EQUIVALENTS, End of period	$	6,908,362		$	3,471,101
NON-CASH INVESTING AND FINANCING ACTIVITIES
Related party loan repaid with common stock	$	193,237		$	—

See notes to condensed consolidated financial statements

6

COLUMBIA LABORATORIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1)  SIGNIFICANT ACCOUNTING POLICIES:

The accounting policies followed for quarterly financial reporting are the same as those disclosed in Note (1) of the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002.

Prior-year financial statements have been reclassified to conform to the 2003 presentations.

(2)  INVENTORIES:

Inventories consist of the following:

	June 30, 2003		December 31, 2002
Finished goods	$	1,907,517	$	1,564,136
Raw materials		827,303		761,074
	$	2,734,820	$	2,325,210

(3)  NOTES PAYABLE:

Notes payable consist of:

	June 30, 2003		December 31, 2002
7.125% convertible subordinated note payable—due March 2005	$	10,000,000	$	10,000,000
9.00% note payable—payable in monthly installments (a)		—		586,667
		10,000,000		10,586,667
Less: current portion		—		(586,667	)
	$	10,000,000	$	10,000,000

(a) Promissory note payable in the original amount of $3,960,000 with interest on the unpaid balance at the fixed rate of 9% per annum. Principal and interest was to be paid in equal monthly installments of $220,000 of principal plus accrued interest commencing June 15, 2002. Pursuant to the note, the Company was obligated to pay down the note by an amount equal to one-third of the proceeds from the sale by the Company of its equity securities. In addition to the monthly payments, the Company paid $1,833,333 in August 2002 (one-third of the $5,500,000 raised by the Company through the sale of its common stock on July 31, 2002). The payment was applied in reverse order of payments due. At June 30, 2003, the note has been fully paid.

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(4)  SEGMENT INFORMATION:

The Company and its subsidiaries are engaged in one line of business, the development and sale of pharmaceutical products, medical devices and cosmetics. The following table shows selected unaudited information by geographic area:

	Net Sales		Loss from Operations			Identifiable Assets
As of and for the six months ended June 30, 2003-
United States	$	4,627,546	$	(9,003,953	)	$	9,295,152
Europe		3,897,800		602,827			7,434,303
	$	8,525,346	$	(8,401,126	)	$	16,729,455
As of and for the six months ended June 30, 2002-
United States	$	2,233,873	$	(1,826,536	)	$	5,340,203
Europe		798,087		(5,934,482	)		5,922,094
	$	3,031,960	$	(7,761,018	)	$	11,262,297
As of and for the three months ended June 30, 2003-
United States	$	3,186,194	$	(4,490,997	)
Europe		1,733,606		483,206
	$	4,919,800	$	(4,007,791	)
As of and for the three months ended June 30, 2002-
United States	$	1,936,268	$	1,137
Europe		518,881		(4,598,339	)
	$	2,455,149	$	(4,597,202	)

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(5)  LOSS PER COMMON AND COMMON EQUIVALENT SHARE:

The calculation of basic and diluted loss per common and common equivalent share is as follows:

	Six Months Ended June 30,						Three Months Ended June 30,
	2003			2002			2003			2002
Net loss	($	9,070,678	)	($	8,236,441	)	$	(4,366,608	)	$	(4,855,498	)
Less: Preferred stock dividends		(93,750	)		(93,750	)		(46,875	)		(46,875	)
Net loss applicable to common stock	($	9,164,428	)	($	8,330,191	)	$	(4,413,483	)	$	(4,902,373	)
Basic and diluted:
Weighted average number of common shares outstanding		35,619,030			34,498,703			35,782,522			34,034,705
Basic and diluted net loss per common share	$	(0.26	)	$	(0.24	)	$	(0.12	)	$	(0.14	)

(6)  LEGAL PROCEEDINGS:

In August 2001, Ares Trading S.A. (“Serono”) filed a lawsuit in the Supreme Court of the State of New York (the “Action”) naming the Company as defendant. The Action set forth claims for an alleged breach of contract for failure to supply Crinone^® in accordance with the supply agreement between the parties. In November 2001, the Company filed counterclaims against Serono. In June 2002, the Company reached a settlement with Serono. The companies agreed to release all claims against each other. Under the terms of the settlement, the Company sublicensed rights to market a second brand of its 8% and 4% progesterone gel products under the trade name “Prochieve ^™” to a defined audience of obstetricians, gynecologists and primary care physicians in the United States. As part of the settlement, Columbia gave Ares a note for $3.96 million, which has been fully paid, to cover out of pocket costs resulting from the recall.

Other claims and lawsuits have been filed against the Company. Although the results of pending litigation are always uncertain, the Company does not believe the results of any such actions, individually or in the aggregate, will have a material adverse effect on our financial position or results of operation. Additionally, the Company believes that it has adequate reserves or adequate insurance coverage for any unfavorable outcome resulting from these actions.

(7)  PRODUCT RECALL:

On April 5, 2001, the Company announced that it had requested its licensee, Serono, to voluntarily recall a number of batches of Crinone. The Company estimated that the direct out-of-pocket costs related to the recall would cost approximately $1.5 million, which was recorded in the first quarter of 2001. As a result of the settlement of the litigation described in Note 6, the Company’s original estimate of the expenses necessary to complete the product recall exceeded the actual expense by approximately $449,000. This amount is shown as a reduction in 2002 Operating Expenses in the Condensed Consolidated Statement of Operations.

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(8)  RELATED PARTY TRANSACTIONS:

During 1993, the Company loaned an individual, who was an officer, director and stockholder of the Company, an aggregate of $110,350. These notes, which bore interest at 10% per annum and which were due on or before December 7, 1997, were subsequently extended through December 7, 1999. On June 30, 2003, the notes and accrued interest totaling $216,639 were paid in full by transferring to the Company, Columbia stock valued at $193,237 and $23,402 in cash.

(9)  AGREEMENTS WITH QUINTILES TRANSNATIONAL CORP.:

On July 31, 2002, the Company and Quintiles Transnational Corp. (“Quintiles”) entered into an agreement to commercialize the Company’s portfolio of women’s healthcare products in the United States. Under the terms of this agreement, Quintiles’ commercialization unit, Innovex, will provide a dedicated team of 55 sales representatives on a three-year, fee-for-service basis, to commercialize the Company’s women’s healthcare products. The costs of the sales representatives are included in selling and distribution expenses. In a second agreement dated July 31, 2002, Quintiles’ strategic investment group, PharmaBio Development, agreed to pay $4.5 million, to be paid in four equal quarterly installments commencing in the third quarter 2002 for the right to receive a 5% royalty on the net sales of the Company’s women’s healthcare products in the United States for five years beginning in the first quarter of 2003. The royalty payments are subject to minimum ($8 million) and maximum ($12 million) amounts and because the minimum amount exceeds $4.5 million, the Company has recorded the amounts received through December 31, 2002 and June 30, 2003, as liabilities. The excess of the minimum ($8 million) to be paid by the Company over the $4.5 million received by the Company is being recognized as interest expense over the five-year term of the agreement, assuming an interest rate of 12.51%. $210,142 was recorded as interest expense in the six months ended June 30, 2003. As of December 31, 2002 and June 30, 2003, $900,000 and $811,858, respectively, are recorded as current liabilities and included in accrued expenses and $1,350,000 and $3,844,075, respectively, are recorded as other long-term liabilities in the accompanying condensed Consolidated Balance Sheets.

On March 5, 2003, the Company and Quintiles announced an agreement to commercialize Columbia’s Striant^™ testosterone buccal bioadhesive product in the United States. Under the terms of the agreement, Quintiles’ commercialization unit, Innovex, will provide a dedicated team of approximately 75 sales representatives for two-and-a-half years. The costs of the sales representatives will be included in selling and distribution expenses. Quintiles’ strategic investment group, PharmaBio Development, also agreed to pay $15 million to Columbia over a 15-month period commencing with the signing of the agreement. In return, Quintiles will receive a 9% royalty on net sales of Striant in the United States up to agreed annual sales revenues, and a 4.5% royalty of net sales above those levels. The royalty term is seven years. Royalty payments will commence with the launch of Striant and are subject to minimum ($30 million) and maximum ($55 million) amounts. Because the minimum amount exceeds the $15 million to be received, the Company has recorded the amounts received through June 30, 2003, as liabilities. The excess of the minimum ($30 million) to be paid by the Company over the $15 million to be received by the Company is being recognized as interest expense over the seven-year term of the agreement, assuming an interest rate of 10.67%. $131,548 was recorded as interest expense in the six months ended June 30, 2003. The Company has received $6 million through June 30, 2003 and $1,893,960 is recorded as a current liability and included in accrued expenses and $4,237,588 is recorded as a long-term liability in the accompanying condensed Consolidated Balance Sheet.

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(10)  STOCK-BASED COMPENSATION:

The Company has elected to apply APB Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations in accounting for its stock options and has adopted the disclosure-only provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123, Accounting for Stock-Based Compensation. If the Company had elected to recognize compensation cost based on the fair value of the options granted at the grant date as prescribed by SFAS No. 123, the Company’s net loss and net loss per common share for the six and three month periods ended June 30, 2003 and 2002 would have been as follows:

	Six Months Ended June 30,						Three Months Ended June 30,
	2003			2002			2003			2002
Net loss, as reported	$	(9,070,678	)	$	(8,236,441	)	$	(4,366,608	)	$	(4,855,498	)
Deduct: Total stock-based compensation expense determined under fair value based method for all awards		(971,457	)		(1,236,381	)		(499,764	)		(624,966	)
Pro forma net loss	$	(10,042,135	)	$	(9,472,822	)	$	(4,866,372	)	$	(5,480,464	)
Loss per share—basic and diluted
As reported	$	(0.26	)	$	(0.25	)	$	(0.12	)	$	(0.14	)
Pro forma	$	(0.28	)	$	(0.29	)	$	(0.14	)	$	(0.16	)

(11)  CAPITAL TRANSACTION:

On May 9, 2003, the Company sold 510,204 shares of its common stock to an institutional investor at a price of $4.90 per share. Gross proceeds amounted to $2,500,000.

(12)  SUBSEQUENT EVENT:

On July 23, 2003, the Company sold 2,244,783 shares of its common stock to a group of institutional investors at a price of $11.70 per share. The price per share represented a negotiated discount to the market price and gross proceeds amounted to $26,263,961.

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Item 2. Management’sDiscussion And Analysis Of Financial Condition And Results Of Operations

Forward-Looking Information

The Company and its representatives from time to time make written or verbal forward looking statements, including statements contained in this and other filings with the Securities and Exchange Commission and in the Company’s reports to stockholders, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements include, without limitation, the Company’s expectations regarding sales, earnings or other future financial performance and liquidity, product introductions, entry into new geographic regions and general optimism about future operations or operating results. Some of these statements can be identified by the use of forward-looking terminology such as “prospects,” “outlook,” “believes,” “estimates,” “intends,” “may,” “will,” “should,” “anticipates,” “expects” or “plans,” or the negative or other variation of these or similar words, or by discussion of trends and conditions, strategy or risks and uncertainties. Although the Company believes that its expectations are based on reasonable assumptions within the bounds of its knowledge of its business and operations, there can be no assurance that actual results will not differ materially from its expectations. Factors that could cause actual results to differ from expectations include, without limitation: (i) the successful marketing of products by the Company and its licensees; (ii) increased competitive activity from companies in the pharmaceutical industry, some of which have greater resources than the Company; (iii) social, political and economic risks to the Company’s foreign operations, including changes in foreign investment and trade policies and regulations of the host countries and of the United States; (iv) changes in the laws, regulations and policies, including changes in accounting standards, that affect, or will affect, the Company in the United States and abroad; (v) foreign currency fluctuations affecting the relative prices at which the Company and foreign competitors sell their products in the same market; (vi) failure to develop the Company’s products or delay in development of the Company’s products and (vii) the timely completion of studies and approvals by the FDA and other regulatory agencies. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on behalf of the Company are expressly qualified in their entirety by the Cautionary Statements in this Quarterly Report. Readers are advised to consult any further disclosures the Company may make on related subjects in subsequent 10-Q, 8-K, and 10-K reports to the Securities and Exchange Commission.

Critical Accounting Policies and Estimates

The Company has identified the policies below as critical to its business operations and the understanding of its results of operations. For a detailed discussion on the application of these and other accounting policies, see Note 1 of the consolidated financial statements included in Item 14 of the Annual Report on Form 10-K, beginning on page F-11. Note that the preparation of this Quarterly Report on Form 10-Q requires the Company to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. There can be no assurance that actual results will not differ from those estimates.

Revenue recognition.    The Company’s revenue recognition is significant because revenue is a key component of the Company’s results of operations. In addition, revenue recognition determines the timing of certain expenses, such as commissions and royalties. Revenue results are difficult to predict, and any shortfall in revenue or delay in recognizing revenue could cause operating results to vary significantly from quarter to quarter. Revenues from the sale of products are recorded at the time goods are shipped to customers. Provisions for returns, rebates and other allowances are estimated based on a percentage of sales and are recorded in the same period the related sales are recognized. Royalties and additional monies owed to the Company based on the strategic alliance partners sales are recorded as revenue as sales are made by the strategic alliance partners. License fees are recognized in net sales over the term of the license.

Impairment of intangible assets.    The Company periodically evaluates its intangible assets for potential impairment indicators. Judgments regarding the existence of impairment indicators are based on legal factors, market condition and operational performance. Future events could cause the Company to conclude that impairment factors exist and that certain intangible assets are impaired. Any resulting impairment loss could have a material adverse impact on results of operations.

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Accounting For PharmaBio Development Agreements.    On July 31, 2002, Quintiles Transnational Corp. strategic investment group, PharmaBio Development, agreed to pay $4.5 million, to be paid in four equal quarterly installments commencing in the third quarter 2002 for the right to receive a 5% royalty on the net sales of the Company’s women’s healthcare products in the United States for five years beginning in the first quarter of 2003. The royalty payments are subject to minimum ($8 million) and maximum ($12 million) amounts and because the minimum amount exceeds $4.5 million, the Company has recorded the amounts received through December 31, 2002 and June 30, 2003, as liabilities. The excess of the minimum ($8 million) to be paid by the Company over the $4.5 million received by the Company is being recognized as interest expense over the five-year term of the agreement, assuming an interest rate of 12.51%. $210,142 was recorded as interest expense in the six months ended June 30, 2003. As of December 31, 2002 and June 30, 2003, $900,000 and $811,858, respectively, are recorded as current liabilities and included in accrued expenses and $1,350,000 and $3,844,075, respectively, are recorded as other long-term liabilities in the accompanying condensed Consolidated Balance Sheets. On March 5, 2003, PharmaBio Development, also agreed to pay $15 million to Columbia over a 15-month period commencing with the signing of the agreement. In return, Quintiles will receive a 9% royalty on net sales of Striant in the United States up to agreed annual sales revenues, and a 4.5% royalty of net sales above those levels. The royalty term is seven years. Royalty payments will commence with the launch of Striant and are subject to minimum ($30 million) and maximum ($55 million) amounts. Because the minimum amount exceeds the $15 million to be received, the Company has recorded the amounts received through June 30, 2003, as liabilities. The excess of the minimum ($30 million) to be paid by the Company over the $15 million to be received by the Company is being recognized as interest expense over the seven-year term of the agreement, assuming an interest rate of 10.67%. $131,548 was recorded as interest expense in the six months ended June 30, 2003. The Company has received $6 million through June 30, 2003 and $1,893,960 is recorded as a current liability and included in accrued expenses and $4,237,588 is recorded as a long-term liability in the accompanying condensed Consolidated Balance Sheet. The accounting for these agreements have been included in this section because of their significance to the Company.

Liquidity and Capital Resources

Cash and cash equivalents increased from $5,018,365 at December 31, 2002 to $6,908,362 at June 30, 2003. During the period, the Company used $9,509,244 for operating activities. During the period, the Company spent $192,891 on property and equipment and paid off $586,667 of the note payable to Serono. The Company also paid $ 93,750 for dividends to holders of its Series C preferred stock. On May 9, 2002, the Company sold 510,204 shares (at $4.90 per share), of its Common Stock to Biotech Value Plus Ltd. The price represented a negotiated discount to the market price and gross proceeds were $2,500,000. The Company received $8,250,000 from PharmaBio Development pursuant to two agreements involving future paybacks based on U.S. sales of the Company’s products. A total of $9,000,000 in three equal installments will be received from PharmaBio by the Company over the third and fourth quarters of 2003 and the first quarter of 2004. The Company also received $1,530,313 from the exercise of outstanding stock options and warrants.

On July 23, 2003, the Company sold 2,244,783 shares of its common stock to a group of institutional investors at a price of $11.70 per share. The price per share represented a negotiated discount to the market price and gross proceeds amounted to $26,263,961.

Effective as of February 6, 2001, the Company entered into the Amended and Restated Common Stock Purchase Agreement with Acqua Wellington to sell up to $16.5 million of the Common Stock, under the Registration Statement, the Prospectus, and the related Prospectus Supplement dated February 6, 2001 and amended on April 13, 2001. Pursuant to the Purchase Agreement, the Company may, from time to time over the term of the Purchase Agreement and at its sole discretion, issue and sell to Acqua Wellington up to $16.5 million of the Common Stock, subject to certain conditions, at a price per share based on the daily volume weighted average price of the Common Stock over a certain period of time less a discount ranging from 5% to 7%. In addition, during the period in which the Company elects to issue and sell shares of the Common Stock to Acqua Wellington, the Company may also, at its sole discretion, grant Acqua Wellington a call option at the same discount for the applicable period to purchase additional shares of the Common Stock up to the applicable amount being sold by the Company in such period, subject to the overall limit of $16.5 million described above. The Company issued and sold $6.5 million and $1.0 million of its Common Stock to Acqua Wellington in 2002 and 2001, respectively. The Company and Acqua Wellington have agreed to extend the term of the Agreement until February 6, 2005. All other terms remain the same. At August 1, 2003, $9 million may be sold under the Agreement subject to the registration statement relating to the amendment becoming effective.

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In connection with the 1989 purchase of the assets of Bio-Mimetics, Inc., which assets consisted of the patents underlying the Company’s Bioadhesive Delivery System, other patent applications and related technology, the Company pays Bio-Mimetics, Inc. a royalty equal to two percent of the net sales of products based on the Bioadhesive Delivery System, to an aggregate of $7.5 million. The Company is required to prepay a portion of the remaining royalty obligation, in cash or stock at the option of the Company, if certain conditions are met. Through June 30, 2003, the Company has paid approximately $2.3 million in royalty payments.

As of June 30, 2003, the Company has outstanding exercisable options and warrants that, if exercised, would result in approximately $54.1 million of additional capital. There can be no assurance that any options or warrants will be exercised.

The Company anticipates it will spend approximately $1,000,000 on property and equipment in 2003.

In accordance with Statement of Financial Accounting Standards No. 109, as of June 30, 2003 and December 31, 2002, other assets in the accompanying consolidated balance sheets include deferred tax assets of approximately $25 and $23 million, respectively, (comprised primarily of a net operating loss carryforward) for which a valuation allowance has been recorded since the realizability of the deferred tax assets are not determinable.

Results of Operations—Six Months Ended June 30, 2003 versus Six Months Ended June 30, 2002

Net sales increased by approximately $5,493,000 from approximately $3,032,000 in 2002 to approximately $8,525,000 in 2003. Sales of Crinone^® accounted for approximately $3,909,000 million in 2003 as compared to approximately $1,709,000 in 2002. In April 2001, the Company requested its licensee, Serono, to voluntarily recall a number of batches of Crinone^®. The Company resumed sales of Crinone^® to Serono in May 2002. Sales of the product Replens were approximately $1,408,000 in 2003 as compared to $659,000 in 2002. New products introduced since the second quarter of 2002, accounted for approximately $2,356,000 of the 2003 net sales.

Gross profit as a percentage of net sales was 55% in 2003 as compared to 39% in 2002. The 55% gross profit percentage in 2003 was the result of the reintroduction of Crinone^® sales and the launches of Prochieve^™ 8%, Prochieve^™ 4% and Rephresh^™ since the second quarter of 2002. The cost of goods sold for the Prochieve^™ products includes a 30% royalty to Serono on net sales. Under the Replens^® Purchase and License Agreement dated April 18, 2000, between the Company and Lil’ Drug Store Products, Inc., the selling price for Replens^® to Lil’ Drug Store Products is equal to the Company’s cost of goods and the Company receives a royalty on sales by Lil’ Drug Store Products. The 39% gross profit percentage in 2002 resulted from the reduced sales caused by the Crinone^® recall and the inability to reduce fixed manufacturing costs.

Selling and distribution expenses increased approximately $7,705,000 in 2003, from approximately $836,000 in 2002 to approximately $8,541,000 in 2003. The commencement of sales of Prochieve^™ 8% to trade customers by the Company and the promotion of this product, RepHresh^™ and Advantage-S^® to physicians, in September 2002, and the subsequent introduction of Prochieve^™ 4% in 2003 accounted for the 2003 increase. Included in the 2003 expenses were sales force costs of approximately $4,033,000 and product marketing expenses of approximately $3,199,000. Additionally, the company has incurred $398,000 in salary expense in 2003.

General and administrative expenses increased by approximately $704,000 in 2003 to approximately $2,980,000 in 2003 compared to approximately $2,276,000 in 2002. The higher costs in 2003 were the result of increases in insurance premiums ($197,000), patent and other legal fees ($175,000) and the hiring of additional administrative personnel subsequent to the second quarter of 2002 ($209,000).

14

Research and development expense decreased in 2003 by approximately $728,000 from approximately $2,318,000 in 2002 to $1,590,000 in 2003. The decrease is primarily related to the costs associated with the Company’s Phase III trials for its male testosterone product which started to conclude in the 2002 first quarter.

Litigation settlement expense in 2002 represents the amount the Company agreed to pay Ares Trading S.A. to settle the litigation that followed the recall of Crinone in April 2001.

Product recall costs in 2002 represents the reversal of the unused estimate of the Company’s direct out-of-pocket costs related to the voluntary recall of Crinone, which was accrued in the first quarter of 2001.

Interest expense increased by approximately $319,000 from approximately $406,000 in 2002 to approximately $725,000 in 2003, primarily as a result of expensing as interest, the difference between the minimum amounts to be paid to PharmaBio Development and the amounts to be received. Interest expense related to the convertible subordinated note payable, totaled approximately $356,000 in 2003 and 2002.

As a result, the net loss for the six months ended June 30, 2003 was $9,070,678 or $(.26) per common share as compared to the net loss for the six months ended June 30, 2002 of $8,236,441 or $(.25) per common share.

Results of Operations—Three Months Ended June 30, 2003 versus Three Months Ended June 30, 2002

Net sales increased by approximately $2,465,000 from approximately $2,455,000 in 2002 to approximately $4,920,000 in 2003. Sales of Crinone^® accounted for approximately $1,850,000 million in 2003 as compared to approximately $1,709,000 in 2002. Sales of the product Replens were approximately $980,000 in 2003 as compared to $295,000 in 2002. New products introduced since the second quarter of 2002, accounted for approximately $1,626,000 of the 2003 net sales.

Gross profit as a percentage of net sales was 57% in 2003 as compared to 63% in 2002. The 57% gross profit percentage in 2003 was the result of the reintroduction of Crinone^® sales and the launches of Prochieve^™ 8%, Prochieve^™ 4% and Rephresh^™ since the second quarter of 2002. The cost of goods sold for the Prochieve^™ products includes a 30% royalty to Serono on net sales. Under the Replens^® Purchase and License Agreement dated April 18, 2000, between the Company and Lil’ Drug Store Products, Inc., the selling price for Replens^® to Lil’ Drug Store Products is equal to the Company’s cost of goods and the Company receives a royalty on sales by Lil’ Drug Store Products.

Selling and distribution expenses increased approximately $4,110,000 in 2003, from approximately $469,000 in 2002 to approximately $4,579,000 in 2003. The commencement of sales of Prochieve^™ 8% to trade customers by the Company and the promotion of this product, RepHresh^™ and Advantage-S^® to physicians, in September 2002, and the subsequent introduction of Prochieve^™ 4% in 2003 accounted for the 2003 increase. Included in the 2003 expenses were sales force costs of approximately $1,970,000 and product marketing expenses of approximately $1,923,000. Additionally, the company has incurred $227,000 in salary expense in 2003.

General and administrative expenses increased by approximately $460,000 in 2003 to approximately $1,552,000 in 2003 compared to approximately $1,092,000 in 2002. The higher costs in 2003 were the result of increases in insurance premiums ($107,000), patent and other legal fees ($326,000) and the hiring of additional administrative personnel subsequent to the second quarter of 2002 ($64,000).

Research and development expense decreased in 2003 by approximately $420,000 from approximately $1,079,000 in 2002 to $659,000 in 2003. The decrease is primarily related to the costs associated with the Company’s Phase III trials for its male testosterone product which started to conclude in the 2002 first quarter.

Litigation settlement expense in 2002 represents the amount the Company agreed to pay Ares Trading S.A. to settle the litigation that followed the recall of Crinone in April 2001.

15

Product recall costs in 2002 represents the reversal of the unused estimate of the Company’s direct out-of-pocket costs related to the voluntary recall of Crinone, which was accrued in the first quarter of 2001.

Interest expense increased by approximately $139,000 from approximately $217,000 in 2002 to approximately $356,000 in 2003, primarily as a result of expensing as interest, the difference between the minimum amounts to be paid to PharmaBio Development and the amounts to be received. Interest expense related to the convertible subordinated note payable, totaled approximately $178,000 in 2003 and 2002.

As a result, the net loss for the three months ended June 30, 2003 was $4,366,608 or $(.12) per common share as compared to the net loss for the three months ended June 30, 2002 of $4,855,498 or $(.14) per common share.

Item 3. Quantitative And Qualitative Disclosures About Market Risk

The Company does not believe that it has material exposure to market rate risk. The Company has only a fixed rate debt obligation that comes due in 2005. The Company may, however, require additional financing to fund future obligations and no assurance can be given that the terms of future sources of financing will not expose the Company to material market risk.

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Item 4. Disclosure Controls And Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s filings under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission. Such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. The Company’s management, including the Chief Executive Officer and the Chief Financial Officer, recognizes that any set of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Within 90 days prior to the filing date of this quarterly report on Form 10-Q, the Company has carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and the Company’s Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings

In August 2001, Ares Trading S.A. (“Serono”) filed a lawsuit in the Supreme Court of the State of New York (the “Action”) naming the Company as defendant. The Action set forth claims for an alleged breach of contract for failure to supply Crinone^® in accordance with the supply agreement between the parties. In November 2001, the Company filed counterclaims against Serono. In June 2002, the Company reached a settlement with Serono. The companies agreed to release all claims against each other. Under the terms of the settlement, the Company licensed rights to market a second brand of its 8% and 4% progesterone gel products under the trade name “Prochieve ^™” to a defined audience of obstetricians, gynecologists and primary care physicians in the United States. As part of the settlement, Columbia gave Ares a note for $3.96 million, which has been fully paid, to cover out of pocket costs resulting from the recall.

Other claims and lawsuits have been filed against the Company. Although the results of pending litigation are always uncertain, the Company does not believe the results of any such actions, individually or in the aggregate, will have a material adverse effect on our financial position or results of operation. Additionally, the Company believes that it has adequate reserves or adequate insurance coverage for any unfavorable outcome resulting from these actions.

Item 2. Changes in Securities

None.

Item 3. Defaults upon Senior Securities

None.

Item 4. Submission of Matters to a Vote of Security Holders

The 2003 annual meeting of shareholders was held on May 15, 2003 for the purpose of electing seven directors. James J. Apostolakis, Jean Carvais, M.D., Max Link, Ph.D., Denis O’Donnell, M.D., Selwyn Oskowitz, M.D., Robert Strauss and Fred Wilkinson were all elected, with each nominee receiving at least 30,910,657 votes out of a possible 35,453722 votes. Also approved by a majority of those voting was a proposal to ratify the selection of Goldstein Golub Kessler LLP as independent auditor for the current year.

Item 5. Other Information

None.

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Item 6. Exhibits and Reports on Form 8-K

A.    Exhibits

10.43	—License and Supply Agreement dated May 27, 2003, between the Company and Mipharm S.p.A.
31.1	—Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer of the Company.
31.2	—Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer of the Company.
32.1	—Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
32.2	—Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.

B.    Reports on Form 8-K

On April 16, 2003, the Company filed a form 8-K in which it reported that William Bologna had resigned from his position as chief science officer, effective immediately, and would step down as chairman of the Company’s board of directors effective May 15, 2003.

On May 12, 2003, the Company filed a form 8-K in which it reported the sale of 510,204 shares of its common stock to Biotech Value Plus, Ltd.

On June 20, 2003, the Company filed a form 8-K in which it reported the approval by the U.S. FDA of Striant, a new treatment form for men with a deficiency or absence of testosterone.

On July 25, 2003, the Company filed a form 8-K in which it reported the sale of 2,244,783 shares of its common stock at a price of $11.70 to a group of institutional investors.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

COLUMBIA LABORATORIES, INC.

/s/    DAVID L. WEINBERG        

DAVID L. WEINBERG, Vice President-

Finance and Chief Financial Officer

DATE: August 14, 2003

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Exhibit Index

Exhibit No.	Description
10.43	—     License and Supply Agreement dated May 27, 2003, between the Company and Mipharm S.p.A.
31.1	—     Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer of the Company.
31.2	—     Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer of the Company.
32.1	—     Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
32.2	—     Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.

1

EX-10.43

Exhibit 10.43

MIPHARM S.p.A.

and

COLUMBIA LABORATORIES (BERMUDA), LTD.

and

COLUMBIA LABORATORIES, INC.

LICENSE AND SUPPLY AGREEMENT

LICENSE AND SUPPLY AGREEMENT, dated as of May 27, 2003, between MIPHARM S.p.A., a corporation organized and existing under the laws of Italy having its principal place of business at Via B. Quaranta 12, 20141, Milan, Italy (“Mipharm”) and COLUMBIA LABORATORIES (BERMUDA), LTD., a Bermuda corporation, having its office at Cedar House, 41 Cedar Avenue, Hamilton HM 12, Bermuda (“Columbia”) and COLUMBIA LABORATORIES, INC., a US corporation incorporated in Delaware having its principal place of business at 354 Eisenhower Parkway, Livingston, NJ 07039 (“Inc”).

RECITALS:

A. Columbia and its Affiliates (as hereafter defined) are engaged in, among other things, the research, development, manufacture, marketing, distribution and sale of drug products in Europe, the United States, and throughout the world.

B. Mipharm is engaged in, among other things, the research, development, marketing, distribution and sale of drug products in the Territory (as hereafter defined).

C. Columbia is the owner of certain Patent Rights, Trademarks and Regulatory Applications (as hereafter defined) relating to the Product (as hereafter defined).

D. It is intended that Columbia UK (as hereafter defined) shall file the European Regulatory Application (as hereinafter defined) relating to the Product and shall transfer the MA (as hereafter defined) in the Territory resulting from the same to Mipharm upon receiving Regulatory Approval.

E. Columbia is willing to grant to Mipharm a license in the Territory and to supply Mipharm with its requirements of Finished Product (as hereafter defined) for this purpose and Mipharm desires to acquire such license and to buy such Finished Products upon and subject to the terms and conditions set forth hereunder.

F. Inc has been made a party to this Agreement solely for the purposes of Clause 18.12

NOW THEREFORE, the Parties hereto agree as follows:

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1. DEFINITIONS

1.1 As used in this Agreement, the following definitions (in addition to other definitions set forth in this Agreement) shall apply:

1.1.1 “Affiliate” shall mean any entity controlling, controlled by or under the common control of Columbia or Mipharm, as the case may be. For the purpose of this Agreement, “control” shall mean the direct or indirect ownership of more than (50%) percent of the outstanding shares or other voting rights of the subject entity or possession, directly or indirectly, of the power to direct or cause the direction of management and policies of such entity;

1.1.2 “Agreement” shall mean this license and supply agreement (which expression shall be deemed to include the Recitals and Exhibits hereto);

1.1.3 “Applicable Laws” means all applicable laws, rules, regulations, directives and guidelines (including any amendments, extensions or replacements thereto) (i) in the Territory that apply to the Commercialization of the Product in the Territory; and (ii) in or outside the Territory that apply to the performance of either Party’s obligations or covenants under this Agreement;

1.1.4 “Business Days” shall mean 9 am to 5 pm local time on a day other than a Saturday, Sunday, or public holiday in Bermuda, Italy, or the USA;

1.1.5 “cGMP” shall mean manufacture in accordance with:

(a) EC Directive 91/356/EEC as may be amended from time to time;

(b) the current guide to good manufacturing practice for medicinal products published by the European Commission; and

(c) the equivalent law or regulation in the Territory;

1.1.6 “Certificate of Analysis” shall mean a document of that name as described in detail in the current guide to good manufacturing practice for medicinal products published by the European Commission;

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1.1.7 “Columbia Patent Rights” means all Patent Rights owned by or licensed to Columbia containing claims reciting or covering Product as more particularly set out in Exhibit A;

1.1.8 “Columbia UK” means a company registered in England and Wales under company number 02425939 with the name Columbia Laboratories (UK) Limited;

1.1.9 “Commencement Date” means the date of execution of this Agreement;

1.1.10 “Commercialization”, “Commercializing”, or “Commercialize” shall mean all activities in the Territory relating to the import, export, promotion, marketing, detail, distribution, storage, handling, offering for sale and sale of the Finished Product;

1.1.11 “European Regulatory Application” means the Regulatory Application to be filed by Columbia UK with the Medicines Control Agency in the UK seeking Regulatory Approval for the Product in the UK and to be used by Columbia UK as the basis for the mutual recognition Regulatory Application in the Territory, as the same is modified or amended from time to time during the Regulatory Application process;

1.1.12 “Expert’s Decision” means the procedure set out in Exhibit D;

1.1.13 “FDA” means the Governmental Authority in the USA with the name “Food and Drug Administration”;

1.1.14 “Finished Product” means Product in final Packaged and Labelled form ready for ultimate commercial sale or use;

1.1.15 “First Commercial Sale” means the first invoiced commercial sale by Mipharm, its Affiliates, agents or sublicensees in the Territory after grant of Regulatory Approval and pricing approval (if required) for Finished Product;

1.1.16 “Force Majeure” means in relation to either Party, any event or circumstance which is beyond the reasonable control of that Party and without the fault or negligence of that Party so affected which results in or

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causes the failure of that Party to perform any or all of its obligations under this Agreement, including, without limitation, inevitable accidents, perils of navigation, floods, fire, storms, drought, or other weather-related conditions, earthquakes, asteroid or meteor activity, explosion, hostilities, sabotage, act of vandalism, war (whether declared or undeclared), civil disturbances, order or act of any government, whether de jure or de facto or any official purporting to act under authority of any such government, illegality arising from domestic or foreign laws or regulations, insurrections, quarantine or custom restrictions, damage in factories or warehouses, strikes, lockouts, other labor difficulty or other disturbance at the Parties or the suppliers of Product, raw materials and/or excipients, energy or other supplies, breakdown of machinery or instruments or acts of God or other similar events beyond the reasonable control of the Party so affected resulting in hindrance of the performance by either Party of its obligations hereunder;

1.1.17    “Good Clinical Practice” or “GCP” shall mean clinical practice as set out in:

(a) ICH Harmonised Tripartite Guideline for Good Clinical Practice (CPMP/ICH/135/95) and any amendment thereof; and

(b) any guidelines concerning good clinical practice published from time to time by the European Commission pursuant to Directive 2001/20/EC or any amendment thereof; and

(c) US Code of Federal Regulations Title 21, Parts 50 (Protection of Human Subjects) and 56 (Institutional Review Boards), as may be amended from time to time; and

(d) the Declaration of Helsinki as last amended at the 52nd World Medical Association October 2000 and any further amendments thereto; and

(e) National Institute of Health Standards for the protection of human subjects as may be amended from time to time; and

       the equivalent law or regulation in any relevant territory.

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1.1.18 “Good Industry Practice” shall mean in relation to any undertaking and any circumstance, the exercise of that degree of skill, diligence, prudence and foresight which would reasonably and ordinarily be expected from a skilled and experienced person engaged in the same type of undertaking under the same or similar circumstances;

1.1.19 “Governmental Authority” shall mean all governmental and regulatory bodies, agencies, departments or entities that regulate, direct or control commercial and other related activities in the Territory, including any relevant government health authority (or successor agency thereof) in the Territory whose approval is necessary to market the Finished Product in the Territory;

1.1.20 “Indication” shall mean all indications in men, including hypogonadism;

1.1.21 “Insolvency Event” shall mean, in relation to either Party, any one of the following:

(a) a notice shall have been issued to convene a meeting for the purpose of passing a resolution to wind up that Party or such resolution shall have been passed other than a resolution for the solvent reconstruction or reorganisation of that Party or for the purpose of inclusion of any part of the share capital of that Party in the list of the American Stock Exchange or quotation of the same on the National Association of Securities Dealers Automated Quotation System or any other international stock exchange or an application by that Party for registration as a public company; or

(b) a resolution shall have been passed by that Party’s directors to seek a winding up or an administration order or a petition for a winding up or administration order shall have been presented against that Party which, in the case of a petition presented against a Party, shall not have been appealed within 7 days of having been lodged or such an order shall have been made and shall have been dismissed within thirty (30) days thereafter; or

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(c) a receiver, administrative receiver, receiver and manager, interim receiver, custodian, sequestrator or similar officer is appointed in respect of that Party or over a substantial part of its assets or any third party takes steps to appoint such an officer in respect of that Party or an encumbrancer takes steps to enforce and enforces its security which shall not have been dismissed by a court of competent jurisdiction within thirty (30) days thereafter; or

(d) that Party takes any step (including starting negotiations) with a view to readjustment, rescheduling or deferral of any part of that Party’s indebtedness, or proposes or makes any general assignment, composition or arrangements with or for the benefit of all or some of that Party’s creditors or makes or suspends or threatens to suspend making payments to all or some of that Party’s creditors or the Party submits to any type of voluntary arrangement.

1.1.22 “Label”, “Labelled” or “Labelling” shall mean all labels and other written, printed or graphic matter upon (i) the Product or any container or wrapper utilized with the Product, or (ii) any written material accompanying the Product, including, without limitation, package inserts and patient information leaflet;

1.1.23 “Marketing Authorisation” or “MA” means any Regulatory Approval for Finished Product granted by the Governmental Authority of the Territory as the same may be varied from time to time during the Term of this Agreement;

1.1.24 “Minimum Purchase Requirements” means the minimum purchase requirements set out in Exhibit B as the same may be amended from time to time during the term of this Agreement under the provisions of Clause 6.5;

1.1.25 “NDA Filing” means the Regulatory Application for Product which is a new drug application submitted by Columbia Laboratories, Inc., with the FDA on August 19, 2002;

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1.1.26 “Net Sales” with respect to Finished Product shall mean the gross amount received by a Party, its Affiliates or sub-licensees for sale of Finished Product to unrelated third parties less:

(a) quantity, trade and/or cash discounts actually granted;

(b) amounts repaid or credited and allowances including cash, credit or free goods allowances, given by reason of chargebacks, retroactive price reductions or billing errors and rebates (including government-mandated rebates), actually allowed or paid;

(c) amounts refunded or credited for Finished Product which was rejected, spoiled, damaged, outdated or returned;

(d) freight, shipment and insurance costs incurred transporting Finished Product to a third party purchaser;

(e) taxes, tariffs, customs duties and surcharges and other governmental charges incurred in connection with the sale, exportation or importation of Finished Product.

Subject to the foregoing provisions if there are any other issues surrounding the calculation of Net Sales these shall to the extent possible be determined in accordance with GAAP in the Territory.

The transfer of Finished Product by a Party or one of its Affiliates to another Affiliate or sub-licensee shall not be considered a sale. In such cases Net Sales shall be determined based on the invoiced sale price by the Affiliate or sub-licensee to the first third party trade purchasers, less the deduction allowed under this Clause.

Upon the sale or other disposal of Finished Product other than in a bona fide arms length transaction exclusively for money or upon any use of Finished Product for the purposes which do not result in a disposal of that Finished Product in consideration of sales revenue customary in the Territory (including, without limitation, the sale of the Finished Product as a “loss

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leader” or in conjunction with the sale of another product in the transaction commonly known as “bundling”), such sale, other disposal or use shall be deemed to constitute a sale at the relevant open market price in the Territory in which the sale, other disposal or use occurs, or, if that price is not ascertainable, a reasonable price assessed on an arm’s length basis or the goods or services provided in exchange of the supply. Disposal of Finished Product for, or use of Finished Product, in clinical or pre-clinical trials or as free samples to be in quantities common in the industry for this sort of Product shall not give rise to any deemed sale under this Clause;

1.1.27 “Parties” shall mean Columbia and Mipharm and “Party” shall mean either Columbia or Mipharm;

1.1.28 “Package”, “Packaged” and “Packaging” shall mean all primary and secondary packaging components, including, without limitation, cartons, partitions, shippers, or any other like matter used in packaging the Product;

1.1.29 “Patent Rights” shall mean patent applications and patents, author certificates, inventor certificates, utility certificates, improvement patents and models and certificates of addition and all foreign counterparts of them, including any divisional applications and patents, refilings, renewals, continuations, continuations-in-part, patents of addition, extensions, (including patent term extensions,) reissues, substitutions, confirmations, registrations, revalidations, pipeline and administrative protections and additions, and any equivalents of the foregoing in the Territory, as well as any supplementary protection certificates and equivalent protection rights in respect of any of them;

1.1.30 “Product” shall mean the testosterone buccal bioadhesive product for men including all relevant and eventual clinical and galenical development such as, without limitation, further indications, formulations, delivery system of administration;

1.1.31 “QA Tests” shall mean the quality assurance tests and testing regimes for Finished Product as set out in the MA;

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1.1.32 “Qualified Person” means a person qualified in accordance with Article 49 or 50 of EU Directive 2001/83, who is responsible under Applicable Law in the Territory for ensuring compliance with such Applicable Law and for carrying out certain specified actions required by such Applicable Law;

1.1.33 “Quarter” shall mean each period of three months ending on 31 March, 30 June, 30 September or 31 December and “Quarterly” shall be construed accordingly;

1.1.34 “Regulatory Application” shall mean a regulatory application or other application (including any supplements or amendments thereto) required to be filed or filed with a Governmental Authority in a country in connection with the marketing and sale of the Finished Product in such country;

1.1.35 “Regulatory Approval” shall mean any and all consents or other authorisations or approvals required from a Governmental Authority to market and sell Finished Product in any country, but excluding any form of pricing or reimbursement approval;

1.1.36 “SmPC” shall mean the summary of product characteristics containing the information set out in Article 11 of EU Directive 2001/83;

1.1.37 “Specifications” shall mean the specifications for Finished Product set forth in the MA in the Territory;

1.1.38 “Technical Agreement” shall mean the agreement to be made between the Parties as specified in Clause 10.5;

1.1.39 “Territory” shall mean Italy, San Marino, Vatican City;

1.1.40 “Trade Dress” means those aspects of the Packaging of the Finished Product involving the design and trade dress thereof which are not required or dictated by the MA, including the style of printing;

1.1.41 “Trademark(s)” shall mean one or more trademarks or trade names that are owned or licensed by or on behalf of Columbia or its Affiliates that the Parties identify pursuant to Clause 3.1 for use in connection with the sale or

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promotion of the Finished Product by Mipharm in the Territory provided that such trademark or trade name is approved by any relevant Governmental Authority in the Territory in relation to the European Regulatory Application and any subsequent MA. As at the Commencement Date, the trademark “STRIANT^™” shall be deemed to be the nominated trademark of Columbia hereunder as the First Trademark (as defined in Clause 3.1) but it remains subject to the approval of the Governmental Authorities in the Territory.

1.2 Further Definitions.

In addition to the definitions set forth under Clause 1.1 above, the following definitions have the meanings in the Clauses corresponding thereto, as set forth below:

Definition	Clause
First Trademark	3.1
New Trademark	3.1
Trademark Usage Manual	3.5
FCPA	5.12
Assessing Party	6.2
Assessed Party	6.2
Committee	7.1
Members	7.1
Chairman	7.1
Initiating Party	8.1
Additional Studies	8.1
Data Package	8.5
Forecasts	9.1
Purchase Order	9.2
Visual Inspection	9.6
Indemnified Party	12.3

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Indemnified Party	12.4
Term	14
Assignee	18.5
Remaining Party	18.5

2. LICENSE/APPOINTMENT

2.1 Columbia hereby grants to Mipharm for the Term an exclusive license for and in the Territory to and under Columbia Patent Rights and the Trademarks to use, import, have imported, market, distribute and sell or have marketed, distributed and sold the Product and Finished Product. Mipharm shall only have the right to sub-license any such rights on the basis that Mipharm shall notify Columbia of the identity of any proposed third party licensee and Columbia shall have [***] to approve such licensee (which approval shall not be unreasonably withheld) and provided that the terms of appointment of such licensee shall prevent the further appointment of sub-licensees without first obtaining Mipharm’s and Columbia’s prior written approval (which approval may be withheld by Columbia in its sole discretion).

Mipharm shall be granted the right to have the Product manufactured in case Columbia fails to manufacture and supply the Product to Mipharm according to the term of this Agreement. In such a situation the parties will negotiate in good faith a royalty rate on Net Sates of the Product in the Territory and this Agreement shall be amended with such additional terms and conditions as are usual and customary.

2.2 Columbia hereby assigns to Mipharm any and all copyright, database rights or other rights in data, know how and other intellectual property (but for the avoidance of doubt excluding the Columbia Patent Rights and the Trademarks) which subsist in or relate to the Regulatory Application in the Territory.

2.3 Columbia will procure that Columbia UK progresses the European Regulatory Application using all commercially reasonable efforts to obtain an MA in the Territory. Forthwith following the grant of the MA in the Territory, Columbia shall procure that Columbia UK provides Mipharm with a copy thereof and transfers to Mipharm such MA. Until the MA is granted in the Territory, although Columbia UK

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shall be named in the European Regulatory Application, it shall hold the same in so far as it is useful or necessary to obtain the MA in the Territory on trust for Mipharm.

2.4 Once Mipharm is the MA holder in the Territory, Mipharm hereby grants to Columbia irrevocable permission to cross refer to the MA when Columbia is making Regulatory Application for Product in any country outside the Territory and upon Columbia’s request, Mipharm will, within 30 days of such request, supply Columbia with a copy of the MA;

2.5 Columbia undertakes and agrees that during the Term it will not, and will procure that its Affiliates do not, appoint any other licensee, distributor, reseller or other person to market, distribute and sell the Product or Finished Product in the Territory nor will it, and it will procure that its Affiliates do not, directly supply for their own account the Product or Finished Product to distributors, resellers or users located within the Territory.

2.6 Columbia shall, and Columbia shall procure that its Affiliates shall, during the Term promptly refer to Mipharm (or as Mipharm shall direct) all enquiries they receive for Finished Product for sale or ultimate delivery within the Territory.

2.7 Mipharm shall exercise its rights conferred under this Clause 2 as principal and it shall not sell or otherwise dispose of Finished Product on behalf of, or in the name of Columbia or any of its Affiliates.

2.8 Mipharm shall not claim any agency or other relationship which indicates any authority to bind Columbia or its Affiliates contractually or incur liabilities on behalf of Columbia or its Affiliates.

2.9 Columbia shall at its own cost and expense be solely responsible for the filing, prosecution and maintenance of the Columbia Patent Rights and the Trademarks in the Territory, and shall use its reasonable efforts to prosecute all patent applications forming part of Columbia Patent Rights and all trademark applications forming part of Trademarks in the Territory (including the conduct of any claims or proceedings relating to them including any opposition reissue or re-examination or proceedings). Columbia will take account of Mipharm’s interest hereunder when making any submission to a patent or trademark office in relation to the Columbia Patent Rights or

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Trademarks in the Territory.

2.10 Mipharm shall promptly notify Columbia in writing if it becomes aware of any infringement or unauthorized use by a third party of the Columbia Patent Rights or Trademarks in the Territory.

2.11 In the event of an infringement of the Columbia Patent Rights or Trademarks by a third party in the Territory, Columbia shall have first right to bring any action or proceedings, and shall have sole control of the conduct of any such proceedings, including, the right to settle them, provided such settlement does not adversely affect Mipharm’s rights and interests within the Territory in accordance with the following:

2.11.1 as an exclusive licensee in the Territory, Mipharm at its election shall have the right to be joined as a co-plaintiff and to be separately represented by counsel of its own choice and at its own cost and expense. In such a situation, if Columbia and Mipharm succeed in any such proceedings in relation to an infringement in the Territory, whether at trial or by way of settlement, in obtaining a financial payment to Columbia and/or Mipharm:

2.11.1.1 Columbia shall first deduct for itself all of its costs and expenses incurred in relation to such proceedings; and

2.11.1.2 Mipharm shall then be entitled for itself all of its costs and expenses incurred in relation to such proceedings; and

2.11.1.3 either if in such proceedings a court has allocated damages to Columbia and Mipharm respectively each shall be entitled to retain such damages within the Territory subject to the provisions of sub-clauses 2.11.1.1 and 2.11.1.2 or, if in such proceedings a court has not so allocated damages within the Territory the Parties shall share such damages [***], subject to the provisions of sub-clauses 2.11.1.1 and 2.11.1.2;

2.11.2 if Mipharm elects not to be joined as a co-plaintiff and not to be separately represented, Mipharm shall, at Columbia’s reasonable request and expense, provide Columbia with reasonable assistance in relation to such action or

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proceedings in the Territory. If Columbia succeeds in any such proceedings in relation to an infringement in the Territory, whether at trial or by way of settlement, in obtaining a financial payment to Columbia, Columbia shall first deduct for itself all of its costs and expenses incurred in relation to such proceedings in the Territory, and, in the event of any balance remaining in relation to the Territory, [***] shall be allocated to Columbia and [***] to Mipharm;

2.11.3 If Columbia fails to institute an action or proceeding in relation to an infringement in the Territory for [***] from becoming aware of the infringement pursuant to this Clause 2.11 and if Mipharm wishes to do so, Mipharm shall so notify Columbia and Mipharm shall have the right to do so and Columbia shall do all such acts and things at Mipharm’s cost and expense as Mipharm shall reasonably request to assist Mipharm in such proceedings, including, lending its name to such proceedings. Mipharm shall have sole control of the conduct of any such proceedings, including the right to settle them, provided such settlement does not adversely affect Columbia’s rights and interests outside of the Territory, and shall be entitled to retain any financial payment awarded in such proceedings or agreed in any such settlement for its own account. Columbia shall do all such acts and things and sign all such documents as may be necessary to give Mipharm the full benefit of this Clause 2.11.3.

2.12 If during the Term, either Party receives any notice, claim or proceedings from any third party alleging infringement of that third party’s Patent Rights or trademarks by reason of any Party’s activities in relation to this Agreement, then the Party receiving that notice shall:

2.12.1 forthwith notify the other Party of the notice, claim or proceeding;

2.12.2 neither Party shall make any admission of liability;

2.12.3 the Parties shall consult with each other, taking advice from their patent or trademark attorneys as to whether they consider the third party intellectual property infringed and if so whether the claim of infringement is valid;

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2.12.4 in the event that the Parties consider that there is infringement of such third party’s intellectual property rights in relation to the Territory, the Parties shall discuss in good faith whether to design around or to challenge the same. If the Parties agree that it is not possible or commercially reasonable to design around such third party intellectual property, or cannot so agree, and, nevertheless, agree to defend the incoming infringement claim from the third party, the Parties shall do so using a single counsel to be jointly appointed by them at their joint cost and expense. Alternatively, the Parties may agree to seek a license from such third party in which case Columbia shall be responsible for doing so. If the Parties can obtain a license upon terms acceptable to each Party in its sole discretion, at that time the Parties shall agree on any fees and royalties that are necessary to obtain and maintain such a license which shall be shared between the Parties in proportions which are agreed between them in good faith which proportions are fair and equitable between them reflecting the respective value of the license to them.

3. TRADEMARKS

3.1 The Parties agree that, subject to consultation through the Committee, it shall be Columbia’s responsibility and expense to provide a single Trademark (the “First Trademark”) for Finished Product satisfactory to the Governmental Authorities in the Territory which can be used for launch of such Finished Product in the Territory. For the avoidance of doubt it is declared and agreed that subject to the views of such Governmental Authorities, this may or may not be the Trademark STRIANT. If at any time thereafter Columbia or Mipharm desires Mipharm to sell the Product in the Territory under a trademark other than the First Trademark, Columbia or Mipharm, as the case may be, shall send written notice to the other requesting a Committee meeting to consider the selection of a different Trademark. In the event a different Trademark is proposed by a Party: (i) the different Trademark (the “New Trademark”) must be acceptable to Columbia (acting reasonably) having regard to Columbia’s desire to have a global Trademark and must be reasonably acceptable to Mipharm, considering the investment already made by Mipharm in the First Trademark, (ii) the New Trademark must be acceptable to the Government Authority in each jurisdiction where a use of the New Trademark would require making the

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change to the applicable Regulatory Application or Regulatory Approval, (iii) all costs (including reasonable attorneys’ fees) for filing and prosecuting applications to register, and maintaining registration of such New Trademark in the Territory will be paid by (A) Mipharm, if Mipharm requested the New Trademark, or (B) Columbia, if Columbia requested the New Trademark, and (iv) any New Trademarks shall be registered in the name of, be owned by and be the sole property of Columbia and subject to the terms and conditions set forth in this Clause 3.

3.2 In relation to any Trademark other than the First Trademark, if the Governmental Authority in the Territory insists on the use of a trademark other than such Trademark all costs (including reasonable attorneys’ fees) for filing and prosecution any new trademark applications will be sustained by Columbia.

3.3 Mipharm agrees to Commercialize Finished Product solely under the Trademark. Mipharm shall ensure that each reference to and use of the Trademark by Mipharm in any marketing material related to the Finished Product is acceptable to Columbia as specified in Clause 3.6 and is accompanied by an acknowledgement that the Trademark is a trademark or registered trademark owned by Columbia and used by Mipharm under license, for example, a marketing brochure would contain a footnoted statement such as: “Trademark is a registered trademark of Columbia Laboratories (Bermuda), Ltd.”.

3.4 The initial Trade Dress for the Finished Product shall be as set out in the European Regulatory Application. Once Mipharm is the MA holder it may request Columbia to modify or alter the Trade Dress for the Finished Product. In such a case Columbia shall implement such modifications or alterations on the following terms:

3.4.1 Mipharm shall supply Columbia with full details of such new Trade Dress and if the cost and expense of printing Packaging with such new Trade Dress is greater than the cost and expense of [***] used by or on behalf of Columbia for the Trade Dress set out in the European Regulatory Application, Columbia shall, within 60 days of receipt of details of such new Trade Dress, advise Mipharm in writing of such additional cost and expense relating to preparing and printing such new Trade Dress specified as a price in Euros per 60 tablet package (or other package volumes as agreed between the Parties);

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3.4.2 if Mipharm decides to proceed, Mipharm shall be responsible for commissioning and acquiring all related artwork, plates and other materials necessary to print the Packaging in the new Trade Dress; and

3.4.3 if Mipharm decides to proceed, the additional price of Product identified by Columbia under Clause 3.4.1 shall be added to the purchase price under Clause 6.1.

3.5 Columbia shall provide Mipharm with a copy of Columbia’s Trademark Usage Manual relating to the manner of use of the Trademark, and may update the Trademark Usage Manual from time to time as Columbia finds appropriate and necessary. Mipharm shall comply with the Trademark Usage Manual; Columbia recognises that the Trademark Usage Manual shall comply with all Applicable Laws and regulations in the Territory.

3.6 A copy of the marketing material (which the Parties agree may be in draft layout) using or otherwise containing the Trademarks in the form to be distributed, referenced or otherwise used by Mipharm in connection with its Commercialization of the Product shall be provided to Columbia not less than thirty (30) days before Mipharm intends to release, distribute, reference or use such material and Columbia shall have five (5) Business Days from receipt of the same to provide Mipharm with any comments or suggested amendments in relation to the use of the Trademark. Mipharm shall take such reasonable comments or suggested amendments into account subject always to Mipharm’s responsibilities as the holder or intended holder of the MA relating to Product. If Columbia does not provide any comments or suggested amendments within such five (5) Business Day period Columbia shall be deemed to have approved the use of the Trademarks in such marketing material. The restrictions of this Clause 3.6 shall not apply in relation to marketing or promotional material relating to Mipharm (as opposed to the Commercialization of Product) and Mipharm shall be free to use the Trademarks in Mipharm’s own promotional material and presentations (for example, company presentations during fund raising activities), provided, always, that it does so in accordance with the Trademark Usage Manual.

3.7 The final decision on Packaging, design and Labelling shall be Mipharm’s; provided, however, that (i) with respect to all Finished Product as far as practicable, subject to

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Applicable Laws and the MA, on the Packaging there will be printed “Manufactured by Mipharm S.p.A., Milan, Italy” and (ii) the Packaging and Labelling will be marked with all relevant patent numbers in the Territory, as may be required by local patent law or practice or otherwise permitted under Applicable Law and the MAs.

3.8 Columbia shall as directed by Mipharm (acting in accordance with the requirement of the relevant MA), ensure that the external Packaging of the Finished Product includes Mipharm’s name and logo, which name and logo as holder of the MA in the Territory. Save to the extent Mipharm may be required to do so by a Governmental Authority or pursuant to the requirements of the MA, Mipharm shall not alter the Packaging or Labelling of the Product nor shall Mipharm conceal or otherwise obscure, remove or otherwise interfere with the Trademarks or other markings, which Columbia, in its sole discretion, may include on the Packaging or Labelling of the Product.

3.9 Mipharm shall provide Columbia with information and examples as to Mipharm’s use of the Trademarks, as Columbia may request, to permit Columbia’s proper maintenance and registrations of the Trademarks.

3.10 Mipharm expressly acknowledges that Columbia owns the Trademarks, and the considerable goodwill associated therewith. Mipharm shall not attack, dispute, or contest the validity of Columbia’s ownership of the Trademarks or any registrations issued or issuing with respect thereto, both during the Term and/or thereafter. Mipharm further agrees that any use of the Trademarks by Mipharm shall be for the benefit of Columbia and any goodwill accrued in connection with the use and display of the Trademarks shall accrue solely to the benefit of Columbia and not Mipharm. In the event Mipharm acquires any rights relating to the Trademark for any reason, Mipharm agrees to assign to Columbia, at no cost to Columbia, all such rights, together with any related goodwill. Mipharm shall not do or perform any act that may endanger, destroy, or similarly affect the value of the goodwill pertaining to the Trademarks nor do any act that might support a petition to cancel or otherwise invalidate any registration relating to the Trademarks or cause the applicable registrar to require a disclaimer of exclusive rights in such Trademarks nor assist any other person or other entity, directly or indirectly, in so doing. Mipharm will, at any time,

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upon the request of Columbia, execute any documents reasonably required by Columbia to confirm Columbia’s ownership of all such rights in the Trademarks.

3.11 Mipharm shall not sell or otherwise distribute any Finished Product under any other trademark, logo or other indicia other than as contemplated under the terms and conditions of this Agreement.

3.12 Mipharm shall not use any trademarks or trade names (other than the Trademarks) so resembling the Trademarks so as to be likely to cause confusion, dilution, or deception. Mipharm shall not register the Trademarks in its own name nor attempt to register any trademarks, marks, or trade names confusingly similar to the Trademarks.

4. COLUMBIA OBLIGATIONS

4.1 Upon and subject to the terms and conditions of this Agreement, Columbia hereby agrees at its own cost and expense:

4.1.1 to procure that Columbia UK uses commercially reasonable efforts to obtain an MA in the Territory by filing and progressing the European Regulatory Application. In the event that a Governmental Authority in the Territory requests that any further clinical trials, studies or investigations be conducted in the Territory before such Governmental Authority grants an MA, Columbia shall promptly conduct or have conducted such trials, studies or investigations at Columbia’s cost and expense.

4.1.2 to provide Mipharm with reasonable advance notice of all material meetings or calls with Governmental Authorities in the Territory relating to the Regulatory Applications and permit a maximum of 2 Mipharm personnel to attend such meetings or calls as an observer at Mipharm’s sole cost and expense;

4.1.3 to manufacture or have manufactured and to supply to Mipharm such amounts of the Finished Product for Mipharm’s Commercialization of the Product in the Territory, as Mipharm may order from time to time on terms and otherwise in accordance with Clause 9 below and to manufacture or have manufactured and supply the Finished Product in the manner specified in the

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MA of the Territory and in accordance with cGMP, the Specifications and the Technical Agreement;

4.1.4 to use commercially reasonable efforts to obtain a manufacturing authorisation for the purposes of manufacturing Finished Product in relation to each and every site at which manufacture (or any part thereof) of Finished Product shall occur, to provide Mipharm with a copy of such manufacturing authorisation(s) and to provide Mipharm with advance written notice of any proposed change to such manufacturing authorisation(s) in order that Mipharm may make any relevant variations to the Regulatory Approval if necessary;

4.1.5 to ensure that Product is handled and stored by it in accordance with all Applicable Laws and to ensure that it creates and retains manufacturing, analytical and distribution records, testing and releasing materials, undertakes production and quality controls, including in-process controls and all necessary stability studies, and analysis relating to the Product all in accordance with the Specification and cGMP;

4.1.6 to have in place a Qualified Person, which Qualified Person shall be responsible for batch release of Product in the Territory and to supply Finished Product which has been released in the Territory for sale in the Territory by a Qualified Person in accordance with Applicable Laws;

4.1.7 to put in place and maintain a technical agreement with each of its contract manufacturers from time to time (including in particular Mipharm) as required by any Governmental Authority which technical agreement shall be identical to the extent required by any Governmental Authority in the Territory (save as to the parties) to the Technical Agreement to be agreed pursuant to Clause 10.5;

4.1.8 to procure that Mipharm, or its duly appointed agent, shall have the right to inspect the premises of Columbia or Columbia’s contract manufacturer(s) where the Finished Product is manufactured, Packaged or Labelled, which

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inspections may take place no more often than once per year upon advance notice at any reasonable time;

4.1.9 to ensure that no changes in chemistry and manufacturing controls specified in the MA for the Finished Product in the Territory are made without Mipharm’s having obtained the prior approval of each applicable Governmental Authority for such changes if such approval is required;

4.1.10 to keep Mipharm informed in a timely manner of any information brought to Columbia’s attention which in Columbia’s reasonable judgment could lead to a variation of the MA, SmPC, Packaging or Labelling (subject to any overriding provisions of the pharmacovigilance procedures agreed pursuant to Clause 10.2);

4.1.11 to provide Mipharm with reasonable assistance in relation to any questions or issues raised by any Governmental Authority relating to Finished Product or the Regulatory Approval, including, but not limited to, the provision of any relevant background data relating to Product in Columbia’s possession or control;

4.1.12 to supply the Finished Product in Packaging as required by Mipharm which incorporates all information (including the patient information leaflet) that may be required by the MA, any Governmental Authority or any Applicable Law from time to time;

4.1.13 to notify Mipharm promptly of any proposed inspections by any Governmental Authority (either in the Territory or outside of the Territory) of the facilities at which Finished Product is manufactured and procure that Mipharm has a right to attend on such occasions if the inspection is by a Governmental Authority in the Territory and in any event Columbia shall inform Mipharm of the outcome;

4.1.14 to establish and maintain a scientific service for scientific information relating to the Product and to liaise with Mipharm in relation to any enquiries made to such service;

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4.1.15 to retain and archive all documentation relating to the Product including, in particular, documentation relating to regulatory matters and to clinical trials of Product; and

4.1.16 to investigate promptly and report to Mipharm all significant customer complaints or reports of incidents relating to the Finished Product affecting quality of which it has knowledge and co-operate with Mipharm in the handling of such complaints and in accordance with Clause 10.1 and to provide a copy of each investigation report under this Clause 4.1.16 to Mipharm.

5. MIPHARM OBLIGATIONS

5.1 Upon and subject to the terms and conditions of this Agreement, Mipharm hereby agrees at its own cost and expense:

5.1.1 to maintain the MA received in relation to the Territory, including by filing variations to such MA as necessary; and

5.1.2 to provide Columbia with reasonable advance notice of all material meetings or calls with Governmental Authorities relating to the MA. A maximum of 2 Columbia personnel may attend such meetings or calls at its own cost and expense.

5.2 Mipharm, as the holder of the MA in the Territory and without limiting its obligations under this Agreement or under any Applicable Law, shall comply with the content and terms of the MA.

5.3 Mipharm shall establish and maintain a scientific service for scientific information relating to the Product and shall liaise with Columbia in relation to any enquiries made to such service;

5.4 Mipharm shall use its reasonable commercial efforts to promote, market and sell the Finished Product, in the Territory launching the same [***] of both Regulatory Approval and any relevant pricing and/or reimbursements approvals being obtained (provided that it is acknowledged that the decision to launch prior to such approvals

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shall be in Mipharm’s sole discretion) and to establish a sales force appointed and trained in accordance with Good Industry Practice to promote the Finished Product. Mipharm shall use its reasonable commercial efforts to obtain any relevant pricing approval. Additionally, Mipharm shall:

5.4.1 comply at all times with all Applicable Laws pertaining to the Commercialization of the Product, as applicable, including without limitation, purchase, storage, handling, marketing, promotion, distribution, offering for sale and sale of the Product in the Territory;

5.4.2 notify Columbia of the identity of any proposed third party subcontractor and Columbia shall have [***] to approve such subcontractor (which approval shall not be unreasonably withheld) and provided that the terms of appointment of such subcontractor shall prevent the further appointment of sub-subcontractors without first obtaining Mipharm’s and Columbia’s prior written approval (which approval may be withheld for any or no reason);

5.4.3 either itself or through its agents or distributors maintain adequate facilities for the efficient Commercialization of the Finished Product throughout the Territory;

5.4.4 purchase from Columbia such quantities of the Finished Product as will enable Mipharm to maintain sufficient stocks to meet all reasonably foreseeable demands for the Finished Product in the Territory;

5.4.5 in dealing with or handling the Finished Product follow the reasonable instructions of Columbia, and provide for or have provided the storage of the Finished Product in a manner consistent with the terms of the applicable MA and Applicable Law;

5.4.6 in marketing and selling the Finished Product,

5.4.6.1 not make any statements, representations, warranties or guarantees concerning the Finished Product which are contrary to the MA for the Finished Product or Applicable Laws; and

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5.4.6.2 avoid any misleading or deceptive marketing practices or any other promotional activities that may harm or otherwise damage Columbia’s or its Affiliates image or reputation, whether within the Territory or outside the Territory;

5.4.7 keep the Committee (as hereinafter defined) informed of the Commercialization of the Finished Product in the Territory (including but not limited to sales of the Finished Product) by way of a quarterly written report detailing the level of sales made during the previous quarter (as reasonably available to Mipharm at the time of compiling such report) and summarising any material developments relating to Product during the previous quarter (for example obtaining pricing and/or reimbursement approval in a particular country in the Territory). Such report shall be submitted within thirty (30) days of the end of each calendar quarter . Mipharm shall also promptly inform the Committee of any other information that it now has or which it may receive in the future which in Mipharm’s opinion is likely to be of interest, benefit, or use to Columbia in relation to the sale of the Finished Products outside the Territory;

5.4.8 maintain or have maintained the Finished Product, pending distribution and sale to customers, in a facility that is properly equipped (including temperature and humidity control) to store pharmaceutical and other sensitive products. Columbia, or its duly appointed agent, shall have the right to inspect at its own costs the premises of Mipharm or sub-contractor where the Finished Product is held, stored, and/or distributed, and Mipharm shall permit such inspection or arrange for such inspection no more often than once per year, upon advance notice at any reasonable time, of the methods and procedures used in the distribution, storage and sale of the Finished Product and provide to Columbia all government inspection reports and certificates relating thereto promptly upon Mipharm’s or its sub-contractors’ receipt thereof;

5.4.9 investigate promptly and report to Columbia all significant customer complaints or reports of incidents relating to the Finished Product affecting

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quality of which it has knowledge and co-operate with Columbia in the handling of such complaints and in accordance with Clause 10.1. Mipharm shall provide a copy of each investigation report under this Clause 5.4.9 to Columbia.

5.4.10 keep Columbia informed in a timely manner of any information brought to Mipharm’s attention which in Mipharm’s reasonable judgment could lead to a variation of the MA, SmPC, Packaging or Labelling (subject to any overriding provisions of the pharmacovigilance procedures agreed pursuant to Clause 10.2); and

5.4.11 retain and archive all documentation relating to the Product, including, in particular, documentation relating to regulatory matters and to clinical trials of Product;.

5.5 Mipharm agrees that it shall not, without Columbia’s prior written approval (not to be unreasonably withheld), distribute or sell in the Territory a testosterone product for the Indication other than the Product.

5.6 Mipharm shall not Commercialize the Product in conjunction or otherwise together with any other products as a loss leader without Columbia’s prior written approval, which approval may be withheld by Columbia for any reason, provided always that Mipharm shall be permitted to sell and promote Finished Product with other products on an arms-length basis in accordance with Good Industry Practice.

5.7 Mipharm shall be responsible for all costs and expenses associated with its Commercialization activities.

5.8 Mipharm, at its sole cost and expense, shall be responsible for obtaining all necessary permissions, consents and licences (other than the MA), required to Commercialize the Finished Product in the Territory under any Applicable Law, including without limitation, any import approvals, wholesale dealer’s licenses and pricing and reimbursement approvals. Columbia agrees to reasonably cooperate with Mipharm in obtaining any such additional necessary authorizations and approvals required to launch the Finished Product in the Territory, including representatives of Columbia attending meetings with the relevant Governmental Authorities if so requested by

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Mipharm together with Mipharm at Columbia’s own cost and expense for such attendance.

5.9 Mipharm shall be responsible for setting the sales price of Finished Product in the Territory.

5.10 Mipharm shall during the Term of this Agreement fulfil all of its obligations and covenants hereunder in a manner that is consistent with Good Industry Practice:

5.11 Mipharm shall not:

5.11.1 advertise the Finished Product or canvass or solicit orders for the Finished Product outside the Territory; or

5.11.2 open branches for the sale of the Finished Product outside the Territory; or

5.11.3 maintain distribution depots for the Finished Product outside the Territory.

5.12 Mipharm affirms that it is familiar with the Foreign Corrupt Practices Act of 1977 of the United States of America, as amended by the Foreign Corrupt Practices Act Amendments of 1988 and as may be further amended and supplemented from time to time (“FCPA”). Mipharm warrants, covenants, represents and agrees that, in connection with the performance of this Agreement or with the sale of any Product, neither Mipharm nor any of its principals, employees or agents will perform any act that may constitute a violation of the FCPA or that may cause a violation under the FCPA by Mipharm or Columbia. Mipharm shall certify the accuracy and veracity of the foregoing representation and warranty from time to time in writing, as Columbia shall request.

6. PRICE, PAYMENT TERMS and sales targets

6.1 Mipharm shall purchase from Columbia all of its requirements for the Finished Product [***].

6.2 Columbia shall keep and shall procure that its Affiliates, agents, distributors and subcontractors keep true and accurate records and books of account containing all data necessary for the verification by Mipharm of the cost of Product to Columbia.

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Those records and books of account shall be kept for seven (7) years following the end of the year to which they relate. Upon Mipharm’s (the “Assessing Party”) written request a firm of accountants appointed by Mipharm and reasonably accepted by Columbia shall carry out a review procedure in relation to Columbia’s (the “Assessed Party”) cost of obtaining Finished Product as follows:

6.2.1 such firm of accountants shall be given access to and shall be permitted to examine such books and records upon twenty (20) Business Days notice having been given by the Assessing Party and at all reasonable times on Business Days for the purpose of certifying to the Assessing Party the cost of Product to Columbia;

6.2.2 prior to any such examination taking place, such firm of accountants shall undertake to the Assessed Party in a deed that they shall keep all information and data contained in such books and records, strictly confidential and shall not disclose such information or copies of such books and records to any third person including the Assessing Party, but shall only use the same for the purpose of the calculations which they need to perform in order to issue the certificate to the Assessing Party which this Clause 6.2 envisages;

6.2.3 any such access examination and certification shall occur no more frequently than once per year and will not go back over records more than two (2) years old unless a discrepancy is found;

6.2.4 the Assessed Party shall make available personnel to answer queries on all books and records required for the purpose of the certification;

6.2.5 if the certification shows that the Assessed Party has not applied the true costs the Parties shall forthwith recalculate the price which should have been paid by Mipharm and any monies which such recalculation shows as being due and owing by the Assessed Party to the Assessing Party shall be paid by Columbia to Mipharm immediately. The cost of the accountant shall be the responsibility of the Assessed Party if the recalculation shows that the Assessed Party has charged the Assessing Party a price [***] excess of the recalculated price and the responsibility of the Assessing Party otherwise.

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6.3 Upon shipment of Product to Mipharm, Columbia shall submit invoices therefor to Mipharm. Mipharm shall pay each invoice in full within ninety (90) days after the date of invoice. All payments shall be made in Euros.

6.4 It is acknowledged and agreed that the Minimum Purchase Requirements operate as follows: if in any year following the date of First Commercial Sale Mipharm has not purchased from Columbia the volume of Product set out in the Minimum Purchase Requirements for that year because of lack of market demand or other reason, in such circumstances Mipharm shall at its option:

6.4.1 issue a Purchase Order or Purchase Orders to Columbia in accordance with the procedures set out in Clause 10 for the outstanding quantities for delivery during that year in which case there shall be no breach of this Agreement by Mipharm; or

6.4.2 fail to purchase the outstanding quantities during such year in which case Mipharm shall be in material breach of this Agreement and the remedy provisions of Clause 15.1.1 shall not apply.

6.5 No later than one hundred eighty (180) days before the end of [***] commencing on the date of First Commercial Sale and covered by the Minimum Purchase Requirements the Parties shall meet and shall seek to agree Minimum Purchase Requirements for [***] of this Agreement. If the Parties fail to agree such new Minimum Purchase Requirements on or before ninety (90) days before the end of [***] the setting of the Minimum Purchase Requirements for [***] shall be referred to the Expert’s Decision. In making this decision the expert shall:

6.5.1 invite written submissions from each of the Parties putting forward justification for the Minimum Purchase Requirements which they are proposing; and

6.5.2 invite oral submissions of no more [***] utilising whatever experts the Parties so choose putting forward justification for the Minimum Purchase Requirements which they are proposing.

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7. COMMERCIALISATION COMMITTEE

7.1 Mipharm and Columbia shall create a Commercialisation Committee (the “Committee”) to consist initially of two persons as voting members (“Members”), one of whom shall be nominated by Mipharm and one of whom shall be nominated by Columbia. Each Member shall be entitled to exercise one (1) vote each on the Committee, whether or not present at any Committee meeting. Columbia shall also be entitled to appoint one of its nominees to be the chairman of the Committee (“Chairman”). In the event of a deadlock in relation to those issues set out in Clause 7.6, the Chairman shall be entitled to cast the deciding vote. The Committee will meet no less frequently then [***].

7.2 Each of Mipharm and Columbia shall be entitled to remove their Member and appoint a replacement therefor. The number of Members may be altered if agreed to by Mipharm and Columbia in writing; provided, however, that, each of Mipharm and Columbia shall be entitled to appoint an equal number of Members.

7.3 The quorum for meetings of the Committee shall be two (2) Members. The venue for meetings not held by teleconference shall alternate between the offices of Mipharm in Milan, Italy and the offices of Columbia’s Affiliate in Livingston, New Jersey or such other venue as may be agreed. Each party shall be responsible for its own expenses including travel and accommodation costs incurred in connection with Committee meetings.

7.4 The Committee shall have power to invite persons whose special skills or influence might advance the Commercialisation of the Product, in confidence and upon behalf of the Committee, to attend and address meetings of the Committee. Each party shall give the other reasonable advance notice of the identity of any such additional attendees which it intends to participate in the Committee meeting in question. For the avoidance of doubt it is agreed that such persons shall not be Members and shall not have a right to vote or participate in the decision making process of the Committee.

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7.5 The Chairperson shall take responsibility for promptly preparing the minutes of any Committee meeting, receiving approval of those minutes from the other Committee Member who participated in the meeting, obtaining each Member’s signature on the approved minutes and promptly distributing a copy of the signed minutes to each Party.

7.6 The Committee shall be a co-ordination, liaison and communication forum in relation to the global issues relating to Product and shall only be a decision making forum in relation to strategic regulatory issues affecting the Product, provided, always, that Mipharm shall never be required to agree to or implement any decision of the Committee which would be contrary to Mipharm’s responsibilities as the holder of the MA in the Territory or to Applicable Laws.

8. CLINICAL STUDIES, TRIALS AND INVESTIGATIONS

8.1 Either Party (the “Initiating Party”), may from time to time, propose to the other Party that additional clinical trials, studies or investigations be initiated in relation to the Product including adding a further indication to the European Regulatory Application or the MA (“Additional Studies”). The Parties shall meet and discuss the same in good faith and if the Parties agree the plans and protocols for such Additional Studies (including which Party shall be the sponsor of such Additional Studies) the cost of such Additional Studies will be shared equally between the Parties. If the Parties do not agree to jointly fund such Additional Studies then the provisions of Clause 8.2 and 8.3 shall apply.

8.2 If Mipharm is the Initiating Party it shall obtain the prior written approval of Columbia, which approval may be withheld by Columbia for any reason or no reason, provided however that Columbia shall furnish to Mipharm the rationale of its decision without delay, on the proposed Additional Studies prior to initiating such Additional Studies and shall prepare, maintain and deliver to Columbia, complete and accurate copies of records and reports, including progress, safety and final reports. Columbia shall reasonably cooperate and assist Mipharm in obtaining any Regulatory Approval required for additional indications or other revised Labelling of Product in the Territory justified by the outcome of such Additional Studies, including attendance at meetings with relevant Governmental Authorities and Mipharm shall file (if

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applicable) variations to the MA and use its reasonable efforts to obtain such variations to the MA relating to such Additional Studies. Cost and expenses pertaining to the variation at the Reference Member State (UK) level shall be sustained by Columbia, while Mipharm shall sustain cost and expenses pertaining to the variation of the MA in the Territory.

8.3 If Columbia is the Initiating party, Columbia shall give Mipharm the opportunity to comment upon such Additional Studies and shall keep Mipharm informed of the progress of such Additional Studies and shall provide to Mipharm a written report of the outcome of such Additional Studies. Columbia shall prepare, maintain and deliver to Mipharm, complete and accurate copies of records and reports, including progress, safety and final report. Columbia shall reasonably cooperate and assist Mipharm in obtaining any variations to the MA required for additional indications or other revised Labelling of Product in the Territory justified by the outcome of such Additional Studies including attendance at meetings with relevant Governmental Authorities and Mipharm shall file (if applicable) for such variations to the MA and use its reasonable efforts to obtain such variations to the MA relating to such Additional Studies. Cost and expenses pertaining to the variation at the Reference Member State (UK) level shall be sustained by Columbia, while Mipharm shall sustain cost and expenses pertaining to the variation of the MA in the Territory.

8.4 Where Mipharm is the Initiating Party a final report of the Additional Study results from all Additional Study sites shall be prepared by Mipharm and reviewed by Columbia, and may thereafter be released or submitted for publication by Mipharm for use at conferences and publication in scientific journals.

8.5 All rights in and to any data, results, information, inventions, discoveries and/or improvements arising out of the performance of an Additional Study, whether patentable or not, conceived, made, obtained or developed (“the Data Package”) pursuant to an Additional Study shall vest in and remain the property of Columbia, provided always that the rights in such Data Package shall be the subject of the assignment to Mipharm under Clause 2. If Columbia uses the Data Package outside the Territory by licensing or otherwise authorising the use of the same by a third party (including the appointment of a distributor):

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8.5.1 if such Data Package has been generated pursuant to an Additional Study funded by Mipharm then notwithstanding that Columbia owns such rights in such Data Package in the event that Columbia grants to a third party any such rights to use such Data Package it shall pay to Mipharm a sum to be agreed in good faith between the Parties;

8.5.2 if such Data Package has been generated pursuant to an Additional Study funded jointly between Mipharm and Columbia then in the event that Columbia grants to a third party any right to use such Data Package it shall pay to Mipharm a sum to be agreed in good faith between the Parties .

9. FORECASTS; ORDERS; DELIVERY AND ACCEPTANCE

9.1 No later than three months prior to the anticipated date of First Commercial Sale of Finished Product in the Territory and each Quarter thereafter, Mipharm shall prepare and provide Columbia with a written forecast by Quarter of its requirements for Product (“Forecasts”) for the immediately succeeding four full Quarters, including, with respect to the first Forecast, the period between the anticipated date of First Commercial Sale and the beginning of the first Quarter following First Commercial Sale. The amounts set forth for the first Quarter in each Forecast shall constitute a firm purchase order and shall be binding upon Mipharm. The amounts set forth in the following three (3) Quarters shall constitute Mipharm’s non-binding, good faith estimate of the Product requirements of Mipharm for such periods; provided, however, that in relation to the amounts set forth for the second Quarter when such Quarter becomes the first Quarter of the next Forecast the amounts set forth in such first Quarter shall not be less than eighty percent (80%) nor shall Columbia be obligated to supply greater than one hundred twenty percent (120%) of the amounts set forth in the immediately preceding Forecast for such Quarter, but Columbia may agree to supply such greater amount in its sole discretion.

9.2 Each firm purchase order provided to Columbia by Mipharm pursuant to Clause 9.1 above shall be in writing and shall specify the description of the Finished Product ordered, the quantity ordered, the price and required delivery date therefore (“Purchase Order”). In the event of a conflict between the terms and conditions of any Purchase Order and this Agreement, the terms and conditions of this Agreement shall

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prevail. Columbia shall have no obligation to supply quantities of Finished Product (i) in the event Mipharm places orders for amounts of Product that are smaller than Columbia or its contract manufacture standard manufacturing batch size for the Product and the amount of Product remaining after filling orders from other Columbia customers are not available in sufficient quantity to fill the order placed by Mipharm; or (ii) in relation to quantities of Finished Product specified in the Purchase Order in excess of one hundred and twenty percent (120%) the quantities specified in the previous Forecast for such Quarter provided under Clause 9.1 above.

9.3 Columbia shall within ten (10) days of the receipt of any Purchase Order from Mipharm made pursuant to Clause 9.2 give written notice to Mipharm if due to Force Majeure it cannot fulfil such Purchase Order and the provisions of Clause 16.1 shall apply.

9.4 All Finished Product supplied under this Agreement shall be delivered Ex Works (INCOTERMS 2000) Columbia’s or its nominee’s manufacturing and/or distribution facility and shall be accompanied by a written certificate of analysis signed by the Qualified Person confirming that such quantity of Finished Product meets the Specification. Mipharm shall secure transport and insurance with its own providers at its sole cost and expense. Mipharm shall pay all freight, insurance charges, taxes, import and export duties, inspection fees and other charges applicable to the sale and transport of Finished Product purchased by Mipharm hereunder which amounts shall be separately set forth on Columbia’s invoices to Mipharm. Title and risk of loss and damages to Finished Product purchased by Mipharm hereunder shall pass to Mipharm upon receipt of the Finished Product by the carrier designated by Mipharm at Columbia’s facility.

9.5 Following receipt of a shipment of Finished Product from Columbia, Mipharm or its designated agent shall, within thirty (30) days, carry out a visual inspection (as defined below) of such shipment to ensure that Packaging and Labelling of Finished Product has taken place in accordance with the Specification and is accompanied by an associated Certificate of Analysis and if Mipharm determines in its sole discretion (exercised reasonably) that it has not so taken place it shall promptly notify rejection of shipment to Columbia in writing. Subject to the provisions of Clause 9.7, if

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Mipharm does not notify Columbia of rejection of such shipment within such thirty (30) days, such shipment of Finished Product shall be deemed to have been accepted.

9.6 For the purposes of this Agreement, “visual inspection” shall mean:

9.6.1 comparing the applicable order against the documentation accompanying the shipment to verify that the delivery date, identity, quantity and exterior shipment labelling comply with the order;

9.6.2 verifying that the Certificate of Analysis for the shipment states that the Product conforms in all material respects to the applicable Specifications; and

9.6.3 visually inspecting the exterior of the shipment of Finished Products to verify that the shipment appears to be in good condition.

For the avoidance of doubt, visual inspection does not include laboratory analysis.

9.7 Notwithstanding the foregoing, Columbia shall remain liable to Mipharm to the extent provided in Clause 9.8 or 9.9 as appropriate for any latent defect that subsequently is discovered which renders the Finished Product unsaleable, if such defect is due to the failure of the Finished Product to meet Specification and/or cGMP and provided that Mipharm immediately informs Columbia by a notice in writing of such defect and rejection of the relevant shipment not later than ten (10) days from the date of discovery of such latent defect.

9.8 Within 10 days of receipt by Columbia of a notice of rejection from Mipharm in accordance with Clauses 9.5 or 9.7 Columbia shall indicate in writing to Mipharm whether Columbia is issuing a return authorisation or not. In the event that a return authorisation is so issued Mipharm shall return to Columbia at Columbia’s expense the quantities of Finished Product in question and Columbia shall replace such quantities within sixty (60) days or as soon as reasonably practicable thereafter. If the payment in respect of such quantities is outstanding, it shall be postponed until such replacement quantities are received and accepted by Mipharm in accordance with this Clause 9.

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9.9 After receipt of any rejection notice from Mipharm pursuant to Clause 9.5 or Clause 9.7 if Columbia does not issue a return authorisation under Clause 9.8, Columbia shall analyze any batch of Finished Product rejected by Mipharm for nonconformity with the Specifications within thirty (30) days of receipt of such notice, and present its findings with respect to such Finished Product to Mipharm. If such tests confirm non-conformity with the Specification Columbia shall promptly supply to Mipharm (at Columbia’s cost and expense) a conforming batch in the same quantity as the rejected batch and shall reimburse Mipharm for any out of pocket costs or expenses incurred by Mipharm including shipping charges in relation to such non-conforming batch. If the Parties cannot agree on whether the batch of Finished Product in question conforms to the Specifications, an independent qualified laboratory reasonably acceptable to both Parties, and at a cost equally shared by both Parties, shall analyze both Mipharm’s and Columbia’s samples of Product in question, and the definitive results of such laboratory shall be binding on the Parties. If the batch of Finished Product in question is determined to be nonconforming, such nonconforming Finished Product shall be held for Columbia’s disposition, or shall be returned to Columbia, in each case at Columbia’s expense, as directed by Columbia no later than fifteen (15) days following such determination. Columbia shall replace each nonconforming batch of Finished Product, or the nonconforming portion thereof, with conforming Finished Product within sixty (60) days or as soon as reasonably practical after receipt of notice of rejection thereof. If the batch of Finished Product in question is determined to be conforming and provided that the Certificate of Analysis did not indicate it to be nonconforming, such Finished Product shall be returned to Mipharm at Mipharm’s cost and expense.

10. REGULATORY AND OTHER MATTERS

10.1 Except as may otherwise be agreed, Mipharm shall refer any significant complaints or reports of incidents which it or any of its Affiliates receives concerning the Finished Product affecting quality to Columbia within four (4) working days of Mipharm’s receipt of the same, provided, that all complaints concerning suspected or actual Finished Product tampering, contamination or mix-up shall be delivered within one (1) working day of receipt of the same by Mipharm or any Affiliate or subcontractor of Mipharm. For the avoidance of doubt, to the extent that any such complaint

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amounts to or relates to an Adverse Reaction the terms of the pharmacovigilance procedures to be agreed by the Parties pursuant to Clause 10.2 shall apply in relation to such complaint: in the event of any inconsistency between the application of this Clause 10.1 and such pharmacovigilance procedures, the terms of such pharmacovigilance procedure shall prevail.

10.2 The Parties agree that within nine months of the Commencement Date they shall agree on a product recall procedure, subject always to the other provisions of this Agreement, a Packaging and Labelling procedure, and a pharmacovigilance procedure, all in accordance with Applicable Laws.

10.3 In the event either Party believes it may be necessary to conduct a recall, field correction, market withdrawal, stock recovery, or other similar action with respect to the Product (a “Recall”), Columbia and Mipharm shall consult with each other as to how best to proceed, it being understood and agreed that the final decision as to any Recall of any Product in the Territory shall be made by Mipharm; provided, however, that Columbia shall not be prohibited hereunder from taking any action that it is required to take under Applicable Law. Mipharm and Columbia shall work together to mutually agree on the details of any Recall decision; however Mipharm is responsible for executing a Recall of Mipharm distributed Product. If a Recall arises from Mipharm’s acts or omissions in the marketing, distribution, storage or handling of such Product, then the cost of goods sold, distribution expenses and third-party recall expenses (collectively, the “Recall Costs”) shall be borne by Mipharm. If a Recall arises from any other reason, including the manufacture of the Product, Columbia’s breach of its express representations, warranties, or obligations hereunder or from Columbia’s responsibility under Applicable Laws the Recall Costs shall be borne by Columbia. Mipharm shall maintain records of all sales of Product and customers sufficient to adequately administer a Recall for the period required by Applicable Laws.

10.4 Mipharm shall maintain records of all sales of Product and customers sufficient for Mipharm (as appropriate) to adequately administer a recall for the period required by Applicable Law.

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10.5 Within 9 months (or such other period as is agreed by the Parties) of the Commencement Date the Parties shall agree upon a technical agreement as required pursuant to Directive 2001/83.

10.6 In addition to the requirements of Clauses 10.1 and 10.3 and the items agreed under Clause 10.2, each Party agrees to keep the other Party informed, commencing within two (2) working days of notification of any action by, or notification or other information which it receives (directly or indirectly) from any Governmental Authority, which (a) raises any material concerns regarding the safety or efficacy of any Product, (b) which indicates or suggests a potential material liability for either Party to third parties arising in connection with any Product, or (c) which is reasonably likely to lead to a Recall of any Product, including in all cases, but not limited to:

10.6.1 Governmental Authority inspections of manufacturing, distribution or other related facilities, in which Product is manufactured, stored or otherwise present;

10.6.2 receipt of a warning letter from any Governmental Authority relating to any Product; or

10.6.3 initiation of any Governmental Authority investigations, detention, seizure or injunction concerning any Product.

10.7 Columbia shall keep Mipharm regularly informed of all material correspondence and communications with any Governmental Authority in the Territory concerning the manufacture, Specification, quality or Packaging of the Finished Product by it or its contract manufacturer.

10.8 If Columbia is advised by its legal advisers that it must communicate with any Governmental Authority in the Territory on any matter the subject of Clauses 10.6 or 10.7, Columbia shall so advise Mipharm immediately and, unless prohibited by Applicable Law, Columbia shall provide Mipharm in advance with a copy of any proposed written communication with any such Governmental Authority and shall comply with any and all reasonable directions of Mipharm concerning any meeting or written or oral communication with such Governmental Authority.

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11. REIMBURSEMENT OF COSTS AND MILESTONE FEE

11.1 Reimbursement Payment. Mipharm shall pay Columbia as reimbursement of part of the world-wide costs sustained by Columbia for the development of the Product a sum of three hundred fifty thousand dollars (US$ 350,000) upon execution of this Agreement.

Columbia will invoice Mipharm for the payment due under this Clause 11.1 upon execution of this Agreement

11.2 Milestone Fees.

11.2.1 Mipharm shall pay to Columbia as consideration of the rights assigned hereunder under Clause 2 a non-refundable milestone payment of:

11.2.1.1 one hundred thousand dollars (US$100,000) upon approval of the MA for the Product in the United Kingdom;

11.2.1.2 one hundred fifty thousand dollars (US$150,000) upon Marketing Authorisation for the Product received in Italy; and

11.2.1.3 four hundred thousand dollars (US$400,000) within sixty (60) days of the end of the calendar month in which cumulative Net Sales of the Product by Mipharm, its Affiliates and/or its licensees for all of the countries in the Territory exceed [***]. Until this payment is made Mipharm shall report Net Sales to Columbia.

11.2.1.4 four hundred thousand dollars (US$400,000) within sixty (60) days of the end of the calendar month in which cumulative Net Sales of the Product by Mipharm, its Affiliates and/or its licensees for all of the countries in the Territory exceed [***]. Until this payment is made Mipharm shall report Net Sales to Columbia.

11.2.2. For the payments due under Clause 11.2 Columbia will invoice Mipharm as follows:

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11.2.2.1. for the payments due under Clauses 11.2.1.1 and 11.2.1.2 upon signature of this Agreement and Mipharm shall pay such invoices within 10 Business Days from occurrence of each event.

11.2.2.2. for each of the payments due under Clause 11.2.1.3 and 11.2.1.4 on the occurrence of each event and Mipharm shall pay such invoices within 10 Business Days of receipt of each invoices.

11.3 All payments made to Columbia under the Agreement shall be made by telegraphic transfer to the account of Columbia at:

[***]

Account Name: [***]

Account Code: [***]

ABA Code: [***]

or any other bank account that may be notified by Columbia to Mipharm from time to time.

11.4 If either Party fails to make any payment to the other Party hereunder on the due date for payment without prejudice to any other right or remedy available to that Party, that Party expecting payment shall be entitled to charge the other Party interest (both before and after judgement) on the amount unpaid at the prime rate listed in the Wall Street Journal from time to time or any successor rate thereto plus five per cent (5%) calculated on a daily basis until payment in full is made without prejudice to that Party’s right to receive payment on the due date.

12. WARRANTIES, INDEMNIFICATION; LIMITATION OF LIABILITY; AND INSURANCE

12.1 Each Party represents and warrants to the other Party that:

12.1.1 it has the corporate power and authority and the legal right to enter into this Agreement and that this Agreement is a legal and valid obligation binding upon such Party and enforceable in accordance with its terms. The execution,

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delivery and performance of the Agreement by such Party does not conflict with any agreement, instrument or understanding, oral or written, to which it is or by which it is bound, nor violate any law or regulation of any court, governmental body or administrative or other agency having jurisdiction over it;

12.1.2 such Party has not, and during the term of the Agreement will not, without the prior written consent of the other Party grant any rights to any third party that would conflict with the rights granted to the other Party hereunder;

12.1.3 in the case of Columbia it has the right to grant the licenses granted under Clause 2.1 and to make the assignment under Clause 2.2 and to enter into its other obligations under this Agreement and that it has taken any corporate action with Columbia Affiliates which is necessary for this to be the case and that it has the authority to act as agent for Columbia UK in the matters specified in this Agreement and the corporate power to procure Columbia UK as specified in this Agreement. Columbia further hereby warrants and undertakes that at the Commencement Date that save as otherwise disclosed to Mipharm in writing it has not assigned, licensed, mortgaged, charged or otherwise disposed of or encumbered the right, title or interest in the Columbia Patent Rights and that so far as it is aware the exercise by Mipharm of its rights hereunder shall not infringe the Patent Rights or trademarks or other intellectual property rights of any third party;

12.1.4 it is a corporation duly organised, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated; and

12.1.5 the execution and delivery of this agreement and the performance of such Party’s obligations do not constitute a default or require any consent under any other contractual obligation of such Party.

12.2 EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT COLUMBIA MAKES NO WARRANTIES OR REPRESENTATIONS, IMPLIED, WITH RESPECT TO THE PRODUCT, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A

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PARTICULAR PURPOSE, USE, PERFORMANCE, NON-INFRINGEMENT OR PATENTABILITY AND ANY SUCH WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED.

12.3 Subject to the provisions of Clause 12.4 and 12.5 Columbia shall be responsible for and shall indemnify Mipharm and its directors, officers, servants and agents (collectively “the Indemnified Party”) against any and all liability, loss, damage, cost and expense (including legal costs) incurred or suffered by the Indemnified Party as a result of

12.3.1 that part of any claim brought against Mipharm by a Third Party which arises as a result of any activities of Columbia, its Affiliates or contract manufacturers under or in relation to this Agreement being a claim that use of any Finished Product(s) has caused death or bodily injury; or

12.3.2 a breach of warranty by Columbia under Clause 12.1.

An Indemnified Party that intends to claim indemnification under this Clause 12.3 shall promptly notify Columbia of any Third Party claim in respect of which the Indemnified Party intends to claim that indemnification. The Indemnified Party shall not compromise or settle the claim prior to any such notice. Columbia may assume and control the defence of any such Third Party claim, provided however, that an Indemnified Party shall have the right to retain its own counsel at its own cost and expense, if representation of that Indemnified Party by the counsel retained by Columbia would be inappropriate due to actual or potential differing interests between the Indemnified Party and any other party represented by that counsel in the proceedings. The Indemnified Party shall co-operate with Columbia and its legal representatives in the investigation of any matter covered by this indemnification.

12.4 Subject to the provisions of Clause 12.5, Mipharm shall be responsible for and shall indemnify Columbia and its Affiliates, directors, officers, servants and agents (collectively “the Indemnified Party”) against any and all liability, loss, damage, cost and expense (including legal costs) incurred or suffered by the Indemnified Party

12.4.1 as a result of that part of any claim brought against Columbia or its Affiliates by a Third Party which arises as a result of the activities by Mipharm or its

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affiliates, sublicensees, distributors or agents under this Agreement being a claim that use of any Finished Product has caused death or bodily injury; or

12.4.2 as a result of a breach of warranty by Mipharm under Clause 12.1.

An Indemnified Party that intends to claim indemnification under this Clause 112.4 shall promptly notify Mipharm of any Third Party claim in respect of which the Indemnified Party intends to claim the indemnifications. The Indemnified Party shall not compromise or settle the claim prior to any such notice. Mipharm may assume and control the defence of any such Third Party claim, provided however, that an Indemnified Party shall have the right to retain its own counsel at its own cost and expense, if representation of that Indemnified Party by the counsel retained by Mipharm would be inappropriate due to actual or potential differing interests between the Indemnified Party and any other party represented by that counsel in the proceedings. The Indemnified Party shall co-operate with Mipharm and its legal representatives in the investigation of any matter covered by this indemnification.

12.5 Neither Party shall be liable to the other in contract, tort, negligence, breach of statutory duty or otherwise for any loss, damage, costs or expenses of any nature whatsoever incurred or suffered by the other or its Affiliates:

12.5.1 of a direct nature where the same is a loss of turnover, profits, business or goodwill; or

12.5.2 an indirect or consequential or punitive nature, including any indirect or consequential economic loss or other indirect or consequential loss of turnover, profits, loss of enterprise value, business or goodwill or otherwise.

12.6 Columbia shall secure and maintain comprehensive general liability insurance with insurers having an AM Best rating within the top 2 categories at the time (at the date of this Agreement known as “superior” or “excellent”), including, product liability, contractual liability, personal injury, and insurance against claims regarding the manufacture, delivery, storage, handling and use of Product under this Agreement, in such amounts as it customarily maintains for similar products and activities in accordance with prudent insurance practice, but in no event less than [***] in the aggregate per year.

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12.7 Mipharm shall secure and maintain comprehensive general liability insurance with insurers having an AM Best rating within the top 2 categories at the time (at the date of this Agreement known as “superior” or “excellent”) including product liability, contractual liability, personal injury, and insurance against claims regarding the delivery, storage and handling and use of Product under this Agreement, in such amounts as it customarily maintains for similar products and activities in accordance with prudent insurance practice, but in no event less than [***] in the aggregate per year.

12.8 Each Party shall maintain such insurance described in Clauses 12.6 and 12.7 during the term of this Agreement and thereafter for so long as it customarily maintains insurance for itself for similar products and activities. Each Party shall note the interest of the other Party on such insurance and shall use commercially reasonable efforts to name the other Party as an additional insured on such insurance if this is also achievable by the other Party and shall provide the other Party proof of such insurance upon request. Each Party shall cause such insurance policies to provide that the other Party shall be given at least thirty (30) days notice of any cancellation, termination or change in such insurance.

13. CONFIDENTIALITY

13.1 The content of the NDA Filing and the European Regulatory Applications and any of the information pertaining to the Product or their respective businesses that has been prior to the Commencement Date or will be communicated by Mipharm to Columbia, on the one hand, or by Columbia to Mipharm, on the other hand, including without limitation, trade secrets, business methods and plans, and pricing, cost, manufacturing and customer information shall be treated by Columbia and Mipharm, respectively, and their respective Affiliates, officers, directors, employees, agents and representatives, as confidential information and shall not be disclosed to third parties or be used except in connection with the transactions and business set forth in this Agreement; provided, however, that such confidential information shall not be subject to the restrictions and prohibitions set forth in this Clause 13 to the extent that such confidential information:

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13.1.1 is available to the public in public literature or otherwise, or after disclosure by one Party to the other becomes public knowledge through no default of the Party receiving such confidential information;

13.1.2 was (as evidenced in writing) known to the Party receiving such confidential information prior to the receipt of such confidential information by such Party, whether received before or after the date of this Agreement;

13.1.3 is obtained by the Party receiving such confidential information from a source free to disclose such information other than the Party supplying such confidential information;

13.1.4 is required to be disclosed pursuant to any order of a court having jurisdiction or any lawful action of a Governmental Authority having jurisdiction over the disclosing Party or court of competent jurisdiction but only to the extent such disclosure is so required; provided, however that in the event of such an order or action, the Party ordered to disclose such confidential information shall give the other Party reasonably timely notice of the disclosure order in order to allow such Party to seek a protective order or such other appropriate relief with respect to the confidential information; or

13.1.5 in the case of the European Regulatory Applications is required to be disclosed to the relevant Governmental Authorities in the Territory and thereafter once an MA is granted is contained in the Packaging, Labelling or SmPC.

13.2 Each Party shall take all precautions as it normally takes with its own confidential information to prevent any improper disclosure of such confidential information to any independent third party.

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13.3 No public announcements or other disclosure to third parties concerning the financial or other terms of this Agreement shall be made, whether directly or indirectly, by either Party to this Agreement, except as may be legally required or as may be required for recording purposes, without first obtaining the approval of the other Party and agreement upon the nature and text of such announcement or disclosure, with the exception that:

13.3.1 a Party may disclose the full terms of this Agreement to its investment bankers, lawyers, accountants and other professional advisors or a third party seeking to invest in, lend funds to acquire or merge with or be acquired by such Party without the other Party’s prior approval provided that such disclosure is made under terms of confidentiality whether express or implied; and

13.3.2 a Party may disclose the terms of this Agreement to any securities exchange or regulatory authority or government body to which either Party is subject or submits, wherever situated, whether or not the requirement has the force of law provided that it takes advantage of all provisions to keep confidential as many terms of this Agreement as possible.

13.4 In respect of those public announcements and disclosures not permitted by Clause 13.3 the Party desiring to make any such public announcement or other disclosure shall inform the other Party of the proposed announcements or disclosure in reasonably sufficient time prior to public release, and shall provide the other Party with a written copy thereof, in order to allow such Party to comment upon such announcement or disclosure, which comments shall be provided by such other Party within five (5) working days. The Parties shall jointly develop press releases and information materials that can be used by either Party for presentations to financial advisers and similar recipients.

14. TERM

The term of this Agreement (the “Term”) shall commence on the date hereof and shall continue for a period of the later of: (i) ten (10) years from the First Commercial Sale of the Finished Product by Mipharm; or (ii) the date of expiration or lapse of the last

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to expire or lapse of rights under any Columbia Patent Rights in the Territory on a country by country basis. The Term shall automatically extend for successive periods of two (2) years each unless either Party provides written notice to the other, at least one hundred eighty (180) days prior to the end of the then existing Term, of its intention not to renew this Agreement.

15. TERMINATION

15.1 This Agreement may be terminated immediately upon written notice of termination given by either Mipharm on the one hand (in circumstances where either Columbia is in breach as specified in Clause 15.1.1 or Columbia or Columbia Laboratories, Inc. satisfy the criteria of Clause 15.1.2) or Columbia on the other hand (where Mipharm satisfies the criteria below):

15.1.1 in the event that the other Party commits a material breach or default under this Agreement, which breach or default shall not be remedied within sixty (60) days after the receipt of written notice thereof by the person in breach or default provided always that:

15.1.1.1 in the case of a breach by Mipharm of Clause 11.2 in which case the remedy period shall be ten (10) days; and

15.1.1.2 in the case of a breach by Columbia under any of the manufacturing and supply obligations of this Agreement the remedy period shall be ninety (90) days; or

15.1.2 in the event that an Insolvency Event occurs in relation to such person.

15.2 Termination of this Agreement (whether under this Clause 15, upon expiration of the Term, or otherwise) shall be without prejudice to any rights of either Party against the other that may have accrued to the date of such termination.

15.3 Upon the effective date of expiration or earlier termination of this Agreement by Columbia pursuant to Clause 15.1:

15.3.1 either Party shall remit to the other Party any payments that are due and payable as of the date of expiration or termination;

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15.3.2 Mipharm’s rights and license under Clause 2.1 within the Territory shall terminate and Mipharm shall reassign to Columbia the subject matter of Clause 2.2.

15.3.3 Mipharm shall supply to Columbia a copy of the MA within 30 days of the date of termination and commensurate with Applicable law Mipharm shall transfer to Columbia or its nominee the MA in the Territory and Mipharm shall not following any such termination use such MA. In the event that in the Territory such a transfer is not possible, Mipharm shall ensure that Columbia has the benefit of the MA and to this end hereby grants to Columbia irrevocable permission to cross refer to any such MA when filing an MA for Finished Product in its own name;

15.3.4 Columbia and Mipharm shall return to each other all confidential information supplied by one Party to the other, including all copies and originals thereof;

15.3.5 At Columbia’s option, (i) Mipharm may have [***] from the Commencement Date of expiration or termination to sell all existing stocks of Product inventory (including, at Columbia’s option, any Product ordered by Mipharm but not yet delivered by Columbia, which Columbia may obligate Mipharm to purchase), and/or (ii) Mipharm shall purchase any unused Packaging and Labelling held by Columbia or its contract manufacturer bearing Mipharm’s name or trademark with the limit of the ordered placed, and/or (iii) Columbia may cancel any or all outstanding Product Orders; and/or (iv) Columbia may repurchase all existing stocks of saleable Product inventory at a price equal to the price paid by Mipharm therefor less (a) any sums owed by Mipharm to Columbia; and (b) any sums attributable to any damage to Finished Product as it is agreed and quantified by the Parties under good faith discussion.

15.3.6 Mipharm shall at Columbia’s cost and expense promptly pack and ship to such destination as Columbia may direct all Finished Product;

15.3.7 The provisions of Clauses 12 and 13 shall continue to apply.

\15.4 Upon termination of this Agreement as a result of a non-renewal notice by Columbia pursuant to Clause 14:

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15.4.1 the provisions of Clause 15.3.1, 15.3.2, 15.3.3 and 15.3.4 shall apply;

15.4.2 Columbia shall repurchase all of the Finished Product (other than Finished Product which has become unsaleable due to any act or omission of Mipharm or any of its Affiliates) then owned by Mipharm at a price equal to the price paid by Mipharm therefor less (a) any sums owed by Mipharm to Columbia; and (b) any sums attributable to any damage to Finished Product as it is agreed and quantified by the Parties under good faith discussion; and Mipharm shall have no obligation to purchase Product ordered by Mipharm but not yet delivered by Columbia;

15.4.3 the provisions of Clauses 12 and 13 shall continue to apply.

16. FORCE MAJEURE

16.1 The obligations of the either Party hereunder shall be suspended during the time and to the extent that such Party is prevented from complying therewith due to Force Majeure.

16.2 As soon as possible after being affected by a Force Majeure circumstance, the Party so affected shall furnish to the other Party all particulars of the Force Majeure and the manner in which its performance is thereby prevented or delayed. The Party whose obligations hereunder have been suspended shall promptly and diligently pursue appropriate action to enable it to lift the Force Majeure situation, except that a Party shall not be obligated to settle any strike, lockout or other labor difficulty on terms contrary to its wishes.

17. RECORDS INSPECTION; RECORD RETENTION

17.1 Columbia shall ensure that its contract manufacturer retains all production records of the processing and manufacture of the Finished Product in accordance with all relevant guidelines and applicable laws in the Territory. Columbia will retain samples of the Product as are required in all countries where Regulatory Approval has been obtained. Once during each calendar year, Columbia shall ensure and/or Columbia shall permit Mipharm or its duly authorized representatives, upon reasonable written notice and at any reasonable time during normal business hours, can visit and inspect

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the production, testing, packing, and shipping facilities for the Product during normal business hours to verify compliance with this Agreement.

17.2 Once during each calendar year, Mipharm shall permit Columbia or its duly authorized representatives, upon reasonable written notice and at any reasonable time during normal business hours, to have access to, and to inspect distribution, packaging and/or storage facilities relating to the Product.

Any inspection shall be at the expense the Party conducting such inspection.

17.3 Retention of Records. All documentation, records, raw data, and specimens pertaining to this Agreement will be held for the length of time required under Applicable Law.

18. GENERAL PROVISIONS

18.1 Independent Contractors. Mipharm and Columbia are independent of each other and nothing contained herein shall be construed to create a joint venture, partnership or similar relationship. Neither Party is authorized to, nor shall it, incur any liability whatsoever for which the other may become directly, indirectly or contingently liable.

18.2 Dispute Resolution; Consent to Jurisdiction. This Agreement shall be construed and interpreted in accordance with English law without regard to principles related to conflicts of laws. The parties expressly agree that the United Nations Convention on Contracts for the International Sale of Goods shall not apply to the interpretation and construction of this Agreement. In an effort to resolve informally and amicably any claim, controversy or dispute (whether such claim, sounds in contract, tort, or otherwise) arising out of or relating to this Agreement, or the breach thereof (a “Dispute”), each Party shall notify the other in writing of a Dispute hereunder that requires resolution. Such notice shall set forth the nature of the Dispute, the amount, if any, involved and the remedy sought. Each Party shall designate a representative who shall be empowered to investigate, discuss and seek to settle the Dispute. If the two representatives are unable to settle the Dispute within thirty (30) days after proper notification, the Dispute shall be submitted to the Chief Executive Officer of each Party for consideration for an additional thirty (30) days. If the Dispute remains unresolved after said sixty (60) day period, either Party shall have a right to commence any action, suit or proceeding with respect to such Dispute in a court of

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competent jurisdiction. The venue for such action, suit or proceeding shall be in the English Courts. No provision of, or the exercise of any rights under, this Agreement shall limit the right of the parties to obtain, apply for, or resort to court ordered injunctive relief. Mipharm and Columbia each further irrevocably consent to the service of any complaint, summons, notice or other process by delivery thereof to it by any manner in which notices may be given pursuant to this Agreement.

18.3 Notices.

18.3.1 Any notice or other communication given pursuant to or made under or in connection with the matters contemplated by this Agreement shall be in writing in the English language and shall be delivered by hand or by courier or shall be sent by recorded delivery to the address of the recipient set out in Exhibit C or as specified by the recipient from time to time in accordance with Clause 18.3.3. Notices sent by hand or by courier shall require a written receipt of delivery. Notices sent by fax or E-Mail shall not be valid of themselves and must be confirmed in hard copy form by hand or by recorded delivery.

18.3.2 Any notice given pursuant to this Clause shall be deemed to have been received:

18.3.2.1 if delivered by hand or by courier, at the time of delivery as evidenced in the receipt of delivery; or

18.3.2.2 if sent by recorded delivery, at the time of delivery.

18.3.3 A Party may notify the other Parties to this Agreement of a change of its name, relevant addressee, address or facsimile number for the purposes of Exhibit C provided that such notification shall only be effective on:

18.3.3.1 the date specified in the notification as the date on which the change is to take place; or

18.3.3.2 if no date is specified or the date specified is less than (five) clear Business Days after the date on which the notice is given,

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the date falling five clear Business Days after notice of any such change has been given.

18.4 Payment. All taxes levied on account of any payment accruing under this Agreement shall be the obligation of Columbia, and if provision is made in law or regulation in the Territory for withholding, such tax shall be deducted from any payment due to Columbia, paid to the proper taxing authority, and receipt for payment of the tax sent to Columbia as soon as practicable.

18.5 Assignment. Columbia shall not assign this Agreement without also assigning to the same assignee the Columbia Patent Rights and Trademarks and conversely may not assign the rights the Columbia Patent Rights and Trade Marks (other than to an Affiliate) without also assigning to the same assignee this Agreement. Mipharm shall not assign this Agreement without also assigning to the same assignee the rights the subject of Clause 2.2 and the MA and conversely may not assign the rights the subject of Clause 2.2 and the MA (other than to an Affiliate) without also assigning to the same assignee this Agreement. This Agreement shall not be assignable by either Mipharm on the one hand or by Columbia on the other hand (“Assignor”) without the written consent of the other (“Remaining Party”) such consent not to be unreasonably withheld, provided however that either Party may assign this Agreement to any Affiliate or to a corporation with which such Party may merge or consolidate, or to which it may transfer all or substantially all of its assets to which this Agreement relates, subject to obtaining a direct deed of undertaking from such corporation addressed to the Remaining Party agreeing to be bound by all the terms of this Agreement.

18.6 Change in control. The rights and obligations under this Agreement shall survive any Change in Control (as defined below) with respect to either Party. This Agreement shall be binding on and inure to the benefit of the successors and assigns of the Parties, including any Affiliate, subsidiary, division or any other entity controlled by or controlling either Party. “Change in Control” means any of the following circumstances or events: (i) the shareholders of either party approve a merger or consolidation (however denominated or effectuated) of the party with or into another entity, (ii) the shareholders or Board of Directors of either party approve the sale,

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lease or transfer (in any way whatsoever) of all or substantially all the assets of the party to any entity; (iii) any entity acquires in one or a series of transactions beneficial ownership of more than 50% of the outstanding shares of either party or (iv) any entity obtains direct or indirect control over either party.

18.7 Amendment and Waiver. This Agreement (including the Exhibits hereto) may be amended, modified, superseded or cancelled, and any other of the terms or conditions hereof may be modified, only by a written instrument executed by both parties hereto or, in the case of a waiver, by the Party waiving compliance. Failure of any Party at any time or times to require performance of any provision hereof shall in no manner affect the right of such Party at a later time to enforce the same, and no waiver of any nature, whether by conduct or otherwise, in any one or more instances, shall be deemed to be or considered as a further or continuing waiver of any other provision of this Agreement.

18.8 Severability. In the event that any one or more of the agreements, provisions or terms contained herein shall be declared invalid, illegal or unenforceable in any respect, the validity of the remaining agreements, provisions of terms contained herein shall in no way be affected, prejudiced or invalidated thereby.

18.9 Entire Agreement. This Agreement, together with the Exhibits hereto, contains the entire agreement between the parties hereto and supersedes any agreements between them with respect to the subject matter hereof.

18.10 Section Headings. The section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

18.11 Counterparts. This Agreement may be executed in any number of separate counterparts, each of which shall be deemed to be an original, but which together shall constitute one and the same instrument.

18.12 Columbia Laboratories, Inc. hereby agrees, by executing this Agreement in the space provided below and subject to Mipharm’s full compliance with the procedures set forth in Clause 12.3 to indemnify, defend and hold Mipharm harmless for all liability,

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loss, damage, cost and expense (including legal costs) incurred or suffered by Mipharm as a result of any breach of warranty by Columbia under 12.1 in the event that Columbia fails to satisfy any claim of Mipharm for such breach under the provisions of Clause 12.3.

Signature Page Follows

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

	MIPHARM S.p.A.		COLUMBIA LABORATORIES (BERMUDA), LTD.
By:	/S/ Giuseppe G. Miglio	By:	/S/ Fred Wilkinson
	Giuseppe G. Miglio Name President & CEO Title		Fred Wilkinson Name President & CEO Title

	AGREED TO SOLELY FOR PURPOSES OF CLAUSE 18.12: COLUMBIA LABORATORIES, INC.
By:	/S/ Fred Wilkinson
	Fred Wilkinson Name President & CEO Title

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EXHIBIT A

European Patents and Applications

“Buccal Tablet” Family

Published Patent Application No:

EP 1 105 104 A1 and any future corresponding national patents in the Territory

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EXHIBIT B

MINIMUM PURCHASE REQUIREMENTS

YEAR	UNITS
[***]	[***]

Assumptions

1. Years start from the first of the month following First Commercial Sale in the Territory

2. A unit is one 60 tablet package or the equivalent number of tablets in other package volumes.

[***]

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EXHIBIT C

NAMES AND ADDRESSES FOR NOTICES

If to Columbia Laboratories (Bermuda), Ltd.,

Columbia Laboratories (Bermuda), Ltd.

P.O. Box HM 1179

Cedar House

41 Cedar Avenue

Hamilton HM 12

Bermuda

Attention: Secretary

Tel: (441) 295-2244

Fax: (441) 292-8666

(441) 295-5328

If to Columbia Laboratories, Inc.,

Columbia Laboratories, Inc.

354 Eisenhower Parkway

Livingston, New Jersey 07039

Attention: President

Tel: (973) 994-3999

Fax: (973) 994-3001

With copy to:

Columbia Laboratories, Inc.

354 Eisenhower Parkway

Livingston, New Jersey 07039

Attention: General Counsel

Tel: (973) 994-3999

Fax: (973) 994-3001

If to Mipharm:

Mipharm S.p.A.

via Quaranta 12

20141 Milan – Italy

Tel: +39 02 53548057

Fax: Attention: Chairman and CEO

Facsimile No. +39 02 53548051

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EXHIBIT D

EXPERT’S DECISION

1. Any matter or dispute to be determined by an expert under this Agreement. (“Expert”) shall be referred to a person suitably qualified to determine that particular matter or dispute who shall be nominated jointly by the Parties or, failing agreement between the Parties within twenty (20) Business Days of a written request by either Party to the other seeking to initiate the Expert’s decision procedure, either party may request the Presidente del Tribunale di Milano to nominate the Expert.

2. The Parties shall with fourteen (14) days of the appointment of the Expert meet with him/her in order to agree the program for oral written and oral submissions provided for in Clause 6.5, which shall be conducted in English.

3. In all cases the terms of appointment of the expert by whomsoever appointed shall include:

3.1. a commitment by the Parties to share equally the expert’s fee;

3.2. a requirement on the expert to act fairly as between the Parties and according to the principles of natural justice;

3.3. a commitment by the Parties to supply to the expert the submissions the subject of Clause 6.5 all such assistance, documents and information as he/she may require for the purpose of his or her determination.

3.4. a commitment by the Parties that all negotiations connected with the dispute shall be conducted in confidence and without prejudice to the rights of the parties in any future proceedings.

4. The expert shall give a written decision which shall contain a factual analysis, his/her conclusions and the reasons for his /her conclusions.

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5. The expert’s decision shall be final and binding on the Parties (save in the case of negligence or manifest error).

6. The parties expressly acknowledge and agree that they do not intend the reference to the expert to constitute an arbitration within the scope of any arbitration legislation, the expert’s decision is not a quasi judicial procedure and the parties shall have no right of appeal against the expert’s decision provided always that this shall not be construed as waiving any rights the parties might have against the expert for breaching his/her terms of appointment or otherwise being negligent.

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EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO RULE 13a-14(a)/15d-14(a)

OF THE SECURITIES EXCHANGE ACT OF 1934

I, Fred Wilkinson, Chief Executive Officer of the Company, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Columbia Laboratories, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors:

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: August 14, 2003
	By:	/s/    FRED WILKINSON
		Fred Wilkinson         Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO RULE 13a-14(a)/15d-14(a)

OF THE SECURITIES EXCHANGE ACT OF 1934

I, David L. Weinberg, Chief Financial Officer of the Company, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Columbia Laboratories, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors:

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: August 14, 2003
	By:	/s/    DAVID L. WEINBERG
		David L. Weinberg Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Columbia Laboratories, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Fred Wilkinson, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/    Fred Wilkinson  

Fred Wilkinson

Chief Executive Officer

August 14, 2003

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Columbia Laboratories, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David L. Weinberg, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/    David L. Weinberg

David L. Weinberg

Chief Financial Officer

August 14, 2003