Exhibit 10.1

STOCK OPTION AGREEMENT (this “Agreement”) dated as of      , 200     (the “Grant
Date”), between Nastech Pharmaceutical Company Inc., a Delaware corporation (the
“Company”), and      (Grantee”), an employee of the Company.

SECTION 1. Grant of Option. Pursuant to the Nastech Pharmaceutical Company Inc.
     (the “Plan”), the Company hereby grants to Grantee, as of the Grant Date, a
Stock Option, to purchase an aggregate of                  shares (the “Option
Shares”) of common stock of the Company, par value $0.006 per share (the “Common
Stock”), at an exercise price of $    per share (the “Option”) subject to
adjustment and the other terms and conditions set forth herein, in the Plan.
Notwithstanding any provision of this Agreement to the contrary, if there is any
conflict between the provisions of this Agreement and the employment agreement
entered into by the Grantee and the Company (the “Employment Agreement”), the
provision of the Employment Agreement shall control.

SECTION 2. Grantee Bound by Plan. The Plan is incorporated herein by reference
and made a part hereof. The Plan shall govern all aspects of this Agreement
except as otherwise specifically stated herein. Grantee hereby acknowledges
receipt of a copy of the Plan and agrees to be bound by all the terms and
provisions thereof. Unless otherwise defined herein, capitalized terms used but
not defined herein shall have the meanings ascribed to them in the Plan. The
Plan should be carefully examined before any decision is made to exercise this
Option.

SECTION 3. Exercise of Option.

(a) General. Subject to the earlier termination of the Option as provided herein
and in the Plan, the Option may be exercised by written notice to the Company at
any time and from time to time after the Grant Date; provided, however, that the
Option shall not be exercisable for more than the number of shares which are
vested in accordance herewith at the time of exercise. The exercise of this
Option and the issuance of Option Shares upon such exercise shall be subject to
compliance by the Company and Grantee with all applicable requirements of law as
set forth in the Plan. The inability of the Company to obtain approval from any
regulatory body having authority deemed by the Company to be necessary to the
lawful issuance and sale of any Common Stock pursuant to this Option shall
relieve the Company of any liability with respect to the non-issuance or sale of
the Common Stock as to which such approval shall not have been obtained.

(b) Vesting. Subject to the earlier termination of the Option as provided herein
and in the Plan, the Option shall vest as follows:

     
1/3
  Of the shares subject to the Option shall be vested on
     
 
   
1/3
  Of the shares subject to the Option shall be vested on
     
 
   
1/3
  Of the shares subject to the Option shall be vested on
     
 
   

(c) Early Expiration of Option. (i) Upon the termination of Grantee’s employment
or consulting relationship with the Company (including any subsidiary thereof)
for any reason, including death, any portion of the Option granted hereunder
that has not been exercised on the date of such termination shall expire in
accordance with subsection (ii) or (iii)of this Section 3(c) as applicable.

(ii) In the event that Grantee’s employment or consulting relationship with the
Company (including any subsidiary thereof) is terminated by the Company for
Cause, Grantee shall automatically forfeit his right to exercise any portion of
the Option granted hereunder that has not been exercised as of the date of such
termination without regard to whether such portion of the Option had previously
vested and such unexercised portion of the Option shall automatically be
cancelled effective at the commencement of business on the date of such
termination.

(iii) In the event that Grantee’s employment or consulting relationship with the
Company (including any subsidiary thereof) is terminated for any reason other
than for Cause, death, or Disability, any unvested portion of the Option granted
hereunder shall immediately expire and any vested portion of the Option granted
hereunder that has not been exercised as of the date of such termination shall
automatically expire, if not exercised beforehand, three months after such
termination.

(iv) In the event that Grantee’s employment or consulting relationship with the
Company (including any subsidiary thereof) is terminated due to Grantee’s death
or Disability, any unvested portion of the Option granted hereunder shall
immediately expire and any vested portion of the Option granted hereunder that
has not been exercised as of the date of such termination shall automatically
expire, if not exercised beforehand, three months after such termination.

(d) Normal Expiration of Option. This Option shall not be exercisable after the
tenth anniversary of the Grant Date (the “Expiration Date”).

SECTION 4. Exercise of Option and Conditions to Exercise. This Option may not be
exercised by Grantee unless the following conditions are met:

(a) Notice. This Option shall be exercised by delivering written notice,
substantially in the form attached hereto as Exhibit I, to the Company at its
principal office addressed to the attention of its Secretary. Such notice shall
specify the number of Option Shares with respect to which the Option is being
exercised and shall be signed by Grantee. This Option may not be exercised for a
fraction of a share of Common Stock;

(b) Securities Requirements. Legal counsel for the Company must be satisfied at
the time of exercise that the issuance of Option Shares upon exercise will be in
compliance with the Securities Act of 1933, as amended (the “Securities Act”),
and applicable United States federal, state, local and foreign laws; and

(c) Payment of Exercise Price. Grantee must pay at the time of exercise the full
purchase price for the shares of Common Stock being acquired hereunder (i) in
cash or its equivalent or (ii) pursuant to such other method as the Committee
may approve from time to time. Please refer to the Plan for a complete
description of the methods for exercise, payment and delivery of Option Shares,
including requirements for the payment of withholding taxes applicable thereto.

SECTION 5. Transferability. This Option may not be sold, assigned, transferred,
pledged, hypothecated or otherwise disposed of by Grantee, except by will or the
laws of descent and distribution (in which case, the transferee shall succeed to
the rights and obligations of Grantee hereunder) and is exercisable during
Grantee’s lifetime only by Grantee or his guardian or legal representative. If
Grantee or anyone claiming under or through Grantee attempts to violate this
Section 5, such attempted violation shall be null and void and without effect,
and the Company’s obligation hereunder shall terminate. If at the time of
Grantee’s death this Option has not been fully exercised, Grantee’s estate or
any person who acquires the right to exercise this Option by bequest or
inheritance or by reason of Grantee’s death may exercise this Option in
accordance with and with respect to the number of shares set forth in Section 3
above. The applicable requirements of Section 4 above must be satisfied in full
at the time of any exercise.

SECTION 6. Administration. Any action taken or decision made by the Company, the
Board or the Committee or its delegates arising out of or in connection with the
construction, administration, interpretation or effect of the Plan or this
Agreement shall lie within its sole and absolute discretion, as the case may be,
and shall be final, conclusive and binding on Grantee and all persons claiming
under or through Grantee. By accepting this grant or other benefit under the
Plan, Grantee and each person claiming under or through Grantee shall be
conclusively deemed to have indicated acceptance and ratification of, and
consent to, any action taken under the Plan by the Company, the Board or the
Committee or its delegates.

SECTION 7. No Rights as Stockholder. Unless and until a certificate or
certificates representing shares of Common Stock shall have been issued to
Grantee (or any person acting under Section 5 above) pursuant to an exercise
hereunder, Grantee shall not be or have any of the rights or privileges of a
stockholder of the Company with respect to shares of Common Stock acquirable
upon exercise of the Option. No adjustment shall be made for cash dividends or
other rights for which the record date is prior to the date of such due exercise
and full payment.

SECTION 8. Investment Representation. Grantee hereby acknowledges that the
Option Shares shall be acquired for investment without a view to distribution,
within the meaning of the Securities Act, and shall not be sold, transferred,
assigned, pledged or hypothecated in the absence of an effective registration
statement for the shares of Common Stock under the Securities Act and applicable
states securities laws or an applicable exemption from the registration
requirements of the Securities Act and any applicable state securities laws.
Grantee also agrees that the Option Shares will not be sold or otherwise
disposed of in any manner which would constitute a violation of any applicable
securities laws, whether federal or state and that the certificate representing
the shares of Common Stock shall contain a legend to such effect.

SECTION 9. Listing and Registration of Common Stock. The Company, in its
discretion, may postpone the issuance and/or delivery of shares of Common Stock
upon any exercise of this Option until completion of such stock exchange
listing, or registration, or other qualification of such shares under any state
and/or federal law, rule or regulation as the Company may reasonably in good
faith consider appropriate.

SECTION 10. Adjustments. (a) Anti-Dilution. In the event of any change in the
number of shares of Common Stock outstanding by reason of any stock dividend or
split, reverse stock split, capitalization, merger, consolidation or otherwise,
the Committee shall make appropriate adjustment to the number of Option Shares
granted hereunder and the exercise price thereof in order to preserve the
position of Grantee and prevent any enlargement or dilution of such position.

(b) Certain Transactions. In the event of the proposed dissolution or
liquidation of the Company, all Options will terminate immediately prior to the
consummation of such proposed action, unless otherwise provided by the
Committee. The Committee may, in the exercise of its sole discretion in such
instances, declare that any Option shall terminate as of a date fixed by the
Committee and give each Grantee the right to exercise his or her Option as to
all or any of the Shares issuable pursuant to the exercise of the Option,
including Shares which would not otherwise be then issuable pursuant to the
exercise of the Option. In the event of a proposed sale of all or substantially
all of the assets of the Company, or the merger of the Company with or into
another corporation, the Option shall be assumed or an equivalent option shall
be substituted by such successor corporation or a parent or subsidiary of such
successor corporation, unless the Board determines, in the exercise of its sole
discretion and in lieu of such assumption or substitution, that the Grantee
shall have the right to exercise the Option in whole or in part, including
Shares which would not otherwise be then issuable pursuant to the exercise of
the Option. If the Board makes an Option exercisable in lieu of assumption or
substitution in the event of a merger or sale of assets, the Board shall notify
the Grantee that the Option shall be exercisable for a period of not less than
15 days from the date of such notice, and the Option will terminate upon the
expiration of such period..

SECTION 11. Notices. Any notice hereunder to the Company shall be addressed to
the Company at 3830 Monte Villa Parkway, Bothell, WA 98021, Attention:
Secretary, and any notice hereunder to Grantee shall be addressed to Grantee at
Grantee’s last address on the records of the Company, subject to the right of
either party to designate at any time hereafter in writing some other address.
Any notice shall be deemed to have been duly given when delivered personally,
one day following dispatch if sent by reputable overnight courier, fees prepaid,
or three days following mailing if sent by registered mail, return receipt
requested, postage prepaid and addressed as set forth above.

SECTION 12. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of any successors to the Company and all persons lawfully claiming
under Grantee.

SECTION 13. Governing Law. The validity, construction, interpretation,
administration and effect of the Plan, and of its rules and regulations, and
rights relating to the Plan and to this Agreement, shall be governed by the
substantive laws, but not the choice of law rules, of the State of Delaware.

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

NASTECH PHARMACEUTICAL COMPANY INC.

     
     

GRANTEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE
OPTION IS EARNED ONLY THROUGH HIS CONTINUED AND SATISFACTORY EMPLOYMENT WITH THE
COMPANY OR ITS SUBSIDIARIES AND NOT THROUGH THE GRANT OF THIS OPTION OR THE
ACQUISITION OF SHARES HEREUNDER. GRANTEE ACKNOWLEDGES AND AGREES THAT NOTHING IN
THIS AGREEMENT, NOR IN THE COMPANY’S      PLAN WHICH IS INCORPORATED HEREIN BY
REFERENCE, SHALL CONFER UPON GRANTEE ANY RIGHT WITH RESPECT TO CONTINUATION OF
EMPLOYMENT BY THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH HIS RIGHT OR
THE COMPANY’S RIGHT TO TERMINATE HIS EMPLOYMENT AT ANY TIME, WITH OR WITHOUT
CAUSE.

Grantee acknowledges receipt of a copy of the Plan and represents that he is
familiar with the terms and provisions thereof, and hereby accepts this Option
subject to all of the terms and provisions thereof except as otherwise
specifically stated in this Option Agreement. Grantee has reviewed the Plan and
this Agreement in their entirety, has had an opportunity to obtain the advice of
counsel prior to executing this Agreement and fully understands all provisions
of this Agreement. Grantee hereby agrees to accept as binding, conclusive and
final all decisions or interpretations of the Board or Committee upon any
questions arising under the Plan.

GRANTEE

     
Name:      

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EXHIBIT I

NOTICE OF EXERCISE OF STOCK OPTION

Reference is hereby made to the [Stock Option Award Agreement] (the “Award
Agreement”) dated as of      , 200     between      and Nastech Pharmaceutical
Company Inc., a Delaware corporation (the “Company”). The undersigned hereby
notifies the Company that its elect to purchase      shares of the Company’s
Common Stock (the “Purchased Shares”) at the option exercise price of $    per
share (the “Exercise Price”) pursuant to that certain option (the “Option”)
granted to the undersigned on      , 200_, to purchase up to      shares of the
Company’s Common Stock.

Concurrently with the delivery of this Exercise Notice to the Secretary of the
Company, the undersigned shall hereby pay to the Company the Exercise Price for
the Purchased Shares in accordance with the provisions of the Award Agreement
and shall deliver whatever additional documents may be required by the Award
Agreement as a condition for exercise.

Date:      

     

Name:

Address:      

     

     

         
Print name in exact manner it is to appear on the stock certificate:
    —  
Address to which certificate is to be sent, if different from address above:
    —  

     

     

Social Security Number      

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