<PAGE>
                                                                   Exhibit 10.38

                       NASTECH PHARMACEUTICAL COMPANY INC.
                            2004 STOCK INCENTIVE PLAN
                        RESTRICTED STOCK GRANT AGREEMENT

     This Restricted Stock Grant Agreement (the "Agreement") is entered into
this 7th day of September, 2005, by and between Nastech Pharmaceutical Company
Inc. (the "Company"), a Delaware Corporation, and Philip Ranker ("Grantee").

ARTICLE I GRANT OF RESTRICTED STOCK

     1.1 Grant of Restricted Stock. Pursuant to, and subject to, the terms and
conditions set forth herein and in the Nastech Pharmaceutical Company Inc. 2004
Stock Incentive Plan (the "Plan"), the Company hereby grants to the Grantee 792
restricted shares (the "Restricted Stock") of common stock of the Company
("Common Stock").

     1.2 Grant Date. The Grant Date of the Restricted Stock is September 7th,
2005.

     1.3 Incorporation of Plan. All terms, conditions and restrictions of the
Plan are incorporated herein and made part hereof as if stated herein. If there
is any conflict between the terms and conditions of the Plan and this Agreement,
the terms and conditions of the Plan, as interpreted by the Compensation
Committee of the Board of Directors of the Company (the "Committee"), shall
govern. Except as otherwise provided herein, all capitalized terms used herein
shall have the meaning given to such terms in the Plan.

ARTICLE II VESTING

     2.1 Vesting. Subject to the further provision of this Agreement, the
Restricted Stock shall vest with respect to a number of whole shares as close as
possible to the following percentage of the total number of shares of Restricted
Stock granted hereunder on the following dates (each, a "Vesting Date"):

<TABLE>
<CAPTION>
PERCENTAGE OF TOTAL SHARES            VESTING DATE
--------------------------            ------------
<S>                          <C>
           33.3%             1st anniversary of Grant Date
           33.3%             2nd anniversary of Grant Date
           33.3%             3rd anniversary of Grant Date
</TABLE>

ARTICLE III TERMINATION OF EMPLOYMENT

     3.1 Termination of Employment. In the event that the Grantee's employment
(which for purposes of this Agreement shall include service as a director or
consultant) with the Company or one of the Company's subsidiaries terminates for
any reason, all unvested shares of Restricted Stock, together with any property
in respect of such shares held by the custodian pursuant to Section 4.3 hereof,
shall be forfeited as of the date of such termination of employment and the
Grantee promptly shall return to the Company any certificates evidencing such
shares. For purposes of this Agreement, the Grantee shall be deemed to have
terminated employment or incurred a termination of employment upon (i) the date
the Grantee ceases to be employed by, or to provide consulting services for, the
Company or any Company subsidiary; or (ii) the date the Grantee ceases to be a
Board member, provided, however, that if the Grantee (x) at the time of
reference is both an employee or consultant and a Board member, or (y) ceases to
be engaged as an employee, consultant or Board member and immediately is engaged
in another of such relationships with the Company or any Company subsidiary, the
Grantee shall not be deemed to have a "termination of employment" until the last
of the dates determined pursuant to subparagraphs (i) and (ii) above. The
Committee, in its discretion, may determine whether any leave of absence
constitutes a termination of employment for purposes of this Agreement.

ARTICLE IV RESTRICTIONS

     4.1 Restrictions on Transferability. Until a share of Restricted Stock
vests, such share may not be sold, assigned, transferred, alienated, commuted,
anticipated, or otherwise disposed of (except by will or the laws of descent and
distribution), or pledged or hypothecated as collateral for a loan or as
security for the performance of any obligation, or be otherwise encumbered, and
are not subject to attachment, garnishment, execution or other legal or
equitable process, and any attempt to do so shall be null and void. If the
Grantee attempts to dispose of or encumber the Grantee's unvested shares of
Restricted Stock, such shares of Restricted Stock, together with any property in
respect of such shares held by the custodian pursuant to Section 4.3 hereof,
shall be forfeited as of the date of such attempted transfer and the Grantee
promptly shall return to the Company any certificates evidencing such shares.

     4.2 Issuance of Certificates.

     (a) Reasonably promptly after the Grant Date, the Company shall issue and
deliver to the Grantee stock certificates, registered in the name of the
Grantee, evidencing the shares of Restricted Stock. Each such certificate may
bear the following legend:

     "THE SALE, TRANSFER, ASSIGNMENT, PLEDGE, HYPOTHECATION ENCUMBRANCE OR OTHER
DISPOSAL OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
TERMS OF THE NASTECH PHARMACEUTICAL COMPANY INC. 2004 STOCK INCENTIVE PLAN AND A
RESTRICTED STOCK GRANT AGREEMENT BETWEEN NASTECH PHARMACEUTICAL COMPANY INC. AND
THE HOLDER OF RECORD OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE. NO
TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IN CONTRAVENTION OF
SUCH PLAN AND RESTRICTED STOCK GRANT AGREEMENT SHALL BE VALID OR EFFECTIVE.
COPIES OF SUCH AGREEMENT MAY BE OBTAINED BY WRITTEN REQUEST MADE BY THE HOLDER
OF RECORD OF THE CERTIFICATE TO THE SECRETARY OF NASTECH PHARMACEUTICAL COMPANY
INC."

     Such legend shall not be removed from such certificates until such shares
of Restricted Stock vest.
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     (b) Reasonably promptly after any such shares of Restricted Stock vest
pursuant to Section 2.1 hereof, in exchange for the surrender to the Company of
the certificates evidencing such shares of Restricted Stock delivered to the
Grantee under Section 4.2(a) hereof, the Company shall issue and deliver to the
Grantee (or the Grantee's legal representative, beneficiary or heir)
certificates evidencing such shares of Restricted Stock, free of the legend
provided in Section 4.2(a) hereof, together with any property in respect of such
shares held by the custodian pursuant to Section 4.3 hereof.

     (c) The Company may require as a condition of the delivery of stock
certificates pursuant to Section 4.2(b) hereof that the Grantee remit to the
Company an amount sufficient in the opinion of the Company to satisfy any
federal, state and other governmental tax withholding requirements related to
the vesting of the shares represented by such certificate.

     (d) The Grantee shall not be deemed for any purpose to be, or have rights
as, a shareholder of the Company by virtue of the grant of Restricted Stock,
except to the extent a stock certificate is issued therefore pursuant to Section
4.2(a) hereof, and then only from the date such certificate is issued. Upon the
issuance of a stock certificate, the Grantee shall have the rights of a
shareholder with respect to the Restricted Stock, including the right to vote
the shares, subject to the restrictions on transferability, the forfeiture
provisions and the requirement that dividends be held in escrow until the shares
vest, as set forth in this Agreement.

     4.3 Dividends, etc. Unless the Committee otherwise determines, any
property, including cash dividends, received by a Grantee with respect to a
share of Restricted Stock as a result of any dividend, recapitalization, merger,
consolidation, combination, exchange of shares or otherwise and for which the
Grant Date occurs prior to such event but which has not vested as of the date of
such event, will not vest until such share of Restricted Stock vests, and shall
be promptly deposited with the Company or a custodian designated by the Company.
The Company shall or shall cause such custodian to issue to the Grantee a
receipt evidencing the property held by it in respect of the Restricted Stock.

ARTICLE V MISCELLANEOUS

     5.1 Delays or Omissions. No delay or omission to exercise any right, power
or remedy accruing to any party hereto upon any breach or default of any party
under this Agreement, shall impair any such right, power or remedy of such
party, nor shall it be construed to be a waiver of any such breach or default,
or an acquiescence therein, or of or in any similar breach or default thereafter
occurring, nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring. Any
waiver, permit, consent or approval of any kind or character on the part of any
party of any breach or default under this Agreement, or any waiver on the part
of any party or any provisions or conditions of this Agreement, must be in a
writing signed by such party and shall be effective only to the extent
specifically set forth in such writing.

     5.2 Right of Discharge Preserved. Nothing in this Agreement shall confer
upon the Grantee the right to continue in the employ or other service of the
Company or one of the Company's subsidiaries, or affect any right which the
Company may have to terminate such employment or service.

     5.3 Integration. This Agreement contains the entire understanding of the
parties with respect to its subject matter. There are no restrictions,
agreements, promises, representations, warranties, covenants or undertakings
with respect to the subject matter hereof other than those expressly set forth
herein. This Agreement, including, without limitation, the Plan, supersedes all
prior agreements and understandings between the parties with respect to its
subject matter.

     5.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.

     5.5 Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware, without regard to
the provisions governing conflict of laws.

     5.6 Grantee Acknowledgment. The Grantee hereby acknowledges receipt of a
copy of the Plan. The Grantee hereby acknowledges that all decisions,
determinations and interpretations of the Committee in respect of the Plan, this
Agreement and the Restricted Stock shall be final and conclusive.

     IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed by its duly authorized officer, and the Grantee has hereunto signed
this Agreement on his own behalf, thereby representing that he has carefully
read and understands this Agreement and the Plan as of the day and year first
written above.

                                        NASTECH PHARMACEUTICAL COMPANY INC.


                                        By: /s/ Steven C. Quay
                                            ------------------------------------
                                        Name: Steven C. Quay, M.D., Ph. D.
                                        Title: Chairman, President and CEO


                                        /s/ Philip Ranker
                                        ----------------------------------------
                                        Philip Ranker