<PAGE>
                                                                    EXHIBIT 10.3

                              AMENDED AND RESTATED
                       NASTECH PHARMACEUTICAL COMPANY INC.
                       2000 NONQUALIFIED STOCK OPTION PLAN

                  NONQUALIFIED STOCK OPTION GRANT AGREEMENT

       This Grant Agreement (the "Agreement") is entered into this 30th day
of January, 2006, by and between Nastech Pharmaceutical Company Inc. (the
"Corporation"), a Delaware Corporation, and Timothy M. Duffy ("Grantee").

ARTICLE 1   GRANT OF OPTION

       Section 1.1 Grant of Options. Subject to the provisions of the Agreement,
and pursuant to the provisions of the Nastech Pharmaceutical Company Inc. 2000
Nonqualified Stock Option Plan (the "Plan"), Corporation hereby grants to
Grantee, as of the Grant Date specified in Attachment A, a Nonqualified Stock
Option (the "Option") to purchase all or any part of the number and class of
shares of Common Stock set forth on Attachment A at the exercise price per share
("Option Price") set forth on Attachment A.

       Section 1.2 Term of Options. Unless the Option granted pursuant to
Section 1.1 terminates earlier pursuant to other provisions of the Agreement,
including the expiration date specified in Attachment A, the Option shall expire
on the expiration date set forth on Attachment A hereto, but in no event later
than the tenth (10th) anniversary of its Grant Date.

ARTICLE 2   VESTING

       Section 2.1 Vesting Schedule. Unless the Option has earlier terminated
pursuant to the provisions of the Agreement, Grantee shall become vested on the
dates specified on Attachment A in a portion of the Option with respect to a
percentage or number of the underlying shares in accordance with the vesting
schedule specified on Attachment A; provided that Grantee shall have been in the
continuous employ of or affiliation (as a director or consultant) with the
Corporation from the Grant Date through any such date.

ARTICLE 3   EXERCISE OF OPTION

       Section 3.1 Exercisability of Option. No portion of the Option granted to
Grantee shall be exercisable by Grantee prior to the time such portion of the
Option has vested.

       Section 3.2 Manner of Exercise. The Option may be exercised, in whole or
in part, by delivering written notice to the Committee or any designee of the
Committee in the form attached hereto as Attachment B or in such other form as
the Committee may require from time to time. Such notice shall specify the
number of shares of Common Stock subject to the Option as to which the Option is
being exercised, and shall be accompanied by full payment of the Option Price of
the shares of Common Stock as to which the Option is being exercised. Payment of
the Option Price shall be made in cash (or cash equivalents acceptable to the
Committee in the Committee's discretion). In the Committee's sole and absolute
discretion, the Committee may authorize payment of the Option Price to be made,
in whole or in part, by such other means as the Committee may prescribe. The
Option may be exercised only in multiples of whole shares and no partial shares
shall be issued. Notwithstanding anything to the contrary herein, the minimum
number of shares that may be purchased upon an exercise of the Option is the
lesser of 100 shares or the number of shares subject to the vested portion of
the Option.

       Section 3.3 Issuance of Shares and Payment of Cash upon Exercise. Upon
exercise of the Option, in whole or in part, in accordance with the terms of the
Agreement and upon payment of the Option Price for the shares of Common Stock as
to which the Option is exercised, the Corporation shall issue to Grantee
<PAGE>
or, in the event of Grantee's death, to Grantee's executor, personal
representative or the person to whom the Option shall have been transferred by
will or the laws of descent and distribution, as the case may be, the number of
shares of Common Stock so paid for, in the form of fully paid and nonassessable
Common Stock. The stock certificates for any shares of Common Stock issued
hereunder shall, unless such shares are registered or an exemption from
registration is available under applicable federal and state law, bear a legend
restricting transferability of such shares.

ARTICLE 4   TERMINATION OF EMPLOYMENT

       Section 4.1 Unvested Portion. Unless the Option has earlier terminated
pursuant to the provisions of this Agreement, the unvested portion of the Option
shall terminate upon termination of Grantee's employment or affiliation (as a
director or consultant) with the Corporation for any reason.

       Section 4.2 Termination of Employment or Affiliation for Reason Other
Than Death or Disability. Unless the Option has earlier terminated pursuant to
the provisions of this Agreement, the Option granted to Grantee shall terminate
in its entirety, regardless of whether the Option is vested in whole or in part,
ninety (90) days after the date Grantee is no longer employed by, nor affiliated
(as a director or consultant) with, the Corporation for any reason other than
Grantee's death or Disability.

       Section 4.3 Upon Grantee's Death. Unless the Option has earlier
terminated pursuant to the provisions of the Agreement, upon Grantee's death,
Grantee's executor, personal representative or the person to whom the Option
shall have been transferred by will or the laws of descent and distribution, as
the case may be, may exercise all or any part of the vested portion of the
Option, provided such exercise occurs within twelve (12) months after the date
Grantee dies, but not later than the end of the stated term of the Option.

       Section 4.4 Termination of Employment or Affiliation by Reason of
Disability. Unless the Option has earlier terminated pursuant to the provisions
of the Agreement, in the event that Grantee ceases, by reason of Disability, to
be an employee of or affiliated (as a director or consultant) with the
Corporation, the vested portion of the Option may be exercised in whole or in
part at any time within twelve (12) months after the date of Disability, but not
later than the end of the stated term of the Option. For purposes of this
Agreement, Disability shall be as defined in Code Section 22(e)(3) and shall be
determined by the Committee, with its determination on the matter being final
and binding.

ARTICLE 5   MISCELLANEOUS

       Section 5.1 Non-Guarantee of Employment. Nothing in the Plan or the
Agreement shall be construed as a contract of employment between the Corporation
(or an affiliate) and Grantee, or as a contractual right of Grantee to continue
in the employ of the Corporation or an affiliate, or as a limitation of the
right of the Corporation or an affiliate to discharge Grantee at any time.

       Section 5.2 No Rights of Stockholder. Grantee shall not have any of the
rights of a stockholder with respect to the shares of Common Stock that may be
issued upon the exercise of the Option until such shares of Common Stock have
been issued to him upon the due exercise of the Option.

       Section 5.3 Withholding of Taxes. The Corporation or any affiliate shall
have the right to deduct from any compensation or any other payment of any kind
(including withholding the issuance of shares of Common Stock) due Grantee the
amount of any federal, state or local taxes required by law to be withheld as
the result of the exercise of the Option; provided, however, that the value of
the shares of Common Stock withheld may not exceed the statutory minimum
withholding amount required by law. In lieu of such deduction, the Committee may
require Grantee to make a cash payment to the Corporation or an affiliate equal
to the amount required to be withheld. If Grantee does not make such payment
when requested, the Corporation may refuse to issue any Common Stock certificate
under the Plan until arrangements satisfactory to the Committee for such payment
have been made.
<PAGE>
       Section 5.4 Nontransferability of Option. The Option shall be
nontransferable other than by will or the laws of descent and distribution.
During the lifetime of Grantee, the Option may be exercised only by Grantee or,
during the period Grantee is under a legal disability, by Grantee's guardian or
legal representative.

       Section 5.5 Agreement Subject to Charter and Bylaws. This Agreement is
subject to the Charter and Bylaws of the Corporation, and any applicable Federal
or state laws, rules or regulations, including without limitation, the laws,
rules, and regulations of the Commonwealth of Delaware.

       Section 5.6 Gender. As used herein, the masculine shall include the
feminine as the circumstances may require.

       Section 5.7 Headings. The headings in the Agreement are for reference
purposes only and shall not affect the meaning or interpretation of the
Agreement.

       Section 5.8 Notices. All notices and other communications made or given
pursuant to the Agreement shall be in writing and shall be sufficiently made or
given if hand delivered or mailed by certified mail, addressed to Grantee at the
address contained in the records of the Corporation, or addressed to the
Committee, care of the Corporation for the attention of its Secretary at its
principal office or, if the receiving party consents in advance, transmitted and
received via telecopy or via such other electronic transmission mechanism as may
be available to the parties.

       Section 5.9 Entire Agreement; Modification. The Agreement contains the
entire agreement between the parties with respect to the subject matter
contained herein and may not be modified, except as provided in the Plan or in a
written document signed by each of the parties hereto.

       Section 5.10 Conformity with Plan. This Agreement is intended to conform
in all respects with, and is subject to all applicable provisions of, the Plan,
which is incorporated herein by reference. Unless stated otherwise herein,
capitalized terms in this Agreement shall have the same meaning as defined in
the Plan. Inconsistencies between this Agreement and the Plan shall be resolved
in accordance with the terms of the Plan. In the event of any ambiguity in the
Agreement or any matters as to which the Agreement is silent, the Plan shall
govern including, without limitation, the provisions thereof pursuant to which
the Committee has the power, among others, to (i) interpret the Plan and Grant
Agreements related thereto, (ii) prescribe, amend and rescind rules and
regulations relating to the Plan, and (iii) make all other determinations deemed
necessary or advisable for the administration of the Plan. The Grantee
acknowledges by signing this Agreement that he or she has received and reviewed
a copy of the Plan.

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

NASTECH PHARMACEUTICAL COMPANY INC.


By:/s/ Philip C. Ranker
-------------------------
Philip C. Ranker, Chief Financial Officer


GRANTEE:   /s/ Timothy M. Duffy
--------------------------------
               Timothy M. Duffy
<PAGE>
                       NASTECH PHARMACEUTICAL COMPANY INC.
                               STOCK OPTION GRANT
                                  ATTACHMENT A
<TABLE>

<S>                            <C>

STOCK OPTION GRANTED TO:       Timothy M. Duffy

TYPE OF OPTION:                NON QUALIFIED

GRANT DATE:                    January 30, 2006

NUMBER AND CLASS OF SHARES:    3,716 SHARES OF COMMON STOCK

EXERCISE PRICE PER SHARE:      $15.95

EXPIRATION DATE:               January 30, 2016

VESTING SCHEDULE:


</TABLE>

<Table>
<Caption>

<S>    <C>          <C>

1.     3,588        of the shares subject to the Option shall be vested on 1/30/2007

2.     64           of the shares subject to the Option shall be vested on 1/30/2008

3.     64           of the shares subject to the Option shall be vested on 1/30/2009

</Table>



                                    NASTECH PHARMACEUTICAL CO. INC.



                                    By:--------------------------------------
                                    Philip C. Ranker, Chief Financial Officer



                                    Grantee:---------------------------------
                                              Timothy M. Duffy
<PAGE>
                       NASTECH PHARMACEUTICAL COMPANY INC.
                               STOCK OPTION GRANT
                                  ATTACHMENT B
                                  EXERCISE FORM


Name and Address of Optionee:



Gentlemen:

1.         Exercise of Stock Option. I hereby exercise the Nonqualified Stock
      Option (the "Stock Option") granted to me on___________ ,200___ , by
      Nastech Pharmaceutical Company Inc. (the "Corporation"), subject to all
      the terms and provisions thereof and of the Nastech Pharmaceutical Company
      Inc. 2000 Nonqualified Stock Option Plan (the "Plan"), and notify you of
      my desire to purchase ____________ shares (the "Shares") of Common Stock
      of the Corporation at a price of $______ per share pursuant to the
      exercise of said Stock Option. I understand that the exercise date shall
      be the date that the Company receives the full payment of the exercise
      price of the Stock Option.

2.         Tax Withholding. I understand that I must submit upon demand from the
      Corporation an amount in cash or cash equivalents sufficient to satisfy
      any federal, state or local tax withholding applicable to this Stock
      Option exercise, in addition to the purchase price enclosed, or make such
      other arrangements for such tax withholding that are satisfactory to the
      Corporation, in its sole discretion, in order for this exercise to be
      effective.

3.         Investment Covenant. I represent and agree that as a condition of
      this Option, the shares of Common Stock of the Corporation that I acquire
      under this option will be purchased for investment and not with a view for
      distribution or resale, unless counsel for the Company is then of the
      opinion that such a representation is not required under the Securities
      Act of 1933, as amended, or any other applicable law, regulation or rule
      of any government agency.


      Total Amount Enclosed: $_______________ (including $______ for tax
withholding)



                                    Date _____________________________


                                    Optionee _________________________


                                    Received by Nastech Pharmaceutical
                                    Company Inc.

                                    On: ___________________,200_______


                                    By: ______________________________