<PAGE>   1


The symbol "***" is used throughout this exhibit to indicate that a portion of
the exhibit has been omitted and filed separately with the commission.

                                                                    Exhibit 10.2

                                               CONFIDENTIAL TREATMENT REQUESTED


                                LICENSE AGREEMENT


        This License Agreement (this "Agreement"), dated as of August 01, 2000
(the "Effective Date") is entered into at San Diego, California by and between
AVANIR PHARMACEUTICALS, a California corporation, having an office at 9393 Towne
Centre Drive, Suite 200, San Diego, California, 92121 ("Licensee"), and IRISYS
RESEARCH & DEVELOPMENT, LLC, a California limited liability company, having
offices at 6190 Cornerstone Court East, Suite 106, San Diego, California 92121
("IriSys"). IriSys and Licensee are also referred to individually as "party" and
collectively as "parties."


                                    RECITALS

        WHEREAS, IriSys is the exclusive licensee of certain patents and a
patent application as set forth under an Exclusive Patent License Agreement
between IriSys and the Center For Neurologic Study ("CNS"), dated as of April 2,
1997, and

        WHEREAS, IriSys has developed certain additional technology and know-how
related to the CNS patents, patent application(s) and the medical use of
dextromethorphan or a combination of dextromethorphan with quinidine or other
enzyme inhibitors, and

        WHEREAS, the Exclusive Patent License Agreement between IriSys and CNS
has been amended prior to the Effective Date (the "Amendment"), and

        WHEREAS, Licensee wishes to acquire the exclusive rights to such
patents, patent application, additional technology and know-how held by IriSys
through an exclusive, worldwide sublicense of such patents and patent
application(s) and a license of such additional technology and know-how from
IriSys, and

        WHEREAS, IriSys is willing to grant Licensee an exclusive, worldwide
sublicense of such patents and patent application and a license of such
additional technology and know-how on the terms and conditions set forth in this
Agreement; and

        NOW THEREFORE, in consideration of the mutual covenants contained below,
the parties agree as follows:

                            ARTICLE I - DEFINITIONS

        1.1. "AFFILIATE(S)" of any specified Person means any other Person
which, directly or indirectly, is in control of, is controlled by or is under
common control with such specified Person. For purposes of this definition,
"control of a Person" means the power, direct or indirect, to direct or cause
the direction of the management and policies of such Person whether by contract
or otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.



                                       1
<PAGE>   2
                                               CONFIDENTIAL TREATMENT REQUESTED

        1.2. "LICENSEE IMPROVEMENTS" means all discoveries and/or inventions
(whether patented or not) made by Licensee during the term of this Agreement
that constitute a modification of Process and/or Product and that would, if
practiced, constitute an infringement of one or more of the Patents.

        1.3. "CONFIDENTIAL INFORMATION" means the terms and conditions of this
Agreement, and all Know-How and other proprietary information which is neither
made freely available nor published nor otherwise made available to the public
through sources entitled to disclose the same, relating to the manufacture, use
and sale of Products or the preparation and sale of a compound that contains
Products or the practice of the Process.

        1.4. "FORCE MAJEURE" as used in this Agreement, means war or
insurrection, fire, flood, strike, labor trouble, work stoppage, embargo,
accident, riot, act of governmental authority, act of God, or contingency beyond
the reasonable control of the parties which prevent performance of obligations
under this Agreement.

        1.5. "GROSS ROYALTY INCOME" means, for the purpose of computing
Licensee's sublicensing royalties under Section 3.2(c) of this Agreement, all
royalty income actually received by Licensee from sublicensees of the Licensed
IP Rights.

        1.6. "LICENSED IP RIGHTS" means Patents, Know-How and IriSys
Improvements sublicensed and licensed under this Agreement.

        1.7. "IRISYS IMPROVEMENTS" means any modification or Process, Product or
both that is made by or on behalf of IriSys during the term of this Agreement,
provided such modification, if unlicensed, would infringe one or more claims of
the Patents. IriSys Improvements does not mean or include developments in
respect of components, materials, or processes useful in practicing the
inventions of Patents, but which do not themselves infringe the licensed claims
of Patents.

        1.8. "KNOW-HOW" means, as of the Effective Date, all business and
technical information of IriSys relating to the Products or the Process or both
that exists as of the Effective Date and that IriSys is free to disclose.

        1.9. "NET SALES" means the sales revenues, receipts and monies directly
or indirectly received by Licensee from sales of Products in the Territory to
Third Parties based on the Net Selling Price.

        1.10. "NET SELLING PRICE" means, for purposes of computing royalties
under Sections 3.2(a) and (b) of this Agreement, Licensee's invoice price for
Products, f.o.b. factory, on an arm's-length trade basis, after deduction of
regular and negotiated trade, Medicaid, governmental, cash, and quantity
discounts, rebates or allowances, transportation costs and costs associated with
returns but before deduction of any other items, including, but not limited to,
agents' commissions.



                                       2
<PAGE>   3
                                               CONFIDENTIAL TREATMENT REQUESTED


        1.11. "PATENTS" all patents issued as of the Effective Date, all patent
applications pending as of the Effective Date and all patents issuing in the
future on the patent application pending as of the Effective Date, as well as
patents issuing from later filed continuations, substitutions or divisionals
thereof, and any reissuances thereof or any other applications or patents to be
issued, that IriSys either owns, or as a licensee, has the right to sublicense
and that cover the Process, Products or both. Such patent rights are limited to
patent applications and patents in the Territory. The patents and patent
application sublicensed under this agreement include the following patents and
patent application of CNS:

               (a)     ***

               (b)     ***

               (c)     ***

               (d)     ***

               (e)     ***

               (f)     ***

               (g)     ***

        1.12. "PERSON" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity.

        1.13. "PROCESS" means the methods, specifications, materials, assays,
quality tests and other materials or information useful in preparation of the
Products.

        1.14. "PRODUCTS" means any pharmaceutical dosage, regardless of form,
strength or indication, comprising dextromethorphan and an oxidase inhibitor and
which, but for the licenses granted pursuant to this Agreement, would infringe
the Licensed IP Rights.

        1.15. "TERRITORY" means worldwide, including all countries, territories
and possessions.

        1.16. "THIRD PARTY" means a Person who is not IriSys, Licensee or an
Affiliate of IriSys or Licensee.

        1.17. USAGE OF CERTAIN TERMS. Words and phrases used in this Agreement,
which are not otherwise defined, will be interpreted in accordance with the
common usage for such term in the United States of America. Technical terms
unless otherwise defined will be interpreted consistent with their common usage
in the pharmaceutical or medical fields. Words in the singular include the
plural and vice versa, unless expressly or implicitly limited. Any references in
this Agreement to years, quarters, months, weeks or days refer to calendar
years, quarters, months, weeks or days, unless otherwise specified.



                                       3
<PAGE>   4
                                               CONFIDENTIAL TREATMENT REQUESTED

                              ARTICLE II - GRANTS

        2.1. GRANT. IriSys grants Licensee an exclusive, royalty-bearing
sublicense under the Patents and license under the Know-How and IriSys
Improvements to offer, make, have made, use, lease, export, import, sell and
resell Products, use the Process or both in the Territory. Licensee will have
the right to sublicense or assign the sublicenses and licenses granted under
this Section 2.1 (a) in its sole discretion and without IriSys' approval with
respect to any non-U.S. country of the Territory and (b) with IriSys approval,
in IriSys' sole discretion, with respect to the United States.

        2.2. RELEASE. Without any admission by either party, IriSys hereby
releases Licensee and all purchasers and users of Products acquired, directly or
indirectly, from Licensee from all claims, demands, and rights of action that
IriSys may have on account of any infringement or alleged infringement of any
claim of the Licensed IP Rights prior to the Effective Date.

        2.3. EFFORTS. During the term of this Agreement, Licensee will use
commercially reasonable efforts to expeditiously develop and commercialize the
Products. Attached to this Agreement as Schedule 2.3 is a development timetable
to develop and commercialize the Products including the submission of
appropriate NDAs which are tied to certain milestone payments. Licensee will use
all commercially reasonable efforts to adhere to the development timetable and
will provide IriSys with a written progress report describing its efforts to
adhere to the development timetable and the status of such efforts on a
quarterly basis.

        2.4. COPYRIGHT OR TRADEMARK. No license under any copyright or trademark
of IriSys is granted under this Agreement.

                          ARTICLE III - CONSIDERATION

        3.1. MILESTONE PAYMENTS. Licensee will pay to IriSys the following
milestone payments upon the accepted filing and approval of the NDA for each
application set forth below. Licensee, at its option, may make the first payment
due on completion of the first to occur of the following milestones in common
stock of Licensee, amounting to the number of shares calculated by dividing the
cash milestone amount by the average of the closing price of Licensee stock on
the ten trading days immediately preceding the occurrence of the milestone
event. All shares transferred to IriSys for payment of any milestone will be
free of all transfer fees and other costs.


                                       4
<PAGE>   5
                                               CONFIDENTIAL TREATMENT REQUESTED


<TABLE>
<CAPTION>
                    MILESTONE                        PAYMENT DUE
                    ---------                        -----------
<S>                                                  <C>
EMOTIONAL LABILITY
Accepted filing of NDA                                   $***
Approval of NDA                                          $***

NEUROPATHIC PAIN
Accepted filing of NDA                                   $***
Approval of NDA                                          $***

IF LICENSEE CHOOSES TO DEVELOP THE PRODUCT
FOR THE FOLLOWING INDICATIONS

CHRONIC COUGH
Accepted filing of NDA                                   $***
Approval of NDA                                          $***

DERMATITIS
Accepted filing of NDA                                   $***
Approval of NDA                                          $***

WEANING FROM NARCOTICS
Accepted filing of NDA                                   $***
Approval of NDA                                          $***
</TABLE>


        3.2. ROYALTIES. Subject to the limitations of Sections 3.2(a), 3.2(b)
and Section 16.1, throughout the term of this Agreement, Licensee will pay
IriSys a running royalty with respect to Net Sales Products sold in any country
where Licensee sells Products itself, through its Affiliates, or through
distributors. All royalties will be payable to IriSys on a quarterly basis
within 45 days after March 31, June 30, September 30 and December 31 during the
term of this Agreement. The royalties payable by Licensee to IriSys for any
particular quarter will be determined in accordance with the following
provisions.

               (a)    PATENT ROYALTIES.

                      (i)    EMOTIONAL LABILITY INDICATION.

                      With respect to any Products sold to Third Parties in each
country of the Territory that would, but for the license granted under this
Agreement infringe a valid, issued and unexpired claim of a Patent covering the
emotional lability indication, the Licensee will pay the Patent Royalties set
forth below in Section 3.2(b) from the date the first Product is sold in such
country until the date of expiration or judicially declared invalidity of the
last Patent claim covering such indication in such country.


                                       5
<PAGE>   6
                                               CONFIDENTIAL TREATMENT REQUESTED

                      (ii)   CHRONIC PAIN INDICATION.

                      With respect to any Products sold to Third Parties in each
country of the Territory that would, but for the license granted under this
Agreement infringe a valid, issued and unexpired claim of a Patent covering the
chronic pain indication, the Licensee will pay the Patent Royalties set forth
below in Section 3.2(b) from the date the first Product is sold in such country
until the date of expiration or judicially declared invalidity of the last
Patent claim covering such indication in such country

                      (iii)  CHRONIC COUGH INDICATION.

                      The parties acknowledge and agree that as of the date of
this Agreement, Licensee does not have a development plan for the chronic cough
indication. If the Licensee chooses to develop a product based on the Licensed
IP Rights, then with respect to any Products sold to Third Parties in each
country of the Territory that would, but for the license granted under this
Agreement infringe a valid, issued and unexpired claim of a Patent covering the
chronic cough indication, the Licensee will pay the Patent Royalties set forth
below in Section 3.2(b) from the date the first Product is sold in such country
until the date of expiration or judicially declared invalidity of the last
Patent claim covering such indication in such country.

                      (iv)   DERMATITIS INDICATION.

                      The parties acknowledge and agree that as of the date of
this Agreement, Licensee does not have a development plan for the dermatitis
indication. If the Licensee chooses to develop a product based on the Licensed
IP Rights, then with respect to any Products sold to Third Parties in each
country of the Territory that would, but for the license granted under this
Agreement infringe a valid, issued and unexpired claim of a Patent covering the
chronic cough indication, the Licensee will pay the Patent Royalties set forth
below in Section 3.2(b) from the date the first Product is sold in such country
until the date of expiration or judicially declared invalidity of the last
Patent claim covering such indication in such country.

                      (v)  PRODUCTS FOR WEANING PATIENTS FROM NARCOTICS AND
                           ANTI-DEPRESSANTS.

                      The parties acknowledge and agree that as of the date of
this Agreement, Licensee does not have a development plan for the narcotics and
antidepressant weaning indication. If the Licensee chooses to develop a product
based on the Licensed IP Rights, then with respect to any Products sold to Third
Parties in each country of the Territory that would, but for the license granted
under this Agreement infringe a valid, issued and unexpired claim of a Patent
covering the chronic cough indication, the Licensee will pay the Patent
Royalties set forth below in Section 3.2(b) from the date the first Product is
sold in such country until the date of expiration or judicially declared
invalidity of the last Patent claim covering such indication in such country.



                                       6
<PAGE>   7
                                               CONFIDENTIAL TREATMENT REQUESTED


                      (vi)   GENERIC COMPETITION.

                      Notwithstanding the other provisions of Section 3.2,
wherever and whenever there is a governmentally approved generic product or
products with the same active ingredient(s) which competes with the Product, but
which does not infringe any Patent licensed under this Agreement, Licensee will
not be obligated during any such time, in any such country, to pay the Patent
Royalties with respect to Net Sales of the Product or Products suffering such
generic competition if the market share of the non-infringing generic
competition exceeds ***% as measured by an appropriate third-party market
assessment service, for example IMS data. Market share will be determined on
dollar sales (i.e. the combined retail, wholesale, hospital, government, and HMO
distribution channels) as reported in third-party market assessments. Further,
market share will be determined on a rolling quarterly basis and each quarter
will be calculated separately after the month closes and third-party data become
available. Royalty payments will be suspended for each subsequent month that the
generic market share, determined from the previous rolling quarter, exceeds
***%. Royalty payments will be reinstated, but not retroactive, for each
subsequent month that the generic market share, determined by the previous
rolling quarter, falls to ***% or below.

                      For clarification, the determination of generic
competition and generic market share shall be determined on an individual
Product basis if possible and a combined Product basis in all other
circumstances. Since the parties can not predict at this time if the
formulations and dosage strengths for each Product for each indication will be
different, generic competition from one Product and indication that adversely
affects any other Product for a separate indication will be considered generic
competition to both Products. In such cases, the two (or more) Products and
indications will be combined for the purposes of calculating market share. If
the combined Products and indications market share falls below ***% then the
obligation of the Licensee to pay royalties shall be suspended for all affected
Products until the combined market share exceeds ***% as outlined in the
preceding paragraph.

               (b) ROYALTIES RATES. The Patent Royalty rates will be as set
forth below:


<TABLE>
<CAPTION>
            ANNUAL NET SALES                  PATENT ROYALTY RATE
            ----------------                  -------------------
<S>                                           <C>
Up to $150,000,000                                    ***%
$150,000,001 - $300,000,000                           ***%
$300,000,001 and above                                ***%
</TABLE>


               (c) LICENSEE'S SUBLICENSING ROYALTIES. In consideration for the
right to sublicense the Licensed IP Rights licensed and sublicensed to Licensee
under Section 2.1, Licensee will pay to IriSys a sum equal to ***% of its Gross
Royalty Income after such royalties have been actually received therefor from
each sublicensee by Licensee. Royalties due under this Section will be payable
upon a quarterly basis as set forth in this Section 3.2.


                                       7
<PAGE>   8
                                               CONFIDENTIAL TREATMENT REQUESTED

        3.3. MINIMUM SALES THRESHOLD.

               (a) SALES THRESHOLD. In each calendar year of the Agreement
beginning in the second year after the first marketing of a Product for a
particular indication, Licensee will be required to reach a yearly minimum sales
level for each indication for which a Product is marketed in the United States
as set forth below:

<TABLE>
<CAPTION>
                                 MINIMUM SALES
                                 DURING PATENT
         INDICATION                 PERIOD
         ----------              -------------
<S>                              <C>
Emotional Lability                    $***
Neuropathic Pain                      $***

If Licensee Chooses To
Develop and Market

Chronic Cough                         $***
Dermatitis                            $***
Weaning From Narcotics                $***
</TABLE>


        Licensee will be required to reach ***% of the yearly minimum sales
level beginning in the second year after first marketing of a Product for a
particular indication. Licensee will be required to reach ***% of the yearly
minimum sales level beginning in the third year after first marketing of a
Product for a particular indication and for each year thereafter until
termination of the agreement. The minimum sales levels for each indication for
which a product is marketed are described in the table above.

        Any excess sales for an indication or indications will be applied to any
deficit sales for any other indication or indications in any same year.

               (b) EFFECT OF FAILURE TO MEET THRESHOLD SALES. If Licensee fails
to achieve the sales threshold set forth in Section 3.3(a) in any single year,
IriSys will not be entitled to terminate the licenses granted under this
Agreement pursuant to Article XVI. IriSys' exclusive remedy for Licensee's
failure to achieve the sales threshold set forth in Section 3.3(a) in any single
year will be that the licenses granted under this Agreement will become
non-exclusive 90 days after the date of a notice by IriSys to Licensee invoking
such remedy under this Section. Actual sales will be measured against the
Threshold Sales levels only after the close of a complete calendar year and
sales data from the last month of the year is determined. The default period
will only commence after the close of the calendar year and sales are reported
to IriSys in the normal course of business following the last month of the
calendar year and after IriSys notifies Avanir that a default exists. Avanir
will have the option of curing the failure to meet Threshold Sales by paying the
additional monies necessary that would equal the minimum royalty amount due for
any and all Products and indications at any time prior to expiration of the 90
day cure period. Minimum royalty payments would be calculated as the applicable
royalty rate set forth in Section 3.2(b) times the sales threshold set forth in
Section 3.3(a).



                                       8
<PAGE>   9
                                               CONFIDENTIAL TREATMENT REQUESTED

        3.4. PAYMENT TERMS. To the extent possible under applicable law,
royalties and other payments due under this Agreement will be paid in United
States Dollars ($US). Subject to Section 12.2, as to sales occurring in a
currency other than $US, the amount due will first be calculated in the currency
in which sale occurred and then converted to $US at the closing selling rate for
$US, as quoted in the Wall Street Journal for the last business day of the
fiscal period for which royalty payments are due. Licensee will pay all amounts
owed to IriSys by wire transfer unless otherwise agreed upon in writing between
the parties.

        3.5. INTEREST. Licensee will pay IriSys interest at the rate of 10% per
annum on any payment which is 30 days or more past due. This provision will
survive the termination of this Agreement.

        3.6. ACCRUAL OF ROYALTIES. For the purpose of determining the dates when
earned royalties accrue pursuant to this Agreement, Products will be considered
to be sold upon the earliest to occur of (a) delivery by Licensee of a billing
statement to a Third Party; (b) delivery of the Product by Licensee or (c)
Licensee's receipt of payment for the Product. No royalties will be due to
IriSys for any Products (i) that are sold or delivered by Licensee as
replacements for defective Products, (ii) that are returned by purchasers for
credit, (iii) as to which full credit is granted customers due to defect in the
Products or (iv) that are lost or damaged in transit for which Licensee is not
reimbursed. If Licensee has paid IriSys royalties on the sale of any Product
during a calendar quarter and such Product is replaced, returned or given
credit, lost or damaged as provided in clauses (i)-(iv) in above, Licensee will
be entitled to a credit for such royalties paid against future royalties due for
the quarter in which such Product is replaced, returned or given credit, lost or
damaged.

                        ARTICLE IV - RECORDS AND REPORTS

        4.1. RECORDS. Licensee will keep accurate and sufficient records in
accordance with generally accepted accounting principles to determine amounts
owed to IriSys under this Agreement. Licensee will deliver a written royalty
report detailing the basis for Licensee's royalty computations, along with the
royalty payment then due, no later than 45 days following the end of each
calendar quarter. If no royalty is due for such quarter, the royalty report will
so state.

        4.2. RETENTION AND INSPECTION. Licensee will maintain records necessary
for the computation of royalties payable by Licensee under this Agreement for
five years following each quarter in which a royalty report is due, including
the period for the last royalty report due upon termination of this Agreement.
Upon reasonable notice to Licensee, such records will be available for
inspection by an independent accounting firm selected by IriSys, and reasonably
acceptable to Licensee, during Licensee's regular business hours. Such records
will only be used by the independent accounting firm to determine the accuracy
of the royalties paid and reports submitted under this Agreement. IriSys will
bear the expenses of the audit; provided that Licensee will reimburse IriSys for
such expenses in the event the audit determines that Licensee has underpaid
royalties to IriSys by 4% or more. Licensee will cooperate in good faith with
any audit pursuant to this provision.



                                       9
<PAGE>   10
                                               CONFIDENTIAL TREATMENT REQUESTED

                          ARTICLE V - CONFIDENTIALITY

        5.1. NON-DISCLOSURE AND USE. During the term of this Agreement and for a
period of five years after termination of this Agreement, each party will
maintain Confidential Information in confidence using the same degree of care as
such party takes to safeguard its own proprietary information of the same
general nature, but in no event less than a reasonable degree of care. Each
party will use any Confidential Information obtained directly or indirectly from
the other party in the course of communications and contacts related to this
Agreement solely for purposes licensed under this Agreement.

        5.2. PERMITTED DISCLOSURE. Each party may disclose Confidential
Information as reasonably necessary in order to comply with (a) the federal
securities laws and the rules and regulations of any applicable stock exchange
governing body and (b) the requirements of government regulatory agencies in
order to market or continue to market Products. Each party may, upon prior
written consent of the other party, which will not be unreasonably withheld,
disclose Confidential Information pertaining to the Products or Processes, or
both, to Third Parties in the regular course of business, including any
sublicensee, provided such other Persons agree in writing to abide by
obligations of confidentiality no less stringent than those contained in this
Agreement.

        5.3. EXCEPTIONS. The obligations of confidentiality will not apply to
any information which:

               (a) was known prior to the receipt of such information, as
evidenced by written records or other reliable evidence, and such information
was not directly or indirectly derived from the other party or its Affiliates.

               (b) is or becomes known to the general public through no fault of
Licensee;

               (c) is received without restriction on its disclosure or in good
faith from a Third Party purporting to have the right to transmit the same;

               (d) is independently developed by employees who have had no
access to Confidential Information; and/or

               (e) is required to be disclosed to government authorities or
courts as a result of operation of law, regulation, or court order, provided
however, immediate written notice of any such request by governmental
authorities or courts must be provided to the disclosing party, all reasonable
steps must be taken by Licensee to restrict further disclosure of the affected
information by such authorities or court and information so disclosed will not
be otherwise removed from these confidentiality obligations.


                                       10
<PAGE>   11
                                               CONFIDENTIAL TREATMENT REQUESTED

                      ARTICLE VI - IRISYS REPRESENTATIONS,
                        WARRANTIES AND INDEMNIFICATIONS

        6.1. AUTHORITY. IriSys represents and warrants that it owns or has the
necessary authority to grant the licenses specified in Article II, including
without limitation, the sublicense to the Patents. IriSys has obtained any and
all third party consents or governmental approvals required to grant the
licenses and sublicenses under this Agreement.

        6.2. EXCLUSIVE PATENT LICENSE AGREEMENT. IriSys represents and warrants
that the Exclusive Patent License Agreement between IriSys and CNS, as amended,
is in full force and effect, and IriSys represents and warrants that there has
been no breach, event of default or waiver of a material right by either party
under such agreement, as amended, except as set forth in the Amendment.

        6.3. DISCLAIMER. IRISYS MAKES NO REPRESENTATION OR WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, NOR IS THERE ANY OTHER
EXPRESSED OR IMPLIED WARRANTIES EXCEPT THOSE EXPRESSLY STATED IN THIS ARTICLE.
LICENSEE'S REMEDIES WITH RESPECT TO IRISYS' REPRESENTATIONS AND WARRANTIES ARE
LIMITED TO THOSE EXPRESSLY STATED IN THIS AGREEMENT. LICENSEE IS SOLELY
RESPONSIBLE FOR ITS ACTIVITIES CARRIED OUT UNDER THE LICENSES GRANTED PURSUANT
TO THIS AGREEMENT.

                     ARTICLE VII - LICENSEE REPRESENTATIONS,
                        WARRANTIES AND INDEMNIFICATIONS

        7.1. AUTHORITY. Licensee warrants to IriSys that Licensee has the
authority to enter into this Agreement.

        7.2. ROYALTY REPORTS. The royalty reports and payments provided by
Licensee to IriSys under Section 4.1 will be provided in a timely manner and
will be accurate in all material respects.

        7.3. DAMAGES LIMITS. Licensee represents, warrants and covenants that
Licensee will not claim against IriSys or any IriSys employee, agent, director
or Affiliate any of the claims for damages referenced in Section 6.4 and will
obligate any Licensee Affiliate, sublicensee, agent, employee, contractor or
insurer not to bring such damage claims against IriSys.

                 ARTICLE VIII - PATENT STATUS AND IMPROVEMENTS

        8.1. PROSECUTION AND MAINTENANCE. Licensee will prosecute and maintain
any Patents covered by this Agreement, and will do so on IriSys' or CNS' behalf
and bear all necessary costs therefor. If Licensee elects not to continue to
fund prosecution of any patent application or to maintain any Patent required to
be prosecuted or maintained by IriSys, Licensee will promptly notify IriSys in
writing and IriSys may continue patent prosecution or maintain any such Patent
at IriSys' cost. IriSys agrees to cooperate and obtain the cooperation of CNS in
any manner reasonably necessary to facilitate the maintenance and prosecution of
any Patent by Licensee under this Section 8.1.


                                       11
<PAGE>   12
                                               CONFIDENTIAL TREATMENT REQUESTED

        8.2. IRISYS IMPROVEMENTS. IriSys will continue to own any IriSys
Improvements, provided that such IriSys Improvements will be included within the
scope of the license granted under Section 2.1. If any IriSys Improvement is
determined to be patentable, the parties will consult with each other as to
whether and where to apply for Patents on such IriSys Improvements, but any such
costs and expenses will be paid by Licensee. If Licensee determines not to pay
for the costs of a patent application on any IriSys Improvement, IriSys will
have the right, but not the obligation, to apply for Patents on any such IriSys
Improvement.

        8.3. LICENSEE IMPROVEMENTS. Licensee will own and have sole rights with
respect to any Licensee Improvements. Licensee will have the sole right to apply
for Patents on Licensee Improvements at Licensee's cost and expense.

                           ARTICLE IX - INFRINGEMENT

        9.1. NOTICE. Each party will notify the other party in writing of any
conflicting uses of or any applications or registrations for, the technology
covered by the grants made in Article II, or of any acts of infringement or acts
of unfair competition involving the Licensed IP Rights, promptly after such
party has knowledge thereof or such matters are brought to such party's
attention. Any notice of infringement or unfair competition will provide full
details, including the name of the infringer and all information the notifying
party possesses to substantiate the alleged infringement or unfair competition.
The parties will meet to discuss the appropriate course of action, and may
collaborate in pursuing such course of action.

        9.2. INFRINGEMENTS BY THIRD PARTIES. If the parties do not otherwise
agree on a course of action, Licensee will have the right to pursue and control
the prosecution, prevention or termination of any infringement of the Patents or
exercise of the other Licensed IP Rights during the term of this Agreement.
Licensee may request IriSys in writing to take reasonable steps to assist
Licensee to license such Third Party under the infringed claim(s) of the Patents
or exercise of the other Licensed IP Rights. If such infringer refuses a license
or a license is not appropriate, Licensee may file an appropriate action for
infringement of the infringed claim(s) in its own name, or in IriSys' name if
necessary. If Licensee determines that it is necessary or desirable for IriSys
to join any such suit or action, IriSys will do so at Licensee's expense. In any
event, if an action for infringement of any claim(s) in the Patents or exercise
of the other Licensed IP Rights is filed, Licensee will have the right to
control such litigation and any sums recovered by Licensee will be owned by
Licensee and treated as Net Sales in the year actually received. If Licensee
chooses not to pursue the prosecution or termination of any infringement,
Licensee will promptly notify IriSys to that effect in writing and IriSys will
have the option to pursue the same at its own expense and all sums recovered by
IriSys will be owned by IriSys.

        9.3. LIMITATIONS ON IRISYS' SECTION 9.2 COSTS. It is agreed that IriSys'
total financial responsibility for pursuing any infringement action described in
Section 9.2 will be limited to a total composite sum not exceeding ***% of the
total payments actually paid to IriSys by Licensee under this Agreement. The
above limitation on IriSys' financial responsibility will not apply to (a) any
payments owed by Licensee under this Agreement and subject to offset by Licensee
pursuant to Section 9.4 and (b) any other amounts owed by IriSys to Licensee
described in Section 9.4.


                                       12
<PAGE>   13
                                               CONFIDENTIAL TREATMENT REQUESTED


        9.4. THIRD PARTY INFRINGEMENT CLAIMS AGAINST PATENTS AND EXERCISE OF
OTHER LICENSED IP RIGHTS.

               (a) In the event that any Third Party initiates any legal or
administrative proceeding challenging the validity, scope or enforceability of
all Patent(s) claiming the Products sold on the date of such a challenge in any
particular country of the Territory, then the Licensee's royalty obligation in
such country will be amended during such challenge period such that *** percent
(***%) of Net Sales in such country will continue to be paid by Licensee to
IriSys in accordance with the terms of this Agreement and the remaining
applicable Patent Royalty in such country will be paid ("Escrow Payment") into a
separate account under the control and custody of an independent escrow agent
mutually acceptable to Licensee and IriSys. If the validity and enforceability
of (i) any individual Patent claiming the Products sold in such particular
country is upheld by a court or other legal or administrative tribunal from
which no appeal is or can be taken, then Licensee and IriSys will instruct the
escrow agent to pay the Escrow Payment plus all interest accruing to such Escrow
Payment to IriSys, or (ii) all Patents claiming the Products sold in such
particular country are not upheld by a court or other legal or administrative
tribunal from which no appeal is or can be taken, then Licensee and IriSys will
instruct the escrow agent to pay the Escrow Payment plus all interest accruing
to such Escrow Payment to Licensee less the costs incurred in instructing the
escrow agent concerned. In the event that the validity and enforceability of all
the Patent(s) claiming the Products sold in a particular country are not upheld
by such court or other legal or administrative tribunal, then Licensee will
retain the license granted herein in such country but the future royalty for
such country to be paid by Licensee to IriSys will be limited to the Non-Patent
Royalty for the remaining term of this Agreement.

               (b) If, during the term of this Agreement, Licensee deems it
necessary to seek, exercise or execute a license from any Third Party in order
to avoid infringement during the exercise of the license herein granted, ***
percent (***%) of any royalties or other fees paid to such Third Party under
such license ("Third Party Fee") may be deducted from royalties otherwise due to
IriSys under this Agreement; provided that in no event will the Patent Royalty
paid to IriSys by Licensee be reduced below *** percent (***%) of what would
otherwise have been paid by Licensee in the absence of such a Third Party
license, and provided further that Licensee will be entitled to carry forward
for the remainder of this Agreement any excess deduction to be fully credited
against future Licensee royalty payments to IriSys until the full deduction of
the Third Party Fee has been effected. Prior to the commencement of Licensee
crediting the Third Party Fee against royalty payments made by Licensee to
IriSys, Licensee will notify IriSys of its intention to seek or exercise or
execute a license with a Third Party. In the event that IriSys believes that
such a Third Party license is not required to avoid infringement of Third Party
patents, then IriSys will so notify Licensee in writing, and the parties will
promptly submit such issue thereafter to a mutually acceptable Third Party who
has suitable expertise on the topic in question ("Unaffiliated Expert"), such
Unaffiliated Expert to be chosen by Licensee and IriSys within ten business days
after IriSys' notification. Licensee and IriSys will request resolution within
thirty days after the date of such submission to such Unaffiliated Expert, and
Licensee will be entitled to deduct the Third Party Fee during the period of
time that the Unaffiliated Expert is making a resolution of the matter. The
resolution of the Unaffiliated Expert will be binding on both Licensee and
IriSys. In the event that the Unaffiliated Expert resolves that such a Third
Party license is necessary to avoid infringement of Third Party patents,



                                       13
<PAGE>   14
                                               CONFIDENTIAL TREATMENT REQUESTED

then the costs of engaging such Unaffiliated Expert will be borne by IriSys. In
the event that the Unaffiliated Expert resolves that such a Third Party license
is not necessary to avoid infringement of Third Party patents, then the costs of
engaging such Unaffiliated Expert will be borne by Licensee, any Third Party Fee
pertaining to the Third Party license in question and credited against royalty
payments made by Licensee to IriSys will be refunded in full to IriSys and no
further deductions of the Third Party Fee will be made by Licensee in respect of
such Third Party license.

               (c) In the event of the institution of any suit by a Third Party
against IriSys, Licensee or its Affiliates, its or their permitted sublicensees
or distributors for patent infringement involving the manufacture, use, sale,
distribution or marketing of Products anywhere in the Territory, the party sued
will promptly notify the other party in writing. Licensee will have the right,
but not the obligation, to defend such suit at its own expense. IriSys and
Licensee will provide reasonable assistance to one another and reasonably
cooperate in any such litigation at the other's request without expense to the
requesting party.

               (d) The parties will keep one another informed of the status of
and of their respective activities regarding any litigation or settlement
thereof concerning Products, provided however that no settlement or consent
judgment or other voluntary final disposition of any suit defended or action
brought by a party may be entered into without the consent of the other party if
such settlement would require the other party to be subject to an injunction or
to make a monetary payment or would otherwise adversely affect the other party's
rights under this Agreement or the validity, scope or enforceability of the
Patents.

                          ARTICLE X - RISK ALLOCATIONS

        10.1. MUTUAL LIMIT OF LIABILITY. NEITHER PARTY WILL BE LIABLE TO THE
OTHER PARTY IN CONTRACT, IN TORT (INCLUDING NEGLIGENCE), UNDER ANY WARRANTY, OR
OTHERWISE, FOR ANY SPECIAL, INCIDENTAL, INDIRECT, OR CONSEQUENTIAL DAMAGE
ARISING OUT OF THE PERFORMANCE OF THIS AGREEMENT AND/OR THE PRACTICE OF IRISYS'
KNOW-HOW AND/OR THE PATENTS, INCLUDING, BUT NOT LIMITED TO, LOSS OF USE,
EXPENSES INVOLVING COSTS OF CAPITAL, LOSS OF PROFITS OR REVENUES OR THE LOSS OF
USE THEREOF.

        10.2. MUTUAL INDEMNITY. Each party will defend, indemnify and save
harmless the other party from any and all claims, loss, damage or expense by
reason of any (a) accident, injuries, damages or injury to any person or
property, including property of IriSys or Licensee, that may occur in connection
with or related to the performance of this Agreement, and which is caused in
whole or in part by the negligent act or omission of such indemnifying party or
any product defect design or (b) violations of any federal, state or local laws,
regulations, rules and ordinances which result or arise from the evaluation,
testing, analysis, transportation, storage, disposal or any other handling or
use by each such party or any subcontractor of each such party. This Section
10.2 will not include injuries or damage caused solely and directly by the
negligent act or omission of the indemnified party. If injury or damage is
caused by the joint negligence of IriSys and Licensee, each party will share the
loss arising from such injuries or damage in proportion with its percentage
amount of negligence.



                                       14
<PAGE>   15
                                               CONFIDENTIAL TREATMENT REQUESTED

                            ARTICLE XI - SUBLICENSES

        11.1. SUBLICENSES. Any sublicense and/or assignment of the IriSys
Know-How license under Article II will include a confidentiality provision no
less favorable to IriSys than that of Article V.

        11.2. SURVIVAL OF SUBLICENSES. In the event of termination of this
Agreement, no subsisting sublicense granted therefore by Licensee pursuant to
this Agreement will thereupon terminate, unless such effect is desired by the
sublicensee, but will instead become a direct license as between IriSys and the
party sublicensed. Licensee will include this survival provision in substantial
form and legal effect, in any sublicense agreement between itself and any
sublicensee.

                        ARTICLE XII - TAXES AND PAYMENTS

        12.1. U.S. TAXES. Licensee will pay and bear the expense of local, state
and/or federal government license, sales and use, property and ad valorem taxes
which may be imposed or assessed on it with respect to payments made by Licensee
to IriSys under this Agreement. To the extent any such taxes are imposed by
non-U.S. governments and can be taken as a credit against IriSys' U.S. federal
income taxes, Licensee will receive a credit in such amount against its
liability pursuant to this Agreement.

        12.2. FOREIGN TAXES AND PAYMENTS. Payments under this Agreement are to
be made directly from Licensee to IriSys and will not be subject to imposition
of a foreign withholding tax. If at any time conditions or legal restrictions
exist which conditions or restrictions prevent the prompt remittance of the
royalties due under this Agreement, or if conversion into U.S. dollars pursuant
to the foregoing cannot be effectuated, the parties will cooperate fully with
each other and make reasonable efforts to permit conversion and remittance; if
such efforts will be unsuccessful, Licensee or its Affiliates or sublicensees
will then, as long as such conditions or restrictions will exist in such
country, pay the royalties in the currency of such country to such person,
company or bank in said country, as will be nominated by IriSys.

                        ARTICLE XIII - KNOW-HOW TRANSFER

        13.1. TRANSFER. IriSys will make available to Licensee Know-How in its
possession regarding the Process, Products or IriSys Improvements and instruct
Licensee's representatives in procedures appropriate to the Process to the best
of its ability upon the request of Licensee.

             ARTICLE XIV - GOVERNMENT REGISTRATIONS AND COMPLIANCE

        14.1. COMPLIANCE WITH LAWS. Licensee will comply with and be bound by
the terms of duly issued regulations and laws of the U.S. restricting or
otherwise affecting the use by Licensee of the Licensed IP Rights and
Confidential Information originating in the U.S., whether those regulations and
laws are presently in effect or may become effective at any time during the term
of this Agreement.


                                       15
<PAGE>   16
                                               CONFIDENTIAL TREATMENT REQUESTED

        14.2. FOREIGN LICENSE REGISTRATIONS. Licensee will, from time to time,
when necessary or desirable under local laws execute such documents in generally
approved form, and do such lawful acts as may be required to confirm, perfect,
and register at Licensee's expense the licenses granted in this Agreement. Upon
termination or cancellation for any reason by either party of the licenses
granted in this Agreement, Licensee hereby empowers IriSys, or whomever IriSys
may appoint, to take all necessary steps to cancel any recordation of licenses
granted in this Agreement and Licensee will, at IriSys' request, do all such
lawful acts as may be required to cancel any such recordation.

                              ARTICLE XV - NOTICES

        15.1. NOTICES. Any notices, reports and communications under this
Agreement will be in writing and sent via personal delivery or facsimile and
confirmed in a document delivered by first-class mail or certified mail
addressed as follows:

               If to IriSys:    IriSys Research and Development, LLC
                                6190 Cornerstone Court East, Suite 106
                                San Diego, California 92121
                                Attn:  Chief Operating Officer
                                Facsimile:  (858) 623-1525

               If to Licensee:  Avanir Pharmaceuticals
                                9393 Towne Centre Drive, Suite 200
                                San Diego, California 92121
                                Attn:  Vice President, Commercial Development
                                Facsimile:  (858) 455-8059


        Address for receipt of notice may be changed by either party by giving
the other party at least 30 days prior written notice of such change.

        15.2. EFFECT. The notices specified in Section 15.1 will be effective
upon the first to occur of (a) receipt of the notice via personal delivery or a
complete facsimile transmission of such notice and (b) five days after the date
when a notice, duly addressed to the home office of the addressed party, is
deposited in the United States mails by the other party. Until written notice of
a change of address has been given, the addresses given in Section 15.1 will be
considered the home office of the parties.

                           ARTICLE XVI - TERMINATION

        16.1. TERM. The term of this Agreement will commence on the Effective
Date and will expire on the first anniversary of the date of expiration of U.S.
Patent Number 5,863,927. Upon the expiration of this Agreement, thereafter
Licensee will have a fully paid up, royalty-free perpetual license to the
Patents, Know-How and IriSys Improvements.


                                       16
<PAGE>   17
                                               CONFIDENTIAL TREATMENT REQUESTED


        16.2. TERMINATION. Upon the occurrence of any of the following events of
default, after giving notice to the defaulting party and following the
completion of the cure period set forth below, the non-defaulting party may
terminate this Agreement, in whole or in part, without prejudice to any legal
remedies available to such party:

               (a) the failure by either party to substantially perform or
comply with any material provision of this Agreement (other than Licensee's
failure to meet minimum sales thresholds which is addressed in Section 3.3),
other than as a result of the other party's failure to substantially perform or
comply with the material provisions hereof; or

               (b) the filing of a petition or application under any bankruptcy
act by either party, or the filing of such a petition or application by any
Third Party on behalf of either party where such petition or application is not
dismissed, bonded or otherwise favorably resolved within 60 days.

Upon receipt of a notice of default, the defaulting party will have a period of
60 days in which to cure such default. If the default is not cured within such
period, the non-defaulting party may terminate this Agreement in whole or in
part immediately upon written notice to the other party. Waiver by the
non-breaching party of its right to terminate this Agreement in whole or in part
due to any particular breach of any provisions thereof will not be construed as
a continuing waiver. Following termination of this Agreement in whole under
Section 16.2, Licensee will not have the right to continue to use Know-How or
the IriSys Improvements and all rights to the Licensed IP Rights will revert to
IriSys.

        16.3. OPTIONAL TERMINATION BY LICENSEE. Licensee may terminate this
Agreement at any time, in whole or in part or with respect to all or any single
country in the Territory, by (a) giving IriSys at least 60 days prior written
notice to such effect and (b) making payment to IriSys of any milestone payments
or royalty payments set forth in Section 3.1 or Section 3.2, that have been
incurred or earned in the portion of the Territory subject to such termination
as of the date of such termination. Licensee need not specify any reason for
such termination. In the event of a termination by Licensee pursuant to this
Section 16.3(a), all rights to the terminated portion of the Licensed IP Rights
will revert to IriSys. Licensee will take such actions as may be necessary to
transfer or assign product registrations, if any, to IriSys, and Licensee will
grant a license to IriSys to use Licensee's information, know-how, and data on
Products in those portions of the Territory subject to such termination subject
to the conditions in Section 16.3(a).

               (a) In the event of termination of the License by the Licensee,
IriSys will pay a royalty to the Licensee for all out-of-pocket third-party
expenses directly related to Phase II and Phase III efficacy studies, or other
studies required by the Food and Drug Administration, and used to obtain a
Product registration. Such royalty payments shall continue until all of
Licensee's out-of-pocket third party expenses directly related to Phase II and
Phase III efficacy studies, or other studies required by the Food and Drug
Administration, and used to obtain a Product registration are recovered by
Licensee. Licensee's expenses not eligible for recovery are those which are not
directly related to the above defined out-of-pocket third-party expenses
directly related to Phase II and Phase III studies used to obtain a Product
registration, including but not limited to Licensee's overhead costs and
personnel expenses.


                                       17
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                                               CONFIDENTIAL TREATMENT REQUESTED


                    (i)      ***.

                    (ii)     ***.

                    (iii)    ***.

        16.4 SPECIAL TERMINATION. IriSys or Licensee, whoever is the aggrieved
party, may also terminate this Agreement in whole or part as to any Patent,
Know-How, Irisys Improvement, country or indication by written notice to the
other upon the occurrence of any one of the following events: (a) the term of
payments are nullified or modified by any law, governmental decree, order or
regulation; (b) any of the provisions of this Agreement are declared
unenforceable by any governmental authority; or (c) a court determination that
one or more of the material licensed claims of the Patents are invalid.

        16.5   CONSEQUENCES OF TERMINATION.

               (b) REVERSION OF LICENSED IP RIGHTS. Upon termination of this
Agreement in whole or in part as to any country in the Territory, all rights to
the terminated portion of the Licensed IP Rights herein will immediately revert
back to IriSys, except as described in Section 16.5(b), and Licensee will
provide IriSys with all proprietary data pertaining to the subject termination
within 60 days of the termination date, except as described in Section 16.3(a).

               (c) SALE OF PRODUCTS. Licensee will have a reasonable time, not
to exceed 90 days after the date of termination, in which to (i) complete work
in progress on the Products and to sell such Products, (ii) complete the
manufacture and sale of Products for which non-cancelable commitments have been
made, and (iii) dispose of any existing inventory of Products in the normal
course of business.

               (d) ACCRUED OBLIGATIONS. No termination of this Agreement will
affect obligations accrued prior to the date of termination, such as payment of
royalties due on Products made or sold prior to such date. The rights and
obligations of Articles V-VII and Section 9.4 will survive termination of this
Agreement.

               (e) IRISYS BANKRUPTCY. Notwithstanding the bankruptcy of IriSys,
or any other provision of this Agreement, or the impairment of performance by
IriSys of its obligations under this Agreement as a result of bankruptcy of
IriSys, Licensee will be entitled to retain the licenses granted in the
Agreement, subject to IriSys' rights to terminate this Agreement for reasons
other than bankruptcy or insolvency as expressly provided in this Agreement.

                           ARTICLE XVII - ARBITRATION

        17.1. ARBITRATION, VENUE AND JURISDICTION. Any controversy arising out
of, or relating to, this Agreement or any modification or extension thereof,
including any claim for damages or rescission, or both, will be finally settled
exclusively by binding arbitration in San Diego, California (or if applicable
law requires some other forum, then such other forum) in accordance with the
Commercial Arbitration Rules then in effect of the American Arbitration
Association. The parties consent to the jurisdiction of the courts of the State
of California, and of the United States District Court for the Southern District
of California for all purposes in



                                       18
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                                               CONFIDENTIAL TREATMENT REQUESTED

connection with arbitration. The parties consent that any process or notice of
motion or other application to either of such courts, and any paper in
connection with arbitration, may be served by certified mail, return receipt
requested or by personal service in accordance with the provisions of Article 15
or in such other manner as may be permissible under the rules of the applicable
court or arbitration tribunal, provided a reasonable time for appearance is
allowed.

        17.2. ARBITRATORS. Selection of the arbitrators will be in accordance
with the rules specified in Section 17.1; provided, however, that in all cases
an odd number of arbitrators will be chosen which shall exceed one. The language
of arbitration and of any decision or award will be English. The award rendered
by the arbitrators will be based upon a majority decision.

        17.3. STATUTE OF LIMITATIONS. The parties further agree that arbitration
proceedings must be requested within four years after the claimed breach
occurred, and that the failure to request arbitration proceedings within such
period will constitute an absolute bar to the institution of any proceedings and
a waiver of all claims.

        17.4. BINDING EFFECT. The parties still further agree that judgment upon
the award rendered by the Arbitrator(s) will be binding on the parties and may
be entered in either of the Courts specified in Section 17.1.

                          ARTICLE XVIII -MISCELLANEOUS

        18.1. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties relating to the subject matter of this Agreement and
supersedes all prior discussions between the parties. There are no terms,
obligations, covenants, express or implied warranties, representations,
statements or conditions other than those set forth in this Agreement. No
variation or modification of this Agreement or waiver of any of its terms or
provisions will be valid unless in writing and signed by both parties.

        18.2. SEVERABILITY. Should any part of this Agreement for any reason be
declared invalid or unenforceable, subject to the parties right to terminate the
Agreement pursuant to Section 16.4, such decision will not affect the validity
or enforceability of any remaining portion, which remaining portion will remain
in force and effect as if the Agreement had been executed with the invalid or
unenforceable portion thereof eliminated. The parties hereby declare their
intention that they would have executed the remaining portion of this Agreement
without including therein any such part or portion which may, for any reason, be
hereafter declared invalid or unenforceable.

        18.3. COMPLIANCE. Each party will comply with any applicable laws and
regulations, including, but not limited to, applicable local, regional or
national safety and environmental legislation.

        18.4. CHOICE OF LAW. This Agreement is to be construed by and
interpreted in accordance with the laws of California, without regard to any
conflict of law principles. All questions concerning the construction or effect
of Patent applications and Patents will be decided



                                       19
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                                               CONFIDENTIAL TREATMENT REQUESTED

in accordance with the laws of the country in which the particular Patent
application or Patent concerned has been filed or granted, as the case may be.

        18.5. INDEPENDENT CONTRACTORS. In the performance of this Agreement,
IriSys and Licensee are independent contractors. Neither party nor any of its
employees or agents will be considered an employee or agent of the other party,
nor will any partnership, co-venture or joint-employer relationship be created
or implied by virtue of this Agreement or of its performance. The parties intend
that this Agreement will not create a partnership for tax purposes.

        18.6. ASSIGNMENT. This Agreement may not be assigned by Licensee without
the express written consent of IriSys, which consent will not be unreasonably
withheld, except that Licensee may assign this Agreement in whole or in part to
an Affiliate of Licensee without the consent of IriSys.

        18.7. WAIVERS. Waiver of any one or more defaults or breaches under this
Agreement will not constitute a continuing waiver of the same or any other
default or breach subsequently occurring. IriSys' waiver of its right to
terminate this Agreement for any reason will not be construed as a continuing
waiver. The failure of either party to insist in any one or more instances upon
performance of any provisions of this Agreement will not be construed as a
waiver or relinquishment of any such provision, and the obligation of the other
party with respect to such future performance will continue in full force and
effect.

        18.8. PUBLICITY AND PRESS RELEASES. Notwithstanding any confidentiality
obligation of Licensee pursuant to this Agreement, IriSys acknowledges that
Licensee is a publicly held company and, as such, is required to disclose
material facts, including the execution of this Agreement and its subject
matter. The text of any press releases will be mutually agreed upon by the
parties prior to release to the public.

        18.9. NON-ASSERTION. IriSys agrees that it will not assert any patent
rights that are now owned or later acquired against Licensee or any of
Licensee's customers in any manner that is inconsistent with the rights granted
under Article II.

        18.10. FORCE MAJEURE. If a Force Majeure circumstance occurs, the party
so affected will be excused from the performance of the particular obligation
affected during the period of the Force Majeure circumstance to the extent so
hindered or prevented.

        18.11. GENERAL ASSURANCES. Each of the parties will to execute,
acknowledge and deliver all such further instruments, and to do all such other
acts as may be reasonably necessary or appropriate in order to carry out their
duties and obligations under this Agreement.


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                                               CONFIDENTIAL TREATMENT REQUESTED


        IN WITNESS WHEREOF the parties have caused this Agreement to be executed
by their duly authorized representatives as of the date first above written.


IRISYS RESEARCH & DEVELOPMENT, LLC     AVANIR PHARMACEUTICALS

By:     /s/ GINA M. STACK              By:    /s/ J. DAVID HANSEN
   --------------------------------       --------------------------------

Name:   Gina M. Stack                  Name: J. David Hansen
     ------------------------------          -----------------------------

Title:  Chief Operating Officer        Title:  Vice President Commercial
       ----------------------------            Development
                                             ------------------------------

Date:   August 01, 2000                Date:  August 01, 2000
      -----------------------------          ------------------------------


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                                               CONFIDENTIAL TREATMENT REQUESTED

                                  SCHEDULE 2.3

                           DEVELOPMENT PLAN ATTACHED


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                                               CONFIDENTIAL TREATMENT REQUESTED

                                  SCHEDULE 2.3

                                       ***



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