Exhibit 10.4


                                                CONFIDENTIAL TREATMENT REQUESTED
                                                --------------------------------
                                         WITH RESPECT TO CERTAIN PORTIONS HEREOF
                                         ---------------------------------------
                                                              DENOTED WITH "***"
                                                              ------------------

                   Evaluation Agreement and Option to License
                   ------------------------------------------

         This  Evaluation  Agreement and Option to License (the  "Agreement") is
made and entered  into as of September 5, 2002 (the  "effective  Date"),  by and
between  BioDelivery  Sciences  International,  Inc., with a business address at
Adm. Bldg. #4, 185 S. Orange Ave.,  Newark,  New Jersey 07103,  USA ("BDSI') and
******************, with a principal place of business at *****************.

WHEREAS:

          1. BDSI is licensed under United States and foreign  federal and state
laws to make,  use,  and/or sell certain  inventions  described in United States
Patent Numbers 4,663,161; 4,871,488; 5,643,574; 5,834,015; 5,840,707; 5,994,318;
6,153,217;   and   other   U.S.   and   foreign   counterparts,    continuation,
continuation-in-part, and divisional applications;

         2. BDSI  commercializes  these  inventions  using products  bearing the
trademark BIORAL(TM);

         3. BDSI desires to provide  ****** with the raw  materials and the know
how  to  make  Cochleate  Vehicle   Preparations  (CVPs)  as  described  in  the
aforementioned patents and patent applications; and

         4. *****, represented by **********, desires to manufacture CVPs and to
perform   studies  on  the   efficacy   of  CVPs  as   delivery   vehicles   for
process-sensitive  ingredients  in companion  animal foods,  and to evaluate the
potential  for  licensing  or  sub-licensing  from BDSI the right to use CVPs in
companion animal foods;

         NOW, THEREFORE,  for and in consideration of the premises,  the parties
hereto hereby agree as follows;

1.       Definitions

1.1      "CVPs" shall mean cochleate  preparations prepared according to methods
         described  in U.S.  Patent  Numbers  4,663,161;  4,871,488;  5,643,574;
         5,834,015;  5,840,707;  5,994,318; 6,153,217 and their U.S. and foreign
         counterparts,   continuation,   continuation-in-part,   and  divisional
         applications;  containing  process-sensitive  ingredients for companion
         animal food use, with know-how provided by BDSI.

1.2      "Confidential  Information" shall mean information  disclosed by either




<PAGE>
***CONFIDENTIAL TREATMENT REQUESTED***
Note: The portions hereof for which  confidential
treatment are being requested are denoted with "*****".


         party for the purpose of preparing  cochleate  formulations  for use in
         companion  animal  foods or human foods and shall  include,  but not be
         limited to, manufacturing  processes,  production techniques,  research
         and testing  materials,  test  results and data,  business and research
         plans,    engineering   drawings,    contract   documents,    formulas,
         formulations, and/or specifications for CVPs and/or food products.

1.3      "Evaluation" shall mean *************************************.

1.4      "Evaluation  Period"  shall  mean  that  period  of time  necessary  to
         adequately perform the Evaluation defined in Section 1.4.


2.       Research Collaboration

2.1      BDSI will provide to ***** soy-derived  phosphatidylserine  at its cost
         to   manufacture   the  product.   *****  will  provide  at  least  one
         process-sensitive  ingredient,  as well as manufacturing facilities and
         personnel  to  encochleate   the   process-sensitive   ingredient  with
         instruction and know how from BDSI and to incorporate the  encochleated
         process-sensitive ingredient into a finished `food product.

2.2      BDSI and ***** will jointly  conduct the Research Plan ("RP")  outlined
         in Appendix A.

2.3      *****  will  pay all  reasonable  expenses  associated  with  the RP as
         outlined in Appendix B.

3.       Confidentiality of Information

3.1      All  information   designated  as   Confidential   Information  by  the
         disclosing  party at the time of disclosure  (1) shall be maintained in
         confidence  by the  receiving  party,  (2)  shall  not be used  for any
         purpose  except as  permitted in this  Agreement,  and (3) shall not be
         disclosed to any third party without the prior  written  consent of the
         disclosing party.

3.2      The receiving party shall use the same level of care to prevent the use
         or disclosure of Confidential Information of the disclosing party as it
         exercises in protecting  its own  Confidential  Information,  provided,
         however, that at all times this level of care shall be no less than the
         reasonable standard of care.

3.3      The receiving  party shall  disclose  Confidential  Information  of the
         disclosing  party  to  only  those  employees,   agents,   consultants,
         collaborators,  or other third parties whose services are necessary for
         performance   of  the  RP  and  who  have  a  duty  to   maintain   the
         confidentiality  of the  Confidential  Information  as the  result of a
         written  agreement  with either the receiving  party or the  disclosing
         party.


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<PAGE>
***CONFIDENTIAL TREATMENT REQUESTED***
Note: The portions hereof for which  confidential
treatment are being requested are denoted with "*****".

3.4      The confidentiality and non-use obligations of this Agreement shall not
         apply to:

         (a)  information  and materials  which at the time of disclosure are in
         the  public  domain;   (b)  information  and  materials  which,   after
         disclosure,  become  part  of  the  public  domain  by  publication  or
         otherwise,  except by breach of this  Agreement;  (c)  information  and
         materials for which the receiving party can establish  reasonable proof
         of possession at the time of disclosure;  (d) information and materials
         which are  subsequently and  independently  developed for the receiving
         party  by  persons   who  have  had  no  access  to  the   Confidential
         Information;  (e)  information  and materials which the receiving party
         shall independently  receive from a third party who has the legal right
         to disclose them; or (f)  information  and materials which are required
         by law to be disclosed,  provided,  however,  that the receiving  party
         shall  provide  to  the  disclosing  party  sufficient  notice  of  the
         requirement   to  disclose   Confidential   Information  to  allow  the
         disclosing party request a protective order or other appropriate remedy
         in a court of competent jurisdiction.

4.       Warranties
         ----------

4.1      *****  warrants  that it will  use all  Materials  received  from  BDSI
         necessary to manufacture CVPs, and/or to complete the RP, in compliance
         with all applicable federal, state and local laws and regulations.

4.2       ***** warrants that it follows appropriate guidelines for the care and
          use of animals  enrolled  in  research  protocols,  and that  Material
          received  from  BDSI  will be used  exclusively  `for the  purpose  of
          manufacturing  the CVPs,  and evaluating the CVPs under the RP, unless
          additional use is agreed to in writing by both parties.

4.3       BDSI warrants that it either owns by assignment, or holds by exclusive
          license from the legal  assignee(s),  the rights to make,  use, and/or
          sell inventions  described in United States Patents numbers 4,663,161;
          4,871,488;  5,643,574; 5,834,015; 5,840,707; 5,994,318; 6,153,217; and
          other     U.S.     and     foreign     counterparts,     continuation,
          continuation-in-part, and divisional applications.

4.4       BDSI warrants that it will perform its necessary legal  obligations to
          maintain its tights to make, use, and/or sell the inventions described
          in the  aforementioned  patents  and to  sub-license  those  rights to
          *****,  and that it will hold  harmless and  indemnify  ***** from any
          reasonable  costs,  including court costs and attorney's fees, for any
          cause of action  for  patent  infringement  that may arise  from *****
          authorized  use of CVPs  under  this  Agreement  and the RP  described
          herein  should  BDSI fail to maintain  its  license to the  inventions
          claimed  in  United  States  Patents  numbers  4,663,161;   4,871,488;
          5,643,574;  5,834,015; 5,840,707; 5,994,318; 6,153,217; and other U.S.
          and  foreign  counterparts,  continuation,  continuation-in-part,  and
          divisional applications.



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<PAGE>

***CONFIDENTIAL TREATMENT REQUESTED***
Note: The portions hereof for which  confidential
treatment are being requested are denoted with "*****".

4.5       Neither ***** nor BDSI make any warranty or  representation  as to the
          purity,  activity,  safety,  accuracy,  or usefulness of the Material,
          Information or results of the Evaluation.

5.    Ownership of Technology
      -----------------------

5.1      New  inventions  and  discoveries,  whether  patentable  or not, may be
         developed as a result of performance of the activities described in the
         RP. The parties  acknowledge  that the practice of such  inventions and
         discoveries  may be subject to a license  for the rights to make,  use,
         and/or sell the inventions as claimed in United States Patents  numbers
         4,663,161;   4,871,488;  5,643,574;  5,834,015;  5,840,707;  5,994,318;
         6,153,217;  and other  U.S.  and  foreign  counterparts,  continuation,
         continuation-in-part, and divisional applications.

5.2      Inventions  created  as a  result  of  performance  of the  RP of  this
         Agreement  that are  invented  solely by employees of BDSI shall be the
         property of BDSI.  BDSI shall have a right to license to third  parties
         any  resulting  patent rights to such  invention  without prior written
         consent from *****.

5.3      Inventions  created  as a  result  of  performance  of the  RP of  this
         Agreement  that are invented  solely by employees of ***** shall be the
         property of *****. ***** shall have a right to license to third parties
         any  resulting  patent tights to such  invention  without prior written
         consent from BDSI.

5.4      Inventions  created  as a  result  of  performance  of the  RP of  this
         Agreement that are invented jointly by employees of BDSI and ***** will
         be owned jointly by BDSI and *****,  with ***** having exclusive rights
         to use the invention under any jointly-owned issued patent,  subject to
         any pre-existing patent rights that shall dominate,  for the purpose of
         producing  companion animal foods and related companion animal products
         and BDSI  having  exclusive  rights to all other  claimed  uses for the
         invention. ***********************************************.

5.5      For solely owned inventions, the party holding ownership shall have the
         right to prepare and prosecute  appropriate patent  applications at its
         own expense. For jointly owned inventions, the parties shall divide the
         costs of preparation and prosecution of appropriate patent applications
         equally,  provided,  however,  that  either  party  may  choose  not to
         participate in the preparation and prosecution of any patent describing
         a  jointly-owned  invention  and  will  have no  obligation  for  costs
         associated  with any patents  filed by the other party.  Should  either
         party choose not to pay its share of the  reasonable  costs  associated
         with   preparation,   prosecution,   and   maintenance  of  any  patent
         application  claiming a  jointly-owned  invention under this Agreement,
         that party will  relinquish  ownership of the patent tights  defined by
         those claims to the other party and will cooperate fully to provide the
         necessary  information  and data to prepare and  prosecute  such patent
         application.


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<PAGE>

***CONFIDENTIAL TREATMENT REQUESTED***
Note: The portions hereof for which  confidential
treatment are being requested are denoted with "*****".

         The  party  retaining  ownership  of the  rights  under  the  patent as
         described  in this Section 5.5 shall have the right to license to third
         parties  any  patent  rights  described  by the  claims of that  patent
         without prior consent of the other party.

6.       Disclosure of Research Data and Results
         ---------------------------------------

6.1      Subject to Section 1.4 and Section 3 of this Agreement,  data collected
         as a result of  performance of the RP by ***** will be provided to BDSI
         and data  collected  by BDSI will be provided  to *****.  Such data may
         include protocols,  records of formulations,  manufacturing  processes,
         and experimental results.

7.       Legal Relationship Between the Parties
         --------------------------------------

7.1      The relationship between ***** and BDSI under this Agreement is that of
         independent  collaborators,  and the  Agreement  shall not be deemed to
         establish a joint venture or partnership between ***** and BDSI.

7.2      Neither party to this  Agreement  shall act as the employee or agent of
         the other and neither party may bind the other to any contract with any
         third party.

8.       License of Patent Rights
         ------------------------

8.1      This  Agreement  provides  *********************  the CVP  technologies
         described  under  the   aforementioned   patents  for  the  purpose  of
         evaluating,  under the RP, the use of the technology for the production
         of companion  animal foods  containing  process-sensitive  ingredients.
         *********************************   No  other   license,   implied   or
         otherwise, is conveyed by BDSI to ***** as a result of this Agreement.

8.2       *****************************************************************.

8.3      The parties  agree that the license  provided for under  Section 8.2 of
         this  Agreement  will include *****  potential use of the technology to
         incorporate  a  variety  of  process-sensitive  ingredients,  or  cargo
         molecules, into ***************. Since many of these ingredients are as
         yet not  specifically  identified,  but will be  identified  in  future
         research,  ***** and BDSI agree that the license will incorporate terms
         to allow the addition of newly-designated  cargo molecules upon request
         by  *****  and  approval  by  BDSI  for  specific  cargo  molecules  or
         categories of cargo molecules.

9.       Entirety of Terms, Assignment of Agreement, and Enforcement of
         --------------------------------------------------------------
         Provisions
         ----------

9.1      This  Agreement  constitutes  the entire  agreement of the parties with
         respect to the subject  matter hereof and shall not be modified  except
         by subsequent mutual written agreement of the parties.



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<PAGE>

***CONFIDENTIAL TREATMENT REQUESTED***
Note: The portions hereof for which  confidential
treatment are being requested are denoted with "*****".


9.2      Neither party may assign or otherwise  transfer this  Agreement and the
         rights  acquired  hereunder  without the  written  consent of the other
         party. Any authorized assignee must agree in writing to be bound by the
         terms of the Agreement

9.3      The provisions of this  Agreement ate separable,  and in the event that
         any  provisions  of this  Agreement  are  determined  to be  invalid or
         unenforceable  under any  controlling  body of law, such  invalidity or
         unenforceability   shall  not  in  any  way  affect  the   validity  or
         enforceability of the remaining provisions hereof.

9.4      This Agreement and any amendment hereto may be executed in counterparts
         and  all of  such  counterparts  taken  together  shall  be  deemed  to
         constitute one and the same instrument.

10.      Notice
         ------

10.1     All notices or other communications required or permitted to be made or
         given hereunder shall be deemed so made or given hand-delivered or sent
         in writing  by  registered  or  certified  mail,  postage  prepaid  and
         return-receipt requested, or by a nationally-recognized courier service
         guaranteeing next-day delivery, charges prepaid, and properly addressed
         to such other party as set forth above or at such other  address as may
         be specified by either party hereto by written notice similarly sent or
         delivered.

10.2     Notices or other  communications  directed to BDSI shall be sent to the
         attention of Raphael  Mannino,  Ph.D.  at BDSI,  185 S. Orange Ave., NJ
         07103, USA or to such other designee or at such other address as may be
         later designated in writing by the BDSI.

10.3     Notices or other communications  directed to ***** shall be sent to the
         attention of *****or to such other designee or at such other address as
         may be later designated in writing by the *****.


11.      Indemnification
         ---------------

11.1     To the extent that any claim against  either party to this Agreement is
         caused  by  negligence  or acts on the part of the  other  party  which
         violate the laws or regulations of the United States  Government or the
         State of ***** or New Jersey,  that party shall  indemnify,  defend and
         hold the other party and its  affiliates  harmless from and against all
         costs, claims, suits, expenses (including reasonable attorney fees) and
         damages incurred by or rendered against that party and its Affiliates.

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<PAGE>

***CONFIDENTIAL TREATMENT REQUESTED***
Note: The portions hereof for which  confidential
treatment are being requested are denoted with "*****".

11.2     The indemnification provisions provided by Section 11.1 shall not apply
         to the  extent  that  such  claims  are  caused  by the  negligence  or
         misconduct of the Party or its Affiliates seeking indemnification.

12.      Termination
         -----------

12.1     Either  party may  terminate  this  Agreement by giving sixty (60) days
         prior written  notice  thereof to the other party,  provided,  however,
         that the  obligation to maintain the  confidentiality  of  Confidential
         Information  shall  survive  termination  of the  Agreement  and  shall
         continue  for a period of five  years  from the  effective  date of the
         Agreement.

12.2     ***** may terminate this  Agreement  immediately  upon notice,  whether
         provided  by BDSI or by  constructive  means such as a news  service or
         publication,  that BDSI has  terminated its license to rights under the
         aforementioned   patents  or  that  BDSI  has  failed  to  perform  its
         obligations under the license, resulting in termination of the license.
         At no time will ***** be obligated to continue the RP or  Evaluation in
         the event that BDSI no longer has rights to sublicense  the  technology
         described  in U.S.  Patent  Numbers  4,663,161;  4,871,488;  5,643,574;
         5,834.015;  5,840,707;  5,994,318; 6,153,217 and their U.S. and foreign
         counterparts,   continuation,   continuation-in-part,   and  divisional
         applications.

13.      Choice of Law
         -------------

13.1     This  Agreement  shall be governed by and construed in accordance  with
         the laws of the state of New York,  without  regard  to  principles  of
         conflicts of Jaws  applicable in such  jurisdiction.  Any dispute under
         this  Agreement  shall be decided in the federal or state courts within
         the State of New York.


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<PAGE>

***CONFIDENTIAL TREATMENT REQUESTED***
Note: The portions hereof for which  confidential
treatment are being requested are denoted with "*****".


         IN  WITNESS  WHEREOF,  the  parties  hereto  have  duly  executed  this
Agreement as of the effective Date by their Authorized representatives.


                                   BIODELIVERY SCIENCES
                                   INTERNATIONAL, INC.

                                   /s/ Frank O'Donnell
                                   ___________________________  Date:_______
                                   Frank O'Donnell, M.D.


                                   *****


                                   ___________________________  Date:_______
                                   *****


                                   ___________________________  Date:_______
                                   *****





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