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                                                                     EXHIBIT 1.1

                                                                  Execution Copy

                       Nastech Pharmaceutical Company Inc.
                               4,250,000 Shares(1)
                                  Common Stock
                               ($0.006 par value)

                                                              New York, New York
                                                                December 8, 2004

Citigroup Global Markets Inc.
Needham & Company, Inc.
WR Hambrecht + Co., LLC
Delafield Hambrecht, Inc.
As Representatives of the several Underwriters,
c/o Citigroup Global Markets Inc.
  388 Greenwich Street
  New York, New York 10013

Ladies and Gentlemen:

            Nastech Pharmaceutical Company Inc., a corporation organized under
the laws of Delaware (the "Company"), proposes to sell to the several
underwriters named in Schedule I hereto (the "Underwriters"), for whom you (the
"Representatives") are acting as representatives, 4,250,000 shares of Common
Stock, $0.006 par value ("Common Stock") of the Company (the "Securities") (said
shares to be issued and sold by the Company being hereinafter called the
"Underwritten Securities"). The Company also proposes to grant to the
Underwriters an option to purchase up to 637,500 additional shares of Common
Stock to cover over-allotments (the "Option Securities;" the Option Securities,
together with the Underwritten Securities, being hereinafter called the
"Securities"). To the extent there are no additional Underwriters listed on
Schedule I other than you, the term Representatives as used herein shall mean
you, as Underwriters, and the terms Representatives and Underwriters shall mean
either the singular or plural as the context requires. Any reference herein to
the Registration Statement, the Basic Prospectus, any Preliminary Final
Prospectus or the Final Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to Item 12 of Form S-3 that
were filed under the Exchange Act on or before the Effective Date of the
Registration Statement or the issue date of the Basic Prospectus, any
Preliminary Final Prospectus or the Final Prospectus, as the case may be; and
any reference herein to the terms "amend", "amendment" or "supplement" with
respect to the Registration Statement, the Basic Prospectus, any Preliminary
Final Prospectus or the Final Prospectus shall be deemed to refer to and include
the filing of any document under the Exchange Act after the Effective Date of
the Registration Statement or the issue date of the Basic Prospectus, any
Preliminary Final Prospectus or the Final Prospectus, as

--------
(1)   Plus an option to purchase from the Company up to 637,500 additional
      Securities to cover over-allotments.

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the case may be, deemed to be incorporated therein by reference. Certain terms
used herein are defined in Section 17 hereof.

            1. Representations and Warranties. The Company represents and
warrants to, and agrees with, each Underwriter as set forth below in this
Section 1.

            (a) The Company meets the requirements for use of Form S-3 under the
      Act and has prepared and filed with the Commission a registration
      statement (file number 333-119429) on Form S-3, including a related basic
      prospectus, for registration under the Act of the offering and sale of the
      Securities. The Company may have filed one or more amendments thereto,
      including a Preliminary Final Prospectus, each of which has previously
      been furnished to you. The Company will next file with the Commission one
      of the following: (1) after the Effective Date of such registration
      statement, a final prospectus supplement relating to the Securities in
      accordance with Rules 430A and 424(b), (2) prior to the Effective Date of
      such registration statement, an amendment to such registration statement
      (including the form of final prospectus supplement) or (3) a final
      prospectus in accordance with Rules 415 and 424(b). In the case of clause
      (1), the Company has included in such registration statement, as amended
      at the Effective Date, all information (other than Rule 430A Information)
      required by the Act and the rules thereunder to be included in such
      registration statement and the Final Prospectus. As filed, such final
      prospectus supplement or such amendment and form of final prospectus
      supplement shall contain all Rule 430A Information, together with all
      other such required information and, except to the extent the
      Representatives shall agree in writing to a modification, shall be in all
      substantive respects in the form furnished to you prior to the Execution
      Time or, to the extent not completed at the Execution Time, shall contain
      only such specific additional information and other changes (beyond that
      contained in the Basic Prospectus and any Preliminary Final Prospectus) as
      the Company has advised you, prior to the Execution Time, will be included
      or made therein. The Registration Statement, at the Execution Time, meets
      the requirements set forth in Rule 415(a)(1)(x).

            It is understood that in connection with the offering and sale of
      the Securities, for purposes of distribution to Canadian Persons, the
      Preliminary Final Prospectus and the Final Prospectus shall have a
      Canadian "wrap-around" (the "Canadian Offering Memorandum"). Insofar as
      they relate to offers or sales of Securities in Canada, all references
      herein to the Preliminary Final Prospectus and the Final Prospectus shall
      include the Canadian Offering Memorandum.

            (b) On the Effective Date, the Registration Statement did or will,
      and when the Final Prospectus is first filed (if required) in accordance
      with Rule 424(b) and on the Closing Date (as defined herein) and on any
      date on which Option Securities are purchased, if such date is not the
      Closing Date (a "settlement date"), the Final Prospectus (and any
      supplement thereto) will, comply in all material respects with the
      applicable requirements of the Act and the Exchange Act and the respective
      rules thereunder; on the Effective Date and at the Execution Time, the
      Registration Statement did not or will not contain any untrue statement of
      a material fact or omit to state any material fact required to be stated
      therein or necessary in order to make the statements therein not
      misleading; and, on the Effective Date, the Final Prospectus, if not filed
      pursuant to Rule 424(b), will

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      not, and on the date of any filing pursuant to Rule 424(b) and on the
      Closing Date and any settlement date, the Final Prospectus (together with
      any supplement thereto) will not, include any untrue statement of a
      material fact or omit to state a material fact necessary in order to make
      the statements therein, in the light of the circumstances under which they
      were made, not misleading; provided, however, that -------- ------- the
      Company makes no representations or warranties as to the information
      contained in or omitted from the Registration Statement or the Final
      Prospectus (or any supplement thereto) in reliance upon and in conformity
      with information furnished in writing to the Company by or on behalf of
      any Underwriter through the Representatives specifically for inclusion in
      the Registration Statement or the Final Prospectus (or any supplement
      thereto).

            (c) Atossa HealthCare, Inc. is the only subsidiary of the Company
      and the Company does not own or control, directly or indirectly, any other
      corporation, association or other entity.

            (d) Each of the Company and its subsidiary has been duly
      incorporated and is validly existing as a corporation in good standing
      under the laws of the jurisdiction in which it is chartered or organized
      with full corporate power and authority to own or lease, as the case may
      be, and to operate its properties and conduct its business as described in
      the Final Prospectus. Each of the Company and its subsidiary is duly
      qualified to do business as a foreign corporation and is in good standing
      under the laws of each jurisdiction which requires such qualification,
      except where the failure to be so qualified in any such jurisdiction could
      not reasonably be expected to have a material adverse effect on the
      condition (financial or otherwise), prospects, earnings, business or
      properties, whether or not arising from transactions in the ordinary
      course of business, of the Company and its subsidiary taken as a whole (a
      "Material Adverse Effect").

            (e) All the outstanding shares of capital stock of the subsidiary
      have been duly and validly authorized and issued and are fully paid and
      nonassessable, and, except as otherwise set forth in the Final Prospectus,
      all outstanding shares of capital stock of the subsidiary are owned by the
      Company free and clear of any perfected security interest or any other
      security interests, claims, liens or encumbrances.

            (f) The Company's authorized equity capitalization is as set forth
      in the Final Prospectus; the capital stock of the Company conforms in all
      material respects to the description thereof contained in the Final
      Prospectus; the outstanding shares of Common Stock have been duly and
      validly authorized and issued and are fully paid and nonassessable; the
      Securities have been duly and validly authorized and, when issued and
      delivered to and paid for by the Underwriters pursuant to this Agreement,
      will be fully paid and non assessable; the certificates for the Securities
      are in valid and sufficient form; and the holders of outstanding shares of
      capital stock of the Company are not entitled to preemptive or other
      rights to subscribe for the Securities; and, except as set forth in the
      Final Prospectus, no options, warrants or other rights to purchase,
      agreements or other obligations to issue, or rights to convert any
      obligations into or exchange any securities for, shares of capital stock
      of or ownership interests in the Company are outstanding.

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            (g) There is no franchise, contract or other document of a character
      required to be described in the Registration Statement or Final
      Prospectus, or to be filed as an exhibit thereto, which is not described
      or filed as required; and the statements in the Final Prospectus under the
      headings "Summary -- Recent Developments," "Risk Factors -- We are
      dependent on our collaborative arrangements with third parties for a
      substantial portion of our revenue, and our development and
      commercialization activities may be delayed or reduced if we fail to
      negotiate or maintain successful collaborative arrangements," " --
      Clinical trials of our product candidates are expensive and
      time-consuming, and the results of these trials are uncertain," " -- We
      are subject to extensive government regulation including the requirement
      of approval before our products may be marketed," " -- If we are unable to
      adequately protect our proprietary technology from legal challenges,
      infringement or alternative technologies, this inability will hurt our
      competitive position and negatively impact our operating results,"
      "Business -- Strategic Collaborations," " -- Licenses, Patents and
      Proprietary Rights," " -- Government Regulations" and "Material United
      States Federal Tax Considerations for Non-U.S. Holders of Common Stock,"
      insofar as such statements summarize legal matters, agreements, documents
      or proceedings discussed therein, are accurate and fair summaries in all
      material aspects of such legal matters, agreements, documents or
      proceedings.

            (h) This Agreement has been duly authorized, executed and delivered
      by the Company.

            (i) The Company is not and, after giving effect to the offering and
      sale of the Securities and the application of the proceeds thereof as
      described in the Final Prospectus, will not be an "investment company" as
      defined in the Investment Company Act of 1940, as amended.

            (j) No consent, approval, authorization, filing with or order of any
      court or governmental agency or body is required in connection with the
      transactions contemplated herein, except such as have been obtained under
      the Act, such as may be required under the federal and provincial
      securities laws of Canada and such as may be required under the blue sky
      laws of any jurisdiction in connection with the purchase and distribution
      of the Securities by the Underwriters in the manner contemplated herein
      and in the Final Prospectus.

            (k) Neither the issue and sale of the Securities nor the
      consummation of any other of the transactions herein contemplated nor the
      fulfillment of the terms hereof will conflict with, result in a breach or
      violation of, or imposition of any lien, charge or encumbrance upon any
      property or assets of the Company or its subsidiary pursuant to, (i) the
      charter or by-laws of the Company or its subsidiary, (ii) the terms of any
      indenture, contract, lease, mortgage, deed of trust, note agreement, loan
      agreement or other agreement, obligation, condition, covenant or
      instrument to which the Company or its subsidiary is a party or bound or
      to which its or its subsidiary's property is subject, or (iii) any
      statute, law, rule, regulation, judgment, order or decree applicable to
      the Company or its subsidiary of any court, regulatory body,
      administrative agency, governmental body, arbitrator or other authority
      having jurisdiction over the Company or its subsidiary or any of its or
      its subsidiary's properties, except in the case of clauses

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      (ii) and (iii), any breaches or violations, which singly or in aggregate,
      could not reasonably be expected to have (i) a material adverse effect on
      the performance of this Agreement or the consummation of any of the
      transactions contemplated hereby or (ii) a Material Adverse Effect.

            (l) No holders of securities of the Company have rights to the
      registration of such securities under the Registration Statement.

            (m) The consolidated historical financial statements and schedules
      of the Company and its consolidated subsidiary incorporated by reference
      in the Final Prospectus and the Registration Statement present fairly in
      all material respects the financial condition, results of operations and
      cash flows of the Company as of the dates and for the periods indicated,
      comply as to form with the applicable accounting requirements of the Act
      and have been prepared in conformity with generally accepted accounting
      principles applied on a consistent basis throughout the periods involved
      (except as otherwise noted therein). The selected financial data set forth
      under the caption "Summary Consolidated Financial Data" in the Final
      Prospectus and Registration Statement fairly present, on the basis stated
      in the Final Prospectus and the Registration Statement, the information
      included therein.

            (n) No action, suit or proceeding by or before any court or
      governmental agency, authority or body or any arbitrator involving the
      Company or its subsidiary or its or its subsidiary's property is pending
      or, to the knowledge of the Company, threatened that (i) could reasonably
      be expected to have a material adverse effect on the performance of this
      Agreement or the consummation of any of the transactions contemplated
      hereby or (ii) could reasonably be expected to have a Material Adverse
      Effect, except as set forth in or incorporated by reference into the Final
      Prospectus (exclusive of any supplement thereto).

            (o) Each of the Company and its subsidiary owns or leases all such
      properties as are necessary to the conduct of its operations as presently
      conducted.

            (p) Neither the Company nor its subsidiary is in violation or
      default of (i) any provision of its charter or by laws, (ii) the terms of
      any indenture, contract, lease, mortgage, deed of trust, note agreement,
      loan agreement or other agreement, obligation, condition, covenant or
      instrument to which it is a party or bound or to which its property is
      subject, or (iii) any statute, law, rule, regulation, judgment, order or
      decree of any court, regulatory body, administrative agency, governmental
      body, arbitrator or other authority having jurisdiction over the Company
      or its subsidiary or any of its properties, as applicable, except in the
      case of clauses (ii) and (iii), any breaches or violations, which, singly
      or in the aggregate, could not reasonably be expected to have Material
      Adverse Effect.

            (q) KPMG LLP, who have certified certain financial statements of the
      Company and its consolidated subsidiary and delivered its report with
      respect to the audited consolidated financial statements and schedules
      incorporated by reference in the

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      Final Prospectus, are independent public accountants with respect to the
      Company within the meaning of the Act and the applicable published rules
      and regulations thereunder.

            (r) There are no transfer taxes or other similar fees or charges
      under federal law or the laws of any state, or any political subdivision
      thereof, required to be paid in connection with the execution and delivery
      of this Agreement or the issuance by the Company or sale by the Company of
      the Securities.

            (s) Each of the Company and its subsidiary has filed all foreign,
      federal, state and local tax returns that are required to be filed or has
      requested extensions thereof, except in any case in which the failure so
      to file would not have a Material Adverse Effect, and has paid all taxes
      required to be paid by it and any other assessment, fine or penalty levied
      against it, to the extent that any of the foregoing is due and payable,
      except for any such assessment, fine or penalty that is currently being
      contested in good faith or would not have a Material Adverse Effect.

            (t) No labor problem or dispute with the employees of the Company or
      its subsidiary exists or to the knowledge of the Company is threatened or
      imminent, and the Company is not aware of any existing or imminent labor
      disturbance by the employees of its or its subsidiary's principal
      suppliers, contractors or customers, that could have a Material Adverse
      Effect.

            (u) The Company and its subsidiary are each insured by insurers of
      recognized financial responsibility against such losses and risks and in
      such amounts as are prudent and customary in the businesses in which they
      are engaged; all policies of insurance insuring the Company or its
      subsidiary or their respective businesses, assets, employees, officers and
      directors are in full force and effect, except where any failure to be in
      full force and effect could not reasonably be expected to have a Material
      Adverse Effect; the Company and its subsidiary are each in compliance with
      the terms of such policies and instruments in all material respects; and
      there are no claims by the Company or its subsidiary under any such policy
      or instrument as to which any insurance company is denying liability or
      defending under a reservation of rights clause; neither the Company nor
      its subsidiary has been refused any insurance coverage sought or applied
      for; and neither the Company nor its subsidiary has any reason to believe
      that it will not be able to renew its existing insurance coverage as and
      when such coverage expires or to obtain similar coverage from similar
      insurers as may be necessary to continue its business at a cost that would
      not have a Material Adverse Effect.

            (v) The subsidiary is not currently prohibited, directly or
      indirectly, from paying any dividends to the Company, from making any
      other distribution on its capital stock, from repaying to the Company any
      loans or advances to such subsidiary from the Company or from transferring
      any of such subsidiary's property or assets to the Company.

            (w) The Company and its subsidiary possess all licenses,
      certificates, permits and other authorizations issued by the appropriate
      federal, state or foreign regulatory authorities necessary to conduct
      their respective businesses, and neither the Company nor

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      its subsidiary has received any notice of proceedings relating to the
      revocation or modification of any such certificate, authorization or
      permit which, singly or in the aggregate, if the subject of an unfavorable
      decision, ruling or finding, would have a Material Adverse Effect.

            (x) The Company and its subsidiary each maintain a system of
      internal accounting controls sufficient to provide reasonable assurance
      that (i) transactions are executed in accordance with management's general
      or specific authorizations; (ii) transactions are recorded as necessary to
      permit preparation of financial statements in conformity with generally
      accepted accounting principles and to maintain asset accountability; (iii)
      access to assets is permitted only in accordance with management's general
      or specific authorization; and (iv) the recorded accountability for assets
      is compared with the existing assets at reasonable intervals and
      appropriate action is taken with respect to any differences.

            (y) The Company has not taken, directly or indirectly, any action
      designed to or that would constitute or that might reasonably be expected
      to cause or result in, under the Exchange Act or otherwise, stabilization
      or manipulation of the price of any security of the Company to facilitate
      the sale or resale of the Securities.

            (z) The Company and its subsidiary are (i) in compliance with any
      and all applicable foreign, federal, state and local laws and regulations
      relating to the protection of human health and safety, the environment or
      hazardous or toxic substances or wastes, pollutants or contaminants
      ("Environmental Laws"), (ii) have received and are in compliance with all
      permits, licenses or other approvals required of them under applicable
      Environmental Laws to conduct their respective businesses and (iii) have
      not received notice of any actual or potential liability under any
      Environmental Law, except where such non-compliance with Environmental
      Laws, failure to receive required permits, licenses or other approvals, or
      liability would not, individually or in the aggregate, have a Material
      Adverse Effect. Except as set forth in the Final Prospectus, neither the
      Company nor its subsidiary has been named as a "potentially responsible
      party" under the Comprehensive Environmental Response, Compensation, and
      Liability Act of 1980, as amended.

            (aa) In the ordinary course of its business, the Company
      periodically reviews the effect of Environmental Laws on the business,
      operations and properties of the Company and its subsidiary, in the course
      of which it identifies and evaluates associated costs and liabilities
      (including, without limitation, any capital or operating expenditures
      required for clean-up, closure of properties or compliance with
      Environmental Laws, or any permit, license or approval, any related
      constraints on operating activities and any potential liabilities to third
      parties). On the basis of such review, the Company has reasonably
      concluded that such associated costs and liabilities would not, singly or
      in the aggregate, have a Material Adverse Effect.

            (bb) The minimum funding standard under Section 302 of the Employee
      Retirement Income Security Act of 1974, as amended, and the regulations
      and published interpretations thereunder ("ERISA"), has been satisfied by
      each "pension plan" (as

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      defined in Section 3(2) of ERISA) which has been established or maintained
      by the Company and/or its subsidiary, and the trust forming part of each
      such plan which is intended to be qualified under Section 401 of the Code
      is so qualified; each of the Company and its subsidiary has fulfilled its
      obligations, if any, under Section 515 of ERISA; neither the Company nor
      its subsidiary maintains or is required to contribute to a "welfare plan"
      (as defined in Section 3(1) of ERISA) that provides retiree or other
      post-employment welfare benefits or insurance coverage (except as may be
      required by the Consolidated Omnibus Budget Reconciliation Act of 1985, as
      amended, or other similar applicable statute); each pension plan and
      welfare plan established or maintained by the Company and/or its
      subsidiary is in compliance in all material respects with the currently
      applicable provisions of ERISA; and neither the Company nor its subsidiary
      has incurred or could reasonably be expected to incur any withdrawal
      liability under Section 4201 of ERISA, any liability under Section 4062,
      4063, or 4064 of ERISA, or any other liability under Title IV of ERISA.

            (cc) There is and has been no failure on the part of the Company and
      to the knowledge of the Company, on the part of any of the Company's
      directors or officers, in their capacities as such, to comply in all
      material respects with any provision of the Sarbanes Oxley Act of 2002 and
      the rules and regulations promulgated in connection therewith (the
      "Sarbanes Oxley Act"), including Section 402 related to loans and Sections
      302 and 906 related to certifications.

            (dd) Neither the Company nor its subsidiary nor, to the knowledge of
      the Company, any director, officer, agent, employee or affiliate of the
      Company or its subsidiary is aware of or has taken any action, directly or
      indirectly, that would result in a violation by such persons of the FCPA,
      including, without limitation, making use of the mails or any means or
      instrumentality of interstate commerce corruptly in furtherance of an
      offer, payment, promise to pay or authorization of the payment of any
      money, or other property, gift, promise to give, or authorization of the
      giving of anything of value to any "foreign official" (as such term is
      defined in the FCPA) or any foreign political party or official thereof or
      any candidate for foreign political office, in contravention of the FCPA
      and the Company and its subsidiary and, to the knowledge of the Company,
      its affiliates have conducted their businesses in compliance with the
      FCPA.

            "FCPA" means Foreign Corrupt Practices Act of 1977, as amended, and
      the rules and regulations thereunder.

            (ee) The operations of the Company and its subsidiary are and have
      been conducted at all times in compliance with applicable financial
      recordkeeping and reporting requirements of the Currency and Foreign
      Transactions Reporting Act of 1970, as amended, the money laundering
      statutes of all jurisdictions, the rules and regulations thereunder and
      any related or similar rules, regulations or guidelines, issued,
      administered or enforced by any governmental agency (collectively, the
      "Money Laundering Laws"), except where a failure to comply with such
      requirements, statutes, rules, regulations or guidelines could not
      reasonably be expected to, singly or in the aggregate, have a Material
      Adverse Effect, and no action, suit or proceeding by or before any court
      or governmental agency, authority or body or any arbitrator involving the
      Company or its

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      subsidiary with respect to the Money Laundering Laws is pending or, to the
      best knowledge of the Company, threatened.

            (ff) Neither the Company nor its subsidiary nor, to the knowledge of
      the Company, any director, officer, agent, employee or affiliate of the
      Company or its subsidiary is currently subject to any U.S. sanctions
      administered by the Office of Foreign Assets Control of the U.S. Treasury
      Department ("OFAC"); and the Company will not directly or indirectly use
      the proceeds of the offering, or lend, contribute or otherwise make
      available such proceeds to any subsidiary, joint venture partner or other
      person or entity, for the purpose of financing the activities of any
      person currently subject to any U.S. sanctions administered by OFAC.

            (gg) The Company and its subsidiary own, possess, license or have
      other rights to use, on reasonable terms, all patents, patent rights,
      trade and service marks, trade and service mark registrations, trade
      names, copyrights, licenses, inventions, trade secrets, technology,
      know-how and other intellectual property (collectively, the "Intellectual
      Property") necessary for the conduct of the Company's business as now
      conducted or as proposed in the Final Prospectus; except where the failure
      to own, possess, license or have other rights to use such Intellectual
      Property could not reasonably be expected to have a Material Adverse
      Effect. Except as disclosed in the Final Prospectus, the Company has not
      received any notice of, and has no knowledge of, any infringement of or
      conflict with asserted rights of the Company by others with respect to any
      patent, patent rights, inventions, trade secrets, know-how, trademarks,
      service marks, trade names or copyrights; and the Company has not received
      any notice of, and has no knowledge of, any infringement of or conflict
      with asserted rights of others by the Company in the conduct of its
      business as now or proposed to be conducted as described in the Final
      Prospectus with respect to any patent, patent rights, inventions, trade
      secrets, know-how, trademarks, service marks, trade names or copyrights
      which, singly or in the aggregate, if the subject of an unfavorable
      decision, ruling or finding, might have a Material Adverse Effect. There
      is no claim being made against the Company regarding patents, patent
      rights or licenses, inventions, collaborative research, trade secrets,
      know-how, trademarks, service marks, trade names or copyrights other than
      as disclosed in the Final Prospectus. The Company does not in the conduct
      of its business as now or proposed to be conducted as described in the
      Final Prospectus infringe or conflict with any right or patent of any
      third party, or any discovery, invention, product or process known to the
      Company, which such infringement or conflict is reasonably likely to
      result in a Material Adverse Effect.

            (hh) Except as disclosed in the Registration Statement and the Final
      Prospectus, the Company (i) does not have any material lending or other
      relationship with any bank or lending affiliate of Citigroup Global
      Markets Holdings Inc., Needham & Company, Inc., WR Hambrecht + Co., LLC or
      Delafield Hambrecht, Inc. and (ii) does not intend to use any of the
      proceeds from the sale of the Securities hereunder to repay any
      outstanding debt owed to any affiliate of Citigroup Global Markets
      Holdings Inc., Needham & Company, Inc., WR Hambrecht + Co., LLC or
      Delafield Hambrecht, Inc.

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            (ii) Except as set forth in the Final Prospectus, the studies, tests
      and preclinical and clinical trials conducted by or on behalf of the
      Company that are described in the Final Prospectus were and, if still
      pending, are being conducted in all material respects in accordance with
      experimental protocols, procedures and controls pursuant to accepted
      professional scientific standards and all applicable local, state and
      federal and foreign laws, rules, regulations and guidances, including, but
      not limited to, the Federal Food, Drug and Cosmetic Act and implementing
      regulations at 21 C.F.R. Parts 50, 54, 56, 58 and 312; the Company is not
      aware of any studies, tests or trials the results of which reasonably call
      into question the clinical trial results described or referred to in the
      Prospectus when viewed in the context in which such results are described
      and the clinical state of development; and the Company has not received
      any notices or correspondence from the U.S. Food and Drug Administration
      or any foreign, state or local governmental body exercising comparable
      authority requiring the termination, suspension or material modification
      of any studies, tests or preclinical or clinical trials conducted by or on
      behalf of the Company.

            (jj) Each of the Exclusive Development, Commercialization and
      License Agreement ("Merck License Agreement") by and between Merck & Co.,
      Inc. ("Merck") and the Company, effective as of September 24, 2004, the
      Supply Agreement ("Merck Supply Agreement") by and between Merck and the
      Company, effective as of September 24, 2004 and the License and Supply
      Agreement (the "Par License Agreement") by and between Par Pharmaceutical,
      Inc. and the Company, effective as of October 22, 2004 has been duly
      authorized by all necessary corporate action of the Company, has been duly
      executed and delivered by the Company and, to the Company's knowledge,
      assuming the due authorization, execution and delivery by the other party
      to such agreement, is a valid, binding and enforceable obligation of the
      Company.

            (kk) There are no business relationships or related-party
      transactions involving the Company or any other person required to be
      described in the Final Prospectus that have not been described as
      required.

            (ll) Neither the Company nor its subsidiary nor, to the Company's
      knowledge, any employee or agent of the Company or its subsidiary has made
      any contribution or other payment to (i) any official of or candidate for,
      any federal, state or foreign office in violation of any law or of the
      character required to be disclosed in the Final Prospectus or (ii) any
      clinical researcher in violation of any federal, state or foreign law or
      any rule of the Food and Drug Administration.

            Any certificate signed by any officer of the Company and delivered
      to the Representatives or counsel for the Underwriters in connection with
      the offering of the Securities shall be deemed a representation and
      warranty by the Company, as to matters covered thereby, to each
      Underwriter.

            2. Purchase and Sale. (a) Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, the Company
agrees to sell to each Underwriter, and each Underwriter agrees, severally and
not jointly, to purchase from the

                                       10
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Company, at a purchase price of $12.69 per share, the amount of the Underwritten
Securities set forth opposite such Underwriter's name in Schedule I hereto.

            (b) Subject to the terms and conditions and in reliance upon the
      representations and warranties herein set forth, the Company hereby grants
      an option to the several Underwriters to purchase, severally and not
      jointly, up to 637,500 Option Securities at the same purchase price per
      share as the Underwriters shall pay for the Underwritten Securities. Said
      option may be exercised only to cover over-allotments in the sale of the
      Underwritten Securities by the Underwriters. Said option may be exercised
      in whole or in part at any time on or before the 30th day after the date
      of the Final Prospectus upon written or telegraphic notice by the
      Representatives to the Company setting forth the number of shares of the
      Option Securities as to which the several Underwriters are exercising the
      option and the settlement date, which shall be three Business Days after
      the exercise of such option or such other date as the Company and the
      Representatives shall agree. The number of shares of the Option Securities
      to be purchased by each Underwriter shall be the same percentage of the
      total number of shares of the Option Securities to be purchased by the
      several Underwriters as such Underwriter is purchasing of the Underwritten
      Securities, subject to such adjustments as you in your absolute discretion
      shall make to eliminate any fractional shares.

            3. Delivery and Payment. Delivery of and payment for the
Underwritten Securities and the Option Securities (if the option provided for in
Section 2(b) hereof shall have been exercised on or before the third Business
Day prior to the Closing Date) shall be made at 10:00 AM, New York City time, on
December 14, 2004 or at such time on such later date not more than three
Business Days after the foregoing date as the Representatives shall designate,
which date and time may be postponed by agreement between the Representatives
and the Company or as provided in Section 9 hereof (such date and time of
delivery and payment for the Securities being herein called the "Closing Date").
Delivery of the Securities shall be made to the Representatives for the
respective accounts of the several Underwriters against payment by the several
Underwriters through the Representatives of the purchase price thereof to or
upon the order of the Company by wire transfer payable in same-day funds to an
account specified by the Company. Delivery of the Underwritten Securities and
the Option Securities shall be made through the facilities of The Depository
Trust Company unless the Representatives shall otherwise instruct.

            If the option provided for in Section 2(b) hereof is exercised after
the third Business Day prior to the Closing Date, the Company will deliver the
Option Securities (at the expense of the Company) to the Representatives, at 388
Greenwich Street, New York, New York, on the date specified by the
Representatives (which shall be within three Business Days after exercise of
said option) for the respective accounts of the several Underwriters, against
payment by the several Underwriters through the Representatives of the purchase
price thereof to or upon the order of the Company by wire transfer payable in
same-day funds to an account specified by the Company. If settlement for the
Option Securities occurs after the Closing Date, the Company will deliver to the
Representatives on the settlement date for the Option Securities, and the
obligation of the Underwriters to purchase the Option Securities shall be
conditioned upon receipt of, supplemental opinions, certificates and letters
confirming as of such date the opinions, certificates and letters delivered on
the Closing Date pursuant to Section 6 hereof.

                                       11
<PAGE>

            4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Securities for sale to the public as set forth
in the Final Prospectus.

            5. Agreements. The Company agrees with the several Underwriters
that:

            (a) The Company will use its best efforts to cause the Registration
      Statement, if not effective at the Execution Time, and any amendment
      thereof, to become effective. Prior to the termination of the offering of
      the Securities, the Company will not file any amendment of the
      Registration Statement or supplement (including the Final Prospectus or
      any Preliminary Final Prospectus) to the Basic Prospectus or any Rule
      462(b) Registration Statement unless the Company has furnished you a copy
      for your review prior to filing and will not file any such proposed
      amendment or supplement to which you reasonably object. Subject to the
      foregoing sentence, if the Registration Statement has become or becomes
      effective pursuant to Rule 430A, or filing of the Final Prospectus is
      otherwise required under Rule 424(b), the Company will cause the Final
      Prospectus, properly completed, and any supplement thereto to be filed in
      a form approved by the Representatives with the Commission pursuant to the
      applicable paragraph of Rule 424(b) within the time period prescribed and
      will provide evidence satisfactory to the Representatives of such timely
      filing. The Company will promptly advise the Representatives (1) when the
      Registration Statement, if not effective at the Execution Time, shall have
      become effective, (2) when the Final Prospectus, and any supplement
      thereto, shall have been filed (if required) with the Commission pursuant
      to Rule 424(b) or when any Rule 462(b) Registration Statement shall have
      been filed with the Commission, (3) when, prior to termination of the
      offering of the Securities, any amendment to the Registration Statement
      shall have been filed or become effective, (4) of any request by the
      Commission or its staff for any amendment of the Registration Statement,
      or any Rule 462(b) Registration Statement, or for any supplement to the
      Final Prospectus or for any additional information, (5) of the issuance by
      the Commission of any stop order suspending the effectiveness of the
      Registration Statement or the institution or threatening of any proceeding
      for that purpose and (6) of the receipt by the Company of any notification
      with respect to the suspension of the qualification of the Securities for
      sale in any jurisdiction or the institution or threatening of any
      proceeding for such purpose. The Company will use its best efforts to
      prevent the issuance of any such stop order or the suspension of any such
      qualification and, if issued, to obtain as soon as possible the withdrawal
      thereof.

            (b) If, at any time when a prospectus relating to the Securities is
      required to be delivered under the Act, any event occurs as a result of
      which the Final Prospectus as then supplemented would include any untrue
      statement of a material fact or omit to state any material fact necessary
      to make the statements therein in the light of the circumstances under
      which they were made not misleading, or if it shall be necessary to amend
      the Registration Statement or supplement the Final Prospectus to comply
      with the Act or the Exchange Act or the respective rules thereunder, the
      Company promptly will (1) notify the Representatives of such event, (2)
      prepare and file with the Commission, subject to the second sentence of
      paragraph (a) of this Section 5, an amendment or supplement that will
      correct such statement or omission or effect such compliance and

                                       12
<PAGE>

      (3) supply any supplemented Final Prospectus to you in such quantities
      as you may reasonably request.

            (c) As soon as practicable, the Company will make generally
      available to its security holders and to the Representatives an earnings
      statement or statements of the Company and its subsidiary that will
      satisfy the provisions of Section 11(a) of the Act and Rule 158 under the
      Act.

            (d) The Company will furnish to the Representatives and counsel for
      the Underwriters, without charge, signed copies of the Registration
      Statement (including exhibits thereto) and to each other Underwriter a
      copy of the Registration Statement (without exhibits thereto) and, so long
      as delivery of a prospectus by an Underwriter or dealer may be required by
      the Act, as many copies of each Preliminary Final Prospectus and the Final
      Prospectus and any supplement thereto as the Representatives may
      reasonably request. The Company will pay the expenses of printing or other
      production of all documents relating to the offering.

            (e) The Company will arrange, if necessary, for the qualification of
      the Securities for sale under the laws of such jurisdictions as the
      Representatives may designate, will maintain such qualifications in effect
      so long as required for the distribution of the Securities and will pay
      any fee of the National Association of Securities Dealers, Inc., in
      connection with its review of the offering; provided that in no event
      shall the Company be obligated to qualify to do business in any
      jurisdiction where it is not now so qualified or to take any action that
      would subject it to service of process in suits, other than those arising
      out of the offering or sale of the Securities, in any jurisdiction where
      it is not now so subject.

            (f) The Company will not, without the prior written consent of
      Citigroup Global Markets Inc., offer, sell, contract to sell, pledge, or
      otherwise dispose of, (or enter into any transaction which is designed to,
      or might reasonably be expected to, result in the disposition (whether by
      actual disposition or effective economic disposition due to cash
      settlement or otherwise) by the Company or any affiliate of the Company or
      any person in privity with the Company or any affiliate of the Company)
      directly or indirectly, including the filing (or participation in the
      filing) of a registration statement with the Commission in respect of, or
      establish or increase a put equivalent position or liquidate or decrease a
      call equivalent position within the meaning of Section 16 of the Exchange
      Act, any other shares of Common Stock or any securities convertible into,
      or exercisable, or exchangeable for, shares of Common Stock; or publicly
      announce an intention to effect any such transaction, until the expiration
      of the Lock-Up Period as set forth in Section 17, provided,
      however, that (i) the Company may issue and sell Common Stock pursuant to
      any employee stock option plan, stock ownership plan or dividend
      reinvestment plan of the Company in effect at the Execution Time and (ii)
      the Company may issue Common Stock issuable upon the conversion of
      securities or the exercise of warrants outstanding at the Execution Time.

            (g) The Company will comply with all applicable securities and other
      laws, rules and regulations, including, without limitation, the Sarbanes
      Oxley Act, and use its

                                       13
<PAGE>

      best efforts to cause the Company's directors and officers, in their
      capacities as such, to comply with such laws, rules and regulations,
      including, without limitation, the provisions of the Sarbanes Oxley Act.

            (h) The Company will not take, directly or indirectly, any action
      designed to or that would constitute or that might reasonably be expected
      to cause or result in, under the Exchange Act or otherwise, stabilization
      or manipulation of the price of any security of the Company to facilitate
      the sale or resale of the Securities.

            6. Conditions to the Obligations of the Underwriters. The
obligations of the Underwriters to purchase the Underwritten Securities and the
Option Securities, as the case may be, shall be subject to the accuracy of the
representations and warranties on the part of the Company contained herein as of
the Execution Time, the Closing Date and any settlement date pursuant to Section
3 hereof, to the accuracy of the statements of the Company made in any
certificates pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder and to the following additional conditions:

            (a) If the Registration Statement has not become effective prior to
      the Execution Time, unless the Representatives agree in writing to a later
      time, the Registration Statement will become effective not later than (i)
      6:00 PM New York City time on the date of determination of the public
      offering price, if such determination occurred at or prior to 3:00 PM New
      York City time on such date or (ii) 9:30 AM on the Business Day following
      the day on which the public offering price was determined, if such
      determination occurred after 3:00 PM New York City time on such date; if
      filing of the Final Prospectus, or any supplement thereto, is required
      pursuant to Rule 424(b), the Final Prospectus, and any such supplement,
      will be filed in the manner and within the time period required by Rule
      424(b); and no stop order suspending the effectiveness of the Registration
      Statement shall have been issued and no proceedings for that purpose shall
      have been instituted or threatened.

            (b) The Company shall have requested and caused Pryor Cashman
      Sherman & Flynn LLP, counsel for the Company, to have furnished to the
      Representatives their opinion, dated the Closing Date and addressed to the
      Representatives, to the effect that:

                  (i) each of the Company and its only subsidiary, Atossa
            HealthCare, Inc., has been duly incorporated and is validly existing
            as a corporation in good standing under the laws of the jurisdiction
            in which it is chartered or organized, with full corporate power and
            authority to own or lease, as the case may be, and to operate its
            properties and conduct its business as described in the Final
            Prospectus, and to the knowledge of such counsel is duly qualified
            to do business as a foreign corporation and is in good standing
            under the laws of each jurisdiction which requires such
            qualification.

                  (ii) all the outstanding shares of capital stock of its
            subsidiary have been duly and validly authorized and issued and are
            fully paid and nonassessable, and, except as otherwise set forth in
            the Final Prospectus, all outstanding shares of capital stock of its
            subsidiary are owned by the Company free and clear of any

                                       14
<PAGE>

            perfected security interest and, to the knowledge of such counsel,
            after due inquiry, of any other security interest, claim, lien or
            encumbrance;

                  (iii) the Company's authorized equity capitalization is as set
            forth in the Final Prospectus; the capital stock of the Company
            conforms in all material respects to the description thereof
            contained in the Final Prospectus; the Securities have been duly and
            validly authorized, and, when issued and delivered to and paid for
            by the Underwriters pursuant to this Agreement, will be fully paid
            and nonassessable; the certificates for the Securities are in valid
            and sufficient form; and the holders of outstanding shares of
            capital stock of the Company are not entitled to preemptive or other
            rights to subscribe for the Securities; and, except as set forth in
            the Final Prospectus, no options, warrants or other rights to
            purchase, agreements or other obligations to issue, or rights to
            convert any obligations into or exchange any securities for, shares
            of capital stock of or ownership interests in the Company are
            outstanding;

                  (iv) to the knowledge of such counsel, there is no pending or
            threatened action, suit or proceeding by or before any court or
            governmental agency, authority or body or any arbitrator involving
            the Company or its subsidiary or its or its subsidiary's property of
            a character required to be disclosed in the Registration Statement
            which is not adequately disclosed in the Final Prospectus, and there
            is no franchise, contract or other document of a character required
            to be described in the Registration Statement or Final Prospectus,
            or to be filed as an exhibit thereto, which is not described or
            filed as required; and the statements included or incorporated by
            reference in the Final Prospectus under the headings "Material
            United States Federal Tax Considerations for Non-U.S. Holders of
            Common Stock" and " Description of Common Stock" insofar as such
            statements summarize legal matters, agreements, documents or
            proceedings discussed therein, are accurate and fair summaries in
            all material respects of such legal matters, agreements, documents
            or proceedings;

                  (v) the Registration Statement has become effective under the
            Act; any required filing of the Basic Prospectus, any Preliminary
            Final Prospectus and the Final Prospectus, and any supplements
            thereto, pursuant to Rule 424(b) has been made in the manner and
            within the time period required by Rule 424(b); to the knowledge of
            such counsel, no stop order suspending the effectiveness of the
            Registration Statement has been issued, no proceedings for that
            purpose have been instituted or threatened and the Registration
            Statement and the Final Prospectus (other than the financial
            statements and other financial and statistical information contained
            therein, as to which such counsel need express no opinion) comply as
            to form in all material respects with the applicable requirements of
            the Act and the Exchange Act and the respective rules thereunder;
            and such counsel has no reason to believe that on the Effective Date
            or the date the Registration Statement was last deemed amended the
            Registration Statement contained any untrue statement of a material
            fact or omitted to state any material fact required to be stated
            therein or necessary to make the statements therein not misleading
            or that the Final Prospectus as of its date and on the Closing Date
            included or

                                       15
<PAGE>

            includes any untrue statement of a material fact or omitted or omits
            to state a material fact necessary to make the statements therein,
            in the light of the circumstances under which they were made, not
            misleading (in each case, other than the financial statements and
            other financial and statistical information contained therein, as to
            which such counsel need express no opinion);

                  (vi) this Agreement has been duly authorized, executed and
            delivered by the Company;

                  (vii) the Company is not and, after giving effect to the
            offering and sale of the Securities and the application of the
            proceeds thereof as described in the Final Prospectus, will not be
            an "investment company" as defined in the Investment Company Act of
            1940, as amended;

                  (viii) no consent, approval, authorization, filing with or
            order of any U.S. court or governmental agency or body is required
            in connection with the transactions contemplated herein, except such
            as have been obtained under the Act and such as may be required
            under the blue sky laws of any U.S. jurisdiction in connection with
            the purchase and distribution of the Securities by the Underwriters
            in the manner contemplated in this Agreement and in the Final
            Prospectus and such other approvals (specified in such opinion) as
            have been obtained;

                  (ix) neither the issue and sale of the Securities, nor the
            consummation of any other of the transactions herein contemplated
            nor the fulfillment of the terms hereof will conflict with, result
            in a breach or violation of, or imposition of any lien, charge or
            encumbrance upon any property or assets of the Company or its
            subsidiary pursuant to, (i) the charter or by-laws of the Company or
            its subsidiary, (ii) the terms of any indenture, contract, lease,
            mortgage, deed of trust, note agreement, loan agreement or other
            agreement, obligation, condition, covenant or instrument known to
            such counsel to which the Company or its subsidiary is a party or
            bound or to which its or their property is subject, or (iii) any
            statute, law, rule, regulation, or, to the knowledge of such
            counsel, any judgment, order or decree applicable to the Company or
            its subsidiary of any court, regulatory body, administrative agency,
            governmental body, arbitrator or other authority having jurisdiction
            over the Company or its subsidiary or any of its or the subsidiary's
            properties;

                  (x) to the knowledge of such counsel, no holders of securities
            of the Company have rights to the registration of such securities
            under the Registration Statement; and

                  (xi) each of Merck License Agreement, Merck Supply Agreement
            and Par License Agreement has been duly authorized by all necessary
            corporate action of the Company and is a valid, binding and
            enforceable obligation of the Company.

                                       16
<PAGE>

      In rendering such opinion, such counsel may rely (A) as to matters
      involving the application of laws of any jurisdiction other than the
      State of New York, the General Corporation Law of the State of
      Delaware or the Federal laws of the United States, to the extent
      they deem proper and specified in such opinion, upon the opinion of
      other counsel of good standing whom they believe to be reliable and
      who are satisfactory to counsel for the Underwriters and (B) as to
      matters of fact, to the extent they deem proper, on certificates of
      responsible officers of the Company and public officials. References
      to the Final Prospectus in this paragraph (b) shall also include any
      supplements thereto at the Closing Date.

            (c) The Company shall have requested and caused Paul G. Lunn,
      intellectual property counsel for the Company, to have furnished to the
      Representatives his opinion, dated the Closing Date and addressed to the
      Representatives, to the effect that, to the knowledge of such counsel,
      there is no pending or threatened action, suit or proceeding by or before
      any court or governmental agency, authority or body or any arbitrator
      involving the Company or its property of a character required to be
      disclosed in the Registration Statement, which is not adequately disclosed
      in the Final Prospectus, and there is no franchise, contract or other
      document of a character required to be described in the Registration
      Statement or Final Prospectus, or to be filed as an exhibit thereto, which
      is not described or filed as required; and the statements included or
      incorporated by reference in the Final Prospectus under the headings "Risk
      Factors," "Business -- Strategic Collaboration" and "Business -- Licenses,
      Patents and Proprietary Rights," insofar as such statements summarize
      intellectual property legal matters, documents or proceedings discussed
      therein, are accurate and fair summaries of such legal matters, documents
      or proceedings.

            (d) The Company shall have requested and caused Buc & Beardsley, FDA
      regulatory counsel for the Company, to have furnished to the
      Representatives their opinion, dated the Closing Date and addressed to the
      Representatives, to the effect that:

                  (i) the statements included in the Final Prospectus under the
            headings "Risk Factors -- We are subject to extensive government
            regulation including the requirement of approval before our products
            may be marketed" and "Business -- Government Regulation," insofar as
            such statements summarize applicable provisions of the FDCA, and
            Public Health Service Act ("PHSA") and implementing regulations, are
            correct in all material respects and do not omit to summarize
            applicable provisions of the FDCA and the PHSA or the implementing
            regulation necessary to make those statements not misleading; and

                  (ii) nothing has come to such counsel's attention that leads
            such counsel to believe that the statements included in the Final
            Prospectus under the headings "Risk Factors -- We are subject to
            extensive government regulation including the requirement of
            approval before our products may be marketed," "Business --
            Government Regulation" and "Business -- Legal Proceedings" contain
            any untrue statement of a material fact relating to Food and Drug
            Administration regulatory matters ("FDA Matters") or omit to state
            any material

                                       17
<PAGE>

            fact relating to FDA Matters which is necessary to make the
            statements therein not misleading in light of the circumstances in
            which they were made.

            (e) The Representatives shall have received from Cleary, Gottlieb,
      Steen & Hamilton, counsel for the Underwriters, such opinion or opinions,
      dated the Closing Date and addressed to the Representatives, with respect
      to the issuance and sale of the Securities, the Registration Statement,
      the Final Prospectus (together with any supplement thereto) and other
      related matters as the Representatives may reasonably require, and the
      Company shall have furnished to such counsel such documents as they
      request for the purpose of enabling them to pass upon such matters.

            (f) The Company shall have furnished to the Representatives a
      certificate of the Company, signed by the Chairman of the Board or the
      President and the principal financial or accounting officer of the
      Company, dated the Closing Date, to the effect that the signers of such
      certificate have carefully examined the Registration Statement, the Final
      Prospectus, any supplements to the Final Prospectus and this Agreement and
      that:

                  (i) the representations and warranties of the Company in this
            Agreement are true and correct on and as of the Closing Date with
            the same effect as if made on the Closing Date and the Company has
            complied with all the agreements and satisfied all the conditions on
            its part to be performed or satisfied at or prior to the Closing
            Date;

                  (ii) no stop order suspending the effectiveness of the
            Registration Statement has been issued and no proceedings for that
            purpose have been instituted or, to the Company's knowledge,
            threatened; and

                  (iii) since the date of the most recent financial statements
            included or incorporated by reference in the Final Prospectus
            (exclusive of any supplement thereto), there has been no material
            adverse effect on the condition (financial or otherwise), prospects,
            earnings, business or properties of the Company and its subsidiary,
            taken as a whole, whether or not arising from transactions in the
            ordinary course of business, except as set forth in or contemplated
            in the Final Prospectus (exclusive of any supplement thereto).

            (g) The Company shall have requested and caused KPMG LLP to have
      furnished to the Representatives, at the Execution Time and at the Closing
      Date, letters (which may refer to letters previously delivered to one or
      more of the Representatives), dated respectively as of the Execution Time
      and as of the Closing Date, in form and substance satisfactory to the
      Representatives, confirming that they are independent accountants within
      the meaning of the Act and the Exchange Act and the respective applicable
      rules and regulations adopted by the Commission thereunder and that they
      have performed a review of the unaudited interim financial information of
      the Company for the nine-month period ended September 30, 2004, and as at
      September 30, 2004, in accordance with Statement on Auditing Standards No.
      100, and stating in effect that:

                                       18
<PAGE>

                  (i) in their opinion the audited financial statements and
            financial statement schedules included or incorporated by reference
            in the Registration Statement and the Final Prospectus and reported
            on by them comply as to form in all material respects with the
            applicable accounting requirements of the Act and the Exchange Act
            and the related rules and regulations adopted by the Commission;

                  (ii) on the basis of a reading of the latest unaudited
            financial statements made available by the Company and its
            subsidiary; their limited review, in accordance with standards
            established under Statement on Auditing Standards No. 100, of the
            unaudited interim financial information for the nine-month period
            ended September 30, 2004, and as at September 30, 2004, incorporated
            by reference in the Registration Statement and the Final Prospectus;
            carrying out certain specified procedures (but not an examination in
            accordance with generally accepted auditing standards) which would
            not necessarily reveal matters of significance with respect to the
            comments set forth in such letter; a reading of the minutes of the
            meetings of the stockholders, directors and audit committee of the
            Company and its subsidiary; and inquiries of certain officials of
            the Company who have responsibility for financial and accounting
            matters of the Company and its subsidiary as to transactions and
            events subsequent to September 30, 2004, nothing came to their
            attention which caused them to believe that:

                        (1) any unaudited financial statements included or
                  incorporated by reference in the Registration Statement and
                  the Final Prospectus do not comply as to form in all material
                  respects with applicable accounting requirements of the Act
                  and with the related rules and regulations adopted by the
                  Commission with respect to financial statements included or
                  incorporated by reference in quarterly reports on Form 10-Q
                  under the Exchange Act; and said unaudited financial
                  statements are not in conformity with generally accepted
                  accounting principles applied on a basis substantially
                  consistent with that of the audited financial statements
                  included or incorporated by reference in the Registration
                  Statement and the Final Prospectus;

                        (2) with respect to the period subsequent to September
                  30, 2004, there were any changes, at a specified date not more
                  than five days prior to the date of the letter, in the
                  long-term debt or note payable of the Company and its
                  subsidiary or capital stock of the Company or decreases in the
                  stockholders' equity of the Company as compared with the
                  amounts shown on the September 30, 2004 consolidated balance
                  sheet included or incorporated by reference in the
                  Registration Statement and the Final Prospectus, or for the
                  period from October 1, 2004 to such specified date there were
                  any increases, as compared with the corresponding period in
                  2003, in net loss from operations or in total or per share
                  amounts of net loss of the Company and its subsidiary, except
                  in all instances for changes or decreases set forth in such
                  letter, in which case the letter shall be

                                       19
<PAGE>

                  accompanied by an explanation by the Company as to the
                  significance thereof unless said explanation is not deemed
                  necessary by the Representatives;

                        (3) the information included or incorporated by
                  reference in the Registration Statement and Final Prospectus
                  in response to Regulation S-K, Item 301 (Selected Financial
                  Data), Item 302 (Supplementary Financial Information), Item
                  402 (Executive Compensation) and Item 503(d) (Ratio of
                  Earnings to Fixed Charges) is not in conformity with the
                  applicable disclosure requirements of Regulation S-K; and

                  (iii) they have performed certain other specified procedures
            as a result of which they determined that certain information of an
            accounting, financial or statistical nature (which is limited to
            accounting, financial or statistical information derived from the
            general accounting records of the Company and its subsidiary) set
            forth in the Registration Statement and the Final Prospectus and in
            Exhibit 12 to the Registration Statement, including the information
            set forth under the captions "Summary Consolidated Financial Data"
            in the Final Prospectus, the information included or incorporated by
            reference in Items 1, 2, 6, 7 and 11 of the Company's Annual Report
            on Form 10-K, incorporated by reference in the Registration
            Statement and the Final Prospectus, the information included in the
            "Management's Discussion and Analysis of Financial Condition and
            Results of Operations" included or incorporated by reference in the
            Company's Quarterly Reports on Form 10-Q, incorporated by reference
            in the Registration Statement and the Final Prospectus and the
            information included in the "Results of Operations and Financial
            Condition" included or incorporated by reference in each of the
            Company's Current Reports on Form 8-K dated March 10, 2004, April
            21, 2004 and October 26, 2004, incorporated by reference in the
            Registration Statement and the Final Prospectus, agrees with the
            accounting records of the Company and its subsidiary, excluding any
            questions of legal interpretation.

            References to the Final Prospectus in this paragraph (g) include any
      supplement thereto at the date of the letter.

            (h) Subsequent to the Execution Time or, if earlier, the dates as of
      which information is given in the Registration Statement (exclusive of any
      amendment thereof) and the Final Prospectus (exclusive of any supplement
      thereto), there shall not have been (i) any change or increase specified
      in the letter or letters referred to in paragraph (g) of this Section 6 or
      (ii) any change, or any development involving a prospective change, in or
      affecting the condition (financial or otherwise), earnings, business or
      properties of the Company and its subsidiary, taken as a whole, whether or
      not arising from transactions in the ordinary course of business, except
      as set forth in or contemplated in the Final Prospectus (exclusive of any
      supplement thereto) the effect of which, in any case referred to in clause
      (i) or (ii) above, is, in the sole judgment of the Representatives, so
      material and adverse as to make it impractical or inadvisable to proceed
      with the offering or

                                       20
<PAGE>

      delivery of the Securities as contemplated by the Registration Statement
      (exclusive of any amendment thereof) and the Final Prospectus (exclusive
      of any supplement thereto).

            (i) Prior to the Closing Date, the Company shall have furnished to
      the Representatives such further information, certificates and documents
      as the Representatives may reasonably request.

            (j) The Securities shall have been listed and admitted and
      authorized for trading on the Nasdaq National Market, and satisfactory
      evidence of such actions shall have been provided to the Representatives.

            (k) At the Execution Time, the Company shall have furnished to the
      Representatives a letter substantially in the form of Exhibit A hereto
      from each executive officer and director of the Company addressed to the
      Representatives.

            If any of the conditions specified in this Section 6 shall not have
been fulfilled when and as provided in this Agreement, or if any of the opinions
and certificates mentioned above or elsewhere in this Agreement shall not be
reasonably satisfactory in form and substance to the Representatives and counsel
for the Underwriters, this Agreement and all obligations of the Underwriters
hereunder may be canceled at, or at any time prior to, the Closing Date by the
Representatives. Notice of such cancellation shall be given to the Company in
writing or by telephone or facsimile confirmed in writing.

            The documents required to be delivered by this Section 6 shall be
delivered at the office of Cleary, Gottlieb, Steen & Hamilton, counsel for the
Underwriters, at One Liberty Plaza, New York, New York 10006, on the Closing
Date.

            7. Reimbursement of Underwriters' Expenses. If the sale of the
Securities provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 6 hereof is not satisfied,
because of any termination pursuant to Section 10 hereof or because of any
refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision hereof other than by reason of a
default by any of the Underwriters, the Company will reimburse the Underwriters
severally through Citigroup Global Markets Inc. on demand for all out-of-pocket
expenses (including reasonable fees and disbursements of counsel) that shall
have been incurred by them in connection with the proposed purchase and sale of
the Securities.

            8. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Underwriter, the directors, officers, employees
and agents of each Underwriter and each person who controls any Underwriter
within the meaning of either the Act or the Exchange Act against any and all
losses, claims, damages or liabilities, joint or several, to which they or any
of them may become subject under the Act, the Exchange Act or other federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the registration statement for the registration of
the Securities as originally filed or in any amendment thereof, or in the Basic
Prospectus, any Preliminary Final Prospectus or the Final Prospectus, or in any
amendment

                                       21
<PAGE>

thereof or supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and agrees to
reimburse each such indemnified party, as incurred, for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished to
the Company by or on behalf of any Underwriter through the Representatives
specifically for inclusion therein. This indemnity agreement will be in addition
to any liability which the Company may otherwise have.

            (b) Each Underwriter severally and not jointly agrees to indemnify
      and hold harmless the Company, each of its directors, each of its officers
      who signs the Registration Statement, and each person who controls the
      Company within the meaning of either the Act or the Exchange Act, to the
      same extent as the foregoing indemnity from the Company to each
      Underwriter, but only with reference to written information relating to
      such Underwriter furnished to the Company by or on behalf of such
      Underwriter through the Representatives specifically for inclusion in the
      documents referred to in the foregoing indemnity. This indemnity agreement
      will be in addition to any liability which any Underwriter may otherwise
      have. The Company acknowledges that the statements set forth in the last
      paragraph of the cover page regarding delivery of the Securities and,
      under the heading "Underwriting" or "Plan of Distribution", (i) the list
      of Underwriters and their respective participation in the sale of the
      Securities, (ii) the sentences related to concessions and reallowances and
      (iii) the paragraph related to stabilization, syndicate covering
      transactions and penalty bids in any Preliminary Final Prospectus and the
      Final Prospectus constitute the only information furnished in writing by
      or on behalf of the several Underwriters for inclusion in any Preliminary
      Final Prospectus or the Final Prospectus.

            (c) Promptly after receipt by an indemnified party under this
      Section 8 of notice of the commencement of any action, such indemnified
      party will, if a claim in respect thereof is to be made against the
      indemnifying party under this Section 8, notify the indemnifying party in
      writing of the commencement thereof; but the failure so to notify the
      indemnifying party (i) will not relieve it from liability under paragraph
      (a) or (b) above unless and to the extent it did not otherwise learn of
      such action and such failure results in the forfeiture by the indemnifying
      party of substantial rights and defenses and (ii) will not, in any event,
      relieve the indemnifying party from any obligations to any indemnified
      party other than the indemnification obligation provided in paragraph (a)
      or (b) above. The indemnifying party shall be entitled to appoint counsel
      of the indemnifying party's choice at the indemnifying party's expense to
      represent the indemnified party in any action for which indemnification is
      sought (in which case the indemnifying party shall not thereafter be
      responsible for the fees and expenses of any separate counsel retained by
      the indemnified party or parties except as set forth below); provided,
      however, that such counsel shall be satisfactory to the indemnified party.
      Notwithstanding the indemnifying party's election to appoint counsel to
      represent the indemnified party in an action, the indemnified party shall
      have the right to employ

                                       22
<PAGE>

      separate counsel (including local counsel), and the indemnifying party
      shall bear the reasonable fees, costs and expenses of such separate
      counsel if (i) the use of counsel chosen by the indemnifying party to
      represent the indemnified party would present such counsel with a conflict
      of interest, (ii) the actual or potential defendants in, or targets of,
      any such action include both the indemnified party and the indemnifying
      party and the indemnified party shall have reasonably concluded that there
      may be legal defenses available to it and/or other indemnified parties
      which are different from or additional to those available to the
      indemnifying party, (iii) the indemnifying party shall not have employed
      counsel satisfactory to the indemnified party to represent the indemnified
      party within a reasonable time after notice of the institution of such
      action or (iv) the indemnifying party shall authorize the indemnified
      party to employ separate counsel at the expense of the indemnifying party.
      It is understood, however, that the Company shall, in connection with any
      one such action or separate but substantially similar or related actions
      in the same jurisdiction arising out of the same general allegations or
      circumstances, be liable for the reasonable fees and expenses of only one
      separate firm of attorneys (in addition to any local counsel) at any time
      for all such Underwriters and controlling persons, which firm shall be
      designated in writing by Citigroup Global Markets Inc. An indemnifying
      party will not, without the prior written consent of the indemnified
      parties, settle or compromise or consent to the entry of any judgment with
      respect to any pending or threatened claim, action, suit or proceeding in
      respect of which indemnification or contribution may be sought hereunder
      (whether or not the indemnified parties are actual or potential parties to
      such claim or action) unless such settlement, compromise or consent
      includes an unconditional release of each indemnified party from all
      liability arising out of such claim, action, suit or proceeding.

            (d) In the event that the indemnity provided in paragraph (a) or (b)
      of this Section 8 is unavailable to or insufficient to hold harmless an
      indemnified party for any reason, the Company and the Underwriters
      severally agree to contribute to the aggregate losses, claims, damages and
      liabilities (including legal or other expenses reasonably incurred in
      connection with investigating or defending same) (collectively "Losses")
      to which the Company and one or more of the Underwriters may be subject in
      such proportion as is appropriate to reflect the relative benefits
      received by the Company on the one hand and by the Underwriters on the
      other from the offering of the Securities; provided, however, that in no
      case shall any Underwriter (except as may be provided in any agreement
      among underwriters relating to the offering of the Securities) be
      responsible for any amount in excess of the underwriting discount or
      commission applicable to the Securities purchased by such Underwriter
      hereunder. If the allocation provided by the immediately preceding
      sentence is unavailable for any reason, the Company and the Underwriters
      severally shall contribute in such proportion as is appropriate to reflect
      not only such relative benefits but also the relative fault of the Company
      on the one hand and of the Underwriters on the other in connection with
      the statements or omissions which resulted in such Losses as well as any
      other relevant equitable considerations. Benefits received by the Company
      shall be deemed to be equal to the total net proceeds from the offering
      (before deducting expenses) received by it, and benefits received by the
      Underwriters shall be deemed to be equal to the total underwriting
      discounts and commissions, in each case as set forth on the cover page of
      the Final Prospectus. Relative fault shall be determined by reference to,
      among other

                                       23
<PAGE>

      things, whether any untrue or any alleged untrue statement of a material
      fact or the omission or alleged omission to state a material fact relates
      to information provided by the Company on the one hand or the Underwriters
      on the other, the intent of the parties and their relative knowledge,
      access to information and opportunity to correct or prevent such untrue
      statement or omission. The Company and the Underwriters agree that it
      would not be just and equitable if contribution were determined by pro
      rata allocation or any other method of allocation which does not take
      account of the equitable considerations referred to above. Notwithstanding
      the provisions of this paragraph (d), no person guilty of fraudulent
      misrepresentation (within the meaning of Section 11(f) of the Act) shall
      be entitled to contribution from any person who was not guilty of such
      fraudulent misrepresentation. For purposes of this Section 8, each person
      who controls an Underwriter within the meaning of either the Act or the
      Exchange Act and each director, officer, employee and agent of an
      Underwriter shall have the same rights to contribution as such
      Underwriter, and each person who controls the Company within the meaning
      of either the Act or the Exchange Act, each officer of the Company who
      shall have signed the Registration Statement and each director of the
      Company shall have the same rights to contribution as the Company, subject
      in each case to the applicable terms and conditions of this paragraph (d).

            9. Default by an Underwriter. If any one or more Underwriters shall
fail to purchase and pay for any of the Securities agreed to be purchased by
such Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of Securities set
forth opposite their names in Schedule I hereto bears to the aggregate amount of
Securities set forth opposite the names of all the remaining Underwriters) the
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase; provided, however, that in the event that the aggregate amount of
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase shall exceed 10% of the aggregate amount of Securities set forth in
Schedule I hereto, the remaining Underwriters shall have the right to purchase
all, but shall not be under any obligation to purchase any, of the Securities,
and if such nondefaulting Underwriters do not purchase all the Securities, this
Agreement will terminate without liability to any nondefaulting Underwriter or
the Company. In the event of a default by any Underwriter as set forth in this
Section 9, the Closing Date shall be postponed for such period, not exceeding
five Business Days, as the Representatives shall determine in order that the
required changes in the Registration Statement and the Final Prospectus or in
any other documents or arrangements may be effected. Nothing contained in this
Agreement shall relieve any defaulting Underwriter of its liability, if any, to
the Company and any nondefaulting Underwriter for damages occasioned by its
default hereunder.

            10. Termination. This Agreement shall be subject to termination in
the absolute discretion of the Representatives, by notice given to the Company
prior to delivery of and payment for the Securities, if at any time prior to
such time (i) trading in the Company's Common Stock shall have been suspended by
the Commission or the Nasdaq National Market or trading in securities generally
on the New York Stock Exchange or the Nasdaq National Market shall have been
suspended or limited or minimum prices shall have been established on either of
such Exchange or the Nasdaq National Market, (ii) a banking moratorium shall
have been

                                       24
<PAGE>

declared either by federal or New York State authorities or (iii) there shall
have occurred any outbreak or escalation of hostilities, declaration by the
United States of a national emergency or war, or other calamity or crisis the
effect of which on financial markets is such as to make it, in the sole judgment
of the Representatives, impractical or inadvisable to proceed with the offering
or delivery of the Securities as contemplated by the Final Prospectus (exclusive
of any supplement thereto).

            11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the Underwriters set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or the Company or any of
the officers, directors, employees, agents or controlling persons referred to in
Section 8 hereof, and will survive delivery of and payment for the Securities.
The provisions of Sections 7 and 8 hereof shall survive the termination or
cancellation of this Agreement.

            12. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Representatives, will be mailed,
delivered or telefaxed to the Citigroup Global Markets Inc. General Counsel (fax
no.: (212) 816-7912) and confirmed to the General Counsel, Citigroup Global
Markets Inc., at 388 Greenwich Street, New York, New York, 10013, Attention:
General Counsel; or, if sent to the Company, will be mailed, delivered or
telefaxed to Chief Financial Officer of Nastech Pharmaceutical Company Inc. (fax
no.: (425) 908-3650) and confirmed to it at Nastech Pharmaceutical Company Inc.,
3450 Monte Villa Parkway, Bothell, WA 98021, attention of the Chief Financial
Officer, with a copy to Pryor Cashman Sherman & Flynn LLP, 410 Park Avenue, New
York, New York 10022, Attn: Blake Hornick, Esq., (fax no.: (212) 798-6329).

            13. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
officers, directors, employees, agents and controlling persons referred to in
Section 8 hereof, and no other person will have any right or obligation
hereunder.

            14. Applicable Law. This Agreement will be governed by and construed
in accordance with the laws of the State of New York applicable to contracts
made and to be performed within the State of New York.

            15. Counterparts. This Agreement may be signed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.

            16. Headings. The section headings used herein are for convenience
only and shall not affect the construction hereof.

            17. Definitions. The terms which follow, when used in this
Agreement, shall have the meanings indicated.

            "Act" shall mean the Securities Act of 1933, as amended, and the
      rules and regulations of the Commission promulgated thereunder.

                                       25
<PAGE>

            "Basic Prospectus" shall mean the prospectus referred to in
      paragraph 1(a) above contained in the Registration Statement at the
      Effective Date including any Preliminary Final Prospectus.

            "Business Day" shall mean any day other than a Saturday, a Sunday or
      a legal holiday or a day on which banking institutions or trust companies
      are authorized or obligated by law to close in New York City.

            "Canadian Person" shall mean any person who is a national or
      resident of Canada, any corporation, partnership, or other entity created
      or organized in or under the laws of the Canada or of any political
      subdivision thereof, or any estate or trust the income of which is subject
      to Canadian Federal income taxation, regardless of its source (other than
      any non-Canadian branch of any Canadian Person), and shall include any
      Canadian branch of a person other than a Canadian Person.

            "Commission" shall mean the Securities and Exchange Commission.

            "Effective Date" shall mean each date and time that the Registration
      Statement, any post-effective amendment or amendments thereto and any Rule
      462(b) Registration Statement became or become effective.

            "Exchange Act" shall mean the Securities Exchange Act of 1934, as
      amended, and the rules and regulations of the Commission promulgated
      thereunder.

            "Execution Time" shall mean the date and time that this Agreement is
      executed and delivered by the parties hereto.

            "Final Prospectus" shall mean the prospectus supplement relating to
      the Securities that was first filed pursuant to Rule 424(b) after the
      Execution Time, together with the Basic Prospectus.

            "Lock-Up Period" shall mean the period beginning with and including
      the date of this Agreement and ending on and including the 90th day after
      the date of this Agreement, except that if (a) during the 16-day period
      ending on and including such 90th day, the Company issues an earnings
      release or (b) prior to such 90th day, the Company announces an intention
      to release earnings information during the 16-day period beginning on such
      90th day, then the Lock-Up Period shall end on and include the 18th day
      following the date of such release.

            "Preliminary Final Prospectus" shall mean any preliminary prospectus
      supplement to the Basic Prospectus which describes the Securities and the
      offering thereof and is used prior to filing of the Final Prospectus,
      together with the Basic Prospectus.

            "Registration Statement" shall mean the registration statement
      referred to in paragraph 1(a) above, including exhibits and financial
      statements, as amended at the Execution Time (or, if not effective at the
      Execution Time, in the form in which it shall become effective) and, in
      the event any post-effective amendment thereto or any

                                       26
<PAGE>

      Rule 462(b) Registration Statement becomes effective prior to the Closing
      Date, shall also mean such registration statement as so amended or such
      Rule 462(b) Registration Statement, as the case may be. Such term shall
      include any Rule 430A Information deemed to be included therein at the
      Effective Date as provided by Rule 430A.

            "Rule 415," "Rule 424," "Rule 430A" and "Rule 462" refer to such
      rules under the Act.

            "Rule 430A Information" shall mean information with respect to the
      Securities and the offering thereof permitted to be omitted from the
      Registration Statement when it becomes effective pursuant to Rule 430A.

            "Rule 462(b) Registration Statement" shall mean a registration
      statement and any amendments thereto filed pursuant to Rule 462(b)
      relating to the offering covered by the registration statement referred to
      in Section 1(a) hereof.

            18. Canada. Each of the Underwriters hereby covenants and agrees
that it will not distribute the Securities in such a manner as to require the
filing of a prospectus or similar document (excluding a private placement
offering memorandum) with respect to the Securities under the laws of any
Province or Territory in Canada.

                                       27
<PAGE>

            If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company and the several Underwriters.

                                             Very truly yours,

                                             NASTECH PHARMACEUTICAL COMPANY INC.

                                             By: /s/ Gregory L. Weaver
                                                 -----------------------
                                                 Name: Gregory L. Weaver
                                                 Title: CFO

The foregoing Agreement is
hereby confirmed and accepted
as of the date first above written.

Citigroup Global Markets Inc.
Needham & Company, Inc.
WR Hambrecht + Co., LLC
Delafield Hambrecht, Inc.

By:Citigroup Global Markets Inc.

By:/s/ Mark Simon
   -------------------------
   Name: Mark Simon
   Title: Managing Director

For themselves and the other
several Underwriters named
in Schedule I to the
foregoing Agreement.

                                       28