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                                                                    EXHIBIT 10.3

                        [KP PHARMACEUTICALS LETTERHEAD]

                                                                    CONFIDENTIAL

                       KP PHARMACEUTICAL TECHNOLOGY, INC.
                               RESEARCH AGREEMENT

This agreement is entered into by and between KP Pharmaceutical Technology,
Inc. hereinafter called "Research Organization", and Pain Therapeutics, Inc., a
corporation with its principal office and place of business at 250 East Grand
Avenue, Suite 70, South San Francisco, CA 94080, hereinafter called "Sponsor".

                                   WITNESSETH

WHEREAS, The research/development program contemplated by this Agreement is of
mutual interest and benefit to the Research Organization and to the Sponsor,

WHEREAS, a Proposal entitled: Development, Manufacture, Testing, Supply and
Stability Studies of Naltrexone and Placebo Capsule Formulation for Human
Clinical Trials has been written which will guide the performance of this
Agreement and the Research Organization agrees it is fully able to perform the
research program in a professional, competent manner with strict adherence to
its terms, and the Research Organization will utilize its best efforts to do so,

NOW THEREFORE, the parties hereto agree as follows:

1.          SCOPE OF WORK

      1.1.  The Research Organization shall exercise its best efforts to carry
            out the research set forth in the attached Proposal ("Research")
            and Cost Estimate (and terms). Project Number: KP980012R2 dated May
            14, 1999 and consisting of 3 pages.

2.    PERFORMANCE PERIOD

      2.1.  Performance of the Research under this Agreement shall start not
            later than one week of both parties signing this Agreement and
            shall be completed by August 1, 1999 (except on-going stability
            studies). Regarding the performance hereunder, time is of the
            essence. In case of delayed performance, this Agreement may, at
            Sponsor's option, be extended for subsequent one-month periods
            until the Research is completed.

      2.2.  This Agreement shall be effective for a period of 3 (three) years
            from the date of signing. The effective period may be extended by
            mutual agreement.

3.          REGULATORY COMPLIANCE

      3.1.  The Research Organization will be responsible for conducting the
            research in full compliance with cGMP regulations and in strict
            accordance with applicable Research Organization policies which
            Research Organization agrees are not inconsistent with the terms
            of this Agreement, the Proposal, generally accepted standards of
            the current Good Manufacturing Practices (cGMPs) and/or Good
            Laboratory Practices (GLPs), all applicable local, state and
            federal laws and regulations governing the performance of



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            research and/or development activities. The Research Organization
            shall retain all records resulting from the Research for the time
            required by applicable federal regulations (the Sponsor will notify
            the Research Organization of the FDA Application filing and
            approval status), and to allow for sponsor (or sponsor's
            representative) and FDA unlimited inspection of all such records.

4.    RECORDKEEPING, REPORTING AND ACCESS

      4.1.  The Sponsor's authorized representative(s), and regulatory
            authorities to the extent required by law, may, during regular
            business hours, arrange in advance with the Research Organization
            to:

            4.1.1  Examine and inspect the Research Organization's facilities
                   required for performance of the Research; and

            4.1.2. Inspect and copy all data and work products relating to the
                   Research.

      4.2.  Research Organization shall cooperate with any regulatory authority
            and allow them access to applicable records and data.

      4.3.  The Research Organization shall perform the following
            record-keeping and reporting obligations in a timely fashion:

            4.3.1. Preparation and maintenance of complete, accurately written
                   records, accounts, notes, reports and data of the Research;

            4.3.2. Reports will be delivered to Sponsor by Research
                   Organization in a timely manner throughout the performance
                   of the research/development.

            4.3.3. A final written report ("Final Report") including a complete
                   summary of research/development activity will be submitted
                   to the Sponsor.

5.    INDEMNIFICATION

      5.1.  During the term if this Agreement, Sponsor shall defend, indemnify
            and hold harmless the Research Organization and any agents and
            employees of Research Organization from any and all liabilities,
            claims, actions or suits (collectively "Claims") for personal
            injury or death arising out of or in connection with the
            administration or use of the Research study drug(s) which are
            manufactured by Research Organization, provided however:

            5.1.1. That the Research Organization conducts the Research in
                   strict accordance with and in full compliance with:

                   a)   the written Proposal, any other written instructions
                        furnished by Sponsor, and in a manner required of a
                        reasonable and prudent researcher;

                   b)   all applicable cGMP/GLP regulations and guidelines
                        related to the performance of this Agreement;

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                c)  all applicable local, state and federal laws, regulations
                    and ordinances that govern the performance of this
                    Agreement, including those that apply to the research and
                    manufacturing, development, testing, shipping, storage,
                    packaging, distribution, environment disposition and
                    labeling of naltrexone, placebo or other chemical agents
                    related to the performance of this Agreement;

           5.1.1.1.     That the Research Organization notifies the Sponsor
                        immediately of the claim or lawsuit;

           5.1.1.2.     That the Research Organization reasonably cooperates
                        with the Sponsor in its investigation and defense
                        thereof; and

           5.1.1.3.     That the Research Organization not settle or otherwise
                        compromise such claim or lawsuit without the Sponsor's
                        prior written consent.

      5.1.2.   In any event, Sponsor or its agents, employees, or directors
               shall not be responsible for any compensatory, consequential,
               special, incidental, punitive or other damages, losses, costs or
               expenses in excess of the total dollar size of this agreement.

   5.2.      The Sponsor shall provide a diligent defense against any
             settlement of any claims brought or actions filed with respect to
             the subject of the indemnity contained herein, whether such claims
             or actions are rightfully or wrongfully brought or filed. The
             Sponsor shall not settle any claims without the Research
             Organization's prior written consent, which consent may not be
             unreasonably withheld.

   5.3.      Deviations from the terms of the Proposal that may arise out of
             necessity will be made following written authorization from the
             Sponsor.

      5.3.1.   Sponsor agrees that it maintains a policy of program of
               insurance or self-insurance at levels sufficient to support the
               indemnification obligations assumed herein. Unless the Sponsor
               is self-insured, upon request the Sponsor will provide evidence
               of its insurance and will provide to the Research Organization,
               thirty (30) days prior, written notice of cancellation of its
               coverage.

6.          TERMINATION

   6.1.      This Agreement may be terminated by either party, upon immediate
             notice, if any of the following conditions occur:

      6.1.1.   If the authorization and approval to perform the Research in the
               United States is withdrawn by the U.S. Food and Drug
               Administration;

      6.1.2.   If animal, human and/or toxicological test results of the
               product made by the Research Organization, in the opinion of
               either the Sponsor or the Research Organization, support
               termination of the Research.

      6.1.3.   If either party fails to strictly comply with all terms of the
               Agreement after receipt of written notice, with a 30 day
               opportunity to cure, from the other party.

   6.2.      Upon the effective date of termination, there shall be an
             accounting conducted by the Research Organization, subject to
             verification by the Sponsor. Within thirty (30) days

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                  after receipt of adequate documentation therefore, the Sponsor
                  will make payment to the Research Organization for:

           6.2.1. All services properly rendered and moneys properly expended by
                  the Research Organization until the date of termination not
                  yet paid for; and

           6.2.2. Reasonable non-cancelable obligations properly incurred for
                  the Research by the Research Organization prior to the
                  effective date of termination; unless the Sponsor objects to
                  any charge, in which case, the parties shall use best efforts
                  to resolve expeditiously any disagreement.

           6.2.3. The Research Organization will credit or return to the Sponsor
                  any funds not expended or obligated by the Research
                  Organization in connection with the Research prior to the
                  effective termination date of the notice of termination.

           6.2.4. Immediately upon receipt of a notice of termination, the
                  Research Organization shall cease conducting research
                  procedures related to proposal.

           6.2.5. Termination of this Agreement by either party shall not affect
                  the rights and obligations of the parties accrued prior to the
                  effective date of the termination.

7.   DELIVERY OF UNUSED MATERIAL

     7.1.  Upon termination or completion of the Research, all unused
compounds, drugs, equipment, whether or not completed, and other related
materials that were furnished to the Research Organization by or on behalf of
the Sponsor shall be returned to the Sponsor at the Sponsor's expense.

8.   APPLICABLE LAW

     8.1.  This Agreement shall be governed by the laws of the states of Indiana
and California.

9.   PUBLICATIONS:

     9.1.  Research Organization desires to independently publish or publicly
release information about any data or techniques arising out of the Research,
then, following completion of the Research and at least sixty (60) days prior
to submission of any manuscript or abstract for publication, Research
Organization will submit a copy of the intended publication to Sponsor for
review and comment. Sponsor will review the intended publication to ensure that
the nature of Sponsor's support is set forth in the publication; to determine
any confidential information should be deleted from the proposed publication;
to determine whether there is patentable matter contained in the proposed
publication; if the Sponsor request in writing, Research Organization will
withhold publication for an additional sixty (60) days to allow for filing a
patent application or taking such other measures as Sponsor deems appropriate
to establish and preserve its proprietary rights.

10.  PATENT RIGHTS:

     10.1. Research Organization shall not acquire any rights of any kind
whatsoever with respect to Sponsor's intellectual property as a result of
performance under this Agreement or


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           otherwise. All inventions, discoveries and technology relating to the
           Research, whether patentable or not, conceived by the Research
           Organization or Sponsor, solely or jointly with others as a result of
           work done under this Agreement, shall be, and remain, at all times
           the sole and exclusive property of Sponsor. Any and all acts
           necessary to assist Sponsor in perfecting its rights to any and all
           inventions, discoveries and technology shall be performed by the
           Research Organization or the Research Organization's employees or
           agents, as appropriate. The Research Organization warrants by the
           execution of this Agreement that it has not entered or will enter
           into any contractual agreement or relationship which would in any way
           conflict with or compromise Sponsor's proprietary interest in, or
           rights to, any inventions, discoveries or technology existing at the
           time of the execution of this Agreement or arising out of or related
           to the performance thereunder.

11.  REPRESENTATIONS AND WARRANTIES:

     11.1. Research Organization represents and warrants that: (a) it has the
           technical competence and legal authority to enter into this
           Agreement; (b) it has no obligation to any other party which is in
           conflict with its obligations under this Agreement; (c) it will
           conduct the Research in strict accordance with in full compliance
           with all applicable local, state and federal laws and regulations for
           the protection of the rights, safety and welfare for human subjects
           in clinical trials.

             RESEARCH AGREEMENT/PILOT cGMP MANUFACTURING FACILITIES

IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
duplicate by proper persons thereunto duly authorized.

RESEARCH ORGANIZATION                   SPONSOR
KP Pharmaceutical Technology, Inc.      Pain Therapeutics, Inc
1212 Rappel Dr.,                        250 East Grand Avenue, Suite 70
Bloomington, In 47404-1702              South San Francisco, CA 94080


  /s/  RS MATHARU                         /s/  REMI BARBIER
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            (Signature)                             (Signature)

   Rajinder PS Matharu, Ph.D.                 Dr. Remi Barbier
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        (Print or Type Name)                   (Print or Type Name)

          President & CEO                        President & CEO
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              (Title)                                (Title)

              5-14-99                                5/14/99
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              (Date)                                 (Date)