Exhibit 10.10

                   CUSTODIAL AND COLLATERAL SECURITY AGREEMENT


         THIS CUSTODIAL AND COLLATERAL SECURITY AGREEMENT (the "Agreement"),
dated as of March 20, 1997, is by and among OFFITBANK, a New York banking
corporation ("Custodian"), JEFFERSON BANK, a Pennsylvania-chartered banking
institution ("Bank") and NEOSE TECHNOLOGIES, INC., a Delaware corporation
("Borrower").

                                   BACKGROUND

         In connection with the issuance by the Montgomery County Industrial
Development Authority of its $8,400,000 Federally Taxable Variable Rate Demand
Revenue Bonds (Neose Technologies, Inc. Project), Series B of 1997 (the "Series
B Bonds"), Borrower and Bank entered into a Reimbursement Agreement dated as of
March 1, 1997 (the "Borrower Reimbursement Agreement") and Borrower executed
various other related documents, including, inter alia, a note (the "Note") to
evidence its obligations to Bank (all such agreements and documents,
collectively the "Loan Documents"). The term "Loan Documents" does not include
the Series A Bonds or the documents executed in connection therewith. Borrower's
obligations to Bank are secured by, inter alia, a mortgage, assignment of leases
and security agreement (the "Mortgage") covering certain real property,
equipment, fixtures, and improvements situate at 102 Witmer Road, Horsham,
Pennsylvania.

         Pursuant to the terms of the Loan Documents, Borrower has agreed to
certain financial covenants, including a requirement to maintain specific
minimum levels of liquid investments in an Investment Account (defined below)
and a Collateral Account (defined and set forth below) with a financial
institution acceptable to Bank. In consideration of Borrower's opening and
maintaining the Investment Account with Custodian, Custodian hereby agrees to
provide certain other services, as described herein, to Borrower and Bank to
facilitate the monitoring of the financial covenants between Borrower and Bank
and to ensure proper control and funding of the Collateral Account pursuant to
the terms of this Agreement.

         NOW THEREFORE, to ensure that Borrower remains in compliance with the
aforementioned financial covenants and other requirements of the Loan Documents,
the parties, intending to be legally bound, hereby agree as follows:

1) Investment Account
         Borrower hereby agrees to open and maintain an investment account (the
"Investment Account") with Custodian, comprised of, inter alia, the Securities
hereafter described. The term "Securities" means unencumbered cash (including
money market funds and the like) any obligation of the United States Treasury,
Federal Agency Securities and other investment grade securities and repurchase
transactions of any of the foregoing types of Securities having a combined fair
market value of at least $20,000,000, and includes Securities now owned and/or
hereafter acquired by Borrower (and maintained in the Investment Account and/or
the



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Collateral Account), as well as any and all proceeds of the foregoing. The
Investment Account is identified in detail on Schedule "A" attached hereto and
made a part hereof.

2) Collateral Account

         Borrower also agrees to establish with Custodian, a Collateral Account
to be titled, "Jefferson Bank Collateral Account Re: Neose Technologies, Inc."
(the "Collateral Account"). Borrower hereby assigns and pledges to Bank, and
grants to Bank a first priority security interest in, all of Borrower's right,
title and interest in, the Collateral Account and all Securities therein,
whether now owned or hereafter acquired, and any and all proceeds thereof. Bank
shall possess all right, title and interest in the Collateral Account and any
and all Securities transferred or deposited therein, from time to time, and Bank
shall be the "entitlement holder" (as such term is defined in ss.8102 of the
Pennsylvania Uniform Commercial Code). Custodian shall: (i) transfer Borrower's
position with respect to the Collateral Account to Bank on Custodian's books
(such entry shall satisfy both ss.8106(d)(1) of the Pennsylvania Uniform
Commercial Code and ss.8313(1)(d) of the Uniform Commercial Code in effect in
the State of New York); (ii) comply with entitlement orders from Bank without
the further consent of Borrower; and (iii) send Bank confirmation of all
purchases of Securities placed in the Collateral Account. Custodian shall be
Bank's agent for the purpose of holding any and all Securities in the Collateral
Account and their proceeds.

         The Collateral Account is and shall be under the sole dominion and
control of Bank, and neither Borrower, nor any person or entity claiming by,
through or under Borrower, shall have any control over the use of, or any right
to withdraw any amount of the Securities from the Collateral Account. The
Collateral Account is identified in detail on Schedule "B" attached hereto and
made a part hereof. The Collateral Account shall also constitute the "Bank's
Pledge Account B", described in the Borrower Reimbursement Agreement.
Notwithstanding anything to the contrary herein, Borrower may enforce the
obligations of Custodian as set forth in paragraph 3(c) below, and may direct
investments in the Collateral Account so long as no "Event of Default" exists
and is continuing under the Note or any other Loan Document, as set forth in
paragraph 4(a) below.

3) Securities

         For ease in facilitating the instructions set forth herein, the
"$4,200,000" and "$8,400,000" amounts referenced below assume that Borrower's
obligations to Bank pursuant to the Loan Documents are $8,400,000. If, at the
close of any business day, Borrower's obligations under the Loan Documents are
greater or less than $8,400,000, Bank will instruct Custodian, as needed, to
transfer a proportionate share of Securities either from or to the Investment
Account, to ensure that the remaining value of the Securities in the Collateral
Account remains consistent with the amounts required pursuant to the Loan
Documents.

         (a) Borrower shall maintain in the Investment Account and/or the
Collateral Account, as applicable, Securities which shall have an aggregate fair
market value not less than $20,000,000. If at any time the aggregate fair market
value of the Securities in the Investment Account (based solely on Custodian's
fair market valuation) falls below a fair market value of

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<PAGE>



$20,000,000 (but not less than $15,000,000), Custodian shall immediately and
automatically, but in no event later than the next business day, transfer from
the Investment Account to the Collateral Account, an amount of Securities such
that the aggregate fair market value of the Securities in the Collateral Account
is not less than $4,200,000. If, at any time, the sum of the aggregate fair
market value of the Securities in the Investment Account and the aggregate fair
market value of the Securities in the Collateral Account is less than
$15,000,000, Custodian shall immediately and automatically transfer from the
Investment Account to the Collateral Account, an amount of Securities such that
the aggregate fair market value of the Securities in the Collateral Account is
not less than $8,400,000. Bank hereby authorizes Custodian to accept
instructions from Borrower with respect to the purchase, sale and distribution
of Securities in the Investment Account, so long as the instructions from
Borrower are not inconsistent with the terms and conditions of this Agreement.

Failure of Custodian to transfer Securities from the Investment Account to the
Collateral Account as set forth in this Agreement, within two (2) business days,
shall constitute an event of default under this Agreement and the Loan Documents
and shall result in Bank's option to make immediate demand for payment in full
of all sums due under the Loan Documents, or to exercise any remedies available
to Bank thereunder, or under any other Loan Document related thereto.

         (b) If, from time to time, after Custodian transfers Securities from
the Investment Account to the Collateral Account as set forth in section 3(a)
above, Borrower is able to provide additional Securities to Custodian in:

         (i) an amount so that the fair market value of the Securities in the
         Investment Account, together with the fair market value of the
         Securities in the Collateral Account shall have a fair market value
         equal to at least $15,000,000, but less than $20,000,000, Custodian
         shall transfer Securities from the Collateral Account to the Investment
         Account, in an amount such that the remaining fair market value of the
         Securities in the Collateral Account shall not be less than $4,200,000;
         or

         (ii) an amount so that the fair market value of the Securities in the
         Investment Account, together with the fair market value of the
         Securities in the Collateral Account shall have a fair market value
         equal to at least $20,000,000, Custodian shall transfer the entire
         balance of Securities in the Collateral Account to the Investment
         Account (unless Bank receives written notice from Borrower as set forth
         in section 5 below).

         (c) In the event Borrower's obligations pursuant to the Loan Documents
are less than $8,400,000 and Bank fails to give the instruction to Custodian
within three (3) days thereafter as provided for herein, Borrower may give such
notice and Custodian shall be entitled to rely thereon, upon approval of the
Bank.

4) Borrower's Ability to Trade: Notice of Event of Default
         (a) Bank hereby authorizes Custodian to accept instructions from
Borrower with respect to the Collateral Account (so long as consistent with this
Agreement) unless and until


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Bank notifies Custodian that an "Event of Default" has occurred under the Note,
or under any other Loan Document and is continuing (each, an "Event of
Default"), and that Bank has curtailed such authority (such notice, a "Notice of
Default"). The Notice of Default may be either written or oral from a duly
authorized agent of Bank, however, if oral, such oral notice must be followed up
in writing from a duly authorized agent of Bank. Upon receipt of a Notice of
Default from Bank, with respect to the Collateral Account, Custodian shall rely
only on instructions given to it by Bank. Prior to receiving a Notice of
Default, Custodian may provide all services to Borrower upon which Borrower and
Custodian may from time to time agree, so long as the provisions of paragraph 3
above and paragraph 6 below are met.

         (b) Upon receiving a Notice of Default from Bank, Custodian shall
immediately and automatically, but in no event later than the next business day,
transfer Securities from the Investment Account to the Collateral Account, such
that the Securities in the Collateral Account shall have a fair market value
(based solely on Custodian's fair market valuation) equal to $8,400,000. Upon
the occurrence of an Event of Default and the funding of the Collateral Account
as hereinbefore set forth, if necessary, Borrower shall cooperate with Bank and
execute any and all additional documentation which may be necessary to ensure
Bank has a first perfected lien security interest in the Securities in the
Collateral Account, in accordance with the laws of the Commonwealth of
Pennsylvania (and/or any other jurisdiction, if necessary). If Borrower cures,
to Bank's reasonable satisfaction, all outstanding Events of Default, including
without limitation the Event of Default which triggered Bank to send Custodian
the Notice of Default, Custodian shall, after receipt of written notice from
Bank to such effect, transfer Securities back to the Investment Account so that
the fair market value of Securities in the Collateral Account remains consistent
with the amounts required to be held therein in accordance with the terms
hereof.

5) Requirements for Release of Other Collateral
         Upon written request from Borrower, Bank shall satisfy the lien of the
Mortgage and release other collateral securing the Note if, and only if:

         (a) the Securities in the Collateral Account have a fair market value
equal to or greater than $8,400,000; and

         (b) the Bank receives Borrower's written request to Bank for the
release of the other collateral stating:

         "In consideration of Bank's agreement to release the lien of its
         Mortgage, Assignment of Leases and Security Agreement dated March 1,
         1997, which was executed by Borrower in connection with, inter alia,
         the issuance of the Montgomery County Industrial Development Authority
         Federally Taxable Variable Rate Demand Revenue Bonds (Neose
         Technologies, Inc. Project) Series B of 1997, Borrower confirms that it
         currently has and will maintain Securities with a fair market value of
         $8,400,000.00 in the Collateral Account, for as long as Borrower has
         any obligations to Bank pursuant to the Loan Documents."




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6) Duties of Custodian
         (a) The sum of the Securities in the Investment Account and the
Collateral Account must at all times have a fair market value of at least
$20,000,000. In addition, all Securities in the Investment Account must at all
times consist of unencumbered cash (including money market funds and the
like),any obligation of the United States Treasury, Federal Agency Securities
and other investment grade securities and repurchase transactions of any of the
foregoing types of Securities with a remaining maturity of less than three (3)
years). Custodian agrees that any new Securities purchased from proceeds of the
Collateral Account shall automatically be placed into the Collateral Account and
become subject to this Agreement.

         (b) Custodian shall monitor the fair market value of the Securities on
each business day that Custodian is open for business, so that Custodian may
immediately and automatically transfer funds from the Investment Account to the
Collateral Account if necessary, as set forth in section 3(a) above.

         (c) Custodian shall send Bank confirmation of all purchases of
Securities into the Collateral Account or transfers from the Investment Account
to the Collateral Account. Custodian shall also provide Bank and Borrower with
copies of all ongoing regular reports and statements issued with respect to the
Investment Account and Collateral Account, and such further information as Bank
may reasonably request from time to time.

         (d) Custodian shall provide Bank and Borrower with immediate notice of
any event which would create a requirement to transfer funds into or out of the
Collateral Account.

         (e) Custodian shall cooperate with Bank and execute all documents
required to perfect Bank's first lien security interest in the Collateral
Account.

         (f) Custodian shall mark its records to show Bank's perfected first
lien security interest in all Securities held in the Collateral Account.

7) Indemnity
         Borrower hereby agrees to pay, indemnify and hold Custodian harmless
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever (including, without limitation, legal fees) with
respect to the performance of this Agreement by Custodian or any of Custodian's
directors, officers, agents or employees, unless arising from its or their own
gross negligence or willful misconduct.

8) Fees and Expenses
         (a) Borrower hereby agrees to pay any additional incremental fees and
expenses of Custodian which are caused by reasonable instructions given to
Custodian by Bank hereunder.




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<PAGE>



         (b) Custodian will advise Bank and Borrower should Custodian believe
that Borrower has failed to pay any fees and expenses assessed against Borrower
hereunder. Failure to pay such fees or expenses shall not effect the validity or
enforceability of this Agreement or terminate or modify Custodian's duties
hereunder.

9) Limitations on Liability of Custodian
         Notwithstanding any other provision of this Agreement, it is agreed by
the parties hereto that Custodian shall not be liable for any action taken by it
or any of its directors, officers, agents or employees in accordance with this
Agreement except for its or their own gross negligence or willful misconduct.

10) Irrevocable Instructions
         Borrower acknowledges that the agreements made by it and the
authorizations granted by it herein are irrevocable and self-operative unless
otherwise specifically agreed to in writing by Bank and that the authorizations
granted in this Agreement are powers coupled with an interest.

11) Waiver of Right of Set-Off and Liens
         With respect to the Investment Account and the Collateral Account only,
Custodian waives with respect to the Securities, for its own account and as
agent for any Third Party Subcustodian (defined below), with respect to all of
its existing and future claims against Borrower or any affiliate thereof, all
existing and future rights of set-off and liens against the Collateral Account,
the Investment Account and any proceeds therefrom, including but not limited to
those rights granted to Custodian in Section 10 of the "U.S. Securities Custody
Agreement" entered into between Borrower and Custodian and the "U.S. Securities
Custody Agreement" entered into between Borrower and Custodian to establish the
Collateral Account. This waiver is in effect for so long as Borrower is indebted
to Bank pursuant to the Loan Documents; provided, however, that Custodian shall
retain the right to charge the Investment Account for all compensation and
expenses with respect to the Collateral Account and the Investment Account. At
the time Borrower is no longer indebted to Bank pursuant to the Loan Documents,
Bank will promptly notify Custodian.

12) Negative Pledge
         (a) Borrower shall not borrow any funds from Custodian or any person or
entity performing subcustodial, safekeeping, clearing, settlement or other
services or transactions in connection with the Collateral Account and/or the
Investment Account, including without limitation, a branch of any United States
bank or any entity that may be affiliated with a United States Bank (each, a
"Third Party Subcustodian").

         (b) Neither Borrower nor Custodian shall not enter into a control
agreement with respect to the Securities, the Collateral Account or the
Investment Account with any person or entity other than Bank.




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<PAGE>

13) Remedies
         (a) Upon the occurrence and continuance of an Event of Default under
any Loan Document, in addition to any other remedies set forth herein, Bank may,
at its option, exercise any or all rights and remedies available to Bank under
the Pennsylvania Uniform Commercial Code or otherwise available to it. All costs
and expenses including, without limitation, reasonable attorney's fees, agency
fees and registration fees incurred or paid by Bank in exercising any right,
remedy or power conferred hereunder and in the enforcement hereof, shall be paid
by Borrower.

         (b) After the occurrence and during the continuation of an Event of
Default, the proceeds of any Securities in the Collateral Account disposed of by
Bank at any time, may be applied to or on account of payment of the Note and in
such order as Bank may elect. In addition, Bank may, at its discretion, apply
any such proceeds to or on account of the payment of any costs and expenses
(including reasonable attorney's fees, legal expenses and registration costs)
incurred by Bank in the custody, preservation, use, operation, preparation for
sale, or in the enforcement of the Loan Documents or of the pledge and security
interest created hereby. Borrower waives and releases any right to require Bank
to collect any sums due under the Note from any other collateral securing the
Note under any theory of marshalling of assets, or otherwise, and specifically
authorizes Bank to apply any collateral against the Note in any manner Bank may
determine.

14) Effectiveness; Integrations; Amendments

         This Agreement shall be effective as of the date first above written.
This Agreement constitutes the entire agreement with respect to the subject
hereof and is binding upon the parties hereto and their respective successors
and assigns and shall inure to their benefit. Neither this Agreement nor any
provision hereof may be changed, amended, modified or waived orally, but only by
an instrument in writing signed by the parties hereto. Any provision of this
Agreement which may prove unenforceable under any law or regulation shall not
affect the validity of any other provision hereof. If any terms, conditions or
provisions of any other agreement between Custodian and Borrower are
inconsistent with the terms, conditions or provisions of this Agreement, the
terms, conditions and provisions of this Agreement shall apply.

15) Termination
         This Agreement shall automatically terminate on the date on which the
all sums due under the Loan Documents have been paid in full by the Borrower to
the Bank and all commitments of Bank with respect thereto have been terminated
and the Loan Documents have been released or canceled. Custodian shall be
entitled to rely on a written certificate of Bank to such effect (which Bank
will provide promptly upon termination of the Loan Documents), and upon receipt
of such written certification of Bank, Custodian shall rely on instructions from
Borrower as to the disposition of the Investment Account and the Collateral
Account.




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<PAGE>



16) Notices
         With respect to this Agreement (unless otherwise specified herein), all
notices, requests and demands to or upon the respective parties hereto to be
effective shall be in writing (including by telecopy or nationally recognized
courier service), and shall be deemed to have been duly made or given when
delivered by hand, or, in the case of telecopy notice, when sent, or, in the
case of a nationally recognized courier service, one business day after delivery
to such courier service, addressed as follows, or to such other address as may
be hereafter notified by the respective parties hereto:

         Bank:               Jefferson Bank
                             1607 Walnut Street
                             Philadelphia, PA 19103
                             Attn: Kenneth R. Frappier, Senior Vice President

         With a Copy to:     Kassab, Archbold & O'Brien, L.L.P.
                             214 North Jackson Street
                             P.O. Box 626
                             Media, Pa. 19063
                             Attn: Marc S. Stein, Esq.

         Custodian:          OFFITBANK
                             520 Madison Avenue
                             New York, NY 10022-4213
                             Attn: James C. Campbell, Director of Operations

         Borrower:           Neose Technologies, Inc.
                             102 Witmer Road
                             Horsham, PA 19044
                             Attn: P. Sherrill Neff, President

         With a Copy to:     Ballard, Spahr, Andrews & Ingersoll
                             1735 Market Street, 51st Floor
                             Philadelphia, Pa. 19103-7599
                             Attn: Lynn R. Axelroth, Esq.

17) Governing Law
         This Agreement shall be governed by, and interpreted in accordance
with, the laws of the Commonwealth of Pennsylvania. The parties hereby
irrevocably submit to the jurisdiction of, and agree to submit any claim or
dispute to the adjudication of a State or Federal Court sitting in the County of
Montgomery or the County of Philadelphia, Pennsylvania. Notwithstanding any
provision of any other Agreement between Custodian and Bank and/or Custodian and
Borrower (including without limitation, the "U.S. Securities Custody Agreements"
executed in conjunction with establishing the Collateral Account and the


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Investment Account) the laws of the Commonwealth of Pennsylvania shall apply to
attachment and perfection of Bank's security interest in the Collateral Account
and the Securities therein.

18) Counterparts
         This Agreement may be executed in any number of counterparts which
together shall constitute one and the same instrument.

19) Borrower's Right to Substitute Custodian
         Upon request of Borrower and after written consent and approval of
Bank, in its sole and absolute discretion, Borrower may substitute the financial
institution serving as Custodian under this Agreement. The substitute Custodian
must be willing to execute an agreement similar to this Agreement and to except
the same responsibilities and duties as this Custodian.

20) Attachment and Perfection
         The parties hereto intend that this Agreement constitute "control"
under Divisions 8 and 9 of the Pennsylvania Commercial Code and cause Bank to
have a first perfected security interest in the Collateral Account and the
Securities therein. The parties also intend that this Agreement constitute a
valid transfer of a security interest under ss.8-313 of the Uniform Commercial
Code in effect in the State of New York.


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         IN WITNESS WHEREOF, each of the parties hereto, intending to be legally
bound, has caused this Agreement to be executed and delivered on the date first
set forth above.

CUSTODIAN:                                       BANK:

OFFITBANK                                        JEFFERSON BANK

By: /s/ Jack D. Burks            (Seal)      By: /s/ Kenneth R. Frappier
   ------------------------------                -------------------------
                                                 Senior Vice President

Attest: /s/ Mary Bell                        Attest: /s/ Daniel O'Brien
        -------------------------                    ---------------------
                                                    Assistant Secretary


                                                    BORROWER:

                                                    Neose Technologies, Inc.

                                                    By: /s/ P. Sherrill Neff   
                                                        ---------------------
                                                        President    
(Seal)                                              
                                                    Attest: /s/ A. Brian Davis
                                                            ------------------
                                                            Secretary


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All Exhibits have been omitted.

Exhibit A - Investment Account

Exhibit B - Collateral Account

The Registrant hereby agrees to furnish supplmentally a copy of any omitted
exhibit to the Securities and Exchange Commission upon request.


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<PAGE>


                            NEOSE TECHNOLOGIES, INC.
                                102 Witmer Road
                          Horsham, Pennsylvania 19044







                                 March 20, 1997


Jefferson Bank
1607 Walnut Street
Philadelphia, PA 19103
Attention:                 Mr. Kenneth R. Frappier
                           Senior Vice President

OFFITBANK
520 Madison Avenue
New York, NY 10022-4213
Attention:                 Mr. James C. Campbell
                           Director of Operations

                  Re:      $8,400,000 Federally Taxable Variable Rate Demand
                           Revenue Bonds (Neose Technologies, Inc. Project),
                           Series B of 1997
Gentlemen:

                  This will confirm that, notwithstanding any provisions to the
contrary in Section 6.20 of the Reimbursement Agreement between Jefferson Bank
("Bank") and Neose Technologies, Inc. ("Borrower") dated as of March 1, 1997,
and the Custodial and Collateral Security Agreement among OFFITBANK, Bank and
Borrower, dated March 20, 1997 (the "Custodial Agreement"), Borrower shall have
until 4:00 p.m. eastern standard time on April 8, 1997 (the "Funding Date") to
fund the amount required to be funded in the Investment Account. Borrower shall
not be in default of any of its obligations under the Reimbursement Agreement
and Custodial Agreement with respect to funding the Investment Account, nor
shall OFFITBANK be required to provide Bank with any notices or to transfer any
Securities into the Collateral Account, so long as Borrower funds its required
contribution into the Investment Account on or before the Funding Date.

                  In the event Borrower fails to fund the Investment Account in
accordance with the terms of the Reimbursement Agreement, the Custodial
Agreement and this letter, on or before the Funding Date, then, without any
notice or opportunity to


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cure, such failure shall be deemed an Event of Default under the Reimbursement
Agreement (as defined therein) and the Custodial Agreement, and Bank shall be
entitled to exercise any and all remedies provided for in the Reimbursement
Agreement and the Custodial Agreement. (Capitalized terms and phrases not
defined in this letter shall have the meanings given to them in the Custodial
Agreement.)

         Please indicate your agreement by executing the enclosed extra copy of
this letter in the space provided and returning it to me.

                                                   Sincerely,

                                                   NEOSE TECHNOLOGIES, INC.


                                                     /s/ P. Sherrill Neff
                                                     --------------------------
                                                   P. Sherrill Neff
                                                   President


AGREED TO AND ACCEPTED by an authorized officer of:

JEFFERSON BANK

By: /s/ Kenneth R. Frappier
Name: Kenneth R. Frappier
Title: Senior Vice President
Date: March 20, 1997


OFFITBANK

By:  /s/ Jack D. Burks
     -----------------
Name:______________________
Title: _______________________
Date: March 20, 1997


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