<PAGE>
                                                                    Exhibit 10.7

Certain confidential portions of this Exhibit were omitted by means of blackout
of the text (the "Mark"). This Exhibit has been filed separately with the
Secretary of the Securities and Exchange Commission without the Mark pursuant to
the Company's Application for Order Granting Confidential Treatment pursuant to
Rule 406 under the Securities Act of 1933, as amended.

WEST PHARMACEUTICAL SERVICES LOGO



                       WEST PHARMACEUTICAL SERVICES, [NC.


                         and its wholly owned subsidiary




                   WEST PHARMACEUTICAL SERVICES LAKEWOOD, INC.


                                       and



                     INNOVATIVE DRUG DELIVERY SYSTEMS, INC.



--------------------------------------------------------------------------------
                        CLINICAL MANUFACTURING AGREEMENT

                                (Nasal Morphine)
--------------------------------------------------------------------------------





                            Dated September 22, 2000



<PAGE>



                        CLINICAL MANUFACTURING AGREEMENT

                 THIS IS A CLINICAL MANUFACTURING AGREEMENT (the
"Agreement"), dated as of September 22, 2000 (the "Effective Date"), among West
Pharmaceutical Services, Inc., a Pennsylvania corporation, ("West") with offices
at 101 Gordon Drive, Lionville, PA, 19341, its wholly owned subsidiary West
Pharmaceutical Services Lakewood, Inc., a Delaware corporation with offices at
1200 Paco Way, Lakewood, New Jersey 08701 ("West/Lakewood"), and Innovative Drug
Delivery Systems, Inc., a Delaware corporation, ("IDDS") with offices located at
787 Seventh Avenue, New York, New York 10019.

                                   Background

                 [ILLEGIBLE] directly and through its subsidiaries, including
West Pharmaceutical Services [ILLEGIBLE] Clinical Research Centre Ltd.
("West/Nottingham") is engaged in, [ILLEGIBLE] and development of delivering
pharmaceutical compounds [ILLEGIBLE] drug-delivery technology. West/Nottingham
is the owner of [ILLEGIBLE]. interest in certain issued letters patent and
pending patent applications relating to the use of chitosan for the transmucosal
delivery of pharmaceutical compounds, including the delivery of Morphine via the
nasal mucosa. West, West/Nottingham and IDDS have entered into a License
Agreement, dated as of August 25, 2000 (the "License Agreement"), under which
West/Nottingham has granted IDDS an exclusive worldwide license to make, have
made, use, import, have imported, sell and have sold products including Morphine
covered by such patents for the treatment of pain in [ILLEGIBLE].

                 [ILLEGIBLE] West/Nottingham have completed pre-clinical
development work for the [ILLEGIBLE] of a product for administering Morphine via
the nasal mucosa. IDDS desires that West and West/Lakewood (West and
West/Lakewood are sometimes collectively referred to herein as the "West Group")
manufacture the product in quantities sufficient for IDDS's clinical trials, and
the West Group agrees to manufacture such clinical supplies, all on the terms
and conditions set forth herein.

                                    Agreement

         Accordingly, intending to be legally bound, the Parties agree as
follows:

I.       Definitions. All capitalized terms used but not defined herein shall
         have the same meaning ascribed thereto in the License Agreement. Terms
         defined in this Section 1 and parenthetically elsewhere in this
         Agreement will throughout this Agreement have the meanings here or
         there provided. Defined terms may be used in the singular or in the
         plural, as sense shall require.

         1.1.     "Clinical Product" means the product containing Morphine
                  combined with chitosan or a chitosan derivative or salt for
                  administration to humans and animals via the nasal mucosa for
                  use in conducting clinical trials in support of obtaining
                  approval to market Licensed Products including Morphine.


<PAGE>



          1.2.     "Product Specification" means:

                   1.2.1.   with respect to the unit dose nasal spray Clinical
                            Product, the specification set forth in "Schedule A"
                            hereto; and

                   1.2.2.   with respect to the multi-dose nasal spray Clinical
                            Product, the specification to be developed by West
                            in cooperation with IDDS.

2.       Agreement to Manufacture, Package, Purchase and Sell. The West Group
         agrees to manufacture, package and sell to IDDS, and IDDS agrees to
         purchase from the West Group, the Clinical Product.

3.       Requirements Contract. IDDS agrees to purchase from the West Group one
         hundred percent (100%) of IDDS's requirements for conducting all of its
         clinical trials for the Clinical Product and all other activities
         necessity or appropriate to obtain Regulatory Agency approval in the
         Major Market Countries for the marketing of the Clinical Product in the
         Field of Use. IDDS shall be excused from the requirements of this
         Section 3 if and to the extent that:

         3.1.     IDDS is required by law or a Regulatory Agency to use Clinical
                  Product manufactured by a third Person in support of the
                  development and commercialization of a Licensed Product to be
                  manufactured by a third Person; or

         3.2.     the West Group is unable to supply 100% of IDDS's
                  requirements for Clinical Product.

4.       Material Supply. The West Group will supply the materials and
         components necessary for the manufacture and packaging of the Clinical
         Product, as set forth and subject to the limitations of "Schedule B"
         hereto.

5.       Price. The price for the Clinical Product to be manufactured and sold
         hereunder is set forth in Schedule B hereto.

6.       Taxes. All sales, use, gross income or other taxes, and import and
         export duties levied by any governmental body, except U.S. federal and
         state and foreign income taxes, relating to the Clinical Product
         manufactured hereunder shall be paid by IDDS. If the West Group is
         required to pay any such taxes or duties IDDS shall reimburse the West
         Group within 30 days of receipt of West's or West/Lakewood's invoice
         therefor.

7.       Purchase Orders and Forecasts: DEA Requirements.

         7.1.     Firm orders for Clinical Product shall be placed by IDDS in
                  writing or orally, provided that all oral orders are confirmed
                  in writing promptly thereafter. All orders shall specify
                  quantities ordered, delivery request date, shipping
                  instructions and such other information as the West Group may
                  reasonably request in order to allow the West Group to fill
                  the order. Lead times on orders will be established by the
                  West Group in writing.


                                       2
<PAGE>


          7.2.     To assure timely delivery of Clinical Product, the West Group
                   and IDDS shall cooperate fully in estimating and scheduling
                   orders of Clinical Product to be placed by IDDS. Prior to the
                   end of each calendar year during the term of this Agreement,
                   IDDS shall provide to the West Group IDDS's estimate of its
                   quarterly requirements of Clinical Product for the next
                   calendar year. Clinical Product shall be delivered only in
                   response to firm IDDS purchase orders indicating exact
                   quantities ordered and requested delivery dates.

         7.3.     IDDS shall, by March 1 of each calendar year, use its best
                  efforts to provide the West Group with all information on
                  IDDS's requirements for Morphine (and any other drug or other
                  substance listed as a "controlled substance" under Section 811
                  of the Controlled Substances Act) for the subsequent calendar
                  year (e.g., by March 1, 2001 for calendar year 2002) necessary
                  for the West Group to file the appropriate regulatory
                  applications with the U.S. Drug Enforcement Agency.

8.       Order Cancellations. Orders are subject to cancellation, change,
         reduction in amount or suspension of deliveries only by mutual
         agreement of the parties or upon 90 days prior written notice. IDDS may
         cancel any order that the West Group fails to deliver in accordance
         with the terms of this Agreement.

9.       Delivery and Payment Terms. Delivery and payments terms are as set
         forth in Schedule B hereto. If delivery is deferred, the goods may be
         stored as provided in Section 11 hereof

10.      Delivery: Risk of Loss. All sales are F.O.B. point of manufacture.
         Shipping dates are estimates only, which are not guaranteed and are
         based upon prompt receipt from IDDS of all necessary shipping and other
         information. The West Group reserves the right to make delivery in
         installments, which shall be separately invoiced and paid for by IDDS
         when due per invoice, without regard to subsequent deliveries.

11.      Storage. If Clinical Product is not shipped within 30 days after
         notification has been made to IDDS that they are ready for shipping for
         any reason beyond the West Group's control, including IDDS's failure to
         give shipping instructions, the West Group may store the Clinical
         Product at IDDS's risk and expense in a warehouse or upon the West
         Group's premises, and IDDS will pay all handling, transportation and
         storage costs at the prevailing commercial rates promptly following the
         West Group's submission of invoices for such costs.


                                       3
<PAGE>



 12.     Insurance. Until payment in full of the purchase price, IDDS shall
         maintain insurance covering all Clinical Product sold by the West Group
         to IDDS in such amounts and against such risks as is customary by
         companies engaged in the same or similar business and similarly
         located, and shall, upon the West Group's request, furnish evidence of
         such insurance reasonably satisfactory to the West Group.

13.      Inspection. IDDS will examine each shipment upon its arrival at the
         specified destination and will promptly notify the West Group in
         writing of any shortage, loss or damage apparent under reasonable
         visual examination. Failure by IDDS to notify the West Group within 15
         days of such examination will constitute a waiver of all claims for
         such shortage, loss or damage. Claims for loss or damage to Clinical
         Product in transit by common carrier must be made to the carrier and
         not the West Group-

14.      Clinical Product Warranties: Remedies and Limitations of Liability:
         Indemnification.

         14.1.    Representations and Warranties. Each of West and West/Lakewood
                  represents and warrants to IDDS that:

                  14.1.1.  at the time of delivery, all Clinical Product will
                           conform to the applicable Product Specification; and

                  14.1.2.  the Clinical Product will be manufactured and
                           packaged in accordance with all applicable laws,
                           rules and regulations.

                  THE FOREGOING CONSTITUTE THE SOLE WARRANTIES AND ARE IN LIEU
                  OF ALL OTHER EXPRESSED AND IMPLIED WARRANTIES, INCLUDING
                  WITHOUT LIMITATION THE IMPLIED WARRANTIES OF MERCHANTABILITY
                  AND FITNESS FOR A PARTICULAR PURPOSE. The foregoing warranties
                  run only to IDDS. There are no oral promises, representations
                  or warranties collateral to or affecting this Agreement.

         14.2.    Limitation of Remedies. If any of the Clinical Product sold
                  hereunder shall be proved to be nonconforming with the
                  specifications, the West Group will replace such nonconforming
                  Clinical Product, or at the West Group's option, provide IDDS
                  with a credit for the invoice price, plus IDDS's shipping
                  costs, with respect to the Clinical Product in question.
                  Clinical Product claimed to be nonconforming shall not be
                  returned without the West Group's prior written approval. The
                  West Group may request that IDDS destroy nonconforming
                  Clinical Product at the West Group's expense, such destruction
                  to be carried out in compliance with applicable law and
                  certified in writing by an appropriate officer of IDDS. THE
                  PROVISIONS OF THIS SECTION 14.2 SETS FORTH IDDS'S EXCLUSIVE
                  REMEDY, AND WEST'S AND WEST/LAKEWOOD'S SOLE LIABILITY, ON ANY


                                       4
<PAGE>


         CLAIM, WHETHER IN TORT, CONTRACT, OR OTHERWISE RELATING TO OR ARISING
         OUT OF DEFECTIVE OR NON CONFORMING CLINICAL PRODUCT AND IN NO EVENT
         SHALL WEST OR WEST/LAKEWOOD BE LIABLE FOR INDEMNIFICATION OF IDDS ON
         ACCOUNT OF ANY CLAIM ASSERTED AGAINST IDDS OR FOR ANY OTHER FURTHER
         DAMAGE, COST, EXPENSE OR LIABILITY OF ANY KIND WHATSOEVER, WHETHER
         DIRECT OR INDIRECT, INCLUDING WITHOUT LIMITATION INCIDENTAL OR
         CONSEQUENTIAL DAMAGES TO IDDS OR ITS AFFILIATES ARISING FROM OR RELATED
         TO ANY DEFECT IN MATERIALS OR WORKMANSHIP, EXCEPT TO THE EXTENT THAT
         SUCH DAMAGE, COST, EXPENSE OR LIABILITY ARISES FROM THE GROSS
         NEGLIGENCE OR WILLFUL MISCONDUCT OF WEST OR WEST/LAKEWOOD.

14.3.    Indemnification.

         14.3.1.  Indemnification by the West Group. Each of West and
                  West/Lakewood shall indemnify, defend and hold IDDS, its
                  directors, trustees, officers, employees and Affiliates
                  harmless from and against any and all claim, loss, damage,
                  liability, injury, cost or expense, including without
                  limitation expenses of litigation and reasonable attorneys'
                  fees, (collectively "Damages") arising out of or in connection
                  with any claims made or suits brought against IDDS to the
                  extent arising from the gross negligence or willful misconduct
                  of West or West/Lakewood, or their Affiliates, subcontractors
                  or agents; provided however that West and West/Lakewood shall
                  not be obligated to provide indemnification hereunder to the
                  extent that any Damages result from the gross negligence or
                  willful misconduct of IDDS.

         14.3.2.  Indemnification by IDDS. IDDS shall indemnify, defend and hold
                  West and West/Lakewood and their directors, trustees,
                  officers, employees and Affiliates harmless from and against
                  any and all Damages (including without limitation the death of
                  or injury to any individual or out of any damage to property)
                  arising out of or in connection with any claims made or suits
                  brought against West or West/Lakewood to the extent arising
                  from the gross negligence or willful misconduct of IDDS, its
                  Affiliates, subcontractors and agents; provided however that
                  IDDS shall not be obligated to provide indemnification
                  hereunder to the extent that any Damages result from the gross
                  negligence or willful misconduct of West or West/Lakewood.


                                       5
<PAGE>


15.      Term and Termination.

         15.1.    Term and Expiration. This Agreement shall become effective as
                  of the Effective Date and, unless terminated earlier pursuant
                  to this Section 15, shall remain in effect for a period of two
                  (2) years, or if earlier until the last to occur Launch Date
                  after the Clinical Product has been Launched in all Major
                  Market Countries.

         15.2.    Termination. This Agreement may be terminated as follows:

                  15.2.1.  By mutual consent of the parties at any time.

                  15.2.2.  By either West or IDDS upon written notice to the
                           other:

                  (a)      in the event of a default by the other party in the
                           due observance or performance of any covenant,
                           condition or limitation of this Agreement or the
                           License Agreement, but only if the defaulting party
                           will not have remedied its default within 30 days (or
                           five days if the default is the failure to pay money
                           when due) after receipt of written notice of such
                           default from the non-defaulting party; or

                  (b)      if the other party is adjudicated a bankrupt, if
                           insolvency, bankruptcy, reorganization, debt
                           adjustment or liquidation proceedings are instituted
                           against such party and not dismissed within 60 days
                           after the institution thereof, if a receiver or
                           trustee is appointed for such party and its assets,
                           or if such party makes a general assignment for the
                           benefit of its creditors.

                  15.2.3.  Survival. Notwithstanding the termination of this
                           Agreement, all rights and obligations of the parties
                           that by their terms survive termination shall remain
                           unaffected until the complete satisfaction or
                           expiration thereof

16.      Miscellaneous Provisions.

         16.1.    Force Majeure. No party hereto shall be held liable or
                  responsible to any other party nor be deemed to have defaulted
                  under or breached this Agreement for failure or delay in
                  fulfilling or performing any term of the Agreement when such
                  failure or delay is caused by or results from causes beyond
                  the reasonable control of the party failing to perform or
                  delayed in performing including, but not limited to, fire,
                  floods, embargoes, war, acts of war (whether war be declared
                  or not), insurrections, riots, civil commotions, strikes,
                  lockouts or other labor disturbances, acts of God or acts,
                  omissions or delays in acting by any governmental authority or
                  the other party.


                                       6
<PAGE>


 16.2.    Assignment. This Agreement may not be assigned or otherwise
          transferred by any party without the consent of the other parties;
          provided, however, that either party may, without such consent, assign
          this Agreement and its rights and obligations hereunder to its
          Affiliates or in connection with the transfer or sale of all or
          substantially all of its business, or in the event of its merger or
          consolidation or change in control or similar transaction. Any
          purported assignment in violation of the preceding sentence shall be
          void. Any permitted assignee shall assume all obligations of its
          assignor under this Agreement.

 16.3.    Severability. In the event any one or more of the provisions contained
          in this Agreement should be held invalid, illegal or unenforceable in
          any respect, the validity, legality and enforceability of the
          remaining provisions contained herein shall not in any way be affected
          or impaired thereby, unless the absence of the invalidated
          provision(s) adversely affect the substantive rights of the parties.
          The parties shall in such an instance use reasonable efforts to
          replace the invalid, illegal or unenforceable provision(s) with valid,
          legal and enforceable provision(s) which, insofar as practical,
          implement the purposes of this Agreement.

 16.4.    Notices Any notice or other communication pursuant to this Agreement
          will be deemed duly made or given: (i) when delivered by hand; (ii) 10
          business days after it is mailed, certified or return receipt request,
          with postage prepaid; (iii) when sent, if sent by telecopy (with
          receipt confirmed) or (iv) when receipt is signed for when sent by
          Federal Express, DHL or other express delivery service. Notices will
          be addressed as follows:

          If to the West Group to:

          West Pharmaceutical Services, Inc.
          101 Gordon Drive
          Lionville, Pennsylvania 19341
          Attention:  Division President, Drug Delivery Systems
          Telecopier: 610 594-3013

          With a required copy to:

          West Pharmaceutical Services, Inc.
          101 Gordon Drive
          Lionville, Pennsylvania 19341
          Attention:  General Counsel
          Telecopier: 610 594-3013


                                       7
<PAGE>

         If to IDDS to:

         Innovative Drug Delivery Systems, Inc.
         787 Seventh Avenue
         New York, NY 10019
         Attention:  David M. Tanen
         Telecopier: 212 554-4355

17.5.    Governing Law/Jurisdiction. This Agreement is acknowledged to have been
         made in and shall be construed, governed, interpreted and applied in
         accordance with the federal patent laws and the laws of the
         Commonwealth of Pennsylvania, without giving effect to its conflict of
         laws provisions. The state and federal courts in Pennsylvania shall
         have exclusive jurisdiction over any litigation arising under this
         Agreement.

17.6.    Arbitration Clause. Any controversy or claim arising out of or relating
         to this Agreement or the breach thereof, which remains unsettled
         following diligent efforts by each party to reach a mutually acceptable
         resolution of such claim or controversy, shall be settled by
         arbitration administered by the American Arbitration Association and
         judgment on the award rendered by the arbitrator(s) may be entered in
         any court having jurisdiction thereof. This Section shall not prevent
         any party from seeking equitable relief

17.7.    Entire Agreement. This Agreement, the Schedules attached hereto and
         incorporated herein by reference, and the Confidentiality Agreement
         among the Parties entered into as of the Effective Date constitute the
         entire Agreement between the parties with respect to the subject matter
         hereof, and supersede all proposals, oral or written, purchase orders,
         confidentiality agreements and all other communications between the
         parties with respect to such subject matter.

17.8.    Modifications. The terms and conditions of this Agreement may be
         amended only by a written instrument duly executed by the Parties.

17.9.    Headings. The headings and captions preceding the Sections hereof are
         inserted solely for convenience of reference, and will not constitute
         part of this Agreement, nor will they affect its meaning, construction
         or effect.

17.10.   Independent Contractors. It is expressly agreed that West/Lakewood and
         IDDS are independent contractors with respect to this Agreement and
         that the relationship between them created by this Agreement shall not
         constitute a partnership, joint venture or agency. No party hereto
         shall have the authority to make any statements, representations or
         commitments of any kind, or to take any action, which shall be binding
         on any other party, without the prior consent of the party to do so.


                                       8
<PAGE>


17.11.   Waiver. The waiver by any party of any right hereunder or the failure t
         perform or of a breach by any other party shall not be deemed a waiver
         o any other right hereunder or of any other breach or failure by said
         other party whether of a similar nature or otherwise.

17.12.   Counterparts. The Agreement may be executed in one or more
         counterparts, each of which shall be deemed an original, but all of
         which together shall constitute one and the same instrument.



IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective duly authorized officers.

INNOVATIVE DRUG DELIVERY SYSTEMS, INC.





By: /s/ Mark C. Rogers
   ---------------------------------------------
   Mark C. Rogers, M.D., Chairman





WEST PHARMACEUTICAL SERVICES, INC.





By:  /s/ Donald E. Morel Jr.
   ---------------------------------------------
   Donald E. Morel Jr., Division President, Drug Delivery Systems


WEST PHARMACEUTICAL SERVICES LAKEWOOD, INC.





By:  /s/ Robert S. Hargesheimer
   ---------------------------------------------
   Robert S. Hargesheimer, Vice President


                                       9

<PAGE>


                                   SCHEDULE B

                       Terms of supply and price breakout











                                       2
<PAGE>






                CLINICAL MANUFACTURING AGREEMENT (NASAL MORPHINE)
                                   SCHEDULE B


                         Terms of Manufacture and Supply

1.   Unit dose devices will be used through Phase II trials.

2.   Multiple dose devices will be used in Phase III trials.

3.   Pending execution of a commercial supply agreement all clinical supplies
     will be produced in a Class 10,000 clinical manufacturing facility.

4.   West will purchase all raw materials, formulate, fill, bulk package, bulk
     label, and perform necessary release and stability testing on the clinical
     supplies under GMP conditions.

5.   Prices do not include the cost of clinical or blind labeling of the product
     or other special handling.

6.   All orders will be for the minimum batch size or whole multiples thereof,
     which will be shipped net of any units required to be retained for QA
     and/or stability testing.

7.   Payments terms are as follows:

                  40% with order
                  30% upon notification of completion of manufacturing
                  30% upon notification of completion of release testing

                  Other than payments required with each order, amounts are due
                  upon invoicing.

8.   Product will be shipped at IDDS direction and cost


<PAGE>



CLINICAL MANUFACTURING AGREEMENT (NASAL MORPHINE)
SCHEDULE B
Nasal Morphine Clinical Supply Manufacturing

--------------------------------------------------------------------------------
Unit Dose Devices

Minimum batch size = *** units
Maximum batch size = *** units

Batch set-up cost = $***
Unit cost = $*** per unit

Above costs apply to *** formulations and placebo.

The device will be a Pfeiffer standard unit dose liquid nasal device delivering
100 microliters per dose.

--------------------------------------------------------------------------------

Multi-Dose Devices

Minimum batch size = *** units

Maximum batch size *** units

The manufacturing costs per batch are broken out as follows:

Formula Strength           Batch set-up         UnIt Cost
(mg/ml morphine)              Cost                 Cost
----------------           ------------         ---------
    ***                       $***               $***
    ***                       $***               $***
    ***                       $***               $***
    ***                       $***               $***

The device system will consist of a standard multi-dose liquid nasal device
(such as a Valois VP-7) delivering 100 microliters of nasal morphine solution
per dose and a 15 ml amber glass vial filled with 12 ml of morphine solution.

--------------------------------------------------------------------------------

Stability Testing

Cost per batch tested = $***

Stability tests follow ICH guidelines as follows:

 - Stability of batch Including shelf life determination
 - Storage @ 25C/60%RH (inverted & upright), Testing @ 1,3,6,9,12,18,24 & 36
   months
 - Storage @ 40C/175%RH (Inverted & upright), Testing @ 0,1,3,6 & 9 months
 - Test by Method I, Method II, USP [791], USP [788], USP [755], Torque & Visual
   inspection

Note that the following unit volumes are necessary in order to perform the above
described stability testing:

   Unit dose - *** units/batch tested
   Multi-dose - *** units/batch tested
--------------------------------------------------------------------------------

*** Represents material which has been omitted pursuant to an Application for
    Order Granting Confidential Treatment and filed separately with the
    Commission.