<PAGE>   1
                                                                   Exhibit 10.5


                               RESEARCH AGREEMENT

         THIS AGREEMENT effective this 1st day of April, 2001, by and between
BioDelivery Sciences International, Inc. ("Sponsor") and the University of
Medicine and Dentistry of New Jersey ("University").


                                   WITNESSETH
                                   ----------

         WHEREAS, the research program contemplated by this Agreement is of
mutual interest and benefit to University and to Sponsor, will further the
instructional and research objectives of University in a manner consistent with
its status as a nonprofit, tax-exempt, educational institution, and may derive
benefits for both Sponsor and University through inventions, improvements
and/or discoveries.

         NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants herein contained, the parties hereto agree to the following:

ARTICLE 1 - DEFINITIONS

As used herein, the following terms shall have the following meanings:

1.1      "Project" shall mean the project described in Appendix A and additional
         research supported by Sponsor under this agreement, under the direction
         of the Principal Investigator.

1.2      "Contract Period" shall mean April 1, 2001 through December 31, 2005.

1.3      "University Intellectual Property" shall mean individually and
         collectively all inventions, improvements and/or discoveries which are
         conceived and/or made (i) by one or more employees of University, or,
         (ii) jointly by one or more employees of University and by one or more
         employees of Sponsor in the performance of the Project, as set forth in
         Article 6.

1.4      "Sponsor Intellectual Property" shall mean individually and
         collectively all inventions, improvements and/or discoveries which are
         conceived and/or made by one or more employees of Sponsor, as set forth
         in Article 6.

1.5      "Principal Investigator" shall mean Raphael J. Mannino, Ph.D.

ARTICLE 2 - RESEARCH WORK

2.1      University shall allocate space in accordance with the requirements
         noted in Appendix B and commence the performance of the Project
         promptly after the effective date of this Agreement, and shall use
         reasonable efforts to perform such Project substantially in accordance
         with the terms and conditions of this Agreement. The Sponsor and
         University shall center into the real estate lease agreement attached
         hereto as Appendix C for the space provided for by Sponsor


                                       1
<PAGE>   2
         by University. Said lease shall be for a period of five (5) years
         commencing on April 1, 2001.

2.2      In the event that the Principal Investigator becomes unable or
         unwilling to continue the Project, either Leila Zarif, Ph.D. or Susan
         Gould-Forgerite, Ph.D. may, at the Sponsor's election, be substituted
         as Principal Investigator. If Sponsor is unwilling to select either Dr.
         Zarif or Dr. Gould-Forgerite as Principal Investigator or if the person
         selected is unable or unwilling to continue the Project, and a mutually
         acceptable substitute is not available, University and/or Sponsor shall
         have the option to terminate this Agreement upon at least ninety (90)
         days prior written notice to the other party.

2.3      Employees of Sponsor or other invitees of Sponsor rendering services
         for Sponsor in connection with the Project or other projects as Sponsor
         shall deem, shall have the right to be present and perform services at
         the space provided in University's facility. The Parties agree that
         certain University personnel will become the Sponsor's employees as of
         June 1, 2001. Those employees that will remain employees of the
         University are shown on Appendix B. BDSI shall provide evidence that it
         holds general liability insurance of at least $1,000,000.00 and that
         such insurance is applicable to its personnel and other invitees
         working at University space. BDSI warrants that it is in full
         compliance with all aspects of New Jersey worker compensation law for
         its employees. BDSI acknowledges that the right of its employees to be
         present and perform services at University's facility will cease upon
         the expiration or termination of this Agreement. BDSI shall furnish
         copies of invention disclosures resulting from work being performed, by
         University employees, at University facilities, to University's Office
         of Patents and Licensing for review in confidence by University.

2.4      Sponsor shall have the right to bring materials used in performance of
         their Projects to and from the University without the need for case by
         case approval by the University.

2.5      The Sponsor shall approve all expenses charged to grants including
         salaries and also shall approve assignment of employees to grant.

ARTICLE 3 - REPORTS AND CONFERENCES

3.1      Written program reports shall be provided by the Principal Investigator
         acting through the University to Sponsor every three (3) months, and a
         final report shall be submitted by University within thirty (30) days
         after the conclusion of the Contract Period or earlier termination of
         this Agreement.

3.2      During the term of this Agreement, representatives of University will
         meet with representatives of Sponsor at times and places mutually
         agreed upon to discuss the progress and results, as well as ongoing
         plans, or changes therein, of the Project to be performed hereunder.


                                       2
<PAGE>   3
ARTICLE 4--COSTS, BILLINGS, AND OTHER SUPPORT

4.1      Total costs to Sponsor hereunder are shown on Appendix B, payment shall
         be made by Sponsor according to the schedule set forth in Appendix B.

4.2      Purchased items shall be handled as follows:

         4.2.1    All equipment, supplies and animals purchased hereunder shall
                  remain the property of Sponsor both during and after the term
                  hereof.

         4.2.2    Sponsor shall have the right to purchase such equipment,
                  supplies and animals itself rather than through University.

4.3      In the event of early termination of this Agreement, Sponsor shall pay
         all costs incurred by the University pursuant to Appendix B as of the
         date of termination, including non-cancellable obligations.

ARTICLE 5--PUBLICATIONS

5.1      Sponsor recognizes that under University policy, the results of the
         Project are publishable. Accordingly, University researchers engaged in
         the Project shall be permitted to present at symposia, national, or
         regional professional meetings, and to publish in journals, theses or
         desertions, or otherwise of their own choosing, methods and results of
         the Project; provided, however, that Sponsor shall have been furnished
         copies of any proposed publication or presentation at least three (3)
         months in advance of the submission of such proposed publication or
         presentation to a journal, editor, or other third party. Sponsor shall
         have: one (1) month, after receipt of said copies, to object to such
         proposed presentation or proposed publication because there is
         patentable subject matter which needs protection. In the event that
         Sponsor makes such objection, said researcher(s) shall refrain from
         making such publication or presentation for a maximum of two (2) months
         from the date of receipt of such objection in order for University or
         Sponsor, as the case may be, to file patent application(s) with the
         United States Patent and Trademark Office and/or foreign patent
         office(s) directed to the patentable subject matter contained in the
         proposed publication or presentation.

ARTICLE 6--INTELLECTUAL PROPERTY

6.1      All rights and title to University Intellectual Property shall belong
         to University, subject to the terms and conditions of this Agreement.

         6.1.1    All rights and title to Sponsor Intellectual Property shall
                  belong to Sponsor, subject to the terms of this Agreement.


                                       3
<PAGE>   4
6.2      Rights to inventions, improvements and/or discoveries, whether
         patentable or copyrightable or not, relating to the Project made
         solely by employees of Sponsor shall belong to Sponsor. Such
         inventions, improvements and/or discoveries made by Sponsor will not
         be subject to the terms and conditions of this Agreement.

6.3      University will promptly notify Sponsor of any University Intellectual
         Property conceived and/or made during the Contract Period under the
         Project. Sponsor will direct that patent applications or other
         applications for other intellectual property protection be filed.
         Sponsor shall promptly prepare, file, and prosecute such U.S. and
         foreign application in Sponsor's name. University Intellectual
         Property improvements, and discoveries patentable or copyrightable
         shall be governed by the License Agreement by and between Sponsor and
         University dated 26th day of September, 1995. Sponsor shall bear all
         costs incurred in connection with such preparation, filing,
         prosecution and maintenance of U.S. and foreign application(s)
         directed to said University Intellectual Property. Sponsor shall make
         sure that such application(s) will cover, to the best of Sponsor's
         knowledge, all items of commercial interest and importance. Sponsor
         shall be responsible for making decisions regarding scope and content
         of application(s) to be filed and prosecution thereof, and University
         shall be given an opportunity to review and provide input thereto.
         Sponsor shall keep University advised as to all developments with
         respect to such application(s) and shall promptly supply to University
         copies of all papers received and filed in connection with the
         prosecution thereof in sufficient time for University to comment
         thereon. If Sponsor elects not to file patent applications or other
         applications for other intellectual property, it shall so notify the
         University and thereafter the University shall have the rights set
         forth in paragraph 6.4 below.

6.4      If Sponsor decides to discontinue the financial support of the
         prosecution or maintenance of the protection, University shall be free
         to file or continue prosecution or maintain any such application(s),
         and to maintain any protection issuing thereon in the U.S. and in any
         foreign country at University's sole expense.

6.5      If Principal Investigator leaves the employ of University, all patents
         and other intellectual property rights with respect to projects
         underway, initiated or conceived while such Principal Investigator was
         employed by University shall remain licensed to Sponsor pursuant to
         University's license agreement with Sponsor.

ARTICLE 7-GRANT OF RIGHTS

7.1      All University Intellectual Property (as defined in Section 1.3) shall
         automatically be licensed to Sponsor pursuant to the terms and
         conditions of the existing License Agreement among University, Sponsor
         and Albany Medical College.

                                       4
<PAGE>   5
ARTICLE 8--TERM AND TERMINATION

8.1      This Agreement shall become effective upon the date first hereinabove
         written and shall continue in effect for the full duration of the
         Contract Period unless sooner terminated in accordance with the
         provisions of this Article 8.

8.2      In the event that either party shall commit any breach of or default in
         any of the terms or conditions of this Agreement, and also shall fail
         to remedy such default or breach within ninety (90) days after the
         receipt of written notice thereof from the other party hereto, the
         party giving notice may, at its option and in addition to any other
         remedies which it may have at law or in equity, terminate this
         Agreement by sending notice of termination in writing to the other
         party to such effect, and such termination shall be effective as of the
         date of the receipt of such notice. University shall promptly return to
         Sponsor uncommitted funds, withholding only that amount needed to
         discharge obligations incurred as noted in Section 8.3.

8.3      Termination of this Agreement by either Party for any reason shall not
         affect the rights and obligations of the parties accrued prior to the
         effective date of termination of this Agreement. No termination of this
         Agreement, however effectuated, shall affect the Sponsor's rights and
         duties under Article 7 hereof, or release the parties hereto from their
         rights and obligations under Articles 4, 5, 6, 7, 9 and 13, nor shall a
         termination of this Agreement affect any other agreements between the
         University and the Sponsor.

ARTICLE 9--INDEPENDENT CONTRACTOR

9.1      In the performance of all services hereunder:

         9.1      University shall be deemed to be and shall be an independent
                  contractor and, as such, University shall not be entitled to
                  any benefits applicable to employees of Sponsor.

         9.2      Neither party is authorized or empowered to act as agent for
                  the other for any purpose and shall not on behalf of the other
                  enter into any contract, warranty or representation as to any
                  matter. Neither shall be bound by the acts or conduct of the
                  other.

ARTICLE 10--INSURANCE

10.1     University warrants and represents that University has adequate
         liability insurance, such protection being applicable to officers,
         employees and agents while acting within the scope of their employment
         by University.


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<PAGE>   6

10.2     Each party hereby assumes any and all risks of personal injury and
         property damage attributable to the negligent acts or omissions of
         that party and the officers, employees, invitees, and agents thereof.

ARTICLE 11-GOVERNING LAW

11.1     This Agreement shall be governed and construed in accordance with the
         laws of the State of New Jersey.

ARTICLE 12-ASSIGNMENT

12.1     This Agreement shall not be assigned by either party without the prior
         written consent of the parties hereto.

ARTICLE 13-NON-DISCLOSURE

13.1     Anything in this Agreement to the contrary notwithstanding, any and
         all knowledge, knowhow, practices, processes, or other information
         ("Confidential Information") disclosed or submitted which is
         designated as confidential information by either party to the other
         shall be received and maintained by the receiving party in strict
         confidence and shall not be disclosed to any third party. Furthermore,
         neither party shall use Confidential Information of the other party
         for any purpose other than those purposes specified in this Agreement.
         Each employee of a party receiving Confidential Information shall be
         apprised of the duty and obligation to maintain Confidential
         Information in confidence and not to use such Information for any
         purpose other than in accordance with the terms and conditions of this
         Agreement.

13.2     Nothing contained herein will in any way restrict or impair either
         party's right to use, disclose or otherwise deal with any Confidential
         Information of the other party which at the time of its receipt:

         13.2.1   Is generally available in the public domain, or thereafter
                  becomes available to the public through no act of the
                  receiving party; or

         13.2.2   Was independently known prior to receipt thereof, or made
                  available to such receiving party as a matter of lawful right
                  by a third party.

13.3     The obligations for protection of Confidential Information of the
         other party shall remain in effect for a period of five (5) years
         after the termination or expiration of this Agreement.


                                       6



<PAGE>   7
ARTICLE 14--AGREEMENT MODIFICATION

14.1     Any agreement to change the terms of this Agreement in any way shall be
         valid only if the change is made in writing and approved by mutual
         agreement of authorized representatives of the parties hereto.

ARTICLE 15--NOTICES

15.1     Notices, invoices, communications and payments hereunder shall be
         deemed made if given by registered or certified envelope, postage
         prepaid, and addressed to the party to receive such notice, invoice or
         communication at the address given below, or such other address as may
         hereafter be designated by notice in writing:

If to Sponsor:

         Dr. Raphael J. Mannino
         BioDelivery Sciences International, Inc.
         UMDNJ-New Jersey Medical School
         Admin. Building 4
         185 South Orange Ave.
         Newark, New Jersey 07103

With a copy to:

         Catherine S. Gidlow
         Bearden, Breckenridge & Gidlow, L.L.C.
         7701 Forsyth Blvd., Suite 375
         St. Louis, Missouri 63105

If to University:

         University of Medicine and Dentistry of New Jersey
         Legal Management
         65 Bergen Street
         Newark, NJ 07107

With a copy to:

         University of Medicine and Dentistry of New Jersey
         Patents and Licensing
         3rd Floor
         Liberty Plaza
         335 George Street
         New Brunswick, NJ 08901


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<PAGE>   8

ARTICLE 16-ENTIRE AGREEMENT

16.1     The terms of this Research Agreement and of that certain lease of even
         date herewith, represent the entire rights and obligations of the
         parties one to the other and supercede and cancel the prior Research
         Agreements, rights and obligations of the parties one to the other.





IN WITNESS WHEREOF, the parties have executed this Agreement in duplicate as
of the day and year first above written.

BIODELIVERY SCIENCES                         UNIVERSITY OF MEDICINE
AND INTERNATIONAL, INC.                      DENTISTRY OF NEW JERSEY



By:    /s/ Leila Zarif                       By:    /s/ Denise Mulkern
       -----------------------------                ----------------------------
       Leila Zarif                                  Denise Mulkern
Title: Vice President & Treasurer            Title: Vice President for Finance
                                                    & Treasurer

                                       8


<PAGE>   9

                                  APPENDIX A

                               RESEARCH PROJECTS

SPACE ALLOCATION

Space required for the performance of this research project will include 8,000
sq. ft. of research and office space located in ADMC Building 4, and use of
UMDNJ Departmental equipment, together with additional space as needed in the
Research Animal Facility.

SCOPE OF RESEARCH

BioDelivery Sciences International, Inc. supports the research mission of The
University of Medicine and Dentistry to investigate fundamental processes in
biomedical sciences. To this end, this research grant will support research in
the areas immunology, cell growth regulation, and drug delivery.

ANTIGEN SPECIFIC MANIPULATION OF THE IMMUNE RESPONSE USING CELL MEMBRANE
DERIVED LIPOSOME VACCINES

         Antigen-specific regulation of the immune response allows for
alteration of the response to antigen without causing undesirable side effects
that are often associated with non-specific immunotherapy. The ability to
specifically focus the immune system to designated antigens in order to enhance
or inhibit the immune response provides the ultimate potential to 1-produce
safer and more effective vaccines and immunotherapies, and 2-design
immunosuppresive formulations for use against autoimmune diseases.

         The use of liposome vaccines as therapeutic agents offers a unique
advantage because they can be formulated to include specific antigens while, at
the same time, their composition is immunologically inert and they can be
easily modified. Formulation of liposomes from cell membranes offers an
additional advantage in that they are able to present antigen to TH cells
within the context of the antigen presenting cell membrane molecules, thereby
more closely mimicking natural antigen presentation.

         Within the past 10 years it has become clear that each stage of the
immune response is controlled not only by antigen-receptor interactions, by also
by costimulatory, accessory molecules such as CD 80 and CD 86. Experimental
evidence suggests that CDS0 and CD86 play important roles in the regulation of
the immune response to different antigens. The goal of this study is to
investigate the individual roles of CD80 and CD86 in the modulation of the
humoral immune response to influenza virus as a well understood and easily
manipulated model system.

         Membrane extracts from B cells that have been exposed to virus in
vitro, are used to formulate liposome vaccines. To study the immunological
consequence of CDS0 and/or CD86 is the immune response, these molecules are
depletion and removed from the membrane extracts


                                       9
<PAGE>   10
prior to vaccine formulation. The vaccines were administered to immunologically
naive mice, who are later challenged and boosted with whole, UV-inactivated
virus.

         Thus far we have observed that removal of CD80 from the membrane
liposomes caused a significant increase in the humoral immune response to flu
antigen. The total immunoglobulin (IG) titer was greater than the titer
achieved from animals treated with non-depleted, virus-exposed B cell membrane
liposome formulations. The IgG1 titer was nearly three times as great as the
positive control at 14 days after the first whole virus challenge and was more
than double the positive control titer at 14-days after the second whole virus
challenge.

         Depletion of CD86, as well as depletion of both CD80 and CD86 invoked
lower influenza-specific total Ig titers, and therefor down regulated the
immune response.

         The major finding of this study thus far is that depletion of
costimulatory molecules from membrane liposome vaccine formulations
significantly changes the humoral immune response to a specific antigen.

         This work is being performed by Ms. Christine A. Woititz, a graduate
student in the Department of Pathology and Laboratory Medicine, UMDNJ-New
Jersey Medical School.

FINDING THE GENES RESPONSIBLE FOR GROWTH CONTROL USING A REVERSIBLE INHIBITOR
OF TRANSFORMED CELL GROWTH

         It has been suggested that the cell surface membrane plays a direct
role in maintaining and regulating cell growth. For example, non-transformed
cells have different surface membrane configurations than transformed cells.
Transformed cells as well as mitotic cells have been associated with an
agglutinable surface configuration. Investigations have established a
correlation between the agglutinable surface configurations and the growth of
both normal and transformed cells.

         "Covering up" this agglutinable cell surface using the non-toxic,
nonagglutinable form of Concanavalin A (Con A), Succinylated Con A (SCA),
restores normal growth regulation. As a result, cells grow to densities similar
to untransformed cells. This growth inhibition is reversible either by the
replacement of media containing SCA with fresh media, or by the addition of
a-methyl mannoside (a-MM), a specific inhibitor of Con A.

         Cell cycle analysis of SV40 transformed 3T3 cells that have undergone
growth inhibition with SCA tended to accumulate the G1 phase of the cell cycle,
whereas SV40 transformed 3T3 cells not treated with SCA tended to accumulate in
the S and G2 phases. Similarly 3T3 fibroblasts accumulate in the G1 phase
during growth arrest due to high cell densities or nutrient starvation. Time
lapse cinemicroscopy studies of 3T3 cells treated with SCA have shown increased
cell-cell adhesion between daughter cells after mitosis and cells that have
come into contact with each other while migrating, again in a manner which
mimics density dependent growth inhibition. The exact biochemical mechanism of
contact inhibition is unknown.

         SCA may be interacting with the cell membrane and causing an overall
change in the cell surface membrane. Another possible mechanism is that SCA is
interacting with a specific


                                      10



<PAGE>   11
membrane receptor triggering a signal transduction cascade that leads to the
synthesis of a second messenger. If this is the case, then it should be
possible to identify the immediate genes responsible for growth inhibition
induced by SCA.

         The goal of this study is to investigate the gene expression patterns
stimulated by SCA using two malignant tumor cell lines, Saos-2 (osteosarcoma)
and RD (rhabdomyosarcoma). Both are malignant mesenchymal neoplasms of
childhood. Rhabdomyosarcoma is a skeletal muscle neoplasm occurring primarily
in the first decade of life, while osteosarcoma, a bone neoplasm, occurs
primarily in the second decade of life.

         Our current working hypothesis is that SCA controls growth inhibition
by interacting with cell surface receptors and triggering a signal transduction
cascade thus resulting in the activation of growth inhibitory genes and/or down
regulation of cell growth stimulatory genes. Our plan is to study the gene
expression patterns of tumor cells in response to SCA via DNA Microarray
technology. When genes with immediate changes in expression are characterized,
the pathway and receptors responsible for controlling cell cycle inhibition can
be determined.

         The identification of genes that are functionally related to the early
phases of neoplastic transformation could ultimately lead to new targets for
cancer drug therapy and approaches to cancer gene therapy.

This work is being performed by Ms. Diane Nordstrom a graduate student in the
Department of Pathology and Laboratory Medicine, UMDNJ-New Jersey Medical
School.

COCHLEATE MEDIATED DELIVERY OF DRUGS TO MACROPHAGE IN VITRO

         Particle scavenging cells, such as macrophage, are the first line of
defense against many microbial infections. However, many microbes, which induce
severe human clinical infections, have been shown to infect macrophage and
avoid destruction. Indeed, macrophage are one of the major strategic areas of
survival and replication for a number of pathogens including Candida,
Mycobacteria, HIV, Leishmania, and Chlamydia.

         Cochleate delivery vehicles are stable phospholipid-calcium
crystalline precipitates composed of simple, naturally occurring materials. They
have a unique multilayered structure consisting of a large, continuous, solid,
lipid bilayer sheet rolled up in a spiral, with little or no internal aqueous
space. Cochleates are stabilized at low pH, and deliver their contents through
membrance fusion.

         Amphotericin B (AmB), is still the most powerful drug against human
fungal diseases. Cochleates have been shown to be highly effective in vivo as
delivery vehicles for AmB in murine models of human fungal infections. The
mechanism of drug delivery mediated by cochleates is, thus far, unknown. It is
possible that in vivo, macrophage play an important role in the removal and
uptake of cochleates, via an endocytotic mechanism.


                                       11
<PAGE>   12

         Since macrophage also play an important role in the host defense and
clearance of fungi and parasites, it is important to further investigate the
interaction between macrophage and cochleates.

         The hypothesis that is being tested in this study is that cochleates
can be taken up by macrophage into edocytic vacuoles; cochleates remain stable
within the vacuoles, and slowly release their contents in an active form.

         J774A.1 macrophage are used as an in vitro model system to investigate
the hypothesis that drug-cochleate formulations are taken up by macrophage,
concentrated within the vacuoles, and allow gradual release of encochleated
drug.

         In this study Rhodamine-labeled cochleates as well as the safety and
efficacy of AmB cochleates (CAMB) in vitro are assessed. Efficacy of CAMB
against C. albicans was assessed using both prophylactic and post-infection
dosing. When macrophage were incubated with CAMB overnight and washed,
challenge with CA resulted in a CFU count close to zero. Microscopic
observation reveals that CAMB are not toxic to the macrophage even at the
highest doses studied. The CAMB are accumulated by the macrophage at high
levels resulting in large distended vacuoles. It is suggested that the CAMB are
concentrated within the vacuoles and are released gradually over time.

         Fluorescence was observed within the vacuoles up to 72 hrs. More
dramatically, we found that Amphotericin B cochleates at low doses (0.1ug
AmB/mL) protect macrophage from challenge by C. albicans.

         These data indicate that, in vitro, CAMB become accumulated within the
macrophage, and are non-toxic, and that the AmB is released in a biologically
active form. These observations suggest that, in vivo, low doses of CAMB can be
administered. Amphotericin B cochleates may become concentrated at the cellular
site of infection, and may provide protection for macrophage if
prophylactically administered prior to challenge with C. albicans.

         Further studies will investigate other drug cochleate formulations,
in order to investigate the direct effect of cochleates on macrophage
function. In addition, the compositions of cochleates will be changed in order
to investigate the relationship between the physical and chemical
characteristics of cochleates, and their potential as drug delivery vehicles.

         This work is being performed by Ms. Sara Krause, a graduate student in
the Department of Pathology and Laboratory Medicine, UMDNJ-New Jersey Medical
School.


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<PAGE>   13
                                   APPENDIX B

 Research Agreement Between UMDNJ and BioDelivery Sciences International, Inc.


<Table>
<Caption>
PERSONNEL                                             SALARY AND FRINGE BENEFITS
---------                                             --------------------------
<S>                                                   <C>
Personnel including Fringe Benefits at 8% for
  graduate student(1)                                          $51,840.00

SUPPLIES
--------

Chemicals(2)                                                   $ 40,000.00

         Total Direct Costs                                    $ 91,840.00

Indirect Costs @ 8% of Direct Costs                            $  7,347.00(3)
Facilities Use Charge - Dean Medical School(4)                 $ 40,000.00
                                                               -----------

                  Total Budget                                 $139,187.00
                                                               ===========
</Table>


-----------------
(1) Includes three (3) graduate students at $17,280 each.
(2) Estimated expenses, to be adjusted semi-annually as to exact costs.
(3) For 2001, for 2002, indirect costs will be 12% of Direct Costs, for 2003,
    indirect costs will be 16% of direct costs, for 2004, indirect cost will be
    20% of direct costs and for 2005, indirect costs will be 24% of direct
    costs.
(4) This refers to the 8,000 square foot lab space being utilized by BDSI at
    185 South Orange Ave., Bldg. 4, which shall be leased to Sponsor by a real
    estate lease agreement to be executed on or around April 1, 2001.


                                       13