<PAGE>

                                                                  Execution Copy

                                 EXHIBIT 10.18

                  DISTRIBUTION, LICENSE AND SUPPLY AGREEMENT

     This Distribution Agreement (the "Agreement") is entered into as of the
Effective Date (as defined below) by and between ANESTA CORP., a Delaware
corporation ("Anesta"), and ELAN PHARMA INTERNATIONAL LIMITED, an Irish company
("Elan").

                                   RECITALS

     Whereas, Anesta owns or holds licenses to certain technology relating to an
oral transmucosal drug delivery system for fentanyl citrate ("OT-fentanyl") and
manufactures the current OT-fentanyl Product (as defined below); and

     Whereas, Elan has substantial experience in the distribution, marketing and
sale of pharmaceutical and other health care products in the Territory (as
defined below).

     Whereas, Anesta and Elan desire to enter into this Distribution, License
and Supply Agreement in order for Elan or its Subdistributors (as defined below)
to distribute OT-fentanyl in the Territory; and

     Now, Therefore, in consideration of the foregoing and the covenants and
promises contained in this Agreement, the Parties agree as follows:

1.   DEFINITIONS

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

     1.1  "Affiliate" shall mean any corporation or entity controlling or
controlled or under common control with Elan or Anesta, as the case may be. For
the purposes of this Agreement, "control" shall mean the direct or indirect
ownership or control of more than 50% of the issued voting shares or other
voting rights of the subject entity to elect directors, or if not meeting the
preceding criteria, any entity owned or controlled by or owning or controlling
at the maximum control or ownership right permitted in the country where such
entity exists. For the purposes of this Agreement, Segix Italia S.p.a., which is
19.9% owned by an Affiliate of Elan, will be included in the definition as an
Affiliate.

     1.2  "Anesta Patents" shall mean all patents (including inventor"s
certificates) owned by or licensed (with right to sublicense) to Anesta (i)
which have issued as of the Effective Date or (ii) which issue at any time from
applications pending as of the Effective Date, or subsequently filed during the
term of this Agreement, which (in the case of both

                                       1.
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(i) and (ii)) claim inventions necessary or useful to the manufacture, use,
import, offer for sale or sale of OT-fentanyl Products, including without
limitation, any continuation, division, continuation-in-part, and any
provisional applications, and which patents have not expired or been held
invalid or unenforceable by a court of competent jurisdiction in a final,
unappealable decision, including without limitation all substitutions,
extensions, registrations, confirmations, re-examinations, reissues or renewals
of such patents. Exhibit C lists, as of the Effective Date, all such patents
that have issued and pending applications and shall be amended from time to time
to include patents or applications owned by or licensed to Anesta to the extent
they claim inventions necessary or useful to the use, import, sale or offer for
sale of OT-fentanyl Products within the Territory or an amendment to any Anesta
Patents.

     1.3  "Anesta Know-How" shall mean all of Anesta"s tangible or intangible
know-how, trade secrets, inventions (whether or not patentable), data, clinical
and preclinical results, information including but not limited to commercial
business information, and any physical, chemical or biological material, any
replication or any part of such material, which exists as of the Effective Date
or which is created during the term of this Agreement that is necessary or
useful to the manufacture, use or sale of OT-fentanyl Products.

     1.4  "Anesta Technology" shall mean the Anesta Patents and Anesta Know-How.

     1.5  "Anesta Trademarks" shall mean all trademarks and trade names owned or
licensed to Anesta (with right to sublicense) pertaining to OT-fentanyl Products
which are listed in Exhibit D. Trademarks and trade names that are owned and
used by Elan to identify itself as the distributor of OT-fentanyl Products are
specifically excluded from this definition. Exhibit D may be amended from time
to time, upon written agreement of the Parties or pursuant to Section 2.9(h), to
include additional trademarks or trade names not previously listed.

     1.6  "Commercial Strategy Team" shall mean the group of distributors of
OT-fentanyl Products, selected by Anesta to formulate a commercial strategy or
strategies for distribution and marketing of OT-fentanyl Products in territories
designated by Anesta.

     1.7  "Confidential Information" shall mean each Party"s information,
inventions, designs, copyright material, specifications, ideas, studies,
findings, conclusions, samples, manuals, operating and testing procedures,
formulas, formulations, know-how or data disclosed to the other Party pursuant
to this Agreement and shall include manufacturing, marketing, clinical and
regulatory, financial, personnel, technical, engineering, scientific, commercial
and other business information, reports and plans, whether in oral, written,
graphic or electronic form. "Confidential Information" shall include, without
limitation, any "Confidential Information" as such term is defined in the
Agreement of

                                       2.
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Non-Disclosure and Confidentiality dated April 30, 1999 by and between Elan and
Anesta as set out in Exhibit I.

     1.8  "DEA" shall mean the United States Drug Enforcement Agency.

     1.9  "Distribution Period" shall have the meaning assigned to such term in
Section 2.4.

     1.10 "Effective Date" shall mean the date on which the second Party signs
this Agreement.

     1.11 "FDA" shall mean the United States Food and Drug Administration or
successor agency whose approval is necessary to market the OT-fentanyl Products
in the US.

     1.12 "Forecast" shall mean a forecast for sales of Units on a Select
Country-by-Select Country basis for the Territory, as set out in Exhibit A as
amended from time to time pursuant to Section 2.5(a).

     1.13 "Field" shall mean any and all uses of OT-fentanyl Products in humans,
including but not limited to premedication, sedation, analgesia (conscious
sedation), and cancer pain management in hospitals, alternative health care
facilities, home and alternate site markets.

     1.14 [ ] shall mean a product containing [ ] which is sold [ ] and in one
or more countries [ ] for a [ ] in such country or countries, as the case may
be, and which is not [ ]

     1.15 "Gross Profit" shall mean Net Sales of OT-fentanyl Products, minus the
sum of the aggregate supply price for the corresponding OT-fentanyl Products
under Section 5.5(b) and 11% of Net Sales of OT-fentanyl Products.

     1.16 "Gross Sales" shall mean all amounts invoiced by Elan or its
Subdistributors for sales of OT-fentanyl Products.

     1.17 "Initial Indication" shall mean the indication(s) for OT-fentanyl
Products as set forth in the SPC of the initial marketing Regulatory Approval
therefor in a country of the Territory.

     1.18 "NDA" or "New Drug Application" shall mean an application to the FDA,
or the equivalent in a country other than the United States, to commence
commercial sale of a drug.

                                       3.
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     1.19 "NDA Package" shall mean Anesta"s NDA for OT-fentanyl Products and all
accompanying data and information including supplements and amendments submitted
by Anesta to the FDA in connection with such NDA.

     1.20 "Net Sales" shall mean Gross Sales, less (i) transportation charges
(but not such transportation charges incurred in connection with transporting
OT-fentanyl Products to the facility designated by Elan upon delivery by
Anesta), (ii) discounts, rebates, credits allowed for defective or returned
goods and other allowances (actually paid or allowed, including but not limited
to, prompt payment and volume discounts and other allowances granted to the end
commercial customer of the OT-fentanyl Products, whether in cash or trade),
(iii) transport insurance, and (iv) any tax, excise or governmental charge upon
or measured by the sale, transportation, delivery or use of the Products,
invoiced by Elan or its Affiliates to its customers.

     1.21 "OT-fentanyl Products" shall mean pharmaceutical products for use in
humans, which contain as their sole active ingredient fentanyl citrate, in
Anesta"s oral transmucosal titratable drug matrix attached to a handle (known as
OT-fentanyl) and in any dosage, including but not limited to those which are
covered by MAA applications [                      ] or any equivalent approval
issued by regulatory authorities in the Territory or any improvements on
products covered thereby. The current version of the OT-fentanyl Product is more
fully described in the Specifications as set out in Schedule G.

     1.22 "Parallel Imports" shall mean sales by a Third Party or Third Parties
of OT-fentanyl Products originating in a member state of the European Union
outside of the Territory to buyers within a Select Country.

     1.23 "Parties" shall mean Anesta and Elan, and "Party" shall mean either of
Anesta or Elan, as the context requires.

     1.24 "Pricing Approval" shall mean any approval or authorization of any
federal, state or local regulatory agency, department, bureau or other
government entity, establishing a pricing scheme for OT-fentanyl Products in a
country of the Territory.

     1.25 "Required Information" shall mean (i) such portions of the NDA Package
as are relevant to Anesta"s applications for Regulatory Approval (other than the
Chemistry, Manufacturing and Controls section) and (ii) such other information
owned by or licensed to Anesta (with the right to grant sublicenses), and which
in either case are required by regulatory authorities in the Territory for the
purpose of granting Regulatory Approvals.

     1.26 "Regulatory Approval" shall mean any approvals, licenses,
registrations, or authorization of any federal, state or local regulatory
agency, department, bureau or

                                       4.
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other government entity, required for the marketing and sale of OT-fentanyl
Products in a country of the Territory.

     1.27 "Reimbursement Approval" shall mean any approval or authorization of
any federal, state or local regulatory agency, department, bureau or other
government entity, establishing a health insurance reimbursement scheme for
OT-fentanyl Products in a country of the Territory.

     1.28 "Select Country" shall have the meaning given such term in Section
2.5(a).

     1.29 "SPC" shall mean the summary of OT-fentanyl Products characteristics
in a marketing Regulatory Approval in the Territory or an application therefor.

     1.30 "Specifications" shall mean the finished Products specifications of
the OT-fentanyl Products attached as Exhibit G.

     1.31 "Subdistributors" shall mean Affiliates of Elan or Third Parties,
which affiliates or Third Parties have been appointed by Elan and, in the case
of Third Parties, approved by Anesta pursuant to Section 2.1(c) to distribute
OT-fentanyl Products in the Territory.

     1.32 "Territory" shall mean Austria, Belgium, Germany, Greece, Ireland,
Italy (including San Marino and the Vatican City), Luxembourg, the Netherlands,
the Philippines, Switzerland, Taiwan and the United Kingdom.

     1.33 "Third Party" means any person or entity other than Anesta, Elan or
their respective Affiliates.

     1.34 "Unit" shall mean a single unit of the OT-fentanyl Products.

     1.35 "Valid Claim" means (a) an issued claim, covering OT-fentanyl
Products, of an issued patent within the Anesta Patents, which has not (i)
expired, been disclaimed or been canceled, (ii) been declared invalid by a
final, unreversed and unappealable decision of a court or other appropriate body
of competent jurisdiction, (iii) been admitted to be invalid or unenforceable
through reissue, disclaimer or otherwise, and/or (iv) been abandoned in
accordance with or as permitted by the terms of this Agreement or by mutual
written agreement; or (b) a claim, covering OT-fentanyl Products, included in a
pending patent application within the Anesta Patents that is being actively
prosecuted by Anesta or its licensor and which has not been (i) canceled, (ii)
withdrawn from consideration, (iii) finally determined to be unallowable by the
applicable governmental authority (and from which no appeal is or can be taken),
and/or (iv) abandoned.

2.   DISTRIBUTION OF OT-FENTANYL PRODUCTS

                                       5.
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     2.1  Exclusive Distributorship and License

          (a)  Appointment and Grant of License. Subject to the terms and
conditions of this Agreement, Anesta hereby appoints Elan to be its exclusive
distributor of OT-fentanyl Products in the Territory and grants to Elan, and
Elan hereby accepts, an exclusive (subject to Section 2.5), royalty bearing
license, sublicensable only pursuant to Section 2.1(c), under the Anesta
Technology and the Required Information to market, import, use, sell, offer for
sale, and distribute the OT-fentanyl Products in the Territory. As set forth in
Section 6.4(b) and only under the conditions set forth therein, Elan shall have
a right to manufacture OT-fentanyl Products.

          (b)  Limitations. Elan shall not, for the Distribution Period, and for
so long as Elan is selling the OT-fentanyl Products pursuant to this Agreement,
[



          ] Anesta shall not, during the Distribution Period and for so long as
Elan is selling the OT-fentanyl Products pursuant to this Agreement, actively
seek customers for the OT-fentanyl Products in the Territory, and in particular,
(but without prejudice to the foregoing generality) will not establish any
branch or maintain any distribution depot for OT-fentanyl Products in the
Territory.

          (c)  Subdistributors. Elan shall have the right to appoint its
Affiliates and Third Parties to distribute the OT-fentanyl Products in the
countries of the Territory, provided that Anesta gives its prior written
approval for any such Third Parties. Anesta shall not unreasonably withhold such
approval and shall either grant or deny such approval in writing within ten (10)
business days from receipt of a written request from Elan. Any Subdistributors
shall perform Elan"s obligations under this Agreement for the benefit of Anesta.
Notwithstanding the previous sentence, Elan shall remain primarily responsible
and liable to Anesta for the performance of this Agreement by its
Subdistributors. Elan shall have the right to sublicense the rights granted to
it under Section 2.1 to any Subdistributors.

     2.2  License to Elan"s Information. To the extent that Elan has the rights
to grant the following license without violating the terms of any agreement or
other agreement with any Third Party, Elan hereby grants to Anesta an exclusive
(except as to Elan and its Subdistributors), perpetual, fully paid-up,
worldwide, sublicensable license to use in the Field (a) the clinical,
preclinical and related information generated by Elan or its Subdistributors
with respect to the OT-fentanyl Products, and all intellectual property arising
therefrom, (b) all relevant safety information generated by Elan with respect to
the OT-fentanyl Products and (c) all marketing information with respect to the
OT-fentanyl Products that Elan reasonably deems useful to Anesta or to
distributors of OT-fentanyl Products outside the Territory; provided however,
that to the extent that such

                                       6.
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information is confidential Anesta will use commercially reasonable efforts to
ensure that any recipient of such information from Anesta enters into an
appropriate binder of confidentiality.

     2.3  Sublicense to Use Other Distributors" Information. To the extent that
Anesta has the rights to grant the following license without violating the terms
of any agreement or other arrangement with any Third Party, Anesta hereby grants
to Elan an exclusive (subject to Section 2.5), fully paid-up sublicense in the
Field within the Territory to use (a) the clinical, preclinical and related
information and inventions generated by other distributors of the OT-fentanyl
Products, and all intellectual property arising therefrom, and (b) all relevant
safety information with respect to the OT-fentanyl Products generated by other
distributors of the OT-fentanyl Products, provided however, that to the extent
that such information is confidential Elan will use commercially reasonable
efforts to ensure the confidentiality of such information

     2.4  Distribution Period. The Distribution Period shall commence upon the
first date of sale of OT-fentanyl Products in the Territory and shall expire [
                         ] years after the Effective Date unless terminated
earlier in accordance with the earlier termination provisions of this Agreement.

     2.5  Performance Obligations; Conversion and Termination of Rights.

          (a)  Determination of Forecasts. The Forecasts for [
               ] and such additional Forecasts for the other countries of the
Territory as may be added from time to time in accordance with the provisions of
this Section 2.5(a) (each such country being a "Select Country"), are and will
be set forth in Exhibit A. At any time, Elan may select one or more other
countries in the Territory to be Select Countries by preparing a forecast of
Elan"s Unit sales (whether directly by Elan or through Subdistributors) in such
country for the first [            ] years after the launch of the OT-fentanyl
Products in the respective country. Such Unit sales forecast shall be based upon
the assumption that Elan shall not participate or be interested in the marketing
or selling in the Territory products that are competitive with OT-fentanyl
Products, whether directly or through its Subdistributors. If Anesta agrees that
such forecast is reasonable, it will be added to Exhibit A as the Forecast for
such Select Country. If Anesta does not agree that such forecast is reasonable,
it shall prepare its own Unit sales forecast for such Select Country for such
[              ] year period. In the event that the Parties do not agree upon
the Forecasts proposed by each of them, within ten business days following
receipt by the Parties of the proposed Forecasts, and in the event of their
failing to agree on the selection and appointment of an independent arbitrator,
the Parties shall contact the President of the Law Society of Ireland (the
"President") and request that an independent US-based arbitrator, who is
knowledgeable of the pharmaceutical industry, be appointed within five business
days. The President shall endeavor to select an arbitrator who is technically
knowledgeable of the

                                       7.
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pharmaceutical industry (and who directly and through his affiliates, has no
business relationship with, and holds no securities of or ownership interest in,
either Party) (the "Arbitrator"). Promptly upon being notified of his
appointment, the Parties shall submit to the Arbitrator details of their
Forecast proposals together with such other information as they think necessary.
A copy of all materials submitted by a Party to the Arbitrator shall be provided
at the same time to the other Party. Neither Party shall engage in ex parte
contact with the Arbitrator. The Arbitrator may meet with both Parties together
and shall thereafter choose from the Forecasts submitted the Forecast which best
reflects a reasonable projection of Unit sales in such country, assuming
commercially reasonable marketing activities, potential competition and other
reasonable market factors. The Arbitrator shall use his best efforts to revert
with his determination within thirty (30) business days of his appointment. The
Parties shall bear the costs of the Arbitrator equally provided that the
Arbitrator may, in his discretion, allocate all or a portion of such costs to
one Party.

          (b)  First Five Years After Launch.

               (i)   If, on a Select Country-by-Select Country basis in the
Territory, Elan"s sales of Units are, during any of the first [            ]
years after the launch of the OT-fentanyl Products in such Select Country, less
than [ ] of the Forecast for such year for such Select Country, Elan, may at its
election, make up for the shortfall in sales in such Select Country in the
manner set forth in Section 2.5(b)(iv), thereby retaining its exclusive rights
in such Select Country for OT-fentanyl Products.

               (ii)  With respect to each of the [ ], Elan shall not be under
any obligation to make any payments pursuant to Section 2.5(b)(i) for sales
shortfalls in the applicable country, and will not lose any of its exclusive
rights granted under Section 2.1 for such country pursuant to Section
2.5(b)(iii), even if there is a sales shortfall as described in Section
2.5(b)(i), in the event that Net Sales of the OT-fentanyl Products in such
country [

                                      ].

               (iii) If Elan elects not to make up the shortfall of sales under
Section 2.5(b)(i) in a Select Country as provided in Section 2.5(b)(iv), Anesta
may, at its election and at its sole discretion, convert the exclusive rights
granted under this Agreement for such Select Country into non-exclusive rights
in such Select Country, upon ninety (90) days prior written notice to Elan. Such
shortfall, if any, shall not be considered a breach for the purposes of Section
10.2, and conversion of Elan"s exclusive distribution rights into non-exclusive
distribution rights shall be Anesta"s sole remedy with respect to such
shortfall. During the 90 day period of notice, Elan may, at its election, pay up
the shortfall of sales as provided in Section 2.5(b)(iv).

               (iv)  Elan may make up for the shortfall in sales referenced in
Section 2.5(b)(i) by paying to Anesta, not later than 90 days after the end of
the twelve-

                                       8.
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month period or during the 90 day notice period, an amount with respect to such
Select Country equal to:

     2.6  [
               ].

          (a)  Remainder of Distribution Period.

               (i)   During any twelve-month period during the Distribution
Period beginning on the [                   ] or any subsequent anniversary of
the launch of OT-fentanyl Products in the [             ], as the case may be,
if the Unit sales in such country are less than [                   ] year of
the Forecast for such country, Elan may, at its election, make up for the
shortfall in sales in the manner set forth in section 2.5(c)(iv), thereby
retaining its exclusive rights granted under Section 2.1 in such country for OT-
fentanyl Products. Notwithstanding the foregoing, Elan shall not be under any
obligation to make any payments pursuant to this Section 2.5(c)(i) for sales
shortfalls in the applicable country, and will not lose any of its exclusive
rights granted under Section 2.1 for such country pursuant to Section
2.5(c)(iii), even if there is a sales shortfall as described in this Section
2.5(c)(i), in the eventt hat Net Sales of the OT-fentanyl Products in such
country [                     ].

               (ii)  During any twelve-month period during the Distribution
Period beginning on the [ ] or any subsequent anniversary of the launch of
OT-fentanyl Products in a Select Country (other than the [                 ]),
if the Unit sales in such Select Country are less than [         ] year of the
Forecast for such Select Country, Elan may, at its election, make up for the
shortfall in sales in the manner set forth in Section 2.5(c)(v), thereby
retaining its exclusive rights granted under Section 2.1 in such Select Country
for OT-fentanyl Products.

               (iii) If Elan elects not to make up the shortfall of sales
pursuant to Section 2.5(c)(i) for the [                ] or pursuant to Section
2.5(c)(ii) in any other Select Country, Anesta may, at its election and at its
sole discretion, convert the exclusive rights granted under this Agreement in
such Select Country into non-exclusive rights upon ninety (90) days prior
written notice to Elan. Such shortfall, if any, shall not be considered a breach
for the purposes of Section 10.2 and conversion of Elan"s exclusive distribution
rights into non-exclusive distribution rights shall be Anesta"s sole remedy with
respect to such shortfall. During the 90 day notice period, Elan may, at its
election, pay up the shortfall of sales.

               (iv)  Elan may make up for the shortfall in sales referenced in
Section 2.5(c)(i) by paying to Anesta, not later than 90 days after the end of
the relevant

                                       9.
<PAGE>

12-month period or during the 90 day notice period, an amount with respect to
such Select Country equal to:

     2.7  [



                                       ]

               (i)   Elan may make up for the shortfall in sales referenced in
Section 2.5(c)(ii) by paying to Anesta, not later than 90 days after the end of
the relevant 12-month period or during the 90 day notice period, an amount with
respect to such Select Country equal to:

     2.8  [



                                                       ]

          (a)  No More Favorable Terms. In the event of conversion of Elan"s
exclusive rights in a Select Country to non-exclusive rights in such Select
Country under Sections 2.5(c) or (b), Anesta shall not enter into an agreement
for the licensing and distribution of the OT-fentanyl Products in such Select
Country on material terms more favorable to the Third Party than to Elan, and in
particular, the purchase price and royalty rate charged to a Third Party
distributor appointed by Anesta in such Select Country shall not be lower than
that charged to Elan in that same Select Country.

          (b)  Competitive Products. If after a merger or acquisition of Elan or
substantially all of its assets referred to in Section 3.6(b), during the
Distribution Period, Elan or its successor entity or its Affiliates launches,
markets, distributes or sells directly or through a distributor or sublicensee,
in the Territory any Competing Product (as defined in Section 3.6(a)):

               (i)  [


                                                  ]

               (ii) if any of the following occur:

                    (1) on a Select Country-by-Select Country basis, Elan"s Unit
sales of the OT-fentanyl Products are, during any of the first [           ]
years after the launch of the OT-fentanyl Products in such Select Country, less
than [    ] of the Forecast for that year for such Select Country,

                                      10.
<PAGE>

                    (2)  during any twelve-month period during the Distribution
Period beginning on the fifth or any subsequent anniversary of the launch of OT-
fentanyl Products in the [

                                     ], or

                    (3)  during any twelve-month period during the Distribution
Period beginning on the fifth or any subsequent anniversary of the launch of
OT-fentanyl Products in a Select Country (other than the [                 ]),
the Unit sales in such Select Country are less than [            ] of the
Forecast for such Select Country,

then Anesta may terminate this Agreement as to the applicable Select Country,
and Elan"s rights under Section 2.1 in such Select Country, by giving Elan 90
days prior written notice, in which event the sell-through period under Section
10.4 shall last for only [           ] with respect to such Select Country.
If Anesta has the right to terminate or has terminated this Agreement as to both
the [                    ] pursuant to this Section 2.5(e), Anesta may terminate
this Agreement as to all countries of the Territory that are not Select
Countries, and Elan"s rights under Section 2.1 in such countries, by giving Elan
90 days prior written notice, in which event the sell-through period under
Section 10.4 shall last for only [       ] with respect to such countries.

          (c)  Adjustment of Sales Targets. In the event that a significant
factor beyond Elan"s control causes Elan not to reach the levels of Unit sales
of the OT-fentanyl Products set forth in Sections 2.5(b) or (c), then the
Parties shall meet to discuss the above circumstances and appropriate means to
address them including, but not limited to, a mutually agreeable reduction of
the applicable Forecast for the relevant year(s). In the event of any such
reduction, the thresholds for any make-up payments and Anesta"s option to
convert Elan"s exclusive right to non-exclusive rights under this Section 2.5
shall be based on the reduced Forecast. Such significant factors beyond Elan"s
control would include:

               (i)   failure to supply the OT-fentanyl Products in accordance
with the provisions of Section 5.1(a);

               (ii)  the Net Sales price of a Unit is [                       ];
and
               (iii) one or more [                 ] marketed by Third Parties
other than subdistributors of the OT-fentanyl Products which [                ]
in the relevant Select Country, where the Gross Sales of [ ] for a calendar
quarter are at [             ] of the combined Gross Sales of OT-fentanyl
Products and the [                ] in such Select Country. The relative sales
proportion of such [                     ]      in any calendar quarter is
conclusively deemed to [                   ] of the combined Gross Sales of OT-

                                      11.
<PAGE>

fentanyl Products and the [                       ] in such Select Country if
Intercontinental Medical Statistics or another mutually agreeable source of such
information has made such determination based on its conduct of a market share
study in such Select Country during such quarter. Once a determination is made
that [                       ] exists for OT-fentanyl Products in any Select
Country, such determination shall be made again each calendar quarter for so
long as one or more [                    ] are marketed in that Select Country).

     2.9  Failure to Launch. In the event that Elan fails to launch OT-fentanyl
Products within a country of the Territory [                                   ]
(a) a Regulatory Approval for OT-fentanyl Products within such country or (b)
issuance of a Pricing Approval (where required or commercially desirable) for
OT-fentanyl Products within such country, Anesta may terminate this Agreement as
to such country, and Elan"s rights under Section 2.1 in such country, by giving
Elan 90 days prior written notice.

     2.10 Parallel Imports. It is recognized that Parallel Importation of OT-
fentanyl Products could affect Elan"s commercial interests in the Territory and
Anesta"s commercial interests outside the Territory.

          (a)  It is agreed that if in any financial year (being 1st January to
31st December), Parallel Imports of the OT-fentanyl Products into a Select
Country [           ] of Net Sales of OT-fentanyl Products in such Select
Country during that financial year, [


                                        ]

          (b)  It is agreed that if in any financial year (being 1st January to
31st December), there are sales of OT-fentanyl Products originating from Elan or
its Subdistributors to buyers within a country of the European Union outside the
Territory and such [


                                             ].

     2.11 Right of First Negotiation. If Anesta develops or acquires [
] products for the Territory, other than OT-fentanyl Products and desires to
appoint a distributor for such products in the Territory rather than
distributing such products itself, Anesta shall notify Elan thereof in writing.
From the date of notification, the Parties shall negotiate exclusively and in
good faith for a period of ninety (90) days for an agreement giving Elan
exclusive distribution rights for such products in the Territory for a mutually
agreed period. If the Parties do not reach agreement in such period, Anesta
shall be free to enter distribution arrangements with Third Parties for such
products in the Territory.

                                      12.
<PAGE>

     2.12 Trademarks and Trade Names.

          (a)  License. Subject to the terms and conditions of this Agreement,
Anesta hereby grants to Elan an exclusive license within the Territory to use
the Anesta Trademarks solely for the purposes of marketing, promoting, selling
and distributing the OT-fentanyl Products under this Agreement. If Anesta
converts Elan"s exclusive rights in a Select Country under Section 2.1 to
non-exclusive rights pursuant to Section 2.5, Elan will continue to have
[                  ] the Anesta Trademarks; provided, however, that Anesta may
terminate such license as to [                                     ] pursuant to
Section 2.9(h), if another non-exclusive distributor of OT-fentanyl Products is
to use such secondary Anesta Trademark in such Select Country.

          (b)  Obligation to Use Trademarks. Elan shall use and have used the
primary Anesta Trademarks, as indicated on Exhibit D, or the secondary Anesta
Trademarks as indicated on Exhibit D as designated by Anesta pursuant to Section
2.9(h), and no other trademarks or trade names, in connection with its
marketing, promotion, sale and distribution of the OT-fentanyl Products in each
country of the Territory, unless otherwise agreed by the Parties; provided,
however that Elan may use its own trademarks and trade names on product
packaging, brochures and other promotion materials to identify itself as the
distributor of the OT-fentanyl Products.

          (c)  Trademark Policy. Elan"s use of the Anesta Trademarks shall
comply with Anesta"s trademark policy as in effect from time to time, which
shall be commercially reasonable from the perspective of each Party and
consistent with standards for trademark policies that are generally accepted
within the pharmaceutical industry, and which Anesta shall provide within ninety
(90) days of the Effective Date. Anesta shall have the right to audit Elan"s
compliance with such trademark policy. Elan shall remedy any non-compliant use
identified by Anesta as soon as is possible using commercially reasonable
efforts after notification by Anesta. However, in the event Anesta alters its
trademark policy, Elan shall have the right to exhaust all existing printed
materials bearing the Anesta Trademark before making any changes to comply with
the new policy. Elan shall bear all costs of changes to its printed materials to
comply with any new trademark policy of Anesta, except that Anesta will
reimburse Elan for all costs incurred for such changes resulting from trademark
policy changes more frequent than once every two (2) years. Elan further agrees
to provide copies of all such materials to Anesta for review and approval prior
to publication and distribution. Anesta agrees that its approval of such
materials will not be unreasonably withheld. The Parties agree that Anesta will
have been deemed to approve any such materials if it does not respond to Elan
within thirty (30) days after having received said materials.

          (d)  Anesta Ownership. Elan hereby agrees to and recognizes Anesta"s
exclusive ownership of the Anesta Trademarks and the renown of the Anesta

                                      13.
<PAGE>

Trademarks. Elan agrees not to take any action inconsistent with such ownership
and further agrees to take any action, at Anesta"s expense, which Anesta
reasonably deems necessary to establish and preserve Anesta"s exclusive rights
in and to the Anesta Trademarks including but not limited to cooperating in the
registration of the Anesta Trademarks on the trademark registry or other
appropriate registration procedure in the Territory.

          (e)  Goodwill. The Parties agree that all use of the Anesta Trademarks
by Elan shall be for the sole and exclusive benefit of Anesta and the goodwill
and reputation accrued in connection with Elan"s use of the Anesta Trademarks
shall accrue to Anesta. In the event Elan acquires any right, title or interest
in or to or relating to the Anesta Trademarks for any reason, effective
immediately upon the expiration or termination of this Agreement Elan hereby
assigns, at no cost, all such right, title and interest, together with any
related goodwill or reputation, to Anesta. Elan agrees to promptly execute all
documents reasonably requested by Anesta in connection with such assignment.

          (f)  Infringement. Each Party shall notify the other Party in writing
promptly upon learning of any infringement by any Third Party of the Anesta
Trademarks in the Territory. Elan agrees that, unless the law of the particular
country of the Territory prohibits Anesta from enforcing the Anesta Trademarks,
only Anesta has the right to enjoin any infringement or registration by a Third
Party of the Anesta Trademarks, provided, however, that Anesta may authorize
Elan to enjoin such infringement or registration, and Anesta shall pay the
reasonable costs of such enforcement. Elan will assist in the prosecution of any
such claim as reasonably requested by Anesta. In the event Anesta chooses not to
enforce its rights against a Third Party infringer, Elan shall have the
discretion to select an alternate trademark as set forth in Section 2.9(h).

          (g)  No Confusion. Elan shall not adopt, use, or register any acronym,
trademark, trade names, service mark or other marketing name that is confusingly
similar to the Anesta Trademarks or the Anesta name, and shall not use the
Anesta Trademarks or the Anesta name other than in connection with distribution
of OT-fentanyl Products pursuant to this Agreement.

          (h)  Selection of Trademarks. Anesta shall have the right to select
additional Anesta Trademarks and register them at its expense, and such Anesta
Trademarks shall be owned by Anesta and added to Exhibit D, initially as
secondary Anesta Trademarks. If (i) a regulatory agency does not approve the
then-current primary Anesta Trademark indicated on Exhibit D, (ii) a Third Party
asserts that such Anesta Trademark infringes its trademarks, (iii) such Anesta
Trademark is successfully opposed by a Third Party, (iv) a petition to cancel
such Anesta Trademark is filed by a Third Party, or (v) there is an infringement
of such Anesta Trademark by any Third Party against which Anesta does not
enforce its rights pursuant to Section 2.9(f), then Anesta shall

                                      14.
<PAGE>

designate one of the secondary Anesta Trademarks (as indicated on Exhibit D) as
a replacement primary Anesta Trademark. If there are no remaining secondary
Anesta Trademarks, Elan shall have the right to select another trademark of its
choosing with the consent of Anesta, which consent shall not be unreasonably
withheld. Any such trademark selected by Elan shall be registered in the name of
Anesta, at Anesta"s expense, shall be added as an Anesta Trademark to Exhibit D
and shall be owned by Anesta.

3.   Marketing.

                                      15.
<PAGE>

     3.1  Promotion and Marketing Obligations. Elan will use commercially
reasonable efforts to promote the sale, marketing and distribution of the OT-
fentanyl Products in the Territory, consistent with accepted business practices,
devoting the same level of efforts thereto as it devotes to its products of
comparable market potential.

     3.2  Marketing Plan. In consultation with Anesta, Elan will be responsible
for assessing the market opportunities for OT-fentanyl Products in the Territory
and preparing and providing to Anesta a marketing plan ("Marketing Plan") on or
before February 1, 2000, which includes pre-launch and initial launch marketing
activities consistent with efforts appropriate for products of similar market
potential. Elan and Anesta will review the Marketing Plan periodically, but at
least annually. For the avoidance of doubt, Elan shall determine the final
content of the Marketing Plan and has full discretion to determine its content.

     3.3  Commercial Strategy Team. Elan will be a member of Anesta's OT-
fentanyl Products Commercial Strategy Team, along with Anesta's other
distribution partners which will be established only for the purposes of
information sharing and co-ordination of regulatory and clinical requirements.

     3.4  Marketing Support. Anesta will, at its own expense, provide
commercially reasonable commercial marketing support in the form of pricing data
and marketing information (including, but not limited to copies of promotional
items, medical article reprints, medical educational strategies and related
materials) regarding the marketing of the OT-fentanyl Products in the United
States and other territories, as Elan may reasonably request from time to time,
to the extent Anesta has the right to provide such information and materials,
and the provision of such information, materials or data does not conflict with
the confidentiality provisions or other terms of Anesta's agreements with Third
Parties.

     3.5  Pricing. Elan shall be solely responsible for setting the price of the
OT-fentanyl Products.

     3.6  Covenant Not to Market Competing Products.

          (a)  For the Distribution Period and for one year thereafter, Elan,
and its Subdistributors shall not market or distribute in the Territory any
product [  ] ("Competing Products").

          (b)  The covenant in Section 3.6(a) shall not apply in the event that
a merger or acquisition of Elan or substantially all of its assets occurs, and
the successor entity of Elan has been marketing [               ] prior to the
merger or acquisition of Elan.

                                      16.
<PAGE>

     3.7  Advertising and Promotion. Elan shall submit all advertising and
promotional materials relating to this Agreement including but not limited to
print advertising, brochures, leaflets and similar materials to Anesta for
review.

     3.8  Reports.

          (a)  Each Party shall keep the other fully informed of all
governmental and regulatory requirements, activities and plans which materially
affect sales of OT-fentanyl Products in the Territory.

          (b)  Prior to the commencement of the Distribution Period, Elan shall
report to Anesta regarding Elan"s pre-launch marketing activities as set forth
in the Marketing Plan prepared pursuant to Section 3.2.

          (c)  During the Distribution Period, Elan will report to Anesta on a
quarterly basis within thirty (30) working days of the end of such quarter
concerning Elan"s marketing efforts and sales results for OT-fentanyl Products,
and shall also provide to Anesta a top-line sales report of sales results
generated or received by Elan or its Subdistributors on a monthly basis thirty
(30) days after the end of each month.

4.   Regulatory Matters.

     4.1  Filing of Regulatory Approvals for Initial Indication.

          (a)  European Union, San Marino, Switzerland and Vatican City.

               (i)    Anesta shall make all appropriate filings to obtain
Regulatory Approval to market the OT-fentanyl Products for the filed SPC as set
forth in Exhibit H in the United Kingdom in order to obtain a Regulatory
Approval for, at a minimum, the SPC as set forth in the Minimum SPC in Exhibit
H. In particular, but without limitation, Anesta shall use commercially
reasonable efforts to perform all clinical and regulatory programs required to
obtain a Regulatory Approval for the Minimum SPC in Exhibit H.

               (ii)   Anesta shall use commercially reasonable efforts to obtain
mutual recognition of the Regulatory Approval obtained pursuant to Section
4.1(a)(i) in the countries of the Territory which are member states of the
European Union. Anesta shall seek Regulatory Approval for the Initial Indication
in San Marino, Switzerland and Vatican City by submitting the United Kingdom
Regulatory Approval application package in an appropriate format or, where
permitted, in conjunction with filings in European Union countries within the
Territory.

               (iii)  Elan shall cooperate with and assist Anesta as reasonably
necessary in obtaining the Regulatory Approvals as provided in Sections
4.1(a)(i) and (ii),

                                      17.
<PAGE>

including, without limitation, by providing guidance, local support and the
benefit of Elan"s experience in obtaining regulatory approvals for
pharmaceutical products in the European Union countries of the Territory and
Switzerland.

          (b)  The Philippines and Taiwan. Elan shall make all appropriate
filings to obtain Regulatory Approval to market the OT-fentanyl Products for the
Initial Indication in the Philippines and Taiwan. Elan shall use commercially
reasonable efforts to perform all clinical and regulatory programs required to
obtain such Regulatory Approvals. Anesta shall provide Elan with all reasonable
assistance necessary for making the filings for such Regulatory Approvals

     4.2  Filing of Regulatory Approvals for Additional Indications.

          (a)  If Elan elects to seek Regulatory Approval for indications other
than the Initial Indication, it shall be responsible for performing any clinical
testing necessary or desirable to support applications for same. Elan shall
provide any clinical protocols at least sixty (60) days before such clinical
work begins for Anesta"s review and approval, which shall not be unreasonably
withheld. Anesta shall provide any comments or approval so that Elan can
implement an approved clinical protocol without delay.

          (b)  If Elan elects to seek Regulatory Approval for indications other
than the Initial Indication, Anesta shall, at Elan"s request and expense, make
all appropriate filings prepared by Elan to obtain Regulatory Approval to market
OT-fentanyl Products for any indication other than the Initial Indication.
Anesta shall provide Elan with access to all available clinical data for OT-
fentanyl Products, as reasonably requested by Elan for that purpose and to the
extent Anesta has the right to provide such access to Elan. Any such additional
Regulatory Approvals (other than those for the Philippines and Taiwan) shall be
made in the name of Anesta.

     4.3  Post-Regulatory Approval Clinical Programs. Elan shall be responsible
at its discretion for conducting any post Regulatory Approval clinical testing
necessary or desirable for the continued and successful marketing of OT-fentanyl
Products in the Territory. Elan shall provide any clinical protocols at least
sixty (60) days before such clinical work begins for Anesta"s review and
approval, which shall not be unreasonably withheld. Anesta shall provide any
comments or approval so that Elan can implement an approved clinical protocol
without delay.

     4.4  Maintenance of Regulatory Approvals. Each Party shall use commercially
reasonable efforts to maintain all Regulatory Approvals in its name. Anesta
shall perform all actions required on its part to ensure that Elan has all
necessary rights under the Regulatory Approvals in Anesta's name to market and
sell the OT-fentanyl Products as permitted under this Agreement. Each Party
shall provide all reasonable assistance to the other Party as necessary to
maintain the Regulatory Approvals in the other Party's

                                      18.
<PAGE>

name, including, without limitation, in the case of Elan, by providing any
required documentation relating to Elan's distribution activities and
obligations under this Agreement to the appropriate regulatory agencies.


     4.5  Pricing and Reimbursement Approvals. Elan shall use commercially
reasonable efforts to obtain commercially viable Pricing Approvals from the
appropriate regulatory agencies within the Territory that require Pricing
Approvals, and if required by regulatory authorities, to obtain Reimbursement
Approval for each country in the Territory for all OT-fentanyl Products.

     4.6  Adverse Experience Reporting. The Parties shall comply with the terms
of Exhibit E relating to adverse experience reporting.

     4.7  Products Recall.

          (a)  Voluntary Recall. If either Party desires to recall OT-fentanyl
Products for non-conformities with Specifications (other than such non-
conformities that would require recall pursuant to the requirements of
applicable laws or regulations), it shall so notify the other Party. If the
other Party does not agree that the relevant OT-fentanyl Products do not comply
with Specifications, the dispute shall be settled as set forth in Section
5.8(c). If the Parties agree as to such non-conformity or such non-conformity is
determined pursuant to Section 5.8(c), then the Party desiring the recall shall
administer the recall in a commercially reasonable manner with the other Party"s
cooperation. If one Party"s actions were the sole cause of the non-conformity
with Specifications, such Party shall bear all costs and expenses of the recall.

          (b)  Mandatory Recall.

               (i)    In the event that the relevant regulatory authority
requires or otherwise initiates a recall of the OT-fentanyl Products for any
reason whatsoever, Elan will forthwith administer the recall. If the Parties are
unable to agree as to whether or not the underlying reason for the recall is a
non-conformity of the OT-fentanyl Products with Specification, and/or whether or
not Anesta or Elan is responsible for such non-conformity, the Parties shall
submit a sample of the recalled OT-fentanyl Products for analysis pursuant to
Section 5.8(c). If a Party is notified by a regulatory authority that a recall
is required, it shall promptly give to the other Party written notice of the
need to recall that quantity

               (ii)   In the event that the principal reason for the recall
under this Section 4.7(b) of the OT-fentanyl Products is Anesta's negligence or
willful misconduct, its failure to supply OT-fentanyl Products conforming to
Specifications, or Anesta's failure to comply with applicable laws or
regulations, then Anesta shall be liable for the cost of the recall and any
replacement quantities of OT-fentanyl Products and will

                                      19.
<PAGE>

reimburse Elan for all its reasonable costs and expenses of such recall. In the
event that the principal reason for the recall under this Section 4.7(b) is
Elan's negligence or willful misconduct, its failure to handle or store OT-
fentanyl Products in conformity with Specifications, or Elan's failure to comply
with applicable laws or regulations, then Elan shall be liable for the cost of
the recall and any replacement quantities of OT-fentanyl Products and will
reimburse Anesta for all its reasonable costs and expenses of such recall.

               (iii) In the event that the reason that the recall of the OT-
fentanyl Products under this Section 4.7(b) was legally required is not one of
those set forth in Paragraph 4.7(b)(ii), the Parties shall share equally the
costs and expenses of the recall, including the costs and expenses of each
Party.

     4.8  Compliance with Laws by Parties.

          (a)  Both Parties shall comply with all applicable present and future
orders, regulations, requirements and laws of any and all federal, state,
provincial and local authorities and agencies in the Territory relating to the
promotion, marketing, sale and distribution of the OT-fentanyl Products on a
country by country basis in the Territory. Regarding the shipment of OT-fentanyl
Products into and within the Territory, Elan shall comply with the requirements
of Exhibit F (as amended from time to time by Anesta to be in accordance with
changes in the applicable laws or regulations or the interpretation thereof) [
                                  ].


          (b)  Upon Anesta's reasonable request, Elan will provide information
to Anesta necessary for Anesta's compliance with FDA and DEA reporting
requirements, including without limitation the information in the forms attached
hereto as Exhibit B and the requirements attached hereto as Exhibit F.

5.   Supply of OT-Fentanyl Products

     5.1  Supply and Purchase of OT-fentanyl Products.

          (a)  Supply Obligation. Subject to the terms of this Agreement, Anesta
shall supply Elan, and Elan shall purchase from Anesta during the Distribution
Period, Elan's requirements of OT-fentanyl Products, for both commercial sale
and clinical studies performed pursuant to the terms of this Agreement. Anesta
covenants that it shall supply all of Elan's requirements for OT-fentanyl
Products during the Distribution Period in accordance with purchase orders
placed by Elan in compliance with this Agreement.

          (b)  Breach of Supply Obligation.

                                      20.
<PAGE>

               (i)   In the event that Anesta fails to supply Elan with all or
part of its requirements of OT-fentanyl Products pursuant to Section 5.1(a) for
a period of less than [                          ] [
    ] for OT-fentanyl Products for such months, less any amounts that Anesta
actually supplies to Elan during such period.

               (ii)  In the event that Anesta fails to supply Elan with all or
part of its requirements of OT-fentanyl Products pursuant to Section 5.1(a) for
a period of more than [
       ]; provided, however, that (1) Elan shall have a duty to [             ],
including, without limitation, by complying with its obligations under Section
[                                                     ] of OT-fentanyl Products;
(2) [                ] failure to supply under this Section 5.1(b)(ii) shall end
at the time when Anesta or Elan has qualified or has had qualified a second
source of supply that has been granted all regulatory approvals necessary for
the manufacture of OT-fentanyl Products for commercial sale, and (3) [
               ] failure to supply shall end for any undersupply occurring more
than two (2) years after the initial failure.

               (iii) Anesta's obligations under Sections 5.1(b)(i) and (ii) and
5.4 shall be Elan's sole remedies for the breaches of Anesta's supply
obligations described therein.

     5.2  Forecasting.

          (a)  Planning Forecast. On or before January 1, 2000 and based upon
projected times for Regulatory Approvals and launch dates on a country-by-
country basis within the Territory, Elan shall provide Anesta with a written
three (3) year forecast by calendar quarter of Elan's anticipated orders for OT-
fentanyl Products on a country-by-country basis within the Territory. This
forecast shall be for facility planning purposes only and shall not constitute a
firm order. Elan shall update this forecast on a semi-annual basis.

          (b)  Rolling Forecasts. On or before the first day of the [
          ] month before the month of the scheduled commercial launch date of
OT-fentanyl Products in any country in the Territory (e.g. a forecast must be
submitted before [                                                          ]
launch date), Elan shall provide to Anesta with a written [
                      ] month forecast

                                      21.
<PAGE>

beginning with the month of the launch date showing Elan's requirements of the
OT-fentanyl Products on a monthly basis by stock-keeping unit ("SKU") in each
country of the Territory. After submission of the initial [        ] forecast
for each country in the Territory, Elan shall provide Anesta with an updated [
    ] forecast prior to the beginning of each subsequent calendar month and
consistent with Elan's Sales & Operations Planning process.

          (c)  Until the OT-fentanyl Products have [       ] of at least [
] [         ] from the date of manufacture, as determined by applicable
regulatory requirements, the Parties shall mutually agree on all forecasts under
this Section 5.2 and accompanying purchase orders pursuant to Section 5.3(a) in
order to minimize risks of expiration of OT-fentanyl Products and shall bear
equally the costs of manufacturing, supplying, shipping and destroying any OT-
fentanyl Products ordered by Elan that [                    ]

     5.3  Purchase Orders and Shipping.

          (a) The initial forecast under Section 5.2(b) shall be accompanied by
firm purchase orders for the first [                               ] months of
the forecast which shall constitute a mutually binding commitment to order and
supply the quantity of OT-fentanyl forecasted for such period. Projections in
the rolling forecast for months [
                                        ] shall be made in good faith and shall
constitute Elan's best estimates of future orders, but shall not be binding on
Elan. After the initial forecast, subsequent rolling forecasts provided under
Section 5.2(b) shall be accompanied by a firm purchase order for [
                                                                    ] month of
the forecast, provided that the purchase order quantity for that month of the
forecast is not greater [
                                  ] of the forecasted quantity as stated in the
preceding forecast submitted by Elan for such month (the "Forecast Amount").
Projections in the rolling forecast for [
                                           ] (other than for months for which a
binding purchase order was submitted with the initial forecast) shall be made in
good faith and shall constitute Elan's best estimates of future orders, but
shall not be binding on Elan. Each purchase order shall specify the quantity
ordered, the required shipment date, and any special instructions or invoicing
information. Each purchase order issued shall be governed by the terms of this
Agreement and, any terms or conditions of such purchase which conflict or are
inconsistent with the terms of the Agreement are hereby rejected.

          (b)  Anesta shall use all commercially reasonable efforts to
manufacture any quantity of OT-fentanyl Products ordered by Elan which exceeds [

] of the Forecast Amount, but Anesta's failure to manufacture any such excess
quantities shall not be a breach of this Agreement.

          (c)  Anesta shall use commercially reasonable efforts to ship all OT-
fentanyl Products ordered by Elan on or before the requested shipment date, as
specified in Section 5.3(a), for such shipment. Anesta shall not be in breach
its supply obligations

                                      22.
<PAGE>

under the relevant purchase order if at least [
                                               ] of a shipment that conforms to
the Specifications is made within five (5) days following such shipment date.
Anesta shall have OT-fentanyl Products released and ready to ship pursuant to
Elan's purchase orders to Elan within one (1) month after the date manufacture
and packaging is complete.

     5.4  Shortage of OT-fentanyl Products. No later than 10 business days after
Anesta"s receipt of the purchase order from Elan, Anesta shall notify Elan if
for any reason Anesta experiences a shortage of OT-fentanyl Products and is
unable to supply to Elan the full quantity of OT-fentanyl Products it has
ordered. In the event of such a shortage, Elan shall be entitled to receive that
quantity of OT-fentanyl Product which bears the same proportion to the total
quantity of available OT-fentanyl Products as the quantity of OT-fentanyl
Products sold to Elan in the six months preceding the supply shortage (or, for
countries in which OT-fentanyl Products have not been launched, the most recent
forecasts for the next six months) bears to all orders for OT-fentanyl Products
received by Anesta during that same six month period. Nothing in this Section
5.4 shall prejudice Elan"s rights under Section 5.1(b).

     5.5  Purchase Price.

          (a)  Preclinical and Clinical Supply. The supply price for OT-fentanyl
Products for use in conducting preclinical work and clinical trials in the
Territory shall be the lesser of (i) [
                                          ] or (ii) the commercial supply price
under Section 5.5(b) for units that Anesta is able to produce with its
commercial production runs plus the cost of any special packaging or labeling
necessary to permit use of the OT-fentanyl Products in such trials.

          (b)  Commercial Supply. The supply price for OT-fentanyl Products for
commercial sale and distribution in the Territory in final marketing and
packaging form FCA Anesta's facility, is a per unit price based on the annual
purchases by Elan of OT-fentanyl Products for the then-current calendar year, as
follows: [

     5.6

            ]

     The applicable supply price for a purchase order will be determined based
on the most recent forecast of total OT-fentanyl Products requirements during
the then current calendar year. Within sixty (60) days after the end of each
calendar year, Anesta shall report to Elan the total purchases by Elan of OT-
fentanyl Products for such calendar year, the final price per unit based on such
purchases, and based upon such price and upon actual payments made by Elan for
such purchases, a calculation of any amounts to be credited or debited to Elan.
The price per Unit

                                      23.
<PAGE>

includes packaging and labeling by Anesta as required pursuant to Section
6.2(a). The resulting difference will be debited or credited to Elan within 60
days.

          (a)  No Changes in Price. The per Unit price scale for OT-fentanyl
Products for commercial distribution in the Territory set forth in Section
5.5(b) will remain unchanged throughout the Distribution Period.

          (b)  Payment Terms. All payments for OT-fentanyl Products will be made
in United States Dollars and shall be due and payable to Anesta not later than
sixty (60) days after delivery of such Products to Elan.

     5.7  Delivery. Deliveries shall be made [ ] (ICC Incoterms 1990) and shall
be shipped to Elan's address as set forth in this Agreement, or as otherwise
directed by Elan in writing. Anesta shall provide appropriate support and
documentation to the appropriate regulatory agencies. Anesta will be
responsible, with reasonable cooperation by Elan, for obtaining all of the
appropriate export licenses and authorizations from the United States for each
country of the Territory in compliance with all U.S. and Territorial
regulations. Elan will be responsible, with reasonable cooperation by Anesta,
for obtaining all of the appropriate import licenses and authorizations into the
Territory in compliance with all U.S. and Territorial regulations. In the event
that a specific regulation of a country in the Territory prohibits shipment of
OT-fentanyl Products as set forth in this Section 5.6, the Parties will discuss
an appropriate and mutually agreeable modification of distribution costs and
methods. The Product shall be delivered with a certificate of analysis as agreed
by the Parties.

     5.8  Acceptance, Rejection and Revocation of Acceptance.

          (a)  Elan shall inspect or shall cause to be inspected all shipments
of OT-fentanyl Products promptly upon receipt. Elan may reject any OT-fentanyl
Products which did not conform to the Specifications at the time of delivery by
Anesta pursuant to Section 5.6. Any such rejection shall be made in writing and
shall indicate the reasons for such rejection.

          (b)  If Elan has not delivered the notice of rejection within thirty
(30) days after receipt of the shipment of OT-fentanyl Products at the facility
designated by Elan in the purchase order, Elan shall be deemed to have accepted
that shipment of OT-fentanyl Products. Once Elan has accepted or is deemed to
have accepted the OT-fentanyl Products, Elan shall have no claim or recourse
(subject to Section 5.7(c) and Anesta's indemnification obligation contained in
Section 11.2) against Anesta relating to such Products.

          (c)  If, after accepting a shipment of OT-fentanyl Products, Elan
subsequently discovers a nonconformity with Specifications that could not
reasonably be

                                      24.
<PAGE>

detected through the inspection pursuant to Section 5.7(a) or a latent
nonconformity arising after inspection other than those caused by shipping,
handling or storage not in compliance with Specifications after delivery by
Anesta, Elan may revoke its acceptance of such shipment by giving written notice
of the nonconformity within ten (10) days of discovering it. A revocation of
acceptance shall have the effect of a rejection under this Section 5.7.


          (d)  Elan's payment obligations under Section 5.5(d) for a shipment
shall be suspended upon Elan's rejection of such shipment pursuant to this
Section 5.7 until a determination whether or not that such rejection was
justified.

     5.9  Rejection Procedures.

          (a)  After notice of rejection is received by Anesta, it shall
cooperate with Elan in determining whether rejection is necessary or justified.
Anesta will evaluate process issues and other reasons for such non-compliance of
the OT-fentanyl Products with Specifications. Anesta shall notify Elan as
promptly as reasonably possible whether it accepts Elan's rejection.

          (b)  If Anesta accepts Elan's rejection, Anesta shall use reasonable
and timely efforts to promptly replace or correct, at Anesta's option, such
rejected OT-fentanyl Products at Anesta"s cost, or, with both Parties" written
approval, to, at Elan's option, either credit Elan's account in an amount equal
to the purchase price of the rejected OT-fentanyl Products, or refund that sum
to Elan at Elan's sole discretion together with any direct costs of destruction
of the relevant Products or transporting them back to Anesta.

          (c)  If Anesta disagrees with Elan's rejection, the Parties shall
submit samples of the rejected OT-fentanyl Products and the samples of the
corresponding batch retained by Anesta to a mutually acceptable Third Party
laboratory, which shall determine whether such OT-fentanyl Products meets the
Specifications and, as part of this process, will also carry out a full
investigation of the manufacturing process for such OT-fentanyl Products if it
believes such an investigation is appropriate. The Parties agree that the
determination of the laboratory, after it has assessed the retention samples and
following any full investigation of the manufacturing process it conducts, shall
be final and determinative. If the Third Party laboratory determines that the
retained samples meets the Specifications, the rejection by Elan is deemed to be
unjustified, and Elan shall pay the full invoice price for the shipment which
contained the OT-fentanyl Products subject to the dispute. If the Third Party
laboratory determines that the relevant shipment of OT-fentanyl Products does
not meet the Specifications, the Parties shall proceed as provided in Section
5.8(b). The Party against whom the Third Party tester rules shall bear the
reasonable costs of the Third Party testing, including without limitation all
costs of investigating the manufacturing process.

                                      25.
<PAGE>

          (d)  At Anesta's election and upon authorization from Anesta and at
Anesta's cost, to do so, Elan shall (i) destroy the rejected OT-fentanyl
Products promptly at Anesta's cost and provide Anesta with certification of such
destruction or (ii) return such OT-fentanyl Products to Anesta at Anesta's
request, provided that such return is permissible by applicable law or
regulations.

          (e)  The remedies set forth in Section 5.8(b) are Elan's sole and
exclusive remedies with respect to claims relating to OT-fentanyl Products which
do not met Specifications when delivered by Anesta. Notwithstanding, nothing in
this Section 5.8(e) shall limit Elan"s rights to indemnification pursuant to
Section 11.2 or prejudice Elan"s rights under Section 5.1(b).

     5.10  Audit. During the Distribution Period and for four (4) years
thereafter, Elan shall keep complete and accurate records pertaining to the
disposition of OT-fentanyl Products and amounts payable under this Agreement in
sufficient detail to permit Anesta to confirm the accuracy of all payments,
including without limitation royalty payments, made or due hereunder. Anesta
shall have the right to appoint an independent Third Party to audit the books of
account of Elan in order to determine whether Elan has properly reported and
accounted for any fees or payments due to Anesta pursuant to this Agreement.
Audits may be performed during regular business hours, not more than once in any
year during the Distribution Period and upon reasonable prior notice to Elan.
The audit fees shall be borne by Anesta unless such audit reveals that
difference between the amount paid to Anesta and the amount actually due Anesta
is five percent (5%) or more of amount actually due Anesta, in which case the
audit fees shall be borne by Elan.

6.   Manufacturing.

     6.1  Manufacture of OT-fentanyl Products. OT-fentanyl Products supplied to
Elan hereunder shall be manufactured by Anesta in accordance with current Good
Manufacturing Practices ("cGMP") and other applicable rules and regulations of
the FDA and the European Commission and other European and United States
governmental or regulatory agencies with jurisdiction over the manufacture, use
or sale of the OT-fentanyl Products.

     6.2  Packaging and Labeling.

          (a)  The OT-fentanyl Products for resale under this Agreement shall be
packaged and labeled according to applicable laws and regulations as required by
regulatory authorities in the Territory, and otherwise as they are packaged and
labeled as for resale in the United Kingdom. If a language other than English is
required in a relevant country of the Territory, Anesta will modify such
packaging and labeling for any single package to contain a maximum of two (2)
languages unless otherwise required by

                                      26.
<PAGE>

law or regulation. At Elan's request and expense, Anesta will make reasonable
modifications to the packaging or labeling other than those required by
regulatory authorities in the Territory. The packaging shall identify Elan as
the distributor and/or marketer of the OT-fentanyl Products.

          (b)  Elan shall inform Anesta of any regulatory or legal requirements
in the Territory for packaging or labeling of OT-fentanyl Products and shall
notify Anesta of any changes to such requirements. Anesta will promptly
implement such changes at its cost and inform Elan of any delays in the delivery
of OT-fentanyl Products caused thereby (e.g. lead time for purchase of
materials, manufacturing time and set-up time, etc.). Any delivery by Anesta of
OT-fentanyl Products in compliance with changes to packaging or labeling as set
forth in this Section 6.2(b) that occurs within a commercially reasonable period
shall not be deemed a breach of Anesta's obligations under this Agreement.
Anesta must promptly inform Elan of any likely delays.

     6.3  Regulatory Inspections; cGMP and QA Audits.

          (a)  Anesta shall cooperate with any inspection of its facilities by a
regulatory agency or authority in the Territory, including but not limited to
any inspection by such regulatory agency or authority prior to the granting of
Regulatory Approval to market the OT-fentanyl Products in the Territory (by
mutual recognition of another jurisdiction's Regulatory Approval or otherwise).
Anesta shall notify Elan as soon as possible of any notification received by
Anesta from any regulatory authority in the Territory to conduct an inspection
of its manufacturing or other facilities used in the manufacturing, packaging,
storage or handling of OT-fentanyl Products. Copies of all correspondence
relevant to the OT-fentanyl Products to and from the regulatory authority in the
Territory will be provided by Anesta to Elan.

          (b)  Upon written request to Anesta, Elan shall have the right to have
its representatives including sub-distributors visit Anesta"s manufacturing
facilities at a mutually agreed time during normal business hours to audit and
assess Anesta's compliance with cGMP and quality assurance standards and to
discuss any related issues with its manufacturing and management personnel. Elan
and its sub-distributors may exercise such right no more than one (1) time per
calendar year provided, however, that if circumstances arise which in Elan's and
its sub-distributors reasonable judgment, require that its representatives visit
Anesta's manufacturing facilities more than once per calendar year, the Parties
will discuss such circumstances and appropriate means to address them.

          (c)  Upon written request to Anesta, Elan and its Subdistributors as a
group shall have the collective right to have their representatives visit
Anesta's manufacturing facilities no more than once per quarter at a mutually
agreed time during

                                      27.
<PAGE>

normal business hours on a day that would not unduly disrupt production
schedules, for informal viewing of the facilities conducted by Anesta personnel.

     6.4  Manufacture During Supply Shortage.

          (a)  If Anesta determines that a shortage of OT-fentanyl Products as
provided in Section 5.4 will continue for longer than [                       ]
months, Anesta shall use diligent, commercially reasonable efforts to qualify,
or to have a Third Party (which Anesta may appoint with Elan"s consent, not to
be unreasonably withheld) qualify, as soon as practicable, a second site for
manufacture and supply of OT-fentanyl Products under this Agreement. Anesta
shall be responsible for such qualification at its expense, and Elan shall
reasonably cooperate in and assist with such qualification.

          (b)  In the event that Anesta does not meet its obligations under
Section 6.4(a), reasonably determines that it cannot meet such obligations and
notifies Elan thereof, or in any event, is unable within [
          ] months to commence the qualification process under Section 6.4(a),
then Elan shall, at its expense and as soon as practicable, qualify a second
site for manufacture of OT-fentanyl Products through itself, an Affiliate or
Third Party reasonably acceptable to Anesta, and shall use efforts to do so that
are diligent and commercially reasonable (without regard to payments Elan may
receive pursuant to Section 5.1). Anesta shall reasonably cooperate in and
assist with such qualification, including without limitation, providing Elan
with any technical data and know-how necessary to give effect to the provisions
of Section 6.4, including the CMC Section, providing to Elan all Anesta Know-how
required for the manufacture of OT-fentanyl Products, including without
limitation providing practical performance advice, shop practice, specifications
as to materials to be used and control methods, and reasonably assisting Elan
with the working up and use of the transferred technology and with the training
of Elan's personnel to the extent which may reasonably be necessary. Anesta will
receive Elan"s scientific staff in its premises for certain periods, the term of
which will be agreed by the Parties. If Elan qualifies a second site for
manufacture of OT-fentanyl Products pursuant to this Section 6.4(b), manufacture
may continue at such site even if Anesta resumes manufacture of OT-fentanyl
Products at levels that could meet Elan's requirements therefor, and Elan may
use OT-fentanyl Products from such second site for distribution under this
Agreement; provided, however, that Anesta shall have the right to resume the
supply of all of Elan's requirements of the OT-fentanyl Products if Anesta has
[                             ] by Elan (including [                 ] costs) in
connection with [                      ].

     6.5   [
                               ]

                                      28.
<PAGE>

7.   Fees, Royalties and Payments


     7.1  Technology Fee. The Parties acknowledge that Elan has paid to Anesta a
partial technology fee of [                 ]. Elan will pay to Anesta [
                      ], as the remainder of the technology fee, within ten (10)
days of the Effective Date. The technology fees will be recognized as revenue by
Anesta, to the extent permitted by generally accepted accounting principles, as
an offset against approximately [                                              ]
of expenses incurred to date by Anesta on behalf of Elan and the Territory,
including, but not limited to, legal fees, travel and documentation costs for
negotiations between the Parties. Such available amounts may also be used to
offset the clinical, regulatory, and premarketing costs associated with Anesta"s
Marketing Authorization Application filed in 1999.

     7.2  Refunds.

          (a)  [
                    ]


          (b)  [
                    ]

     7.3  Success Fees. Elan shall pay to Anesta the following success fees upon
the first achievement of the applicable milestone:

          [
                                       ]


Each success fee shall be paid only one time.

                                      29.
<PAGE>

     7.4  Royalties.

          (a)  Coverage by Valid Claim. For so long as there exists at least one
Valid Claim in any country of the Territory, Elan will pay Anesta royalties on
sales of OT-fentanyl Products equal to a percentage of Net Sales of OT-fentanyl
Products in the Territory, as determined in the following table:

                [



                ]

The royalty rates in this Section 7.4(a) may be adjusted as provided in Section
7.4(c).

          (b)  No Coverage by Valid Claim. After the expiration of the last-to-
expire Valid Claim, Elan shall pay Anesta royalties of [
    ] of Net Sales of OT-fentanyl Products in the Territory, which royalty shall
be for Elan"s licenses to the Anesta Trademarks.

          (c)  Generic Competition. If, during the period where there is a Valid
Claim, [                         ] is sold by a Third Party in a country of the
Territory and has a market share of at least [                      ] in such
country, as measured by the dollar value of commercial sales of such [
        ] relative to the dollar value of the combined commercial sales of such
[                     ] and OT-fentanyl Products, then the Parties shall meet to
negotiate in good faith [                  ] for such country so that the
Parties [                      ] of the commercial sales of such [
] in such country.

     7.5  Royalty Payments. Royalty payments under this Agreement shall accrue
to Anesta on a calendar quarter basis and payments shall be made by Elan to
Anesta within days following the end of each calendar quarter. Each royalty
payment shall be accompanied by a report summarizing the Gross Sales, the
applicable deductions and Net Sales made and the royalty payable thereon, on a
product-by-product and country-by-country basis during the relevant three-month
period.

     7.6  Currency. Royalties payable to Anesta under this Agreement shall be
paid in United States dollars. Net Sales in each country and royalties thereon
shall be calculated using the rate of exchange for the currency in such country,
calculated as the average of the sales exchange rate and the purchase exchange
rate for such currency quoted for the close of business on the last day of
business of the applicable royalty period

                                      30.
<PAGE>

in The Wall Street Journal. All payments would be made in US dollars unless
otherwise agreed.

     7.7  Manner and Place of Payment. Any payments to Anesta shall be made by
wire transfer to First Security Bank of Utah, or such other bank as Anesta shall
specify from time to time.

     7.8  Withholding. Any income or other taxes on any monies payable to Anesta
which Elan is required by law to pay or withhold on behalf of Anesta, shall be
deducted by Elan from such monies due. Elan shall furnish Anesta with proof of
such payments. Any such tax required to be paid or withheld shall be an expense
of and borne solely by Anesta. Elan shall promptly provide Anesta with a
certificate or other documentary evidence to enable Anesta to support a claim
for a refund or a foreign tax credit with respect to any such tax so withheld or
deducted by Elan. At Anesta's request, Elan shall reasonably cooperate to
support any claim by Anesta for such a refund or credit.

8.   Intellectual Property

                                      31.
<PAGE>

     8.1  Ownership of Intellectual Property. Anesta shall retain all of its
rights, title and interest in and to all Anesta Technology, Anesta Trademarks,
copyrights, and all other industrial and intellectual property embodied in or
which covers the OT-fentanyl Products, subject to the licenses granted in this
Agreement. Except as otherwise expressly provided in this Agreement, Elan has no
right, title or interest in any industrial or intellectual property relating to
the OT-fentanyl Products and shall not manufacture or otherwise sell or
distribute the OT-fentanyl Products.

     8.2  Prosecution and Maintenance of Licensed Patents.

          (a) Anesta shall remain responsible for patent prosecution and
maintenance of Anesta Patents and shall bear all expenses associated therewith,
including, without limitation, prosecution, renewal and other fees necessary to
maintain the Anesta Patents in full force and effect until the earlier of their
expiration or the termination or expiration of this Agreement.

          (b) Anesta shall not during the term of this Agreement assign any
Anesta Patents to any person or corporation (other than an Affiliate of Anesta
or a successor to substantially all of the pharmaceutical assets or business of
Anesta, whether in a merger, sale of stock, sale of assets or other transaction)
without the written consent of Elan, provided that such consent shall not be
unreasonably withheld. Any Affiliate or successor of Anesta who is assigned the
Anesta Patents will assume the same obligations under this Agreement as Anesta.

     8.3  Third Party Patent Infringement. The provisions of this Section 8.3
are subject to the provisions of 12.2.

          (a) Potential Infringement. In the event either Anesta or Elan learns
of any Third Party patents which may cover the distribution, marketing or sale
of any OT-fentanyl Products in the Territory, as carried out by Elan in
accordance with its rights under this Agreement, such Party will notify the
other. The Parties agree to confer in good faith regarding such potential
infringement risk and to explore reasonable alternatives for avoiding such risk.
The Parties shall bear equally the cost of any payments made to such Third Party
for a license under such patent to make, use and sell OT-fentanyl Products,
which has been mutually agreed to by the Parties, and [ ] its royalty
obligations to Anesta pursuant to Section 7.4, [ ] for the applicable calendar
year.

          (b) Third Party Claims; Defense by Anesta. If a Third Party files a
claim, suit or action against Elan claiming that a patent or other intellectual
property right owned by it is infringed or misappropriated by the distribution,
marketing or sale of any OT-fentanyl Products, and such claim, suit or action
arises out of Elan's permissible

                                      32.
<PAGE>

exercise of its rights under this Agreement, the Parties shall confer in good
faith regarding such alleged infringement or misappropriation. Anesta may, but
shall not be obligated to defend any such claims, suits or actions. Elan will
assist in the defense of any such claim, suit or action as reasonably requested
by Anesta. Anesta shall not settle any such claim, suit or action if such
settlement would impose on Elan the obligation to pay any damages without the
prior express written consent of Elan, which shall not be unreasonably withheld
or delayed.

          (c)  Defense by Elan. If Anesta elects not to defend against Third
Party claims, suits or actions pursuant to Section 8.3(b), Anesta shall give
notice of its decision to Elan within sufficient time to permit Elan to defend
against such claims, suits or actions, and Anesta shall assist in such defense
as reasonably requested by Elan. Elan shall not settle any such claim, suit or
action if such settlement would impose on Anesta the obligation to pay any
damages (including royalties under a license) without the prior express written
consent of Anesta, which shall not be unreasonably withheld or delayed

     8.4  Infringement of Anesta Technology.

          (a) Notice of Infringement. In the event Anesta or Elan becomes aware
of any actual or threatened infringement or misappropriation of any Anesta
Technology licensed hereunder in the Territory, the Party first having knowledge
of such infringement shall promptly notify the other.

          (b) Prosecution by Anesta. Anesta may, but shall not be obligated to
commence, at its own expense, an infringement action against any person or
entity infringing, including infringement or misappropriating the Anesta
Technology directly or contributorily. Elan shall cooperate with Anesta as
reasonably requested, at Anesta's expense. If Elan so desires, it may join such
action at its own expense. Any and all amounts recovered with respect to such an
action shall be applied first to reimburse the Parties for their out-of-pocket
expenses (including reasonable attorneys' fees) in prosecuting such infringement
or misappropriation. The remainder shall be shared equally by the Parties after
reimbursement of expenses.

          (c) Prosecution by Elan. In the event Anesta is unable to or elects
not to commence an action against the person or entity responsible for the
alleged infringement or misappropriation within one-hundred twenty (120) days of
the date of Anesta's becoming aware of such infringement, then Elan may, but
shall not be required to, prosecute the alleged infringement or threatened
infringement. In such event Elan shall act in its own name and at its own
expense. Anesta shall cooperate with Elan as reasonably requested, at Elan's
expense. If Anesta so desires, it may join such action at a later date, at its
own expense. Any amounts recovered with respect to such an action shall be
applied first to reimburse the Parties for their out-of-pocket expenses
(including

                                      33.
<PAGE>

reasonable attorneys' fees) in the prosecution of such infringement. The
remainder shall be shared equally by the Parties after reimbursement of
expenses.

9.   Confidentiality; Publication

                                      34.
<PAGE>

     9.1  Confidentiality. Except to the extent expressly authorized by this
Agreement or otherwise agreed in writing by the Parties, the Parties agree that,
for the term of this Agreement and for five (5) years thereafter, the receiving
Party shall keep confidential and shall not publish or otherwise disclose and
shall not use for any purpose other than as provided for in such Agreements any
Confidential Information furnished to it by the other Party pursuant to such
Agreements unless the receiving Party can demonstrate by competent proof that
such Information:

          (a)  was already known to the receiving Party, other than under an
obligation of confidentiality, at the time of disclosure by the other Party;

          (b)  was generally available to the public or otherwise part of the
public domain at the time of its disclosure to the receiving Party;

          (c)  became generally available to the public or otherwise part of the
public domain after its disclosure and other than through any act or omission of
the receiving Party in breach of such Agreements;

          (d)  was disclosed to the receiving Party, other than under an
obligation of confidentiality to a Third Party, by a Third Party who had no
obligation to the disclosing Party not to disclose such information to others,
as shown by independent proof; or

          (e)  was independently discovered or developed by the receiving Party
without the use of Confidential Information belonging to the disclosing Party,
as shown by pre-existing proof.

     9.2  Authorized  Disclosure.  Each Party may disclose Confidential
Information belonging to the other Party to the extent such disclosure is
reasonably necessary in the following:

          (a)  regulatory filings;

          (b)  prosecuting or defending litigation;

          (c)  complying with applicable governmental regulations;

          (d)  conducting pre-clinical or clinical trials of OT-fentanyl
Products;

          (e)  disclosure to Affiliates or sub-distributors who agree to be
bound by similar terms of confidentiality; and

          (f)  legally required disclosures other than as set forth in Sections
9.2(a)-(d).

                                      35.
<PAGE>

Notwithstanding the foregoing, if a Party is required to make a disclosure of
the other Party's Confidential Information pursuant to this Section 9.2 it will,
except where impracticable, give reasonable advance notice to the other Party of
such disclosure and use commercially reasonable efforts to secure confidential
treatment of such information. In any event, the Parties agree to take all
reasonable action to avoid disclosure of Confidential Information hereunder.

     9.3 Publications. Each Party primarily responsible for a proposed
publication relating to OT-fentanyl Products in the Territory (the primary
purpose of which is not advertising), whether written or oral, shall at least
thirty (30) days before presentation or submission of the proposed publication
to a Third Party, submit such proposed publication to the other Party for review
in connection with obtaining or preservation of patent rights and/or to
determine whether such other Party's Confidential Information should be modified
or deleted. The receiving Party shall have thirty (30) days in which to review
and consent to each proposed publication, such consent not to be unreasonably
withheld. The review period may be extended for an additional thirty (30) days
when the receiving Party provides a reasonable need for such extension,
including, but not limited to the preparation and filing of pertinent patent
applications. By mutual agreement of the Parties, this period may be further
extended.

10.  Term and Termination of Agreement

                                      36.
<PAGE>

     10.1  Term. Unless earlier terminated in accordance with Section 10.2, this
Agreement shall expire upon the expiration of the Distribution Period. Elan
shall have the right to extend the Distribution Period for additional [ ]
periods by giving Anesta written notice of its intent to do so at least six (6)
months prior to the expiration of the then-current Distribution Period.

     10.2  Termination.

           (a) Material Breach. Each Party shall have the right to terminate
this Agreement with written notice to the other Party for material breach of
this Agreement by the other Party. Any notice of material breach shall specify
the breach in reasonable detail. The termination shall be effective sixty (60)
days after receipt of the written notice, unless the breaching Party cures the
breach within that sixty (60) days notice period, or, if such breach is
incapable of cure within such sixty (60) day period, the breaching Party has
commenced good faith efforts to cure such breach within such sixty (60) day
period and cures such breach within six (6) months after the receipt of the
notice of material breach.

          (b)  [
                    ]

               (i)  the Parties shall negotiate in good faith during a thirty
(30) day period, [                 ] of the Agreement with appropriate[
                                                         ] under this Agreement,
such as [                                  ] of OT-fentanyl Product [
                                                                     ] of OT-
fentanyl Products because of such [                                      ]; or

               (ii) if the Parties have not reached an agreement as provided in
Section 10.2(b)(i) above, [                       ] within thirty (30)
days thereafter by providing ten (10) days prior written notice [           ].
If [              ] this Agreement pursuant to this Section 10.2(b)(ii), [ ]

     10.3 Accrued Rights, Surviving Obligations. Termination or expiration of
this Agreement shall not affect any accrued rights of either Party. The terms of
Sections 2.2, 2.9(d), 2.9(e), 3.6, 4.6, 4.7, 4.8, 5.9, 7.5 (for royalty payments
accruing during the Distribution Period), 7.6, 7.7, 7.8, 10.3, 10.4, 10.5, 10.6,
12.4, and 12.5, and Articles 8, 9, 11, and 13 of this Agreement shall survive
termination or expiration of this Agreement.

                                      37.
<PAGE>

     10.4 Existing OT-fentanyl Products Inventory; Sell-Through. Upon expiration
or termination (other than pursuant to Section 10.2 for a material breach by
Elan) of the Agreement, Elan may, where permitted by law, sell any OT-fentanyl
Products in its inventory for a period of six (6) months in accordance with the
terms of this Agreement. Promptly after the expiration of the sell-through
period, Elan will, at its cost, destroy any unsold OT-fentanyl Products
remaining in its inventory and will provide appropriate evidence of such
destruction to Anesta. Anesta will have the right to cancel any purchase orders
placed by Elan which were accepted by Anesta prior to such termination, and
which require delivery of OT-fentanyl Products after the date of termination.

     10.5 Transfer of Regulatory Approvals. Upon expiration or termination of
the Agreement, Elan shall transfer or cause to be transferred to Anesta all
Regulatory Approvals, or applications therefor, that are in the name of Elan at
Anesta's cost.

     10.6 No Payment for Good Will. Where permitted by applicable law, Elan
hereby expressly and irrevocably waives any of the following that arise directly
from the termination of this Agreement: claims for compensation or damages based
on lost profits, good will generated for the OT-fentanyl Products or customers
of the OT-fentanyl Products enlisted by Elan during the term of this Agreement,
and any other claims or statutory rights.

11.  Indemnity

     11.1 Clinical Trials. Elan shall indemnify, defend and hold Anesta, its
Affiliates and their employees and agents ("Anesta Indemnitees") harmless from
and against any and all losses, claims, damages, costs and expenses, including
reasonable attorneys' fees that directly result from Third Party claims, actions
or proceedings (collectively, "Losses") arising out of any injury or death to
any person or damage to property that results from Elan's conduct of any human
clinical trials under this Agreement which are initiated solely by Elan; except
that Elan shall have no obligation to indemnify Anesta pursuant to this Section
11.1 to the extent that Anesta is obligated to indemnify and hold harmless Elan
Indemnitees for such Losses pursuant to Section 11.2.

     11.2 Indemnification by Anesta. Anesta agrees to and hereby does indemnify,
defend and hold Elan, its Affiliates and their employees and agents ("Elan
Indemnitees") harmless from and against all Losses arising from: (a) the death
or injury to person or damage to property and resulting from (i) the design or
manufacture of the OT-fentanyl Products, including the failure of such Products
to meet Specifications at the time of delivery pursuant to the delivery terms of
Section 5.6, (ii) Anesta's transportation, storage, use, and handling of the
OT-fentanyl Products and the disposal of hazardous materials in connection with
the manufacture thereof, or (iii) the negligence, recklessness or willful
misconduct of Anesta or Anesta's officers, employees or agents; or (b) the
breach of the representations and warranties of Anesta in Section 12.2; or (c)
the

                                      38.
<PAGE>

breach of the warranty made by Anesta in Section 12.1; except that Anesta shall
have no obligation to indemnify Elan pursuant to this Section 11.2 to the extent
that Elan is obligated to indemnify and hold harmless Anesta Indemnitees for
such Losses pursuant to Sections 11.1 or 11.3.

     11.3 Indemnification by Elan. Elan agrees to and hereby does indemnify and
hold Anesta Indemnitees harmless from and against all Losses arising from: (a)
the sale or other distribution of OT-fentanyl Products by Elan in violation of
the terms of this Agreement; or (b) any representation made or warranty given by
Elan with respect to the OT-fentanyl Products (other than the labeling for the
OT-fentanyl Products as approved by the FDA or equivalent regulatory agencies in
the Territory); or (c) the death or injury to person or damage to property
resulting from (i) the manufacture, sale or use of any product which is not
supplied by Anesta and which is sold or combined by Elan with an OT-fentanyl
Products, (ii) the provision of services by Elan, (iii) improper handling,
storage or transport of the OT-fentanyl Products by Elan or its agents, (iv) the
unauthorized alteration, modification or adulteration of the OT-fentanyl
Products by Elan, or (v) the negligence, recklessness or willful misconduct of
Elan or Elan's officers, employees or agents; except that Elan shall have no
obligation to indemnify Anesta pursuant to this Section 11.3 to the extent that
Anesta is obligated to indemnify and hold harmless Elan Indemnitees for such
Losses pursuant to Section 11.2.

     11.4 Procedure. The above indemnification obligations shall be effective
only if the party seeking indemnification under these indemnification provisions
(the "Indemnified Party") complies with the terms of this Section 11.4. The
Indemnified Party shall (i) give the other Party (the "Indemnifying Party")
notice of the relevant Third Party claim(s) underlying the Loss (the "Claim"),
(ii) cooperate with the Indemnifying Party, at the Indemnifying Party's expense,
in the defense of such Claim, and (iii) give the Indemnifying Party the right to
control the defense and settlement of any such Claim, except that the
Indemnifying Party shall not enter into any settlement that affects the
Indemnified Party's rights or interest without the Indemnified Party's prior
written approval. The Indemnified Party shall have no authority to settle any
Claim on behalf of the Indemnifying Party.

12.  Representations and Warranties; Limitations of Liability

     12.1 OT-fentanyl Products Warranty.

          (a) Compliance with cGMP and Specifications. Anesta warrants that
OT-fentanyl Products delivered under this Agreement (i) are manufactured in
accordance with cGMP, as set forth in the U.S. Food, Drug and Cosmetics Act, as
amended from time to time, and applicable regulations and guidances thereunder
and other applicable FDA and other rules and regulations of the United States or
applicable non-United States regulatory authorities in Europe, (ii) conform to
the Specifications, except for non-

                                      39.
<PAGE>

conformities caused by shipping, handling or
storage of OT-fentanyl Products not in compliance with the Specifications after
delivery by Anesta pursuant to Section 5.6; and (iii) are not adulterated or
misbranded. Elan's remedies and Anesta's liability with respect to this warranty
are set forth in Section 12.1(b). This warranty may only be modified or amended
by a written instrument signed by a duly authorized officer of Anesta and
accepted by Elan.

          (b) Sole Remedy. Subject to Sections  5.1(b) and 11.2, in the event of
a breach by Anesta of the warranty set forth in Section 12.1(a), Elan's sole and
exclusive remedies will be those provided in Section 5.8.

     12.2 General Representations and Warranties of Anesta.

          (a) Facilities. Anesta represents that, as of the Effective Date, its
manufacturing facilities for OT-fentanyl Products conform in all material
respects to applicable laws, regulations (including cGMP) and (ii) [
                                                          ] contemplated hereby.
Anesta warrants that the preceding sentence shall be true throughout the
Distribution Period, provided that in the event a non-conformity or inadequacy
is discovered, Anesta shall not be in breach of this Section 12.2(a) for such
period as correction of the deficiency reasonable requires, so long as Anesta
applies diligent efforts to make such correction.

          (b) [          ] Matters. Anesta represents and warrants that, as of
the Effective Date, it has made to Elan [

                                                          ] for OT-fentanyl
Products in the Territory. Anesta is not a party to any agreement or arrangement
which restricts performance under this Agreement.

          (c) Infringement; Litigation. Anesta represents that as of the
Effective Date, to the best of its knowledge and belief (i) the use,
importation, offer for sale and sale of OT-fentanyl Products in the Territory in
accordance with this Agreement does not infringe any Third Party intellectual
property right in the Territory, and (ii) there is no pending or threatened
litigation relating to the OT-fentanyl Products and Anesta, and (iii) Anesta has
not received any written notice from any Third Party either contesting the
validity of any of the Anesta Patents or claiming that any use of the Anesta
Patents or OT-fentanyl Products infringe on any intellectual property of a Third
Party.

          (d) Application for Regulatory Approval in the United Kingdom. Anesta
represents that it has filed an application for Regulatory Approval in the
United Kingdom.

                                      40.
<PAGE>

          (e)  Control of Technology. Anesta represents and warrants that it is
the sole owner and/or the licensee of the Anesta Patents (as they exist as of
the Effective Date) and the Anesta Trademarks, the Anesta Know-How (as it exists
as of the Effective Date) and the OT-fentanyl Products regulatory filings.

     12.3 Representations and Warranties of Both Parties.

          (a)  Corporate Power. Each Party represents and warrants that it (i)
is duly organized and validly existing in the jurisdiction of its incorporation,
(ii) is qualified to business in each other jurisdiction in which the conduct of
its business requires such qualification, (iii) is in compliance with all
applicable laws, rules, regulations and orders relating to its business and
assets, and (iv) is not in material default of its memorandum or articles of
association, or its certificate of incorporation or by-laws, as the case may be,
except in the case of (ii) and (iii) where such failure to qualify or be in
compliance would not have a material adverse effect on the business and assets
of such Party or the performance of this Agreement by such Party.

          (b)  Due Authorization and Enforceability. Each Party represents and
warrants that it has full corporate authority to execute and deliver this
Agreement, that this Agreement has been duly executed and delivered by such
Party and constitutes the legal and valid obligations of such Party and is
enforceable against such Party in accordance with its terms, and that the
execution, delivery and performance of this Agreement will not violate, be
inconsistent with or result in a default under or creation of lien or
encumbrance under (except as specifically contemplated by this Agreement), such
Party's memorandum or articles of association, or certificate of incorporation
or by-laws, as the case may be, or any material agreement, contract, license
understanding or instrument binding upon or affecting such Party or its
properties or assets, whether express, implied, written or oral, or any
applicable laws, rules, regulations or orders affecting either Party or its
properties or assets, except where such violation would not have a material
adverse effect on the business and assets of such Party.

          (c)  Export, Import and Product Handling. Anesta represents and
warrants that it will comply with all U.S. and Territorial regulations relating
to the manufacture and exportation and warehousing of the OT-fentanyl Products
and will ensure that all such authorizations are in place. Elan warrants that it
will comply with all U.S. and Territorial regulations relating to the
importation, re-exportation (to the best of its ability and control),
warehousing, and distribution of the OT fentanyl Products and will ensure that
all required authorizations are in place.

          (d)  Rights to Grant Licenses. Each Party represents and warrants that
it has the sole, exclusive and unencumbered right to grant the licenses and
rights herein granted to the other Party by it, and that it has not granted any
option, license, right or

                                      41.
<PAGE>

interest in or to OT-fentanyl Products to any Third Party which could conflict
with the rights granted by it under this Agreement.

     12.4 Limitation of Liability. Subject to each Party's indemnification
obligations under Article 11, in no event shall either Party be liable for any
indirect, incidental, special or consequential damages, including loss of
profits [

                                                  ] revenue, data or use,
incurred by the other Party, whether in contract or tort or based on a warranty,
even if the other Party has been advised of the possibility of such damages,
Elan acknowledges that the allocation of risks and benefits under this Agreement
is based on, and amounts payable by Elan under this Agreement would be greater
in the absence of, the limitations described in this Section 12.4.

     12.5 No Other Warranties. Except as set forth in Article 11, Anesta neither
assumes nor authorizes any person to assume any liability or warranty in
connection with the OT-fentanyl Products. The warranties of Anesta set forth in
this Article 12 are in lieu of all other warranties, express or implied, and
specifically, without limitation, Anesta disclaims any implied warranty of
merchantability, fitness for a particular purpose or freedom from infringement
of Third Party intellectual property rights.

13.  Miscellaneous

     13.1 Governing Law; Forum. This Agreement shall be governed by New York
law, excluding its choice of law provisions. The provisions of the United
Nations Convention on Contracts for the International Sale of Goods shall not
govern or apply to this Agreement. In any legal action relating to this
Agreement, each Party agrees to submit to the exclusive jurisdiction of courts
of the State of New York or a United States federal court, in each case located
within the boundaries of the United States District Court, Southern District of
New York.
     13.2 Dispute Resolution.

          (a) In the event of any dispute, either Party may provide written
notice of such dispute to the other Party, whereupon the Chief Executive Officer
of Anesta and the President of Elan (or his or her designated senior executive
officer) shall attempt to resolve such dispute by good faith negotiations within
thirty (30) days after such notice is received by the other Party.

          (b) If the respective Chief Executive Officers or equivalents cannot
resolve the dispute within the time allotted, the Chief Executive Officers shall
select a mediator with appropriate expertise in the subject matter to which the
dispute relates, who will be engaged to resolve the dispute.

                                      42.
<PAGE>

          (c) If the Chief Executive Officers cannot agree on a mediator, each
shall choose a mediator and the two mediators selected shall choose a third
mediator who will then be engaged to resolve the dispute. If the Parties are
unable to resolve their dispute through mediation within ninety (90) days after
receipt of the written notice of dispute by the other Party, either Party may
seek appropriate judicial or equitable relief under Section 13.1.

     13.3 Entire Agreement; Amendments. This Agreement sets forth the entire
terms of the distribution arrangement between the Parties hereto and, except as
otherwise set forth herein, supersedes and terminates all prior agreements and
understandings between the Parties. No subsequent alteration, amendment, change
or addition to this Agreement shall be binding upon the Parties unless reduced
to writing and signed by an authorized officer of each Party.

     13.4 Notices. Any notice required or permitted to be given under this
Agreement shall be in writing, shall specifically refer to this Agreement and
shall be deemed to have been sufficiently given and received for all purposes if
(i) eight (8) days after the notice was mailed by registered mail, postage
prepaid and return receipt requested, (ii) two (2) days after the notice was
sent by internationally recognized express delivery service, (iii) one (1) day
after the notice was sent by facsimile transmission, with transmission
confirmed, or (iv) immediately if the notice is personally delivered. Unless
otherwise specified in writing, the mailing addresses of the Parties shall be as
described below.

For Anesta:          [

                                 ]

With a Copy to:      [

                                 ]

                                      43.
<PAGE>

For Elan:            [

                                 ]

With a copy to:      [
                                 ]

     13.5 Assignment. Neither Party may assign or transfer this Agreement or any
rights or obligations hereunder without the prior written consent of the other,
not to be unreasonably withheld, except that either Party may make such an
assignment without the other Party's consent to its Affiliates or to a successor
to substantially all of the pharmaceutical assets or business of such Party,
whether in a merger, sale of stock, sale of assets or other transaction,
provided that if a proposed assignment would have an adverse financial impact
upon the other Party (e.g. by reason of changed tax treatment of payments due
under this Agreement), such assignment shall be subject to such other Party's
prior written consent. Any attempted assignment or transfer of this Agreement or
rights or obligations hereunder that is not in compliance with this Section 13.5
shall be void.

     13.6 Public Announcements. Each Party agrees that, except as may be
required by law, it shall not disclose the substance or details of this
Agreement without the prior written consent of the other Party, such consent not
to be unreasonably withheld. Nothing herein shall prevent either Party from
disclosing such information to (i) its Affiliates who are bound to the
provisions of this Section 13.6, or (ii) to its financial advisors, legal
advisors or any person or entity who may be interested in investing in or
acquiring substantially all of the assets or securities of such Party, provided
that such Party has used commercially reasonable efforts in good faith to obtain
a binder of confidentiality.

     13.7 Severance. If any Article or part thereof of this Agreement is
declared invalid by any court of competent jurisdiction, or any government or
other agency having

                                      44.
<PAGE>

jurisdiction over either Anesta or Elan deems any Article or part thereof to be
contrary to any anti-trust or competition laws, then such Article or part
thereof shall be deemed stricken from this Agreement in that jurisdiction. To
the extent possible the Parties shall revise such invalidated Article or part
thereof in a manner that will render such provision valid without impairing the
Parties' original interest.

     13.8 Non-Waiver. The failure of a Party in any one or more instances to
insist upon strict performance of any of the terms and conditions of this
Agreement shall not be construed as a waiver or relinquishment, to any extent,
of the right to assert or rely upon any such terms or conditions on any future
occasion. Except as otherwise specified, all rights, remedies, undertakings,
obligations and agreements contained in this Agreement shall be cumulative and
none of them shall be a limitation of any other remedy, right, undertaking,
obligation or agreement.

     13.9 Further Documents. Each Party hereto agrees to execute such further
documents and take such further steps as the other Party reasonably determines
may be necessary or desirable to effectuate the purposes of this Agreement.

     13.10 Force Majeure. Except as set forth in Sections 5.1(b)(i) and (ii), no
Party shall be in breach of this Agreement, or liable to the other Party, for
any delay or failure of performance to the extent such delay or failure is
caused by circumstances beyond its reasonable control and that even with the
exercise of diligent efforts it is unable to prevent ("Force Majeure"), provided
that the Party claiming Force Majeure uses its commercially reasonable efforts
to overcome the same. In the event of Force Majeure, the Parties agree to
discuss the circumstances and effects thereof, including the effects on Elan's
diligence obligations under this Agreement, and appropriate mechanisms to
address such circumstances and effects.

     13.11 Foreign Corrupt Practices Act. Anesta and Elan each agrees that it
shall comply with the requirements of the U.S. Foreign Corrupt Practices Act
(the "Act") and shall refrain from any payments to Third Parties which would
cause Anesta or Elan to violate the Act.

     13.12 U.S. Drug Enforcement Agency (DEA) Compliance. Elan will be
responsible for assuring that all test sites and distribution facilities in the
Territory are compliant with applicable U.S. DEA regulations. Elan shall not, to
the best of its ability and control, ship or permit to be shipped any
OT-fentanyl Products in violation of applicable U.S. DEA regulations or other
applicable U.S. law regarding shipment of narcotics. Elan will maintain
appropriate processes and documentation systems in order to fulfill applicable
U.S. DEA reporting requirements.

     13.13 Disclaimer of Agency. This Agreement shall not constitute any Party
the legal representative or agent of another, nor shall any Party have the right
or authority to

                                      45.
<PAGE>

assume, create, or incur any Third Party liability or obligation of any kind,
express or implied, against or in the name of or on behalf of another except as
expressly set forth in this Agreement.

     13.14 Counterparts. This Agreement may be executed in one or more counter
parts, each of which shall be an original and all of which shall constitute
together the same document.

                                      46.
<PAGE>

     IN WITNESS WHEREOF, the Parties hereto have duly executed this Agreement as
of the date first written above.

Anesta Corp.                                  Elan Pharma International Limited


By:____________________________               By:_______________________________
Name: Thomas B. King                          Name:  David Hurley
Title:President and Chief Executive Officer   Title:  Director
Date:                                         Date:

                                      47.
<PAGE>

                                                                  Execution Copy




                  DISTRIBUTION, LICENSE AND SUPPLY AGREEMENT

                                 Anesta Corp.

                                      and

                       Elan Pharma International Limited

                                  Dated as of

                               December 7, 1999

                                      48.
<PAGE>

                                   Exhibit A
                   Net Sales Forecast per Distribution Year


                  [
                                                 ]

                                      49.
<PAGE>

                                   Exhibit B

                      Adverse Event Reporting Information

                                  (attached)

<PAGE>

                                   Exhibit C

                                Anesta Patents

[
                                             ]


<PAGE>

                                   Exhibit D

                               ANESTA TRADEMARKS

                              Actiq(R) (primary)
                              Fenquel (secondary)


<PAGE>

                                  Exhibit E

                         Adverse Experience Reporting

1.   Language and Definitions.

The language used for all communications under this Exhibit E shall be English.
"Adverse Experience" and "Serious" shall have the same meaning, respectively, as
set forth in the ICH E2 A guideline. For the purpose of this Agreement the
phrase "associated with the use of" is not intended to imply a causal
relationship between an event and the use of the OT-fentanyl Products. A
"Report" shall consist of, at a minimum, the following information: (aa) an
identifiable patient; (bb) a subject OT-fentanyl Product; (cc) an identified
reporting source; (dd) an identified event; and (ee) such other information as
may then be required by the relevant regulatory authorities.

2.   Serious Adverse Events.

Elan and Anesta each shall notify the other, by telephone or facsimile (with
telephone confirmation of receipt), within forty-eight (48) hours after it
becomes aware of any Serious Adverse Event associated with the use of any
OT-fentanyl Products. Within five (5) calendar days of first receiving a report
of such Serious Adverse Event, the Party receiving such report will provide the
other Party with a written report, by facsimile (with telephone confirmation of
receipt), on FDA Form 3500A (Medwatch) (for reports from Anesta to Elan) or
CIOMS I (for reports from Elan to Anesta), or such other forms as the relevant
regulatory authorities may require from time to time. Samples of FDA Form 3500A
and CIOMS I are attached to this Agreement as Exhibit B. Follow-up reports to
the initial reports will be submitted using the same procedures and timelines.

3.   Non-Serious Events.

Elan and Anesta will notify each other of non-Serious Adverse Events as follows:
(aa) non-Serious Adverse Events occurring in the course of clinical trials will
be disclosed in the final clinical trial report, which shall be provided to the
Party not conducting the clinical trial within ten (10) calendar days of
completing such report; (bb) non-Serious Adverse Events reported in the course
of post-marketing surveillance will be provided as a line listing every two (2)
months within ten (10) calendar days of the end of each relevant month.

4.   Database.

Anesta will maintain the safety database for OT-fentanyl Products. Any inquiries
requiring database output will be generated by Anesta as set forth in Section 8
below.

<PAGE>

5.   Literature Surveillance.

Anesta will carry out systematic literature surveillance and notify Elan of
Serious Adverse Events as specified under Section 9 and of non-Serious Adverse
Events on a periodic basis.

6.   Periodic Reports.

Anesta will prepare any required periodic safety reports. Anesta will provide to
Elan a copy of such reports via the same means as such reports are delivered to
FDA.

7.   Regulatory Reporting Requirements.

Anesta and Elan each will be responsible for regulatory reporting and for
responding to regulatory inquiries within their respective territories. Anesta
will generate the required data base output for such responses from the safety
database for OT-fentanyl Products.

8.   Record Keeping by Elan as "Non-Applicant".

Elan will retain the following documents for each Adverse Experience report of
which it notifies Anesta:

<PAGE>

               (i)     A copy of each Adverse Experience report.

                       (1) For clinical trials, such report will be the
immediate reports and the case report forms of Serious Adverse Experiences.

                       (2) For non-Serious Adverse Experiences, such report will
be the case report form.

                       (3) For post-marketing surveillance reports, such report
will be the CIOMS I forms.

               (ii)    A record of the date Elan submitted such report to
Anesta.

               (iii)   A record of the date Anesta received such report.

               (iv)    A record of the type of report filed by Elan with the
authorities (e.g. initial, first follow-up, second follow-up, etc.)

               (v)     Name and address of the sponsor/manufacturing company
(i.e.  Anesta).

9.   Company Contacts.

The following persons will be designated the contact person for communications
between the Parties pursuant to this Section 9, and may be modified in writing
from time to time:

          For Anesta:  Dr.  Paul Litka, Vice President, Clinical Drug
                       Development
                       4745 Wiley Post Way, Suite 650
                       Salt Lake City, Utah 84116
                       USA
                       Telephone and Confirmation: 801.321.7625
                       Facsimile: 801.321.7490
                       E-Mail: plitka@anesta.com


<PAGE>

          For Elan:    Dr. Tim Corn
                       Elan Pharma Limited
                       Elan House
                       Avenue One
                       Letchworth, Herts
                       SG6 2HU
                       United Kingdom
                       Telephone and Confirmation:  00 44 1462 707 203
                       Facsimile:  00 44 1462 707 253
                       E-Mail: timcorn@elaneurope.com

10.  Updating/Revising Agreement.

The Parties shall amend this Agreement from time to time to the extent necessary
to incorporate changes to this Exhibit E resulting from changes in the
regulatory requirements applicable to adverse events.


<PAGE>

                                   Exhibit F

                 Requirements for Handling/Shipping of Opioids

                  ANESTA CONTROLLED SUBSTANCES EXPORT PROCESS

[





                                                                       ]


<PAGE>

                                   Exhibit G

                                Specifications


<PAGE>

                                   Exhibit H

                            Target and Minimum SPC

[




                           ]


<PAGE>


<PAGE>

                                   Exhibit I


                Agreement of Non-disclosure and Confidentiality


<PAGE>
                               Table Of Contents
                                  (continued)


<TABLE>
<CAPTION>
                                                                                                           Page
<S>                                                                                                        <C>
1.   Definitions...........................................................................................   1

     1.1   "Affiliate".....................................................................................   1

     1.2   "Anesta Patents"................................................................................   1

     1.3   "Anesta Know-How"...............................................................................   2

     1.4   "Anesta Technology".............................................................................   2

     1.5   "Anesta Trademarks".............................................................................   2

     1.6   "Commercial Strategy Team"......................................................................   2

     1.7   "Confidential Information"......................................................................   2

     1.8   "DEA"...........................................................................................   2

     1.9   "Distribution Period"...........................................................................   2

     1.10  "Effective Date"................................................................................   2

     1.11  "FDA"...........................................................................................   3

     1.12  "Forecast"......................................................................................   3

     1.13  "Field".........................................................................................   3

     1.14  "Generic Actiq Product".........................................................................   3

     1.15  "Gross Profit"..................................................................................   3

     1.16  "Gross Sales"...................................................................................   3

     1.17  "Initial Indication"............................................................................   3

     1.18  "NDA" or "New Drug Application".................................................................   3

     1.19  "NDA Package"...................................................................................   3

     1.20  "Net Sales".....................................................................................   3

     1.21  "OT-fentanyl Products"..........................................................................   4

     1.22  "Parallel Imports"..............................................................................   4

     1.23  "Parties".......................................................................................   4

     1.24  "Pricing Approval"..............................................................................   4

     1.25  "Required Information"..........................................................................   4

     1.26  "Regulatory Approval"...........................................................................   4

     1.27  "Reimbursement Approval"........................................................................   4
</TABLE>

                                      i.
<PAGE>

                               Table of Contents
                                  (continued)

<TABLE>
<CAPTION>
                                                                                                           PAGE
<S>                                                                                                        <C>
     1.28  "Select Country"................................................................................   4

     1.29  "SPC"...........................................................................................   4

     1.30  "Specifications"................................................................................   4

     1.31  "Subdistributors"...............................................................................   5

     1.32  "Territory".....................................................................................   5

     1.33  "Third Party"...................................................................................   5

     1.34  "Unit"..........................................................................................   5

     1.35  "Valid Claim"...................................................................................   5

2.   Distribution of OT-fentanyl Products..................................................................   5

     2.1   Exclusive Distributorship and License...........................................................   5

           (a)      Appointment and Grant of License.......................................................   5

           (b)      Limitations............................................................................   5

           (c)      Subdistributors........................................................................   6

     2.2   License to Elan's Information...................................................................   6

     2.3   Sublicense to Use Other Distributors' Information...............................................   6

     2.4   Distribution Period.............................................................................   6

     2.5   Performance Obligations; Conversion and Termination of Rights...................................   6

           (a)      Determination of Forecasts.............................................................   7

           (b)      First Five Years After Launch..........................................................   7

           (c)      Remainder of Distribution Period.......................................................   8

           (d)      No More Favorable Terms................................................................   9

           (e)      Competitive Products..................................................................   10

           (f)      Adjustment of Sales Targets...........................................................   10

     2.6   Failure to Launch..............................................................................   11

     2.7   Parallel Imports...............................................................................   11

     2.8   Right of First Negotiation.....................................................................   12

     2.9   Trademarks and Trade Names.....................................................................   12

           (a)      License...............................................................................   12
</TABLE>

                                      ii.
<PAGE>

                               Table Of Contents
                                  (Continued)

<TABLE>
<CAPTION>
                                                                                                           Page
<S>                                                                                                        <C>
           (b)      Obligation to Use Trademarks..........................................................   12

           (c)      Trademark Policy......................................................................   12

           (d)      Anesta Ownership......................................................................   13

           (e)      Goodwill..............................................................................   13

           (f)      Infringement..........................................................................   13

           (g)      No Confusion..........................................................................   13

           (h)      Selection of Trademarks...............................................................   13

3.   Marketing............................................................................................   14

     3.1   Promotion and Marketing Obligations............................................................   14

     3.2   Marketing Plan.................................................................................   14

     3.3   Commercial Strategy Team.......................................................................   14

     3.4   Marketing Support..............................................................................   14

     3.5   Pricing........................................................................................   14

     3.6   Covenant Not to Market Competing Products......................................................   14

     3.7   Advertising and Promotion......................................................................   15

     3.8   Reports........................................................................................   15

4.   Regulatory Matters...................................................................................   15

     4.1   Filing of Regulatory Approvals for Initial Indication..........................................   15

           (a)      European Union, San Marino, Switzerland and Vatican City..............................   15

           (b)      The Philippines and Taiwan............................................................   16

     4.2   Filing of Regulatory Approvals for Additional Indications......................................   16

     4.3   Post-Regulatory Approval Clinical Programs.....................................................   16

     4.4   Maintenance of Regulatory Approvals............................................................   17

     4.5   Pricing and Reimbursement Approvals............................................................   17

     4.6   Adverse Experience Reporting...................................................................   17

     4.7   Products Recall................................................................................   17

           (a)      Voluntary Recall......................................................................   17

           (b)      Mandatory Recall......................................................................   17
</TABLE>

                                     iii.
<PAGE>

                               Table of Contents
                                  (Continued)

<TABLE>
<CAPTION>
                                                                                                           Page
<S>                                                                                                        <C>
     4.8   Compliance with Laws by Parties................................................................   18

5.   Supply of OT-fentanyl Products.......................................................................   18

     5.1   Supply and Purchase of OT-fentanyl Products....................................................   18

           (a)      Supply Obligation.....................................................................   18

           (b)      Breach of Supply Obligation...........................................................   18

     5.2   Forecasting....................................................................................   19

           (a)      Planning Forecast.....................................................................   19

           (b)      Rolling Forecasts.....................................................................   19

     5.3   Purchase Orders and Shipping...................................................................   20

     5.4   Shortage of OT-fentanyl Products...............................................................   20

     5.5   Purchase Price.................................................................................   21

           (a)      Preclinical and Clinical Supply.......................................................   21

           (b)      Commercial Supply.....................................................................   21

           (c)      No Changes in Price...................................................................   21

           (d)      Payment Terms.........................................................................   22

     5.6   Delivery.......................................................................................   22

     5.7   Acceptance, Rejection and Revocation of Acceptance.............................................   22

     5.8   Rejection Procedures...........................................................................   23

     5.9   Audit..........................................................................................   23

6.   Manufacturing........................................................................................   24

     6.1   Manufacture of OT-fentanyl Products............................................................   24

     6.2   Packaging and Labeling.........................................................................   24

     6.3   Regulatory Inspections; cGMP and QA Audits.....................................................   24

     6.4   Manufacture During Supply Shortage.............................................................   25

     6.5   Manufacture by Elan in Europe..................................................................   26

7.   Fees, Royalties and Payments.........................................................................   26

     7.1   Technology Fee.................................................................................   26

     7.2   Refunds........................................................................................   26
</TABLE>

                                      iv.
<PAGE>

                               Table of Contents
                                  (Continued)

<TABLE>
<CAPTION>
                                                                                                           Page
<S>                                                                                                        <C>
     7.3   Success Fees...................................................................................   27

     7.4   Royalties......................................................................................   27

           (a)      Coverage by Valid Claim...............................................................   27

           (b)      No Coverage by Valid Claim............................................................   27

           (c)      Generic Competition...................................................................   27

     7.5   Royalty Payments...............................................................................   28

     7.6   Currency.......................................................................................   28

     7.7   Manner and Place of Payment....................................................................   28

     7.8   Withholding....................................................................................   28

8.   Intellectual Property................................................................................   28

     8.1   Ownership of Intellectual Property.............................................................   28

     8.2   Prosecution and Maintenance of Licensed Patents................................................   29

     8.3   Third Party Patent Infringement................................................................   29

           (a)      Potential Infringement................................................................   29

           (b)      Third Party Claims; Defense by Anesta.................................................   29

           (c)      Defense by Elan.......................................................................   29

     8.4   Infringement of Anesta Technology..............................................................   30

           (a)      Notice of Infringement................................................................   30

           (b)      Prosecution by Anesta.................................................................   30

           (c)      Prosecution by Elan...................................................................   30

9.   Confidentiality; Publication.........................................................................   30

     9.1   Confidentiality................................................................................   30

     9.2   Authorized Disclosure..........................................................................   31

     9.3   Publications...................................................................................   31

10.  Term and Termination of Agreement....................................................................   32

     10.1  Term...........................................................................................   32

     10.2  Termination....................................................................................   32

           (a)      Material Breach.......................................................................   32
</TABLE>

                                      v.
<PAGE>

                               Table of Contents
                                  (continued)

<TABLE>
<CAPTION>
                                                                                                           Page
<S>                                                                                                        <C>
            (b)      Non-Approval..........................................................................  32

     10.3   Accrued Rights, Surviving Obligations..........................................................  32

     10.4   Existing OT-fentanyl Products Inventory; Sell-Through..........................................  33

     10.5   Transfer of Regulatory Approvals...............................................................  33

     10.6   No Payment for Good Will.......................................................................  33

11.  Indemnity.............................................................................................  33

     11.1   Clinical Trials................................................................................  33

     11.2   Indemnification by Anesta......................................................................  33

     11.3   Indemnification by Elan........................................................................  34

     11.4   Procedure......................................................................................  34

12.  Representations and Warranties; Limitations of Liability..............................................  34

     12.1   OT-fentanyl Products Warranty..................................................................  34

            (a)      Compliance with cGMP and Specifications...............................................  34

            (b)      Sole Remedy...........................................................................  35

     12.2   General Representations and Warranties of Anesta...............................................  35

            (a)      Facilities............................................................................  35

            (b)      Material Matters......................................................................  35

            (c)      Infringement; Litigation..............................................................  35

            (d)      Application for Regulatory Approval in the United Kingdom.............................  35

            (e)      Control of Technology.................................................................  35

     12.3   Representations and Warranties of Both Parties.................................................  35

            (a)      Corporate Power.......................................................................  36

            (b)      Due Authorization and Enforceability..................................................  36

            (c)      Export, Import and Product Handling...................................................  36

            (d)      Rights to Grant Licenses..............................................................  36

     12.4   Limitation of Liability........................................................................  36

     12.5   No Other Warranties............................................................................  37

13.  Miscellaneous.........................................................................................  37
</TABLE>

                                      vi.
<PAGE>

                               Table of Contents
                                  (continued)

<TABLE>
<CAPTION>
                                                                                                           PAGE
     <S>                                                                                                   <C>
     13.1     Governing Law; Forum........................................................................   37

     13.2     Dispute Resolution..........................................................................   37

     13.3     Entire Agreement; Amendments................................................................   37

     13.4     Notices.....................................................................................   38

     13.5     Assignment..................................................................................   39

     13.6     Public Announcements........................................................................   39

     13.7     Severance...................................................................................   39

     13.8     Non-Waiver..................................................................................   39

     13.9     Further Documents...........................................................................   40

     13.10    Force Majeure...............................................................................   40

     13.11    Foreign Corrupt Practices Act...............................................................   40

     13.12    U.S.  Drug Enforcement Agency (DEA) Compliance..............................................   40

     13.13    Disclaimer of Agency........................................................................   40

     13.14    Counterparts................................................................................   40
</TABLE>

                                     vii.
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