<PAGE>
                                                                    Exhibit 10.4

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

WEST PHARMACEUTICAL SERVICES LOGO


                       WEST PHARMACEUTICAL SERVICES, INC.


                         And its wholly owned subsidiary


                   WEST PHARMACEUTICAL SERVICES DRUG DELIVERY
                         & CLINICAL RESEARCH CENTRE LTD.

                                       and




                     INNOVATIVE DRUG DELIVERY SYSTEMS, INC.



--------------------------------------------------------------------------------
                                LICENSE AGREEMENT
--------------------------------------------------------------------------------



                              Dated August 25, 2000


<PAGE>


                                LICENSE AGREEMENT

         THIS IS A LICENSE AGREEMENT (the "Agreement"), dated as of August 25,
2000 (the "Effective Date"), among West Pharmaceutical Services, Inc., a
Pennsylvania corporation, ("West") with offices at 101 Gordon Drive, Lionville,
PA, 19341, its wholly owned subsidiary West Pharmaceutical Services Drug
Delivery & Clinical Research Centre Ltd., a corporation organized under the laws
of England and Wales, ("West/Nottingham") with offices at Albert Einstein
Centre, Nottingham Science and Technology Park, University Boulevard,
Nottingham, NG7 2TN, United Kingdom; and Innovative Drug Delivery Systems, Inc.,
a Delaware corporation, ("IDDS") with offices at 787 Seventh Avenue, New York,
New York 10019.

                                   Background

         West (directly and through its subsidiaries, including West/Nottingham)
is engaged in, among other things, the research and development of novel means
of delivering pharmaceutical compounds using its patented and proprietary
drug-delivery technology.

         West/Nottingham is the owner of the entire right, title and interest in
certain issued letters. patent and pending patent applications as set forth in
Schedule 1 hereto relating to the use of chitosan for the transmucosal delivery
of pharmaceutical compounds.

         IDDS desires to conduct and fund further research and development
activities with respect to West's drug delivery technology with a view toward
commercialization of certain identified products for the treatment of pain in
humans and animals. IDDS desires to secure, and West and West/Nottingham desire
to grant, an exclusive worldwide license under the patents and patent
applications, and a non-exclusive license to certain other related patented and
unpatented technology to make, use and sell such products, all on the terms and
subject to the conditions set forth below.

                                    Agreement

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

1.       Definitions. Terms defined in this Section 1 and parenthetically
         elsewhere in this Agreement will throughout this Agreement have the
         meanings here or there provided. Defined terms may be used in the
         singular or in the plural, as sense shall require.

         1.1      "Affiliate" means, with respect to any Party, an entity, over
                  50% of the voting securities of which are directly or
                  indirectly controlled by such Party, or an entity that
                  directly or indirectly controls over 50% of the voting
                  securities of such Party.

         1.2      "Background IP" means know-how, knowledge, experience,
                  inventions, processes, technical information, trade secrets,
                  formulas, protocols, data and results (and any patents and
                  patent applications claiming any of the foregoing) arising
                  from or acquired outside the development activities covered by
                  this Agreement and the R&D Agreements that is necessary or
                  useful for practicing the art covered by the Licensed Patents
                  or Program IP.


<PAGE>


         1.3      "Chitosan-based Technology" means all of West's patented or
                  proprietary drug-delivery technology using chitosans, which is
                  appropriate for delivering drug compounds within the Field of
                  Use.

         1.4      "Clinical Manufacturing Agreement" means the agreement between
                  IDDS and West Pharmaceutical Services Lakewood, Inc., a wholly
                  owned subsidiary of West ("West/Lakewood"), to be entered into
                  by the Parties providing for the manufacture of clinical
                  supplies of a Licensed Product containing Morphine.

         1.5      "COX-2 Inhibitor" means any compound that inhibits the
                  cyclooxygenase-2 (COX-2) enzyme.

         1.6      "Development Milestone and Option Agreement" means the
                  agreement between IDDS and West and West/Nottingham, to be
                  entered into by the Parties providing for the payment of
                  development milestones and granting an option for West to
                  manufacture commercial quantities of Licensed Products
                  containing Morphine.

         1.7      "EMEA" means the European Agency for the Evaluation of Medical
                  Products.

         1.8      "FDA" means the U.S. Food and Drug Administration.

         1.9      "Field of Use" means the transmucosal delivery to humans or
                  animals of Identified Compounds for the treatment of pain and
                  with respect to Midazolam only, for sedation or the treatment
                  of pain or anxiety. As used in this Agreement, the term
                  "transmucosal" means via the nasal, sublingual, pulmonary,
                  rectal or vaginal mucosa.

         1.10     "Identified Compound" means (a) opioid alkaloid morphine
                  and/or a salt thereof ("Morphine"), (b) Fentanyl, (c)
                  Midazolam, and (d) such other drug compound agreed to by the
                  parties in accordance with Section 3.2 hereof.

         1.11     "Licensed Patents" means the letters patent and letters patent
                  that may issue from patent applications listed in Schedule 1
                  hereto, including all continuations, continuations-in-part,
                  divisionals, reissues and reexaminations thereof.

         1.12     "Licensed Product" means an Identified Compound whose
                  composition, manufacture or use comes within the scope of any
                  unexpired claim of any of the Licensed Patents then in force
                  in the country iA which the activity at issue takes place.

         1.13     "M-6-G Option Agreement" means the agreement to be entered
                  into among the Parties which provides for IDDS to have an
                  option to add morphine-6-glucuronide as an Identified Compound
                  under this Agreement.



                                       2
<PAGE>



         1.14     "Major Market Country" means the United States, Japan, or any
                  European Union nation party to the EMEA Mutual Recognition
                  guidelines for pharmaceutical products.

         1.15     "Net Sales Price" means the actual gross amount invoiced for
                  the sale of a Licensed Product by IDDS or any Sublicensee,
                  less: (i) trade, cash, promotional and quantity discounts;
                  (ii) recalls, credits and allowances on account of returned or
                  rejected Licensed Products including, but not limited to,
                  allowance for breakage and spoilage; (iii) rebates,
                  chargebacks and amounts paid on sale or dispensing of Licensed
                  Product; (iv) retroactive price reductions; and (v) sales,
                  excise, VAT or other taxes, transportation and insurance
                  charges and additional special transportation, customs duties
                  and other governmental charges actually paid by IDDS or any
                  Sublicensee.

         1.16     "NSAIDS" means non-steroidal anti-inflammatory drug compounds.

         1.17     "Party" means a party to this Agreement.

         1.18     "Person" means an individual, partnership, limited liability
                  company, corporation, trust or unincorporated organization or
                  other business entity, and a government or agency or political
                  subdivision thereof.

         1.19     "Program IP" means know-how, knowledge, experience,
                  inventions, processes, technical information, trade secrets,
                  formulas, protocols, data and results (and any patents and
                  patent applications claiming any of the foregoing), arising
                  from or acquired specifically in the course of the development
                  activities covered by this Agreement and the R&D Agreements
                  that relate specifically to the Field of Use.

         1.20     "R&D Agreement" means the research and development agreements
                  to be entered into among the Parties providing for, among
                  other things, the research and development activities to be
                  performed by or on behalf of the Parties and the milestone
                  payments to be paid to West by IDDS with respect to each
                  Identified Compound.

         1.21     "Regulatory Agency" means any governmental regulatory
                  authority responsible for granting health or pricing
                  approvals, registrations, import permits and other approvals
                  required before a Licensed Product may be tested or marketed
                  in any country. Regulatory Agency shall include the FDA, EMEA
                  and any analogous agency in any other country or region.

         1.22     "Royalty Payment Period" means (i) the period of time
                  commencing on the date of the first commercial sale of a
                  Licensed Product in any country and ending on the day
                  immediately before the first day of the seventh calendar month
                  thereafter and (ii) each subsequent period of six calendar
                  months.

         1.23     "Royalty Reporting Period" means (i) the period of time
                  commencing on the date of the first commercial sale of a
                  Licensed Product in any country and ending on the day
                  immediately before the first day of the fourth calendar month
                  thereafter and (ii) each subsequent period of three calendar
                  months.


                                       3
<PAGE>


         1.24     "Sublicensee" means any Person granted a sublicense by IDDS
                  under Section 2.1.3 hereof.

         1.25     "Western Europe" means the countries of Andorra, Austria,
                  Belgium, Denmark, Finland, France, Germany, Greece, Italy,
                  Ireland, Liechtenstein, Luxembourg, Monaco, the Netherlands,
                  Norway, Portugal, Spain, Sweden, Switzerland and the United
                  Kingdom.

2.       Grant of Rights.

         2.1      Subject to the terms and conditions of this Agreement, West
                  and West/Nottingham, as applicable, hereby grant, and IDDS
                  accepts, a license providing the following rights:

                  2.1.1    the worldwide exclusive right to use and practice the
                           art covered by the Licensed Patents and the Program
                           IP to develop, have developed, make, have made, use,
                           offer to sell, sell, have offered for sale, have
                           sold, import and have imported the Licensed Products
                           in the Field of Use;

                  2.1.2    the non-exclusive worldwide right to use and practice
                           the art covered by the Background IP to the extent
                           necessary to exploit the rights granted in Section
                           2.1.1; and

                  2.1.3    the right to sublicense any or all of the rights
                           granted in Sections 2.1.1 and 2.1.2 hereof.

         2.2      For purposes of this Agreement, the expression "exclusive
                  right" means that neither West, West/Nottingham nor any of
                  their Affiliates have, nor will any of them grant, nor shall
                  any of them have authority to grant any Person, any right to
                  make, use, market or sell any Licensed Products within the
                  Field of Use. West and West/Nottingham reserve all rights not
                  expressly granted and not inconsistent with IDDS's full
                  exercise of the rights granted under this Agreement.

         2.3      West's Right to Terminate Agreement. West may, in its sole and
                  absolute discretion, terminate this Agreement if:

                  2.3.1    within 30 days of the Effective Date the Parties,
                           following good faith negotiations, do not enter into
                           all of the following:

                           (a)      the Clinical Manufacturing Agreement,

                           (b)      the Development Milestone and Option
                                    Agreement,


                                       4
<PAGE>


                            (c)     an R&D Agreement with respect to Midazolam
                                    (each of items a, b and c of this Section
                                    2.3.1 to contain terms and conditions
                                    consistent with those specified in the
                                    Letter of Intent dated June 19, 2000 among
                                    West, IDDS (f/k/a Alchemy Pharmaceuticals,
                                    Inc.) and Paramount Capital Investments, LLC
                                    (the "Letter of Intent") with respect to the
                                    appropriate Identified Compound and subject
                                    matter), and

                           (d)      the M-6-G Option Agreement (which shall
                                    contain terms and conditions consistent with
                                    those set forth in Exhibit A hereto);

                  or

                  2.3.2    within 30 days of the Effective Date IDDS does not
                           obtain at least $10 million in equity financing, said
                           amount to be available to IDDS without restriction.

         2.4      West's Right To Terminate Fentanyl License.

                  2.4.1    The Parties shall endeavor to enter into within 30
                           days of the Effective Date an R&D Agreement with
                           respect to Fentanyl, which shall contain terms and
                           conditions consistent with those specified in the
                           Letter of Intent with respect to Fentanyl with
                           chitosan, provided that such R&D Agreement shall also
                           provide that IDDS need not commence development work
                           on a Licensed Product containing Fentanyl and
                           chitosan until the FDA allows (by way of a pre-Phase
                           III meeting or otherwise) the commencement of Phase
                           III clinical studies with respect to a Licensed
                           Product containing opioid alkaloid morphine and/or a
                           salt thereof and chitosan.

                  2.4.2    If the Parties, despite continuing good faith
                           negotiations, are unable to complete the Fentanyl R&D
                           Agreement within 30 days of the Effective Date,
                           either Party may request an additional 30 days to
                           complete good faith negotiations and enter into such
                           an agreement.

                  2.4.3    If, within 60 days of the Effective Date, following
                           good faith negotiations, the parties do not enter
                           into the agreement referenced in Section 2.4.1, then
                           West may, in its sole and absolute discretion,
                           terminate the licenses granted hereunder with respect
                           to Fentanyl.

         2.5      The provisions of Section 7.3 and 7.4 of this Agreement shall
                  apply to any termination under Section 2.3 or, with respect
                  only to Fentanyl, 2.4.



                                       5
<PAGE>


 3.      Rights to Additional Technology.

         3.1      Right of First Refusal. West will promptly notify IDDS if a
                  third Person wants to begin negotiations with West or any of
                  its Affiliates for the development of Chitosan-based
                  Technology for the transmucosal delivery of any
                  non-proprietary drug compounds in the Field of Use. West may
                  negotiate with any such third Person, provided that IDDS will
                  have the right of first refusal, exercisable within 30 days
                  following receipt by IDDS of West's notice, to enter into
                  research, development, license and similar agreements on the
                  same terms and conditions as may result from such
                  negotiations. Notwithstanding the foregoing, the right of
                  first refusal shall not apply to (and West shall have no duty
                  of notification with respect to) the following: (i) COX-2
                  Inhibitors; (ii) NSAIDs; (iii) the indications of (A)
                  inflammation caused by osteo-arthritis and rheumatoid
                  arthritis, and (B) with respect to compounds contractually
                  under development as of June 13, 2000 on behalf of third-party
                  clients, migraine; (iv) in the event that the Parties do not
                  enter into the M-6-G Option Agreement within 30 days of the
                  Effective Date, or if entered into IDDS does not exercise the
                  option therein granted, morphine-6-glucuronide; and (v) in the
                  event of a Fentanyl license termination pursuant to Section
                  2.4, Fentanyl.

         3.2      Extension of Grant of Rights to Certain Additional Compounds
                  for Pain.

                  3.2.1    IDDS may exercise the rights to the Chitosan-based
                           Technology granted in Section 2 hereof with respect
                           to any additional (i) non-proprietary or (ii)
                           proprietary or patented drug compounds either owned
                           outright or licensed by IDDS (including for this
                           purpose any of its Sublicensees) ("Additional
                           Compounds"), and such Additional Compounds shall be
                           included as Identified Compounds for all purposes of
                           this Agreement, provided that:

                           (a)      any such Additional Compound is subject to
                                    the Field of Use;

                           (b)      IDDS shall pay to West/Nottingham royalty
                                    payments with respect to each such
                                    Additional Compound as if it were included
                                    as an Identified Compound in this Agreement;
                                    and

                           (c)      IDDS shall pay to West/Nottingham
                                    Proof-of-Concept and milestone payments with
                                    respect to each such Additional Compound on
                                    the same terms as specified in the Letter of
                                    Intent with respect to Nasal Fentanyl;
                                    provided, that nothing herein shall impose
                                    any obligation on West or West/Nottingham to
                                    perform any Proof-of-Concept study or other
                                    research or development work in
                                    consideration for such Proof-of-Concept or
                                    milestone payments.

                  3.2.2    In connection with any such Additional Compound, IDDS
                           shall grant West, at West's option, an exclusive
                           right of first negotiation to negotiate an R&D
                           Agreement for the pre-clinical development of such
                           Additional Compound, as follows:

                           (a)      Within 30 days after the date of receipt of
                                    notice that IDDS wishes to extend the rights
                                    granted hereunder to an Additional Compound,
                                    West shall inform IDDS whether or not it
                                    wishes to enter into negotiations towards
                                    entering into an R&D Agreement for the
                                    pre-clinical development of such Additional
                                    Compound.



                                       6
<PAGE>


                            (b)     If West does wish to enter into such an R&D
                                    Agreement, West and IDDS shall negotiate in
                                    good faith the terms of such R&D Agreement
                                    for a period not to exceed 90 days.

                            (c)     If West does not wish to enter into such an
                                    R&D Agreement or West and IDDS fail to reach
                                    agreement on the terms of such agreement
                                    within such 90-day period, then IDDS shall
                                    be free to proceed with third Persons with
                                    pre-clinical development of such Additional
                                    Compound.

                  3.2.3    West may license the Chitosan-based Technology and
                           Program IP in the Field of Use to third Persons that
                           either own outright or that have licensed proprietary
                           or patented compounds, excluding compounds being
                           developed by IDDS or any of its Sublicensees.

                  3.2.4    In the event that the Parties do not enter into the
                           M-6-G Option Agreement within 30 days of the
                           Effective Date, or if entered into IDDS does not
                           exercise the option therein granted, West may license
                           the Chitosan-based Technology and Program IP in the
                           Field of Use to third Persons for use with respect to
                           morphine-6-glucuronide.

                  3.2.5    In the event of a Fentanyl license termination
                           pursuant to Section 2.4, West may license the
                           Chitosan-based Technology and Program IP in the Field
                           of Use to third Persons for use with respect to
                           Fentanyl.

                  3.2.6    Notwithstanding the foregoing, the provisions of
                           Section 3.2.1 and 3.2.2 hereof shall not apply to (a)
                           compounds which are COX-2 Inhibitors or NSAIDS, (b)
                           in the event that the Parties do not enter into the
                           M-6-G Option Agreement within 30 days of the
                           Effective Date, or if entered into IDDS does not
                           exercise the option therein granted,
                           morphine-6-glucuronide, and (c) in the event of a
                           Fentanyl license termination pursuant to Section 2.4,
                           Fentanyl.

4.       License Fees; Royalties.

         4.1      License Fees. Within 30 days following the Effective Date,
                  IDDS shall pay to West the amount of $***.

         4.2      Sublicensing Fees. In the event that IDDS sublicenses any
                  right granted hereunder to any Person listed on Schedule 2
                  hereto, then IDDS shall pay to West one-third the amount of
                  any up-front license fees (excluding royalties on sales
                  covered below) received by IDDS from such Sublicensees within
                  ten business days of receipt thereof.


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

                                       7
<PAGE>

         4.3      Royalties on Sales by IDDS.

                  4.3.1    In consideration of the rights granted hereunder,
                           IDDS shall pay to West/Nottingham a semi-annual
                           royalty on the Net Sales Price of each Licensed
                           Product sold or otherwise disposed of by IDDS and its
                           Sublicensees pursuant to the applicable royalty rate
                           in the specified territories as set forth below, in
                           the case where West manufactures or packages the
                           Licensed Product and in the alternative case where
                           West does not perform manufacturing or packaging:

                                                              Western   Rest of
                           Product                    U.S.     Europe    World
                           -----------------------------------------------------

                           West Manufactures          ***%      ***%      ***%
                           Other Manufacturer         ***%      ***%      ***%


                           Each Licensed Product shall be considered sold or
                           otherwise disposed of in the specified territory in
                           which it is distributed for use. With respect to any
                           sublicense granted by IDDS, IDDS shall be fully
                           responsible for the reporting and payment to
                           West/Nottingham of royalties and other payments due
                           as a result of such sublicensing activities.

                  4.3.2    Royalties under this Section will be paid to
                           West/Nottingham within 30 days following the end of
                           each Royalty Payment Period. For purposes of
                           computing royalties payable hereunder, amounts in
                           currencies other than U.S. dollars will be converted
                           into U.S. dollars at the official exchange rate of
                           that country on the last business day of the
                           applicable Royalty Payment Period under this
                           Agreement. If transfer restrictions exist or are
                           imposed that prevent payments from IDDS to
                           West/Nottingham in U.S. dollars, upon receipt of
                           regulatory approval of a Licensed Product the Parties
                           agree to cooperate to procure whatever licenses or
                           permits are required to obtain the waiver of those
                           restrictions or otherwise to facilitate the
                           conversion to U.S. dollars or to place the royalties
                           on deposit at interest with a bank or like
                           institution in such country in local currency for the
                           account of West/Nottingham until such payments can be
                           made.

         4.4      Minimum Royalties.

                  4.4.1    As a condition of maintaining the licenses (including
                           without limitation the exclusivity thereof) granted
                           hereunder, IDDS shall pay to West/Nottingham a
                           minimum annual royalty equal to $*** per year for
                           each Licensed Product that receives approval by a
                           Regulatory Agency to be marketed (such as FDA
                           approval of a New Drug Application) in any Major
                           Market Country; provided, that IDDS shall pay only
                           one minimum annual royalty for each Licensed Product
                           if that Licensed Product receives such regulatory
                           approval in more than one Major Market Country.


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

                                       8
<PAGE>


                  4.4.2    The minimum annual royalty requirement for each
                           Licensed Product shall commence one year after the
                           first such approval (the "Minimum Royalty
                           Commencement Date") for such Licensed Product. If
                           total royalty payments pursuant to Section 4.3 hereof
                           for any Licensed Product in any one-year period
                           commencing on the applicable Minimum Royalty
                           Commencement Date or an anniversary thereof are less
                           than $***, IDDS shall pay to West/Nottingham the
                           shortfall within 30 days of the end of the following
                           Royalty Reporting Period.

         4.5      Limitations on Payment of Royalties.

                  4.5.1    All existing monetary obligations of IDDS to
                           West/Nottingham will cease with respect to any
                           Licensed Product manufactured or sold in a given
                           country where the activity in that country is no
                           longer covered by at least one valid claim of a
                           Licensed Patent then in force.

                  4.5.2    If in any proceeding before any court, agency, or
                           tribunal involving the validity, infringement, or
                           enforceability of any claim of any Licensed Patents,
                           such claims have been held to be invalid, or not
                           infringed, or unenforceable, by a final judgment,
                           decrees, or decision from which no appeal can be
                           taken, or from which no appeal is taken, then in that
                           event IDDS and its Sublicensees shall thereafter be
                           free of any royalty obligation hereunder as and to
                           the invalid, non-infringed or unenforceable claims in
                           the jurisdiction in which the underlying patent was
                           granted, until or unless such coverage resumes.

         4.6      Manner of Payment. All amounts payable under this Agreement
                  shall be in United States dollars by wire transfer of
                  immediately available funds to an account or accounts
                  specified in writing by West at least five days prior to the
                  due date thereof

         4.7      Interest. Any required royalty payments not made for any
                  reason on or before the due date specified in Section 4.3.2
                  shall bear interest at the U.S. prime interest rate for
                  short-term funds plus two percentage points from such due date
                  until the date it is received. The interest will be calculated
                  on a daily average basis.

         4.8      Tax Withholding. No federal, state or local taxes, assessments
                  or other charges owed by West/Nottingham on any royalty
                  payments made under this Agreement shall be withheld or
                  deducted by IDDS from such payments, except as hereinafter
                  provided. If IDDS shall be required by the laws of any
                  jurisdiction to deduct or withhold from any payment to West or
                  West/Nottingham any income taxes that may be levied against
                  them, IDDS may deduct such income taxes, provided that it
                  promptly furnishes to West an original or duplicate tax
                  receipt evidencing the payment of such taxes to the
                  appropriate authority.

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

                                       9
<PAGE>


         4.9      Reports and Audit.

                  4.9.1    Periodic Reports. IDDS will deliver to West,
                           simultaneously with the payment of royalties, and
                           otherwise within 30 days after the end of each
                           Royalty Report Period, a written report signed by a
                           responsible officer of IDDS showing the amount of
                           Licensed Products sold during the applicable period
                           and sums received, as the case may be, and
                           calculation of the Net Sales Price for such Licensed
                           Products and the payment due. If no payments are due
                           for the period, the report will so state.

                  4.9.2    Record Keeping. IDDS will keep at its principal place
                           of business (or such other address as it notifies to
                           West) accurate records showing the total amount of
                           Licensed Products sold or otherwise disposed of
                           during the immediately preceding three years and all
                           items of deduction in arriving at the Net Sales
                           Price.

                  4.9.3    Audit. IDDS and each Sublicensee that makes any sales
                           of Licensed Products will permit its books and
                           records of sales of Licensed Products to be examined
                           from time to time, no more often than annually, upon
                           30 days' written notice, and to the extent necessary
                           to verify the accuracy of the royalty reports
                           hereunder, such examination to be made by
                           an-independent auditor appointed by West and
                           reasonably acceptable to IDDS and the Sublicensees
                           whose books are to be examined. Such auditor may
                           review any book, record, voucher, receipt or invoice
                           relating to the manufacture, sale or other
                           disposition of the Licensed Products, or of the
                           make-up of the invoice therefor; and all other facts
                           or matters relating to the calculation of the amount
                           of royalty due (including papers and vouchers
                           received from all Sublicensees). IDDS shall include
                           in each sublicense granted by it pursuant to this
                           Agreement a provision requiring the Sublicensee to
                           make reports to IDDS, to keep and maintain books and
                           records of sales made pursuant to such sublicense and
                           to grant access to such books and records by West's
                           independent auditor to the same extent and under the
                           same obligations as required of IDDS under this
                           Agreement.

                  4.9.4    Audit Report and Disputes Thereon. The auditor will
                           report in writing to West the Net Sales Price of all
                           Licensed Products sold or otherwise disposed of, and
                           the calculation of royalties payable, for the period
                           under audit, and other appropriate information
                           reviewed in the course of the audit. West shall share
                           this audit report with IDDS. If such auditor
                           concludes that an overpayment or underpayment was
                           made, then the owing Party shall pay the amount due
                           within 30 days of the date West delivers such
                           auditor's written report ~to IDDS. If IDDS disputes
                           the conclusion of the auditor, then the parties will
                           resolve the dispute according to Section 9.7 hereof
                           The fees charged by such auditor shall be paid by
                           West unless the audit discloses that the additional
                           payments payable by IDDS for the audited period
                           differ by more than 5% of the payments actually made
                           for such period, in which case IDDS shall pay the
                           reasonable fees and expenses charged by the auditor.
                           Upon expiration or termination of this Agreement for
                           any reason, West will have the right to have a final
                           audit conducted by an independent auditor appointed
                           by West and paid for in accordance with the
                           foregoing.


                                       10
<PAGE>



                  4.9.5    Delivery of Final Report. IDDS will deliver to West a
                           final written report within 30 days after the date of
                           the termination of this Agreement detailing sales or
                           other dispositions of each Licensed Product upon
                           which royalty payments are payable to
                           West/Nottingham. Concurrent with the delivery of such
                           written report, IDDS will pay to West/Nottingham the
                           balance of all royalties due and payable to
                           West/Nottingham.

5.       Patents.

         5.1      Filing. Prosecution and Maintenance of Patents. West and
                  West/Nottingham shall, at their own cost and expense:

                  5.1.1    take all commercially reasonable steps required to
                           maintain the Licensed Patents in full force and
                           effect;

                  5.1.2    be responsible for the day-to-day activities
                           associated with filing and prosecuting applications
                           for the Licensed Patents;

                  5.1.3    at IDDS's reasonable request, provide IDDS copies of
                           any papers relating to the filing, prosecution and
                           maintenance of the Licensed Patents.

         5.2      Cooperation of IDDS. IDDS shall, at its own cost and expense,
                  cooperate in providing information to assist West with the
                  prosecution of the Licensed Patents.

         5.3      Abandonment of Patents. In the event that West and/or
                  West/Nottingham desires to discontinue maintenance or
                  prosecution of any Licensed Patent, West and/or
                  West/Nottingham shall so inform IDDS and, if IDDS requests,
                  West and/or West/Nottingham shall assign to IDDS such Licensed
                  Patent. IDDS shall thereafter be responsible for all costs and
                  expenses relating to such patent, and any obligation by IDDS
                  to pay royalties with respect to such patent shall terminate.


                                       11
<PAGE>


         5.4      Infringement.

                  5.4.1    West and IDDS each shall give immediate notice to the
                           other of any potential or actual infringement by a
                           third Person of any Licensed Patent of which they
                           become aware or of any certification of which they
                           become aware filed under the United States "Drug
                           Price Competition and Patent Term Restoration Act of
                           1984" claiming that any Licensed Patents covering the
                           Licensed Products are invalid or unenforceable or
                           that infringement will not arise from the
                           manufacture, use or sale of Licensed Products by a
                           third Person.

                  5.4.2    West shall have the first right to settle with the
                           infringer or to bring suit or other proceeding
                           against the infringer in its own name, or after
                           consultation with IDDS, in the name of IDDS where
                           necessary. IDDS shall be kept advised at all times of
                           such suit or proceeding brought by West. IDDS may, in
                           its discretion, join West as party to the suit or
                           other proceeding, provided that West shall retain
                           control of the prosecution of such suit or
                           proceedings. IDDS agrees to cooperate with West in
                           its efforts to protect such Licensed Patents.

                  5.4.3    If West does not settle with the infringer or bring
                           suit or other proceeding u against the infringer
                           within 45 days of receipt of notice of such
                           infringement, IDDS may in its discretion, bring suit
                           or other proceeding at its expense against the
                           infringer, provided that IDDS shall first consult
                           with West as to whether such act(s) by a third Person
                           reasonably constitute infringement and whether it is
                           commercially advisable to bring such suit or
                           proceeding, as reasonably determined by West and
                           IDDS, jointly. West shall be kept advised at all
                           times of such suit or proceedings brought by IDDS.
                           West may, in its discretion, join IDDS as party to
                           the suit or other proceeding, provided that IDDS
                           shall retain control of the prosecution of such suit
                           or proceedings. West agrees to cooperate with IDDS in
                           its efforts to protect the Licensed Patents,
                           including joining as a party where necessary. IDDS
                           agrees to prosecute diligently any suit or proceeding
                           it initiates under this Section.

                  5.4.4    Each Party will bear its own expenses with respect to
                           any suit or other proceeding against an infringer.
                           Any recovery in connection with such suit or
                           proceeding will first be applied to reimburse West
                           and IDDS for their out-of-pocket expenses, including
                           attorney's fees. The balance of any recovery shall be
                           divided between t?ie Parties in proportion to the
                           respective loss suffered or as would be suffered by
                           the Parties resulting from the infringement.


                                       12
<PAGE>

6.       Certain Covenants.

         6.1      Post-Launch Promotion. IDDS will use commercially reasonable
                  efforts to promote and sell Licensed Products in Major Market
                  Countries and in all other countries either directly or
                  through Affiliates or Sublicensees, where a commercially
                  attractive market opportunity exists. For the sake of
                  certainty and the avoidance of doubt, the parties agree that,
                  as used herein, "commercially reasonable efforts" are those
                  commercial efforts IDDS uses in promoting and selling similar
                  products in the Field of Use, provided that such efforts are
                  no less than those typically used in the pharmaceutical
                  industry for promoting and selling products of similar value
                  in the Field of Use.

         6.2      Reporting to West. IDDS shall provide to West, no less
                  frequently than semiannually, the following information:

                  6.2.1    a report to West in a format reasonably acceptable to
                           West describing the status of IDDS's development and
                           commercialization efforts with respect to the
                           Licensed Products, and

                  6.2.2    provide West with a summary balance sheet for the
                           previous six months.

         6.3      Use of Up-Front Sublicensing Fees. In the event that IDDS
                  sublicenses any rights granted hereunder and receives any
                  up-front license fees with respect thereto, IDDS shall use
                  such fees (including without limitation the two-thirds of the
                  fees retained by IDDS pursuant to Section 4.2 hereof) for the
                  development, commercialization, promotion and sale of Licensed
                  Products to the extent necessary to satisfy its then existing
                  obligations under this Agreement and all other agreements
                  among the Parties and consistent with its fiduciary
                  responsibilities to its stockholders.

7.       Term and Termination.

         7.1      Term and Expiration. This Agreement shall become effective as
                  of the Effective Date and, unless terminated earlier pursuant
                  to this Section, shall remain in effect until the last to
                  expire of the Licensed Patents.

         7.2      Termination. As used in this Section 7, West and/or
                  West/Nottingham are sometimes referred to as "Licensor" and
                  IDDS is sometimes referred to as "Licensee." This Agreement
                  and the licenses herein granted may be terminated as follows:

                  7.2.1    By mutual consent of the Parties at any time.

                  7.2.2    By either Licensee or Licensor upon written notice
                           to the other Party:

                           (a)      in the event of a default by the other Party
                                    in the due observance or performance of any
                                    covenant, condition or limitation of this
                                    Agreement, any R&D Agreement, the Clinical
                                    Manufacturing Agreement, the Development
                                    Milestone and Option Agreement or the M-6-G
                                    Option Agreement, but only if the defaulting
                                    Party will not have remedied its default
                                    within 30 days (or within five business days
                                    in the event of a default under Section 4.1,
                                    4.2, 4.3 or 4.4) after receipt of written
                                    notice of such default from the
                                    non-defaulting party; or


                                       13
<PAGE>



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

                  7.2.3    By Licensee, in whole or in part with respect to
                           those Identified Compounds the use of which requires
                           chitosan, in the event that the FDA does not allow
                           the use of chitosan in Licensed Products as
                           contemplated hereunder.

         7.3      Effect of Termination.

                  7.3.1    Upon termination of this Agreement under Section 7.2
                           hereof Licensee and all Sublicensees hereunder shall
                           cease and desist from any and all manufacture, use
                           and sale of any Licensed Product that actually
                           infringes any then-existing Licensed Patent in the
                           country of manufacture, use or sale. The restriction
                           of this Section 7.3.1 shall not apply to any Licensed
                           Products in inventory or in the manufacturing process
                           before notice of termination was given.

                  7.3.2    In the event of termination of this Agreement by
                           Licensor pursuant to Section 7.2.2(b), the
                           restriction of Section 7.3.1 shall not apply to the
                           manufacture, use and sales of any Licensed Product by
                           any Sublicensee under any sublicense in effect prior
                           to the date of Licensee's insolvency, bankruptcy,
                           reorganization, debt adjustment or liquidation
                           proceedings, provided that (a) such Sublicensee is
                           not in breach of any provision of its sublicense and
                           such sublicense is not subject to termination by
                           Licensee, and (b) such Sublicensee agrees to make
                           royalty payments to Licensor with respect to the
                           manufacture, use and sales of Licensed Products by
                           such Sublicensee. Such sublicensd shall terminate and
                           any such Sublicensees shall cease and desist from any
                           and all manufacture, use and sale of any Licensed
                           Product if such Sublicensee fails to make or is
                           prohibited from making royalty payments to Licensor
                           with respect to such manufacture, use or sale.


                                       14
<PAGE>


                  7.3.3    In addition, in the event of such termination for any
                           reason other than breach of this Agreement by
                           Licensor:

                           (a)      Licensee shall transfer to Licensor all
                                    final or pending approvals from and all
                                    filings with any Regulatory Agency for all
                                    Licensed Products (including without
                                    limitation the Investigational New Drug
                                    Application held by West with respect to
                                    morphine if IDDS cross-files such IND
                                    pursuant to the Development Milestone and
                                    Option Agreement to be entered into among
                                    the Parties; and

                           (b)      Licensee and Licensor shall enter into a
                                    written license agreement, containing such
                                    terms and conditions as are usual and
                                    customary in agreements of the type, whereby
                                    Licensee, to the extent it has grantable
                                    rights, shall grant to Licensor an exclusive
                                    (with right to sublicense), worldwide, fully
                                    paid-up, royalty-free, perpetual license to:

                                    (i)          All inventions and patents
                                                 worldwide made by Licensee
                                                 arising out of activities under
                                                 this Agreement to the-extent
                                                 they relate to Identified
                                                 Compounds in the Field of Use;

                                    (ii)         To the extent they relate to
                                                 Identified Compounds in the
                                                 Field of Use, all licenses,
                                                 rights, permissions and
                                                 freedom-to-operate grants
                                                 worldwide acquired from third
                                                 parties by Licensee; and

                                    (iii)        All Program IP arising under
                                                 this Agreement and the
                                                 R&D Agreements.


         7.4      Survival. Notwithstanding the termination of this Agreement,
                  all rights and obligations that by their terms survive
                  termination shall remain unaffected until the complete
                  satisfaction or expiration thereof including Licensee's
                  obligation to submit all required reports and to pay all
                  amounts due and payable as of the date of termination in the
                  manner provided by this Agreement.

8.       Representations and Disclaimer.

         8.1      Representations by West and West/Nottingham. Each of West and
                  West/Nottingham represents and warrants to IDDS:

                  8.1.1    It has the full legal right, power and authority to
                           enter into this Agreement.

                  8.1.2    It has not entered, and will not enter, into any
                           agreement that conflicts with the provisions of this
                           Agreement.


                                       15
<PAGE>


                  8.1.3    To its knowledge, the Licensed Patents do not
                           infringe any valid right of any third Person.

                  8.1.4    To its knowledge, West/Nottingham has all right,
                           title and interest in and to the Licensed Patents,
                           free and clear of all liens, charges and encumbrances
                           of any kind whatsoever.

                  8.1.5    To its knowledge, there is no pending, and it has
                           received no written notice of any, claim of
                           infringement, interference or invalidity regarding
                           any part or all of the Licensed Patents and their use
                           as contemplated in the underlying patent applications
                           as presently drafted.

                  8.1.6    It has not granted any license, option or other
                           rights under the Licensed Patents in the Field of Use
                           to third Persons, and to their knowledge, no third
                           Person has any valid claim with respect thereto.

         8.2      Representations by Paramount and IDDS. IDDS represents and
                  warrants to West and West/Nottingham:

                  8.2.1    It has the full legal right, power and authority to
                           enter in this Agreement.

                  8.2.2    It has not entered, and will not enter, into any
                           agreement that conflicts with the provisions of this
                           Agreement.

         8.3      Disclaimer of Warranties. EXCEPT AS OTHERWISE EXPRESSLY SET
                  FORTH IN THIS AGREEMENT, NEITHER WEST NOR WEST/NOTTINGHAM
                  MAKES ANY REPRESENTATIONS, GUARANTEE OR WARRANTY OF ANY KIND,
                  EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO
                  REPRESENTATIONS OR WARRANTIES TO THE VALIDITY OR SCOPE OF ANY
                  LICENSED PATENT OR THE RESULTS TO BE EXPECTED FROM IDDS'S USE
                  OF ANY INVENTION OR PROCESS CONTAINED IN THE LICENSED PATENTS
                  OR FROM THE MANUFACTURE, USE OR SALE OF THE LICENSED PRODUCTS.
                  NEITHER WEST NOR WEST/NOTTINGHAM NOR ANY AFFILIATE OF EITHER
                  OF THEM SHALL HAVE ANY RESPONSIBILITY TO IDDS OR OTHERS UNDER
                  ANY LEGAL PRINCIPLE FOR THE ABILITY OF IDDS TO USE ANY
                  LICENSED PATENTS; FOR THE QUALITY OR PERFORMANCE OF ANY
                  LICENSED PRODUCT MANUFACTURED UNDER THE LICENSED PATENTS; FOR
                  CLAIMS OF THIRD PERSONS RELATING TO ANY LICENSED PRODUCT
                  MANUFACTURED OR SOLD BY IDDS OR ANY SUBLICENSEE HEREUNDER, OR
                  FOR ANY FAILURE IN PRODUCTION, DESIGN OR OPERATION OF ANY
                  LICENSED PRODUCT MANUFACTURED OR SOLD BY ANY OF THEM. WEST AND
                  WEST/NOTTINGHAM DISCLAIM ANY WARRANTIES OF MERCHANTABILITY OR
                  FITNESS FOR A PARTICULAR USE. IN NO EVENT SHALL WEST,
                  WEST/NOTTINGHAM OR ANY AFFILIATE OF EITHER OF THEM BE LIABLE
                  TO IDDS OR ANY SUBLICENSEE FOR INDIRECT, SPECIAL, INCIDENTAL
                  OR CONSEQUENTIAL DAMAGES UNDER THIS AGREEMENT OR OTHERWISE,
                  REGARDLESS OF WHETHER WEST OR WEST/NOTTINGHAM OR ANY AFFILIATE
                  OF EITHER OF THEM KNEW OR HAD REASON TO KNOW OF THE
                  POSSIBILITY OF SUCH DAMAGES.


                                       16
<PAGE>



         8.4      Indemnification.

                  8.4.1    West and West/Nottingham shall indemnify, defend and
                           hold IDDS harmless from and against all costs and
                           damages (including reasonable attorneys' fees) to the
                           extent arising from West's or West/Nottingham's
                           breach of any representation contained in Section 8.1
                           hereof

                  8.4.2    IDDS shall indemnify, defend and hold West and
                           West/Nottingham harmless from and against all costs
                           and damages (including reasonable attorneys' fees) to
                           the extent arising from IDDS's breach of any
                           representation contained in Section 8.2 hereof

                  8.4.3    If any Party hereto intends to seek indemnity under
                           this Section 8.4, it shall promptly notify the
                           indemnifying Party of such claim. The Parties shall
                           cooperate and shall use their best efforts to find a
                           suitable defense to and/or resolution of any such
                           claim. The indemnifying Party shall be entitled to
                           settle or assume the defense of any such claim,
                           provided that any settlement (other than a settlement
                           involving solely the payment of money) shall be
                           subject to the approval of the indemnified Party,
                           which shall not be unreasonably withheld or delayed.

9        Miscellaneous Provisions.

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

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


                                       17
<PAGE>



         9.3      Marking. IDDS agrees that all Licensed Products that are sold
                  by IDDS or any Sublicensees will be marked with the number(s)
                  of the applicable Licensed Patents licensed hereunder in
                  accordance with each country's patent laws.

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

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

                  If to West or West/Nottingham to:

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

                  With a required copy to:

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

                  If to IDDS, to:

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


                                       18
<PAGE>



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

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

         9.8      Entire Agreement. This Agreement, the Confidentiality
                  Agreement among the Parties entered into as of the Effective
                  Date and the Letter of Intent constitute the entire Agreement
                  between the parties with respect to the subject matter hereof
                  and supersede all proposals, oral or written, purchase orders,
                  confidentiality agreements and all other communications
                  between the parties with respect to such subject matter.

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

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

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


                                       19
<PAGE>


         9.12     Waiver. The waiver by any Party of any right hereunder or the
                  failure to perform or of a breach by any other Party shall not
                  be deemed a waiver of any other right hereunder or of any
                  other breach or failure by said other Party whether of a
                  similar nature or otherwise.

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




                                       20
<PAGE>


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



INNOVATIVE DRUG DELIVERY SYSTEMS, INC.




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


WEST PHARMACEUTICAL SERVICES, INC.



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


WEST PHARMACEUTICAL SERVICES DRUG DELIVERY &
CLINICAL RESEARCH CENTRE LTD.




By: /s/ Donald E. Morel Jr
    ---------------------------------------------------------------
    Donald E. Morel Jr.,
    Chairman


                                       21
<PAGE>


                                   Schedule 1
                                Patent Portfolio

--------------------------------------------------------------------------------
Patent No.                                Granted        Expiry
--------------------------------------------------------------------------------
Composition for Nasal Administration
(WESR/P11435,); Nasal Morphine and M-6-G

5629011                                   USA            July 12, 2013
665806                                    Australia      February 4, 2013
2277682                                   UK             February 4,2013
306283                                    Norway         February 4,2013
0625044                                   EPO            February 4,2013
5554388                                   USA            September 2013
0460020                                   EPO            February 2010
301692                                    Norway         February  2010
2127805                                   Canada         Examination Requested
5-513869                                  Japan          Examination Requested
Intranasal Fentanyl
98/47535                                  PCT
Intranasal Midazolam
2317562                                   UK             July 20l6
712621                                    Australia      July 2016
--------------------------------------------------------------------------------


                                      1-1
<PAGE>


                                   Schedule 2

                         Certain Identified Sublicensees

Baxter Healthcare Corporation
Ethypharm
Helsinn Healthcare SA.
Kyowa Hakko Kogyo Co., LTD
Grunenthal GmbH
Laboratorios Andromaco SA.
Link Pharmaceuticals, LTD
Nycomed Pharma
Pohl-Boskamp Co.







                                      2-1
<PAGE>


                                    EXHIBIT A


                        Summary of Terms of M-6-G Option

Pursuant to the Letter of Intent, IDDS and West intended to develop several
products, including Morphine-6-glucuronide ("M-6-G"), for treating pain and in a
formulation employing the technologies licensed under this Agreement. IDDS has
concluded not to proceed to develop a product incorporating M-6-G and West's
technologies at the present time, but wants the right to decide in the near
future whether to do so.

West desires to grant IDDS the right to develop an M-6-G product employing
West's technologies, provided that West is compensated for the delay and
provided further that provisions are made for the mitigation of the effects of
the delay on the ultimate timeliness and value of an M-6-G Licensed Product,
according to the following terms and conditions:

OPTION: West shall grant to IDDS an option to license the Licensed Patents
respecting M-6-G as if M-6-G were included as an Identified Compound in this
Agreement. IDDS may exercise the option at any time for a period of 90 days
following the execution of the M-6-G Option Agreement.

OPTION CONSIDERATION: In consideration of the grant of the option, IDDS shall
pay to West the amount of $*** upon signing of the option agreement.

TERMS OF LICENSE: If IDDS exercises the option, the license with respect to
M-6-G shall provide for a license fee of $*** payable at signing of the
license agreement, and milestone payments as follows:

         Completion of Phase I/II clinical trial           $ ***
         Start of Phase III trial                            ***
         First NDA or similar filing                         ***
         NDA Approval                                        ***

Definitions respecting the Milestones will be conformed with those provided in
the Letter of Intent for other Identified Compounds requiring comparable
milestone payments.

TERMS OF R&D AGREEMENT: If IDDS exercises the option, the Parties will enter
into a research and development agreement pursuant to which West will perform
pre-clinical development services, which shall contain terms and conditions
consistent with those specified in the Letter of Intent with respect to M-6-G,
provided that such R&D Agreement shall also provide that IDDS need not commence
development work on a Licensed Product containing M-6-G and chitosan until the
FDA allows (by way of a pre-Phase III meeting or otherwise) the commencement of
Phase III clinical studies with respect to a Licensed Product containing opioid
alkaloid morphine and/or a salt thereof and chitosan.

Unless separately defined herein, all capitalized terms used herein have the
same meaning as those terms used in the License Agreement.



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



                                      2-1