Document:

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                                                                    Exhibit 10.3

                                LICENSE AGREEMENT

               This License Agreement (this "Agreement") effective as of this
11th day of December, 1998, between Wake Forest University, an educational
institution organized under the laws of the state of North Carolina, having its
principal offices at Winston-Salem, North Carolina 27109 ("Wake Forest"), and
Pilot Biotechnologies, Inc., a North Carolina corporation with its principal
offices at Winston-Salem, North Carolina (the "Company").

The parties hereto agree as follows:

1.             Definitions

               For all purposes of this Agreement the following terms, as used
herein, will have the meanings specified below:

                  1.1 "Affiliate" of a specified Person means a Person that
directly or indirectly controls, is controlled by, or is under common control
with, the specified Person. For purposes of this Agreement, the direct or
indirect ownership of more than 50% of the outstanding voting shares of a
Person, the right to receive 50% or more of the profits or earnings of a Person,
or the right to control policy decisions of a Person, will be deemed to
constitute control.

                  1.2 "Chilton" means Dr. Floyd H. Chilton.

                  1.3 "Co-Owned Patent Applications" means the United
                      States patent applications identified in Part II of
                      Schedule A hereto jointly owned as of the Effective
                      Date by Wake Forest and SKB and all Patent Rights
                      related thereto.

                  1.4 "Effective Date" means the date of this Agreement first
                       written above.

                  1.5 "Field" means the use of arachidonic acid, any arachidonic
acid metabolites and any phospholipids (excluding phospholipases) containing
arachidonate to regulate, control, influence or otherwise affect inflammatory or
proliferative responses in humans and animals.

                  1.6 "FDA" means the United States Food and Drug Administration
or any successor to such agency performing similar functions.

                  1.7 "IND" means an Investigational New Drug Application or
such other application as shall be required to be filed with the FDA in order to
obtain approval to commence clinical studies in humans with respect to a
Licensed Product.

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                                                                    Exhibit 10.3

                  1.8 "Invention" means any invention, discovery, proprietary
development, data and information, in any medium or manifestation, including any
method, process, composition of matter, apparatus, device, system, product,
article of manufacture or appliance.

                  1.9 "Inventive Contribution" means creative effort by an
individual that in type and scope qualifies such individual for inventorship
status under United States patent law.

                  1.10 "License" means the worldwide, royalty-bearing license
granted to the Company by Wake Forest under Section 2.1 hereof.

                  1.11 "Licensed Processes" means any method, procedure or
process covered in whole or in part by a pending claim of a patent application
within the Patent Rights or an unexpired claim in a patent within the Patent
Rights.

                  1.12 "Licensed Products" means any apparatus, device,
composition of matter, system, product, article or appliance, and any component
or part of the foregoing, covered in whole or in part by a pending claim of a
patent application within the Patent Rights or an unexpired claim in a patent
within the Patent Rights or any apparatus, device, composition of matter,
system, product, article or appliance, and any component or part of the
foregoing, that is used, incorporated or practiced in whole or in part in a
Licensed Processes.

                  1.13 "Net Sales" means the gross sales amount of all sales or
leases of Licensed Products or Licensed Processes by the Company and its
Affiliates to any Person less (i) any customary quantity, trade or cash
discounts actually given, (ii) allowed returns or allowances given in lieu of
allowed returns, (iii) uncollectible amounts written off that were previously
included in Net Sales, (iv) freight and insurance, if separately itemized on the
invoice and paid by the customer and (v) any value-added, sales, use or excise
taxes, duties or similar governmental assessments actually included in the
invoice amount, provided, however, that no deductions will be taken for any
other costs incurred in the manufacture, offering for sale, sale, distribution,
shipment, promotion, advertisement, exploitation or commercialization of the
Licensed Products or Licensed Processes, for any costs of collections, or for
any other costs, expenditures, fees or expenses. Licensed Products or Licensed
Processes will be considered "sold" when delivered, billed out or invoiced,
whichever occurs first. For all Licensed Products or Licensed Processes used by
the Company as premiums to promote, market, sell or lease products or processes
other than Licensed Products or Licensed Processes, such premiums will be deemed
to have been sold at the Company's customary sales price.

                  1.14 "Patent Application" means the United States patent
application identified in Part III of Schedule A hereto exclusively owned as of
the Effective Date by Wake Forest and all Patent Rights related thereto.

                  1.15 "Patent Rights" means any patents issuing from the Patent
Application or the Co-Owned Patent Applications, or any patent issuing from any
patent applications filed after the Effective Date with respect to the Subject
Inventions, any related United States or foreign

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applications or patents based upon any of such patents or patent applications,
as well as any continuations (but not continuations-in-part or divisionals that
relate to new Inventions), any reexaminations, reissues, substitutes, renewals
or extensions of any of the foregoing patent applications or patents, and all
rights to bring an action against any Person to recover damages or lost profits
resulting from the infringement of such Patent Rights.

                  1.16 "Person" means any individual, corporation, partnership,
company, joint venture, domestic or foreign government or any agency,
department, branch or subdivision thereof, and any other organization,
association or entity.

                  1.17 "PLA" means a Product License Application or such other
application as shall be required to be filed with the FDA to obtain Product
Approval for any Licensed Product.

                  1.18 "PLA Submission" means the submission to the FDA by the
Company or its sublicensee of a PLA that has been prepared in good faith by the
Company or its sublicensee to comply with FDA requirements necessary to obtain
Product Approval.

                  1.19 "Product Approval" means final FDA approval to market
commercially in the United States a specified Licensed Product for use in
humans.

                  1.20 "Research Agreement" means the Research Agreement of even
date herewith between Wake Forest and the Company attached hereto as Exhibit A.

                  1.21 "SKB" means SmithKline Beecham Holdings Corporation, a
Pennsylvania corporation, and any subsidiary or other Affiliate thereof.

                  1.22 "Subject Inventions" means the Inventions of Chilton
identified in Part I of Schedule A hereto owned as of the Effective Date by Wake
Forest and all Patent Rights related thereto.

2.                Grant of License

                  2.1 Subject to the terms of this Agreement, Wake Forest hereby
grants to the Company for the term of the License set forth below, an exclusive,
worldwide right and license to make, have made, use, improve, lease, market,
sell and sublicense the Licensed Products and to practice, use, improve, lease,
market, sell, and sublicense the Licensed Processes, subject, however, to and
limited by the rights of other Persons described in Section 2.3 and to a
reservation of rights by Wake Forest to make, have made and use the Licensed
Products and to practice and use the Licensed Processes for noncommercial
educational, research and academic purposes.

                  2.2 Wake Forest hereby agrees that it will not grant to any
Person any other license to make, have made, use, improve, lease, market or sell
the Licensed Products or to practice, use, improve, lease, market or sell the
Licensed Processes for the term of the License set forth below.

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                  2.3 Notwithstanding anything to the contrary in this
Agreement, the Company acknowledges that (a) the United States government
retains certain rights in certain of the Patent Rights that were funded in whole
or in part under contracts, grants or similar agreements with United States
governmental agencies; and (ii) Wake Forest is a co-owner of the Co-Owned Patent
Applications with SKB and is not granting under this Agreement any license or
right covering or affecting SKB's rights in the Co-Owned Patent Applications.
The License granted under Section 2.1 is expressly subject to such rights and
interests.

                  2.4 From and after the Effective Date and during the term of
this Agreement, the rights and obligations of Wake Forest and the Company with
respect to new Inventions made by either party within and outside the Field
shall be as follows:

                      (a) All Inventions both in and outside the Field made
after the Effective Date by or on behalf of the Company or acquired or licensed
by the Company from any Person as a result of research or activity (i) that are
outside sponsored research programs and protocols undertaken pursuant to the
Research Agreement or anticipated by protocols related to research undertaken
pursuant to the Research Agreement, and (ii) for which neither Chilton nor any
other employee of Wake Forest while employed by Wake Forest provided any
independent Inventive Contribution ("Company Owned Inventions"), will be solely
owned or licensed by the Company without restriction under this Agreement. The
Company will be free to seek patent protection for and to develop, market and
commercialize all Company Owned Inventions as it determines in its discretion
without any accounting, compensation or other obligation to Wake Forest.

                      (b) All Inventions outside the Field made after the
Effective Date by Chilton or other Wake Forest students, employees or other
personnel while employed by or while attending Wake Forest without any financial
assistance or Inventive Contribution by the Company or its employees under the
Research Agreement or otherwise ("Wake Forest Inventions"), will be solely owned
by Wake Forest without restriction under this Agreement. Wake Forest will be
free to seek patent protection for and to develop, market and commercialize all
Wake Forest Inventions as it determines in its discretion without any
accounting, compensation or other obligation to the Company.

                      (c) All Inventions in the Field made after the Effective
Date for which Chilton while employed by Wake Forest or any student or employee
of Wake Forest under the direction and control of Chilton provided any
independent Inventive Contribution that are made (i) pursuant to sponsored
research programs and protocols undertaken pursuant to the Research Agreement,
or (ii) using substantial financial resources, equipment or premises of the
Company will be considered "Company Sponsored Field Inventions." All Company
Sponsored Field Inventions will be (i) jointly owned by Wake Forest and the
Company if one or more employees of the Company (who are not also employed by
Wake Forest) provided any independent Inventive Contribution to such Invention;
or (ii) otherwise solely owned by Wake Forest. All Company Sponsored Field
Inventions will be subject to the rights and obligations of the parties under
Section 2.5(a) hereof.

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                      (d) All Inventions in the Field made after the Effective
Date by Chilton while employed by Wake Forest or other Wake Forest students,
employees or other personnel under the direction and control of Chilton without
any substantial financial assistance or Inventive Contribution by the Company or
its personnel will be solely owned by Wake Forest ("WFU Field Inventions") and,
if made prior to the fourth anniversary of the Effective Date, will be subject
to the rights and obligations of the parties under Section 2.5(b) hereof.

                      (e) All Inventions in the Field made after the Effective
Date by Chilton while employed by Wake Forest or other Wake Forest students,
employees or other personnel under the direction and control of Chilton without
any substantial financial assistance from the Company, but with an Inventive
Contribution by the Company or its personnel, will be jointly owned by Wake
Forest and the Company ("Joint Field Inventions") and, if made prior to the
fourth anniversary of the Effective Date, will be subject to the rights and
obligations of the parties under Section 2.5(b) hereof.

                      (f) All Inventions outside the Field made after the
Effective Date by or on behalf of the Company for which Chilton while employed
by Wake Forest or any student or employee of Wake Forest under the direction or
control of Chilton provided any independent Inventive Contribution that are (i)
made pursuant to sponsored research programs and protocols undertaken pursuant
to the Research Agreement or (ii) made using substantial financial resources,
equipment or premises of the Company will be considered "Company Sponsored
Non-Field Inventions." All Company Sponsored Non-Field Inventions will be (i)
jointly owned by Wake Forest and the Company if one or more employees of the
Company (who are not also employed by Wake Forest) provided any independent
Inventive Contribution to such Inventions; or (ii) otherwise solely owned by
Wake Forest. All Company Sponsored Non-Field Inventions will be subject to the
rights and obligations of the parties under Section 2.5(b) hereof.

                  2.5 Wake Forest hereby grants to the Company the following
rights with respect to Inventions made after the Effective Date:

                      (a) In the case of a Company Sponsored Field Invention,
Wake Forest shall promptly provide the Company with notice (subject to customary
confidentiality restrictions) of the discovery of such Company Sponsored Field
Invention, including a summary of the Company Sponsored Field Invention, any
patent disclosures and any supporting technical data or other information it
possesses that may be relevant to understanding the value or commercial
significance of such Company Sponsored Field Invention. Wake Forest hereby
grants the Company a first option to negotiate an exclusive, worldwide,
royalty-bearing license covering such Company Sponsored Field Invention and Wake
Forest's joint or sole ownership interests therein as determined pursuant to
Section 2.4(c) (the "Option"). The Company may exercise the Option by providing
written notice to Wake Forest within thirty (30) days of its receipt of the
notice of the Company Sponsored Field Invention. Upon exercise of the Option,
the parties shall negotiate in good faith the terms of such license based on the
fair market value of such Company Sponsored Field Invention. In general, the
terms of the license will (i) be commercially reasonable; (ii) be consistent to
the extent practical with

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the terms of this Agreement; (iii) contain research support, royalties,
milestone payments and other financial considerations (in any appropriate
combination) that take into account the fair market value of the Company
Sponsored Field Invention in terms of the prospects for commercialization of the
Company Sponsored Field Invention (alone or in combination with other
technology), the patentability of the Company Sponsored Invention and the
strength of any associated patent rights, the relative Inventive Contributions
of the Company (if any) and Wake Forest to the Company Sponsored Field
Invention, prevailing license terms in the industry, Wake Forest's ownership
interest in the Company and the economic benefits that are reasonably expected
to inure to Wake Forest from commercialization of the Company Sponsored Field
Invention as a result of such ownership, the economic benefits that are
reasonably expected to inure to the Company's other shareholders as a result of
the license of the Company Sponsored Field Invention by Wake Forest, and all
other relevant factors; and (iv) otherwise be as agreed by the parties. In the
event the parties are unable to negotiate a license agreement within six months
of the initial notification from Wake Forest regarding the Company Sponsored
Field Invention, the Company may elect at any time within thirty (30) days of
the expiration of such six month period to submit those financial terms that
remain open for determination by a majority decision from a panel of three
experts familiar with university-derived technology transfer and licensing
transactions, one of whom will be selected by Wake Forest, one of whom will be
selected by the Company and one of whom will be selected by the other two
experts. The parties will select their experts within thirty (30) days of the
date of election by the Company. Each party will pay the fees and expenses of
its own expert and one-half the fees and expenses of the third expert. In
conjunction with such a determination, the parties shall use reasonable efforts
to narrow the issues submitted for determination to the greatest extent possible
and each party may make such submissions and provide such testimony to such
panel as is reasonably necessary to present its position on the matter to be
determined. The panel will be instructed to render its decision within thirty
(30) days, and such decision will be binding on all parties hereto and
enforceable in any court having jurisdiction. If in the opinion of the panel one
of the parties created the necessity for arbitration by taking an unreasonable
final position on the financial terms, then the panel shall direct that all the
costs of arbitration be paid by that party. In such event, such costs will be
paid within thirty (30) days of the panel's final decision (or as soon as
possible thereafter when the costs are determined).

                      (b) In the case of a WFU Field Invention, a Joint Field
Invention or a Company Sponsored Non-Field Invention, Wake Forest shall promptly
provide the Company with notice of the Invention similar to the notice described
in Section 2.5(a) and the Company will have the exclusive right for a period of
sixty (60) days following its receipt of such notice to submit to Wake Forest
the royalty rate and other financial terms and conditions it is willing to
provide to Wake Forest in order to obtain an exclusive, worldwide license
covering such Invention and Wake Forest's joint or sole ownership interests
therein. Wake Forest will have thirty (30) days from its receipt of such
submission to either elect to enter into a license agreement upon the terms and
conditions proposed by the Company or other terms mutually acceptable to the
Company and Wake Forest or else attempt to obtain a bona fide third party
license of such Invention on terms more favorable to Wake Forest than those
proposed by the Company. Wake Forest may enter into a bona fide third party
license covering such Inventions on more favorable terms within 180 days of its
delivery of

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notice to the Company of rejection of the Company's proposed license
terms, free of any rights of the Company. If Wake Forest is unable to obtain a
bona fide third party license within such 180 day period, then it will again
provide the Company with the right to propose license terms with respect to such
Invention under this Section 2.5(b) prior to undertaking any effort to negotiate
a third party license covering such Invention with any other Person.

3.             Royalties and Milestone Payments

               3.1 The Company agrees to pay to Wake Forest an earned royalty
at incremental rates based on percentages of Net Sales during each calendar year
as follows:

<TABLE>
<CAPTION>

                             On Annual Net Sales Of                    Royalty Rate
                             ----------------------                    ------------

                             <S>                                         <C>
                             $0 - $10,000,000                               3%
                             $10,000,001 - $20,000,000                      4%
                             > $20,000,000                                  5%
</TABLE>

Notwithstanding the foregoing table, if the Company's Net Sales for any two
successive calendar years exceed $25,000,000 in each year, the earned royalty
rate for the following and all succeeding years shall be a fixed rate equal to
five percent (5%) of Net Sales. No multiple or compounded royalties will be
applied on the grounds that a Licensed Product or Licensed Process is covered by
more than one Patent Right licensed hereunder.

               3.2 The Company may, at its option, elect to pay earned royalties
otherwise payable to Wake Forest in cash under Section 3.1, in whole or in part,
by delivering to Wake Forest a warrant that entitles Wake Forest to purchase,
for a term of ten (10) years, at an aggregate exercise price of $1.00, a number
of shares of the Company's common stock (calculated to the nearest whole share)
determined by dividing the dollar amount of the royalty to be paid with warrants
by the per share common stock equivalent price most recently received by the
Company from the sale in a single transaction or series of related transactions
of at least $500,000 of its common stock, or securities convertible into or
exchangeable for common stock, to one or more institutional, venture capital or
other accredited investors. The Company's rights under this Section 3.2 may be
exercised by delivery of written notice to Wake Forest prior to the due date for
payment of the corresponding earned royalty, together with a duly executed
warrant registered in the name of Wake Forest and covering the requisite number
of shares of common stock; provided, that the Company's rights under this
Section 3.2 shall terminate and be of no further force or effect with respect to
any royalties earned on Net Sales attributable to periods after the earlier of
(i) the last day of the calendar year next following the first year in which the
Company first reports Net Sales; or (ii) the last day of the calendar year in
which the Company first reports revenues from sales of products or processes
other than Licensed Products or Licensed Processes of $5,000,000 or more.

               3.3 In the event earned royalties paid to Wake Forest under
Section 3.1 of this Agreement or delivered to Wake Forest in warrants under
Section 3.2 of this Agreement do not aggregate a

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minimum of $30,000 for the calendar year ending on December 31, 2001, or do not
aggregate the same amount for any succeeding calendar year during the period of
the License, the Company will pay to Wake Forest (in cash or in warrants if
permitted under this Section and Section 3.2) within sixty (60) days following
the end of each such calendar year the deficiency between the earned royalties
paid or delivered to Wake Forest during each such calendar year and the minimum
royalty amount of $30,000 to ensure that Wake Forest receives the minimum
royalty of $30,000 in cash or warrants for each such calendar year.
Notwithstanding the foregoing, the Company may not pay minimum royalties under
this Section 3.3 by delivery of warrants under Section 3.2 in 2004 or any
calendar year thereafter absent the written approval of Wake Forest.

               3.4 If the Company is required to pay royalties or similar fees
or payments to any Person (other than to (i) SKB; (ii) any Affiliate of the
Company; or (iii) to Johns Hopkins University in respect of Inventions
previously made by Chilton while employed there) in connection with the
manufacture, use or sale of the Licensed Products or Licensed Processes as a
result of (i) any legal requirement imposed on the Company by a governmental
Person, (ii) any settlement agreement between the Company and the Person that
was submitted and approved by Wake Forest, such approval not to be unreasonably
withheld, or (iii) a final, nonappealable judgement in an infringement action,
then the earned royalty rate set forth in Section 3.1 of this Agreement shall be
reduced by the amount of royalties paid by the Company to such Person (but not
below fifty percent (50%) of the rate that would otherwise be applicable absent
the prior written consent of Wake Forest).

               3.5 In further consideration for the License granted hereunder,
the Company shall pay Wake Forest the following amounts within thirty (30) days
of the completion of the applicable events described below:

                           (a) $10,000 upon the date of acceptance and approval
                  (without notice not to proceed with clinical testing) by the
                  FDA of an IND by the Company or its sublicensee with respect
                  to the first Licensed Product;

                           (b) $25,000 upon the date of completion of the first
                  FDA-approved Phase II (or combined Phase I and II) clinical
                  trials by the Company or its sublicensee with respect to the
                  first Licensed Product;

                           (c) $50,000 upon the date of completion of the first
                  FDA-approved Phase III (or combined Phase II and III) clinical
                  trials by the Company or its sublicensee with respect to the
                  first Licensed Product;

                           (d) $100,000 upon the date of each PLA Submission
                  with respect to each Licensed Product; and

                           (e) $250,000 upon Product Approval for each Licensed
                  Product.

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4.             Sublicenses

               4.1 Wake Forest hereby grants to the Company the exclusive
right to grant exclusive or nonexclusive sublicenses to other Persons for the
Licensed Products and Licensed Processes to the full extent of the License
granted to the Company hereunder.

               4.2 For each sublicense granted by the Company hereunder, the
Company will pay to Wake Forest a proportion of royalties received from such
sublicensee equal to the lesser of (i) the proportion that will yield Wake
Forest a royalty rate on Licensed Products and Licensed Processes sold or leased
by such sublicensee equal to the amounts that Wake Forest would have received
from the Company under Section 3.1 had the Licensed Products or Licensed
Processes been sold or leased by the Company (rather than by the sublicensee);
or (ii) twenty-five percent (25%) of all royalties received by the Company from
such sublicensee. Insofar as a sublicensee pays the Company milestone payments,
up-front license fees, maintenance fees, minimum royalties or other sums
(however characterized) or delivers securities or other noncash property or
provides other value to the Company in consideration of the sublicense, Wake
Forest shall be entitled to share in all such payments, fees and other
consideration only to the extent of the lesser of (i) the positive difference,
if any, between (A) the sum of (1) the royalties that Wake Forest would have
received from the Company under Section 3.1 had the Licensed Products or
Licensed Processes been sold or leased by the Company (rather than by the
sublicensee) and (2) the milestone payments that Wake Forest would have received
from the Company under Section 3.5 had the Licensed Product been submitted to
the FDA for approval by the Company (rather than by the sublicensee) and (B) the
royalties actually paid to Wake Forest with respect to such sublicense under the
first sentence of this Section 4.2 or (ii) twenty-five percent (25%) of all such
payments, fees or other sums) or value, including, without limitation,
twenty-five percent (25%) of the fair market value (as determined in good faith
by the Company's Board of Directors) of any securities or other noncash property
or consideration provided by the sublicensee. The Company shall be entitled to
retain all payments, fees, property or other sums or value without compensation
to Wake Forest to the extent it is not required to share the same with Wake
Forest pursuant to the preceding sentence.

               4.3 Unless otherwise agreed by Wake Forest, termination of the
License granted to the Company by Wake Forest under this Agreement will
terminate all sublicenses that may have been granted by the Company; provided,
however, that any sublicensee who desires to continue its sublicense may so
advise Wake Forest in writing of such sublicensee's desire to continue the
sublicense within thirty (30) days of the sublicensee's receipt of written
notice of the termination of the Company's License and, subject to the
sublicensee's agreement to assume relative to Wake Forest all the obligations,
including obligations for payment, contained in the sublicense agreement with
the Company, Wake Forest, in its reasonable discretion, may elect to continue
the sublicense.

               4.4 Any sublicense granted by the Company must contain
provisions corresponding to those of Section 4.3 of this Agreement relative to
termination and the conditions of continuance of any sublicenses.

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5.             Commercially Reasonable Efforts and Due Diligence

               5.1 The Company will use commercially reasonable efforts (either
alone or through research collaborations with research organizations or
alliances with pharmaceutical companies or other Persons) to bring one or more
of the Licensed Products or Licensed Processes to market as soon as is
reasonably practical, taking into account scientific, clinical and regulatory
uncertainties. The Company will be considered to be using commercially
reasonable efforts to bring one or more of the Licensed Products or Licensed
Processes to market (i) if the Company has ongoing research under the Research
Agreement related to the Licensed Products or Licensed Products at annualized
budgeted expenditure levels in excess of $50,000; (ii) if the Company has
ongoing, either alone or through collaborations or alliances with others, one or
more preclinical or clinical trial research programs described in a development
plan furnished to Wake Forest under Section 5.2; or (iii) if the Company
otherwise can demonstrate that it is actively pursuing development or
commercialization of a Licensed Product or Licensed Process. Upon receipt of a
Product Approval for the first Licensed Product, the Company will have no
further obligations under this Section 5.2 other than an obligation to use
commercially reasonable efforts to market and sell the Licensed Product for
which Product Approval was obtained and the obligation to use commercially
reasonable efforts to pursue commercialization and development of other Licensed
Products or Licensed Processes that are commercially viable. Notwithstanding the
foregoing, if requested by Wake Forest the Company will relinquish its License
with respect to any Invention covered by the Patent Rights that has no strategic
or commercial significance to the Company, that is not included in any ongoing
or planned research or development activities by the Company and that if
licensed to another Person would not be competitive against or otherwise
adversely affect the Company's business, financial condition, competitive
position or prospects.

               5.2 The Company will prepare and submit to Wake Forest within six
months of the Effective Date of this Agreement a development plan of the Company
for bringing one or more of the Licensed Products or Licensed Processes to
market. The development plan of Company will be revised and updated from time to
time (and not less frequently than once per calendar year), will be subject to
review and approval of Wake Forest (such approval not to be unreasonably
withheld) and, upon acceptance by Wake Forest, will become a part of this
Agreement.

               5.3 If Wake Forest believes the Company is failing to use
commercially reasonable efforts to bring to market or to market or commercialize
one or more of the Licensed Products or Licensed Processes, Wake Forest may send
notice to the Company pursuant to Section 15 hereof asserting such belief and
the basis therefor. The Company shall have one hundred twenty (120) days from
its receipt of such notice either to commence using commercially reasonable
efforts to Wake Forest's reasonable satisfaction or, if the Company disputes
Wake Forest's claim, to send notice to Wake Forest requesting arbitration of
such issue in accordance with Section 16.12 hereof.

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6.             Warranty

               6.1 Wake Forest warrants that, to the best of its knowledge and
belief, it is the owner of all rights, title and interest in the Patent Rights,
free of any liens, licenses, encumbrances, restrictions and other legal or
equitable claims, subject, however, to any rights of (i) governmental
authorities; and (ii) SKB.

               6.2 ALL PROPERTY, WHETHER TANGIBLE OR INTANGIBLE, WHICH MAY BE
DELIVERED HEREUNDER, WILL BE DELIVERED ON AN "AS IS, WHERE IS" BASIS WITHOUT ANY
EXPRESS OR IMPLIED WARRANTY. OTHER THAN THE OBLIGATIONS OF WAKE FOREST SET FORTH
IN THIS AGREEMENT, WAKE FOREST MAKES NO OTHER WARRANTIES WHATSOEVER. WAKE FOREST
HEREBY DISCLAIMS ALL WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING, WITHOUT
LIMITATION, ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, OR ANY IMPLIED WARRANTIES ARISING FROM ANY COURSE OF
DEALING, USAGE, OR TRADE PRACTICE. WAKE FOREST ASSUMES NO RESPONSIBILITY WITH
RESPECT TO THE EXPLOITATION OR COMMERCIALIZATION OF THE PATENT RIGHTS OR THE
MANUFACTURE, USE, SALE, LEASE OR DISTRIBUTION OF ANY METHODS, PROCESSES,
APPARATUS, DEVICES, SYSTEMS, PRODUCTS, ARTICLES, AND/OR APPLIANCES DERIVED FROM
OR USING THE LICENSED PRODUCTS OR LICENSED PROCESSES BY COMPANY. WAKE FOREST
WILL NOT BE LIABLE FOR LOSS OF PROFITS, LOSS OF USE, OR ANY OTHER DIRECT,
INCIDENTAL, CONSEQUENTIAL, OR EXEMPLARY DAMAGES.

7.             Records, Reports, and Payments

               7.1         Records

                           7.1.1 The Company will keep and maintain and will
require any of its sublicensees to keep and maintain complete, accurate and
correct records and books relating to the sale or lease of the Licensed Products
and Licensed Processes for five years following the end of the calendar year to
which such records and books pertain.

               7.2         Financial Reports

                           7.2.1 Commencing in the calendar quarter when the
Company's first royalty or milestone payment to Wake Forest is due, the Company
will render to Wake Forest calendar quarter reports for each calendar quarter
during the remaining term of the License under this Agreement. Within thirty
days following each such calendar quarter as well as within thirty days
following expiration of the sixty day period of permissible sales of inventory
following termination of this License under Section 9.5 of this Agreement, the
Company will provide to Wake Forest a written report setting forth the following
information:

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                  (a)      accounting for all Licensed Products sold,
                           distributed, or leased;
                  (b)      accounting for all the Licensed Processes used,
                           leased or sold;
                  (c)      gross sales of Licensed Products and Licensed
                           Processes;
                  (d)      any applicable deductions, allowances, and charges as
                           provided in Section 1.11 of this Agreement;
                  (e)      total Net Sales; and
                  (f)      total royalties, milestone payments and other amounts
                           due.

               Subject to Section 3.2 hereof, the Company will remit to Wake
Forest with each such report the amount of royalty payments, milestone payments
and other amounts shown thereby to be due. If no sales or leases of the Licensed
Products or Licensed Processes were made during any calendar quarter, the
Company will provide to Wake Forest a statement to that effect.

                  7.2.2 The books and records of account kept by the Company
will be made available upon reasonable notice, during normal business hours for
examination by one or more auditors of Wake Forest's choosing, who will be
permitted to enter upon the premises of the Company and make and retain copies
of any and all parts of said books and records of account, including invoices,
that are relevant to any report required to be rendered by the Company under
this Agreement. Said copies will be provided at no cost to Wake Forest. Any
amount found to have been owed but not paid will be paid promptly to Wake Forest
with interest at the rate of 15% per year. In the event any such audit shows
that the Company has underpaid its obligation hereunder by five percent (5%) or
more during any calendar quarter, the Company will reimburse Wake Forest for the
out-of-pocket expense for such audit.

                  7.2.3 Except as set forth in Section 3.2, royalty or other
payments will be paid in United States dollars to Wake Forest in Winston-Salem,
North Carolina, or at such other place as Wake Forest may reasonably designate
consistent with the laws and regulations controlling in any foreign country. Any
withholding taxes that the Company is required by law to withhold on remittance
of the royalty payments will be deducted from the royalty paid. The Company will
furnish Wake Forest with original copies of all official receipts for such
taxes. If any royalties hereunder are based on Net Sales converted from foreign
currency, such conversion will be made by using the exchange rate prevailing at
a first-class foreign exchange bank on the last business day of the calendar
quarter reporting period to which such royalty payments relate.

                                      -12-
<PAGE>
8.             Patent Prosecution

               8.1 The filing and prosecution of all United States and foreign
patent applications and maintenance of all United States and foreign patents
within the Patent Rights will be the primary responsibility of Wake Forest;
provided, however, that the Company will be notified prior to any initial patent
application filing in a country and the Company generally will be kept informed
of, and will have a reasonable opportunity to participate at its sole expense
in, all major decisions affecting all filing, prosecution and maintenance
activities related to the Patent Rights. Wake Forest will seek patent protection
for each invention within the Patent Rights in all countries designated by the
Company from time to time so long as the Company assumes full financial
responsibility for the associated patent preparation, prosecution and
maintenance costs in such countries. Upon the failure or refusal of Wake Forest
to undertake such prosecution efforts, the Company may, upon notice to Wake
Forest, assume such efforts unless Wake Forest commences such efforts to the
reasonable satisfaction of the Company within thirty (30) days of such notice.

               8.2 Upon the receipt by the Company of at least $2,500,000 of
aggregate gross cash proceeds from the sale of its equity securities (calculated
on a cumulative basis and excluding the sale of $750,000 of Series A Preferred
Stock), the Company will reimburse Wake Forest in two equal installments for all
reasonable fees and out-of-pocket expenses incurred by Wake Forest prior to the
Effective Date (up to a maximum of $40,000) related to the preparation, filing,
prosecution and maintenance of the United States and foreign patent applications
set forth on Schedule A, one-half of which will be payable in ten (10) business
days following such receipt and one-half of which will be payable in 180 days
following such receipt. Upon presentation of itemized statements to the Company,
the Company will reimburse Wake Forest for all reasonable fees and out-of-pocket
expenses incurred by Wake Forest after the Effective Date relating to the
preparation, filing, prosecution and maintenance of the United States and
foreign patent applications set forth on Schedule A and any United States and
foreign patents issuing thereon as well as any additional United States and
foreign patent applications and patents within the Patent Rights that are
initiated by mutual agreement of the Company and Wake Forest or at the request
of the Company.

               8.3 In the event Company determines that filing, prosecution or
maintenance of any of the United States or foreign patent applications or
patents within the Patent Rights is not justified, it will advise Wake Forest in
writing and Wake Forest will then have the option to file, prosecute or maintain
any such Patent Rights at its own expense. Wake Forest will then have the option
in such event in its sole discretion to delete such United States or foreign
patent applications or patents within said Patent Rights from the License to
Company for the territory covered thereby such that Company will have no rights
under this Agreement for any such deleted United States or foreign patent
applications or patents. Wake Forest will obtain all rights in and to such
deleted United States or foreign patent applications or patents and Wake Forest
will be free to exploit and to assign or license any such deleted United States
or foreign patent applications or patents to third parties without effect on the
amount of royalties due to Wake Forest under Section 3.1.

                                      -13-
<PAGE>
               8.4 In the event that any claim of any application within the
Patent Rights is canceled, abandoned, or otherwise disallowed by a final
non-appealable or non-appealed action of a Patent Office having jurisdiction, or
in the event that any claim of any patent within the Patent Rights is held
invalid or unenforceable by a non-appealable or non-appealed decision by any
court of competent jurisdiction, such claim will be deemed to have expired, as
of the date of final disallowance or final decision of invalidity or
non-enforceability.

               8.5 The Company agrees to mark the Licensed Products made, used
or sold in the United States with all applicable United States patent numbers.
All Licensed Products used, shipped to or sold in other countries will be marked
in such a manner as to conform with the patent laws and practice of the country
of use, shipment or sale.

9.             Termination

               9.1 Unless sooner canceled or terminated as herein provided,
the License will continue for the full term of the last expiring patent or
patent application within the Patent Rights.

               9.2 If the Company has an involuntary petition in bankruptcy
filed against it, or if the Company files a petition covering itself in
bankruptcy, or if the business of the Company is placed in the hands of a
receiver, assignee or trustee for the benefit of creditors (whether by the
voluntary act of the Company or otherwise), and such proceeding continues in
effect unstayed for sixty (60) days, this Agreement will automatically terminate
without any notice whatsoever to Company.

               9.3 If the Company at any time defaults in the payment of any
royalty or other payment, or in providing any report due under this Agreement or
makes any false report, or commits a material breach of any covenant or
undertaking set forth herein, Wake Forest will have the right, in addition to
all other remedies available, to terminate this Agreement and revoke any and all
Licenses herein granted, by giving the Company thirty (30) days prior written
notice of such breach or default; provided, however, that if the Company
rectifies such default or breach within such 30-day period, then this Agreement
will remain in effect and the rights and License herein granted will be in force
as if no default or breach had occurred on the part of the Company; and
provided, further, that if at the expiration of such 30-day period the Company
is working diligently to cure such default or breach, it will be provided an
additional period, not to exceed ninety (90) days, to cure such default or
breach to the reasonable satisfaction of Wake Forest. In the event of
termination under this Section 9.3, the Company will continue to be obligated to
pay to Wake Forest all license fees, royalties or other payments payable and
reimburse all costs incurred or committed that are reimbursable at the time of
termination pursuant to this Section 9.3.

               9.4 The Company will have the right to terminate the License
under this Agreement with or without cause at any time on six months' written
notice to Wake Forest under Section 15 hereof.

               9.5 Upon termination of the License for any reason, nothing
herein will be construed to release either party from any obligation accrued
prior to the effective date of such termination. Any

                                      -14-
<PAGE>
termination of this License will not relieve Company of any obligations to make
payments for any royalties or other payments that may have accrued prior to the
date of such termination. After the effective date of any termination of the
License under this Agreement, the Company, for and only for a sixty (60) day
period following such termination, may sell all Licensed Products in the
inventory of the Company at the usual sales price of the Company for such
Licensed Products provided that the Company will pay to Wake Forest the
royalties thereon as required by Section 3.1 of this Agreement and will submit
the reports required by Section 7.2 of this Agreement. Any Licensed Products
remaining in inventory of the Company following such sixty (60) day period will
be transferred and given to Wake Forest without charge or cost to Wake Forest.

               9.6 Upon termination of this Agreement for any reason the
License rights granted herein will immediately revert to Wake Forest.

               9.7 If, at any time during the term this Agreement, the Company
directly or indirectly opposes or actively assists any Person to oppose the
grant of any letters patent on any patent application within the Patent Rights
or directly or indirectly disputes or actively assists any Person to dispute the
validity of any patent within the Patent Rights, or any of the claims thereof,
Wake Forest will be entitled within sixty (60) days thereafter to revoke all or
any portion of the License granted hereunder upon thirty (30) days prior written
notice to the Company.

10.            Infringement

               10.1 Each party will promptly inform the other in writing of any
alleged infringement by any Person of any of the patents within the Patent
Rights, and provide such other party with any available evidence of
infringement. Neither party will settle or compromise any claim or action
involving infringement of the Patent Rights in a manner that imposes any
restrictions or obligations on the other party without the other party's written
consent, which consent will not be unreasonably withheld.

               10.2 During the term of this Agreement, the Company may, but
shall not be obligated to, prosecute at its own expense any such infringements
of the Patent Rights and, in furtherance of such prosecution, the Company may
join Wake Forest as a party plaintiff in any such suit, without expense to Wake
Forest. The total cost of any such infringement action commenced or defended
solely by the Company will be borne by the Company, and the Company will keep
any recovery or damages for past infringement derived therefrom.

               10.3 If, within six months after having been notified of any
alleged infringement, the Company is unsuccessful in persuading the alleged
infringer to desist, and the Company has not brought or is not diligently
prosecuting an infringement action, or if the Company notifies Wake Forest at
any time prior thereto of its intention not to bring suit against any alleged
infringer, then, and in those events only, Wake Forest will have the right to
prosecute at its own expense any infringement of the Patent Rights, and Wake
Forest may, for such purposes, use the name of the Company as party plaintiff,
without expense to the Company. Except as set forth in Section 10.1,

                                      -15-
<PAGE>
settlement, consent judgment or other voluntary final disposition of the suit
may be entered into by Wake Forest without the consent of the Company. The total
cost of any such infringement action commenced or defended solely by Wake Forest
will be borne by Wake Forest, and Wake Forest will keep any recovery or damages
for past infringement derived therefrom.

               10.4 In the event an infringement action is brought against the
Company arising from the use of the Patent Rights, the Company will defend such
action and will be solely responsible for all of its attorneys' fees, costs of
defense, and liability arising out of that action.

               10.5 In the event that a declaratory judgment action alleging
invalidity or non-infringement of any of the Patent Rights is brought against
the Company, the Company will be responsible, at its sole expense, for the
defense of the action and the Company will keep any recovery or damages derived
therefrom or from any counterclaims asserted therein unless and until Wake
Forest elects to intervene and participate in the defense of the action in
accordance with the next sentence. Wake Forest, at its option, will have the
right to intervene and participate in the defense of the action at its own
expense, whereupon Wake Forest and the Company will share in any recovery or
damages derived therefrom or from any counterclaims asserted therein in
proportion to the total out-of-pocket costs contributed by each party.

               10.6 In any infringement suit brought or declaratory judgment
action defended by either party to protect any of the Patent Rights pursuant to
this Agreement, the other party will, at the request and expense of the party
initiating such suit, cooperate in all respects and, to the extent possible,
have its employees testify when requested and make available relevant records,
papers, information, samples, specimens and the like.

11.            Indemnification and Insurance

               11.1 The Company and any of its sublicensees will, at all times
during the term of this Agreement and thereafter, indemnify, hold harmless, and
defend Wake Forest, its trustees, officers, directors, employees, agents and its
Affiliates, from and against all claims, losses, damages, and liability of
whatsoever kind or nature, as well as all costs and expenses, including legal
expenses and reasonable attorneys' fees, which arise or may arise at any time
out of or in connection with any activity of the Company involving the Licensed
Products or Licensed Processes or the Patent Rights, including without
limitation the manufacture, use, sale, lease, commercialization, licensing or
distribution of any system, method, process, apparatus, device, product, article
or appliance derived from or using the Licensed Products or Licensed Processes
or the Patent Rights.

               11.2 The Company and any of its sublicensees will carry liability
insurance at its expense, adequate to assure its obligations to the Wake Forest
under Section 11.1 of this Agreement. The Company will include satisfactory
evidence of adequate insurance coverage with each quarterly report required by
Section 7.2 of this Agreement.

                                      -16-
<PAGE>
12.            Assignment

               Except as otherwise specifically provided in this Section 12,
neither this Agreement nor any of the licenses or rights herein granted will be
assignable or otherwise transferable by the Company without the prior written
permission of Wake Forest. The Company may assign or otherwise transfer this
Agreement and the License granted hereby and the rights acquired by it to and
only to the assignee or transferee of the Company's entire business or of that
part of the Company's business to which the License granted hereby relates;
provided, however, that such assignee or transferee agrees in writing to be
bound by the terms and conditions of this Agreement. The Company will give Wake
Forest thirty (30) days prior notice of such assignment and transfer, and if
Wake Forest raises no reasonable objection in writing to such assignment or
transfer within fifteen (15) days after Wake Forest receives such notice, then
Wake Forest will be deemed to have approved such assignment or transfer so long
as the assignee or transferee agrees in writing to be bound by the terms and
conditions of this Agreement. If the Company sells or otherwise transfers its
entire business or that part of its business to which the License granted hereby
relates and the assignee or transferee does not agree in writing to be bound by
the terms and conditions of this Agreement within fifteen (15) days of such sale
or transfer, Wake Forest will have the sole right to terminate this License by
providing to such transferee or assignee written notice of termination.

13.            Non-Use of Names

               The Company will not use the names of Wake Forest or Chilton in
his capacity as an employee of Wake Forest, nor any adaptation thereof, in any
advertising, promotional or sales activities without prior written consent
obtained from Wake Forest in each separate case, except that the Company may
state that it is licensed under one or more of the patents or patent
applications within the Patent Rights.

14.            Export Controls

               It is understood that Wake Forest is subject to United States
laws and regulations controlling the export of technical data, computer
software, laboratory prototypes, and other commodities that may require a
license from the applicable agency of the United States Government and/or may
require written assurances by the Company that the Company will not export data
or commodities to certain foreign countries without prior approval of such
agency. Wake Forest neither represents that a license will not be required nor
that, if required, it will be issued.

15.            Payments, Notices and Other Communications

               Any payment, notice, or other communication pursuant to this
Agreement will be sufficiently made or given on the date of mailing if sent to
such party by certified first class mail, postage prepaid, addressed to it at
its address below or as it will designate by written notice given to the other
party:

                                      -17-
<PAGE>
                Wake Forest:        Beth Fordham-Meier Director,
                                    Technology Transfer and Industry Relations
                                    Wake Forest University School of Medicine
                                    Medical Center Boulevard
                                    Winston-Salem, NC 27157-1023

                With a copy to:     J. Reid Morgan, Esq.
                                    University Counsel
                                    Wake Forest University
                                    P.O. Box 7656
                                    Winston-Salem, NC 27109

               Company:             Pilot Biotechnologies, Inc.
                                    Albert Hall
                                    101 North Chestnut Street
                                    Winston-Salem, NC 27101
                                    Attention: J. Phillips Johnston, President

16.            Miscellaneous Provisions

               16.1 This Agreement will be construed, governed, interpreted, and
applied in accordance with the laws of the State of North Carolina, U.S.A.,
except that questions affecting the construction and effect of any patent will
be determined by the law of the country in which the patent was granted.

               16.2 The parties hereto acknowledge that this Agreement sets
forth the entire agreement and understanding of the parties hereto as to the
subject matter hereof, and will not be subject to any change or modification
except by the execution of a written instrument subscribed to by the parties
hereto.

               16.3 The provisions of this Agreement are severable, and in the
event that any provision of this Agreement will be determined to be invalid or
unenforceable under any controlling body of law, such invalidity or
unenforceability will not in any way affect the validity or enforceability of
the remaining provisions hereof.

               16.4 The failure of either party to assert a right hereunder or
to insist upon compliance with any term or condition of this Agreement will not
constitute a waiver of that right or excuse a similar subsequent failure to
perform any such term or condition by the other party.

                                      -18-
<PAGE>
               16.5 In any litigation or dispute arising under or relating to
this Agreement between the parties hereto, the prevailing party or parties will
be entitled to recover its reasonable attorneys fees and litigation costs.

               16.6 This Agreement will be binding and enure to the benefit
of the parties hereto and their respective affiliates, and permitted successors
and assigns.

               16.7 The representations, warranties, covenants, and undertakings
contained in this Agreement are for the sole benefit of the parties hereto and
their permitted successors and assigns and such representations, warranties,
covenants, and undertakings will not be construed as conferring any rights on
any other party.

               16.8 Nothing contained in this Agreement will be deemed to
place the parties hereto in a partnership, joint venture or agency relationship
and neither party will have the right or authority to obligate or bind the other
party in any manner.

               16.9 This Agreement may be executed in two or more counterparts,
each of which will be deemed an original, but all of which taken together will
constitute one and the same instrument.

               16.10 Except for a matter submitted for determination under
Section 2.5(a) or a matter concerning the obligations of the Company under
Section 11, any controversy or dispute arising under this Agreement, including
any question regarding the existence, scope, validity, breach or termination of
this Agreement, shall be referred to and finally settled by arbitration in the
City of Winston-Salem, North Carolina, USA, under the auspices of, and conducted
in accordance with, the rules of the American Arbitration Association. All
arbitration proceedings shall be before a board of three (3) arbitrators who are
knowledgeable about biotechnology development and financial matters and the
legal, tax and other issues affecting institutions of higher learning, and each
party shall select one (1) arbitrator and the selected arbitrators shall select
the third arbitrator. The arbitration proceedings shall be conducted in the
English language and any award shall be in United States dollars. The cost of
the third arbitrator shall be divided equally between the parties and each party
shall pay the costs of the arbitrator selected by it. Any award of the
arbitrators shall be final and conclusive on the parties to this Agreement, and
judgment upon such award may be entered and enforced in any court having
jurisdiction thereof. With the exception of an action brought to enforce the
terms of a previous arbitration award, arbitration shall be the sole and
exclusive method of resolving disputes between the parties in connection with
this Agreement.

               16.11 Either party may seek injunctive or other relief from a
court for enforcement of any arbitration award. The prevailing party in any
arbitration or other action under this Agreement may seek to recover from the
other all costs, including attorney's fees, related to such action.

               IN WITNESS WHEREOF, the parties hereto have hereunto set their
hands and seals and duly executed this License Agreement as of the day and year
first set forth above.

                                      -19-
<PAGE>
WAKE FOREST UNIVERSITY                   PILOT BIOTECHNOLOGIES, INC.

By:  /s/Lawrence D. Smith                 By: /s/ J. Phillips L. Johnston
   --------------------------------          --------------------------------
     Lawrence D. Smith                            J. Phillips L. Johnston
     Associate Dean                               President
     Research Development

DATE: December 11, 1998                   DATE: December 11, 1998

                                       20<PAGE>

                                                                   Exhibit 10.4

                               RESEARCH AGREEMENT

               THIS RESEARCH AGREEMENT, is by and between PILOT BIOTECHNOLOGIES
INC., a corporation organized under the laws of the State of North Carolina,
whose offices are located at Albert Hall, 101 North Chestnut Street,
Winston-Salem, NC 27101 (the "Company"), and WAKE FOREST UNIVERSITY SCHOOL OF
MEDICINE, an educational institution organized under the laws of the State of
North Carolina, whose offices are located at Medical Center Boulevard,
Winston-Salem, North Carolina 27157 (hereinafter called "Wake Forest").

               Wake Forest and the Company agree as follows:

1.             Wake Forest will perform sponsored research for the Company in
               the field of arachidonic acid metabolism and in other fields as
               mutually agreed by the parties on terms as specifically agreed to
               by the parties from time to time during the term of this
               Agreement. Each new specific research project will be the subject
               of a separate sub-agreement that will describe the scope of work
               and associated research protocols to be performed, anticipated
               inventions, findings and discoveries, key personnel assigned to
               the project, required equipment, a project budget, timing for
               completion of the project, deliverables and other work product
               and reporting provisions, as well as any amendments to the
               general terms and conditions in this Agreement applicable to that
               project.

               Wake Forest will not refuse a specific research project
               unreasonably, but each specific project must meet the definition
               of research of a type that can properly be performed by an
               educational tax-exempt organization.

2.             This Agreement shall be for a term commencing on the last date of
               signature to this Agreement and ending on December 31, 2002. The
               term may be extended by mutual agreement in writing. Either
               party may terminate this Agreement, with or without cause, on
               thirty (30) days prior written notice to the other party,
               except that obligations that have been incurred pursuant to
               Paragraphs 7, 8, 9 and 13, and noncancellable budgeted
               obligations under ongoing research projects, will survive
               termination.

3.             Unless otherwise agreed in an applicable sub-agreement, within
               thirty (30) days after completion of each specific research
               project under this Agreement, Wake Forest will submit a written
               study report to the Company reporting the results of the
               research.

4.
               Commencing in 1999, the Company shall request that Wake Forest
               perform sufficient research such that the Company shall pay
               Wake Forest at least $50,000 per year (the "Minimum Annual
               Amount") during each calendar year during the term of this
               Agreement. Each separate sub-agreement will include a detailed
               budget and a payment schedule for paying any costs over and
               above the Minimum Annual Amount due in any year. Commencing on
               July 1, 1999, and on the first day of July, October, January
               and April in each year during the term hereof, the Company
               shall pay Wake Forest the positive difference (if any) between
               the sum of $12,500 ($25,000 for July 1, 1999 and September 1,
               1999) and

<PAGE>
               the cumulative amount of payments to Wake Forest previously
               made under this Agreement in excess of the accrued portion of
               the Minimum Annual Amount for that year (assuming the Minimum
               Annual Amount accrues in equal quarterly installments). In the
               event that the Company shall request Wake Forest to perform
               research during any calendar year for aggregate payments
               greater than $50,000, the parties shall provide in the
               applicable sub-agreement a mutually acceptable payment
               schedule for such additional work and such excess when paid
               shall be credited against future quarterly installments of the
               Minimum Annual Amount. Checks will be made payable to Wake
               Forest University School of Medicine (Federal Identification
               Number 56-0532138), will reference this Agreement and GTS      ,
               and will be mailed to the following address:

                            Wake Forest University School of Medicine
                            Attn: The Controller's Office
                            Medical Center Boulevard
                            Winston-Salem, North Carolina 27157

5.             Title to any equipment purchased by Wake Forest in the
               performance of the work under this Agreement, whether or not
               purchased with funds provided under this Agreement, will
               remain with Wake Forest and will be free of all claims, liens
               or encumbrances of the Company, unless otherwise provided in
               an applicable sub-agreement.

6.             The research services and studies contemplated by this Agreement
               will be performed under the general direction of Dr. Floyd H.
               "Ski" Chilton, Department of Medicine, Section of Pulmonary and
               Critical Care, or under other mutually acceptable Principal
               Investigators. In the event he is unable or unwilling to continue
               with the studies, the parties will attempt to find a mutually
               acceptable substitute. In the event a mutually acceptable
               substitute is not found, this Agreement may be terminated in
               accordance with Paragraph 2. If Wake Forest personnel are
               requested by the Company to travel to locations designated by the
               Company as part of the services to be rendered hereunder, the
               Company will reimburse Wake Forest for all necessary and
               reasonable out-of-pocket expenses incurred in such travel. All
               such expenses shall be supported by receipts. Upon receipt by the
               Company of all such receipts, the Company shall promptly
               reimburse Wake Forest.

7.             Wake Forest is free to publish, present or use any results
               arising out of the performance of research under this Agreement
               for its own noncommercial educational, research or academic
               purposes provided that the publication, presentation or use does
               not disclose any Confidential Information (as defined in
               Paragraph 8) of the Company. Wake Forest agrees that any proposed
               publication or presentation relating to the studies conducted
               under this Agreement will be submitted to the Company for review
               at least thirty (30) days prior to submission for publication or
               presentation. No right of manuscript approval is implied by this
               provision. In the event that the proposed publication or
               presentation contains patentable subject matter, Wake Forest
               will, upon written request from the Company within the thirty
               (30) day review period, delay the publication or presentation for
               a maximum of an additional ninety (90) days

                                       2
<PAGE>
               to allow the Company or Wake Forest to file a patent
               application prior to the publication or presentation of the
               research.

8.             Wake Forest agrees to hold in confidence, in accordance with this
               paragraph, any written or oral information, in any medium,
               disclosed by the Company to Wake Forest under this Agreement or
               any sub-agreement and identified by the Company as confidential
               (hereinafter "Confidential Information"). For the purposes of
               this Agreement, "hold in confidence" means that Wake Forest will
               protect the Confidential Information in the same manner in which
               it protects its own confidential information of a similar nature.
               Confidential Information will remain the property of the Company
               and will be disclosed to, and used by, only those persons
               associated with Wake Forest necessary for the performance of
               services under this Agreement, and only to the extent necessary
               to comply with this Agreement. The obligation to hold in
               confidence shall not apply to:

               (a)         any Confidential Information that is or becomes
                           public knowledge through no act or omission of Wake
                           Forest;

               (b)         Confidential Information that was already lawfully in
                           Wake Forest's possession on the initial date of
                           disclosure by the Company;

               (c)         Confidential Information acquired by Wake Forest from
                           any third party without restrictions on disclosure;
                           and

               (d)         the disclosure of the results of any research
                           performed hereunder in strict compliance with the
                           provisions of Paragraph 7 hereof.

               Further, it is acknowledged that Wake Forest may disclose
               Confidential Information to the extent required by law, but Wake
               Forest agrees such disclosure shall be limited only to such
               parties and such extent as is so required and such disclosure
               shall only be made after providing the Company with written
               notice of such pending disclosure as far in advance as possible
               in order to provide the Company with a meaningful opportunity to
               seek a protective order preventing such disclosure.

               Wake Forest agrees that all such Confidential Information shall
               be returned to the Company upon request or upon expiration or
               termination of this Agreement, except that Wake Forest may retain
               one copy of such Confidential Information for its records. The
               obligations of Wake Forest under this Paragraph 8 shall survive
               the expiration or termination of this Agreement and will endure
               for five (5) years from the date of such expiration or
               termination.

9.             The rights of the parties with respect to ownership and use of
               all inventions and discoveries, whether or not patentable,
               derived in the course of research performed under this
               Agreement shall be governed by the License Agreement of even
               date herewith between Wake Forest and the Company.

                                       3
<PAGE>
               Wake Forest will cause its employees working on each research
               project under this Agreement to affirm that their rights in and
               to any inventions made or discovered as a result of work
               performed on a project under this Agreement are owned by Wake
               Forest according to Wake Forest's Inventions and Patent Policy.

10.            If either party should become insolvent or should make any
               assignment for the benefit of creditors, or should be adjudicated
               bankrupt, or should file a petition in bankruptcy, or is named as
               debtor in an involuntary bankruptcy proceeding, or if a receiver
               or trustee of the property of either party is appointed, then
               this Agreement, at the option of the other party, will terminate,
               effective on the date notice of such termination is given.

11.            Neither party may assign its rights or obligations under this
               Agreement or any part thereof without the written consent of
               the other party, such consent not to be unreasonably withheld.

12.            The terms of this Agreement shall be construed in accordance with
               the laws of the State of North Carolina. Any dispute under this
               Agreement shall be decided in the federal or state courts within
               the State of North Carolina. This Agreement shall supersede any
               previous understandings or agreements, written or otherwise,
               regarding this subject matter except the License Agreement
               executed contemporaneously by the parties. This Agreement may
               only be amended by a written instrument signed by both parties.

13.            The Company will indemnify, defend and hold harmless Wake Forest,
               its officers, employees, agents and subcontractors and their
               employees from any suit, action, claim, demand, judgment and
               expense arising out of this Agreement. The Company agrees that if
               any such claim is asserted or such suit brought against Wake
               Forest or its officers, employees, agents or subcontractors or
               their employees, the Company will defend such claim or suit at
               the expense of the Company. The Company will not settle or
               compromise any such claim or action in a manner that imposes any
               restrictions or obligations on Wake Forest without Wake Forest's
               written consent, which consent shall not be unreasonably
               withheld.

               The Company will have no obligation to indemnify Wake Forest and
               its officers, employees, agents or subcontractors or their
               employees under this Paragraph 13 if it is determined that the
               suit, action, claim, demand, judgment or expense for which
               indemnity is sought was primarily due to the negligence, willful
               misconduct, breach or other non-performance of Wake Forest or its
               officers, employees, agents or subcontractors or their employees.

                                       4
<PAGE>
               IN WITNESS WHEREOF, the parties hereto have caused this Research
Agreement signed by their respective officers duly authorized as of the last
date and year written below.

WAKE FOREST UNIVERSITY                      PILOT BIOTECHNOLOGIES, INC.
   SCHOOL OF MEDICINE

By:  /s/Lawrence D. Smith                 By:   /s/ J. Phillips L. Johnston
   -------------------------------           --------------------------------
        Lawrence D. Smith                           J. Phillips L. Johnston
        Associate Dean                              President
        Research Development

DATE:  December 11, 1998                   DATE:  December 11, 1998

                                       5

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