Document:

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                                                                   Exhibit 10.12

                       Paramount Capital Investments, LLC
                             Paramount Capital, Inc.
                    Paramount Capital Asset Management, Inc.
                         787 Seventh Avenue, 48th Floor
                            New York, New York 10019

                                                               December 31, 2001

Innovative Drug Delivery Systems, Inc.
787 Seventh Avenue, 48th Floor
New York, New York 10019
Attention: Leonard Firestone, Chief Executive Officer

          RE: SERVICES AGREEMENT
          ----------------------

Dear Dr. Firestone:

         Beginning on February 23, 1998, some or all of Paramount Capital
Investments, LLC, Paramount Capital, Inc., Paramount Capital Asset Management,
Inc. and all of their affiliates (collectively, "Paramount") have provided
Innovative Drug Delivery Systems, Inc. ("IDDS") with certain services including
the use of office space, use of computers, industry expertise, financial support
and administrative and legal assistance (the "Services"). This letter
memorializes our recent discussions and will set forth certain agreements
between Paramount and IDDS with respect to the provision of such Services in the
past, and the continuation of the provision of such Services in the future.
Accordingly, in consideration of One Thousand Dollars ($1000.00) paid by IDDS to
Paramount, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, IDDS and Paramount hereby agree as
follows:

         Paramount has provided the Services to IDDS since the date set forth
above without any expectation of monetary consideration;

         Paramount will continue to provide the Services to IDDS without any
expectation of monetary consideration through the end of the third quarter of
2002; and

         Paramount hereby waives any claims of repayment or reimbursement from
IDDS for any costs or expenses for or associated with the Services heretofore
provided, and Services that will be provided through the end of the third
quarter of 2002.

         This letter shall supercede all other agreements regarding the subject
matter herein. Please acknowledge your agreement by executing and delivering to
us the enclosed copy of this letter at your earliest convenience.

                [REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]

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                                               Very truly yours,

                                 PARAMOUNT CAPITAL INVESTMENTS, LLC

                                 PARAMOUNT CAPITAL, INC.

                                 PARAMOUNT CAPITAL ASSET MANAGEMENT, INC.

                                 By:    /s/ Lindsay A. Rosenwald, MD
                                        ----------------------------------
                                 Name:  Lindsay A. Rosenwald, MD
                                        ----------------------------------
                                 Title: Chairman of the Above Entities
                                        ----------------------------------
                                             Dec. 31, 2001

INNOVATIVE DRUG DELIVERY SYSTEMS, INC.

By:    /s/ Leonard Firestone
       ----------------------------------
Name:  Leonard Firestone
       ----------------------------------
Title: Chief Executive Officer
       ----------------------------------

                     * SIGNATURE PAGE TO SERVICES AGREEMENT

                                       2<PAGE>

                                                                   Exhibit 10.13

                       Paramount Capital Investments, LLC
                             Paramount Capital, Inc.
                    Paramount Capital Asset Management, Inc.
                         787 Seventh Avenue, 48th Floor
                            New York, New York 10019

                                                               December 31, 2001

Innovative Drug Delivery Systems, Inc.
787 Seventh Avenue, 48th Floor
New York, New York 10019
Attention: Leonard Firestone, Chief Executive Officer

             RE: IP LETTER AGREEMENT
             -----------------------

Dear Dr. Firestone:

         Beginning on February 23, 1998, some or all of Paramount Capital
Investments, LLC, Paramount Capital, Inc., Paramount Capital Asset Management,
Inc. and all of their affiliates (collectively, "Paramount") have provided
office space and made other monetary and non-monetary support available to
Innovative Drug Delivery Systems, Inc. ("IDDS"). This letter agreement (the
"IP Letter Agreement") memorializes our recent discussions and will set forth
certain agreements between Paramount and IDDS with respect to intellectual
property rights arising during the period Paramount has provided, and may in the
future provide, such support to IDDS. Accordingly, in consideration of One
Thousand Dollars ($1000.00) paid by IDDS to Paramount, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, IDDS and Paramount hereby agree as follows:

         Paramount agrees that regardless of any resources provided by Paramount
to IDDS at any past, present, or future time, Paramount has and shall have no
right, title or interest in or to any of the patents, patent applications,
know-how, trade-secrets, trade dress, trademarks, service marks, logos, domain
names, copyrights or any other intellectual property (whether or not
registered) (i) developed by IDDS or its employees or consultants solely within
the scope of their employment or consultancy with IDDS, or (ii) concerning the
product candidates of IDDS as described in IDDS's Registration Statement on Form
S-1, as amended, relating to IDDS's initial public offering, or (iii)
concerning the technologies set forth on Schedule A attached hereto, and (iv)
all enhancements, improvements, and derivations of (i) through (iii) above (the
"IDDS Intellectual Property").

         To the extent that Paramount it deemed to have any rights, title or
interest in or to any of the IDDS Intellectual Property, Paramount hereby
assigns, transfers and conveys to IDDS (i) all rights, title and interest as
Paramount may possess (now or in the future) in and to the IDDS Intellectual
Property worldwide; and (ii) the entire right, title and interest in and to the
IDDS Intellectual Property, together with all income, royalties, damages and
payments now or hereafter due or payable by any third party with respect to
the IDDS Intellectual Property, all

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causes of action (at law or in equity) and all rights to sue, counterclaim and
recover for past, present and future infringement pf the rights granted hereby.

         Paramount further agrees that it will: (i) cooperate with IDDS in the
filing and prosecution of any and all patent, trademark, copyright or other
intellectual property registrations or applications; (ii) execute, verify,
acknowledge and deliver all such further papers, including applications and
instruments of transfer; and (iii) perform such other acts as IDDS lawfully may
request, to facilitate IDDS's right to obtain, protect, maintain, defend or
enforce any of the rights granted hereunder. In the event that IDDS is unable
for any reason whatsoever to secure Paramount's signature to any document when
so required to effectuate fully this assignment, Paramount hereby irrevocably
designates and appoints IDDS and IDDS's duly authorized officers and agents, as
Paramount's agents and attorneys-in-fact to act for and on its behalf and
instead of it, to execute and file any such document and to do all other
lawfully permitted acts to further the purposes of the foregoing, with the
same legal force and effect as if executed by the undersigned, such designation
and appointment to be coupled with an interest.

         For purposes of this Agreement, the parties hereto are independent
contractors and are not partners or joint venturers, and, except as provided
herein, neither party has any right or authority to bind the other in any way.
This Agreement shall be binding on and inure to the benefit of the respective
permitted successors and assigns of the parties. Upon execution by both
parties, this Agreement shall constitute the entire agreement between the
parties with respect to the subject matter hereof and shall supersede all
proposals, oral or written, all negotiations, conversations, discussions and
past dealings between or among the parties relating to the subject matter of
this Agreement. In the event that any of the provisions of this Agreement shall
be held by a court or other tribunal of competent jurisdiction to be
unenforceable, such provisions shall be limited or eliminated to the minimum
extent necessary so that this agreement shall otherwise remain in full force and
effect and enforceable. This Agreement shall be governed by the laws of the
State of New York, without regard to the choice of law rules thereof and the
sole jurisdiction and venue for actions related to the subject matter hereof
shall be conducted in the state or federal courts of the State and County of New
York. This Agreement may be executed in one or more counterparts (including
facsimile counterparts), each of which shall be deemed an original and all of
which, when taken together, shall constitute one and the same instrument.

         Please execute and deliver to us the enclosed copy of this IP Letter
Agreement at your earliest convenience.

                [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

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                                               Very truly yours,

                                 PARAMOUNT CAPITAL INVESTMENTS, LLC

                                 PARAMOUNT CAPITAL, INC.

                                 PARAMOUNT CAPITAL ASSET MANAGEMENT, INC.

                                 By:    /s/ Lindsay A. Rosenwald, MD
                                        ----------------------------------
                                 Name:  Lindsay A. Rosenwald, MD
                                        ----------------------------------
                                 Title: Chairman
                                        ----------------------------------
                                        December 31, 2001

INNOVATIVE DRUG DELIVERY SYSTEMS, INC.

By:    /s/ Leonard Firestone
       ----------------------------------
Name:  Leonard Firestone
       ----------------------------------
Title: Chief Executive Officer
       ----------------------------------

                     * SIGNATURE PAGE TO IP LETTER AGREEMENT

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