Document:

Cooperative Research and Developement  Agreement

 Exhibit 10.123 
 A COOPERATIVE RESEARCH AND DEVELOPMENT AGREEMENT 
 Between 
 BioDelivery Sciences International Inc 
 2501 Aerial Center Parkway, Suite 205 
 Morrisville, NC 27560 
 (Cooperator) 
 and 
 Walter Reed Army Institute of Research 
 503 Robert Grant Avenue 
 Silver Spring, MD 20910-7500 
 (Laboratory)

 Article 1. Background 
 1.00
This Agreement is entered into under the authority of the Federal Technology Transfer Act of 1986, 15 U.S.C. 3710a, et seq., between the Cooperator and the Laboratory, the parties to this Agreement. 
 1.01 Laboratory, on behalf of the U.S. Government, and Cooperator desire to cooperate in research and development on “Evaluation of the cochleate
technology to deliver non orally bioavailable drugs via the oral route in the treatment diseases like malaria and leishmaniasis” according to the attached Scope of Work described in Appendix A hereto (the “SOW”).

 NOW, THEREFORE, the parties agree as follows: 
 Article 2.
Definitions 
 2.00 The following terms are defined for this Agreement as follows: 
 2.01 “Agreement” means this cooperative research and development agreement. 
 2.02 “Invention” and “Made” have the meanings set forth in Title 15 U.S.C. Section 3703(9) and (10). 
 2.03 “Proprietary Information” means information marked with a proprietary legend or otherwise identified in writing by a party (or orally
identified, provided that written confirmation be promptly provided) which embodies trade secrets developed at private expense or which is confidential business or financial information, provided that such information: 
 (i) is not generally known, or which becomes generally known or available during the period of this Agreement from other sources without obligations
concerning their confidentiality; 
  

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 (ii) has not been made available by the owners to others without obligation concerning its
confidentiality; 
 (iii) is not already available to the receiving party without obligation concerning its confidentiality; and 

(iv) is not independently developed by or on behalf of the receiving party, without reliance on the information received hereunder. 
 2.04 “Subject Data” means all recorded information first produced in the performance of this Agreement. 
 2.05 “Subject Invention” means any Invention Made as a consequence of, or in relation to, the performance of work under this Agreement.

 Article 3. Research Scope and Administration 
 3.00 Scope of Work. Research performed under this Agreement shall be performed in accordance with the SOW incorporated as a part of this Agreement at Appendix A. It is agreed that any descriptions, statements,
or specifications in the SOW shall be interpreted as goals and objectives of the services to be provided under this Agreement and not requirements or warranties. Laboratory and Cooperator will endeavor to achieve the goals and objectives of such
services; however, each party acknowledges that such goals and objectives, or any anticipated schedule of performance, may not be achieved. 
 3.01 Review of Work. Periodic conferences shall be held between the parties for the purpose of reviewing the progress of work. It is understood that the nature of this research is such that completion within the period of performance
specified, or within the limits of financial support allocated, cannot be guaranteed. Accordingly, all research will be performed in good faith. 
 3.02 Principal Investigator. Any work required by the Laboratory under the SOW will be performed under the supervision of COL Alan Magill, Division Director, Division of Experimental Therapeutics, Walter Reed Army Institute of
Research, 503 Robert Grant Avenue, Silver Spring, Maryland 20910-7500: Phone: 301-319-9959; Email: Alan.Magill@us.army.mil who, as co-principal investigator has responsibility for the scientific and technical conduct of this project on behalf of the
Laboratory. Any work required by the Cooperator under the SOW will be performed under the supervision of Dr. Raphael J. Mannino, Chief Scientific Officer and Executive Vice President, BioDelivery Sciences International, Inc, 4 Bruce
Street, Newark, New Jersey 07103; Phone: 973-972-8018; Email rjmannino@bdsinternational.com who, as co-principal investigator has responsibility for the scientific and technical conduct of this project on behalf of the Cooperator. 
 3.03 Scope Change. If at any time the co-principal investigators mutually determine that the research data dictates a substantial change in the
direction of the work, the parties shall make a good faith effort to agree on any necessary change to the SOW and make the change by written notice to the address listed in section 12.07 Notices. 
  

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 3.04 Final Report. The parties shall prepare a final report of the results of this project within
six months after completing the SOW. 
 Article 4. Ownership and Use of Physical Property 
 4.01 Ownership of Materials or Equipment. All materials or equipment (“Materials”) developed or acquired under this Agreement by
the parties shall be the property of the party which developed or acquired the property, except that government equipment provided by Laboratory (1) which through mixed funding or mixed development must be integrated into a larger system, or
(2) which though normal use at the termination of the Agreement has a salvage value that is less than the return shipping costs, shall become the property of Cooperator. 
 4.02 Use of Provided Materials. Both parties agree that any Materials and/or Proprietary Information relating to them which were provided
by one party to the other party will be used for research purposes only. The Materials and/or Proprietary Information shall not be sold, offered for sale, used for commercial purposes, or be furnished to any other party without advance written
approval from the providing party’s official signing this Agreement or from another official to whom the authority has been delegated, and any use or furnishing of material shall be subject to the restrictions and obligations imposed by this
Agreement. 
 4.03 Laboratory Chemical Inventory System (CIS) The Materials and/or Proprietary Information received from
Cooperator and data derived as a result of this collaboration will be entered into an access limited, password-protected Chemical Inventory System (CIS) database that is maintained within the Division of Experimental Therapeutics at Recipient
Laboratory. The database permits the Division of Experimental Therapeutics at the Laboratory to screen all chemical structures within CIS for their potential utility in the diagnosis, prevention or treatment of diseases. The Cooperator’s
Material (s) and/or Proprietary Information received under this Agreement will be included within the CIS, will be retained therein and, if the Cooperator does not inform the Laboratory that the materials should be returned to the Cooperator at
the time of expiration of this Agreement, may be subject to in silico screening that may be outside the use addressed in the SOW and/or may take place beyond the expiration date of this Agreement. Laboratory will promptly notify Collaborator if
screening identifies a potential new use for a Cooperator’s Material(s) and/or Proprietary Information. 
 4.04 Retention of
Information entered into the CIS. If screening of Cooperator’s Material(s) and/or Proprietary Information via the CIS was initiated by a third party, and such screening identifies one of the Cooperator’s Material(s) that is proprietary
or identifies Proprietary Information of the Cooperator, then Laboratory will inform Cooperator of the nature of the Material(s) and/or Proprietary Information (including, as applicable, the chemical structure of the compound of interest) and the
reason for which it was screened. If Cooperator expresses interest in future collaboration on the compound, the Laboratory will also notify third party of interest of the Cooperator. In such cases, Cooperator, Laboratory and the third party will
determine a mechanism to exchange information related the compound and the screen. 
  

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 Article 5. Financial Obligation 
 5.00 Funding. The parties shall each be individually responsible for funding its own respective researchers throughout this Agreement, including
laboratory facilities, salaries, overhead and indirect costs, etc. Each party may determine at its own discretion, the amount of resources, personnel, materials or funds it will devote to the work under this Agreement. 
 5.01 Expenses. The parties shall each be individually responsible for expenses incurred by their respective researchers. Neither party shall be
liable or obligated to any third party contractual agreement undertaken by the other party. 
 Article 6. Patent Rights 
 6.00 Reporting. The parties shall promptly report to each other all Subject Inventions reported to either party by its employees. All Subject
Inventions Made during the performance of this Agreement shall be listed in the Final Report required by this Agreement. 
 6.01
Cooperator Employee Inventions. Laboratory waives any ownership rights the U.S. Government may have in Subject Inventions Made by Cooperator employees and agrees that Cooperator shall have the option to retain title in Subject Inventions Made
by Cooperator employees. Cooperator shall notify Laboratory promptly upon making this election and agrees to timely file patent applications on Cooperator’s Subject Invention at its own expense. Cooperator agrees to grant to the U.S. Government
on Cooperator’s Subject Inventions a nonexclusive, nontransferable, irrevocable, paid-up license in the patents covering a Subject Invention, to practice or have practiced, throughout the world by, or on behalf of the U.S. Government. The
nonexclusive license shall be evidenced by a confirmatory license agreement prepared by Cooperator in a form satisfactory to Laboratory. 
 6.02 Laboratory Employee Inventions. Laboratory shall have the initial option to retain title to, and file patent application on, each Subject Invention Made by its employees. The Laboratory agrees to grant an exclusive license to
any Subject Invention Made by its employees under this Agreement to which it has ownership to the Cooperator in accordance with Title 15 U.S. Code Section 3710a, on terms negotiated in good faith. Any invention arising under this Agreement is
subject to the retention by the U.S. Government of nonexclusive, nontransferable, irrevocable, paid-up license to practice, or have practiced, the invention throughout the world by or on behalf of the U.S. Government. 
 6.03 Joint Inventions. Any Subject Invention patentable under U.S. patent law which is Made jointly by Laboratory employees and Cooperator
employees under the SOW shall be jointly owned by the parties. The parties shall discuss together a filing strategy and filing expenses related to the filing of the patent covering the Subject Invention. If a party decides not to retain its
ownership rights to a jointly owned Subject Invention, it shall offer to assign such rights to the other party, whereupon, if such offer is accepted, the parties shall negotiate a mutually acceptable assignment agreement. 
 6.04 Government Contractor Inventions. If Laboratory contractors are used at any 

  

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time during the term of this Agreement to fulfill Laboratorys’ obligation under this Agreement, the Laboratory will notify the Cooperator in writing
prior to initiating work with a contract agency. At that time, Cooperator and Laboratory will determine by modification of this Agreement the mechanism by which the Laboratory will fullfill its obligation to provide an exclusive license on any
subject invention to the cooperator. 
 6.05 Filing of Patent Applications. The party having the right to retain title to, and file
patent applications on, a specific Subject Invention may elect not to file patent applications, provided it so advises the other party within 90 days from the date it reports the Subject Invention to the other party. Thereafter, the other party may
elect to file patent applications on the Subject Invention and the party initially reporting the Subject Invention agrees to assign its ownership interest in the Subject Invention to the other party subject to the retention by the party assigning
ownership of a nonexclusive, irrevocable, paid-up license to practice, or have practiced, the Subject Invention throughout the world. 
 6.06
Patent Expenses. The expenses attendant to the filing of patent applications shall be borne by the party filing the patent application. Each party shall provide the other party with copies of the patent applications it files on any Subject
Invention along with the power to inspect and make copies of all documents retained in the official patent application files by the applicable patent office. The parties agree to reasonably cooperate with each other in the preparation and filing of
patent applications resulting from this Agreement. 
 Article 7. Exclusive License 
 7.00 Grant. The Laboratory agrees to grant to the Cooperator an exclusive license in each U.S. patent application, and patents issued thereon,
covering a Subject Invention, which is filed by the Laboratory subject to the reservation of a nonexclusive, nontransferable, irrevocable, paid-up license to practice and have practiced the Subject Invention on behalf of the United States.

 7.01 Exclusive License Terms. The Cooperator shall elect or decline to exercise its right to acquire an exclusive license to any
Subject Invention within six months of being informed by the Laboratory of the Subject Invention. The specific royalty rate and other terms of license shall be negotiated promptly in good faith and in conformance with the laws of the United States.

 Article 8. Background Patent(s) 
 8.00 Laboratory Background Patent(s): Laboratory has filed patent application(s), or is the assignee of issued patent(s), listed below which contain(s) claims that are related to research contemplated under this Agreement. No
license(s) to this/these patent applications or issue patents is/are granted under this Agreement, and this/these application(s) and any continuations to it/them are specifically excluded from the definitions of “Subject Invention”
contained in this Agreement: 
 U.S. Patent No. 6,284,772, Issued: September 04, 2001, Indolo[2,1-B] quinazole-6, 12-dione antimalarial
compounds and methods of treating malaria therewith, Inventors: Pitzer, Kevin K.; Scovill, John P.; Kyle, Dennis E.; Gerena, Lucia. 
  

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 U. S. Patent No. 6,531,487, Issued: March 11, 2003, Indolo[2,1-B] quinazole-6, 12-dione antimalarial
compounds and methods of treating malaria therewith, Inventors: Pitzer, Kevin K.; Scovill, John P.; Kyle, Dennis E.; Gerena, Lucia. 
 Patent Application filed November 19, 2004. US Utility serial number 10/992,363; PCT serial number PCT/US04/38909. 2-Guanindinylimidzaolideinedione Compounds making and use thereof. Lin, Ai J., Zhang, Quan, Guan, Jian, and
Milhous, Wilbur. 
 8.01 Cooperator Background Patent(s): Cooperator has filed patent applications, or is the assignee of, or
otherwise owns or has a license or other interest in, the issued patents listed below which contain claims that are related to research contemplated under this Agreement. No licenses to these patent applications or issued patents are granted under
this Agreement, and these patents, patent applications and any continuations to them are specifically excluded from the definitions of “Subject Invention” contained in this Agreement: 
 Cochleate Intellectual Property Portfolio – US Patents and Applications 
 US Issued: 
 US6592894 Hydrogel-isolated cochleate formulations, process of preparation and their use for the
delivery of biologically relevant molecules 2003-07-15 
 US6340591 Integrative protein-DNA cochleate formulations and methods for transforming cells
2002-01-22
 US6165502 Protein-lipid vesicles and autogenous vaccine comprising the same 2000-12-26
 US6153217 Nanocochleate formulations, process of preparation and method of delivery of pharmaceutical agents 2000-11-28
 US5994318 Cochleate delivery vehicles 1999-11-30
 US5840707 Stabilizing and delivery means of biological molecules 1998-11-24
 US5834015 Protein-lipid vesicles and autogenous vaccine
comprising the same 1998-11-10
 US5643574 Protein- or peptide-cochleate vaccines and methods of immunizing using the same 1997-07-01
 US4871488 Reconstituting viral glycoproteins into large phospholipid vesicles 1989-10-03
 US4663161 Liposome methods and compositions 1987-05-05 77% 
  

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 US Published Applications: 
 US20050013855A1 Cochleate compositions directed against expression of proteins 2005-01-20
 US20050013854A1 Novel encochleation methods,
cochleates and methods of use 2005-01-20
 US20050008686A1 Cochleate preparations of fragile nutrients 2005-01-13
 US20040146551A1 Geodate delivery vehicles 2004-07-29
 US20030228355A1 Novel hydrogel-isolated cochleate formulations, process of preparation and their use for the delivery of biologically relevant molecules 2003-12-11
 US20020034822A1 Integrative protein-DNA cochleate formulations and methods for transforming cells 2002-03-21
 Article 9. Subject Data and Proprietary Information 
 9.00 Subject Data Ownership. Subject Data shall be
jointly owned by the parties. Either party shall have the right to review all Subject Data that has not been delivered to the other party, except to the extent that such Subject Data are subject to a claim of confidentiality or privilege by a third
party. 
 9.01 Proprietary Information/Confidential Information. Each party shall place a proprietary notice on all information it
delivers to the other party under this Agreement which it asserts is proprietary. The parties agree that any Proprietary Information or other confidential information furnished by one party to the other party under this Agreement, or in
contemplation of this Agreement, shall be used, reproduced and disclosed by the receiving party only for the purpose of carrying out the research contemplated by this Agreement and for no other purpose, and shall not be released by the receiving
party to third parties unless consent to such release is obtained from the providing party. 
 9.02 Army limited-access database.
Notwithstanding anything to the contrary in this Article, the existence of established CRADAs specifying areas of research and their total dollar amounts may be documented on limited access, password-protected websites of the U.S. Army Medical
Research and Materiel Command (the parent organization of Laboratory), to provide the Command’s leadership with a complete picture of military research efforts. 
 9.03 Laboratory Contractors. Cooperator acknowledges and agrees to allow Laboratory’s disclosure of Cooperator’s proprietary information to Laboratory’s Contractors for the purposes of carrying
out this Agreement. Laboratory agrees that it has or will ensure that its Contractors are under written obligation not to disclose Cooperator’s Proprietary Information or other confidential information, except as required by law or court order,
before Contractor employees have access to Cooperators proprietary information under this Agreement. 
  

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 9.04 Release Restrictions. Laboratory shall have the right to use all Subject Data for any
Governmental purpose, but shall not release Subject Data publicly except: (i) Laboratory in reporting on the results of research may publish Subject Data in technical articles and other documents to the extent it determines to be appropriate;
and (ii) Laboratory may release Subject Data where release is required by law or court order. The parties agree to confer prior to the publication of Subject Data to assure that no Proprietary Information is released and that patent rights are
not jeopardized. Prior to submitting a manuscript for review which contains the results of the research under this Agreement, or prior to publication if no such review is made, each party shall be offered an ample opportunity to review any proposed
manuscript and to file patent applications in a timely manner. 
 9.05 FDA Documents. If this Agreement involves a product regulated
by the U.S. Food and Drug Administration (FDA), then the Cooperator or the U.S. Army Medical Research and Materiel Command, as appropriate, may file any required documentation with the FDA. In addition, the parties authorize and consent to allow
each other or their contractors or agents access to, or to cross-reference, any documents filed with the FDA related to the product. 
 Article 10.
Termination 
 10.00 Termination by Mutual Consent. Cooperator and Laboratory may elect to terminate this Agreement, or
portions thereof, at any time by mutual consent. Such termination shall be effected in writing. 
 10.01 Termination by Unilateral
Action. Either party may unilaterally terminate this entire Agreement at any time by giving the other party written notice, not less than 30 days prior to the desired termination date. 
 10.02 Termination Procedures. In the event of termination, the parties shall specify the disposition of all property, patents and other results of
work accomplished or in progress, arising from or performed under this Agreement by written notice. Upon receipt of a written termination notice, the parties shall not make any new commitments and shall, to the extent feasible, cancel all
outstanding commitments that relate to this Agreement. Notwithstanding any other provision of this Agreement, any exclusive license entered into by the parties relating to this Agreement shall be simultaneously terminated unless the parties agree to
retain such exclusive license. 
 Article 11. Disputes 
 11.00 Settlement. Any dispute arising under this Agreement which is not disposed of by agreement of the principal investigators shall be submitted jointly to the signatories of this Agreement. A joint decision
of the signatories or their designees shall be the disposition of such dispute. However, nothing in this section shall prevent any party from pursuing any and all administrative and/or judicial remedies which may be allowable. 
  

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 Article 12. Liability 
 12.00 Property. Neither party shall be responsible for damages to any property provided to, or acquired by, the other party pursuant to this Agreement. 
 12.01 Cooperator’s Employees. Cooperator agrees to indemnify and hold harmless the U.S. Government for liability of any kind involving an
employee of Cooperator arising in connection with this Agreement, and for all liabilities arising out of the use by Cooperator of Laboratory’s research and technical developments, or out of any use, sale or other disposition by Cooperator of
products made based on Laboratory’s technical developments, except to the extent the liability is due to the negligence of Laboratory or its employees, contractors, agents or representatives under the provisions of the Federal Torts Claims Act.
This provision shall survive termination or expiration of this Agreement. 
 12.02 No Warranty. The parties make no express or implied
warranty pursuant to this Agreement as to any matter whatsoever, including the conditions of the research or any Invention or product, whether tangible or intangible, Made, or developed under this agreement, or the ownership, merchantability, or
fitness for a particular purpose of the research or any Invention or product. 
 Article 13. Miscellaneous 
 13.00 Governing Law. This Agreement shall be governed by the laws of the United States Government. 
 13.01 Export Control and Biological Select Agents and Toxins. The obligations of the parties to transfer technology to one or more other parties,
provide technical information and reports to one or more other parties, and otherwise perform under this Agreement are contingent upon compliance with applicable United States export control laws and regulations. The transfer of certain technical
data and commodities may require a license from a cognizant agency of the United States Government or written assurances by the Parties that the Parties shall not export technical data, computer software, or certain commodities to specified foreign
countries without prior approval of an appropriate agency of the United States Government. The parties do not, alone or collectively, represent that a license shall not be required, nor that, if required, it shall be issued. In addition, where
applicable, the parties agree to fully comply with all laws, regulations, and guidelines governing biological select agents and toxins. 
 13.01 Independent Contractors. The relationship of the parties to this Agreement is that of independent contractors and not as agents of each other or as joint venturers or partners. 
 13.02 Use of Name or Endorsements. (a) The parties shall not use the name of the other party on any product or service which is directly or
indirectly related to either this Agreement or any patent license or assignment agreement which implements this Agreement without the prior approval of the other party. (b) By entering into this Agreement, Laboratory does not directly or
indirectly endorse any product or service provided, or to be provided, by Cooperator, its successors, assignees, or licensees. Cooperator shall not in any way imply that this Agreement is an endorsement of any such product or service. Press releases
or other public releases of 

  

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information shall be coordinated between the parties prior to release, except that: (i) the Laboratory may release the name of the Cooperator and the
title of the research without prior approval from the Cooperator and (ii) Laboratory acknowledges that Cooperator is a publicly-traded company with public disclosure obligations and, therefore, Laboratory shall work expeditiously with
Cooperator in connection with any public announcement of this Agreement. 
 13.03 Survival of Specified Provisions. The rights
specified in provisions of this Agreement covering Patent Rights, Subject Data and Proprietary Information, and Liability shall survive the termination or expiration of this Agreement. 
 13.04 FDA Regulated Products. If this Agreement involves a product regulated by the FDA, then the parties consent and authorize each other and
their designated agents or contractors to have access to, and to cross-reference, any documents filed with the FDA relating to the product. 
 13.05 Notices. All notices pertaining to or required by this Agreement shall be in writing and shall be signed by an authorized representative addressed as follows: 
  

			
	 If to Cooperator:
	 	Raphael J. Mannino
		 	Chief Scientific Officer
		 	Executive Vice President
		 	185 S. Orange Ave.
		 	Newark, New Jersey 07103
		
	 If to Laboratory:
	 	Director
		 	Walter Reed Army Institute of Research
		 	ATTN: Office of Research and Technology Applications
		 	503 Robert Grant Avenue
		 	Silver Spring, MD 20910-7500

 Any party may change such address by notice given to the other in the manner set forth above. 
 Article 14. Duration of Agreement and Effective Date 
 14.01 Effective Date. This Agreement shall enter into force as of the date it is signed by the last authorized representative of the parties. 
  

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 14.02 Expiration Date. This Agreement will automatically expire 3 (Three) years from
effective date unless it is revised by written notice and mutual agreement. 
 IN WITNESS WHEREOF, the Parties have caused this agreement to
be executed by their duly authorized representatives as follows: 
  

									
	 For the Cooperator:
	 		  		 	
		 		 		  	 /s/ Raphael J. Mannino
	 	
		 		 		  	BioDelivery Sciences International, Inc.	 	
		 		 		  	Raphael J. Mannino	 	
		 		 		  	Chief Scientific Officer	 	
		 		 		  	Executive Vice President	 	
	 Date
	 	19 May 2006	 		  		 	
				
	 For the U.S. Government:
	 		  		 	
		 		 		  	 /s/ Kenneth A. Bertram
	 	
		 		 		  	Kenneth A. Bertram	 	
		 		 		  	COL, Medical Corps	 	
		 		 		  	Commander, Walter Reed Army	 	
		 		 		  	Institute of Research	 	
	 Date
	 	7 June 2006	 		  		 	

  

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 Cooperative Research and Development Agreement between the Walter Reed Army Institute of Research (Laboratory) and
BioDelivery Sciences International, Inc. (Cooperator), Inc. 
 APPENDIX A 
 Statement of Work 
 Title: “Evaluation of the cochleate technology to deliver non orally
bioavailable drugs via the oral route in the treatment of diseases like malaria and leishmaniasis” 
 Background: The mission
of the Division of Experimental Therapeutics is to discover and develop new pharmaceutical agents to protect military members from death, disease and injury. This also involves finding better approaches to deliver drugs to the site of action which
is the goal of this collaboration. 
 BioDelivery Sciences International, Inc. (“BioDelivery”) is a specialty pharmaceutical
company that is exploiting its licensed and proprietary patented drug delivery technologies to develop clinically-significant new formulations of proven therapeutics. One such proprietary technology is called Bioral® drug delivery technology. Using this technology, selected drugs are
encapsulated in a nanocrystalline structure termed a “cochleate” cylinder. All of the components of the cochleate cylinder are naturally occurring substances. It is believed that the cochleate cylinder provides an effective
delivery mechanism without forming a chemical bond, or otherwise chemically altering the selected drug.
 The goal of the collaboration
between Laboratory and BioDelivery is to package drugs that are otherwise not orally bioavailable in a form where they can be orally administered. The WRAIR Division of Experimental Therapeutics has several promising anti-malarial compounds that are
not orally bioavailable. These will be sent to BioDelivery to see if their proprietary technology makes them more bioavailable. In addition, one of the lead products from BioDelivery is an orally administered amphotericin B (ampho B) cochleate.
Ampho B is a known efficacious drug for the treatment of cutaneous leishmaniasis. The proprietary Ampho B cochleate will be received from BioDelivery and evaluated in both in vitro and in vivo models against leishmanial parasites. 
 If needed, cochleate formulations of the anti-malarial compounds and Amphotericin B (for treatment of Leishmania) may be prepared by BioDelivery for an
IV route of administration, as well as for cutaneous and intransasal administration. These products would further progress toward current MIDRP program goals related to the development of new pharmaceutical agents for the treatment of infectious
diseases such as malaria and leishmaniasis. 
 Laboratory Agrees to: 
 1. Laboratory will provide sufficient quantities of selected anti-malarial drugs to BioDelivery for formulation into BioDelivery’s proprietary
cochleate/nanocochleate drug delivery system. The antimalarials that will be sent to the company include compounds classified as typtanthrins and imidazolidinediones. 
  

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 2. Evaluate BioDelivery’s proprietary product called Bioral® Amphotericin B a BALB/C model of L. major. The Leishmaniasis work will be done in a
limited number of mouse tests. 
 3. Evaluate in an animal malaria model the antimalarial drugs that BioDelivery formulated into their proprietary delivery
technology. 
 4. Provide to BioDelivery the results of testing of the newly formulated antimalarials and Amphotericin B. 
 Cooperator Agrees to: 
 1. Incorporate anti-malarial
drugs into the BioDelivery’s Cochleate/Nanocochleate Drug Delivery system and return formulated drugs to Laboratory for evaluation in animal models. 
 2. Provide to Laboratory sufficient quantities of Bioral® Amphotericin B for evaluation against Leishmaniais in animal studies as described above in number 2. 
 From time to time,
WRAIR personnel may work at BioDelivery International Inc. laboratories and BioDelivery International Inc. personnel may work at WRAIR laboratories as necessary to accomplish the goals of this research collaboration. 
  

 13Fifth Amendment to May 31, 2005 Laurus Master Fund, Ltd.

 EXHIBIT 10.125 
 FIFTH AMENDMENT 
 (May Note) 
 This Fifth Amendment (this “Amendment”), effective as of April 10, 2007, is entered into by and between BIODELIVERY SCIENCES INTERNATIONAL, INC., a Delaware corporation (the
“Company”), and LAURUS MASTER FUND, LTD., a Cayman Islands company (“Laurus”), for the purpose of amending the terms of the Secured Convertible Term Note, dated May 31, 2005 (as amended, modified or
supplemented from time to time, the “Term Note”), which Term Note was issued by the Company to Laurus pursuant to that certain Securities Purchase Agreement dated as of May 31, 2005 (as amended, modified or supplemented, the
“Purchase Agreement”) and the Related Agreements (as such term is defined in the Purchase Agreement). Capitalized terms used herein without definition shall have the meanings ascribed to such terms in the Term Note. 
 WHEREAS, the Company and Laurus have heretofore agreed to postpone the required payments by the Company of the Monthly Principal Amounts due on the first
business day of each calendar month beginning in September 2005 through January 2008 (such Monthly Principal Amounts, the “Previous Postponed Amounts”) as set forth in that certain Amendment to the Term Note, dated June 29,
2005, that certain Second Amendment to the Term Note, dated December 28, 2005, that certain Third Amendment to the Term Note, dated July 31, 2006 and that certain Fourth Amendment to the Term Note, dated December 28, 2006
(collectively, the “Amendments”); 
 WHEREAS, Laurus has agreed, on the terms and conditions set forth herein, to:
(i) further postpone the obligation of the Company to make certain scheduled amortization payments of the Previous Postponed Amounts and certain additional scheduled amortization payments in accordance with the terms of the Term Note as set
forth herein and (ii) exercise warrants currently held by Laurus to purchase 833,871 shares of Common Stock, thus providing gross proceeds to the Company of $3,235,419, which exercise shall be effected in accordance with the terms set forth in
this Amendment (the “Laurus Warrant Exercise”), and, in consideration of the foregoing and in consideration of the other agreements set forth herein, the receipt and sufficiency of which is hereby acknowledged, the Company has
agreed to issue an additional common stock purchase warrant to Laurus to purchase up to 833,871 shares of the Common Stock of the Company at an exercise price of $5.00 per share (the “New Warrant”). 
 NOW, THEREFORE, in accordance with Section 5.5 of the Term Note and in consideration of the above, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties hereto amend the Term Note and, as applicable, all the Related Agreements, and agree as follows: 
 1. Laurus hereby agrees that the Company shall not be required to pay the Previous Postponed Amounts as of the first business day of January 2008 as required by the Amendments, and instead the aggregate of all such
Previous Postponed Amounts (which, as a result of previous conversion of Term Note principal, currently equals $1,262,093) shall be due and payable, in either cash or stock as provided for in the Term Note, on the first business day of July 2008,
together with all other amounts due and payable on such date under the Purchase Agreement and the Related Agreements. 
  

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 2. Laurus hereby agrees that the Company shall not be required to pay the Monthly Principal Amounts due
on the first business day of April 2007 through June 2008 (collectively, the “Additional Postponed Amounts”) on such dates, and instead the aggregate of all such Additional Postponed Amounts (which, as a result of previous
conversion of Term Note principal, currently equals $1,262,093) shall be due and payable, in either cash or stock as provided for in the Term Note, on the first business day of July 2008, together with all other amounts due and payable on such date
under the Purchase Agreement and the Related Agreements. 
 3. In consideration of the agreements set forth in Sections 1 and 2 above, and
the other agreements contained herein, the receipt of which is hereby acknowledged: (i) Laurus hereby agrees to effect the Laurus Warrant Exercise as of the date hereof or as soon as practicable thereafter and transmit cash by wire transfer of
immediately available funds in the aggregate amount of $3,235,419 to the Company and (ii) the Company hereby agrees to issue to Laurus the New Warrant. 
 4. The Company and Laurus further agree that, simultaneously with the execution of this Amendment, enter into a Second Amended and Restated Registration Rights Agreement, dated as of the date hereof (the
“Amended Registration Rights Agreement”), which amends and restates that certain Amended and Restated Registration Rights Agreement, dated December 28, 2006, between the Company and Laurus. The Amended Registration Rights
Agreement shall govern the registration with the SEC of the shares of Common Stock underlying the New Warrant and certain other securities of the Company held by Laurus and described therein. 
 5. By its execution of this Amendment, Laurus acknowledges and agrees that all principal and interest due and owing by the Company to Laurus under that
certain Secured Convertible Term Note, dated February 22, 2005 (as amended, modified or supplemented from time to time, the “February 2005 Term Note”) has heretofore been converted by Laurus into shares of Common Stock pursuant
to the terms of the February 2005 Term Note and, therefore, the February 2005 Term Note is paid in full and satisfied. 
 6. The Company
understands that the Company has an affirmative obligation to make public disclosure of material agreements and material amendments to such agreements in accordance with legal and regulatory requirements. The Company hereby acknowledges that Laurus
shall not be deemed to have misappropriated any information of the Company by reason of entering into this Amendment. The Company hereby agrees to file a Form 8-K (“8-K”) relating to this Amendment (or include a description of this
Amendment in its Annual Report on Form 10-KSB for the year ended December 31, 2006 (the “10-K”)) within four (4) business days after the execution hereof. Prior to filing the 8-K or the 10-K, the Company shall give Laurus
a reasonable opportunity to review and comment on language regarding Laurus contained in such amendment. 
 7. This Amendment shall be
effective as of the date hereof following: (i) the execution and delivery of this Amendment and the Amended Registration Rights Agreement by each of the Company and Laurus and (ii) the execution and delivery of the New Warrant by the
Company to Laurus. 
  

 2 

 8. Except as specifically set forth in this Amendment, there are no other amendments to the Purchase
Agreement, the Term Note or any other Related Agreements entered into therewith, and all of the other forms, terms and provisions of the Purchase Agreement, the Term Note and such other Related Agreements shall remain unmodified and in full force
and effect. 
 9. The Company hereby represents and warrants to Laurus that as of the date hereof, after giving effect to this Amendment (the
terms of which shall not constitute an Event of Default), (i) no Event of Default exists and is continuing and (ii) all representations, warranties and covenants made by Company in connection with the Purchase Agreement and the Related
Agreements are true, correct and complete and all of Company’s and its Subsidiaries’ covenant requirements have been met. Laurus hereby agrees that on the date hereof, after giving effect to this Amendment, the Company is not in default of
its obligation to submit payment for the Previous Postponed Amounts under the previous Amendments to the Term Note. Laurus further agrees that at this time it will not exercise any remedies it has under the Term Note, Purchase Agreement, Related
Agreements or otherwise that may have arisen or resulted from the Company’s non-payment of the Previous Postponed Amounts. 
 10. From
and after the date hereof, all references in the Purchase Agreement and the Related Agreements to the Term Note, the Purchase Agreement and the Related Agreements shall be deemed to be references to the Term Note, the Purchase Agreement and the
Related Agreements respectively, as the case may be, as modified hereby. 
 11. This Amendment shall be binding upon the parties hereto and
their respective successors and permitted assigns and shall inure to the benefit of and be enforceable by each of the parties hereto and its successors and permitted assigns. THIS AMENDMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND
GOVERNED BY THE LAW OF THE STATE OF NEW YORK. This Amendment may be executed in any number of counterparts, each of which shall be an original, but all of which shall constitute one instrument. 
 [Signature Page Follows] 
  

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 IN WITNESS WHEREOF, each of the Company and Laurus has caused this Fifth Amendment to be effective
and signed in its name effective as of the date set forth above. 
  

					
	BIODELIVERY SCIENCES INTERNATIONAL, INC.
			
	By:	 	 /s/ James A. McNulty
	 	
	Name:	 	James A. McNulty	 	
	Title:	 	Secretary, Treasurer and CFO	 	
		
	LAURUS MASTER FUND, LTD.	 	
			
	By:	 	 /s/ Eugene Grin
	 	
	Name:	 	Eugene Grin	 	
	Title:	 	Fund Manager and Director	 	

 [Signature Page to Fifth Amendment to May Note, dated April 10, 2007] 
  

 4

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