Document:

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                                                                   EXHIBIT 10.16

                         REGISTRATION RIGHTS AGREEMENT

          THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of
December 16, 1998 is entered into by and between Inspire Pharmaceuticals, Inc.,
a Delaware corporation (the "Company"), and Santen Pharmaceutical Co., Ltd., a
Japan corporation ("Santen").

          WHEREAS, the Company and Santen have entered into a Series D Preferred
Stock Purchase Agreement of even date herewith (the "Purchase Agreement"); and

          WHEREAS, the Company and Santen desire to provide for certain
arrangements with respect to the registration of shares of capital stock of the
Company under the Securities Act of 1933;

          NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement, the parties hereto agree as follows:

          1.  Certain Definitions.  As used in this Agreement, the following
              -------------------
terms shall have the following respective meanings:

               "Commission" means the Securities and Exchange Commission, or any
                ----------
other Federal agency at the time administering the Securities Act.

               "Common Stock" means the common stock, $.001 par value per share,
                ------------
of the Company.

               "Exchange Act" means the Securities Exchange Act of 1934, as
                ------------
amended, or any similar Federal statute, and the rules and regulations of the
Commission issued under such Act, as they each may, from time to time, be in
effect.

               "Prior Registration Rights Agreements" means (i) the Investors'
                ------------------------------------
Rights Agreement, dated as of April 8, 1997, by and among the Company and the
Investors named therein, as amended by Amendment No.1 to Series B Convertible
Preferred Stock Purchase Agreement and Second Amended and Restated Stockholders'
Agreement effective as of June 30, 1997, and as further amended by Amendment No.
2 to Series B Convertible Preferred Stock Purchase Agreement and Second Amended
and Restated Stockholders' Agreement effective as of September 9, 1997, as may
be further amended from time to time, and (ii) the Registration Rights
Agreement, dated September 10, 1998, by and between the Company and Kissei
Pharmaceuticals Co., Ltd., as may be amended from time to time.

               "Registrable Shares" means (i) the shares of Common Stock issued
                ------------------
or issuable upon conversion of the Shares, and (ii) any Common Stock issued as
(or issuable upon the conversion or exercise of any warrant, right or other
security that is issued as) a dividend or other distribution with respect to, or
in exchange for or in replacement of, the shares of Common Stock referred to in
clause (i); provided, however, that shares of Common Stock which are Registrable
            --------  -------
Shares shall cease to be Registrable Shares (x) upon any sale pursuant to a
Registration Statement or Rule 144 under the Securities Act, or (y) upon any
sale in any manner to a person or entity which, by virtue of Section
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12 of this Agreement, is not entitled to the rights provided by this Agreement.
Wherever reference is made in this Agreement to a request or consent of holders
of a certain percentage of Registrable Shares, the determination of such
percentage shall include shares of Common Stock issuable upon conversion of the
Shares even if such conversion has not yet been effected.

               "Registration Expenses" means the expenses described in
                ---------------------
Section 4.

               "Registration Statement" means a registration statement filed by
                ----------------------
the Company with the Commission for a public offering and sale of Common Stock
(other than a registration statement on Form S-8 or Form S-4, or their
successors, or any other form for a similar limited purpose, or any registration
statement covering only securities proposed to be issued in exchange for
securities or assets of another corporation).

               "Securities Act" means the Securities Act of 1933, as amended, or
                --------------
any similar Federal statute, and the rules and regulations of the Commission
issued under such Act, as they each may, from time to time, be in effect.

               "Selling Stockholders" means all stockholders who desire to sell
                --------------------
shares of stock pursuant to registration rights granted under (i) this Agreement
and (ii) the Prior Registration Rights Agreements.

               "Shares" means (i) the "Shares," as such term is defined in
                ------
Section 1.1(b) of the Purchase Agreement, and (ii) any other shares of Common
Stock, whether issued or merely issuable, with respect to which rights have been
granted under this Agreement that are held by any Stockholder.

               "Stockholder" means each Santen and any other person granted
                -----------
rights under this Agreement by the Company, and any persons or entities to whom
the rights granted under this Agreement are transferred by a Stockholder, its
successors or assigns pursuant to Section 12 hereof.

          2.   Incidental Registration.
               -----------------------

               a.   Whenever the Company proposes to file a Registration
Statement at any time and from time to time, it will, prior to such filing, give
written notice to all Stockholders of its intention to do so and, upon the
written request of a Stockholder or Stockholders given within 20 days after the
Company provides such notice (which request shall state the intended method of
disposition of such Registrable Shares), the Company shall use its best efforts
to cause all Registrable Shares which the Company has been requested by such
Stockholder or Stockholders to register to be registered under the Securities
Act to the extent necessary to permit their sale or other disposition in
accordance with the intended methods of distribution specified in the request of
such Stockholder or Stockholders; provided, however, that the Company shall have
                                  --------  -------
the right to postpone or withdraw any registration effected pursuant to this
Section 2 without obligation to any Stockholder.

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          b.   In connection with any registration under this Section 2
involving an underwriting, the Company shall not be required to include any
Registrable Shares in such registration unless the holders thereof accept the
terms of the underwriting as agreed upon between the Company and the
underwriters selected by it (provided that such terms must be consistent with
this Agreement).  If in the opinion of the managing underwriter it is
appropriate because of marketing factors to limit the number of Registrable
Shares and other shares of Common Stock of the Company (including shares of
Common Stock issued or issuable upon conversion of shares of any currently
unissued series of preferred stock of the Company) (the "Other Shares") with
registration rights granted pursuant to the Prior Registration Rights Agreement
to be included in the offering, then the Company shall be required to include in
the registration only that number of Registrable Shares and Other Shares, if
any, which the managing underwriter believes should be included therein;
provided, however, that no persons or entities other than the Company, the
--------  -------
Stockholders and persons or entities holding registration rights shall be
permitted to include securities in the offering.  If the number of Registrable
Shares and Other Shares to be included in the offering in accordance with the
foregoing is less than the total number of shares which the holders of
Registrable Shares and Other Shares have requested to be included, then the
number of Registrable Shares and Other Shares to be included in the registration
statement by holders of Registrable Securities and holders of Other Shares shall
be reduced by excluding first up to all of the Registrable Shares; any further
reduction shall be among the holders of Other Shares pursuant to the provisions
of the respective Prior Registration Rights Agreements.  If any holder would
thus be entitled to include more securities than such holder requested to be
registered, the excess shall be allocated among other requesting holders pro
rata based upon their total ownership of shares of Common Stock (giving effect
to the conversion into Common Stock of all securities convertible thereinto).

     3.   Registration Procedures.  If and whenever the Company is required by
          -----------------------
the provisions of this Agreement to use its best efforts to effect the
registration of any of the Registrable Shares under the Securities Act, the
Company shall:

          a.   file with the Commission a Registration Statement with respect to
such Registrable Shares and use its best efforts to cause that Registration
Statement to become and remain effective;

          b.   as expeditiously as possible prepare and file with the Commission
any amendments and supplements to the Registration Statement and the prospectus
included in the Registration Statement as may be necessary to keep the
Registration Statement effective, in the case of a firm commitment underwritten
public offering, until each underwriter has completed the distribution of all
securities purchased by it and, in the case of any other offering, until the
earlier of the sale of all Registrable Shares covered thereby or 120 days after
the effective date thereof;

          c.   as expeditiously as possible furnish to each selling Stockholder
such reasonable numbers of copies of the prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and such
other documents as the selling Stockholder may

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reasonably request in order to facilitate the public sale or other disposition
of the Registrable Shares owned by the selling Stockholder; and

          d.   as expeditiously as possible use its best efforts to register or
qualify the Registrable Shares covered by the Registration Statement under the
securities or Blue Sky laws of such states as the selling Stockholders shall
reasonably request, and do any and all other acts and things that may be
necessary or desirable to enable the selling Stockholders to consummate the
public sale or other disposition in such states of the Registrable Shares owned
by the selling Stockholder; provided, however, that the Company shall not be
                            --------  -------
required in connection with this paragraph (d) to qualify as a foreign
corporation or execute a general consent to service of process in any
jurisdiction.

     If the Company has delivered preliminary or final prospectuses to the
selling Stockholders and after having done so the prospectus is amended to
comply with the requirements of the Securities Act, the Company shall promptly
notify the selling Stockholders and, if requested, the selling Stockholders
shall immediately cease making offers of Registrable Shares and return all
prospectuses to the Company.  The Company shall promptly provide the selling
Stockholders with revised prospectuses and, following receipt of the revised
prospectuses, the selling Stockholders shall be free to resume making offers of
the Registrable Shares.

     4.   Allocation of Expenses.  The Company will pay all Registration
          ----------------------
Expenses of all registrations under this Agreement.  For purposes of this
Section 4, the term "Registration Expenses" shall mean all expenses incurred by
the Company in complying with this Agreement, including, without limitation, all
registration and filing fees, exchange listing fees, printing expenses, fees and
expenses of counsel for the Company and the fees and expenses of one counsel
selected by the Selling Stockholders pursuant to the provisions of the
respective Prior Registration Rights Agreements and this Agreement to represent
all Selling Stockholders (which shall be the counsel selected by the Selling
Stockholders who are parties to the Prior Registration Rights Agreements, unless
no such Selling Stockholders are participating in the subject registration, in
which event the holders of the Registrable Securities shall select such
counsel), state Blue Sky fees and expenses, and the expense of any special
audits incident to or required by any such registration, but excluding
underwriting discounts, selling commissions and the fees and expenses of Selling
Stockholders' own counsel (other than the counsel selected to represent all
Selling Stockholders).

     5.   Indemnification and Contribution.
          --------------------------------

          a.   In the event of any registration of any of the Registrable Shares
under the Securities Act pursuant to this Agreement, the Company will indemnify
and hold harmless the seller of such Registrable Shares, each underwriter of
such Registrable Shares, and each other person, if any, who controls such seller
or underwriter within the meaning of the Securities Act or the Exchange Act
against any losses, claims, damages or liabilities, joint or several, to which
such seller, underwriter or controlling person may become subject under the
Securities Act, the Exchange Act, state securities or Blue Sky laws or
otherwise, insofar as such losses, claims, damages or liabilities

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(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in any
Registration Statement under which such Registrable Shares were registered under
the Securities Act, any preliminary prospectus or final prospectus contained in
the Registration Statement, or any amendment or supplement to such Registration
Statement, or arise out of or are based upon the omission or alleged omission to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; and the Company will reimburse such seller,
underwriter and each such controlling person for any legal or any other expenses
reasonably incurred by such seller, underwriter or controlling person in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not be liable in
                     --------  -------
any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon any untrue statement or omission made in such
Registration Statement, preliminary prospectus or final prospectus, or any such
amendment or supplement, in reliance upon and in conformity with information
furnished to the Company, in writing, by or on behalf of such seller,
underwriter or controlling person specifically for use in the preparation
thereof.

          b.   In the event of any registration of any of the Registrable Shares
under the Securities Act pursuant to this Agreement, each seller of Registrable
Shares, severally and not jointly, will indemnify and hold harmless the Company,
each of its directors and officers and each underwriter (if any) and each
person, if any, who controls the Company or any such underwriter within the
meaning of the Securities Act or the Exchange Act, against any losses, claims,
damages or liabilities, joint or several, to which the Company, such directors
and officers, underwriter or controlling person may become subject under the
Securities Act, Exchange Act, state securities or Blue Sky laws or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement under which
such Registrable Shares were registered under the Securities Act, any
preliminary prospectus or final prospectus contained in the Registration
Statement, or any amendment or supplement to the Registration Statement, or
arise out of or are based upon any omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, if the statement or omission was made in reliance upon
and in conformity with information relating to such seller furnished in writing
to the Company by or on behalf of such seller specifically for use in connection
with the preparation of such Registration Statement, prospectus, amendment or
supplement; provided, however, that the obligations of such Stockholders
            --------  -------
hereunder shall be limited to an amount equal to the proceeds to each
Stockholder of Registrable Shares sold in connection with such registration.

          c.   Each party entitled to indemnification under this Section 5 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided, however, that counsel for the
                                --------  -------
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not be
unreasonably withheld); and, provided, further, that the failure of any
                             --------  -------

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Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 5. The Indemnified
Party may participate in such defense at such party's expense; and provided,
                                                                   --------
still further, that the Indemnifying Party shall pay such expense if
-------------
representation of such Indemnified Party by the counsel retained by the
Indemnifying Party would be inappropriate due to actual or potential differing
interests between the Indemnified Party and any other party represented by such
counsel in such proceeding.  No Indemnifying Party, in the defense of any such
claim or litigation shall, except with the consent of each Indemnified Party,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release from all liability in respect of such
claim or litigation, and no Indemnified Party shall consent to entry of any
judgment or settle such claim or litigation without the prior written consent of
the Indemnifying Party.

          d.   In order to provide for just and equitable contribution to joint
liability under the Securities Act in any case in which either (i) any holder of
Registrable Shares exercising rights under this Agreement, or any controlling
person of any such holder, makes a claim for indemnification pursuant to this
Section 5 but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 5 provides for
indemnification in such case, or (ii) contribution under the Securities Act may
be required on the part of any such selling Stockholder or any such controlling
person in circumstances for which indemnification is provided under this Section
5; then, in each such case, the Company and such Stockholder will contribute to
the aggregate losses, claims, damages or liabilities to which they may be
subject (after contribution from others) in such proportions so that such holder
is responsible for the portion represented by the percentage that the public
offering price of its Registrable Shares offered by the Registration Statement
bears to the public offering price of all securities offered by such
Registration Statement, and the Company is responsible for the remaining
portion; provided, however, that, in any such case, (A) no such holder will be
         --------  -------
required to contribute any amount in excess of the proceeds to it of all
Registrable Shares sold by it pursuant to such Registration Statement, and (B)
no person or entity guilty of fraudulent misrepresentation, within the meaning
of Section 11(f) of the Securities Act, shall be entitled to contribution from
any person or entity who is not guilty of such fraudulent misrepresentation.

     6.   Information by Holder.  Each Stockholder including Registrable Shares
          ---------------------
in any registration shall furnish to the Company such information regarding such
Stockholder and the distribution proposed by such Stockholder as the Company may
reasonably request in writing and as shall be required in connection with any
registration, qualification or compliance referred to in this Agreement.

     7.   "Stand-Off" Agreement.  Each Stockholder, if requested by the Company
           --------------------
and the managing underwriter of an offering by the Company of Common Stock or
other securities of the Company pursuant to a Registration Statement, shall
agree not to sell publicly or otherwise transfer

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or dispose of any Registrable Shares or other securities of the Company held by
such Stockholder for a specified period of time (not to exceed 180 days)
following the effective date of such Registration Statement; provided, however,
                                                             --------  -------
that:

          a.   such agreement shall only apply to the first Registration
Statement covering Common Stock to be sold on its behalf to the public in an
underwritten offering; and

          b.   all Stockholders holding not less than the number of shares of
Common Stock held by such Stockholder (including shares of Common Stock issuable
upon the conversion of Shares, or other convertible securities, or upon the
exercise of options, warrants or rights) and all officers and directors of the
Company enter into similar agreements.

     8.   Rule 144 Requirements.  After the earliest of (i) the closing of the
          ---------------------
sale of securities of the Company pursuant to a Registration Statement, (ii) the
registration by the Company of a class of securities under Section 12 of the
Exchange Act, or (iii) the issuance by the Company of an offering circular
pursuant to Regulation A under the Securities Act, the Company agrees to:

          a.   comply with the requirements of Rule 144(c) under the Securities
Act with respect to current public information about the Company;

          b.   use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act (at any time after it has become subject to
such reporting requirements); and

          c.   furnish to any holder of Registrable Shares upon request (i) a
written statement by the Company as to its compliance with the requirements of
said Rule 144(c), and the reporting requirements of the Securities Act and the
Exchange Act (at any time after it has become subject to such reporting
requirements), (ii) a copy of the most recent annual or quarterly report of the
Company, and (iii) such other reports and documents of the Company as such
holder may reasonably request to avail itself of any similar rule or regulation
of the Commission allowing it to sell any such securities without registration.

          9.   Mergers, Etc.  The Company shall not, directly or indirectly,
               ------------
enter into any merger, consolidation or reorganization in which the Company
shall not be the surviving corporation unless the proposed surviving corporation
shall, prior to such merger, consolidation or reorganization, agree in writing
to assume the obligations of the Company under this Agreement, and for that
purpose references hereunder to "Registrable Shares" shall be deemed to be
references to the securities which the Stockholders would be entitled to receive
in exchange for Registrable Shares under any such merger, consolidation or
reorganization; provided, however, that the provisions of this Section 9 shall
                --------  -------
not apply in the event of any merger, consolidation or reorganization in which
the Company is not the surviving corporation if all Stockholders are entitled to
receive in exchange for their Registrable Shares consideration consisting solely
of (i) cash, (ii) securities of the acquiring corporation which may be
immediately sold to the public without registration under the Securities

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Act, or (iii) securities of the acquiring corporation which the acquiring
corporation has agreed to register within 90 days of completion of the
transaction for resale to the public pursuant to the Securities Act.

     10.  Additional Registration Rights.  The Company, at its discretion, may
          ------------------------------
grant registration rights, pari passu with the rights granted in Section 2, to
                           ----------
persons who become holders of Common Stock or other securities convertible into
Common Stock subsequent to the date of this Agreement by causing such holders to
execute a copy of this Agreement, and shall not be obligated to seek or obtain
the consent of the Stockholders in order to do so.

     11.  Termination.  All of the Company's obligations to register Registrable
          -----------
Shares under this Agreement shall terminate five (5) years after the closing of
a firm commitment underwritten public offering pursuant to an effective
registration statement under the Securities Act of 1933, as amended, covering
the offer and sale of Common Stock for the account of the Corporation to the
public.

     12.  Transfers of Rights.  This Agreement, and the rights and obligations
          -------------------
of any Stockholder hereunder, may be assigned by such Stockholder to any person
or entity to which Shares are transferred by such Stockholder, and such
transferee shall be deemed a "Stockholder" for purposes of this Agreement;
provided, however, that the transferee provides written notice of such
--------  -------
assignment to the Company.

     13.  General.
          -------

          a.   All notices, requests, consents, and other communications under
this Agreement shall be in writing and shall be delivered by hand or mailed by
first class certified or registered mail, return receipt requested, postage
prepaid:

               If to the Company, at Inspire Pharmaceuticals, Inc., 4222 Emperor
Boulevard, Suite 470, Durham, North Carolina 27703, USA, Attention: Christy
Shaffer, Ph.D., or at such other address or addresses as may have been furnished
in writing by the Company to the Stockholders;

               If to Santen, at 3-9-19 Shimoshinjo, Higashiyodogawa-ku, Osaka,
533-8651, JAPAN, Attention: Ichiro Otokozawa, General Manager, Business
Development Department, or at such other address or addresses as may have been
furnished in writing by Santen to the Company; or

               If to any other Stockholder, to the most recent address appearing
on the records of the Company for such Stockholder.

Notices provided in accordance with this Section 13(a) shall be deemed delivered
upon personal delivery or two business days after deposit in the mail.

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<PAGE>

          b.   This Agreement embodies the entire agreement and understanding
between the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings relating to such subject
matter, which shall be of no further force or effect.

          c.   Any term of this Agreement may be amended and the observance of
any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), with the written consent of
the Company and the holders of at least 50% of the Registrable Shares; provided,
                                                                       --------
however, that this Agreement may be amended with the consent of the holders of
-------
less than all Registrable Shares only in a manner which affects all Registrable
Shares in the same fashion. No waivers of or exceptions to any term, condition
or provision of this Agreement, in any one or more instances, shall be deemed to
be, or construed as, a further or continuing waiver of any such term, condition
or provision.

          d.   This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original, but all of which shall be one and
the same document.

          e.   The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.

          f.   This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware.

                                       9
<PAGE>

          Executed as of the date first written above.

                                       INSPIRE PHARMACEUTICALS, INC.

                                       By: /s/ David J. Drutz
                                          ---------------------------
                                          David J. Drutz, M.D.
                                          Vice Chairman

                                       SANTEN PHARMACEUTICAL CO., LTD.

                                       By: /s/ Takakazu Morita
                                           ---------------------------
                                           Takakazu Morita
                                           Chief Executive Officer and President

                                      10<PAGE>

                                                                   Exhibit 10.17

[NOTE: CERTAIN PORTIONS OF THIS DOCUMENT HAVE BEEN MARKED TO INDICATE THAT
CONFIDENTIALITY HAS BEEN REQUESTED FOR THIS CONFIDENTIAL INFORMATION. THE
CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.]

                                     SIMBEC

                          CLINICAL RESEARCH AGREEMENT

This Clinical Research Agreement is made by and between SIMBEC RESEARCH LIMITED
("Simbec"),
A United Kingdom corporation and INSPIRE PHARMACEUTICALS INC. ("Company").

Whereas, Simbec is engaged in the business of performing clinical research
studies;

Whereas, Company is engaged in the development, manufacture, distribution and/or
sale of pharmaceutical

and medical products and desires to retain Simbec's services in conducting the
study entitled [CONFIDENTIAL TREATMENT REQUESTED], in accordance with the terms
and conditions herein;

Now, therefore, in consideration of the mutual covenants herein contained, the
parties agree as follows:

ARTICLE 1 - DEFINITIONS

1.1  "Protocol" - A plan which governs how the study will proceed for a
particular project.  A protocol

includes, but is no limited to, a description of how many subjects will be
evaluated and how and what information will be obtained from subjects.  A
protocol is identified by the specific protocol or project number.

1.2  "Facilities" -Clinical facility designated in a protocol where subjects
involved in the study receive treatment and where data are collected.

1.3  "Case Report Form (CRF)" - A collection of documents designed specifically
for recording data as required under a protocol.  A CRF is created and completed
for each subject involved in the study.

ARTICLE II - ENGAGEMENT OF SIMBEC TO MANAGE THE STUDY;  TRANSFER OF
OBLIGATIONS

2.1  Study Protocol
Simbec will review the clinical protocol.

2.2  CRF Development

Simbec will provide Company with paper Case Report Forms (CRFs) for this study.
The CRFs will be printed on NCR paper and the Company will review all drafts and
approve the final version of the CRFs before printing.  Similarly, Informed
Consent Forms will be prepared by Simbec and are subject to the Company's
approval.

2.3  Program Database

Simbec agrees to determine necessary requirements, prepare database
specifications, program the database, validate the database prior to data entry,
verify database output after data entry is complete and store the database by
archiving it according to Simbec's business practices.  Simbec agrees to provide
Company with a complete copy of the final electronic database in PC SAS (R)
and/or Excel (R) format promptly at the conclusion of the study.  Simbec will
perform coding of adverse events using COSTART dictionary.
<PAGE>

2.4  Perform Double Data Entry

Simbec agrees to enter manually all information contained in each CRF twice, by
two (2) different individuals, into the study database to compare the two (2)
data sets to ensure that the data entered are identical and to identify and
correct any data entry discrepancies.  If the central laboratory does not
provide validated electronic data, Simbec agrees to enter manually data received
on hard copy for the central laboratory twice, by two (2)different individuals,
into a database for the laboratory data, to compare the two (2) data sets to
ensure that the data entered are identical; and to identify and correct any data
entry discrepancies.  If any data entry discrepancies require resolution by the
clinical facility, Simbec will prepare and submit data queries to the clinical
facility.  Simbec agrees to complete data entry and issue all necessary data
queries to the clinical facility within four (4) weeks of receipt of the final
case report form.  Simbec will ensure that database edits are completed and the
database is closed and declared clean within one (1) week after receipt of the
final completed data query from the clinical facility.

2.5  Biostatistical Analysis and Reporting
Simbec will produce a study safety summary within one week of completion of each
study cohort.  The safety summary will include:

     -  Listings of all adverse events recorded for each cohort.
     -  Listings of all ocular assessments recorded for each cohort.
     -  A tolerance assessment by the investigating physician.

Simbec will conduct the final analysis of study data according to the
statistical analysis plan based on the protocol developed using SAS and Excel
programs and formulae used in all statistical analysis.  Preliminary tables for
Company's review of format and data listings will be provided before the
database has been closed.

2.6  Data Management

Simbec will provide Company with Data Handling Manual or equivalent which will
include computer programming for appropriate data edit checks.  Simbec will also
provide Company with CRFs annotated with SAS variable names used in data
management and statistical analysis.

2.7  Communication with the Company

Simbec agrees to conduct liberal, routine communications with Company by
telephone, facsimile, e-mail, or correspondence and will promptly inform Company
of any unusual occurrences in the conduct of the study.  In person visits to
Company's facilities are not included in the price estimate for the study and,
if required, will be billed separately at Simbec's hourly rate, plus travel
expenses.

2.8  Laboratory Analysis
Laboratory analysis, subject assessments and reports thereof will be provided as
detailed in the Protocol.

1)  Simbec agrees to provide data associated with subject screening; and
2)  Simbec agrees to provide the physical examinations of the subjects and
reports thereof as described in the Protocol

2.9  Provide Quality Control
Simbec agrees to perform quality control during the study by conducting quality
reviews according to Simbec's SOPS.

2.10     Additional Reporting, Reports or Audits
If Company requests any additional reporting, reports or audits by Simbec,
Company agrees to pay Simbec its hourly rate for these additional reports,
reporting or audits.

2.11     Regulatory Compliance
The Study will performed by Simbec to Good Laboratory Practice (GLP) and Good
Clinical Practice (GCP) regulations and guidelines as appropriate.
It is understood that Simbec is responsible for obtaining ethics committee
approval, this approval is a pre-requisite to proceeding with the Study.
<PAGE>

2.12 Conduct of Study
Simbec agrees to conduct the study in strict accordance with the study protocol
and in compliance with the applicable International Committee of Harmonization
guidelines, United Kingdom Medicines Control Agency guidelines, Good Clinical
Practice and the United States Food and Drug Administration's Code of Federal
Regulations section 21, parts 50 and 56.  Simbec agrees to maintain complete
records of the disposition of study drug, including dates and quantities used by
the subjects.  Simbec agrees to prepare and maintain complete and accurate case
histories to record all observations and other data pertinent to the study on
each study subject.

2.13 Study Monitoring
During the study period, Simbec will monitor the progress of the Study to
determine whether the study is being conducted in accordance with the provisions
specified herein under Section 2.12 (Conduct of Study).  Simbec will conduct a
100%audit of case report form data and communicate changes necessary to correct
and reduce discrepancies and errors.  Upon completion of each monitoring visit,
Simbec will provide to Company a written report of the observations of the visit
and the progress of the study.

ARTICLE III - COMPANY'S OBLIGATIONS

3.1 Regulatory Compliance
Company will obtain regulatory approval for the study under the laws of the
United Kingdom.

3.2 CRF Development
Company agrees to consult with and provide any needed information to assist
Simbec with the preparation of a template CRF.  Company also agrees to notify
Simbec of its approval of the final CRF template and identify which version of
the, CRF template it has approved.

3.3 CRF Printing
Company agrees to consult with and provide any needed information to assist
Simbec with the preparation of a template CRF.  Company also agrees to notify
Simbec of its approval of the final CRF template and identify which version of
the, CRF template it has approved.

3.4 Communication with Simbec
Company agrees to conduct routine communications with Simbec by telephone,
facsimile, email, or correspondence.

3.5 Notify FDA of Serious and Unexpected Adverse Events
The Company agrees that the reporting of all "serious and unexpected adverse
events" to the FDA, as required by the laws of the United States, will be the
sole responsibility of the Company.  Simbec will notify Company of each serious
or unexpected adverse event within 24 hours of its knowledge of the event using
the Serious Adverse Event Report form provided by the Company.

3.6 Study Monitoring and/or Site Audits
During the study period, Company may monitor the progress of the Study to
determine whether the study is being conducted in accordance with the provisions
specified herein under Section 2.12 (Conduct of Study).  Access to subject
medical records and study documentation will be necessary for monitoring and/or
site auditing purposes.  Simbec's records and medical information gathered
during this study will be reviewed by representatives of Company and may also be
disclosed to the appropriate regulatory authorities, including the United States
Food and Drug Association and the Local Research Ethics Committee.

3.7 Pay Simbec for its Services and Total Costs of the Study
Company agrees to pay Simbec for all of Simbec's work on and services for the
study and to pay all of the total costs for the study as specified in this
agreement and according to the provisions below:
<PAGE>

3.7.a Price Estimate for the Study
Company understands and hereby acknowledges that Exhibit 1 attached to this
agreement is a list of specific activities for the study and a price estimate
for each phase of the study which has been created by Simbec.  Company
acknowledges that Exhibit 1 is an estimate of the total price of the study.
Simbec agrees that the total cost, as set forth in Exhibit 1, shall not exceed
[CONFIDENTIAL TREATMENT REQUESTED] (excluding VAT and additional charges
detailed in Exhibit 1).  Simbec agrees that the invoices submitted to the
Company for the work performed for the study will be fully itemized.  In the
event that the study costs exceed the budget set forth in Exhibit 1, Simbec will
notify Company, in writing, to request approval of additional costs.

3.7.b Payment Schedule
Company agrees to pay for actual work on and services for the study as outlined
in Exhibit I attached hereto in the following manner:

[CONFIDENTIAL TREATMENT REQUESTED]

All payments will be made by Company to Simbec within 30 days of receipt of
invoice.

ARTICLE IV - CONFIDENTIALITY

In consideration for each others' promises and obligations herein, Simbec agrees
that they will not disclose to third parties any non-public information relating
to the study, Company's involvement in the study, any non-public information
about the pharmaceutical products in the study, unless they are required to do
so under the law.  Simbec may disclose need-to-know information to a third party
only if they have signed a confidentiality agreement with Simbec that is
equivalent to the agreement that was signed between Simbec and the Company.
Simbec will not publish any information related to the study without prior
written authorization from Company.  Simbec will notify company in writing of
any such disclosure at least fifteen (15) days in advance of making such
disclosure.

Exceptions to Confidentiality Provisions
Except as otherwise expressly provided in this agreement, the preceding
paragraph shall not apply to any Confidential Information that Simbec can prove
conclusively (a) has been published in writing and has become, prior to the time
of use or disclosure by Simbec, a part of the public domain other than by reason
of any acts or omissions by possession or knowledge, prior to the time of
Simbec's use or disclosure, by any third party (other than those acting for or
on behalf of Inspire) as a matter of legal right and without restriction on use
or disclosure, (b) was in Simbec's possession or actually known by Simbec prior
to commencement of Simbec's engagement with Inspire, as a matter of legal right
and without restriction on use and disclosure and was not acquired by Simbec or
any of Simbec's employees representatives or
<PAGE>

contractors directly or indirectly from Inspire, or (c) was required to be
disclosed by Simbec to comply with applicable laws or regulations or with a
court or administrative order final beyond the possibility of appeal or other
review, provided that Inspire received prior written notice of such disclosure
and that Simbec takes all reasonable and lawful actions to obtain confidential
treatment for such disclosure and, if possible, to minimize the extent of such
disclosure.  For purposes of this Agreement, no information shall be deemed to
be in the public domain or in Simbec's possession or knowledge or in the
possession or knowledge of any of Simbec's employees, representatives or
contractors merely because such information is embraced by more general
information in the public domain or in the possession or knowledge of any of the
foregoing.

ARTICLE V - ASSIGNMENT

This Agreement is for the benefit of and shall bind the parties hereto and their
respective successors and assigns provided, however, that neither this Agreement
nor any benefit hereunder may be assigned or  otherwise transferred by either
party to any third party without the prior written consent of the other party.

ARTICLE VI - NOTICES

Written communications and any notice which is required to be given hereunder
may be sent by facsimile, e-mail, delivered by courier services or mailed by
prepaid registered post, addressed as follows:

TO: Inspire Pharmaceuticals, Inc.
4222 Emperor Boulevard, Suite 470
Durham, North Carolina 27703
United States of America
Attention:  Ben Yerxa Ph. D.
Facsimile: (919) 941-9797

TO:  Simbec Research Limited
Merthyr Tydfil Industrial Park
Merthyr Tydfil
Mid Glamorgan CF48 4DR
United Kingdom
Attention:  Mark Cooper
Facsimile: 011-44-1443-692494

Any written communication or notice so delivered shall be deemed to have been
received by the addressee at the time and date when actually delivered, or in
any event within ten (10) days after posting in the manner provided herein,
provided no postal disruption shall exist.  Written documents or notices sent by
wire communications (i.e., facsimile transmission, etc.) shall be deemed to have
been received by the addressee at the time and date when actually sent with
evidence of transmission.  The above addresses may be changed at any time by
giving prior written notice.

ARTICLE VII - INTELLECTUAL PROPERTY OWNERHSIP

All Study data collected during the conduct of the Study Protocol shall be and
remain the exclusive property of company.  Further, any ideas, know-how,
inventions, processes or other intellectual property which are generated under
or in connection with the Study shall belong to and shall be the sole and
exclusive property of the Company and that Simbec will take all reasonable steps
required to protect such ownership rights for the Company.

ARTICLE VIII - IDEMNIFICATION

8.1 Simbec carries "No Fault" insurance to compensate for injury, accident, ill
health or death caused by participation in clinical trials without regard to
proof of negligence and without delay.  Where there is any doubt over causation
the benefit of doubt will be given to the claimant.
<PAGE>

8.2 Simbec is indemnified under this policy against professional negligence in
the form of injuries or damages caused by failure to exercise all proper and
reasonable care and skill in the conduct of the Project.

8.3 the Company undertakes to provide product liability cover against injury and
damages arising from the use of products in the Project.

8.4 Simbec shall inform the Company of any claims or legal actions arising out
the Project without delay.

8.5 The obligations of Simbec and the Company under these Indemnity clauses
shall commence at the commencement of the Project and continue in perpetuity.

8.6 Provisions for arbitration in the event of disagreement must be agreed with
Simbec who shall arrange for a Barrister of at least ten years standing to be
appointed by the Royal College of Physicians as arbiter.

8.7 The Company agrees to indemnify and hold harmless Simbec from and against
any loss, damage, cost or expense (including reasonable legal fees) suffered or
incurred by Simbec arising out of any claim or proceedings in respect of death
or bodily injury to Subjects recruited to the Project caused by participation in
the Project unless such loss, damage, cost or expense is due either to the
failure of Simbec to conduct the Project in accordance with the Protocol or is
as a result of Simbec's negligence, willful default, failure or omission whether
by itself, its employees, servants or agents.

8.8 The Company agrees to indemnify and hold harmless the Principal Investigator
from and against any      loss, damage, costs or expenses (including reasonable
legal fees) suffered or incurred by the Principal     Investigator arising our
of any claims or proceedings in respect of death or bodily injury to Subjects
recruited to the Project caused by participation in the Project unless such
loss, damage, cost or expense is due either to the failure of the Principal
Investigator to conduct the Project in accordance with the Protocol or is as a
result of the Principal Investigator's negligence, willful default, failure or
omission whether by itself, its employees, servants or agents.

8.9 Simbec agrees to indemnify and hold harmless the company from and against
any loss, damage, cost or expense (including reasonable legal fees) suffered or
incurred by the Company arising out of any claims or proceedings in respect of
death or bodily injury to Subjects recruited to the Project caused by Simbec's
negligence, willful default, failure or omission in the conduct of the Project
whether by itself, its employees, servants or agents.

8.10 The foregoing clauses, 8.1-8.9, are in accordance with The Clinical Trial
Compensation Guidelines of The Association of the British Pharmaceutical
Industry.

ARTICLE IX - REFUND PAYMENT FOR ITS SERVICES FOR ERROR AND OMISSION CLAIMS

In the event of errors or omissions caused by the negligence or intentional
misconduct of Simbec that render a study unacceptable to the United States Food
and Drug Administration, the parties agree that Simbec's sole obligation to
Company is to promptly refund all payments Company made to Simbec for Simbec's
work on or services for the study, exclusive of reasonable costs that may have
been paid to Simbec for travel expenses, copying, study supplies and other
similar variable costs not related to the conduct of the study.  If FDA rejects
the study for any reason other than the negligence or intentional misconduct of
Simbec or the violation of any law, rule or regulation of applicable
governmental authority, the parties agree that Simbec has no obligation to
Company to refund any payments.  The parties also agree that Simbec is not
liable or responsible for consequential, indirect, or economic damages, however
caused, including but not limited to lost profits.  Company hereby acknowledges
that consequential, indirect and economic losses are contingent and hypothetical
and therefore the parties agree that as liquidated damages, Simbec shall be
liable only for an amount of money equal to the payments it has received for its
work on and services for the Study.
<PAGE>

ARTICLE X - BINDING AND FINAL ARBITRATION

In consideration for each others `promises and obligations herein, the parties
agree that if at any time any question, dispute, or difference arises between
Company and Simbec or Company and Simbec regarding the study agreement, the
matter will be submitted to binding and final arbitration in North Carolina,
United States.  Such Arbitration shall be held pursuant to the rules of the
American Arbitration Association.

ARTICLE XI - EFFECTIVE DATES

This agreement is effective the day it has become signed by each of the parties.
The agreement remains effective until the study is completed, terminated, or
after ninety (90) days from the submission of the final data for the study.  The
proposed time schedule for the study is shown in Appendix 2.

ARTICLE XII - FORCE  MAJEURE

No party shall be in breach of this agreement because of an act of God, fire,
storm, explosion, government legislation or regulation, war, civil commotion,
strike, insurrection, embargo, energy shortage or failure or any other reason
beyond the control of either party.  The parties agree to notify each other
promptly of any force majeure that will effect the party's ability to perform as
required under this agreement.

ARTICLE XIII - WAIVER

No breach of any provision of this agreement by the parties can be waived unless
the waiver is in writing.  Waiver of one breach shall not be deemed a waiver of
any other breach of the same or any other provision.

ARTICLE XIV - POSTPONEMENT, CUBTAILMENT/EARLY TERMINATION

In the event of postponement of the Project by the Company after scheduled dates
for commencement have been agreed by both parties, Simbec shall be reimbursed
for all reasonable additional costs incurred, including subject screening costs,
etc.  Further, [CONFIDENTIAL TREATMENT REQUESTED].

The company shall have the privilege of curtailing or terminating the study
immediately upon written notice to Simbec.  Simbec reserves the right to
terminate without notice or penalty the study where Simbec deems necessary:

a. in the interest of subject safety;

b. in order to comply with the requirements of any governmental agency, board or
department; and

c. in order to comply with the decision of any judicial authority.

In the event of termination, the Company shall pay Simbec for that proportion of
the price of the project represented by the work Simbec have completed or is
irrevocably obligated to complete.  Further, additional costs associated with
loss of revenue are payable, [CONFIDENTIAL TREATMENT REQUESTED].

The termination or curtailment of this Agreement shall not relieve either party
of its obligation to the other in respect of (i.) maintaining confidentiality,
(ii) obtaining consent for advertising and publication.  (iii) indemnification.
(iv.) compensation for services performed and, (v.) appropriate reporting of any
data obtained.

ARTICLE XV - ENTIRE AGREEMENT

The provisions of this agreement and the attachments hereto constitute the final
and entire agreement between the parties.  All prior negotiations, statements,
agreements and understandings between the parties are hereby canceled and
superseded by this agreement.
<PAGE>

ARTICLE XVI - ACKNOWLEDGEMENT OF REVIEW AND UNDERSTANDING

Each party acknowledges and represents that it has read and fully understands
and agrees to all provisions contained in this agreement and has had the
opportunity to review and revise this agreement and the exhibits attached
hereto.

ARTICLE XVII - EXECUTION

The parties agree that this agreement and its exhibits may be executed in two or
more counterparts, each of which is deemed to be one and the same instrument.

Signed:   /s/ Mark Cooper            /s/ Christy L. Shaffer
          ---------------            ----------------------

Name:      Mark Cooper               Christy L. Shaffer, PhD

Title:     Research Manager          President and CEO

Date:          26 Aug 99                      8/30/99
           -------------------       ---------------------------

For:       Simbec Research Ltd       Inspire Pharmaceuticals Ltd
<PAGE>

                                   APPENDIX 1

                           Exhibit 1: Cost Quotation
<PAGE>

                                   QUOTATION

     Dr Ben Yerxa                                 SIMBEC LOGO
To:  Inspire Pharmaceuticals Inc
     4222 Emperor Boulevard                         SIMBEC
     Suite 470
     Durham
     NC  27703
     USA

DATE:          09 JULY 1999
QUOTATION NO:  RD580/22385  (Issue 2)

     COSTS OF A DOUBLE-MASKED, RANDOMISED, PLACEBO-CONTROLLED, RISING DOSE
    STUDY OF MULTIPLE OCULAR INSTILLATIONS OF INS 365 OPTHALMIC SOLUTION IN
                 PATIENTS WITH MILD TO MODERATE DRY EYE DISEASE

<TABLE>
<CAPTION>
                   Item                   Hours    Events      Unit         Per       Number       Total
                                                              Price/                             ((Pounds)
                                                             Hr Rate                             Sterling)
-----------------------------------------------------------------------------------------------------------
<S><C>                                   <C>       <C>      <C>         <C>          <C>        <C>
1            Protocol Design                                         *     Study
             Protocol Review                                                                 1            *
                                                                                     sub-Total            *
-----------------------------------------------------------------------------------------------------------

2           Case Record Forms
            CRF Design                                               *     Page             24            *
            CRF Review                                               *      CRF             62            *
            CRF Binding & Printing - Triplicate                      *     Page           1488            *
                                                                                     sub-Total            *
-----------------------------------------------------------------------------------------------------------

3           Ethics/Regulatory
            Presentation to LRECs                                    *   Per LREC            2            *
            Presentation to Simbec Ethics                            *   Study               1            *
            Committee                                                                sub-Total            *
-----------------------------------------------------------------------------------------------------------

4           Patients
            Patient Recruitment                                      *    Subject           62            *
            Patient Screening:  pre Study                            *    Subject           62            *
            Opthalmic/Slit Lamp/IO Pressure                          *    Subject           62            *
            Examinations                                             *    Subject           62            *
            Patient Screening:  post Study                           *    Subject           62            *
            Patient Payments                                                         sub-Total            *
-----------------------------------------------------------------------------------------------------------

5           Pharmacy
            Trial Supplies Administration                            *     Study             1            *
            Dosing                                                   *  Study Phase          4            *
                                                                                     sub-Total            *
-----------------------------------------------------------------------------------------------------------

                                                                           Carried forward                *
                                                                      -------------------------------------
</TABLE>

*    [CONFIDENTIAL TREATMENT REQUESTED]

                            SIMBEC RESEARCH LIMITED
                     Merthyr Tydfil CF48 4DR United Kingdom
                   Tel: +(0) 1443 690977 Fax +(0) 1443 692494

Protocol No. 03-102                                                        10/14
<PAGE>

                                                    Simbec [Logo]

                                                        SIMBEC

                                                        Page 2
         RD580/22385  (Issue 2)

     COSTS OF A DOUBLE-MASKED, RANDOMISED, PLACEBO-CONTROLLED, RISING DOSE
    STUDY OF MULTIPLE OCULAR INSTILLATIONS OF INS 365 OPTHALMIC SOLUTION IN
                 PATIENTS WITH MILD TO MODERATE DRY EYE DISEASE

<TABLE>
<CAPTION>
                        Item                       Hours  Events  Unit Price/       Per        Number         Total
                                                                    Hr Rate                                 ((Pounds)
                                                                                                            Sterling)
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
                                                                                   Brought forward              *
-----------------------------------------------------------------------------------------------------------------------
<S> <C>                                            <C>    <C>     <C>          <C>            <C>        <C>
6          Study Conduct, Supervision, etc
      (1) Per Group of 8 Subjects (Cohorts 1-4)
            In-House Overnight Pre Dosing              4                    *      Days               1               *
                   Main Study Days                    48                    *      Days               1               *
                  Minor Study Days                     8                    *      Days               1               *
                 Medical Supervision                   8                    *      Days               1               *
    Opthalmic/Slit Lamp/IO Pressure Examinations                            *  Patient/Event         40               *
                    Bed occupancy                              8            *   Patient/Day           2               *
                      Catering                                 8            *   Patient/Day           2               *
                                                                                              sub-Total               *
-----------------------------------------------------------------------------------------------------------------------

                   Per Cohorts 1-4                                                            sub-Total               *
-----------------------------------------------------------------------------------------------------------------------
           Study Conduct, Supervision, etc
       (II) Per Group of 6 Subjects (Cohort 5)
            In-House Overnight Pre Dosing              4                    *      Days               1               *
                   Main Study Days                    40                    *      Days               1               *
                  Minor Study Days                     8                    *      Days               1               *
                 Medical Supervision                   8                    *      Days               1               *
    Ophthalmic/Slit Lamp/IO Pressure Examinations                           *  Patient/Event         30               *
                    Schirmar test                                           *  Patient/Event        120               *
                    Bed occupancy                              6            *   Patient/Day           2               *
                      Catering                                 6            *   Patient/Day           2               *
                                                                                              sub-Total               *
-----------------------------------------------------------------------------------------------------------------------

                    Per Cohort 5                                                              sub-Total               *
-----------------------------------------------------------------------------------------------------------------------
             Principal Investigator fees                                    *      Study              1               *
-----------------------------------------------------------------------------------------------------------------------
                      Per Study                                                               sub-Total               *
-----------------------------------------------------------------------------------------------------------------------
7           Pre-Study Laboratory Testing
       Biochemistry/Haematology/Urinalysis/DoA                              *    Specimen         45.00               *
                      Virology                                              *    Specimen         22.00               *
                                                                                              sub-Total               *
-----------------------------------------------------------------------------------------------------------------------
                                                                                              sub-Total               *
-----------------------------------------------------------------------------------------------------------------------
8           Post Study Laboratory Testing
         Biochemistry/Haematology/Urinalysis                                *    Samples @        30.00               *
                                                                                              sub-Total               *
-----------------------------------------------------------------------------------------------------------------------
9               Meetings with Sponsor
           Meetings/Monitoring attendance                                   *     Meeting             4               *
                                                                                              sub-Total               *
-----------------------------------------------------------------------------------------------------------------------

                                                                                   Carried forward                    *
                                                                             ------------------------------------------
</TABLE>

*    [CONFIDENTIAL TREATMENT REQUESTED]
                            SIMBEC RESEARCH LIMITED
                     Merthyr Tydfil CF48 4DR United Kingdom
                   Tel: +(0) 1443 690977 Fax +(0) 1443 692494

Protocol No. 03-102                                                        11/14

<PAGE>

                                                         Simbec [Logo]

                                                            SIMBEC

                                                            Page 3
          RD580/22385 (Issue 1)

     COSTS OF A DOUBLE-MASKED, RANDOMISED, PLACEBO-CONTROLLED, RISING DOSE
    STUDY OF MULTIPLE OCULAR INSTILLATIONS OF INS 365 OPTHALMIC SOLUTION IN
                 PATIENTS WITH MILD TO MODERATE DRY EYE DISEASE

<TABLE>
<CAPTION>
                      Item                   Hours  Events  Unit Price/      Per         Number          Total
                                                              Hr Rate                                  ((Pounds)
                                                                                                       Sterling)
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
                                                                              Brought forward              *
-------------------------------------------------------------------------------------------------------------------
<S>   <C>                                    <C>    <C>     <C>          <C>          <C>           <C>
 10              Data Management
      Database and Data Entry Screen design     16                    *     Study                1                *
           CRF Page Double Data Entry                                 *   CRF Page            1488                *
      Data Validation, queries & resolution                           *      CRF                62                *
                 Study Close out                                      *    Subject              62                *
                  Database lock                                       *     Study                1                *
              Statistical Analysis              30                    *     Study                1                *
                                                                                         sub-Total                *
-------------------------------------------------------------------------------------------------------------------
 11             Quality Assurance
            Protocol, CRF and Reports           12                    *     Study                1                *
                Study Monitoring                16                    *     Study                1                *
                                                                                         sub-Total                *
-------------------------------------------------------------------------------------------------------------------
 12                  Reports
           Final Study Report Writing           35                    *     Study                1                *
          Final Study Report production         20                    *     Study                1                *
                                                                                         sub-Total                *
-------------------------------------------------------------------------------------------------------------------
 13            Project Management
                                                80                    *     Study                1                *
                                                                                         sub-Total                *
-------------------------------------------------------------------------------------------------------------------
                                                                         TOTAL ((Pounds) Sterling)                *
-------------------------------------------------------------------------------------------------------------------
</TABLE>

*    [CONFIDENTIAL TREATMENT REQUESTED]

Additional:    1.   Patient referral Costs and Screening Payments @
                    (Pounds)250.00 per patient eligible for screening
               2.   Packaging and Shipment of Samples/Trial Supplies - at cost
                    plus * handling charge.

                              QUOTATION ACCEPTANCE

  I/We accept this quotation and wish the study to proceed subject to contract

Signed: /S/ Christy L. Shaffer               Position in Company: Pres & CEO
        ----------------------                                    -----------
Date: 8/30/99
     ----------

                            SIMBEC RESEARCH LIMITED
                     Merthyr Tydfil CF48 4DR United Kingdom
                   Tel: +(0) 1443 690977 Fax +(0) 1443 692494
           VAT No.: GB 289 0833 21 Registered in England No. 1191772

Protocol No. 03-102                                                       10/14
<PAGE>

                                   APPENDIX 2

                                 Study Schedule

                       [CONFIDENTIAL TREATMENT REQUESTED]

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