Document:

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                                                                    Exhibit 10.2

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

                                LICENSE AGREEMENT

         This License Agreement (hereinafter referred to as this "Agreement"),
effective as of February 25, 1998 (the "Effective Date"), is entered into by and
between Dr. Stuart Weg (the "Licensor") and Pain Management, Inc., a corporation
duly organized and existing under the laws of the State of Delaware (the
"Company").

         WHEREAS, the Licensor is the owners of U.S. Patent Number 5,543,434,
entitled "Nasal Administration of Ketamine to Manage Pain" and United States
Patent Applications USSN ***, entitled "Nasal Administration of Ketamine to
Manage Pain and Reduce Drug Dependency" (collectively the "Ketamine
Technology"), which is based on inventions and confidential information
discovered by the Licensor;

         WHEREAS, the Licensor may discover or develop additional intellectual
property, technical information or proprietary rights that may be subject to the
terms of this Agreement; and

         WHEREAS, the Company now desires to obtain a license to the Ketamine
Technology, under the initial application and to further developments to the
Ketamine Technology, upon the terms and conditions hereinafter set forth.

         NOW, THEREFORE, it is agreed as follows:

                             ARTICLE 1 - DEFINITIONS

         For the purposes of this License Agreement, the following words and
phrases shall have the following meanings:

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

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         1.1 "Affiliate" shall mean, with respect to any Entity (as hereinafter
defined), any Entity that directly or indirectly controls, is controlled by, or
is under common control with such Entity.

            1.1.1 "Control" shall mean, for this purpose, direct or indirect
control of more than fifty percent (50%) of the voting securities of an Entity
or, if such Entity does not have outstanding voting securities, more than 50% of
the directorships or similar positions with respect to such Entity.

            1.1.2 "Entity" shall mean any corporation, association, joint
venture, partnership, trust, university, business, individual, government or
political subdivision thereof, including an agency, or any other organization
that can exercise independent legal standing

         1.2 "Patent Rights" shall mean all U.S. and foreign patents and patent
applications set forth in Appendix I;

            1.2.1 Any later-filed United States and/or foreign patent
applications based on the patent applications and/or patents listed in Appendix
I, or corresponding thereto, including any continuations, continuations-in-part,
divisional, reissues, reexaminations, or extensions thereof, and any subsequent
patent applications and/or patents relating to the use of ketamine for the
treatment of pain, including any continuations, continuations-in-part,
divisional, reissues, reexaminations, or extensions thereof;

            1.2.2 Any other United States and/or foreign patent applications
and/or patents together with any and all patents issuing thereon, including
continuation, divisionals and re-issue applications and continuation-in-part
applications and any United States or foreign patents granted upon such
applications, based upon inventions or improvements discovered by the Licensor
during the term of the Consulting Agreement relating to the Ketamine Technology,
any and all of which shall be deemed added to Appendix I;

                                      -2-
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            1.2.3 Any United States and/or foreign patents issuing from any of
the foregoing; and

            1.2.4 Any United States and/or foreign trademark applications filed
by or on behalf of the Licensor related to the Ketamine Technology.

         1.3 "Know-how" shall mean all tangible information (other than that
contained in the Patent Rights) whether patentable or not (but which has not
been patented) and physical objects related to the Ketamine Technology or to the
Licensed Product (as defined below), including but not limited to formulations,
materials, data, drawings and sketches, designs, testing and test results,
regulatory information of a like nature, owned by any of the Licensor, which the
Licensor has the right to disclose and license to the Company.

         1.4 "Licensed Product(s)" shall mean:

            1.4.1 Any product which is covered in whole or in part by a valid
and unexpired claim contained in the Patent Rights in the country in which the
product is made, used, leased or sold;

            1.4.2 Any product which is manufactured using a process which is
covered in whole or in part by a valid and unexpired claim contained in the
Patent Rights in the country in which the process is used;

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            1.4.3 Any product which is used according to a method which is
covered in whole or in part by a valid and unexpired claim contained in the
Patent Rights in the country in which the method is used.

         1.5 "Licensed Process(es)" shall mean any process or method, which is
covered, in whole, or in part, by a valid and unexpired claim contained in the
Patent Rights in the country in which the process or method is used.

         1.6 "Net Sales" shall mean the total gross receipts for sales of
Licensed Products or practice of Licensed Processes by or on behalf of the
Company or any of its Affiliates or sublicensees or otherwise making Licensed
Products available to others without sale or other dispositions, whether
invoiced or not, less only the sum of the following:

            1.6.1 Usual trade discounts to customers;

            1.6.2 Sales, tariff duties and/or use taxes directly imposed and
with reference to particular sales;

            1.6.3 Outbound transportation prepaid or allowed and transportation
insurance;

            1.6.4 Amounts allowed or credited on returns;

            1.6.5 Bad debt deductions actually written off during the accounting
period;

            1.6.6 Sales commissions; and

            1.6.7 Packaging and freight charges.

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                                ARTICLE 2 - GRANT

         2.1 The Licensor hereby grants to the Company and the Company accepts,
subject to the terms and conditions of this Agreement, an exclusive, worldwide
license in all fields of use to practice under the Patent Rights and to utilize
the Know-how, and to make, have made, use, lease and/or sell Licensed Products
and to practice Licensed Processes, until expiration or termination of the
Patent Rights as hereinafter provided.

         2.2 The Licensor hereby grants to the Company and Company accepts, an
option (the "Option") to an exclusive, worldwide license, with the right to
grant sublicenses, to any future inventions discovered by the Licensor relating
to the analgesic management of pain ("Future Inventions"). The Licensor shall
promptly provide written notice to the Company of any such Future Inventions.
The Option shall be exercisable by the Company upon written notice delivered to
Licensor within ninety (90) days of receipt of written notice of the
availability of a Future Invention. Upon the exercise of the Option, the
Licensor and the Company shall negotiate in good faith the terms of a license to
such Future Invention, which terms shall include royalty payments, milestone
payments, reimbursement of expenses and assumption by the Company of patent
prosecution costs. In the event that the Company determines not to exercise its
Option to a Future Technology, or, having exercised its Option, the Company and
the Licensor have not agreed to terms for the license to any Future Invention
within one hundred eighty (180) days, then, unless otherwise agreed between the
parties hereto, the Company shall have no further rights in such Future
Invention, and the Licensor shall be free to enter into any agreement with a
third party respecting such Future Invention as the Licensor deems fit.
Notwithstanding the foregoing, nothing in this paragraph 2.2 shall require the
Company to exercise an Option or negotiate a license to any invention contained
in the Patents Rights, Know-how or with respect to any Future Invention related
to the use of ketamine, for which the terms of this Agreement control.

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         2.3 To the Licensor's knowledge and belief, the Licensor has all right,
title, and interest in and to the Patent Rights, including exclusive, absolute,
irrevocable right, title and interest thereto, free and clear of all liens,
charges, encumbrances or other restrictions or limitations of any kind
whatsoever and to the Licensor's knowledge and belief, other than as set forth
on Schedule B hereof, there are no licenses, options, restrictions, liens,
rights of third parties, disputes, royalty obligations, proceedings or claims
relating to, affecting, or limiting its rights or the rights of the Company
under this Agreement with respect to, or which may reasonably lead, to a claim
of infringement or invalidity regarding, any part or all of the Patent Rights
and their use as contemplated in the underlying patent.

         2.4 To the Licensor's knowledge and belief there is no pending claim of
infringement, interference or invalidity regarding, any part or all of the
Patent Rights and the use thereof as contemplated in the underlying patent.

         2.5 The Licensor has disclosed certain information to the Company
subject to the terms of the Confidentiality Agreement entered into prior to the
execution of this Agreement, some of which information may have been made
available to the public without restriction. Accordingly, attached hereto as
Schedule A is a list of all prior written publications, oral presentations and
any other public disclosure of the Patent Rights and/or information covered by
Know-how.

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         2.6 The Licensor grants to the Company the right to grant sublicenses
to third parties under the license granted hereunder.

            2.6.1 Within thirty (30) days after execution or receipt thereof, as
applicable, the Company shall provide the Licensor with a copy of each
sublicense issued hereunder and shall promptly deliver copies of all royalty
reports received by the Company from such sublicensees.

            2.6.2 Any sublicensee under this Agreement shall be required to
comply with Articles 3,5,9 and 10 of this Agreement.

            2.6.3 Upon termination of this Agreement other than by expiration in
accordance with paragraph 7.7, any and all sublicenses shall survive such
termination.

                            ARTICLE 3 - DUE DILIGENCE

         The Company shall use its reasonable best efforts to bring Licensed
Products or Licensed Processes to market through a thorough, vigorous and
diligent development program for commercial exploitation of the Patent Rights
and Know-how, including compliance with the milestones set forth in Exhibit A.
The Company shall continue active, diligent marketing efforts for the Licensed
Products or Licensed Processes throughout the life of this Agreement.

                  ARTICLE 4 - ROYALTIES AND OTHER CONSIDERATION

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         4.1 In consideration of the rights, privileges and license granted
hereunder, the Company shall pay to the Licensor as set forth in, and in
accordance with the provisions of, this Article 4 until the earlier to occur of
(a) the last to expire patent contained in the Patent Rights and (b) until or
termination of this License Agreement as hereinafter provided.

         4.2 (a) Pursuant to a stockholders agreement to be entered into between
Lindsay A. Rosenwald, M.D., the Company, the Licensor, Herbert Brotspies and
Calgar and Associates (the "Stockholders Agreement"), the Company shall grant to
the Licensor and/or his representatives a number of shares of common stock of
the Company, par value $.001 per share (the "Common Stock"), representing
twenty-five percent (25%) of the initial share capital of the Company. Twenty
percent (20%) shall be immediately issued to the Licensor and/or his
representatives and distributed as follows: (i) seventeen percent (17%) to the
Licensor; (ii) one-half percent (1.5%) to Herbert Brotspies and (iii) one-half
percent (1.5%) to Calgar and Associates.

         (b) Of the shares of Common Stock to be issued to the Licensor and/or
his representatives, the Company shall hold in escrow a number of such shares of
Common Stock equal to five percent (5%) of the initial share capital of the
Company (the "Escrow Shares"). The Escrow Shares shall vest, if at all, and be
released from escrow upon completion of a statistically significant Phase III
clinical trial and shall be distributed as follows: (i) four and one-quarter
percent (4.25%) to the Licensor; (ii) three hundred seventy-five one-hundredth
percent (0.375%) to Herbert Brotspies and (iii) three hundred seventy-five
one-hundredth percent (0.375%) to Calgar and Associates.

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         4.3 The Company shall pay to the Licensor and/or his representatives a
non-refundable semi-annual royalty in an amount equal to *** percent (***%) of
Net Sales by the Company, or any Affiliate of the Company, of the Licensed
Products or Licensed Processes covered by at least one issued and unexpired
claim under the Patent Rights to be paid as follows: (a) *** percent (***%) to
the Licensor; (b) *** percent (***%) to Herbert Brotspies and (c) *** percent
(***%) to Calgar and Associates.

         4.4 The Company shall pay to the Licensor non-refundable semi-annual
royalties in an amount equal to the greater of (a) *** percent (***%) of the
royalties received by Licensee or its Affiliate from sales by any sublicensee of
Licensed Products or Licensed Processes and (b) *** percent (***%) of Net Sales
by any such sublicensee. In addition, the Company shall pay to the Licensor ***
percent (***%) of all sublicensing fees or other lump sum payments or other
compensation received by the Company or an Affiliate from its sublicensees for
the use, lease or sale of Licensed Products and Licensed Processes, excluding
(i) payments used or reimbursed for research and development and (ii) payments
as a result of the issuance of debt or equity securities of the Company. Any
payments made pursuant to this paragraph 4.4 shall be made as follows: (A)
ninety percent (90%) to the Licensor; (B) five percent (5%) to Herbert Brotspies
and (C) five percent (5%) to Calgar and Associates.

         4.5 The Company agrees to pay to the Licensor the Milestone Payments
set forth on Exhibit A attached hereto, which shall be deducted from or credited
against, as the case may be, payments in accordance with section 4.4 above.

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

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         4.6 The Company agrees not to sell the technology without requiring the
purchaser thereof to comply with the terms of this Agreement.

         4.7 On sales of Licensed Products by the Company to Affiliates or
related parties that are end users of such Licensed Products the value of Net
Sales attributed under this Article 4 shall be that which would have been
received in an arms-length transaction, based on sales of like quantity and
quality products at or about the time of such transaction.

         4.8 No multiple royalties shall be payable because the use, lease or
sale of any Licensed Product or Licensed Process is, or shall be, covered by
more than one valid and unexpired claim contained in the Patent Rights. In
addition, royalties shall be paid for a Licensed Product or Licensed Process
based upon only one of paragraphs 4.3 or 4.4 above (that is, royalties on direct
sales of a Licensed Product or Licensed Process by the Company or its Affiliates
shall be based only on paragraph 4.3, while royalties on sales of a Licensed
Product or Licensed Process by the Company's sublicensees shall be based only on
paragraph 4.4, so as to avoid double counting).

         4.9 In the event that a Licensed Product is sold in the form of a
combination product containing one or more products or technologies that are
themselves not a Licensed Product, the Net Sales for such combination product
shall be calculated by multiplying the sales price of such combination product
by the fraction A/(A+B) where A is the invoice price of the Licensed Product
(or, if sold to an Affiliate, the Fair Market Value of the Licensed Product) and
B is the total invoice price of the other products or technologies (or, if
purchased from an Affiliate, the Fair Market Value of the other products or
technologies). In the case of a combination product which includes one or more
Licensed Products, the Net Sales for such combination product upon which the
royalty due to the Licensor is based shall not be less than the normal aggregate
Net Sales for such Licensed Product.

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         4.10 Royalty payments shall be paid in United States dollars in New
York, New York or at such other place as the Licensor may reasonably designate
consistent with the laws and regulations controlling in any foreign country. Any
withholding taxes that the Company, its Affiliate or any sublicensee shall be
required by law to withhold on remittance of the royalty payments shall be
deducted from such royalty payment to the Licensor. The Company shall furnish
the Licensor with the original copies of all official receipts for such taxes.
If any currency conversion shall be required in connection with the payment of
royalties hereunder, such conversion shall be made by using the exchange rate
prevailing at Citibank, N.A. in New York, New York on the last business day of
the calendar quarterly reporting period to which such royalty payments relate.

         4.11 Royalties payable to the Licensor shall be paid semi-annually on
or before the thirtieth (30th) day of June and the thirty-first (31st) day of
December of each calendar year. Each such payment shall be for unpaid royalties
which accrued within or prior to the Company's two most recently completed
fiscal quarters.

         4.12 No payment obligations shall be due with respect to any sale or
sublicense covering any Licensed Product in a country it

            4.12.1 There are no issued Patent Rights underlying such Licensed
Product in such country; and

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            4.12.2 To the extent that a patent application is pending, there is
no claim within such patent application on which a royalty herein can reasonably
be based or that has been pending for less than seven (7) years since the
initial filing date.

         4.13 To the extent that the Company or any Affiliate of the Company is
required, by order or judgement of any court to obtain in any jurisdiction any
license from a third party in order to make, use or sell any Licensed Product or
Licensed Process, then up to fifty percent (50%) of the royalties payable
hereunder with respect to such Licensed Product or Licensed Process in such
jurisdiction may be deducted from royalties otherwise payable to the Licensor
hereunder, provided that in no event shall the aggregate royalties payable to
the Licensor in any semi-annual period in such jurisdiction be reduced by more
than fifty percent (50%) as a result of any such deduction, and provided further
that any excess deduction remaining as a result of such limitation may be
carried forward to subsequent periods.

                         ARTICLE 5 - REPORTS AND RECORDS

         5.1 The Company shall keep full, true and accurate books of account
containing all particulars that may be necessary for the purpose of showing the
amounts payable to the Licensor by way of royalty as aforesaid. Said books of
account shall be kept at the Company's principal place of business and the
supporting data shall be open up to twice per year upon reasonable notice to the
Company, for three (3) years following the end of the calendar year to which
they pertain, for inspection by an auditor selected by the Licensor, except one
to whom the Company has reasonable objection, for the purpose of verifying the
Company's royalty statement or compliance in other respects with this License
Agreement. If an inspection shows an under reporting or underpayment in excess
of the greater of *** dollars ($***) or *** percent (***%) of royalties payable
for any twelve (12) month period, then the Company shall reimburse the Licensor
for the cost of the inspection at the time the Company pays the unreported
royalties, including any late charges as required by paragraph 5.4 of this
Agreement. All payments required under this Article 5 shall be due within sixty
(60) days of the date the Licensor provides the Company notice of the payment
due.

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

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         5.2 Within sixty (60) days from the end of each quarter of each
calendar year, the Company shall deliver to the Licensor complete and accurate
reports, giving such particulars of the business conducted by the Company during
the preceding quarter under this License Agreement as shall be pertinent to a
royalty accounting hereunder. These. shall include at least the following:

            5.2.1 All Licensed Products and Licensed Processes used, leased or
sold, by or for the Company, its Affiliates or any sublicensees.

            5.2.2 Total amounts invoiced for Licensed Products and Licensed
Processes used, leased or sold, by or for the Company, its Affiliates or any
sublicensees.

            5.2.3 Deductions applicable in computed "Net Sales" as defined in
Paragraph 1.6.

            5.2.4 Total royalties due based on Net Sales by or for the Company,
its Affiliates or any sublicensee, any lump sum payment due to the Licensor, if
any, pursuant to paragraph 4.4.

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            5.2.5 Names and addresses of all sublicensees and Affiliates of the
Company.

            5.2.6 On an annual basis, the Company's year-end audited financial
statements.

         5.3 With each such quarterly report submitted, the Company shall pay to
the Licensor the royalties due and payable under this Agreement. If no royalties
shall be due, the Company shall not be required to make a report pursuant to
this Article 5.

         5.4 Amounts that are not paid when due and that are not the subject of
a bona fide dispute shall accrue interest from the due date until paid, at a
rate equal to the then prevailing prime rate of Citibank, N.A., plus two percent
(2%).

         5.5 The Company agrees to forward to the Licensor semi-annually a copy
of any report, which is in substance similar to the report required by this
Article 5, received from any sublicensee and other documents received from any
sublicensee as the Licensor may reasonably request, as may be pertinent to an
accounting of royalties.

         5.6 The Licensor agree to hold in confidence each report delivered by
the Company pursuant to this Article 5 until the termination of this Agreement.
Notwithstanding the foregoing, the Licensor may disclose any such information
required to be disclosed pursuant to any judicial, administrative or
governmental request, subpoena, requirement or order, provided that the Licensor
takes reasonable steps to provide the Company with the opportunity to contest
such request, subpoena, requirement or order.

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                 ARTICLE 6 - PATENT PROSECUTION AND MAINTENANCE

         6.1 Upon receipt by the Company of appropriate documentation, the
Company shall reimburse the Licensor in an amount not to exceed Two Hundred
Twenty Five Thousand Dollars ($225,000) for (a) reasonable past patent expenses,
(b) expenses incurred prior to the Effective Date with respect to United States
and foreign patent applications and (c) administrative costs incurred in
connection with any of the foregoing, payable in equal monthly installments over
a nine (9) month period commencing ninety (90) days from the Effective Date;
provided, however, that the entire amount payable pursuant to this Section 6.1
or the balance thereof, as the case may be, shall become due and payable on the
thirtieth (30th) day following the closing of the first public offering or
private placement of debt or equity securities of the Company in which gross
proceeds to the Company exceed Two Million Dollars ($2,000,000). Notwithstanding
the foregoing, the Company shall reimburse the Licensor in the amount of
twenty-five thousand dollars ($25,000) within forty-five (45) days from the
Effective Date. All amounts payable pursuant to this Section 6.1 shall be made
to the individuals and/or entities set forth on Schedule I attached hereto. In
addition, the Company shall assume all future patent expenses.

         6.2 The Company shall diligently prosecute and maintain the Patent
Rights as set forth in Appendix I hereto (as the same may be amended or
supplemented from time to time after the date hereof), including, but not
limited to, the filing of patent applications for inventions and improvements to
the Ketamine Technology, based upon inventions or improvements discovered by the
Licensor or the Company, utilizing such patent counsel as may be mutually agreed
upon by the parties hereto. The Company agrees to keep the Licensor reasonably
well informed with respect to the status and progress of any such applications,
prosecutions and maintenance activities including and to consult in good faith
with the Licensor and take into account the Licensor's comments and requests
with respect thereto. Both parties agree to provide reasonable cooperation to
each other to facilitate the application and prosecution of patents pursuant to
this Agreement and the Consulting Agreement.

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         6.3 The Company may, in its discretion, elect to abandon any patent
application or issued patent comprising the Patent Rights, in which case the
Company shall make no further use of such Patent Rights and shall have no
further royalty obligation to the Licensor in respect of any Licensed Products
and Licensed Processes the manufacture, use or sale of which is covered by an
issued claim of such abandoned Patent Rights. Prior to any such abandonment, the
Company shall give the Licensor at least sixty (60) days notice and a reasonable
opportunity to take over prosecution of such Patent Rights. In such event, the
Licensor shall have the right, but not the obligation, to commence or continue
such prosecution and to maintain any such Patent Rights under its own control
and at its expense and the Company shall then make no further use of any such
Patent Rights and shall have no royalty or other obligation to the Licensor in
respect of any Licensed Products and Licensed Processes, the manufacture, use or
sale of which is covered by an issued claim of such Patent Rights. The Company
agrees to cooperate in such activities, including execution of any assignments
or other documents necessary to enable the Licensor to obtain and retain sole
ownership and control of such Patent Rights.

                             ARTICLE 7 - TERMINATION

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         7.1 If the Company shall become bankrupt, or shall file a petition in
bankruptcy, or if the business of the Company shall be placed in the hands of a
receiver, assignee or trustee for the benefit of creditors, whether by the
voluntary act of the Company or otherwise, this License Agreement shall
automatically terminate.

         7.2 In the event that the Company fails to make payment to the Licensor
of royalties due in accordance with the terms of this Agreement, provided such
failure to make payment is not as a result of a bona fide dispute between the
Licensor and the Company, the Licensor shall have the right to terminate this
License Agreement within sixty (60) days after giving said notice of termination
unless the Company shall pay to the Licensor, within the 60-day period, all
such royalties due and payable. Subject to Article 8, upon the expiration of the
60-day period, if the Company shall not have paid all such royalties due and
payable, the rights, privileges and license granted hereunder shall, at the
option of the Licensor, immediately terminate.

         7.3 Upon any material breach or default of this License Agreement by
the Company, other than as set forth in Paragraphs 7.1 and 7.2 hereinabove, the
Licensor shall have the right to terminate this Agreement and the rights,
privileges and license granted hereunder upon giving sixty (60) days notice to
the Company. Such grounds for termination include, but shall not be limited to,
the Licensor's reasonable determination that the Company is not using its
reasonable best efforts to develop the Ketamine Technology and keep Licensed
Products or Licensed Processes reasonably available to the public after
commercial use commences. Such termination shall become effective immediately
unless the Company shall have cured any such breach or default prior to the
expiration of the sixty (60) day period referred to above.

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         7.4 In the event that the Company has not obtained financing (or
otherwise obtained net assets) in excess of two million dollars ($2,000,000)
within one (1) year from the date hereof, then the Licensor at his option may
terminate this Agreement upon ten (10) days notice to the Company. If so
terminated (a) the Company shall return to the Licensor all documents,
equipment, tangible information or other items relating to the Ketamine
Technology and shall no longer have any right, title or interest therein and (b)
the Company shall repurchase any shares of Common Stock issued to the Licensor,
Herbert Brotspies and/or Calgar and Associates pursuant the Stockholders
Agreement at a price per share equal to $.00l.

         7.5 The Company shall have the right at any time to terminate this
Agreement in whole or as to any portion of the Patent Rights by giving sixty
(60) days notice thereof in writing to the Licensor.

         7.6 Upon termination of this Agreement for any reason, nothing herein
shall be construed to release either party from any obligation that matured
prior to the effective date of such termination or obligations under Articles 5,
8, 9, 10, 15 and 16. The Company and/or any sublicensee thereof may, however, at
any time after the effective date of such termination and continuing for a
period not to exceed six (6) months thereafter, sell all completed Licensed
Products, and any Licensed Products in the process of manufacture at the time of
such termination, and sell the same, provided that the Company shall pay or
cause to be paid to the Licensor the royalties thereon as required by Article 4
of this License Agreement and shall submit the reports required by Article 5
hereof on the sales of Licensed Products.

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         7.7 If not terminated sooner, this Agreement shall terminate on the
date of the last to expire claim contained in the Patent Rights.

         7.8 Upon termination of this Agreement, except pursuant to 7.7 hereof,
the Company shall have no future rights to the Patent Rights and Know-how
granted hereunder, and shall make no further use thereof, including the
manufacture, use or sale of Licensed Products or Licensed Processes, except as
otherwise set forth herein.

                             ARTICLE 8 - ARBITRATION

         8.1 Any dispute arising from or relating to this Agreement shall be
determined before a tribunal of three (3) arbitrators in New York, New York in
accordance with the rules of the American Arbitration Association. One
arbitrator shall be selected by the Licensor, one arbitrator shall be selected
by the Company and the third arbitrator shall be selected by mutual agreement of
the first two arbitrators.

         8.2 Any claim, dispute, or controversy concerning the validity,
enforceability, or infringement of any patent contained in the Patent Rights
licensed hereunder shall be resolved in court having jurisdiction thereof.

         8.3 In the event that, in any arbitration proceeding, any issue shall
arise concerning the validity, enforceability, or infringement of any patent
contained in the Patent Rights licensed hereunder, the arbitrators shall, to the
extent possible, resolve all issues other than validity, enforceability, and
infringement; in any event, the arbitrators shall not delay the arbitration
proceeding for the purpose of obtaining or permitting either party to obtain
judicial resolution of such issues, unless an order staying the arbitration
proceeding shall be entered by a court of competent jurisdiction. Neither party
shall raise any issue concerning the validity, enforceability, or infringement
of any patent contained in the Patent Rights licensed hereunder, in any
proceeding to enforce any arbitration award hereunder, or in any proceeding
otherwise arising out of any such arbitration award.

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         8.4 The costs of such arbitration shall be borne proportionate to the
finding of fault as determined by the Arbitrator. Judgment on the arbitration
award may be entered by any court of competent jurisdiction.

                   ARTICLE 9 - INFRINGEMENT AND OTHER ACTIONS

         9.1 The Company and the Licensor shall promptly provide written notice,
to the other party, of any alleged infringement by a third party of the Patent
Rights and provide such other party with any available evidence of such
infringement.

         9.2 During the term of this Agreement, the Company shall have the
right, but not the obligation, to prosecute and/or defend, at its own expense
and utilizing counsel of its choice, any infringement of, and/or challenge to,
the Patent Rights. In furtherance of such right, the Licensor hereby agrees that
the Company may join the Licensor as a party in any such suit, without expense
to the Licensor. No settlement, consent judgment or other voluntary final
disposition of any such suit which would adversely affect the rights of the
Licensor may be entered into without the consent of the Licensor, which consent
shall not be unreasonably withheld. The Company shall indemnify and hold the
Licensor harmless against any costs, expenses or liability that may be found or
assessed against the Licensor in any such suit other than resulting from the
Licensor's gross negligence, recklessness or wilful misconduct.

                                      -20-
<PAGE>

         9.3 In the event that a claim or suit is asserted or brought against
the Company alleging that the manufacture or sale of any Licensed Product by the
Company, an Affiliate of the Company, or any sublicensee, or the use of such
Licensed Product by any customer of any of the foregoing, infringes proprietary
rights of a third party, the Company shall give written notice thereof to the
Licensor. The Company may, in its sole discretion, modify such Licensed Product
to avoid such infringement and/or may settle on terms that it deems advisable in
its sole discretion, subject to paragraph 9.2. Otherwise, the Company shall have
the right, but not the obligation, to defend any such claim or suit. In the
event the Company elects not to defend such suit, the Licensor shall have the
right, but not the obligation to do so at its sole expense.

         9.4 Any recovery of damages by the Company, in any such suit, shall be
applied first in satisfaction of any unreimbursed expenses and legal fees of the
Company relating to the suit and then to the Licensor for any royalties credited
in accordance with paragraph 9.4. The balance remaining from any such recovery
shall be treated as royalties received by the Company from sublicensees and
shared by the Licensor and the Company eighty percent (80%) to the Company and
twenty percent (20%) to the Licensor.

         9.5 The Company may credit up to fifty percent (50%) of any reasonable
litigation costs incurred by the Company in any country pursuant to this Article
9 and up to 50% of all amounts paid in judgement or settlement of litigation
within this Article 9 scope of against royalties thereafter payable to the
Licensor hereunder for such country and apply the same toward one-half of its
actual, reasonable out-of-pocket litigation costs. If one-half of such
litigation costs in such country exceeds 50% of royalties payable to the
Licensor in any year in which such costs are incurred than the amount of such
costs, expenses and amounts paid in judgement or settlement, in excess of such
50% of the royalties payable shall be carried over and credited against royalty
payments in future years for such country.

                                      -21-
<PAGE>

         9.6 If within ninety (90) days from receipt of notice by the Company of
any alleged infringement, the Company shall have been unsuccessful in persuading
the alleged infringer to desist, or shall not have brought and shall not be
diligently prosecuting an infringement action, or if the Company shall notify
the Licensor, at any time prior thereto, of its intention not to bring suit
against the alleged infringer, then, and in those events only, the Licensor
shall have the right, but not the obligation, to prosecute, at its own expense
and utilizing counsel of its choice, any infringement of the Patent Rights, and
the Licensor may, for such purposes, join the Company as a party plaintiff. The
total cost of any such infringement action commenced solely by the Licensor
shall be borne by the Licensor and the Licensor shall keep any recovery or
damages for infringement or otherwise derived therefrom and such shall not be
applicable to any royalty obligation of the Company.

         9.7 In any suit to enforce and/or defend the Patent Rights pursuant to
this License Agreement, the party not in control of such suit shall, at the
request and expense of the controlling party, cooperate in all respects and, to
the extent possible, have its employees testify when requested and make
available relevant records, papers, information, samples, specimens, and the
like.

                                      -22-

<PAGE>

                 ARTICLE 10 - LIMITATION OF LIABILITY, INDEMNITY

         10.1 Other than as set forth in Article 2 hereof, the Licensor, by this
License Agreement, makes no representations or warranties as to the validity
and/or breadth of the inventions contained in the Patent Rights and the Company
so acknowledges. Other than as set forth in Article 2, the Licensor, by this
License Agreement makes no representations or warranties as to patents now held
or which will be held by others in the field of the Licensed Products and/or
Licensed Processes for a particular purpose.

         10.2 EXCEPT AS MAY BE EXPRESSLY PROVIDED HEREIN, THE LICENSOR DOES NOT
MAKE, AND EXPRESSLY DISCLAIMS ANY WARRANTIES, EITHER EXPRESS OR IMPLIED, ORAL OR
WRITTEN, AS TO MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

         10.3 The Company agrees to defend, indemnify and hold the Licensor
harmless from and against all liability, demands, damages, including without
limitation, expenses or losses including death, personal injury, illness or
property damage (each a "Claim") arising directly or indirectly: (a) out of use
by the Company or its transferees of inventions licensed or information
furnished under this License Agreement or (b) out of any use, sale or other
disposition by the Company or its transferees of Patent Rights, Licensed
Products or Licensed Processes, except to the extent, in each such case, that
such Claim results from or arises out of the Licensor's gross negligence,
recklessness or wilful misconduct. The Company agrees that any sublicense
agreement it enters relative to the Licensed Products and/or Licensed Processes
shall contain a covenant by such sublicensee providing for the indemnification
of the Licensor as provided in this Article.

                                      -23-
<PAGE>

         10.4 (a) The Company shall obtain and carry in full force and effect
commercial, general liability insurance, at such time when the Company has
developed Licensed Products for sale, which shall protect the Company and the
Licensor with respect to events covered by paragraph 10.3 above. Such insurance
shall be written by a reputable insurance company, shall list the Licensor as an
additional named insured thereunder, shall be endorsed to include product
liability coverage and shall require thirty (30) days written notice to be given
to the Licensor prior to any cancellation or material change thereof. The limits
of such insurance shall not be less than two million dollars ($2,000,000) per
occurrence with an aggregate of five million dollars ($5,000,000) for personal
injury or death, and one million dollars ($1,000,000) per occurrence with an
aggregate of three million dollars ($3,000,000) for property damage. The Company
shall provide the Licensor with Certificates of Insurance evidencing the same.

         (b) Notwithstanding the foregoing, if the requirements of this
paragraph 10.4 are not consistent with general industry norms or good business
practices at the time, the Licensor agrees to negotiate in good faith to modify
this paragraph 10.4; provided, however, that if the Company, using good-faith
reasonable efforts, cannot obtain the insurance required by this paragraph 10.4
at rates that are prudent given the Company's financial position as determined
by the Board of Directors of the Company at the time such insurance is required
then the Licensor agrees to waive the requirements of this paragraph 10.4 until
a determination by the Board of Directors of the Company that the Company's
financial position permits it to obtain the insurance required by this paragraph
10.4.

                                      -24-
<PAGE>

                             ARTICLE 11 - ASSIGNMENT

         This Agreement and the rights and duties appertaining hereto may not be
assigned by either party without first obtaining the written consent of the
other, which Consent shall not be unreasonably withheld. Any such purported
assignment, without the written consent of the other party, shall be null and of
no effect. Notwithstanding the foregoing, the Company may assign this Agreement
(i) to a purchaser, merging or consolidating corporation, or acquiror of
substantially all of the Company's assets or business and/or pursuant to any
reorganization qualifying under section 368 of the Internal Revenue Code of 1986
as amended, as may be in effect at such time, or (ii) to an Affiliate of the
Company subject to the consent of the Licensor which consent shall not be
unreasonably withheld.

                    ARTICLE 12 - PAYMENT OF FEES AND EXPENSES

                  Each of the Company and the Licensor shall be responsible for
their own expenses relating to the preparation and consummation of this
Agreement and the agreements and transactions contemplated hereby.

                                      -25-
<PAGE>

                    ARTICLE 13 - USE OF NAMES AND PUBLICATION

         13.1 Nothing contained in this Agreement shall be construed as granting
any right to the Company or its Affiliates to use in advertising, publicity, or
other promotional activities any name, trade name, trademark, or other
designation of the Licensor or any of its units (including contraction,
abbreviation or simulation of any of the foregoing) without the prior, written
consent of the Licensor; provided, however, that the Licensor acknowledges and
agrees that the Company may use the name of the Licensor in various documents
used by the Company for capital raising and financing without such prior written
consent where the use of such names may be required by law. The Company agrees
to promptly provide the Licensor with a copy of any documents used by the
Company, which contain the name of the Licensor. The Licensor may act as a
consultant and scientific advisor to the Company with respect to the licenses
granted to the Company hereunder, subject to the policies, if any, of the
Licensor.

         13.2 Nothing herein shall be deemed to establish a relationship of
principal and agent between the Licensor and the Company, nor any of their
agents or employees for any purpose whatsoever. This Agreement shall not be
construed as creating a partnership between the Licensor and the Company, or as
creating any other form of legal association or arrangement which would impose
liability upon one party for the act or failure to act of the other party.

         13.3 In the event that the Licensor desires to publish or disclose, by
written, oral or other presentation, Know-how, Patent Rights, or any material
information related thereto then the Licensor shall notify the Company in
writing by facsimile where confirmed by the receiving party, and/or by certified
or registered mail (return receipt requested) of its intention at least sixty
(60) days prior to any speech, lecture or other oral presentation and at least
sixty (60) days before any written or other publication or disclosure. The
Licensor shall include with such notice a description of any proposed oral
presentation or, in any proposed written or other disclosure, a current draft of
such proposed disclosure or abstract. The Company may request that the Licensor,
no later than thirty (30) days following the receipt of such notice, delay such
presentation, publication or disclosure in order to enable the Company to file,
or have filed on their behalf, a patent application, copyright or other
appropriate form of intellectual property protection related to the information
to be disclosed or request that the Licensor does so. Upon receipt of such
request to delay such presentation, publication or disclosure, the Licensor
shall arrange for a delay of such presentation, publication or disclosure until
the earlier to occur of (a) to ninety (90) days and (b) such time as the Company
or the Licensor has filed, or has had filed on its behalf, such patent
application, copyright or other appropriate form of intellectual property
protection in form and in substance reasonably satisfactory to the Company and
the Licensor. If the Licensor does not receive any such request from the Company
to delay such presentation, publication or disclosure, the Licensor may submit
such material for presentation, publication or other form of disclosure.

                                      -26-
<PAGE>

             ARTICLE 14 - PAYMENTS, NOTICES AND OTHER COMMUNICATIONS

                  Any payment, notice or other communication required or
permitted to be given pursuant to this Agreement shall be in writing and sent by
certified first class mail, postage prepaid, by hand delivery or by facsimile if
confirmed in writing, in each case effective upon receipt, at the addresses
below or as otherwise designated by written notice given to the other party:

                   In the case of the Licensor:

                            Stuart L. Weg, M.D.
                            ***
                            ***
                            Tel:     ***
                            Fax:     ***

                   In the case of the Company:

                            Pain Management, Inc.
                            c/o Paramount Capital Investment, LLC
                            787 Seventh Avenue, 48th Floor
                            New York, New York 10019
                            Tel:     212-554-4350
                            Fax:     212-554-4355
                            Attn:    Michael S. Weiss

                              15 - CONFIDENTIALITY

         15.1 Any proprietary or confidential information relating to the
Ketamine Technology (including but not limited to Know-how and patent
prosecution documents relating to Patent Rights) collectively constitute the
"Confidential Information." The Company and the Licensor agree that they will
not use the Confidential Information for any purpose unrelated to this Agreement
or the Research Agreement, and will hold it in confidence during the term of
this Agreement and for a period of five (5) years after the termination or
expiration date of this Agreement. The Company and the Licensor shall exercise
with respect to such the Confidential Information the same degree of care as the
Company and the Licensor exercise with respect to their own confidential or
proprietary information of a similar nature, and shall not disclose it or permit
its disclosure to any third party (except to those of its employees,
consultants, or agents who are bound by the same obligation of confidentiality
as the Company of the Licensor is bound by pursuant to this Agreement). However,
such undertaking of confidentiality by the Company or the Licensor shall not
apply to any information or data which:

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

                                      -27-
<PAGE>

            15.1.1 The receiving party receives at any time from a third party
lawfully in possession of same and having the right to disclose same.

            15.1.2 Is, as of the date of this Agreement, in the public domain,
or subsequently enters the public domain through no fault of the receiving
party.

            15.1.3 Is independently developed by the receiving party as
demonstrated by written evidence without reference to information disclosed to
the receiving party.

            15.1.4 Is disclosed pursuant to the prior written approval of the
disclosing party.

            15.1.5 Is required to be disclosed pursuant to law or legal process
(including, without limitation, to a governmental authority) provided, in the
case of disclosure pursuant to legal process, reasonable notice of the impending
disclosure is provided to the disclosing party and disclosing party has agreed
to such disclosure in writing or has exhausted its right to contest such
disclosure.

                                      -28-
<PAGE>

                      ARTICLE 16 - MISCELLANEOUS PROVISIONS

         16.1 This License Agreement shall be construed, governed, interpreted
and applied in accordance with the laws of the State of New York, without regard
to principles of conflicts of laws.

         16.2 If this Agreement or any associated transaction is required by the
law of any nation to be either approved or registered with any governmental
agency, the Company shall assume all legal obligations to do so and the costs in
connection therewith.

         16.3 The Company shall observe all applicable United States and foreign
laws with respect to the use, sale manufacture and transfer of Licensed Products
and related technical data to foreign countries, including, without limitation,
the regulations of the Food and Drug Administration and its foreign equivalents,
the International Traffic in Arms Regulations (ITAR), the Export Administration
Regulations.

         16.4 The parties hereto acknowledge that this Agreement, including the
Appendices and documents incorporated by reference, sets forth the entire
agreement and understanding of the parties hereto as to the subject matter
hereof, and shall not be subject to any change of modification except by the
execution of a written instrument subscribed to by the parties hereto.

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

                                      -29-
<PAGE>

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

         16.7 The headings of the several articles are inserted for convenience
of reference only and are not intended to be a part of or to affect the meaning
or interpretation of this Agreement.

         16.8 This Agreement will not be binding upon the parties until it has
been signed below on behalf of each party, in which event, it shall be effective
as of the date recited on page one.

         16.9 This Agreement embodies the entire understanding of the parties
and shall supersede all previous communications, representations or
understandings, either oral or written, between the parties relating to the
subject matter hereof.

         16.10 Each party hereto shall be excused from any breach of this
Agreement which is proximately caused by governmental regulation, act of war,
strike, act of God or other similar circumstance normally deemed outside the
control of the parties.

                                      -30-
<PAGE>

                  IN WITNESS WHEREOF, the parties hereto have executed this
License Agreement, in triplicate by proper persons thereunto duly authorized.

PAIN MANAGEMENT, INC.                                       LICENSOR

By: ____________________                          By: ______________________

Name:      Michael S. Weiss                       Name: Stuart Weg, M.D.
           ----------------                             ----------------
Title:     Sole Director                          Date: February 24, 1998
           -------------                                -----------------
Date:      February 25, 1998
           -----------------

                                      -31-
<PAGE>

                                   APPENDIX I

1. United States Patent Applications USSN ***, entitled "Nasal Administration
   of Ketamine to Manage Pain."

2. United States Patent Applications USSN ***, entitled "Nasal Administration
   of Ketamine to Manage Pain and Reduce Drug Dependency."

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

                                      -32-
<PAGE>

                                    EXHIBIT A

                         PERFORMANCE MILESTONE PAYMENTS

To ensure that the Company is diligently pursuing the development and
commercialization of the Licensed Products and Licensed Processes, in further
consideration of the license and options granted herein, the Company shall make
the following payments (the "Milestone Payments") in accordance with the
following schedule:

<TABLE>
<CAPTION>
           MILESTONE                                 AMOUNT                                DATE
<S>                                                  <C>                    <C>
   Investigative New Drug (IND)                                                 *** (***) Months following
        Application Filing                          $***                            the Effective Date

  Completion of First Clinical
  Trial Pursuant to a Company                                                  *** (***) Months following
         sponsored IND                               $***                          the Effective Date

  Commencement of Phase II/III                                                       *** (***) Months
   Phase III pivotal trial (1)                      $***                         following the Effective Date

   New Drug Application (NDA)                                                   *** (***) Months From the
          Filing (1),(2)                            $***                               Effective Date

                                                                                      *** (***) Months
                                                                                   following execution the
       NDA Approval (1),(2)                         $***                               Effective Date

                                                                                   *** (***) Months from
     First Commercial Sale (1),(2)                  $***                             the Effective Date
</TABLE>

         (1) Payable in cash or equity at the discretion of the Company. The
Company shall only be entitled to make payments in equity if the Company is a
publicly traded company. Any equity payments payable hereunder shall be priced
at the average closing price of the common stock of the Company for the ten (10)
consecutive trading days immediately preceding the date of achievement of any
such milestone or the date upon which any such payment becomes due, whichever is
earlier.

         (2) *** percent (***%) of such Milestone Payment shall be creditable
against royalties earned pursuant to articles 4.3 and/or 4.4; provided, however,
that in no event shall royalties earned pursuant to articles 4.3 and/or 4.4 be
reduced by more than *** percent (***%) in any applicable semi-annual period.

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

                                      -33-
<PAGE>

Any Milestone Payments made in accordance with the above shall be distributed as
follows: (a) eighty-five percent (85%) to the Licensor; (c) seven and one-half
percent (7.5 %) to Herbert Brotspies and (c) seven and one-half percent (7.5 %)
to Calgar and Associates.

                                      -34-

<PAGE>

                                   SCHEDULE A

For each twenty-five thousand dollar ($25,000) payment described in paragraph
6.1 hereof, payment shall be made as follows:

                  Stuart Weg, M.D.                            $21,250.00

                  Herbert Brotspies                           $ 1,875.00

                  Calgar & Asociates                          $ 1,875.00

                                      -35-<PAGE>
                                                                    Exhibit 10.4

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

WEST PHARMACEUTICAL SERVICES LOGO

                       WEST PHARMACEUTICAL SERVICES, INC.

                         And its wholly owned subsidiary

                   WEST PHARMACEUTICAL SERVICES DRUG DELIVERY
                         & CLINICAL RESEARCH CENTRE LTD.

                                       and

                     INNOVATIVE DRUG DELIVERY SYSTEMS, INC.

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

                              Dated August 25, 2000

<PAGE>

                                LICENSE AGREEMENT

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

                                   Background

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

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

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

                                    Agreement

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

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

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

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

<PAGE>

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

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

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

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

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

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

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

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

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

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

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

                                       2
<PAGE>

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

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

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

         1.17     "Party" means a party to this Agreement.

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

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

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

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

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

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

                                       3
<PAGE>

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

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

2.       Grant of Rights.

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

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

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

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

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

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

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

                           (a)      the Clinical Manufacturing Agreement,

                           (b)      the Development Milestone and Option
                                    Agreement,

                                       4
<PAGE>

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

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

                  or

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

         2.4      West's Right To Terminate Fentanyl License.

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

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

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

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

                                       5
<PAGE>

 3.      Rights to Additional Technology.

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

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

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

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

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

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

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

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

                                       6
<PAGE>

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

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

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

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

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

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

4.       License Fees; Royalties.

         4.1      License Fees. Within 30 days following the Effective Date,
                  IDDS shall pay to West the amount of $2,250,000.

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

                                       7
<PAGE>

         4.3      Royalties on Sales by IDDS.

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

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

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

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

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

         4.4      Minimum Royalties.

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

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

                                       8
<PAGE>

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

         4.5      Limitations on Payment of Royalties.

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

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

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

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

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

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

                                       9
<PAGE>

         4.9      Reports and Audit.

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

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

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

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

                                       10
<PAGE>

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

5.       Patents.

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

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

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

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

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

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

                                       11
<PAGE>

         5.4      Infringement.

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

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

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

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

                                       12
<PAGE>

6.       Certain Covenants.

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

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

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

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

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

7.       Term and Termination.

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

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

                  7.2.1    By mutual consent of the Parties at any time.

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

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

                                       13
<PAGE>

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

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

         7.3      Effect of Termination.

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

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

                                       14
<PAGE>

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

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

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

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

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

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

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

8.       Representations and Disclaimer.

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

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

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

                                       15
<PAGE>

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

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

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

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

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

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

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

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

                                       16
<PAGE>

         8.4      Indemnification.

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

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

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

9        Miscellaneous Provisions.

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

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

                                       17
<PAGE>

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

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

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

                  If to West or West/Nottingham to:

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

                  With a required copy to:

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

                  If to IDDS, to:

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

                                       18
<PAGE>

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

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

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

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

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

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

                                       19
<PAGE>

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

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

                                       20
<PAGE>

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

INNOVATIVE DRUG DELIVERY SYSTEMS, INC.

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

WEST PHARMACEUTICAL SERVICES, INC.

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

WEST PHARMACEUTICAL SERVICES DRUG DELIVERY &
CLINICAL RESEARCH CENTRE LTD.

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

                                       21
<PAGE>

                                   Schedule 1
                                Patent Portfolio

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

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

                                      1-1
<PAGE>

                                   Schedule 2

                         Certain Identified Sublicensees

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

                                      2-1
<PAGE>

                                    EXHIBIT A

                        Summary of Terms of M-6-G Option

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

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

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

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

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

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

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

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

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

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

                                      2-1

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