Document:

<PAGE>

                                                                    Exhibit 10.9

                      MANUFACTURING AND SUPPLY AGREEMENT

          This Manufacturing and Supply Agreement ("Agreement") is entered into
by and between Neuro-Biometrix, Inc., a Colorado corporation, with its principal
place of business at 7995 E. Prentice Ave., Suite 110, Greenwood Village,
Colorado 80111 (hereinafter "Neuro-Biometrix") and Novel Biomedical, Inc., a
Minnesota corporation with its principal place of business at 13845 Industrial
Park Blvd., Plymouth, Minnesota 55441 (hereinafter "Novel").

                                   RECITALS

          1.  Neuro-Biometrix markets and sells medical devices for use in the
middle ear. The two human use devices currently being made by Novel are called
the RW(mu)Cath(TM) (Novel Part #90077-5XX) and the RWE-Cath(TM) (Novel Part
#90078-5XX) (the "Human Products"). The two animal models are called the Animal
RW(mu)Cath(TM) (Novel Part #70012-5XX) and the Animal RWE-Cath (Novel Part
#70013-5XX) (the "Animal Products"). The Human Products and the Animal Products
are collectively called the ("FINISHED PRODUCTS").

          2.  Novel is in the business of designing, developing, manufacturing,
sterilizing and packaging medical devices.

          3.  The parties have entered into a confidentiality agreement dated
July 9, 1996.  The parties entered into a Consulting Agreement dated September
18, 1996.  This Consulting Agreement includes two sections (Confidentiality and
Inventions/Assignment) which supplement the July 9, 1996 confidentiality
agreement.  The parties entered a second confidentiality agreement dated August
12, 1997.  These three agreements shall be collectively referred to as the
"Confidentiality Agreements."  The Confidentiality Agreements are hereby
incorporated in this Manufacturing and Supply Agreement.

          4.  The parties desire to enter into an agreement under which Novel
will manufacture and supply FINISHED PRODUCTS to Neuro-Biometrix, according to
Neuro-Biometrix' specifications which is described in Top Level Novel Drawings
(90077-5XX, 90078-5XX, 70012-5XX and 70013-5XX) (hereafter referred to as the
"top level drawings").  This Manufacturing and Supply Agreement is not intended
to alter or amend the Confidentiality Agreements.

          In consideration of the foregoing and of the mutual covenants,
promises and conditions set forth below, the parties intending to be bound,
agree as follows.

                                   AGREEMENT

                                   ARTICLE 1
                          NEURO-BIOMETRIX OBLIGATIONS

          1.  Placement of Orders:
              -------------------

               A.   Purchase Orders: Neuro-Biometrix purchase of the FINISHED
                    ---------------
PRODUCTS shall be governed by purchase orders issued for a period of six (6)
months. The purchase order will cover a total number of FINISHED PRODUCTS.
However, other products

* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.

<PAGE>

(i.e. the balloon RW(mu)Cath(TM)/RWE-Cath(TM)) may be substituted for FINISHED
PRODUCTS, when agreed to by both parties. Firm releases will be authorized by
Neuro-Biometrix against the purchase order as indicated in Section B(i) below.
The terms and conditions of this Agreement supersede the terms and conditions
contained on the Neuro-Biometrix purchase order form. The First Purchase order
will cover [***] FINISHED PRODUCTS.

          B.   Forecasts: Neuro-Biometrix agrees to share with Novel a six (6)
               ---------
month rolling forecast of Neuro-Biometrix' reasonably anticipated cumulative
quantity of FINISHED PRODUCTS. Neuro-Biometrix agrees to update the forecast
monthly and provide it to Novel by the 1st day of each month. The forecast will
contain three levels of order commitment; Firm Releases, Scheduled Releases, and
Forecasted Releases:

               (i)    Firm Releases: The first sixty (60) days of the forecast
are fixed with respect to both quantity and delivery date. "Delivery date" shall
be the date that the Finished Products are received by Neuro-Biometrix. The
parties will mutually agree upon delivery dates. Novel is authorized to produce
these items and Neuro-Biometrix is committed to purchase them as planned. Neuro-
Biometrix may reschedule firm delivery dates with Novel's written agreement when
necessary.

               (ii)   Scheduled Releases: The next sixty (60) days of the
forecast are for the procurement of materials. Novel is authorized to purchase
materials needed to fill these requirements, subject to minimum order
requirements. Upon termination of this Agreement (see Article 3, Section 16),
Neuro-Biometrix commits to purchase, at Novel's direct out of pocket cost, [***]
all the non-cancelable or non-returnable materials purchased by Novel in
reasonable reliance on the Scheduled Releases. No material procurement or
capacity scheduling will take place until Neuro-Biometrix has transmitted the 6-
month Rolling Forecast to Novel. In the event of a Technology Transfer (See
Article 2, Section 9 below), all materials that Neuro-Biometrix is required to
purchase under this paragraph shall be used in the production of FINISHED
PRODUCTS that Novel is supplying during the transfer or, if reasonable,
transferred to the transferee.

               (iii)  Forecasted Releases: The last sixty (60) days of the
forecast contain Neuro-Biometrix' current estimate of the demand for the
FINISHED PRODUCTS and is offered only for planning purposes. Neuro-Biometrix
makes no commitment except that this is its best estimate at the time of the
Forecast. Circumstances may develop during the course of business, which would
make it prudent for larger range commitments to Novel's suppliers by Novel.
Prior to making such a commitment, the parties must agree in writing to the
commitment.

     2.   Inventory: Novel agrees to maintain a stock of components and
          ---------
materials of sufficient quantity to cover production of the forecasted needs by
Neuro-Biometrix. Novel will not maintain a FINISHED PRODUCTS inventory unless a
specific Finished Goods Inventory Agreement is negotiated between the parties.

     3.   Delivery: Novel shall ship the FINISHED PRODUCTS in accordance with
          --------
Neuro-Biometrix' instructions for method of shipment as designated by Neuro-
Biometrix in the purchase order. Upon shipment, Novel must inform Neuro-
Biometrix of Novel's lot number,

* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.

                                      -2-
<PAGE>

quantity of each FINISHED PRODUCT shipped, product destination, carrier, bill to
and ship to address, and package weight. Novel will insure, at the invoice
price, all shipments. Neuro-Biometrix will pay the costs of such insurance.
Novel reserves the right to ship a partial order (must be at least [***] of
order). Novel also reserves the right to over-ship by a maximum of [***] of
order).

     4.   Right to Inspect: Neuro-Biometrix shall have ten days upon receipt of
          ----------------
a shipment of FINISHED PRODUCTS from Novel to inspect the products. Upon the
discovery of a defect, Neuro-Biometrix may return the FINISHED PRODUCTS to
Novel. Novel will replace (or repair) the defective FINISHED PRODUCTS free of
charge, in the next month's shipment. A "defect" shall be defined as a failure
to meet the specifications (including notes on the drawings) set forth in the
"top-level" drawings.

     5.   Charges for Development, Engineering, Assembly and related
          ----------------------------------------------------------
expenses: If Neuro-Biometrix requests that Novel work on significantly
--------
modifying a FINISHED PRODUCT, the parties will agree in advance to any charges
associated with such development.  If no such request is made by Neuro-
Biometrix, there will be no engineering, assembly or expense charges.

     6.   Device Charges:  Neuro-Biometrix will pay the following per unit
          --------------
"device charges."  All prices are FOB Novel.

<TABLE>
<CAPTION>
   ----------------------------------------------------------------------------------------
                                                      [***]       [***]        [***]
                                                      UNITS       UNITS        UNITS
   <S>                                                <C>         <C>          <C>

   RW(mu)Cath(TM) (Novel Part #90077)                 $ [***]     $ [***]      $ [***]
   ----------------------------------------------------------------------------------------
   RWE-Cath(TM) (Novel Part #90078)                   $ [***]     $ [***]      $ [***]
   ----------------------------------------------------------------------------------------
   Animal RW(mu)Cath(TM) (Novel Part #70012)          $ [***]     $ [***]      $ [***]
   ----------------------------------------------------------------------------------------
   Animal RWE-Cath(TM) (Novel Part #70013)            $ [***]     $ [***]      $ [***]
   ----------------------------------------------------------------------------------------
</TABLE>

     If one of the following occur, after this Agreement is signed by both
parties, the parties will, in good faith, determine a revised per unit price:

     .    There is a significant design change to a FINISHED PRODUCT

     .    There is a significant price increase from one of the suppliers used
          by Novel for the manufacture of the FINISHED PRODUCTS, and Novel has
          made reasonable efforts to locate an alternative supplier.

     .    Neuro-Biometrix makes a special order request, above and beyond the
          order supplied in Article 1, Paragraph 1 (Purchase Orders) above.

     .    Neuro-Biometrix requests less than [***] FINISHED PRODUCTS for a
          particular month.

     .    Novel determines that the cost of materials is lower than expected

     .    Neuro-Biometrix pays to upgrade the equipment or staff involved in the
          production which lowers the unit price, per a mutually agreeable plan
          and budget.

* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.

                                      -3-
<PAGE>

                                   ARTICLE 2
                              NOVEL'S OBLIGATIONS

     1.   Manufacture and Supply:  Novel shall manufacture, package, label and
          ----------------------
provide sterilized FINISHED PRODUCTS and shall supply the FINISHED PRODUCTS in
accordance with the terms of this agreement.  Novel shall utilize controlled
procedures and processes for product manufacturing.  The processes used for
packaging and sterilization shall be validated.  Sterilization may be performed
only by an FDA registered facility, that has been certified by a Notified Body
to be in compliance with EN 46002.  Each FINISHED PRODUCT must be identified by
lot # to maintain traceability, and stamped with an expiration date.

     2.   Sale Only to Neuro-Biometrix:  Novel agrees not to sell or give or
          ----------------------------
otherwise provide access to FINISHED PRODUCTS to anyone other than Neuro-
Biometrix, without the prior written consent of Neuro-Biometrix.

     3.   Legal/Quality Compliance:  The activities performed by Novel under
          ------------------------
this agreement will be performed in substantial compliance with all applicable
FDA Regulations, EN46001/ISO 9001, and certain portions of the Medical Device
Directive (EC Council Directive 93/42/EEC) (the "MDD") as defined in Article 2,
Section 8 below, and other US federal, state and local laws, rules, regulations,
quality standards and guidelines.  Any noncompliance will be remedied within 90
days of the time that Novel becomes aware of such noncompliance, by written
communication from Neuro-Biometrix, the FDA, a Notified Body or another
regulatory agency.

     4.   No Defects in Products Shipped to Neuro-Biometrix:  Novel agrees to
          -------------------------------------------------
manufacture and ship to Neuro-Biometrix sterile, packaged FINISHED PRODUCTS that
are free from "defect" in material and workmanship in accordance with the top-
level drawings.

     5.   Changes to Performance Characteristics:  Novel agrees to notify Neuro-
          --------------------------------------
Biometrix of any changes (of which Novel is aware) in the performance
characteristics (per top level drawings) or regulatory status of a FINISHED
PRODUCT, or to any component/material thereof, or to the manufacturing,
packaging, labeling, quality control, quality assurance, or sterilization
processes, or any other issue that may affect the quality, safety or
effectiveness of a FINISHED PRODUCT supplied to Neuro-Biometrix under this
agreement.

     6.   Change Control:  A Neuro-Biometrix officer will be required to approve
          --------------
and sign off on any changes to the "top-level drawings" of the configuration of
each of NBI's FINISHED PRODUCTS -- including device design, labeling, packaging
and sterilization.  Neuro-Biometrix' signature is required before Novel can
implement the change.  This "top-level drawing" must be referred to by Novel in
its Bill of Materials and other lower level documents utilized by Novel's
employees and subcontractors during manufacturing, packaging, sterilization and
labeling.  The Notes on the "top-level drawing" are considered to be a material
part of the drawing.  Therefore, Neuro-Biometrix must approve and sign off on
any change to one of these notes, prior to any change in the notes going into
effect.  Neuro-Biometrix will also own this "top-level drawing."  A list of
Neuro-Biometrix' officers is included as Exhibit A.  If and when this officer
list is changed, Novel will be notified.

* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.

                                      -4-
<PAGE>

     7.   Novel's Production Ability:  Novel shall deliver all FINISHED
          --------------------------
PRODUCTS, by the date set forth in the purchase order; provided however, that it
shall not be deemed a breach of Novel's delivery obligation hereunder to the
extent Novel fails to deliver, in any particular month, any FINISHED PRODUCTS in
excess of the lesser of [***] FINISHED PRODUCTS, or 150% of the number of units
ordered for delivery in the prior month.

     8.   Novel's Assistance to Neuro-Biometrix for Regulatory
          ----------------------------------------------------
Compliance/Quality Assurance:  All of the documents and records maintained by
----------------------------
Novel related to the FINISHED PRODUCTS shall be maintained and controlled in
compliance with Article 2, paragraph 3 above.  All documents retained by Novel
that are related to the production of the FINISHED PRODUCTS shall be available
to Neuro-Biometrix, the FDA, a Notified Body, a Competent Authority or another
regulatory body when reasonably requested upon five business days' notice.
Novel's obligation to maintain and control these records and documents shall
continue for a period of five years from the date of delivery of the applicable
FINISHED PRODUCT to Neuro-Biometrix.  The costs of maintaining these documents
shall be borne by Novel.

     The following list is not exhaustive.  It is meant only as an example of
some of the documents and records that Novel will maintain and control.

     .    a Device Master Record for each type of FINISHED PRODUCT, per 21 CFR
          (S)820.181 (Quality System Regulation);

     .    a Design History File for each type of FINISHED PRODUCT, per QSR 21
          CFR (S)820.30(j) (Quality System Regulation);

     .    Device History Records for each lot of FINISHED PRODUCTS shipped to
          Neuro-Biometrix per 21 C.F.R. (S)820.184, (Quality System Regulation)

     .    Technical Documentation/Quality System Records required by EN
          46001/ISO 9001.

     .    "Technical Documentation" required by the Medical Device Directive (EC
          Council Directive 93/42/EEC), as defined by the items listed in Neuro-
          Biometrix Standard Operating Procedure Q-l6 (copy attached as Exhibit
          B) labeled "Maintained by Turn-key." Any changes to SOP Q-16, that
          place additional requirements on Novel will require the approval of
          both parties.

     9.   Technology Transfer:  Solely, at Neuro-Biometrix' option, Neuro-
          -------------------
Biometrix shall have the right to require Novel to transfer to Neuro-Biometrix
or a third party of Neuro-Biometrix' choice, all of the technology (including
Novel's proprietary and confidential information) related to the manufacture of
the FINISHED PRODUCTS in accordance with Exhibit C.  This technology transfer
can be initiated by Neuro-Biometrix at any time.

     10.  ISO/EN 46001/46002--MDD Compliance:  Neuro-Biometrix has been audited
          ----------------------------------
and expects to be certified for EN 46002 (ISO 9002) by TUV Product Service.
Neuro-Biometrix also expects to be recommended for EC (CE Mark) certification
for the RW(mu)Cath and the RWE-Cath by TUV Product Service.  Neuro-Biometrix
expects to have its ISO 9002 certificate by the end of November 1997.  Neuro-
Biometrix expects to be able to affix the CE Mark to its Human Products by the
end of 1997.  Novel will be audited for ISO/EN 9001/46001 compliance in February
1998.  If, as a result of something that Novel is in sole control of, the

* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.

                                      -5-
<PAGE>

Notified Body or Competent Authority determine that Neuro-Biometrix loses its
ISO certification or is unable to affix the CE Mark to its products, Novel will
remedy the situation at Novel's cost within 60 days.  The situation would be
"remedied" when Neuro-Biometrix is again able to affix the CE Mark to the
RW(mu)Cath and the RWE-Cath, and regains its ISO Certification. If Novel is
unable to remedy the situation in 60 days, Neuro-Biometrix can compel Novel to
complete a technology transfer, as defined in Article 2, Section 9 (in 90 days
or less) at [***] of the costs described in Exhibit C.

     11.  Continuation Of Confidentiality Obligations in the event of a
          -------------------------------------------------------------
Technology Transfer:  In the event of a technology transfer, the parties'
-------------------
confidentiality obligations will continue in accordance with the confidentiality
agreements mentioned above.  Prior to the transfer of any of Novel's
confidential information, the third party will be required to sign a reasonable
confidentiality agreement to protect Novel's confidential information.  The
transferee will then have Novel's permission to use Novel's confidential and
proprietary information only in the manufacture of the FINISHED PRODUCTS.

     12.  Neuro-Biometrix' Right To Inspect and Audit Novel:  Neuro-Biometrix or
          -------------------------------------------------
its agent, shall have the right during reasonable business hours to inspect
and/or audit Novel's facilities and records in order to verify Novel's
compliance with this contract, product specifications and applicable regulatory
requirements.  The cost of conducting such inspections/audits shall be borne by
Neuro-Biometrix.

     13.  QSR Certificates:  Each shipment of FINISHED PRODUCTS from Novel to
          ----------------
Neuro-Biometrix will be accompanied by a Certificate of QSR compliance from
Novel and the contract sterilization firm involved in the sterilization of the
Neuro-Biometrix shipment.  This certificate must identify and clearly mark the
lot # and Novel Part # with Rev #, for each lot of FINISHED PRODUCTS.  If and
when Novel is certified to ISO 9001/EN 46001, Novel will include this in its
Certificates.

     14.  Packaging:  Novel will use reasonable efforts when packaging all
          ---------
Neuro-Biometrix FINISHED PRODUCTS to protect the FINISHED PRODUCTS during
shipment to Neuro-Biometrix, so that the FINISHED PRODUCTS will be ready for
subsequent shipment to Neuro-Biometrix' customers.

     15.  Tooling:  Novel shall continue to procure and/or produce, at Neuro-
          -------
Biometrix' costs, all tools, molds, dies, jigs, fixtures and other similar items
(hereafter collectively referred to as "tooling") required to make Neuro-
Biometrix' products.  Tooling purchases must be authorized by Neuro-Biometrix
before the purchase is made.  Neuro-Biometrix shall continue to own all tooling
purchased by Neuro-Biometrix, including any replacement tooling purchased by
Neuro-Biometrix.  In the event of a technology transfer, Neuro-Biometrix shall
own and Novel shall transfer all tooling and copies of a detailed set of current
assembly drawings for all tooling.  During the term of this agreement Novel
shall maintain the tooling, at Novel's expense.  Neuro-Biometrix has the right
to inspect all tooling during normal business hours.  Upon request by Neuro-
Biometrix during this agreement, or upon termination of this agreement, Novel
shall surrender all tooling to Neuro-Biometrix.  The reasonable costs of
removing and transferring tooling shall be borne by Neuro-Biometrix, unless the
tooling is being removed/transferred as part

* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.

                                      -6-
<PAGE>

of a technology transfer, in which case the costs will be included in the
technology transfer fee. Novel will maintain an inventory of Neuro-Biometrix'
tooling, and this inventory list will be updated and provided to Neuro-Biometrix
on a semi-annual basis, beginning November 15, 1997, upon Neuro-Biometrix'
request.

     16.  Process Control:  Novel will utilize controlled procedures and
          ---------------
processes for product manufacturing, packaging and sterilizing.  Validated
processes will be performed by a qualified person(s) and be documented.  All
controlled processes utilized will ensure conformance to Neuro-Biometrix'
requirements and the requirements set forth in Article 2, Paragraph 3.  Specific
work instructions will be developed by Novel where the lack of such instructions
could adversely affect the quality of the FINISHED PRODUCTS.  All Novel records
related to process control will be available to Neuro-Biometrix during its audit
of Novel or for another legitimate purpose.

     17.  Inspection and Testing:  Inspections and testing will be performed by
          ----------------------
Novel prior to each shipment of FINISHED PRODUCTS to Neuro-Biometrix to assure
compliance with quality and legal requirements (See Article 2, Paragraph 3), and
product specifications.  Novel will only ship FINISHED PRODUCTS that have been
inspected and tested (and that passed the inspections and tests) to Neuro-
Biometrix.  All inspections and testing are performed per Novel's procedures and
work instructions and is documented by Novel in the Device History Records to be
maintained by Novel.  All Novel records related to inspection and testing will
be available to Neuro-Biometrix during its audit of Novel or for another
legitimate purpose.

     18.  Purchasing Records and Data:  Novel is responsible for purchasing all
          ---------------------------
materials and services related to the production, packaging, labeling and
sterilization of Neuro-Biometrix' products.  Novel will use its own purchasing
procedures for verification methods concerning quality of product components,
materials and services.  Novel will test components in a statistically valid way
to show their acceptability in the FINISHED PRODUCT.  Purchasing records and
data will be maintained by Novel and this data will always be available to
Neuro-Biometrix during an audit or for another legitimate purpose.

     19.  Inspection, Measuring and Test Equipment Used by Novel:  Inspection,
          ------------------------------------------------------
measurement and test equipment will be used and maintained by Novel to assess
conformance to Novel's performance requirements.  Equipment calibration and
maintenance will occur at regularly scheduled intervals according to Novel's
specifications and standards.  The calibrations will be performed to written
specifications based on appropriate standards and records will be maintained per
Novel's Procedures.  These records will be available to Neuro-Biometrix during
an audit of Novel or for any other legitimate purpose.

     20.  Cross-Indemnification:  Neuro-Biometrix will indemnify and hold
          ---------------------
harmless Novel for loss and/or liability arising out of the negligence or
intentionally wrongful conduct of Neuro-Biometrix.  Novel will indemnify and
hold harmless Neuro-Biometrix for loss and/or liability arising out of the
negligence or intentionally wrongful conduct of Novel.  "Liability" includes all
litigation costs, including reasonable attorney's fees and expenses, court costs
and any settlement or award entered.

* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.

                                      -7-
<PAGE>

     21.  Insurance:  Novel agrees to maintain at least [***] in product
          ---------
liability insurance coverage.  Novel agrees to add Neuro-Biometrix as an
additional named insured on Novel's products liability insurance policy
effective the day this Agreement is executed.  The [***] cap in Article 3,
Section 9 is not for the benefit of Novel's insurer[s], and will not limit the
coverage provided to Neuro-Biometrix hereunder.  In the event of a claim, Neuro-
Biometrix will be eligible for coverage for the full [***]. With respect
to Neuro-Biometrix' products liability insurance in the event of a claim against
Neuro-Biometrix resulting from Novel's manufacture of a "defective" FINISHED
PRODUCT, the parties agree that Novel's products liability insurance will be
primary and non-contributory.  Novel will provide Neuro-Biometrix with a
Certificate of Insurance (and a copy of the policy endorsement adding Neuro-
Biometrix as a named insured) demonstrating that Neuro-Biometrix is an
additional named insured on Novel's product liability policy, within 30 days of
execution of this agreement.

                                    ARTICLE
                           MISCELLANEOUS PROVISIONS

     1.   Term:  This agreement shall be one year beginning November 1, 1997 and
          ----
expiring on October 31, 1998, unless sooner terminated as provided hereafter or
by operation of law.

     2.   Renewal:  Neuro-Biometrix reserves the right to extend the terms of
          -------
this agreement at Neuro-Biometrix' option, for successive one year periods.
Notice of intent to extend this agreement shall be sent in writing, to Novel,
ninety (90) days prior to the anniversary date of this Agreement.

     3.   Integration:  This is the final and entire agreement and understanding
          -----------
between the parties and supersedes all prior agreements and understandings, oral
or written (except the Confidentiality Agreements discussed above), as to the
subject matter described herein.  No modifications made to this agreement will
be valid unless such modification is in writing and signed by an authorized
representative of the party against whom enforcement is sought.

     4.   Waiver:  No term, covenant, or written condition of this agreement
          ------
shall be deemed waived except by the written agreement of the parties.
Forbearance or indulgence by either party in any regard whatsoever shall not
constitute a waiver of the term, covenant, or condition to be performed by the
other party to which the same may apply, and until complete performance by the
other party of such term, covenant or condition, the performing party shall be
entitled to invoke any remedy available to it under this agreement or otherwise
available to it in law or in equity despite such forbearance or indulgence.

     5.   Savings Clause:  If any provision of this agreement shall be held by a
          --------------
court of competent jurisdiction to be contrary to law, such provision shall be
deemed to be null and void, and the remainder of this agreement shall be in full
force and effect.

     6.   Assignment/Delegation:  Neither party shall delegate or assign its
          ---------------------
duties under this agreement without the other party's prior written consent, and
any purported delegation or

* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.

                                      -8-
<PAGE>

assignment without such consent shall be void, except that, Novel may delegate
its sterilization responsibilities, but sterilization is still in Novel's
"control."

     7.   Independent Contractors:  During the term of this agreement, the
          -----------------------
relationship of each of the parties to the other is that of independent
contractor.  Nothing herein shall be deemed to authorize or empower either
party, its agents or employees to act as agent for the other party or conduct
business in the name, or for the account of, the other party or any of the other
party's affiliates or otherwise bind the other party in any manner.

     8.   Governing Law:  This agreement shall be governed by the laws of the
          -------------
state of Colorado, irrespective of the location of the parties' signing, and
without giving effect to conflict of law rules.

     9.   Warranty and Limitations of Remedies:  Novel guarantees good
          ------------------------------------
workmanship in accordance with generally accepted professional standards for
work of this nature. Novel makes no other guarantees or warranties, expressed or
implied, including any implied warranty of merchantability or fitness for a
particular purpose. In no event will either party be liable for any lost profits
or incidental or consequential damages regardless of whether advised of the
possibility of such damages, nor any claim against such party by any other
party. Novel's maximum liability arising out of its performance under this
Agreement, whether in contract or in tort, including negligence, is limited to
the lesser of [***] or a refund of total moneys paid to Novel by Neuro-
Biometrix, Inc., including moneys paid prior to the execution of this agreement.

     10.  Notices:  Any notice given under this Agreement shall be mailed by
          -------
first class registered or certified airmail, express delivery, postage prepaid,
and return receipt requested, or sent by telefax, to the receiving party at the
address set forth below, or at such other address as the party may from time to
time designate:

                            Novel Biomedical, Inc.
                          13845 Industrial Park Blvd.
                              Plymouth, MN 55441
                       Attention:  Jon Kagan, President
                              612-557-0920 (fax)

                             Neuro-Biometrix, Inc.
                       7995 E. Prentice Ave., Suite 110
                              Englewood, CO 80111
                   Attention:  Dan Arenberg, Vice President
                              303-850-0671 (fax)

Notices shall be considered given on the date mailed or sent, if mailed or sent
in accordance with the provisions of the Paragraph above, subject to proof of
receipt by telecopy confirmation or return receipt.

* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.

                                      -9-
<PAGE>

     11.  Remedies:  No right or remedy conferred or reserved by the Agreement
          --------
shall be exclusive of any other right or remedy herein or provided by law or in
equity.  To the extent any provision of this Agreement may be inconsistent with
any remedy provided by law, this Agreement shall be controlling.

     12.  Force Majeure:  Neither party shall be liable for failure to perform
          -------------
or for any delay in performing any of its obligations hereunder other than as
provided for in hereof, when such failure or delay is caused, directly or
indirectly, by fire, flood, earthquake, riot, accident, explosion, strike, or
other labor disturbances (regardless of the unreasonableness of the degree of
the demand of labor), war, seizure under legal process orders or acts of any
government or branch or agency thereof, or acts of God.

     13.  Arbitration:  Any and all disputes reserved for arbitration in this
          -----------
Agreement which cannot be resolved through negotiations between the parties
shall be submitted to binding arbitration.  If the parties fail to reach a
settlement of their dispute within fifteen (15) days after the earliest date
upon which one of the parties notified the other(s) of its desire to attempt to
resolve the dispute, then the dispute shall be promptly submitted to arbitration
by a single arbitrator who is a former state or federal judge.  Unless the
parties agree otherwise, the arbitration shall be conducted by Judicial
Arbitration and Mediation Services JAMS) or any similar arbitration provider who
can provide a former judge to conduct such arbitration if JAMS is no longer in
existence.  Venue shall be Colorado.  The decision of the arbitrator shall be
final, nonappealable and binding upon the parties, and it may be entered in any
court of competent jurisdiction.  The arbitrator shall be bound by the laws of
the state in which the arbitration is held and all rules relating to the
admissibility of evidence, including, without limitation, all relevant
privileges and the attorney work product doctrine.  Discovery shall be permitted
in accordance with the rules and procedures of the forum state unless otherwise
agreed to by the parties or ordered by the arbitrator on the basis of strict
necessity adequately demonstrated by the party requesting an extension of time.
The arbitrator shall have the power to grant equitable relief including
attorney's fees and costs, where applicable under law.  The arbitrator shall
issue a written opinion setting forth his or her decision and the reasons
therefor within thirty (30) days after the arbitration proceeding is concluded.
The obligation of the parties to submit any dispute arising under or related to
this Agreement to arbitration as provided in this Section shall survive the
expiration or earlier termination of this Agreement.  Notwithstanding the
foregoing, either party may seek and obtain an injunction or other appropriate
relief from a court to preserve or protect intellectual property rights or to
preserve the status quo with respect to any matter pending conclusion of the
arbitration proceeding, but no such application to a court shall in any way be
permitted to stay or otherwise impede the progress of the arbitration
proceeding.

     14.  Failure to Perform:  If Novel or Neuro-Biometrix fail to perform any
          ------------------
material obligation hereunder, the other party may, in addition to any other
remedy it may have at law or in equity, give notice of its intent to terminate
this Agreement for material breach, specifying the act or omission upon which
such notice is based.  If the specified breach is not cured within sixty (60)
days of the date of such notice, the non-breaching party shall be entitled to
terminate this Agreement forthwith upon written notice effective on the date of
such notice.

* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.

                                      -10-
<PAGE>

     15.  Termination Upon Notice:  Either party may terminate this agreement
          -----------------------
effective any time commencing six months after the effective date of this
Agreement by giving the other party at least [***] advance notice in writing.
Should Neuro-Biometrix institute a Technology Transfer pursuant to Article 2,
Section 9 of this Agreement, the completion of such technology transfer,
including the payment of any cancellation liability, will be treated as a
termination of this Agreement.

     16.  Termination/Cancellation Liability:  Neuro-Biometrix will share with
          ----------------------------------
Novel a 6 month rolling forecast as per Article 1, Section 1 of this Agreement.
If Neuro-Biometrix terminates this Agreement because of Novel's failure to
perform and subsequent failure to cure a material breach, Neuro-Biometrix will
not have any cancellation liability.  Cancellation of this Agreement by Neuro-
Biometrix for any other reason (including a technology transfer pursuant to
Article 2, Section 9) shall result in Neuro-Biometrix' liability for all
FINISHED PRODUCTS scheduled for delivery ("Firm Releases") per Article 1,
Section 1, and for the cost of all materials required to be purchased under
Article 1, Section 1.B (ii).  Novel shall use reasonable efforts to minimize any
and all purchase order cancellation charges, bill-backs, and/or re-stocking
charges.

     17.  Bankruptcy:  If either party is adjudged bankrupt, or becomes
          ----------
insolvent, or makes an assignment for the benefit of creditors, or if its
business is placed in the hands of a trustee, whether by voluntary action or
otherwise, the other party may, if permitted under applicable law, terminate
this Agreement immediately upon notice effective on the date of such notice.

     18.  Corrective/Preventive Action taken by Novel:  If Corrective/Preventive
          -------------------------------------------
Action is taken by Novel effecting the top-level drawing of a FINISHED PRODUCT,
Novel must notify Neuro-Biometrix of the action and keep Neuro-Biometrix up to
date on the progress of the implementation of such Corrective/Preventive Action.

* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.

                                      -11-

<PAGE>

     IN WITNESS HEREOF, Neuro-Biometrix, Inc. and Novel Biomedical, Inc.
executed this agreement on the respective dates indicated.

NEURO-BIOMETRIX, INC.               NOVEL BIOMEDICAL, INC.

By: /s/ Daniel K. Arenburg            By: /s/ Jonathan Kagar
   ------------------------------        ------------------------------
Printed: Daniel K. Arenburg           Printed: Jonathan Kagar
        -------------------------             -------------------------
Title: Vice President                 Title: President
      ---------------------------           ---------------------------
Date: November 3, 1997                Date: November 24, 1997
     ----------------------------          ----------------------------

* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.
<PAGE>

                                   Exhibit A
                             NEURO-BIOMETRIX, INC.
                                   OFFICERS
                               October 23, 1997

1.   I. Kaufman Arenberg, MD, President
2.   Daniel Arenberg, Vice President of Operations
3.   Michael Arenberg, Vice President of Marketing
4.   Christine Lemke, Vice President of Research and Development

* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.

<PAGE>

                                   EXHIBIT B
                             NEURO-BIOMETRIX, INC.

                         Standard Operating Procedure
                                      for
 Maintaining a Technical File for Compliance with the Medical Device Directive

                              Procedure No. Q-16

                       Revision Date:  October 23, 1997

                     Approved:  /s/ Daniel K. Arenburg
                              ------------------------------

Training and Distribution Complete (Effective Date)          10/23/97
                                                   ---------------------------

* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.
<PAGE>

                                TECHNICAL FILE

A.   PURPOSE

     The purpose of this procedure is to establish the content of a technical
file as required by the Medical Device Directive.

B.   SCOPE

     This procedure applies to products distributed by NBI within the European
Union.

C.   REFERENCE DOCUMENTS

     Medical Device Directive NBI Quality Manual EN 46002

D.   DEFINITIONS

     Technical File - a compilation of information and data regarding the
construction, materials, processing, testing, labeling and packaging of a NBI
product distributed in Europe.

E.   RESPONSIBILITY

     The Quality Department is responsible for the maintenance of the technical
file.

F.   PROCEDURE

     1.   The technical file has an index clearly stating the information
          contained within.

     2.   The technical file shall reside at NBI and be available for review
          by a Notified Body or a Competent Authority within the European Union
          within five (5) working days from the date of request.

     3.   A copy of the technical file or summaries of the information
          contained in the technical file may also reside in Europe with the
          Authorized Representative.

     4.   Similar products (i.e., product family extensions) may be in the
          same technical file.

     5.   The technical file contains the following information:

          .    Index
          .    Administrative information
            .    Product name
            .    Product classification per MDD
            .    Name and address of manufacturer
            .    Name and address of Authorized Representative
            .    EC Declaration of Conformity
            .    Power of Attorney Granted to Authorized Representative
          .    Photographs of the product
          .    Product description
            .    Brief product history
            .    Intended use
            .    Indications and contraindications

* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.

<PAGE>

            .    Description of any accessories
            .    Description of other models in product family
          .    Labeling
            .    Instructions for use
            .    Operator's manual
            .    Service manual
            .    Package labels
            .    Patient information
          .    Specifications and product performance information (Maintained by
               Turn-key)
            .    Materials list
            .    Specifications
          .    Risk analysis
            .    EN1441
            .    FMEA
            .    Complaint history
            .    Clinical experience
          .    Essential requirements per Annex 1 of the MDD
            .    List of standards
            .    Company procedures (Maintained by Turn-key)
            .    Work instructions (Maintained by Turn-key)
            .    Specifications (Maintained by Turn-key)
            .    Quality steps (Maintained by Turn-key)
          .    Biocompatibility
          .    Sterilization
            .    Cycle description
            .    Validation report
          .    Packaging Qualification
            .    Physical package qualification
            .    Shelf life information
          .    Product test data
            .    Bench testing
            .    Biostability
            .    Design qualification testing
            .    Design qualification plan summary
          .    Clinical report
          .    Manufacturing flow diagram (Maintained by Turn-key)
            .    Include all QA steps
            .    Bioburden testing
            .    Pyrogen testing
            .    Traceability
          .    Compatibility with other products intended to be connected with
               this product.

          .    Declaration as to the content of a substance (drug) per Annex 1
               section 7.4.

* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.

<PAGE>

          .    Summary of other regulatory approvals and registrations.

G.   Attachments

     None

* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.

<PAGE>

                                   EXHIBIT C
                              TECHNOLOGY TRANSFER
Scope:
-----

     To accomplish a transfer of the technology used by Novel to manufacture the
FINISHED PRODUCTS, as that term is defined in the Manufacturing and Supply
Agreement ("Supply Agreement") between Novel and Neuro-Biometrix dated November
1, 1997, to Neuro-Biometrix or a third-party designated by Neuro-Biometrix
("Transferee").

     A technology transfer will be coordinated by Ricci Smelser, R&D engineer at
Novel, or Mr. Smelser's replacement.  The technology transfer team will include:
Mr. Smelser, a manufacturing manager, a documentation specialist, a QA
department representative, assemblers and/or technicians who assemble the
FINISHED PRODUCTS, and other personnel as appropriate (e.g. manufacturing
engineer & equipment department personnel.

     A technology Transfer will be "initiated" by Neuro-Biometrix when it
informs Novel of the name of the Transferee.  Transferee must agree in writing
to keep all Novel Confidential Information confidential, not to use it for any
products other than the FINISHED PRODUCTS, and take reasonable steps to maintain
its confidentiality.

Commitments:
-----------

     1.   Provide Transferee with current revisions of all Novel Component
master, Novel Device Master (processes) and SOP documents used in the
manufacture of the FINISHED PRODUCTS.  Information found in Novel Component
masters not related to the FINISHED PRODUCTS may be deleted.

     2.   Provide Transferee with a copy of the FINISHED PRODUCTS Design History
File and Device Master Record.  Novel will maintain Device History Records for
five years, per the MDD.

     3.   Construct and calibrate (per Novel standard practice) equipment and
fixtures per the options selected by Neuro-Biometrix.

     4.   Supply FINISHED PRODUCTS as ordered by Neuro-Biometrix, per the Supply
Agreement.

     5.   Train Transferee personnel at Novel (max. 2 people for 10 days each).
This training must begin within 14 days of Novel's indication to Neuro-Biometrix
that Novel is ready to begin training.

     6.   Transfer, install and setup all tooling and equipment to Transferee.
Novel's ability to supply FINISHED PRODUCTS will end at this point unless
tooling is duplicated for 2 site production.

* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.

<PAGE>

     7.   Train Transferee at Transferee's location (5 days max.).  This
training must begin within 14 days of Novel's indication to Neuro-Biometrix that
Novel is ready to begin training.

Fees and Terms:
--------------

     1.   Fees:  [***] Fee for technology transfer.  [***] to be paid at the
          ----
completion of:  steps 1,2, 5, 6 & 7.  All commitments will be complete within 90
days of initiation of the Technology Transfer, unless optional custom equipment
is required by Neuro-Biometrix or the Transferee.  If optional custom equipment
is required, all commitments will be complete within 150 days of initiation of
the Technology Transfer.  If the Transferee is outside of the US, there will be
an additional fee to be agreed upon by the parties.

     2.   Estimated Expenses/Required Equipment:  [***]. Expenses are
          -------------------------------------
billed as incurred on a monthly basis (net 30 days). Estimate does not include
any client or Transferee facility expenses. Estimate does not include costs of
duplicating FINISHED PRODUCT tooling (if manufacturing is continued at Novel
following completion of Commitment 7). Purchase of Air Torch [***]. Estimate
does not include any standard capital equipment (e.g. microscope, pouch sealer).

     3.   Estimated Optional Custom Equipment Costs:  [***]. Molding Press
          -----------------------------------------
[***], Fusing Machine [***]. Custom Equipment terms are 50% in advance and 50%
billed upon shipment. Prices are FOB Novel. Crating and shipping charges are not
included.

* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.

<PAGE>

                                                  September 30, 1999

BY FACSIMILE

Jon Kagan, President
Novel Biomedical, Inc.
13845 Industrial Park Blvd.
Plymouth, MN  55441

          Re:  Assignment of Manufacturing and Supply Agreement

Dear Mr. Kagan:

     This letter is in reference to the Manufacturing and Supply Agreement
entered into by and between IntraEAR, Inc., formerly Neuro-Biometrix, Inc.
("IntraEAR") and Novel Biomedical, Inc. ("Novel") effective November 1, 1997
("Supply Agreement").

     Durect Corporation ("Durect") and IntraEAR have executed an Asset Purchase
Agreement dated September 24, 1999 ("Asset Purchase Agreement") for the
acquisition by Durect of substantially all of the assets and business of
IntraEAR ("Acquisition").  Under the Asset Purchase Agreement, IntraEAR has
agreed to assign to Durect and Durect has agreed to take assignment of the
Supply Agreement subject to Novel's written consent to such assignment.

     This letter confirms that Novel consents to IntraEAR's assignment of the
Supply Agreement to Durect upon the closing of the Acquisition (currently
anticipated to be October 1, 1999) subject to the following conditions:

     1.   Payment shall have been received by Novel for all outstanding amounts
due and payable by IntraEAR under the Supply Agreement as of October 1, 1999;

     2.   Durect shall assume the obligations for the purchase order in effect
as of the date of this letter; and

     3.   Durect shall render payments under the Agreement within 30 days after
the receipt of Novel's invoice. Durect shall be entitled to a reduction of [***]
off the amount due for payments made within 10 days of the receipt of Novel's
invoice.

     This consent by Novel shall be effective upon the receipt by Novel of
payment for all outstanding amounts due and payable by IntraEAR under the Supply
Agreement as of October 1, 1999.

* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.
<PAGE>

     Please sign below to indicate Novel's acceptance of the foregoing and fax a
copy back to my attention at (408) 777-3577.

     Please feel free to call me if you have any questions (408) 777-1419.
Durect looks forward to working with Novel.

                                   Very truly yours,

                                   James E. Brown
                                   Chief Executive Officer

AGREED TO AND ACCEPTED
NOVEL BIOMEDICAL, INC.

By: __________________________
     Jon Kagan, President

Dated: ________________________

* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.<PAGE>

                                                                   EXHIBIT 10.10

                           MASTER SERVICES AGREEMENT

     This Master Services Agreement ("Agreement") is made between Durect
Corporation, which has a place of business at 10240 Bubb Road, Cupertino,
California 95014 (hereinafter "Sponsor"), and Quintiles, Inc., a North Carolina
corporation having its principal place of business at 1007 Slater Road, Chelsea
Place, Durham, North Carolina 27703 (hereinafter "Quintiles"). When signed by
both parties, this Agreement will set forth the terms and conditions under which
Quintiles agrees to provide certain services to Sponsor as set forth herein.

                                   Recitals:

     A.   Sponsor is in the business of developing, manufacturing and/or
distributing pharmaceutical products, medical devices and/or biotechnology
products.  Quintiles is in the business of providing clinical trial services,
research, and other services for the pharmaceutical, medical device and
biotechnology industries.

     B.   Sponsor and Quintiles desire to enter into this Agreement to provide
the terms and conditions upon which Sponsor may engage Quintiles from time-to-
time to provide services for individual studies or projects by executing
individual Work Orders (as defined below) specifying the details of the services
and the related terms and conditions.

                                  Agreement:

1.0  Scope of the Agreement; Work Orders; Nature of Services.

   (a)    Scope of Agreement.  As a "master" form of contract, this Agreement
          ------------------
   allows the parties to contract for multiple projects through the issuance of
   multiple Work Orders (as discussed in Section 1(b) below), without having to
   re-negotiate the basic terms and conditions contained herein.  This Agreement
   covers the provision of services by Quintiles and Quintiles' corporate
   affiliates (see Section 16) and, accordingly, this Agreement represents a
   vehicle by which Sponsor can efficiently contract with Quintiles and its
   corporate affiliates for a broad range of services.

   (b)    Work Orders. The specific details of each project under this Agreement
          -----------
   (each "Project") shall be separately negotiated and specified in writing on
   terms and in a form acceptable to the parties (each such writing, a "Work

* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.

                                      -1-
<PAGE>

   Order"). A sample Work Order is attached hereto as Exhibit A. Each Work Order
   will include, as appropriate, the scope of work, time line, budget and
   payment schedule. Each Work Order shall be subject to all of the terms and
   conditions of this Agreement, in addition to the specific details set forth
   in the Work Order. To the extent any terms or provisions of a Work Order
   conflict with the terms and provisions of this Agreement, the terms and
   provisions of this Agreement shall control, except to the extent that the
   applicable Work Order expressly and specifically states an intent to
   supersede the Agreement on a specific matter.

   (c)    Nature of Services. The services covered by this Agreement may include
          ------------------
   strategic planning, expert consultation, clinical trial services, statistical
   programming and analysis, data processing, data management, regulatory,
   clerical, project management, central laboratory services, preclinical
   services, pharmaceutical sciences services, medical device services, and
   other research and development services requested by Sponsor and agreed to by
   Quintiles as set forth in the relevant Work Order (collectively, the
   "Services"). Quintiles and Sponsor, where appropriate, shall cooperate in the
   completion of a Transfer of Obligations Form in conjunction with the relevant
   Work Order. Any responsibilities not specifically transferred in the Transfer
   of Obligations Form shall remain the regulatory responsibility of Sponsor.
   The Transfer of Obligations Form will be filed with the Food and Drug
   Administration ("FDA") by Sponsor where appropriate, or as required by law or
   regulation.

2.0  Payment of Fees and Expenses.  Sponsor will pay Quintiles for fees,
expenses and pass-through costs in accordance with each Work Order.  Sponsor
agrees that the budget and payment schedule for each Work Order will be
structured in an effort to maintain cash neutrality for Quintiles (with respect
to the payment of professional fees, pass-through costs and otherwise). Upon
execution of a Work Order, Sponsor shall pay Quintiles an agreed upon percentage
of each budget as set forth in such Work Order as an advance against the total
compensation value of the budget.  Sponsor will draw from these funds in order
to pay for services and related costs and expenses consistent with the terms of
the Work Order.  In developing the payment schedule, the parties, as one of the
considerations, will take into account the timing of work performed by Quintiles
and payments received from Sponsor.  Unless otherwise agreed in a particular
Work Order, the following shall apply: (a) Quintiles will invoice Sponsor
monthly for the fees, expenses and pass-through costs relating to the Project;
and, (b) Sponsor shall pay each invoice within [*  *  ] of the

* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.

                                      -2-
<PAGE>

date of the invoice. If any portion of an invoice is disputed, then Sponsor
shall pay the undisputed amounts as set forth in the preceding sentence and the
parties shall use good faith efforts to reconcile the disputed amount as soon as
practicable. Sponsor shall pay Quintiles interest in an amount equal to [ * **]
(or the maximum lesser amount permitted by law) of all undisputed amounts owing
hereunder and not paid within thirty (30) days of the date of the invoice.

3.0  Term.  This Agreement shall commence on the date of execution and shall
continue until terminated by either party in accordance with Section 15 below.

4.0  Change Orders. Any material change in the details of a Work Order or the
assumptions upon which the Work Order is based (including, but not limited to,
changes in fees, expenses and pass-through costs, an agreed starting date for a
Project or suspension of the Project by Sponsor) may require changes in the
budget and/or time lines, and shall require a written amendment to the Work
Order (a "Change Order"). Each Change Order shall detail the requested changes
to the applicable task, responsibility, duty, budget, time line or other matter.
The Change Order will become effective upon the execution of the Change Order by
both parties, and Quintiles will be given a reasonable period of time within
which to implement the changes. Both parties agree to act in good faith and
promptly when considering a Change Order requested by the other party. Without
limiting the foregoing, Sponsor agrees that it will not unreasonably withhold
approval of a Change Order, even if it involves a fixed price contract, if the
proposed changes in budgets or time lines result from, among other appropriate
reasons, forces outside the reasonable control of Quintiles or changes in the
assumptions upon which the initial budget or time lines were based. Quintiles
reserves the right to postpone effecting material changes in the Project's scope
until such time as the parties agree to and execute the corresponding Change
Order. For any Change Order that affects the scope of the regulatory obligations
that have been transferred to Quintiles, Quintiles and Sponsor shall execute a
corresponding amendment to the Transfer of Obligations Form. Such amendment
shall be filed by Sponsor where appropriate, or as required by law or
regulation.

5.0  Confidentiality. It is understood that during the course of this Agreement,
Quintiles and its employees may be exposed to data and information which is
confidential and proprietary to Sponsor. All such data and information
(hereinafter "Sponsor Confidential Information") written or verbal, tangible or
intangible, made available, disclosed, or otherwise made known to

* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.

                                      -3-
<PAGE>

Quintiles and its employees as a result of Services under this Agreement shall
be considered confidential and shall be considered the sole property of Sponsor.
All information regarding Quintiles' pricing and Quintiles' Property (as defined
in Section 6.0 below), disclosed by Quintiles to Sponsor in connection with this
Agreement is proprietary, confidential information belonging to Quintiles (the
"Quintiles Confidential Information", and together with the Sponsor Confidential
Information, the "Confidential Information"). The Confidential Information shall
be used by the receiving party and its employees only for purposes of performing
the receiving party's obligations hereunder. Each party agrees that it will not
reveal, publish or otherwise disclose the Confidential Information of the other
party to any third party without the prior written consent of the disclosing
party. Each party agrees that it will not disclose the terms of this Agreement
or any Work Order to any third party without the written consent of the other
party, which shall not unreasonably be withheld. These obligations of
confidentiality and nondisclosure shall remain in effect for a period of [* * *]
after the termination of the applicable Work Order.

The foregoing obligations shall not apply to Confidential Information to the
extent that it: (a)  is or becomes generally available to the public other than
as a result of a disclosure by the receiving party;  (b)  becomes available to
the receiving party on a non-confidential basis from a source which is not
prohibited from disclosing such information;  (c)  was developed independently
of any disclosure by the disclosing party or was  known to the receiving party
prior to its receipt from the disclosing party, as shown by contemporaneous
written evidence; or (d)  is required by law or regulation  to be disclosed.

6.0  Ownership and Inventions.  All data and information generated or derived by
Quintiles as the result of services performed by Quintiles under this Agreement
shall be and remain the exclusive property of Sponsor.  Any inventions that may
evolve from the data and information described above or as the result of
services performed by Quintiles under this Agreement shall belong to Sponsor and
Quintiles agrees to assign its rights in all such inventions and/or related
patents to Sponsor. Notwithstanding the foregoing, Sponsor acknowledges that
Quintiles possesses certain inventions, processes, know-how, trade secrets,
improvements, other intellectual properties and other assets, including but not
limited to analytical methods, procedures and techniques, procedure manuals,
personnel data, financial information, computer technical expertise and
software, which have been independently developed by Quintiles and which

* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.

                                      -4-
<PAGE>

relate to its business or operations (collectively "Quintiles' Property").
Sponsor and Quintiles agree that any Quintiles' Property or improvements thereto
which are used, improved, modified or developed by Quintiles under or during the
term of this Agreement are the sole and exclusive property of Quintiles.

At the completion of the Services by Quintiles, all materials, information and
all other data owned by Sponsor, regardless of the method of storage or
retrieval, shall be delivered to Sponsor in such form as is then currently in
the possession of Quintiles, subject to the payment obligations set forth in
Paragraph 2 herein. Alternatively, at Sponsor's written request, such materials
and data may be retained by Quintiles for Sponsor for a period of [* * ], or
disposed of pursuant to the written directions of Sponsor. [ * * * ] Quintiles,
however, reserves the right to retain, at its own cost and subject to the
confidentiality provisions herein, one copy of all materials provided to Sponsor
as the result of the Services, to be used to satisfy regulatory requirements or
to resolve disputes regarding the Services. Nothing in this Agreement shall be
construed to transfer from Sponsor to Quintiles any FDA or regulatory record-
keeping requirements unless such transfer is specifically provided for in the
applicable Transfer of Obligations Form.

7.0  Independent Contractor Relationship.  For the purposes of this Agreement,
the parties hereto are independent contractors and nothing contained in this
Agreement shall be construed to place them in the relationship of partners,
principal and agent, employer/employee or joint venturers.  Neither party shall
have the power or right to bind or obligate the other party, nor shall it hold
itself out as having such authority.

8.0  Regulatory Compliance; Inspections. Quintiles agrees that its Services will
be conducted in compliance with all applicable laws, rules and regulations,
including but not limited to the Federal Food, Drug and Cosmetic Act and the
regulations promulgated pursuant thereto, and with the standard of care
customary in the contract research organization industry. Quintiles certifies
that it has not been debarred under the Generic Drug Enforcement Act and that it
will not knowingly employ any person or entity that has been so debarred to
perform any Services under this Agreement.  Sponsor represents and certifies
that it will not require Quintiles to perform any assignments or tasks in a
manner that would violate any applicable law or regulation.  Sponsor further
represents that it will cooperate with Quintiles in taking any actions that
Quintiles reasonably believes are necessary to comply with the regulatory
obligations that have been transferred to Quintiles.

* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.

                                      -5-
<PAGE>

     Each party acknowledges that the other party may respond independently to
any regulatory correspondence or inquiry in which such party or its affiliates
is named.  Each party, however, shall:  a)  notify the other party promptly of
any FDA or other governmental or regulatory inspection or inquiry concerning any
study or Project of Sponsor in which Quintiles is providing Services, including,
but not limited to, inspections of investigational sites or laboratories;  b)
forward to the other party copies of any correspondence from any regulatory or
governmental agency relating to such a study or Project, including, but not
limited to, Form  FD-483 notices, and FDA refusal to file, rejection or warning
letters, even if they do not specifically mention the other party; and, c)
obtain the written consent of  the other party, which will not unreasonably be
withheld, before referring to the other party or any of its affiliates in any
regulatory correspondence. Where reasonably practicable, each party will be
given the opportunity to have a representative present during an FDA or
regulatory inspection.  Each party, however, acknowledges that it may not direct
the manner in which the other party fulfills its obligations to permit
inspection by governmental entities.

     Each party agrees that, during an inspection by the FDA or other regulatory
authority concerning any study or Project of Sponsor in which Quintiles is
providing Services, it will not disclose information and materials that are not
required to be disclosed to such agency, without the prior consent of the other
party, which shall not unreasonably be withheld.   Such information and
materials includes, but are not limited to, the following:  1)  financial data
and pricing data (including, but not limited to, the Budget and Payment sections
of the Work Order);  2)  sales data (other than shipment data);  and, 3)
personnel data (other than data as to qualification of  technical and
professional persons performing functions subject to regulatory requirements).

During the term of this Agreement, Quintiles will permit Sponsor's
representatives (unless such representatives are competitors of Quintiles) to
examine or audit the work performed hereunder and the facilities at which the
work is conducted upon reasonable advance notice during regular business hours
to determine that the Project assignment is being conducted in accordance with
the agreed task and that the facilities are adequate.  Unless the [ *  *  *  ]

9.0  Relationship with Investigators.  If a particular Work Order obligates
Quintiles to contract with investigators or investigative sites (collectively,
"Investigators") then any such contract shall be on a form mutually acceptable
to Quintiles and

* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.

                                      -6-
<PAGE>

Sponsor. If an Investigator requests any material changes to such form,
Quintiles shall submit the proposed change to Sponsor, and Sponsor shall
promptly review, comment on and/or approve such proposed changes. If Sponsor
approves a form Investigator Agreement, or any changes to the form, that differ
from the terms of this Agreement or a Work Order (including, but not limited to,
allowing an Investigator to publish results or data that Quintiles is prohibited
from revealing), then Quintiles shall have no liability for any such approved
provisions or changes. The parties acknowledge and agree that Investigators
shall not be considered the employees, agents, or subcontractors of Quintiles or
Sponsor, and that Investigators shall exercise their own independent medical
judgment. Quintiles' responsibilities with respect to Investigators shall be
limited to those responsibilities specifically set forth in this Agreement and
the applicable Work Order.

     If Quintiles will be paying Investigators on behalf of Sponsor, the parties
will agree in the applicable Work Orders as to a schedule of amounts to be paid
to Investigators.  Sponsor acknowledges and agrees Quintiles will only pay
Investigators from advances or pre-payments received from Sponsor for
Investigators' services, and that Quintiles will not make payments to
Investigators prior to receipt of sufficient funds from Sponsor.  Sponsor
acknowledges and agrees that Quintiles will not be responsible for delays in a
study or Project to the extent that such delays are caused by Sponsor's failure
to make adequate pre-payment for Investigators' services.  Sponsor further
acknowledges and agrees that payments for Investigators' services are pass-
through payments to third parties and are separate from payments for Quintiles'
Services.  Sponsor agrees that it will not withhold Investigator payments except
to the extent that it has reasonable questions about the services performed by a
particular Investigator.

10.0  Conflict of Agreements.  Quintiles represents to Sponsor that it is not a
party to any agreement which would prevent it from fulfilling its obligations
under this Agreement and that during the term of this Agreement, Quintiles
agrees that it will not enter into any agreement to provide services which would
in any way prevent it from providing the services contemplated under this
Agreement.  Sponsor agrees that it will not enter into an agreement with a third
party that would alter or affect the regulatory obligations delegated to
Quintiles in any study or Project without the written consent of Quintiles,
which will not be unreasonably withheld.

11.0  Publication.    Project results may not be published or referred to, in
whole or in part, by Quintiles or its affiliates

* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.

                                      -7-
<PAGE>

without the prior expressed written consent of Sponsor. Neither party will use
the other party's name in connection with any publication or promotion without
the other party's prior, written consent.

12.0  Limitation of Liability. Neither party, nor its affiliates, nor any of its
or their respective directors, officers, employees or agents shall have any
liability of any type (including, but not limited to, contract, negligence, and
tort liability), for any special, incidental, indirect or consequential damages,
including, but not limited to the loss of opportunity, loss of use, or loss of
revenue or profit, in connection with or arising out of this Agreement, any Work
Order, or the Services contemplated hereunder, even if such damages may have
been foreseeable to such party. In addition, in no event shall the collective,
aggregate liability (including, but not limited to, contract, negligence and
tort liability) of Quintiles and its affiliates and its and their respective
directors, officers, employees and agents under this Agreement or any Work Order
hereunder exceed the amount of fees actually received by Quintiles from Sponsor
for the assignment or task from which such liability arose.

13.0  Indemnification. Sponsor shall indemnify, defend and hold harmless
Quintiles and its affiliates, and its and their directors, officers, employees
and agents (each, a "Quintiles Indemnified Party"), from and against any and all
losses, damages, liabilities, reasonable attorney fees, court costs, and
expenses (collectively "Losses") resulting or arising from any third-party
claims, actions, proceedings, investigations or litigation relating to or
arising from or in connection with this Agreement, any Work Order, or the
Services contemplated herein (including, without limitation, any Losses arising
from or in connection with any study, test, device, product or potential product
to which this Agreement or any Work Order relates), except to the extent such
Losses are determined to have resulted solely from the negligence or intentional
misconduct of the Quintiles Indemnified Party seeking indemnity hereunder, in
which event Quintiles shall indemnify, defend and hold harmless Sponsor and its
Affiliates, and its and their directors, officers, employees, and agents
("Durect Indemnified Parties") from and against any such Losses.

14.0  Indemnification Procedure. Each Indemnified Party shall give the
indemnifying party prompt notice of any such claim or lawsuit (including a copy
thereof) served upon it and shall fully cooperate with the Indemnifying Party
and its legal representatives in the investigation of any matter the subject of
indemnification. The Indemnified Party shall not unreasonably

* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.

                                      -8-
<PAGE>

withhold its approval of the settlement of any claim, liability, or action
covered by this Indemnification provision.

15.0  Termination.  This Agreement or any Work Orders may be terminated without
cause by Sponsor or by Quintiles at any time during the term of the Agreement on
[ *  *  * ] prior written notice to Quintiles or Sponsor, as appropriate. Either
party may terminate this Agreement or any Work Order for material breach upon
[ * * * ] written notice specifying the nature of the breach, if such breach has
not been substantially cured within the [ * * * ] period. In the event that
Quintiles or Sponsor determines, in its sole discretion, that the continued
performance of the Services contemplated by this Agreement would constitute a
potential or actual violation of regulatory or scientific standards of
integrity, such Party may terminate this Agreement or the applicable Work Order,
by giving written notice stating the effective date (which may be less than
[ * * * ] from the notice date) of such termination. Any written termination
notice shall identify the specific Work Order or Work Orders that are being
terminated.

In the event this Agreement or any Work Order is terminated, Sponsor shall pay
Quintiles for all Services performed in accordance with the applicable Work
Order(s) hereunder, and reimburse Quintiles for all costs and expenses incurred
in performing those Services.  If payments in a terminated Work Order are
milestone-based, and the Work Order is terminated after costs have been incurred
by Quintiles toward achieving a milestone, but that milestone has not yet been
completed, Sponsor will pay Quintiles' standard fees for actual work performed
toward that milestone up to the date of termination. In the event this Agreement
is terminated and Quintiles is determined to have breached this Agreement,
Sponsor may deduct from its payment obligations amounts directly related to the
damages suffered by Sponsor as a result of such breach.  Upon receipt of a
termination notice, Quintiles shall cease performing any work not necessary for
the orderly close out of the affected Project or for the fulfillment of
regulatory requirements. Sponsor shall pay for all actual costs, including time
spent by Quintiles personnel (which shall be billed at Quintiles' standard rates
in effect as of the date of the termination notice), incurred to complete
activities associated with the termination and close out of affected Projects,
including the fulfillment of any regulatory requirements.

Upon the termination of this Agreement or any Work Order, Quintiles shall
deliver to Sponsor all data and materials provided by Sponsor to Quintiles for
the conduct of Services under the impacted Project(s).  All statistical data,
all

* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.

                                      -9-
<PAGE>

statistical reports, all data entries and any other documentation produced as
the result of Services performed by Quintiles under the impacted Project(s)
shall be delivered to Sponsor upon payment to Quintiles for all Services
completed in accordance with the applicable Work Order.

16.0 Relationship with Affiliates; Request for Personnel.  Sponsor agrees that
Quintiles may use the Services of its corporate affiliates to fulfill Quintiles'
obligations under this Agreement and any Work Order.  Any affiliate so used
shall be subject to all of the terms and conditions applicable to Quintiles
under this Agreement or any Work Order, and entitled to all rights and
protections afforded Quintiles under this Agreement and any Work Order.
Quintiles agrees that Sponsor's affiliates may use the services of Quintiles
(and its affiliates) under this Agreement.  In such event, such Sponsor's
affiliates shall be bound by all the terms and conditions of this Agreement and
any Work Order and entitled to all rights and protections afforded Sponsor under
this Agreement and any Work Order.  Any such affiliate of Sponsor or Quintiles
may execute a Work Order directly.  The term "affiliate" shall mean all entities
controlling, controlled by or under common control with Sponsor or Quintiles, as
the case may be.  The term "control" shall mean the ability to vote fifty
percent (50%) or more of the voting securities of any entity or otherwise having
the ability to influence and direct the polices and direction of an entity.  In
addition, Quintiles shall use its reasonable efforts to accommodate Sponsor's
requests for specific personnel to be assigned to specific tasks and/or
projects.

17.0  Cooperation; Sponsor Delays; Disclosure of Hazards. Sponsor shall forward
to Quintiles in a timely manner all data and information in Sponsor's possession
or control necessary for Quintiles to conduct the Services. Quintiles shall not
be liable to Sponsor nor be deemed to have breached this Agreement or any Work
Order for errors, delays or other consequences arising from Sponsor's failure to
timely provide documents, materials or information or to otherwise cooperate
with Quintiles in order for Quintiles to timely and properly perform its
obligations. Sponsor acknowledges that, if it materially delays or suspends
performance of the Services, then the personnel and/or resources originally
allocated to the Project may be re-allocated, and Quintiles will not be
responsible for delays due to required re-staffing or re-allocation of
resources. Sponsor shall provide Quintiles with all information available to it
regarding known or potential hazards associated with the use of any substances
supplied to Quintiles by Sponsor and Sponsor shall comply with all current
legislation and regulations concerning the shipment of substances by the land,
sea or air.

* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.

                                      -10-
<PAGE>

18.0  Force Majeure.  In the event either party shall be delayed or hindered in
or prevented from the performance of any act required, hereunder by reasons of
strike, lockouts, labor troubles, inability to procure materials or services,
failure of power or restrictive government or judicial orders, or decrees,
riots, insurrection, war, Acts of God, inclement weather or other reason or
cause beyond that party's control, then performance of such act (except for the
payment of money owed) shall be excused for the period of such delay.

19.0  Notices and Deliveries.  Any notice required or permitted to be given
hereunder by either party hereunder shall be in writing and shall be deemed
given on the date received if delivered personally or by a reputable overnight
delivery service, or three days after the date postmarked if sent by registered
or certified mail, return receipt requested, postage prepaid to the following
addresses:

If to Quintiles:                            If to Sponsor:

Paula Brown Stafford                                    Jean Liu
Executive Vice President                    Vice President and General Counsel
Quintiles, Inc.                                Durect Corporation
1007 Slater Road                            10240 Bubb Road
Chelsea Place                               Cupertino, California  95104
Durham, North Carolina  27703

With a copy to:

Quintiles Transnational Legal Department
P.O. Box 13979
Research Triangle Park, North Carolina
27709-3979
Attention: John Russell

If Sponsor delivers, ships, or mails materials or documents to Quintiles, or
requests that Quintiles deliver, ship, or mail materials or documents to Sponsor
or to third parties, then the expense and risk of loss for such deliveries,
shipments, or mailings shall be borne by Sponsor.  Quintiles disclaims any
liability for the actions or omissions of third-party delivery services or
carriers.

20.0  Insurance.  Each party will maintain, for the duration of this Agreement,
insurance in an amount reasonably adequate to

* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.

                                      -11-
<PAGE>

cover its obligations hereunder, and, upon request, each party will provide to
the other party a certificate of insurance showing that such insurance is in
place.

21.0  Foreign Currency Exchange.  For all Work Orders in which Quintiles will
earn fees or incur expenses in excess of one million U.S. Dollars in a currency
differing from the invoice and payment currency, a foreign currency exchange
provision will be included in the Work Order.

22.0  [ *  *  *  ].   Where services in a Work Order are provided by Quintiles
[ * * *].

23.0  Assignment.  Except as stated above in Section 16, neither party may
assign any of its rights or obligations under this Agreement to any party
without the express, written consent of the other party.

24.0  Enforceability. This Agreement shall be construed, governed, interpreted,
and applied in accordance with the laws of the State of New York, exclusive of
its conflict of law provisions.  The failure to enforce any right or provision
herein shall not constitute a waiver of that right or provision.   If any
provisions herein are found to be unenforceable on the grounds that they are
overly broad or in conflict with applicable laws, it is the intent of the
parties that such provisions be replaced, reformed or narrowed so that their
original business purpose can be accomplished to the extent permitted by law,
and that the remaining provisions shall not in any way be affected or impaired
thereby.

25.0  Survival.   The rights and obligations of Sponsor and Quintiles, which by
intent or meaning have validity beyond such termination (including, but not
limited to, rights with respect to product-related inventions, confidentiality,
discoveries and improvements, indemnification and liability limitations) shall
survive the termination of this Agreement or any Work Order.

26.0  Arbitration. Any controversy or claim arising out of or relating to this
Agreement or the breach thereof shall be settled by arbitration administered by
the American Arbitration Association ("AAA") under its Commercial Arbitration
Rules, and judgment on the award rendered by the arbitrator shall be binding and
may be entered in any court having jurisdiction thereof.  Such arbitration shall
be filed and conducted at the office of the AAA closest to the Quintiles office
having responsibility for the Project if filed for by Sponsor and the AAA office
in Santa Clara County, California, if filed for by Quintiles, and shall be

* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.

                                      -12-
<PAGE>

conducted in English by one arbitrator mutually acceptable to the parties
selected in accordance with AAA Rules.

27.0  Entire Agreement and Modification. This Agreement contains the entire
understandings of the parties with respect to the subject matter herein, and
supersedes all previous agreements (oral and written), negotiations and
discussions. Any modifications to the provisions herein must be in writing and
signed by the parties.

     IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto
through their duly authorized officers on the date(s) set forth below.

                     ACKNOWLEDGED, ACCEPTED AND AGREED TO:

Quintiles, Inc.                         Durect Corporation

By: /s/ Paula Brown Stafford            By: /s/ James E. Brown

Print Name:  Paula Brown Stafford       Print Name:  James E. Brown

Title:  Executive Vice President        Title:  President
        and Chief Executive Officer

Date: October 19, 1999                  Date: November 1, 1999

FEDERAL ID #  56-1323952

                                   EXHIBIT A
                               SAMPLE WORK ORDER

                                  WORK ORDER

This Work Order ("Work Order") is between Durect Corporation ("Sponsor") and
Quintiles ____________ ("Quintiles") and relates to the Master Services
Agreement dated the ___ day of _________, 19__, (the "Master Agreement").
Pursuant to the Master Agreement, Quintiles has agreed to perform certain
services in

* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.

                                      -13-
<PAGE>

accordance with written work orders, such as this one, entered into from time-
to-time describing such services.

The parties hereby agree as follows:

1.   Work Order.  This document constitutes a "Work Order" under the Master
Agreement and this Work Order and the services contemplated herein are subject
to the terms and provisions of the Master Agreement.

2.   Services and Payment of Fees and Expenses.   The specific services
contemplated by this Work Order (the "Services") and the related payment terms
and obligations are set forth on the following attachments, which are
incorporated herein by reference:

SCOPE OF WORK              ATTACHMENT 1
PROJECT BUDGET             ATTACHMENT 2
TIMELINE                   ATTACHMENT 3
PAYMENT SCHEDULE           ATTACHMENT 4
TRANSFER OF OBLIGATIONS    ATTACHMENT 5

3.  Term.  The term of this Work Order shall commence on the date of execution
and shall continue until the services described in Attachment 1 are completed,
unless this Work Order is terminated in accordance with the Master Agreement.

4.  Affiliates and Subcontractors.   Sponsor agrees that Quintiles may use the
services of its corporate affiliates to fulfill Quintiles' obligations under
this Work Order.  Any such affiliates shall be bound by all the terms and
conditions of, and be entitled to all rights and protections afforded under, the
Master Agreement and this Work Order.  Any subcontractors or consultants (other
than Quintiles' affiliates) that will be used by Quintiles in performing the
Services are listed below:

5.  Amendments.  No modification, amendment, or waiver of this Work Order shall
be effective unless in writing and duly executed and delivered by each party to
the other.

                     ACKNOWLEDGED, ACCEPTED AND AGREED TO:

Quintiles ____________                  Durect Corporation

By:                                 By:

Title:                              Title:

Date:                               Date:

* Material has been omitted pursuant to a request for confidential treatment,
and such material has been filed separately with the SEC.

                                      -14-

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